Revenue-sharing clubs provide economic insurance and incentives for sustainability in common-pool resource systems

Andrew R. Tilman, Simon Asher Levin, James R. Watson

Research output: Contribution to journalArticle

4 Scopus citations

Abstract

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.

Original languageEnglish (US)
Pages (from-to)205-214
Number of pages10
JournalJournal of Theoretical Biology
Volume454
DOIs
StatePublished - Oct 7 2018

All Science Journal Classification (ASJC) codes

  • Statistics and Probability
  • Modeling and Simulation
  • Biochemistry, Genetics and Molecular Biology(all)
  • Immunology and Microbiology(all)
  • Agricultural and Biological Sciences(all)
  • Applied Mathematics

Keywords

  • Agent-based model
  • Common-pool resource
  • Complex adaptive systems
  • Cooperation
  • Fisheries management
  • Human behavior
  • Insurance
  • Risk
  • Social-ecological systems
  • Sustainability

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