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Chapter 10 Applications To Natural Resources: Objective
Chapter 10 Applications To Natural Resources: Objective
Chapter 10 Applications To Natural Resources: Objective
Objective:
Optimal management and utilization of natural
resources.
Two kinds of natural resource models:
(i)renewable resources such as fish, food, timber,etc.,
Section 10.2: an optimal forest thinning model.
(ii)nonrenewable or exhaustible resources such as
petroleum, minerals, etc.
Section 10.3: an exhaustible resource model.
subject to (10.2).
where
let
rewrite (10.11) as
As in Section 7.2.2 and 7.2.4, the turnpike level
given by
is
Economic interpretation:
where
The interpretation of (x) is that it is the sustainable
economic rent at fish stock level x.This can be seen by
substituting
into (10.3), where
obtained using (10.12), is the fishing effort required to
maintain the fish stock at level x. Suppose we have
attained the equilibrium level
given by (10.2), and
suppose we reduce this level to
by using fishing
effort of
.
. From (10.18),
Case 1:
Note that
in the second integral is an
impulse control bringing the forest from value
to 0
by a clearcutting operation; differentiate (10.25) with
respect to T, equate the result to zero,
If the solution T lies in
Case 2:
In the Vidale-Wolfe advertising model of Chapter 7, a
similar case occurs when T is small; the solution for
x(T) is obtained by integrating (10.13) with u =0 and
x0 = 0. Let this solution be denoted as x*(t). Here
(10.24) becomes
differentiate (10.27) and equate to zero, we get
If the solution lies in the interval
keep it; otherwise
set
The optimal value T* can be obtained by
computing J*(T) from both cases and selecting
whichever is larger.
is
Case 2
To obtain the solution requires finding a value of (T)
such that
where
The time t*, if it is less than T, is the time at which
and
Subcase 2b
in Figure 10.9