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

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

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

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

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 =

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

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

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

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

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.

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

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)

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

Baja California

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.

Spiny Lobster Fishery

Maximum Sustainable Yield Maximum Sustainable Yield No increase in Fishing Effort No increase in Fishing Effort

Abalone Fishery

Overfished Overfished Quota system Quota system Reference point: Reference point: B t > B t-1 No increase in fishing effort

Pacific Ocean Fishing Areas - Cooperativas PNA BP PUR BT EMAN CSI LR PROG PA

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

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)

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

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?

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