Increasing marginal returns and the danger of collapse of commercially valuable fish stocks

On the basis of data from the North Sea herring fishery, we discuss the consequences of increasing marginal returns on the exploitation of renewable resources. We show that high, but still reasonable, discount rates can cause extinction to be optimal even in the ideal case of a sole owner and a resource with a high growth rate. In the case of lower discount rates, optimal cyclical policies can periodically drive the resource to levels approaching Safe Minimum Standards. We discuss the sustainability, intergenerational equity, social risk aversion, and theoretical issues raised by increasing marginal returns.