Does the optimal size of a fish stock increase with environmental uncertainties?

We analyze the e ect of environmental uncertainties on optimal shery management in a bio-economic shery model. Unlike most of the literature on resource economics, but in line with ecological models, we allow the di erent biological processes of survival and recruitment to be a ected di erently by environmental uncertainties. We show that the overall e ect of uncertainty on the optimal size of a sh stock is ambiguous, depending on the prudence of the value function. For the case of a risk-neutral shery manager, the overall e ect depends on the relative magnitude of two opposing e ects, the `convex-cost e ect' and the `gambling e ect'. We apply the analysis to the Baltic cod and the North Sea herring sheries, concluding that for risk neutral agents the net e ect of environmental uncertainties on the optimal size of these sh stocks is negative, albeit small in absolute value. Under risk aversion, the e ect on optimal stock size is positive for su ciently high coe cients of constant relative risk aversion.