economics

AEB 2451: Economics of Resource Use Lecturer: Misti Sharp

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Assignment 10: Common Pool Resources

Instructions: You may work in groups but you must turn in your own work! Indicate on the front page who you worked with (max 3 people). An electronic copy must be submitted online before midnight on Friday. Show all work so that partial credit may be given. This homework is worth 15 points total.

1) Read about the Atlantic Cod and the human “Tragedy of the Commons” article: http://www.wbur.org/cognoscenti/2014/12/03/overfishing-georges-bank-david-ropeik and reflect on why, economically, a fisherman like Tony could earn so much money without a degree “back in the day.” Were the Cod fishermen of years passed truly taking into account the full opportunity cost when they were behaving as they were? (3 points)

2) Suppose that the total benefit and total cost for a cod fisherman in the 1970s was as given in the table below where one boat could garner $9,000 in total fish revenue and $5,000 in total costs. Use this information to answer the next 3 questions.

a. Complete the following table rounding to 1 decimal if necessary (3 points):

# of Boats

Total Benefit (000s)

Total Costs (000s)

Average Benefit

Marginal Benefit

Marginal cost

1 9 5 2 17 10 3 24 15 4 30 20 5 35 25 6 39 30 7 41 35 8 43 40 9 44 45 10 44 50

b. If the fisher were to have accepted the scientific evidence instead of fighting it and stopped fishing at the economically efficient level, how many boats would have been released into the Gulf of Maine? (3 points)

c. Given that the cod fishery was subject to tragedy, how many boats were likely released into the Gulf of Maine? (3 points)

3) Read the following article and discuss how we are responding to the lack of Cod in the US: https://www.usnews.com/news/best-states/maine/articles/2017-03-24/maines-cod-fishermen-have- worst-year-in-history In the “Global Scarcity” part of the course, we talked about becoming self- sufficient in food production. Would those tactics work for this fishery resource? Why or why not? (3 points)

AEB 2451: Economics of Resource Use Lecturer: Misti Sharp

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4) Read the attached article by Lynne and Burkhart (1990) about Florida Water Institutions. Discuss how water is managed in Florida. From a neoclassical theory perspective, does it appear as if it is possible to allocate water efficiently in Florida? What is required for efficient allocation using a neoinstitutional approach? Based on the discussion provided by the article, are you surprised that there have been “water wars” in Florida in recent years? Answer all questions fully for full credit. (3 points)