The economics of fishery management

Simple model of fish biologyxMSY x Stock that gives “maximum sustainable yield”... Does stock grow or shrink?If more fish are harvested than grow, population shrinks.. If more fish grow

The economics of fishery management

The role of economics in fishery regulation

Simple model of fish biology

xMSY

x

Stock that gives “maximum sustainable yield”

Interpreting this curve

x

x •depends on stock sizeGrowth rate of population

low stock  slow growth high stock  slow growth

• Also “sustainable yield curve”

• MSY

Does stock grow or shrink?

If more fish are harvested than grow, population shrinks

If more fish grow than are harvested, population grows

For any given E, what harvest level is just sustainable?

Where k*E*x = x

“Yield-effort curve”

H(E)

E Gives sustainable harvest

as a function of effort level

Introduce economics

Costs of harvesting

TC = w*E

• w is the cost per unit effort

Revenues from harvesting

TR = p*H(E)

• p is the price per unit harvest

Draw the picture

TR=p*H(E) TC=w*E

to EOA (open access)

Open access resource

Economic profit: when revenues exceed costs (not accounting profit)

Open access creates externality of entry

I’m making profit, that attracts you, you harvest fish, stock declines, profits decline.

Entrants pay AC, get AR (not MC, MR)

So fishers enter until AR = AC

But, even open access is sustainable

Though not socially desirable

Why manage fisheries?

Otherwise, open access: externality of entry

drives value of fishery to 0.

May drive to extinction (or economic extinction) Non-extractive values ignored.

Technology may destroy habitat, harvest

individuals that should not be harvested, etc

(another consequence of open access)

Technology may improve, so management must keep up.

How manage fisheries?

Depends largely on characteristics of

Some management alternatives

Harvest quotas (for whole fishery)

Individual transferable quotas (ITQ, IFQ)Marine reserves (area closures)

Season closures

Ex-vessel tax (few)

Regulated entry (licenses)

Regulated efficiency (gear)

Effort tax (few)

Small-scale fisheries

Many small, multi-purpose boats

Difficult to enforce regulations

Local management most successful

Kinship rights, social pressure

Mainly limited entry, also gear, some area closures, etc Often self-imposed.New entrants, technology, & markets are attractive; can be destructive

Baja California

History of cooperativas

Pre-1991: “Reserved Species Regime”

Lobster, abalone, etc only harvested by fishing cooperatives (A property right)

Post-1991: “Concession Regime”

Gave access rights for 20 years in particular areas (benthic) or by boats (pelagic) (Another form of property right)

Post-2000: “National Fishing Guide”

Info on catch, status, management of 287 marine species (Pacific) – each fishery different.

Spiny Lobster Fishery

• Maximum Sustainable Yield

• No increase in Fishing Effort

Abalone Fishery

Individual Transferable Quotas

Regulator sets “total allowable catch”

(TAC)

Distributes quotas (auction, sell at fixed price, give away based on historical

catch, or equal distribution)

Quota rights can be traded

Some systems, buy right to harvest in perpetuity (as % of TAC)

ITQs and property rights

Prior to 1976 coastal nations did not have

rights to marine resources in “high seas”

1976 Magnuson Act & Law of the Sea: Grants rights to coastal nations to marine resources 200 miles from shore.

But how to regulate within a country?

ITQs effectively secure property rights to fish

in the ocean.

Lack of property rights is what causes problems with open access

Potential problems with ITQs

Allocation of quotas?

High-grading incentive

Enforcement & administrative costsMost quotas held by largest firms

“privatizing the oceans”?

How set TAC in first place?

Alaskan Halibut

Prior to adoption, season 1 day

Poor fish quality, excessive investment for harvest, frozen most of year.

Adopted 1995: free allocation to fishing vessels based on historic catch.

Debit cards, fish tickets for enforcement

A success, longer season, higher profits, more fish, bigger/better quality fish