TY - JOUR
T1 - Revenue-sharing clubs provide economic insurance and incentives for sustainability in common-pool resource systems
AU - Tilman, Andrew R.
AU - Levin, Simon Asher
AU - Watson, James R.
N1 - Funding Information:
Funding was provided by the National Science Foundation grants GEO-1211972 and OCE-1426746, and by the Nordforsk-funded project Green Growth Based on Marine Resources: Ecological and Socio-Economic Constraints (GreenMAR) AGMT dtd 05-05-2014. We also acknowledge the SEReNe program of Princeton University.
Funding Information:
Funding was provided by the National Science Foundation grants GEO-1211972 and OCE-1426746 , and by the Nordforsk -funded project Green Growth Based on Marine Resources: Ecological and Socio-Economic Constraints (GreenMAR) AGMT dtd 05-05-2014 . We also acknowledge the SEReNe program of Princeton University.
Publisher Copyright:
© 2018 Elsevier Ltd
PY - 2018/10/7
Y1 - 2018/10/7
N2 - Harvesting behaviors of natural resource users, such as farmers, fishermen and aquaculturists, are shaped by season-to-season and day-to-day variability, or in other words risk. Here, we explore how risk-mitigation strategies can lead to sustainable use and improved management of common-pool natural resources. Over-exploitation of unmanaged natural resources, which lowers their long-term productivity, is a central challenge facing societies. While effective top-down management is a possible solution, it is not available if the resource is outside the jurisdictional bounds of any management entity, or if existing institutions cannot effectively impose sustainable-use rules. Under these conditions, alternative approaches to natural resource governance are required. Here, we study revenue-sharing clubs as a mechanism by which resource users can mitigate their income volatility and importantly, as a co-benefit, are also incentivized to reduce their effort, leading to reduced over-exploitation and improved resource governance. We use game theoretic analyses and agent-based modeling to determine the conditions in which revenue-sharing can be beneficial for resource management as well as resource users. We find that revenue-sharing agreements can emerge and lead to improvements in resource management when there is large variability in production/revenue and when this variability is uncorrelated across members of the revenue-sharing club. Further, we show that if members of the revenue-sharing collective can sell their product at a price premium, then the range of ecological and economic conditions under which revenue-sharing can be a tool for management greatly expands. These results have implications for the design of bottom-up management, where resource users themselves are incentivized to operate in ecologically sustainable and economically advantageous ways.
AB - Harvesting behaviors of natural resource users, such as farmers, fishermen and aquaculturists, are shaped by season-to-season and day-to-day variability, or in other words risk. Here, we explore how risk-mitigation strategies can lead to sustainable use and improved management of common-pool natural resources. Over-exploitation of unmanaged natural resources, which lowers their long-term productivity, is a central challenge facing societies. While effective top-down management is a possible solution, it is not available if the resource is outside the jurisdictional bounds of any management entity, or if existing institutions cannot effectively impose sustainable-use rules. Under these conditions, alternative approaches to natural resource governance are required. Here, we study revenue-sharing clubs as a mechanism by which resource users can mitigate their income volatility and importantly, as a co-benefit, are also incentivized to reduce their effort, leading to reduced over-exploitation and improved resource governance. We use game theoretic analyses and agent-based modeling to determine the conditions in which revenue-sharing can be beneficial for resource management as well as resource users. We find that revenue-sharing agreements can emerge and lead to improvements in resource management when there is large variability in production/revenue and when this variability is uncorrelated across members of the revenue-sharing club. Further, we show that if members of the revenue-sharing collective can sell their product at a price premium, then the range of ecological and economic conditions under which revenue-sharing can be a tool for management greatly expands. These results have implications for the design of bottom-up management, where resource users themselves are incentivized to operate in ecologically sustainable and economically advantageous ways.
KW - Agent-based model
KW - Common-pool resource
KW - Complex adaptive systems
KW - Cooperation
KW - Fisheries management
KW - Human behavior
KW - Insurance
KW - Risk
KW - Social-ecological systems
KW - Sustainability
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U2 - 10.1016/j.jtbi.2018.06.003
DO - 10.1016/j.jtbi.2018.06.003
M3 - Article
C2 - 29883741
AN - SCOPUS:85048537421
SN - 0022-5193
VL - 454
SP - 205
EP - 214
JO - Journal of Theoretical Biology
JF - Journal of Theoretical Biology
ER -