Title: Modelling resilience to environmental shocks
Authors: Michael Kuhn - International Institute for Applied Systems Analysis (Austria) [presenting]
Stefan Wrzaczek - International Institute for Applied Systems Analysis (Austria)
Abstract: A simple economic-ecological framework of resource extraction is studied that explicitly incorporates (i) a regime-changing shock and (ii) the scope for a Skiba-point to lead to divergent behaviors towards either systemic recovery or system collapse following the shock. This structure allows us to model resilience (in the sense of regime-changing shocks either being avoided or systemic recovery being possible and optimal) and its behavioral implications in a meaningful way. Specifically, we propose a model-based measure of resilience that, upon proper calibration of the model can be employed in numerical assessments of the implications for the resilience of different extraction policies. Applying a framework of marginal valuations of state variables and model parameters allows improving analytical insights into the model and distinguishing different channels driving the optimal behavior. We also study a simple example and show that for that particular case, the anticipation of shocks is leading to less precautionary behavior and would, therefore, compromise systemic resilience.