FEEM working papers "Note di lavoro" series
2002 .013

The Use of Common Property Resources: A Dynamic Model


Authors: Michele Moretto, Paolo Rosato
Series: Climate Change and Sustainable Development
Editor: Carlo Carraro
Type: Book
Keywords: Common property resources,option value,uncertainty
JEL: Analisi degli aspetti economico-estimativi e giuridici delle terre soggette al diritto di godimento collettivo
Published in: Atti del XXXI Incontro di Studio Ce.S.E.T., Sassari

Abstract

The government of common agricultural and forestry land is a topic that is currently enjoying a revival of interest. Many local communities have shown the ability to pursue sustainable use of natural resources thanks to their self-governed authorities. In this context the relationship between public and private interest which is established in use of the resource is a fairly controversial. The paper proposes a dynamic model to analyse the behaviour of a user of a common property resource in a "real option" framework, where the value of the right to use the resource is affected by: 1) uncertainty on the future amount of the resource; 2) entry and exit costs and 3) the number of users competitors.
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