Pricing resilience in a dynamic economy-environment system: A capital-theoretic approach
2007 (English)Report (Other scientific)
This paper develops a theory for pricing ecological resilience in a dynamic economy-environment system. Following Holling (1973), we define resilience as the maximal perturbation that the system can absorb without flipping into an undesirable state. Based on a multisector growth model, we derive the shadow price of resilience with respect to the probabilities that the system will flip in the future. We also expore the implications of different stochastic processes characterizing the resilience stock. The theory is illustrated by a numerical example from southeast Australia.
Place, publisher, year, edition, pages
The Swedish Royal Academy of Sciences , 2007.
, Beijer discussion papers, 208
IdentifiersURN: urn:nbn:se:uu:diva-15401OAI: oai:DiVA.org:uu-15401DiVA: diva2:43172