Optimization of inputs in a spatially variable natural resource: Unconditional vs. conditional analysis

Eli Feinerman*, Eshel Bresler, Gideon Dagan

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

1 Scopus citations

Abstract

Stochastic optimization of inputs in a spatially variable natural resource is studied, with special emphasis placed on the problem faced by a risk-averse decision maker (DM): how to use, in the best possible way, the given body of information, which is embodied in one realization of the relevant measurements. Two approaches, unconditional and conditional, are investigated and compared. The unconditional and the conditional stochastic optimization problems are defined and an illustrative numerical example is given. The principal conclusion drawn is that the conditional analysis has the potential to increase the DM's welfare substantially, as compared with the unconditional one.

Original languageEnglish
Pages (from-to)140-154
Number of pages15
JournalJournal of Environmental Economics and Management
Volume17
Issue number2
DOIs
StatePublished - Sep 1989

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