Transcript The economics of fishery management

Managing the
Fishery
How can we regulate the fishery to
avoid problems of open access?
Why manage fisheries?
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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 (bycatch),
etc (another consequence of open access)
Technology may improve, so management must
keep up.
How to manage fisheries?
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Depends largely on characteristics of
fishery
Biology & status of stocks
 History of extraction
 Commercial vs. subsistence, status of
stocks
 Other values (non-extractive, recreational,
fairness, distributional)
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Many failures, some successes
Some management
alternatives
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Limits on catch
 Harvest quotas (for whole fishery)
 Individual transferable quotas (ITQ, IFQ)
 Marine reserves (area closures)
 Harvest tax
Notice: Many of these are
Limits on effort
“property rights” solutions
 Season closures
 Ex-vessel tax
 Regulated entry (licenses)
 Regulated efficiency (gear)
 Effort tax
Internalization of externalities
 Cooperatives
 TURFs
Small-scale fisheries
Many small, multi-purpose boats
 Difficult to enforce regulations
 Local management most successful
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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
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Tax on Catch
TC
$
Total revenue [pH(E)] decreases with
tax (t) on catch to (p-t)H(E)
TR
Efficient fishery
OA with tax
Effort
OA without tax
Tax on catch: reduces open access equilibrium; right tax
moves effort level to efficient amount of effort
Tax on Effort
TC= cE
$
Total costs increase with
tax (t) on effort to (c+t)E
TR
Efficient fishery
OA with tax
Effort
OA without tax
Tax on effort: reduces open access equilibrium; right tax
moves effort level to efficient amount of effort
Transferable quotas on
catch
Quota levels must be set at efficient
catch level
 Must be transferable among fishers
 Value of quota is effectively the same
thing as a tax on catch
 Efficiency requires observation of
stock (difficult)
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Transferable Quotas on
Effort
TC
$
TR
Issue effort
permits
Effort
OA without tax
Transferable quotas on effort: reduces effort to efficient level
Individual Transferable
Quotas
Regulator sets “total allowable catch”
(TAC) based on many factors.
 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)
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ITQs and property rights
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Prior to 1976 coastal nations did not have rights
to marine resources in “high seas”
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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.
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Lack of property rights is what causes problems
with open access
Potential problems with ITQs
Allocation of quotas?
 High-grading incentive
 Enforcement & administrative costs
 Most quotas held by largest firms
 “privatizing the oceans”?
 How set TAC in first place?
 TAC based on imperfectly observed
stock
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Alaskan Halibut
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Historically used season closures
Prior to adoption of ITQ, season 1 day
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Poor fish quality, excessive investment for
harvest, frozen most of year.
ITQ 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
Cooperatives/Cooperativas
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Often devise own rules – social pressure to
abide.
Have exclusive rights to areas, self-enforce.
Federal management supercedes bargaining process with feds to determine
management
TURFs: Territorial User Rights (spatial
property rights)
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Good when few spatial externalities
Fishing Areas - Cooperativas
29.00
28.80
28.60
PNA
28.40
28.20
PUR
28.00
BP
27.80
BT
27.60
27.40
EMAN
27.20
CSI
27.00
LR
26.80
PROG
26.60
PA
26.40
26.20
-116.00
-115.60
-115.20
-114.80
-114.40
-114.00
-113.60
-113.20
Resource “Concessions”
Give exclusive access for 20 years
 Good chance of renewal if
“stewardship” can be proven
 Same principle in reauthorization of
MSFCMA (Magnusson)
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Reluctant to relinquish control? Make
property right insecure
 This induces the wrong behavior.
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Economics of Marine
Reserves
Marine reserves implemented for a
variety of reasons
 What are their economic impacts?
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Could reserves ever increase rents to
a fishery?
YES! E.g.
Source/Sink
 Increasing returns to scale (fecundity)
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