Resource management has to take account of the possibility of tipping points and regime shifts in ecological systems that provide the resources. This article focuses on the typical model of regime shifts in the ecological literature and analyzes optimal management and common-property issues when trade-offs occur between the loss of ecosystem services and the benefits of the activities that may lead to a regime shift. Regime shifts are uncertain. This article also analyzes optimal management in the case of a potential future regime shift. Research on regime shifts is rapidly developing, and the issue is studied from many different angles. This article is restricted to some standard economic analyses, but in the presence of regime shifts. It focuses on examples like lakes, fisheries, and climate change but provides a framework of analysis that can be used for many environmental issues facing us today.


Article metrics loading...

Loading full text...

Full text loading...


Literature Cited

  1. Basar T, Olsder G-J. 1982. Dynamic Noncooperative Game Theory New York: Academic [Google Scholar]
  2. Biggs R, Blenckner T, Folke C, Gordon L, Norström A et al. 2012. Regime shifts. Encyclopedia in Theoretical Ecology Hastings A, Gross L. 609–16 Berkeley/Los Angeles, CA: Univ. Calif. Press [Google Scholar]
  3. Bikhchandani S, Hirshleifer D, Welch I. 1992. A theory of fads, fashion, custom, and cultural change as informational cascades. J. Polit. Econ. 100:5992–1026 [Google Scholar]
  4. Brock W, de Zeeuw A. 2002. The repeated lake game. Econ. Lett. 76:1109–14 [Google Scholar]
  5. Brock W, Starrett D. 2003. Managing systems with non-convex positive feedback. Environ. Resour. Econ. 26:4575–602 [Google Scholar]
  6. Cai Y, Judd K, Lontzek T. 2012. The social cost of abrupt climate change. Work. Pap., Hoover Inst., Stanford Univ
  7. Carpenter S. 2003. Regime Shifts in Lake Ecosystems: Pattern and Variation (Excellence in Ecology, Vol. 15). Oldendorf/Luhe, Ger.: Int. Ecol. Inst
  8. Carpenter S, Ludwig D, Brock W. 1999. Management of eutrophication for lakes subject to potentially irreversible change. Ecol. Appl. 9:3751–71 [Google Scholar]
  9. Clarke H, Reed W. 1994. Consumption/pollution tradeoffs in an environment vulnerable to pollution-related catastrophic collapse. J. Econ. Dyn. Control 18:5991–1010 [Google Scholar]
  10. Crépin A-S. 2003. Multiple species boreal forests—what Faustmann missed. Environ. Resour. Econ. 26:4624–46 [Google Scholar]
  11. Crépin A-S. 2007. Using fast and slow processes to manage resources with thresholds. Environ. Resour. Econ. 36:2191–213 [Google Scholar]
  12. Crépin A-S, Biggs R, Polasky S, Troell M, de Zeeuw A. 2012. Regime shifts and management. Ecol. Econ. 84:15–22 [Google Scholar]
  13. Crutzen P. 2006. Albedo enhancement by stratospheric sulfur injections: a contribution to resolve a policy dilemma?. Clim. Change 77:211–19 [Google Scholar]
  14. Dasgupta P, Mäler K-G. 2004. The Economics of Non-Convex Ecosystems Dordrecht, Neth.: Kluwer Acad. [Google Scholar]
  15. de Zeeuw A, Zemel A. 2012. Regime shifts and uncertainty in pollution control. J. Econ. Dyn. Control 36:7939–50 [Google Scholar]
  16. Dechert W, O’Donnell S. 2006. The stochastic lake game: a numerical solution. J. Econ. Dyn. Control 30:9–101569–87 [Google Scholar]
  17. Dockner E, Long N. 1993. International pollution control: cooperative versus non-cooperative strategies. J. Environ. Econ. Manag. 25:113–29 [Google Scholar]
  18. Elmquist T, Folke C, Nyström M, Peterson G, Bengtsson J et al. 2003. Response diversity, ecosystem change and resilience. Front. Ecol. Environ. 1:9488–94 [Google Scholar]
  19. Folke C, Carpenter S, Walker B, Scheffer M, Elmquist T et al. 2004. Regime shifts, resilience, and biodiversity in ecosystem management. Annu. Rev. Ecol. Evol. Syst. 35:557–81 [Google Scholar]
  20. Gjerde J, Grepperud S, Kverndokk S. 1999. Optimal climate policy under the possibility of a catastrophe. Resour. Energy Econ. 21:3–4289–317 [Google Scholar]
  21. Gladwell M. 2000. The Tipping Point: How Little Things Can Make a Big Difference New York: Little Brown Co. [Google Scholar]
  22. Gollier C, Treich N. 2003. Decision-making under scientific uncertainty: the economics of the precautionary principle. J. Risk Uncertain. 27:177–103 [Google Scholar]
  23. Heijdra B, Heijnen P. 2013. Environmental abatement and the macroeconomy in the presence of ecological thresholds. Environ. Resour. Econ. 55:147–70 [Google Scholar]
  24. Holling C. 1959. The components of predation as revealed by a study of small-mammal predation on the European pine sawfly. Can. Entomol. 91:5293–320 [Google Scholar]
  25. Hughes T, Baird A, Bellwood D, Card M, Connolly S et al. 2003. Climate change, human impacts, and the resilience of coral reefs. Science 301:929–33 [Google Scholar]
  26. Kamien M, Schwartz N. 1971. Optimal maintenance and sale age for a machine subject to failure. Manag. Sci. 17:8B495–504 [Google Scholar]
  27. Kiseleva T, Wagener F. 2010. Bifurcations of optimal vector fields in the shallow lake model. J. Econ. Dyn. Control 34:5825–43 [Google Scholar]
  28. Kossioris G, Plexousakis M, Xepapadeas A, de Zeeuw A. 2011. On the optimal taxation of common-pool resources. J. Econ. Dyn. Control 35:111868–79 [Google Scholar]
  29. Kossioris G, Plexousakis M, Xepapadeas A, de Zeeuw A, Mäler K-G. 2008. Feedback Nash equilibria for non-linear differential games in pollution control. J. Econ. Dyn. Control 32:41312–31 [Google Scholar]
  30. Krugman P. 1991. History versus expectations. Q. J. Econ. 106:2651–67 [Google Scholar]
  31. Lemoine D, Traeger C. 2014. Watch your step: optimal policy in a tipping climate. Am. Econ. J. Econ. Policy 6:1137–66 [Google Scholar]
  32. Lenton T, Held H, Kriegler E, Hall J, Lucht W, Rahmstorf S et al. 2008. Tipping elements in the Earth’s climate system. Proc. Natl. Acad. Sci. USA 105:61786–93 [Google Scholar]
  33. Ludwig D, Jones D, Holling C. 1978. Qualitative analysis of insect outbreak systems: the spruce budworm and forest. J. Anim. Ecol. 47:315–32 [Google Scholar]
  34. Mäler K-G, Xepapadeas A, de Zeeuw A. 2003. The economics of shallow lakes. Environ. Resour. Econ. 26:4603–24 [Google Scholar]
  35. Monderer D, Shapley L. 1996. Potential games. Games Econ. Behav. 14:1124–43 [Google Scholar]
  36. Polasky S, de Zeeuw A, Wagener F. 2011. Optimal management with potential regime shifts. J. Environ. Econ. Manag. 62:2229–40 [Google Scholar]
  37. Reed W. 1988. Optimal harvesting of a fishery subject to catastrophic collapse. IMA J. Math. Appl. Med. Biol. 5:3215–35 [Google Scholar]
  38. Rinaldi S, Scheffer M. 2000. Geometric analysis of ecological models with slow and fast processes. Ecosystems 3:6507–21 [Google Scholar]
  39. Scharfstein D, Stein J. 1990. Herd behavior and investment. Am. Econ. Rev. 80:3465–79 [Google Scholar]
  40. Scheffer M. 1997. Ecology of Shallow Lakes London: Chapman and Hall [Google Scholar]
  41. Scheffer M, Bascompte J, Brock W, Brovkin V, Carpenter S et al. 2009. Early-warning signals for critical transitions. Nature 461:726053–59 [Google Scholar]
  42. Scheffer M, Carpenter S, Foley J, Folke C, Walker B. 2001. Catastrophic shifts in ecosystems. Nature 413:6856591–96 [Google Scholar]
  43. Skiba A. 1978. Optimal growth with a convex-concave production function. Econometrica 46:3527–39 [Google Scholar]
  44. Stern N. 2007. The Economics of Climate Change: The Stern Review Cambridge, UK: Cambridge Univ. Press [Google Scholar]
  45. Tsur Y, Zemel A. 1996. Accounting for global warming risks: resource management under event uncertainty. J. Econ. Dyn. Control 20:6–71289–305 [Google Scholar]
  46. van der Ploeg F, de Zeeuw A. 2013. Climate policy and catastrophic change: Be prepared and avoid risk. Res. Pap. 118, OxCarre, Univ. Oxford
  47. Wagener F. 2003. Skiba points and heteroclinic bifurcations, with applications to the shallow lake system. J. Econ. Dyn. Control 27:91533–61 [Google Scholar]
  48. Zeeman E. 1976. Catastrophe theory. Sci. Am. 234:65–83 [Google Scholar]

Data & Media loading...

  • Article Type: Review Article
This is a required field
Please enter a valid email address
Approval was a Success
Invalid data
An Error Occurred
Approval was partially successful, following selected items could not be processed due to error