Environmental and Resource Management under Myopia

• Main Author: FUJII, Tomoki
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2006
• Subjects: non-constant discounting; resource management; myopia; time-consistency; observational equivalence; Agricultural and Resource Economics
• Online Access: https://ink.library.smu.edu.sg/soe_research/943; https://ink.library.smu.edu.sg/context/soe_research/article/1942/viewcontent/hotelling_ncd.pdf
• Institution: Singapore Management University

Myopia is important in environmental and resource management problems because they often involve intertemporal decisions over a long time horizon. We present a parsimonious extension of standard dynamic programming equation in a continuous time and continuous state setting, which enables rich description of myopic behavior. In our model, the process of planning future controls and choosing current control are clearly distinguished. We Illustrate the behavior of various types of myopic agents with a simple example of non-renewable resource extraction, and discuss the policy relevance of the expiry of extraction permits to resource management under Myopia.