Transcript The economics of fishery management

Fishery Economics
The role of economics in fishery
regulation
Renewable Resources

Examples
Fisheries  today
 Forests
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Characteristics
Natural growth
 Carrying Capacity
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Motivation
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Group Project: Otters eating lots of
shellfish, south of Pt. Conception. Marine
Fisheries Service considering removing
otters, and you are doing a CBA on the
policy. What is the damage the otters are
causing and thus the value of restricting
them to the north of Pt. Conception?
See
http://www.bren.ucsb.edu/research/2001Gro
up_Projects/Final_Docs/otters_final.pdf
Some terms we will use
Stock – total amount of critters -- biomass
 Natural growth rate (recruitment) – biologic
term
 Harvest – how many are extracted (flow)
 Effort – how hard fisherman try to harvest
(economic term)
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Simple Model of Fish
Biology
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Exponential growth
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Stock, x
With constant growth rate, r:
= rx  x=aert
t
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Crowding/congestion/food limits (drag)
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Carrying capacity: point, k, where stock
cannot grow anymore: x ≤ k
As we approach k, “drag” on system
keeps us from going further
Resource limitations, spawning location
limitations
k
x
t
Put growth and drag
together
Biomass
(x)
Growth
Rate
time
“Carrying
Capacity” (k)
xMSY
Stock that gives “maximum
sustainable yield”
x
Interpreting the growth-stock curve
AKA: recruitment-stock; yield-biomass curves
GR
Growth rate of population
depends on stock size
low stock  slow growth
high stock  slow growth
dx/dt = g(x)
x
Introduce harvesting
H1
GR
H2
H3
xc
xb
xa
x
H1: nonsustainable  extinction
H2: MSY – consistent with stock size Xb
H3: consistent with two stock sizes, xa and xc
xa is stable equilibrium; xc is unstable. Why??
Introduce humans

Harvest depends on

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H
How hard you try (“effort”); stock size; technology
H = E*x*k
k = technology “catchability”
E = effort (e.g. fishing days)
x = biomass or stock
Harvest for high effort
kEHx
kELx
Harvest for low effort
x
Will stock grow or shrink
with harvest?
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If more fish are harvested than grow, population
shrinks.
If more fish grow than are harvested, population grows.
For any given E and k, what harvest level is just
sustainable?
Where k*E*x = g(x) (1)
and
g(x) = H
(2)
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This can be solved for the sustainable harvest level as
a function of E: H(E)
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Solve (1) first for x(E)
Substitute into (2) to get H(E)
“Yield-effort curve”
H(E)
Gives sustainable harvest
as a function of effort level
Notice that this looks like
recruitment-stock graph. This
is different though it comes
from recruitment-stock relation.
E
Introduce economics

Costs of harvesting effort

TC = w•E
• w is the cost per unit effort
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Revenues from harvesting

TR = p•H(E)
• p is the price per unit harvest
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Draw the picture
Rents
to the
fishery
Open Access vs.
Efficient Fishery
TC=w*E
$
TR=p*H(E)
E
$/E
Value of fishery
maximized at E*.
Profits attract entry
to EOA (open access)
MR
w
AR
MC=AC
E* EMSY EOA
E
Open access resource
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Economic profit: when revenues exceed costs (not
accounting profit)
Open access creates externality of entry.
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Entrants pay AC, get AR (should get MR<AR)
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So fishers enter until AR = AC ( TR = TC)
But even open access is sustainable
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I’m making profit, that attracts you, you harvest fish,
stock declines, profits decline.
Though not socially desirable
What is social value of fish caught in open access
fishery?

Zero: total value of fish = total cost of catching them
Illustration of equilibria
Maximum Sustainable Yield (Effort EMSY)
Sustainable
Catch
○
○
○
Open Access Catch
(Effort EOA)
Efficient Catch (Effort E*)
Note: efficient catch
lets biology (stock)
do some of the work!
X
Mechanics of solving fishery pblms
(with solutions for specific functions)
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Start with biological mechanics:
 G(X) = aX – bX2 [G, growth; X stock]
Harvest depends on effort: H=qEX
Sustainable harvest when G(X) = H
 First compute X as a function of E
 Then substitute for X in harvest equation to yield H(E) which will
depend on E only
Costs: TC = c E
Total Revenue TR=p*H(E) where p is price of fish
Open access: find E where TC=TR
Efficient access: find E where
 Marginal revenue from effort (dTR/dE) equals
 Marginal cost (cost per unit of effort)
Example: NE Lobster Fishery
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Bell (1972) used data to determine catch (lb. lobsters)
per unit of effort (# traps), using 1966 data
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Price is perfectly elastic at $0.762/lb.
Average cost of effort: $21.43 per trap
Open access equilibrium: TC = TR
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E=891,000 traps; H=25 million lbs.
Compare to actual data: E=947,000;H=25.6 million lbs.
Maximum Sustainable Yield
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H(E) = 49.4 E - 0.000024E2
E=1,000,000 traps; H=25.5 million lbs.
Efficient equilibrium
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E=443,000 traps; H=17.2 million lbs.