Transcript The economics of fisheries and open

Fisheries: The steady-state model
Richard T. Woodward
Department of Agricultural Economics
Texas A&M University
[email protected]
Phone: 979-845-5864
What is an open-access good and
why does it lead to inefficiencies?
• An open access resource is a limited
resource that appears to each individual to
be limitless.
• Individuals use the resource without taking
into account the effect that their use has on
others.
• Which property right characteristic fails?
A full
day’s work
for an
Indian
fisherman
Growth in the Fish
Stock (tons)
Fish Stock
(tons)
Growth in the Fish
Stock (tons)
Fish Stock
(tons)
Growth in the Fish
Stock (tons)
Fish Stock
(tons)
Growth in the Fish
Stock (tons)
Fish Stock
(tons)
Growth in the Fish
Stock (tons)
Fish Stock
(tons)
Growth in the Fish
Stock (tons)
Natural
Equilibrium
Fish Stock
(tons)
Growth (tons per year)
2.5
2
1.5
1
0.5
0
0
1
2
3
4
5
Stock (tons)
6
7
8
a. Suppose there are no fishermen in the lake and the lake's
initial stock is one ton. Approximately what would be the
stock in each of the next 5 years?
b. Approximately what would be the stock after 100 years
(i.e., what is the biological equilibrium)?
9
Growth in the Fish
Stock (tons)
When fishing begins, the
growth is taken out
(harvested) instead of
adding to the stock in the
next period
Sustainable
yield (Y(E0))
Fish Stock
(tons)
Growth in the Fish
Stock (tons)
More effort
Y(E1)
Y(E0)
Fish Stock
(tons)
Growth in the Fish
Stock (tons)
High effort
level  low
harvests
Y(E4)
Y(E3)
Medium effort
level  high
harvests
Low effort
level  low
harvests
Y(E2)
Y(E1)
Y(E0)
Fish Stock
(tons)
Growth (tons per year)
2.5
2
1.5
1
0.5
0
0
1
2
3
4
5
Stock (tons)
6
7
8
9
•Now assume that one boat comes into the fishery after it has reached
its biological equilibrium. This boat can, in any given year, harvest
40% of the stock. What would be the stock after harvests and
growth next year (assume harvests and growth take place
simultaneously).
•Approximately what would the stock be after 4 years?
Growth (tons per year)
2.5
2
1.5
1
0.5
0
0
1
2
3
4
5
Stock (tons)
6
7
•2 boats can harvest 60% of the stock.
•3 boats can harvest 70% of the stock.
•Approximately what would the stock be after 4 years?
8
9
Sustainable Harvests
(tons)
Maximum
Sustainable
Yield (MSY)
Quantity of
Fishing Effort
Sustainable Revenue ($’s)
Revenue
Quantity of
Fishing Effort
Benefits and Costs of
Fishing Effort ($’s)
Costs
Revenue
Quantity of
Fishing Effort
Benefits and Costs of
Fishing Effort ($’s)
Sustainable
Resource
Rents
Costs
Revenue
Quantity of
Fishing Effort
Benefits and Costs of
MR = MC
Fishing Effort ($’s)
Costs
R(Ee)
Rents
Revenue
C(Ee)
Ee
Quantity of
Fishing Effort
Rent elimination in an Open Access Fishery
(a.k.a The Tragedy of the Commons)
Costs
Benefits and Costs of
Fishing Effort ($’s)
Revenue
Ee
Eo
Quantity of
Fishing Effort
Costs
Benefits and Costs of
Fishing Effort ($’s)
Rents
Revenue
Ee
Em
Eo
Quantity of
Fishing Effort
Example
Cost per boat = $0.95
Output Price = $1
3
2.5
Costs
$'s
2
Sustainable Revenue
1.5
1
0.5
0
0
0.5
1
1.5
2
Boats
2.5
3
3.5
The Gulf of Nicoya, Costa Rica
Solutions to the “Tragedy of the
Commons”
• Limiting the season or otherwise making fishing
more difficult (e.g., unreasonable restrictions on
equipment or very short open seasons)
Inefficiently
high Costs
Benefits and Costs of
Fishing Effort ($’s)
Efficient
Costs
Waste
Revenue
Em
Ec
Quantity of
Fishing Effort
Solutions to the
“Tragedy of the Commons”
• Limiting the season or otherwise
making fishing more difficult
• Taxing effort
Benefits and Costs of
Fishing Effort ($’s)
Costs after Tax
Costs
Tax
Revenue
Revenue
Ee
Em
Ec
Quantity of
Fishing Effort
Solutions to the
“Tragedy of the Commons”
• Limiting the season or otherwise
making fishing more difficult
• Taxing effort
• Establishing common ownership over
the fishery (fishery cooperatives, 200
mile limit)
• Individual transferable quotas
Benefits and Costs of
Fishing Effort ($’s)
Costs
Rents
Revenue
Ee
Effort level determine by
the group or otherwise
limited
Quantity of
Fishing Effort
Why is Fisheries Management so
Difficult?
• Uncertainty
(People don’t trust other people’s estimates)
• Politics
• Enforcement
• The simple models don’t describe a complex world
• Bycatch
The Problem of Bycatch
World Fish Utilization
Million Metric Tons
100
91.7
92.0
93.5
93.9
1994
1995
1996
1997
87.3
93.2
94.8
1998
1999
2000
80
60
40
20
0
Freshwater
Source: FAO 2000 Yearbook of Fishery Statistics: Summary tables
Marine
Summary
•
•
•
•
Biological growth and biological equilibrium
MSY, MEY, and open-access equilibrium
Open access  Common property
Efficient policies: taxation, establishing
ownership over the resource, ITQ’s
• Inefficient policies: making life difficult for
fishermen
• Fisheries management is difficult,
complicated and important!