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Abstract

The paradigm of adaptive natural resource management (AM), in which experiments are used to learn about uncertain aspects of natural systems, is gaining prominence as the preferred technique for administration of large-scale environmental projects. To date, however, tools consistent with economic theory have yet to be used to either evaluate AM strategies or improve decision-making in this framework. Adaptive control (AC) techniques provide such an opportunity. This paper demonstrates the conceptual link between AC methods, the alternative treatment of realized information during a planning horizon, and AM practices; shows how the different assumptions about the treatment of observational information can be represented through alternative dynamic programming model structures; and provides a means of valuing alternative treatments of information and augmenting traditional benefit-cost analysis through a decomposition of the value function. The AC approach has considerable potential to help managers prioritize experiments, plan AM programs, simulate potential AM paths, and justify decisions based on an objective valuation framework.

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