Tinbergen and tipping points: Could some thresholds be policy-induced?

• We describe the relevance of the dynamic Tinbergen rule for systems with potential thresholds.
• We clarify the controllability concept in the context of natural resource economics problems.
• We show how different institutional arrangements can lead to qualitatively different outcomes when systems are assumed to be globally convex.
• We show that a lack of global convexity does not ensure a threshold.

Thresholds and tipping points that are characteristic of dynamic multi-stability are increasingly prominent touchstones of the science-policy interface. Prior economic work has shown thresholds arising in convex-concave ecological models that exclude humans may disappear in models of coupled economic-ecological systems when economic agents are included as part of the system. Less well-understood is how this result may depend on the ability of humans to manage complex systems. We examine the role of institutions that condition the available management choices. We find institutional restrictions do not generate non-convexities when the ecological system is well-behaved, but that these restrictions may generate non-convexities when the ecological system is convex-concave. These results are tied to the concept of path controllability, which is when managers have sufficient controls to guide the system across the state space. Path controllability is the dynamic version of the Tinbergen rule, and generally requires separate controls to manage each possible ecological externality. We link the concepts of ecosystem externalities, thresholds, and path controllability to provide new economic insights into problems with the potential for multi-stability, and we illustrate the importance of institutions for managing convex-concave systems.