Document Type

Article

Journal/Book Title/Conference

Natural Resource Modeling

Volume

33

Issue

2

Publisher

Wiley-Blackwell Publishing, Inc.

Publication Date

12-10-2019

First Page

1

Last Page

48

Abstract

We present a general-equilibrium (GE) bioeconomic model of Utah's Great Salt Lake (GSL) ecosystem that tightly links the lake's ecosystem with its regional economy and attendant international trading partners, thereby enabling full identification of dynamic feedback effects in the presence of prolonged drought. The drought modeled here mimics a drying climate's impact on the lake's nutrient pool. We demonstrate how prolonged drought affects key bioeconomic variables over time, and how the GSL bioeconomy recovers toward a new steady state. We also consider how two separate fishery-specific regulatory tools—a temporary harvest moratorium and ad valorum tax on the fishery's factors of production—alter the bioeconomy's recovery path. Our main finding is that a fishery-specific regulation can induce perverse social-welfare effects in a GE context by inducing a shift of resources out of the fishery and into a sector of the economy that produces a negative externality, in our case pollution from the mining industry. These welfare effects are appraised with two different measures of equivalent variation—one based on an initial benchmark period and the other on expenditure differences that roll through time. Our model further demonstrates how these perverse-welfare effects can be mitigated by imposing either an output or input tax on the mining industry.

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