The economics of fishery management

1. The economics of fishery management The role of economics in fishery regulation

2. Simple model of fish biology Biomass (x) “Carrying Capacity” xMSY x time Stock that gives “maximum sustainable yield”

3. Interpreting this curve • Growth rate of population • depends on stock size • low stock  slow growth • high stock  slow growth • Also “sustainable yield curve” • MSY x

4. Introduce humans • Harvest depends on • Harvest “effort”, stock size, and technology H = k*E*x k = technology “catchability” E = effort (e.g. fishing days) x = biomass or stock Harvest for high effort H kEHx kELx Harvest for low effort x

5. 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 =

6. “Yield-effort curve” Gives sustainable harvest as a function of effort level H(E) E

7. 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

8. $ TC=w*E Rents to the fishery TR=p*H(E) E EOA $/E Value of fishery maximized at E*. Profits attract entry to EOA (open access) MR w MC E* E

9. 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

10. 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.

11. How manage fisheries? • Depends largely on characteristics of fishery • Biology & status of stocks • History of extraction • Commercial vs. subsistence, status of stocks • Other values (non-extractive, recreational) • May failures, some successes

12. 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)

13. 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

14. Baja California

15. 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.

16. Spiny Lobster Fishery

18. Maximum Sustainable Yield • No increase in Fishing Effort

19. Abalone Fishery

21. Overfished • Quota system • Reference point: • Bt > Bt-1 • No increase in fishing effort

22. 29.00 28.80 28.60 28.40 28.20 28.00 27.80 27.60 27.40 27.20 27.00 26.80 26.60 26.40 26.20 -116.00 -115.60 -115.20 -114.80 -114.40 -114.00 -113.60 -113.20 Fishing Areas - Cooperativas PNA PUR BP BT EMAN CSI LR Pacific Ocean PROG PA

23. Cooperativas • 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

24. 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)

25. 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

26. 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?

27. 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