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Global non-sustainable harvest of renewable

resources reduces their present price but increases
their net present value

Adam Lampert

PII: S0928-7655(23)00064-7
DOI: https://doi.org/10.1016/j.reseneeco.2023.101409
Reference: RESEN101409

To appear in: Resource and Energy Economics

Received date: 28 September 2022
Revised date: 11 November 2023
Accepted date: 14 November 2023
Please cite this article as: Adam Lampert, Global non-sustainable harvest of
renewable resources reduces their present price but increases their net present
value, Resource and Energy Economics, (2023)
doi:https://doi.org/10.1016/j.reseneeco.2023.101409
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 Global non-sustainable harvest of renewable resources reduces
their present price but increases their net present value
Adam Lampert1,*

(1) Institute of Environmental Sciences, The Robert H. Smith Faculty of Agriculture, Food and Environment,
The Hebrew University of Jerusalem, Rehovot, Israel

* Corresponding author, address: 229 Hertsel St., P. O. Box 12, Rehovot, Israel
Phone: +972-52-390-3433
Email: adam.lampert@mail.huji.ac.il

The author declares no conflicting interests and no conflicting financial interests.

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Abstract
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Over-exploitation of natural resources is a major problem, and transitions to sustainable
harvest are taking place worldwide. To determine the optimal harvesting strategy, including
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the optimal speed and approach to transition toward sustainable harvest, policymakers need
to estimate the net values of natural resources. Previous studies have shown that discounting
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reduces the future value of natural resources, but the long-term increase in their price may
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partially compensate for discounting. However, the price and future values of natural
resources may also be affected by the transition from over-harvesting to sustainable harvest.
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Here we present a model that endogenizes the effect of non-sustainable harvest on the price
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of a renewable natural resource. We show that the transition to sustainable harvest is

expected to increase the resource’s price significantly, at a rate that is greater than its long-
term increase. Incorporating this effect increases the estimated net present value of
ecosystems providing renewable natural resources.

Keywords: Dual discounting; Optimal harvest; Over-exploitation; Renewable resources;

Sustainable harvest.

JEL codes: H43, Q22, Q23

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1. Introduction

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Over-harvesting of natural resources is one of today’s biggest environmental problems

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(Millennium Ecosystem Assessment 2005). In turn, to determine environmental policy,
policymakers need estimates of the cost due to over-harvesting, namely, what is the net
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present value (NPV) of a given natural resource, incorporating both present and future values
(Conrad and Clark 1987; Nordhaus 1991; Stern 2007). The NPV of the resource can be affected
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by both discounting and future changes in its price. Discounting generally implies that future
resources are less valuable than present ones, but this may be counterbalanced by the
a

anticipated increase in the price of non-substitutable natural resources due to their increased.
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In particular, it is well-known that these two effects may even up entirely or partially,
depending on the substitutability of the resource scarcity (Nordhaus 1991; Arrow et al. 1996;
u

Dasgupta 2001; Neumayer 2003; Weikard and Zhu 2005; Hoel and Sterner 2007; Sterner and
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Persson 2008; Traeger 2011; Drupp 2018; Rennert et al. 2021).

To calculate the future value and price of renewable natural resources, several previous
studies have assumed that the price of the natural resource increases at some constant rate,
𝜆:

𝑃(𝑡) = 𝑃0 𝑒 𝜆𝑡 , (1)

where 𝑃(𝑡) is the price at time 𝑡, and 𝑃0 is the present price, and the value of 𝜆 by the long-
term changes in the availability of the natural resource (Cline 1992; Weitzman 1994; Arrow
et al. 1996; Horowitz 1996; Hasselmann 1999; Portney and Weyant 1999; Dasgupta 2001;
Neumayer 2003; Hoel and Sterner 2007; Sterner and Persson 2008; Stern 2008; Gollier 2010;

2
Traeger 2011; Dasgupta 2021). In turn, consider a renewable resource that some ecosystem
continuously produces and supplies at a steady rate 𝛽. The net present value (NPV) of the
ecosystem, due to providing the resource, depends on both 𝜆 and the discount rate, 𝛿. If both
𝜆 and 𝛿 are constants, and 𝜆 ≥ 𝛿, then the NPV diverges, whereas if 𝜆 < 𝛿, the NPV is given
by

∞
𝛽𝑃0
NPV = ∫ 𝛽𝑃(𝑡)𝑒 −𝛿𝑡 = . (2)
0 𝛿−𝜆

However, the problem that we address in this paper is how to determine the NPV if 𝜆 is not

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constant but is affected by both short-term and long-term changes in patterns of harvest.

Specifically, harvesting may affect the price of the natural resource in two different ways.

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First, as ecosystems worldwide become degraded due to harvesting, the resource’s

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availability drops and its price increases: this leads to an even greater increase in the
resource’s price in the long run. (This is added to the price increase of natural resources that
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would appear even without over-harvesting, due to the fact that the supply of natural
resources remains approximately constant while the supply of manufactured goods increases
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due to economic growth (Nordhaus 1991; Traeger 2011).) In addition, harvesting has a short-
term effect on prices, as the price in a given year is determined by the amount of the resource
a

that has been harvested in that year. Consider, for example, renewable resources such as fish
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and timber, and assume that they are valuable only as consumption products after they have
been harvested (ignore their value to the ecosystem). The market price of these resources in
u

a given year is affected by the harvest during that year because more harvest means higher
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supply, which results in lower prices. To illustrate how harvesting affects prices on both short
and long timescales, consider an ecosystem that provides a habitat for a natural resource,
such as a forest that provides timber, a fishery that provides fish, or an agroecological system
that provides food. Over-harvesting in these ecosystems may lead to long-term degradation
of the ecosystem that takes long to recover, or even lead to irreversible changes to the
ecosystem (Scheffer and Carpenter 2003; Folke et al. 2004; Barnosky et al. 2012). Therefore,
over-harvesting of these systems at the global scale may lead to a short-term decrease in the
price of the natural resources but to increased scarcity of the resource in the future. This
implies that, to determine the future prices of natural resources, one needs to consider
changes in their global pattern of harvesting.

3
In this paper, we aim to suggest how to incorporate the effect of global over-harvesting at
present and in the near-future on the far-future price of natural resources and the value of
the ecosystems providing them. We develop a model that endogenizes how harvesting affects
the present and future consumption of a natural resource. We show that, to calculate the
NPV of the ecosystem, it is insufficient to calculate its long-term increase in price; rather, the
NPV incorporates the anticipated price changes at intermediate timescales (due to the
transition to sustainable harvest), which may be much greater than the price’s long-term
increase. Specifically, we show that, if present non-sustainable harvest increases, the present
price of the resource decreases while the NPV of the ecosystem increases; therefore, the long-

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term rate of increase in price cannot be a good proxy for price changes on intermediate

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timescales. This is because present over-harvesting causes ecosystem degradation, which
results in a future reduction in harvest, and when the harvest decreases, the price increases.

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More generally, if present harvesting is non-sustainable, harvesting will have to decrease at
some point, which will trigger an increase in the natural resource’s price, on top of its long-
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term increase. This paper extends the existing literature on dual discounting and long-term
prices (Cline 1992; Weitzman 1994; Arrow et al. 1996; Horowitz 1996; Hasselmann 1999;
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Portney and Weyant 1999; Dasgupta 2001; Neumayer 2003; Hoel and Sterner 2007; Sterner
and Persson 2008; Stern 2008; Gollier 2010; Traeger 2011; Dasgupta 2021) by incorporating
a

the transient effect of changes in the pattern of harvesting. This study also extends upon the
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paper (Lampert 2019) that examined how changes in harvesting affect the discount rate,
differing in that the present paper (1) focuses on changes in the prices of natural resources
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and how they affect the value of the ecosystems providing them and (2) considers a natural
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recovery of the ecosystem that has been over-harvested.

2. Model

2.1 Dynamics of the natural resource

We consider a renewable resource, such as fish, timber, or crop, whose consumption is

proportional to the magnitude of its harvest. We assume that, at any given time, any given
area of the ecosystem (e.g., the fishery, the forest, or the agro-ecological system) may be (1)
harvested sustainably, (2) harvested non-sustainably, or (3) not harvested (Lampert 2019).
Sustainable harvest in a given area (e.g., harvesting at the fish growth rate, while also using

4
methods that preserve the habitat and the fish’s size structure (Clark 2010)) implies that the
resource is being harvested at some sustainable rate, 𝛽𝑠 , and the ecosystem remains
unharmed in that area (Lampert 2019). A non-sustainable harvest (e.g., over-harvesting fish
in a fishery) implies that the resource is being over-harvested at some non-sustainable rate
𝛽𝑛 , where 𝛽𝑛 > 𝛽𝑠 , and the ecosystem in that area becomes degraded at a rate 𝜇. Such a
degraded area recovers at a rate 𝛾. Note that 𝛽𝑛 and 𝛽𝑠 are fixed constants representing the
unit of resource caught in the harvested region.

In turn, the consumption of the natural resource at time 𝑡, 𝑓(𝑡), is given by

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𝑓(𝑡) = 𝛽𝑛 𝐻n (𝑡) + 𝛽𝑠 𝐻s (𝑡), (3)

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where 𝐻n (𝑡) and 𝐻s (𝑡) are the choice variables representing the area of ecosystems under
non-sustainable and sustainable harvest, respectively, at time 𝑡. And the consumption of all
other goods at time 𝑡, 𝑐(𝑡), is given by -p
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𝑐(𝑡) = 𝑐0 exp(𝑔𝑡) − 𝐶𝑛 𝐻𝑛 (𝑡) − 𝐶𝑠 𝐻𝑠 (𝑡) . (4)

The first term, 𝑐0 exp(𝑔𝑡), characterizes an economy that grows at a rate 𝑔 (Ramsey 1928;
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Solow 1956). The second term, 𝐶𝑛 𝐻𝑛 + 𝐶𝑠 𝐻𝑠 , characterizes the direct cost of harvesting,
where 𝐶𝑛 and 𝐶𝑠 are the cost per unit area of non-sustainable harvest and sustainable harvest,
a

respectively. We assume that, per resource unit, sustainable harvest is more expensive
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(𝛽𝑠 𝐶𝑠 ≥ 𝛽𝑛 𝐶𝑛 ).

In turn, the amount of non-degraded area of the ecosystem providing the resource worldwide
u

in year 𝑡 is given by 𝑋(𝑡). Initially 𝑋(0) = 𝑋max , but over time, some part of the ecosystem
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may become degraded due to non-sustainable harvest, and the degraded area recovers at a
rate 𝛾:

𝑑𝑋
= −𝜇𝐻𝑛 (𝑡) + 𝛾(𝑋max − 𝑋(𝑡)) . (5)
𝑑𝑡

In turn, the following constraints apply because one cannot harvest over an area that is larger
than the entire area of the ecosystem, and harvest is non-negative: For all 𝑡,

𝐻𝑛 (𝑡) + 𝐻𝑠 (𝑡) ≤ 𝑋(𝑡) , (6𝑎)

𝐻𝑛 (𝑡) ≥ 0, 𝐻𝑠 (𝑡) ≥ 0. (6𝑏)

5
Note that the dynamics of 𝑐(𝑡), 𝑓(𝑡), and 𝑋(𝑡) in our model are similar to those described in
Lampert (2019), except that Lampert (2019) considered no recovery (𝛾 = 0) and discrete-
time dynamics.

2.2 Social welfare and prices

We consider the widely-used social welfare function (Xepapadeas 2005; Hoel and Sterner
2007; Sterner and Persson 2008; Traeger 2011)

∞
𝑈 = ∫ 𝑢(𝑐, 𝑓)𝑒 −𝜌𝑡 𝑑𝑡 , (7)

of
0

where 𝑢(𝑐, 𝑓) is the instantaneous utility of consumption and 𝜌 is the pure-time preference.

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We assume that the natural resource is non-substitutable, and accordingly, we consider the
following, widely-used form of 𝑢 (Xepapadeas 2005):

𝑓 1−𝜃 𝑐1−𝜂
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𝑢=𝑎 + (1 − 𝑎) , (8)
1−𝜃 1−𝜂
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where 𝜃 is the elasticity of utility with respect to consumption of the natural resource, 𝜂 is
the elasticity of utility with respect to consumption of all other goods, and 𝑎 is the relative
weight of the natural resource. In turn, under assumptions of a perfectly-competitive market,
a

the price of the natural resource, 𝑃, is defined as the number of units of 𝑐 that one needs to
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add to get the same utility effect as one unit of 𝑓. This is given by the marginal utility of 𝑓
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divided by the marginal utility of 𝑐:

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𝑢𝑓 (𝑡)
𝑃(𝑡) = , (9)
𝑢𝑐 (𝑡)

where subscripts denote partial derivatives.

2.3 Possible solutions and scenarios

We consider three scenarios that differ in how the harvest functions, 𝐻𝑛 (𝑡) and 𝐻𝑠 (𝑡), are
determined.

Scenario 1: Sustainable solution.

6
In this scenario, we assume that only sustainable harvest is possible; namely, 𝐻𝑛 (𝑡) = 0 at all
times. In turn, 𝐻𝑠 (𝑡) is determined by a social planner such that it maximizes social welfare,
𝑈 (Eq. (7)). Note that 𝐻𝑠 has no effect on the future availability of the resource, and therefore,
𝑋(𝑡) = 𝑋max at all times. It follows that, for all 𝑡, 𝐻𝑠 (𝑡) maximizes 𝑢(𝑡) under the constraints
given by Eqs. (5) and (6). We derive the solution in Appendix A.

Scenario 2: Socially optimal solution.

In this scenario, we assume that both 𝐻𝑛 (𝑡) and 𝐻𝑠 (𝑡) are determined by a social planner
such that they maximize 𝑈. Note that non-sustainable harvest affects the future availability

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of the resource, and therefore, to find the socially optimal solution, we use Dynamic
Programming with backward induction (Appendix B).

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Scenario 3: Open-access and privately-owned areas.
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In this scenario, we consider two regions: (1) managed and (2) open-access. The open-access
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region is open for any agent to harvest. Each agent aims to maximize their own profit, and
therefore, the agents ignore the future value of the ecosystem, which could be utilized by
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other agents. Since we assume that non-sustainable harvest is cheaper per unit than
sustainable harvest, only non-sustainable harvest is used in the open-access area, and the
a

amount of the non-sustainable harvest there at time 𝑡 is such that it maximizes 𝑢(𝑡). In turn,
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in the managed area, we assume that a social planner determines the harvest functions that
maximize social welfare. We distinguish two cases of Scenario 3: In case A, we assume that,
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after the open-access region becomes degraded, it becomes part of the managed area as it
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recovers; in case B we assume that the open-access region remains open-access at all times.
In Appendix C, we provide a complete mathematical description of the model and derive the
solution.

2.3 Parameter values

The model is general and could represent a variety of systems. Therefore, the ranges of
plausible parameter values is very large and depend on the particular system. Here we give
some further information about the considerations underlying the choice of parameters.
First, note that some parameters could be scaled out. In particular, the absolute values of 𝛽𝑛
and 𝛽𝑠 could be scaled out with the system size, and the important parameter is the ratio

7
between 𝛽𝑛 and 𝛽𝑠 . And the ratio between 𝛽𝑛 and 𝛽𝑠 depends on the particular system. In a
fishery, for example, if non-sustainable harvest would imply catching all the fish and
sustainable harvest would imply keeping the fish population size fixed, then 𝛽𝑛 /𝛽𝑠 would be
the growth rate of the fish (Clark 2010). In turn, the economic growth rate, 𝑔, is around 1.5–
2.0% year −1 in developed countries but could be higher in developing countries (Nordhaus
1994; Arrow et al. 2014). The costs 𝐶𝑛 and 𝐶𝑠 are harder to estimate, but they play a role only
in the initial stage. 𝜇 can be scaled with time, and the value of 𝛾 can vary from 𝛾 = 0,
characterizing a system does not recover naturally, to some other 𝛾 > 0, characterizing a
system that recovers within about 1/𝛾 years. Finally, regarding the utility functions, estimates

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of 𝜃 and 𝜂 vary between 1 and 3 (unitless), and those of 𝜌 between 0 and 3% year −1

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(Nordhaus 1994; Arrow et al. 2014).

3. Results -p
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We first describe the resulting harvest functions, 𝐻𝑛 (𝑡) and 𝐻𝑠 (𝑡), as well as the price of the
natural resource, 𝑝(𝑡), in each of the three scenarios (Fig. 1). We then present the calculation
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of the value of the ecosystem.

3.1 Sustainable harvest scenario

a
rn

If only sustainable harvest takes place, the area being harvested, 𝐻𝑠 (𝑡), increases
exponentially until the entire system is under sustainable harvest and 𝐻𝑠 = 𝑋max (Appendix
u

A; Fig. 1A). During this initial period when the harvest increases, the natural resource’s price
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is given by (Appendix A)

𝐶𝑠
𝑃= . (10)
𝛽𝑠

However, once the entire system is under harvest, 𝑓 = 𝛽𝑠 𝑋max , and substitution in Eq. (9)
implies that (Appendix A)

𝑎𝑐 𝜂 (𝑡)
𝑃(𝑡) = . (11)
(1 − 𝑎)(𝛽𝑠 𝑋max )𝜃

Note that this equation is still valid even if the parameters 𝑎, 𝛽𝑠 , 𝜃, and 𝜂 vary over time. If
these parameters are constants, the price is constant as long as 𝐻𝑠 < 𝑋max (Eq. (10)), and

8
increases approximately exponentially afterward (Fig. 1A). Specifically, in the long run 𝑐 ≈
𝑐0 exp(𝑔𝑡) (Eq. (4)), and 𝑃 increases at a rate

𝜆 = 𝜂𝑔 . (12)

The discount rate is given in the long run by Ramsey’s formula

𝛿 = 𝜂𝑔 + 𝜌 (13)

(Appendix A) (Ramsey 1928; Solow 1956), and therefore, if 𝑢 is given by Eq. (8), the natural
resource loses its value at a rate 𝛿 − 𝜆 = 𝜌 (Eqs. (1) and (2)).

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3.2 Optimal harvest scenario

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If the degraded ecosystem recovers relatively quickly,

𝛾 𝛽𝑠
>
𝜇 𝛽𝑛
, -p (14)
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the optimal strategy is to harvest only non-sustainably as the system recovers sufficiently fast,
such that it is not worth harvesting only the portion 𝛼 to prevent its degradation (Appendix
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B). However, this case is not realistic in many real-world systems in which sustainable harvest
is the preferred long-term strategy (Conrad and Clark 1987). We therefore focus on the case
a

where 𝛾/𝜇 < 𝛽𝑠 /𝛽𝑛 . In the long run, when 𝑐0 exp(𝑔𝑡) is much greater than the cost of
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harvesting, one of two options occurs. In the case where the future is highly discounted, 𝜌 >
𝛽𝑠 /𝛽𝑛 − 𝛾/𝜇, the optimal harvesting strategy is to exploit the entire system and keep 𝑋 at
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zero. On the other hand, if 𝜌 < 𝛽𝑠 /𝛽𝑛 − 𝛾/𝜇, the optimal strategy is to keep 𝑋 = 𝑋max in the
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long run and sustain the entire system (Fig. 1B). (The discount here is given by 𝛿 − 𝜆, which
equals 𝜌, in the case where 𝑢 is given by Eq. (8), as shown in Appendix B.) However, notice
that even if keeping 𝑋 = 𝑋max is optimal in the long run, the optimal solution may include
non-sustainable harvest during early periods when the cost of harvest is still not negligible
compared to 𝑐0 exp(𝑔𝑡) (Fig. 1B). Specifically, our analysis shows that non-sustainable harvest
in early stages is optimal if the parameters 𝛽𝑠 and 𝑐0 are sufficiently small (Fig. 2A).

3.3 Open-access vs. managed ecosystem scenario

As long as there are still non-degraded areas in the open-access region, non-sustainable
harvest there increases exponentially at a rate 𝑔𝑡 (Fig. 1C,E; Appendix C). This process

9
continues until the entire open-access region becomes degraded (in both cases A and B of
Scenario 3). In case A, optimal management takes place thereafter. In the long run, the system
recovers and approaches the same state and price as the one subject to the optimal solution;
however, during the years after the open-access region has been exhausted, until it recovers,
the price of the natural resource is higher (Fig. 1C,D). In turn, in case B, since the open-access
area remains open-access after it becomes degraded, non-sustainable harvest occurs in all
areas that recover, and the non-degraded open-access area remains zero (Fig. 1E-F).

A notable change in the price appears just after the open-access region becomes fully

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degraded in both cases A and B (Fig. 1C-F and Fig. 2B). Specifically, as long as harvesting occurs
in the open-access region, the price is determined by the cost of harvesting and is given by

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(Appendix C)

𝑃=
𝐶𝑛
𝛽𝑛
. -p (15)
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However, after the open-access region becomes exhausted, 𝑃(𝑡) depends on 𝑋(𝑡).
Specifically, as we show in Appendix A, it follows from Eqs. (8) and (9) that the price is given
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by

𝑎 𝑐 𝜂 (𝑡)
a

𝑃(𝑡) = ∙ 𝜃 . (16)
(1 − 𝑎) 𝑓 (𝑡)
rn

In case A, after the point at which the entire system is being harvested sustainably, 𝑓(𝑡) =
u

𝛽𝑠 𝑋(𝑡), and it follows that

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𝑎 𝑐 𝜂 (𝑡)
𝑃(𝑡) = 𝜃
∙ . (17)
(1 − 𝑎)𝛽𝑠 𝑋 𝜃 (𝑡)

In the long run, after the system recovers (if 𝛾 > 0), 𝑋(𝑡) approaches 𝑋max and 𝑃(𝑡) becomes
the same as in the sustainable harvest solution (Eq. (10)). Note that 𝑃 in Eq. (17) is larger than
that in Eq. (11) because 𝑋 < 𝑋max , which implies that the non-sustainable harvest in the
open-access region ultimately results in a higher future price of the natural resource, as also
demonstrated in Fig. 1D. In case B, this effect is even stronger as the price 𝑃(𝑡) in the long
run is even lower than that in case A (Fig. 1F).

3.4 The value of a unit area of the ecosystem providing the natural resource

10
In both cases A and B, the price increases right after the open-access region becomes
exhausted can be significant (e.g., 4-fold with the parameter values used in Fig. 1C-F). Our
sensitivity analysis (Fig. 2B) shows that this increase in price is most prominent when the
entire system is under harvest at that time (𝐻𝑛 + 𝐻𝑠 = 𝑋). Also, the increase in price is
greater if 𝛽𝑠 is smaller. In Appendix C, we show that this increase in price depends on the
initial area that has been initially in the open-access region, 𝑋 𝑜 (0): The larger 𝑋 𝑜 (0) is, the
longer the duration in which the price is held lower, but the larger the price is after the
increase (Fig. 1D,F).

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This raises the question of what the marginal benefit is due to a given area of the ecosystem
being non-degraded. In other words, what is the marginal value of X? Namely, what is the

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decline in 𝑈 per unit of present decline in 𝑋? If we measure the value in units of 𝑐, this gives
us the price of 𝑋, 𝑃𝑋 . In Appendix D, we show that, if 𝑋 = 𝑋max , 𝛾 + 𝜌 > 0, and 𝛾/𝜇 < 𝛽𝑠 /𝛽𝑛 ,
then the value of 𝑋 is given by -p
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𝑐0 𝑎𝛽𝑠1−𝜃
𝑃𝑋 = 𝜃
. (18)
(1 − 𝑎)(𝛾 + 𝜌)𝑋max
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In the more general case in which 𝑋 < 𝑋max , 𝑃𝑋 is larger and is given by Eq. (S43) (Appendix
D). From Eq. (18), it follows that 𝑃𝑋 does not depend on 𝑔 or 𝜂. It also follows that, if the
a

ecosystem does not recover (𝛾 = 0) and there is no pure time preference (𝜌 = 0), 𝑃𝑋 diverges
rn

and the value of the ecosystem approaches infinity.

u

4. Discussion
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We showed that, when a renewable natural resource — such as fish, timber, or agricultural
ecosystem services — is over-harvested (harvested non-sustainably) during a given year, its
price decreases for that year but increases in subsequent years. This anticipated increase in
price, resulting from the transition to sustainable harvesting, comes on top of the anticipated
long-term increase in price. Since numerous natural resources worldwide are currently
subjected to over-harvesting, it is projected that their harvest will eventually transition
towards a more sustainable approach (Bringezu and Bleischwitz 2017). Then, when over-
harvesting drops, the supply (and consumption) of natural resources might drop, which may

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lead to an increase in their price, on top of the long-term increase in price attributed to
economic growth (increase in 𝑐 relative to 𝑓) (Fig. 1C).

The anticipated increase in the price of a natural resource, resulting from transitioning from
over-harvesting to sustainable harvesting, is significant. After that increase, the price would
be higher than it would have been if only sustainable harvest had been used in all regions in
the first place (Fig. 1D,F). Note that, in the real world, the transition to sustainable harvest is
not anticipated to be sudden as depicted in Fig. 1D,F; however, a more gradual transition
ultimately results in the same change in price. This observation aligns with the Lampert

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(2019), which found a parallel finding regarding changes in the discount rate.

In turn, calculating the change in the price of the resource enabled us to calculate the benefit

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due to a unit of non-degraded area of the ecosystem, or the marginal cost incurred by over-

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harvesting the ecosystem and causing its degradation, 𝑃𝑋 . In particular, we show that, if 𝑋 =
𝑋max , 𝛾 + 𝜌 > 0, and 𝛾/𝜇 < 𝛽𝑠 /𝛽𝑛 , then 𝑃𝑋 is given by Eq. (18). This equation implies that
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the ecosystem’s value (1) is inversely proportional to 𝛾 + 𝜌 (and it diverges if 𝛾 = 0 and 𝜌 =
0), and (2) it does not depend on the economic growth rate 𝑔. More generally, we showed
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that 𝑃𝑋 increases if the non-degraded area decreases (Appendix D, Eq. (S43)).

While previous studies have shown how the price depends on changes in the availability of
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the natural resource over time (𝑑𝑓/𝑑𝑡) (Hoel and Sterner 2007; Traeger 2011), but have
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considered this rate to be constant, here we endogenized the effect of harvesting and
explicitly modeled how 𝑓(𝑡) depends on global-scale harvesting. Specifically, harvesting in a
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given year determines 𝑓(𝑡) in that year, while non-sustainable harvest also induces future
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changes on 𝑓(𝑡) as it reduces the total non-degraded area of the ecosystem, 𝑋. We also
endogenized the effect of harvesting on the consumption of the other goods, 𝑐, by
incorporating the direct cost of harvesting, 𝐶𝑠 and 𝐶𝑛 ; this somewhat unorthodox addition is
not necessary for obtaining the main results, but it is reasonable to consider it as it results in
a gradual (not sudden) exploitation of the open-access areas. For simplicity, we assumed that
the natural resource is non-substitutable (Eq. (8)), but the analysis can be readily extended to
incorporate more general forms of 𝑢.

The anticipated price increase during the transition to sustainable harvest implies that
policymakers should not rely solely on the market price of harvested natural resources and

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their predicted long-term change in order to estimate the price of the natural resource and
the NPV of the ecosystem providing the resource (or the cost due to the degradation of the
ecosystem providing the resource). Specifically, in our model, as long as over-harvesting
occurs and as long as open-access areas exist, the market price of the natural resource is given
by Eq. (15), which falls below the price that policymakers need to consider in order to
correctly evaluate the cost due to over-harvesting of the natural resource (Eqs. (17) and (18);
Fig. 1D,F). In particular, it has been widely suggested that policymakers need to take into
account the long-term exponential price increase due to the resource’s increased scarcity (Eq.
(1)) (Traeger 2011); but here we showed that the price increase at intermediate timescales

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could significantly surpass its long-term increase. This effect is added to changes in the

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discount due to changes in the pattern of harvesting that have been previously examined
(Lampert 2019), and we showed here that they apply even if the ecosystem recovers, as long

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as this recovery is not too rapid (Eq. (14)). Therefore, incorporating the effect of present over-
harvesting on future resource prices implies that the net present value of ecosystems
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providing natural resources is higher than previously proposed.
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Competing interests
The authors declare no conflicting interests.
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Figure 1: The price of the natural resource increases after non-sustainable harvest stops.
Shown are the total amount of resource being harvested sustainably, 𝛽𝑠 𝐻s (blue lines) and
non-sustainably, 𝛽𝑛 𝐻n (red lines), the total non-degraded area of the ecosystem, 𝑋 (dashed
black lines), and the market price of the natural resource, 𝑃 (light green), as a function of
time, for four different cases. (A) Scenario 1: sustainable solution. Sustainable harvest
increases until the entire system is under harvest. (B) Scenario 2: Socially optimal solution.
Some non-sustainable harvest is employed in the beginning, but after some point, only
sustainable harvest is used. (C) Scenario 3 case A: Open access and managed regions. During

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the first period, non-sustainable harvest is employed in the open-access region. Afterward,
the entire system is managed and harvest is sustainable. Immediately after the non-
sustainable harvest stops, the price “jumps” and increases very rapidly. (D) Comparison of
Scenario 3 case A and Scenario 1 (both solutions, to Scenario 1 and to Scenario 3 case A, are
shown for the same parameter values). The non-sustainable harvest in the open-access region
keeps the price lower, but after it stops, the price jumps and becomes higher than what it
would have been if only sustainable harvest was employed in the first place (compare the
solid and the dotted green lines). (E) Scenario 3 case B: Open access and managed regions.
Non-sustainable harvest is employed in the open-access area until it becomes degraded, and
then it continues in recovered regions of the open-access area. Meanwhile, in the managed
region, harvest is sustainable. As in panel C, the price “jumps” and increases very rapidly

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immediately after the entire open-access area becomes degraded. (F) Comparison of Scenario
3 case B and Scenario 1 (both solutions, to Scenario 1 and to Scenario 3 case B, are shown for

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the same parameter values). As in panel D, the non-sustainable harvest in the open-access
region keeps the price lower, but after it stops, the price jumps and becomes higher than
what it would have been if only sustainable harvest was employed in the first place (compare
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the solid and the dotted green lines). Parameters: (all panels A-F) 𝛽𝑠 = 1, 𝑔 = 0.03, 𝜇 = 1,
𝜃 = 𝜂 = 2, 𝑎 = 0.5, 𝜌 = 0.01; (A-B) , 𝛽𝑛 = 10, 𝑐0 = 0.1, 𝐶𝑛 = 5, 𝐶𝑠 = 0.06, 𝛾 = 0.03; (C-F)
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𝛽𝑛 = 100, 𝑐0 = 0.01, 𝐶𝑛 = 0.05, 𝐶𝑠 = 0.0007, 𝛾 = 0.01.
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Figure 2: Sensitivity analysis of the results with respect to changes in parameter values. (A)
Demonstrated are the total areas that are harvested non-sustainably during the initial period

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in Scenario 2 for various values of the parameters 𝛽𝑠 and 𝑐0 . If 𝛽𝑠 and 𝑐0 are sufficiently large,
the optimal solution comprises only sustainable harvest, and the solution of Scenario 2
coincides with that of Scenario 1. However, for sufficiently low values of 𝛽𝑠 and 𝑐0 , the optimal
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solution comprises non-sustainable harvest during the initial period. (B) Demonstrated are
the changes in the price occurring after the open-access area becomes exhausted (logarithm
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of the ratio between the price right after the transition and the price right before the
transition). The increase in the price is most significant if 𝛽𝑠 is smaller. The change in price is
smaller if, at the time when the open-access region is exhausted, some areas are not yet
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under harvest (𝐻𝑠 + 𝐻𝑛 < 𝑋), which occurs for larger values of 𝛽𝑠 and smaller values of 𝑐0 .
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Parameters: (both panels A-B) 𝑔 = 0.03, 𝜇 = 1, 𝜃 = 𝜂 = 2, 𝑎 = 0.5, 𝜌 = 0.01 (A) 𝛽𝑛 =

200, 𝐶𝑛 = 1, 𝐶𝑠 = 1, 𝛾 = 0.02; (B) 𝛽𝑛 = 2000, 𝐶𝑛 = 1, 𝐶𝑠 = 0.007𝛽𝑠 , 𝛾 = 0.01.
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Declaration of Competing Interest

The author declares no competing interests.

Highlights

• Over-harvesting may lead to irreversible degradation and lower future harvest

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• Natural resource harvest may lead to lower present prices but higher future prices
• Transitioning to sustainable harvest may increase future price of natural resources

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