Economics of Fisheries Flashcards
Draw the goods and services diagram.
Where does fishing play into the economic web?
Common resources – They are rivals since if you catch a fish and keep that fish, that fish is no longer able to be caught and consumed by another person. However, they are not excludable, historically. Common resources are where we get overuse because there is no excludability property. Management is trying to make this excludable to make this, not an issue anymore.
Sustainable Harvest Equation
What can the sustainable harvest equation be used for?
Use this equation to map from our biological space to our fishing space.
Explain the sustainable harvest diagram:
Think of it as the mirror image.
With a high fishing effort, you are going to have a collapse.
Intermediate level of fishing effort, you can fish at MSY
The stock will be at carry capacity if you have no fishing effort.
What are some common management strategies?
- Open Access
- Total Allowable Catch
- Input Controls
- Catch Shares (Incentives)
Open Access Equilibrium
anyone is free to enter the fishery and fish as much as they want
Under no management or regulation
Explain the tragedy of the commons theory with open access equilibrium:
Not associated with the resource collapsing or being exploited down to nothing.
The tragedy is that the resource yields no surplus value. It is exploited to the point that is yields no excess benefit.
Give an example of the Tragedy of the Commons with Open Access equilibrium:
Lantern Fish – mesopelagic species estimated biomass 90% higher than all the other biomass in the ocean.
Why don’t we fish for them? It costs a lot to get out there, lower CPUE and the market value of the species is not demanding.
The tragedy of the commons is not overuse in a biological sense but because of unfavorable conditions.
What is the issue with open access (or common use) fisheries?
The resource outcome is conditional on economic parameters, which can change. If it becomes more cost-effective to go and exploit that resource or demand higher could lead to rapid over-exploitation.
What does MEY stand for?
Maximum economic yield
The maximum amount of profit that can be pulled out of the system.
When does the MEY of a fishery occur?
at the effort level with the highest total profits (difference between revenue and cost)
Explain the profits curve.
Profits are the difference between the green curve and the blue curve. (Revenues vs net cost). Going to the highest where the slope of these two things equals.
Why doesn’t MEY equal MSY?
- effort becomes increasingly less productive (stock effect)
- costs are increasing in effort
Total Allowable Catch
First management tool used
Set an upper limit and allow fishing to occur until this limit is reached.
Total Allowable Catch
First management tool used
Set an upper limit and allow fishing to occur until this limit is reached.
If set appropriately, what can TAC achieve?
Biological goals
What can TAC achieve?
Biological goals - If set appropriately and limited bycatch
What is the overarching issue associated with TAC?
Economically this is not efficient because of human incentives. One overarching limit incentivizes people to go out as much as possible and catch as much as possible.
What is the negative of TAC?
Safety
Flooding the market
Product quality.
Dynamic -> in the sense that any profit or value you extract as a company this year from the fishery will incentivize you to revest back into your equipment.
Where do all the profits go in a TAC management system?
Increased costs - using more inputs than are necessary and often operating in an inefficient manner
Reduced value - Low product quality and flooding the market decreases prices received for landings.
What are input controls?
Technical measures that can achieve a desired biological outcome. However, they also generally to bad economic outcomes.
What are some examples of input controls?
- Temporal restrictions
- Gear or technology restrictions
What is an example of Input Controls management?
Groundfish fishery – New England.
The prevailing management was done by days at sea. Each boat has a specific allocation.
Management was based on effort.
The clock started in terms of using your days when you left the dock. The clock ended when you got back.
Fishing grounds were far away, so fishermen invested in these giant engines to get to Georges’s bank as fast as possible.
What is an example of Input Controls management?
Groundfish fishery – New England.
The prevailing management was done by days at sea. Each boat has a specific allocation.
Management was based on effort.
The clock started in terms of using your days when you left the dock. The clock ended when you got back.
Fishing grounds were far away, so fishermen invested in these giant engines to get to Georges’s bank as fast as possible.
What does fishing effort respond to? What do people respond to?
biological and economic conditions
people respond to incentives.
What have economists viewed as the solution to the tragedy of the commons?
Ownership
Providing excludability to the resource.
AKA Catch Shares
Catch Shares (property right systems)
Generally is shares of total allowable catch – as a business owner, you get a certain amount of the TAC. Generally, not implemented in pounds but in percent and/or spatial.
Give an example of a fishery that changed to a Catch Shares management system.
North Pacific Halibut:
- Originally was an open-access fishery.
- Refrigerated rail cars opened new markets and increased demand.
- Decided to move to an input control system and decided to manage season length. This led to very poor quality and safety issues.
- Finally, Catch Shares (individual fishing quotas were implemented in US and Canada in 1991 and 1995
Once the Catch Shares system (open rights system) was in place in Canada, the outcomes were:
Season expands to nine months
90% of product fresh
Ex-vessel prices increase 50%
Employment down 20%
What are the catch shares system (property rights) challenges?
Technical
Political
Philosophical
Why is high-grading a challenge in catch share systems?
If you get a set number of points or percent of an allocation, you want to catch the best, highest marketable fish.
Example: smaller unhealthy fish were caught, you would incentivize to throw that fish back.
Why is bycatch especially a challenge in Catch share systems?
To catch the higher value product but to catch the higher value, the lower value species are caught in unison.
You cannot catch the higher-value species if you hit your limit on the lower-value species. Choke species.
What are the two main considerations with distribution in a Catch Share system?
- Recent catch history
- Vessel capacity
