 Homework #8 Due Thursday  Quiz #4 Thursday Nov. 17 th  Homework #9 Thursday Nov. 17 th  Group Outline due Thursday Nov. 17th  Exam #4 Dec. 1st

 Fisheries: renewable resources with biological growth.  Examine the difference between maximum sustainable yield and economic optimum.  Tragedy of the Commons associated with common pool resources (fisheries).  Examine the difference between the open-access and static-efficient outcome.

 Like forests, our benefit from fish depends up how fish stock grow over time.  Milner Baily Schaefer developed a model that examines the relationship between fish stock and the growth of the fish stock. Schaefer worked as a biologist at the Washington State Fisheries Department in the 1930s and for the International Pacific Salmon Fisheries Commission in Canada in the 1940s. Most noted for his work on population dynamics of fisheries.

Biological Dimension— The Schaefer model - an average relationship between the growth of the fish population and the size of the fish population. Small population sizes lead to population growth rate increases. Large population sizes lead to growth rate decreases.

 Natural equilibrium – a population size that would persist in the absence of outside influences ( Ŝ )  Stable equilibrium – a population in which movements away from that level set forces in motion to restore it. ( Ŝ )  Minimum viable population – the lowest population below which growth in the population is negative (S)  Maximum sustainable yield population – the population size that yields the maximum growth.

 Static vs. Dynamic  The static-efficient sustainable yield is the catch level that, if maintained perpetually, would produce the largest annual net benefit.  The dynamic-efficient sustainable yield incorporates discounting. The dynamic efficient sustainable yield will equal the static efficient sustainable yield if the discount rate equals zero.

 Assumptions of the economic model are: The price of fish is constant and does not depend on the amount sold. (price-taker) The marginal cost of a unit of fishing effort is constant. The amount of fish caught per unit of effort expended is proportional to the size of the fish population.  The static-efficient sustainable yield allocation maximizes the constant net benefit.

 Open-access creates two kinds of external costs: Contemporaneous external costs are the costs imposed on the current generation from overfishing. Too many resources (boats, fishermen, etc.) are committed to fishing. Intergenerational external costs are the costs imposed on the future generation from the exploitation of the stock today. Overfishing reduces stocks and thus future profits.  Unlimited access creates property rights that are not well-defined.  With free-access, individual fishermen have no incentive to “save” the resource.

 Fishery in the Bering Sea and Aleutian Island (Huppert 1990)  Found that the efficient number of boats was 9, the actual number of boats was 147.

 Regulation  Taxes  ITQs (Individual Transferable Quotas )  Subsidies  Buy Backs  Dynamic Efficient amount of Effort

 Open-access resources do not automatically lead to a stock lower than the maximum sustainable yield.  Open-access fishing may or may not pose a threat of species extinction.  Open-access resources generally violate both the efficiency and sustainability criteria.