41 Let the discount rate be r. Various stock levels of the resource are possible, ranging from the minimum threshold, to the maximum carrying capacity. Below the threshold, the population declines to zero; beyond the carrying capacity, the stock will also tend to decline. In between the threshold and the carrying capacity, the stock grows. The growth rate at first increases with the stock level, then decreases to zero towards the carrying capacity. At equilibrium, the harvest equals the growth rate, hence the resource stock remains constant. The equilibrium stock is that level at which the (positive) change in growth rate equals the discount rate. Hence if the discount rate increases, the equilibrium stock falls (in order to realize greater changes in the growth rate). It is quite possible for the discount rate to be sufficiently high, such that the short-term equilibrium stock is set below the threshold level - implying complete extraction of the resource in the long run. The problem with the equilibrium solution is that the value of the resource, as well as the discount rate, is set only by the current generation. Compared to valuation that represents future generations of users, the harvest price may be too low, or the discount rate too high. The problem is starkly put when long run equilibrium entails extinction of a species. The future generations may desire some positive population of the species, but its irreversible elimination precludes this option.
Regimes for reducing exploitation Regulation and taxation instruments. To correct these externalities, the State faces the challenge of a cost-effective means of limiting extraction effort. The most direct method is administrative regulation. However the geographic sprawl of the CPRs as well as transportation costs have in many countries rendered this instrument largely