Renewable Resource Use: Transition from Capture to Allocation and Optimal Stock Recovery

Unlimited access and capture is the best allocation policy for any resource as long as there are no crowding externalities and the harvest rate does not exceed the regeneration rate. If harvest consistently overtakes growth, unlimited capture should no longer be permitted. Without a new institutional arrangement, individuals with access to a common pool resource may ignore the opportunity costs of their action. This practice has in fact caused many resource stocks to fall below the sustainable minimum levels. Because the transition to an efficient allocation mechanism was poorly designed (or missing) or because of the lack of communication with the affected parties, transitional economic and political issues have delayed and raised the cost of the needed institutional change, and in some cases thwarted the change entirely. Although transition issues have often frustrated the efforts to adopt efficient institutions, previous studies have devoted little attention to optimal stock recovery and transition issues. This study develops a model of optimal harvest path for stock recovery, explores implementation issues, and suggests ways to address typical equity and efficiency concerns in a transition process.