A Portfolio Theory Approach to Fishery Management
Marius RĂDULESCU1, Constanţa Zoie RĂDULESCU2, Magdalena Turek RAHOVEANU3, Gheorghiţă ZBĂGANU4
1 Institute of Mathematical Statistics and Applied Mathematics
Casa Academiei Române, 13, Calea 13 Septembrie,
Bucharest 5, RO-050711, Romania
2 I C I Bucharest
(National Institute for R & D in Informatics)
8-10 Averescu Blvd.
011455 Bucharest 1, Romania
3 Institute for Agricultural Economics and Rural Development
Bd. Măraşti nr. 61, Bucharest 1, RO-011464, Romania
4 Faculty of Mathematics and Computer Science, University of Bucharest
Academiei 14, Bucharest, RO-010014, Romania
Abstract: Several portfolio selection models for fishery management are presented. The financial risk is measured by the first lower partial moment of the return. The purpose of the models is to obtain optimal fishing plans that minimize the financial risk or maximize the expected return. The ranges of variation for the parameters of the minimum risk model are determined. A numerical example for a fishery from the Galati county, Romania is analyzed.
Keywords: portfolio selection, fishery management, lower partial moment, risk, maximum sustainable yield, risk.
CITE THIS PAPER AS:
Marius RĂDULESCU, Constanţa Zoie RĂDULESCU, Magdalena Turek RAHOVEANU, Gheorghiţă ZBĂGANU, A Portfolio Theory Approach to Fishery Management, Studies in Informatics and Control, ISSN 1220-1766, vol. 19 (3), pp. 285-294, 2010.
In the last decades fisheries management has been shifting toward an ecosystem-based fisheries management, also called an ecosystem approach to fisheries. The ecosystem approach to fishery management is a significant step towards sustainable use of the natural resources. It combines harmoniously economic objectives with environmental and social objectives. In this paper, we present several portfolio selection models for fishery management. Our fshery models consider multiple fish species and take into account both economic and environmental constraints. They are inspired from Sanchirico’s paper  and take into account the ecosystem approach. Note that the approach based on financial portfolio theory to fish management is compatible with the ecosystem-based approach. The differences between our model and the Sanchirico portfolio selection model from Sanchirico  are the following:
- in our models an additional constraint connected to the budget for fish harvesting or with the input costs is introduced;
- we determine the range of variation for the parameters of our models. This facilitates the integration of our models in a decision support system;
- we use the first lower partial moment as a measure for the financial risk. This approach implies the introduction of a target parameter for the return of the fishing plans. The financial risk occurs if the return of the fishing plan is below this target parameter.
An approach for managing discrete assets based on the first lower partial moment can be found in Radulescu .
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