Implementing Stochastic Bio-Economic Model For North-East Artic Cod Fishery

This paper studies how a stochastic model can be used to determine optimal levels of exploitation of the Norwegian cod fish species. A noncritical depensation growth model is developed for this species in order to examine both deterministic and stochastic results. Estimation of the biological and the noise term parameters in the stochastic biomass dynamics involved simulation and the empirical North East Artic Cod (NEAC) data sets for the years 1985 - 2001. Kolmogorov Smirnov criterion based estimation method is used to estimate both drift and diffusion parameters simultaneously. The estimates are quite reasonable and the model is able to capture the salient features of the NEAC. The model is used to derive numerically optimal level of exploitations under different diffusion functions in the stochastic case and various discount rates in the deterministic case. Optimal catches are compared to the historical catch records. A striking feature of our modeling approach is that these records fit surprisingly well the infinite discounting tracks, i.e., the bliss solution. Our general results indicate that over fishing resulted from lack of long term planning as well as non adequate response to uncertainty.