Renewable resource management with environmental prediction: the importance of structural specification

Environmental variability can substantially influence renewable resource growth, and as the ability to forecast environmental conditions improves, opportunities for adaptive management emerge. Using a stochastic stockrecruitment model, Costello, et al. (<link/>) show the optimal management response to a prediction of favourable growth conditions is to reduce current harvests. We find this result may be reversed when environmental variability and stock are substitutes in growth, a possibility that has been ignored by resource economists. As an example, we analyze the South Carolina white shrimp fishery, finding the optimal response to a prediction of favourable overwinter conditions is to increase fall harvests.