Dynamic efficiency of conservation of renewable resources under uncertainty

We examine the efficiency of conservation of a renewable resource whose nat ural productivity is influenced by random environmental disturbances. We al low for non-concave biological production and stock-dependent social welfar e. Unlike deterministic models, conservation may be inefficient no matter h ow productive the resource growth function is. In addition, improvements in the natural productivity of the resource might increase the possibility of extinction. We characterize the conditions on social welfare, resource gro wth, the discount I ate, and the distribution of environmental disturbances that are sufficient For conservation to be efficient. The productivity of the resource under the worst possible environmental conditions, the discoun t rate, and the welfare function are all crucial factors in determining the efficiency of conservation. Journal of Economic Literature Classification Numbers: Q20, O41, D90. (C) 2000 Academic Press.