John O.S. Kennedy

Estimating the Economic Value of Mount Buffalo National Park with the Travel Cost and Contingent Valuation Models

The Mount Buffalo National Park is the oldest national park in Victoria, Australia. There has been a rapid increase in the number of visitors to the park during the last decade and park management has been a concern, especially in the light of declining budgetary allocations and potential damage due to the increased visitor numbers. Policy options to increase park revenue remain unclear because of a lack of information on demand parameters and user costs. This study estimates the economic value of the park using the travel cost method (TCM) and the contingent valuation method (CVM). The TCM gives higher consumer surplus (CS) than the CVM. The CS shows that the economic value of the park is high and that there are opportunities to introduce innovative fee schemes to enhance its revenue. Present entry fee systems do not capture the economic value of the park.

Scope for efficient multinational exploitation of North-East Atlantic mackerel

The three major harvesters of North-East Atlantic mackerel are modelled as exercising alternative coalitional strategies. Incentives for coalition formation are analysed by finding the maximum rents that harvesters can obtain under all possible coalition arrangements. The main result is that for a wide range of parameter values, the all-player coalition is unstable if joint rents cannot be redistributed amongst the players. Without transfers, the outcome is the type of non-cooperative fishing currently observed. However, if transfers are possible, side payments can be found for the mackerel fishery to sustain the efficiency gains of joint maximization. It is shown how they can be set to enhance the likelihood of their being accepted by players operating under a regional fisheries management organisation, or to be self-enforcing and protect against defection by sub-coalitions.

An adaptive decision-making aid for dairy cow replacement

Abstract A decision aid is developed for the retention or replacement of individual dairy cows. An important determining factor is the cows milk-yield potential. However, the potential is difficult to assess from recorded yields in previous lactations because temporary environmental factors mask the underlying yield potential. An optimal replacement strategy can be found using stochastic dynamic programming. In this paper the approach is extended to allow for the Bayesian re-evaluation of yield potential on the basis of previous recorded yields. The sensitivity of the replacement decision to variance estimates determined for a sample of commercial dairy herds in England and Wales is tested in an adaptive dynamic programming model. The paper concludes by demonstrating the way in which the model results could be used for helping to identify which cows should be culled without replacement if the expected milk production of the herd is above the quota limit.

Principles of dynamic optimization in resource management

The type of resource problem amenable to static analysis is distinguished from that requiring dynamic analysis. Possibly due to the apparent complexity of optimal control theory methods, often dynamic models have not been applied where they would be appropriate. In this article dynamic programming arguments are used to derive optimality conditions directly and simply. They are derived for a renewable resource such as a fishery, but they have application to resource management in general. The approach is illustrated by examples to the extraction of a depletable resource, to feeding for weight gain, and to applying fertilizer when some fertilizer carriers over from one crop season to another. Conditions for the optimal replacement of biological units are also considered.

Economics of a nest-box program for the conservation of an endangered species: a reappraisal

An optimization model is developed to identify timing and placement strategies for the installation of nest boxes and the harvesting of timber to meet joint timber–wildlife objectives. Optimal management regimes are determined on the basis of their impacts on the local abundance of a threatened species and net present value (NPV) and are identified for a range of NPV levels to identify production possibility frontiers for abundance and NPV. We apply the model to a case study focusing on an area of commercially productive mountain ash (Eucalyptus regnans F. Muell.) forest in the Central Highlands region of Victoria, Australia. The species to be conserved is Leadbeater’s possum (Gymnobelideus leadbeateri McCoy), which is locally limited by a scarcity of nesting hollows. The modeling is exploratory but indicates that nest boxes may offer a promising population recovery tool if consideration is taken of their placement and areal extent through time. Résumé : Les auteurs ont développé un modèle d’optimisation pour identifier les stratégies concernant le moment et l’emplacement pour l’installation de nichoirs et la récolte de bois afin de rencontrer les objectifs conjoints pour la matière ligneuse et la faune. Les régimes optimaux d’aménagement sont déterminés sur la base de leurs impacts sur l’abondance locale d’une espèce menacée et la valeur nette actualisée. Ils sont identifiés pour une gamme de niveaux de valeur nette actualisée afin d’identifier les limites possibles de production en fonction de l’abondance et de la valeur nette actualisée. Nous appliquons le modèle à une étude de cas concentrée dans une zone de forêt commerciale productive d’eucalyptus géant (Eucalyptus regnans F. Muell.) sur le plateau central dans la région de Victoria en Australie. L’espèce à conserver est le bucorve du Sud (Gymnobelideus leadbeateri McCoy) qui est localement en nombre limité à cause de la rareté des cavités pouvant servir de nichoir. La modélisation est exploratoire mais indique que les nichoirs peuvent constituer un outil intéressant pour rétablir la population si leur emplacement et leur répartition dans le temps sont pris en considération. [Traduit par la Rédaction] Spring et al. 2003

A Computable Game Theoretic Approach to Modelling Competitive Fishing

A fishery is considered in which the young are harvested by one nation, and the adults by another. The harvests are sold on separate markets. Finding the optimal strategies of the two nations is treated as a problem in dynamic non-cooperative game theory. While in most other models players make decisions simultaneously at each stage, in this model each player makes his decision separately in time, knowing the action of the previous player. The model is applied to the southern bluefin tuna fishery which is jointly exploited by Australia and Japan. The results of non-cooperative and cooperative strategies are compared.

ECONOMIC BENEFITS OF INTEGRATING A HYDROPONIC-LETTUCE SYSTEM INTO A BARRAMUNDI FISH PRODUCTION SYSTEM

The economic benefits of an aquaculture-hydroponic integrated system are evaluated using a hydroponic-lettuce and barramundi fish production system as a case study. Technical data were obtained for a case study farm located at Port Stephens, New South Wales, Australia. The net present values of annual cash flows over a 10-year planning horizon were determined for barramundi and lettuce production as stand-alone units, and alternatively as integrated units, using a capital budgeting framework. Integrated production enables barramundi effluent to be used as a source of nutrients for the lettuce production. This results in an increase in net benefits equal to the reduction in barramundi effluent disposal costs, and the saving of some water and nutrient costs of the lettuce system.

Optimal Management of a Flammable Forest Providing Timber and Carbon Sequestration Benefits: An Australian Case Study

In deciding to keep or fell a forest stand given its age, the risk of loss of timber through wildfire is an important consideration. If trees also have value from sequestration of carbon, another effect of fire is the unplanned loss of stored carbon. Factors affecting the decision to keep or fell trees, and how much to spend on fire protection, are investigated using stochastic dynamic programming, using carbon sequestration in stands of mountain ash in Victoria as a case study. The effect of treating sawlogs as a permanent carbon sink after harvesting is explored.

Optimal Annual Changes in Harvests from Multicohort Fish Stocks: The Case of Western Mackerel

An optimising model is developed to determine the sequence of total allowable catches of western mackerel which would result in the maximum present value of the stream of annual rents. It is found that the optimal steady state fishing mortality would be one half to one third of recent levels. For the base formulation of the model the optimal plan calls for periodic fishing, with a moratorium on fishing for the first two years, and for a very substantial catch in the third year. The sensitivity of pulse fishing as an optimal strategy is tested with respect to number of solution iterations, asymmetric charges for increasing fleet capacity, quadratic adjustment costs, harvesting stock effects, the rate of discount, and the price elasticity of demand for mackerel.

Rent-Maximization Versus Competition in the Western and Central Pacific Tuna Fishery

Abstract The potential for achieving sustainable and efficient harvesting of three species of migratory tuna in the Western and Central Pacific Ocean is examined. The stocks reside in exclusive economic zones (mainly those of Pacific island countries) and in the high seas. Most harvesting is carried out by distant water fishing nations, including the USA, Japan, Taiwan, China, and Korea. Problems of achieving sustainability and efficiency in the harvesting of the stocks by disparate countries are made more difficult due to changes in the harvesting levels of one fleet affecting the rents of another fleet through changes in the age distribution of stock. These types of problem are under review by the Western and Central Pacific Fisheries Commission. Results from an age-structured steady-state bioeconomic model are used to show: the changes in fleet rents and catches of tuna if all fleets form a cooperative grand coalition to deploy fishing effort to maximize rents over the region; the likely non-stability of the grand coalition; and the inferior Nash Equilibria outcomes if fleets fish non-cooperatively to maximize their own rents.