DUKE ENVIRONMENTAL ECONOMICS WORKING PAPER SERIES organized by the NICHOLAS INSTITUTE FOR ENVIRONMENTAL POLICY SOLUTIONS Measuring Improvement in the Energy Performance of the U.S. Cement Industry

1 The emergence of ecosystem-based management suggests that traditional fisheries man2 agement and protection of environmental quality are increasingly interrelated. Fishery 3 managers, however, have limited control over most sources of marine and estuarine pol4 lution and at best can only adapt to environmental conditions. We develop a bioeconomic 5 model of optimal harvest of an annual species that is subject to an environmental distur6 bance. We parameterize the model to analyze the effect of hypoxia (low dissolved oxygen) 7 on the optimal harvest path of brown shrimp, a commercially important species that is 8 fished in hypoxic waters in the Gulf of Mexico and in estuaries in the southeastern United 9 States. We find that hypoxia alters the qualitative pattern of optimal harvest and shifts 10 the season opening earlier in the year; more severe hypoxia leads to even earlier season 11 openings. Failure to adapt to hypoxia leads to greater losses when the effects of hypoxia 12 are more severe. However, rent gains from adapting fishery management to hypoxia are 13 relatively small compared to rent losses from the hypoxia effect itself. This suggests that it 14 is critical for other regulatory agencies to control estuarine pollution, and fishery managers 15 need to generate value from the fishery resources through other means such as rationaliza16 tion. 17