The factors that influence efficient renewable resource management are the same as the factors that affect nonrenewable resource management: the demand for the resource, the initial stock, the costs of extraction, and the discount rate. In contrast to nonrenewable resources, of course, the growth rate of the renewable resource also plays a role. Let's compare and contrast the roles of these factors for the two kinds of resources.
(a) How does a higher discount rate affect the immediate harvest of a renewable and a nonrenewable resource? Does a higher interest rate have the same or different qualitative effect?
(b) How does an increase in the initial stock affect the immediate harvest of a renewable and a nonrenewable resource? Does it have the same or different qualitative effect?
(c) How does an increase in costs of extraction affect the immediate harvest of a renewable and a nonrenewable resource? Does it have the same or different qualitative effect?
(d) Suppose that demand for a renewable resource is expected to increase in the future. Would resource managers prefer to have more or less of the resource available then? How can they arrange to have their preferred stock at that time? What effect will that arrangement have on current harvest of the renewable resource? Is this effect qualitatively the same as or different from the effect of future increased demand for a nonrenewable resource?
(e) Unlike for a nonrenewable resource, it is possible to have a sustained-yield harvest of a renewable resource. Is a sustained-yield harvest always desirable? Provide an example of a situation where an unsustainable harvest may nevertheless be efficient.
(f) Nonrenewable resources, such as aquifers (underground pools of water) can also be open-access resources. Do you expect that open access will pose the same problems for nonrenewable resources that they do for renewable resources? Why or why not?