Reference no: EM132414862

Whale populations are an example of what is called an open-access resource. As its name implies anyone with the desire and wherewithal can exploit, e.g., harvest, the resource. The problem is that in the absence of any sort of policy intervention individuals will engage in an excessive amount of harvesting. This is because the individual's actions entail both explicit and external costs. In the case of whaling (or more generally, commercial fishing) the explicit costs include such things as the whaling ship, fuel, and the cost of hiring a crew. The external costs include the adverse effect an individual whaler's/fisherman's harvest has on the success of other whalers/fishermen, and on the affected population's ability to reproduce (and avoid extinction) as the size of the population decreases.

a) Develop a policy recommendation that would allow individuals to continue to harvest whales, or other species of fish, while simultaneously internalizing the external costs of their actions.