Scandinavian Working Papers in Economics

Discussion Papers,
Norwegian School of Economics, Department of Business and Management Science

No 2016/20: A bridge between continuous and discrete-time bioeconomic models: Seasonality in fisheries

Sturla F. Kvamsdal (), José M. Maroto (), Manuel Morán () and Leif K. Sandal ()
Additional contact information
Sturla F. Kvamsdal: SNF – Centre for Applied Research, Postal: SNF – Centre for Applied Research, Helleveien 30, N-5045 Bergen, Norway
José M. Maroto: Dept. of Statistics and Operations Research II, Complutense University of Madrid, Postal: Complutense University of Madrid , Department of Statistics and Operations Research II, 28223 Madrid, Spain
Manuel Morán: Dept. of Foundation of Economic Analysis I, Complutense University of Madrid, Postal: Complutense University of Madrid , Department of Foundation of Economic Analysis I, 28223 Madrid, Spain
Leif K. Sandal: Dept. of Business and Management Science, Norwegian School of Economics, Postal: NHH , Department of Business and Management Science, Helleveien 30, N-5045 Bergen, Norway

Abstract: We develop a discretization method for continuous-time bioeconomic models. Based on this method, we develop a discrete-time bioeconomic model to analyze seasonality in fisheries. The discretization method consists of three steps: first, we estimate a proper growth function for the continuous-time model with the ensemble Kalman Filter. Second, we use the Runge-Kutta method to discretize the growth function. Third, we use the Bellman approach to analyze optimal management of seasonal fisheries in a discrete-time setting. We analyze both the case of quarterly harvest and the case of monthly harvest, and we compare these cases with the case of annual harvest. We find that seasonal harvesting is a win-win optimal solution with higher harvest, higher optimal steady state equilibrium, and higher economic value than obtained in the case of annual harvesting. We also demonstrate that the discretization method overcomes the errors and preserves the strengths of both continuous and discrete-time bioeconomic models.

Keywords: OR in natural resources; bioeconomic modeling; seasonal fisheries; discrete-time optimization

JEL-codes: C44; C61; Q22; Q57

23 pages, November 30, 2016

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