The name is absent

Resilience, uncertainty, and the role of economics in
ecosystem management

Nicholas Brozovic*

University of Illinois at Urbana-Champaign

May 31, 2007

Abstract

Many natural systems have the potential to switch between alternative dynamic behaviors. We
consider a system with two distinct equations of motion that are separated by a threshold value
of the state variable. We show that utility maximization will give a decisionmaking rule that
is consistent with ecosystem-based management objectives that aim to reduce the probability
that the system crosses the threshold. Moreover, we find that increasing uncertainty (both
uncertainty embedded in the natural system and uncertainty of the decisionmaker about the
location of the threshold) can lead to nonmonotonic changes in precaution. Although small
increases in uncertainty may at first increase precaution, large enough increases in uncertainty
will lead to a decrease in precaution.

* Department of Agricultural and Consumer Economics, 326 Mumford Hall, MC-710, 1301 West Gregory Drive,
Urbana, IL 61801; email: nbroz@uiuc.edu

^Department of Economics and School of International and Public Affairs, 420 West 118th Street, Room 1308,
New York, NY 10027; email: ws2162@columbia.edu

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