How to improve the management of renewable resources: The case of Canada's northern cod fishery

The paper examines how an easy-to-apply optimal feedback rule can be used to solve for optimal levels of exploitation of a renewable resource. Using data from Canada's northern cod fishery, the optimal feedback rule is used to derive optimal levels of exploitation for the years 1962-91 under different discount rates, alternative model specifications, and parameter assumptions. The optimal feedback rule indicates that over much of the period the fishery was economically overexploited and, given the stock development that actually took place, a harvesting moratorium should have been instituted three years earlier than when it was introduced. The results show how the use of a simple and flexible optimal rule by managers of renewable resources can generate substantial gains.