Optimal exploitation of renewable resources under uncertainty and the extinction of species (Q2490713)

The paper proposes a model where a renewable resource with stochastic concave growth function is harvested over time according to the optimal dynamic decisions of a social planner. The conditions under which the optimal policy leads to a global extinction, global conservation and the existence of a safe standard of conservation are characterized. These conditions are specified in terms of the economic and ecological primitives of the model: the biological growth function, the welfare function, the distribution of shocks and the discount rate. The results indicate that, unlike deterministic models, extinction and conservation in stochastic models are not determined by a simple comparison of the growth rate and discount rate; the welfare function plays an important role.