EEP101_lecture14a

Or number of fish change stock size today is the

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Unformatted text preview: k size today is the resource stock of tomorrow is the EQUAL TO EQUAL today’s stock MINUS MINUS today’s harvest (or mining) PLUS resource stock growth (for renewable resource) PLUS new discoveries PLUS PLUS Applying Our Knowledge of Interest Rates Interest Higher interest rates lead to increased mining or Higher harvesting Resource owners that have to pay high interest for Resource funds are more likely to mine resources & sell them than resource owners who face low interest rates Poor individuals with heavy credit constraints are more Poor likely to mine their resources likely Income & credit support for the poor reduce NR Income Net discounted present value (NPV) Net Discounting to time 0 is used for comparing income Discounting of different periods of The objective of resource management programs are The to maximize the sum of discounted values of all net benefits over time (Net Benefits of period 1, plus 2, plus 3, etc.) (Net Example: Computing NPV Example: If we have earned If 55 dollars at first period 55 60.5 dollars at period two 60.5 If the discount rate is 10% The NPV i...
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