Behavioral externalities in natural resource production possibility frontiers: integrating biology and economics to model human-wildlife interactions

Production possibility modeling has been applied to a variety of wildlife management issues. Although it has seen only limited employment in modeling human-wildlife output decisions, it can be expected that the theory's use in this area will increase as human interactions with and impacts on wildlife become more frequent. At present, most models applying production possibility theory to wildlife production can be characterized in that wildlife output quantities are determined by physically quantifiable functions representing rivalrous resources. When the theory is applied to human-wildlife interactions, it may not be sufficient to model the production tradeoffs using only physical constraints. As wildlife are known to respond to human presence, it could be expected that human activity may appear in wildlife production functions as an externality. Behavioral externalities are revealed by an output's response to the presence of another output and can result in a loss of concavity of the production possibilities frontier. Ignoring the potential of a behavioral externality can result in an unexpected and inefficient output allocation that may compromise a wildlife population's well-being. Behavioral externalities can be included in PPF models in a number of ways, including the use of data or cumulative effects modeling. While identifying that behavioral externalities exist and incorporating them into a model is important, correctly interpreting their implications will be critical to improve the efficiency of natural resource management. Behavioral externalities may cause a loss of concavity anywhere along a PPF that may compel managerial decisions that are inconsistent with multiple use doctrines. Convex PPFs may result when wildlife species are extremely sensitive to any level of human activity. It may be possible to improve the PPF's concavity by reducing the strength of the behavioral effect. Any change in the PPF that increases the convexity of the production set could offer natural resource managers additional opportunities to optimally provide multiple natural resource outputs. Techniques that minimize the effect could focus on either the human or wildlife outputs, or both. Methods could focus on reducing the externality itself through changing the production of the offending output or to reduce the impact of the externality through a change in the production of the affected output. Managers unfamiliar with PPF modeling can employ PPF thinking by recognizing that every decision involves tradeoffs and that sometimes these tradeoffs are unnecessary negative impacts that could be mitigated without compromising the resource.