A Quantitative Precautionary Approach
Abstract:I propose that precaution be introduced in exploitation of natural resources by means of a performance bond, which exploiters would be required to purchase, to be paid in case of collapse of the stock. The size of the penalty would not be determined solely on the basis of economic considerations but would be chosen to promote more precaution in exploitation. I perform calculations to show how such a requirement can discourage risky polices and reduce the impact of policies that are optimal under the system of penalties. The insurance premium for the performance bond would be responsive to various factors that influence the probability of collapse, including nonnormal distribution of process noise, critical depensation, possible catastrophes in recruitment or survival, and uncertainty about parameters of the stock-recruit relationship. Such a system of penalties may remove some of the vagueness that has plagued attempts to define and implement precautionary policies.
Document Type: Research Article
Publication date: March 1, 2002
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