Quiz 6 Why do fishers use a high discount rate? A. They are faced with immediate costs that cannot be put off to the future (e.g., boat payments) B. The prices that they get at the dock are discounted from the prices that retailers receive C. They are uncertain whether they will have access to rebuilt stocks D. Fish populations grow at a slower rate than invested capital If fishing is unprofitable at a global level, why does it persist? (a one word answer is fine) Which of the following should increase the optimum investment in fishing? A. A higher discount rate B. Lower variability in quota C. A higher price for fish D. Lower operating costs

Fisheries Economics

Price varies $1.8 million – Bluefin tuna (489 pounds) 4 cents per pound - menhaden

Cost of harvest varies Ika shibi (handline) fishing for tuna off Hawaii

Cost of harvest varies

Cost of harvest varies

Fuel, boat loans, permits, crew shares

The Gordon Model Only “normal” profit made (wages + interest on capital) Gordon 1954

Clark’s Blue Whales Economic Rent: any payment to a factor of production in excess of the cost needed to bring that factor into production. Present Value: a future amount of money that has been discounted to reflect its current value, as if it existed today. “A dollar today is worth more than a dollar tomorrow” Discount Rate: the theoretical or observed rate at which someone discounts a future amount of money. Discount rate depends on the marginal opportunity cost of capital in alternative investments Clark 1973 Science

Clark’s Blue Whales Blue whale – population growth rate: 4% Real estate interest rate: 9% Savings bond interest rate: 0.1% Clark 1973 Science

BMEY > BMSY Grafton et al. 2007 Science

Economically optimal rebuilding: the “bang-bang” solution Ecurrent EMEY Effort Time

Fishery subsidies: the good, the bad, and the ugly Beneficial Fishery management Marine protected areas Fishery R&D Capacity enhancing Fuel subsidies Boat construction subsidies (loan guarantees) Port and processing infrastructure Price and marketing support Foreign access agreements (EU-ACP fishing agreements) Ambiguous Fisher assistance programs (payments during rebuilding) or retraining Vessel buyback programs (spillover effects – Canadian cod boats transferred to Argentina). Rural community development programs (mosquito netting used for fishing) Sumaila et al. 2010

Recreational Fisheries Economics

Recreational Fisheries Economics