Controlling a biological invasion: a non-classical dynamic economic model (Q934901)

The purpose of this paper is to analyze the economics of controlling a biological invasion, the objective being to minimize the discounted sum of social costs associated to damages and control costs. The authors start by constructing a control model and providing an analysis of its long-run behaviour. This model cannot be transformed into a standard optimal growth or resource management problem, as it includes non-convexity and state-dependence in the objective function and a negative shadow price of the biological capital stock. Then, the question of when to control, which is specially relevant in nonconvex models, is considered. The paper characterizes the limiting outcomes under an optimal policy by examining conditions under which the optimal policy leads to: (i) eradication of the invasion from any size, (ii) eradication of small invasions but not large invasions and (iii) non eradication. These conditions are given in terms of the ecological and economical fundamentals of the model: the biological growth of the invasion, control costs, damages and the social discount rate. The paper shows the importance of the initial invasion size in determining the optimal policy and illustrates the information that is needed to evaluate the economic efficiency of invasive species control.