Costly Renewable Resource Management and International Trade

Renewable resource management is necessary to avoid the dissipation ofinter-temporal rents due to open access exploitation. In reality management iscostly, which implies that the first best solution is not appropriate. Managementcosts must be considered explicitly in optimization problems, to find theappropriate second best solutions. This is the focus of this dissertation, whichcontains applied theoretical analyses of dynamic bio-economic models, wheremoving away from open access exploitation of a renewable resource is costly.Partial equilibrium problems of harvesting a scarce renewable resourceare analyzed, where economic incentives of poachers, who are punished ifcaught, are included. Harvest, enforcement and resource price are endogenouslydetermined. The punishment increases poachers' expected marginal costs and theresource market price, which forces at least some poachers out of the market.Different relative harvest cost structures are considered between social plannerand poachers, which drives the manner in which the market supply is optimallyshared between them. Corrective policies are given for a pseudo-monopolistseeking to maximize his discounted profit instead of total economic surplus.Further policy adjustments are characterized, in case the resource entails nonmarketvalues.A two-good, two-variable-factor bio-economic trade model is alsodeveloped for a small country. Open access, first and second best resourcemanagement models are analyzed, assuming that instantaneous gains areindependent of the resource stock and that resource management incurs a flow ofinstantaneous fixed cost. The most empirically realistic model allows forresource management regime switches, which is influenced by the trade regimeand the world price of the resource good.Different cases are characterized in relation to changes in welfare andconservation, following a move from autarky to free trade. Free trade isunambiguously beneficial in some cases, but not always. Specifically, if openaccess is the second best management regime in autarky, then a smallcomparative advantage in the resource good could be detrimental to the homecountry. There exists a greater comparative advantage in the resource good,above which free trade would be beneficial. Understanding what drives theempirically relevant detrimental consequences of free trade can be helpful forpolicy-making.