A diversified portfolio: joint management of non-renewable and renewable resources offshore

Most resource models and resource policies address non-renewable and renewable resources separately for optimal management. A stochastic control model is developed that includes ecological and economic uncertainty for jointly managing both types of natural resources. The model is applied to analyze options for offshore oil platforms with data from California. Model components include fisheries benefits, maintenance and extraction costs, decommissioning costs, and the market value of oil. Numerical sensitivity analysis helps determine how these components affect the options of removing and salvaging the platform, continuing diversified resource production or delaying extraction activity.