Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/57105
Authors: 
Quaas, Martin F.
Baumgärtner, Stefan
Year of Publication: 
2011
Series/Report no.: 
University of Lüneburg Working Paper Series in Economics 193
Abstract: 
We study optimal adaptive grazing management under uncertain rainfall in a discrete-time model. As in each year actual rainfall can be observed during the short rainy season, and grazing management can be adapted accordingly for the growing season, the closed-loop solution of the stochastic optimal control problem does not only depend on the state variable, but also on the realization of the random rainfall. This distinguishes optimal grazing management from the optimal use of most other natural resources under uncertainty, where the closed-loop solution of the stochastic optimal control problem depends only on the state variables. Solving this unusual stochastic optimization problem allows us to critically contribute to a long-standing controversy over how to optimally manage semi-arid rangelands by simple rules of thumb.
Subjects: 
environmental risk
risk management
stochastic optimal control
grazing management
rules of thumb
JEL: 
Q57
D81
Q12
Document Type: 
Working Paper

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