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The polluted ecosystem game

W.A. Brock (Department of Economics, University of Wisconsin, Madison, Wisconsin, USA)
W.D. Dechert (Department of Economics, University of Wisconsin, Madison, Wisconsin, USA)

Indian Growth and Development Review

ISSN: 1753-8254

Article publication date: 18 April 2008

Abstract

Purpose

The purpose of this paper is to address the issue of optimal management of ecosystems by developing a dynamic model of strategic behavior by users/communities of an ecosystem such as a lake, which is subject to pollution resulting from the users. More specifically, it builds a model of two ecosystems that are spatially connected.

Design/methodology/approach

The paper uses the techniques of optimal control theory and game theory.

Findings

The paper uncovers sufficient conditions under which the analysis of the dynamic game can be converted to an optimal problem for a pseudo authority. It is shown that if the discount rate on the future is high enough relative to ecological self‐restoration parameters then multiple stable states appear. In this case, if the pollution level is high enough it is too costly in terms of what must be given up today to restore the damaged system. By using computational methods, the paper evaluates the relative strengths of lack of coordination, strength of ecosystem self‐cleaning forces, size of discount rates, etc.

Originality/value

The methodology as well as findings can help to devise an optimal management strategy over time for ecosystems.

Keywords

Citation

Brock, W.A. and Dechert, W.D. (2008), "The polluted ecosystem game", Indian Growth and Development Review, Vol. 1 No. 1, pp. 7-31. https://doi.org/10.1108/17538250810868116

Publisher

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Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited