The purpose of the article is to investigate the link between pollution and marine renewable resources. A bio-economic model of a fishery is developed to derive a marginal damage function for nutrient enrichment using the dynamic production function approach. | Marginal damage cost of nutrient enrichment: the case of the Baltic Sea Thanh Viet Nguyen1, Lars Ravn-Jonsen2, Niels Vestergaard2*, 1. Faculty of Development Economics, VNU University of Economics and Business, Hanoi, Vietnam; 2. Centre for Fisheries & Aquaculture Management & Economics (FAME), Department of Environmental and Business Economics, University of Southern Denmark ; *The Corresponding Author, email: nv@, Phone: +4565504181, Fax +4565501091. Abstract The purpose of the article is to investigate the link between pollution and marine renewable resources. A bio-economic model of a fishery is developed to derive a marginal damage function for nutrient enrichment using the dynamic production function approach. This function can be compared with the marginal abatement cost and hence it provides the basis for polices that balance the use of nutrients in land-based industries (for example agriculture) with the external cost in the marine environment. The model is empirically applied to the case of the Baltic Sea, where Eastern Baltic cod fisheries are affected by nutrient enrichment. The results indicate that nitrogen loadings are too high and that they need to be reduced in order to get the optimal cod stock level. Keywords: Marginal damage function, marine environment, eutrophication, eastern Baltic cod, bio-economic modeling. JEL classification: D24, H41, Q18, Q22, Q53 1 1. Introduction Eutrophication is considered a serious environmental problem for the Baltic Sea (MacKenzie et al.,, 2002; Rockmann et al.,, 2007; HELCOM, 2009). Eutrophication is a change in the trophic status of the water. In case of eutrophication there is a high primary production caused by excessive input of nutrients; the water becomes turbid as a consequence of the dense phytoplankton population, and large aquatic plants are out-shaded and disappear along with their associated invertebrate populations. Moreover, decomposition of the large biomass of phytoplankton cells .
