Issues for Federal Fisheries off Alaska By Ron Felthoven Economics and Social Sciences Research Program Alaska Fisheries Science Center

Rationalization Programs Fishing and Processing Decisions Differ in an ITQ or Cooperative System What will happen to the size of current fleet? What will happen to the size of current fleet? Consolidation will decrease the number of jobs in the industryConsolidation will decrease the number of jobs in the industry Can impact small rural communities Can impact small rural communities Who is likely to remain in the fishery? Who is likely to remain in the fishery? AK residents vs. non-residentsAK residents vs. non-residents Larger companies vs. independent ownersLarger companies vs. independent owners Where will the remaining vessels deliver their fish? Where will the remaining vessels deliver their fish? Can have implications for communities dependent upon processingCan have implications for communities dependent upon processing

Rationalization Programs How will rationalization in one fishery impact other? How will rationalization in one fishery impact other? Owners may want to lease quota and devote all effort elsewhereOwners may want to lease quota and devote all effort elsewhere Time flexibility may allow for activity in bothTime flexibility may allow for activity in both May affect marine mammals during critical times May affect marine mammals during critical times How might fishing strategies change? How might fishing strategies change? Will spatio-temporal intensity of effort be dispersed or intensified?Will spatio-temporal intensity of effort be dispersed or intensified? Will searching behavior increase? Will new areas be fished?Will searching behavior increase? Will new areas be fished? Is cooperation among vessels likely?Is cooperation among vessels likely?

Rationalization Programs How might harvester’s increased flexibility be affected by processor willingness to accept deliveries? How might harvester’s increased flexibility be affected by processor willingness to accept deliveries? Can be costly to keep plant open for deliveries for an extended seasonCan be costly to keep plant open for deliveries for an extended season One party’s predicted actions may be impacted by another’sOne party’s predicted actions may be impacted by another’s Is highgrading likely to be a factor? Is highgrading likely to be a factor? What are the retention requirements?What are the retention requirements? What type of observer coverage is required?What type of observer coverage is required? Do processors pay a premium for certain size or grade of a given species?Do processors pay a premium for certain size or grade of a given species?

Fuel Costs Increased Fuel Costs Affect Many Aspects of Fishing Increased Fuel Costs Affect Many Aspects of Fishing Increased costs make marginally profitable operations unprofitableIncreased costs make marginally profitable operations unprofitable Need to offset cost increases may change fishery participation and fishing locationsNeed to offset cost increases may change fishery participation and fishing locations Managers may want to consider repercussion of these behavioral responses Managers may want to consider repercussion of these behavioral responses Can/will vessels modify their engines to save fuel?Can/will vessels modify their engines to save fuel? How is the competitive balance between wild caught fish and aquaculture affected?How is the competitive balance between wild caught fish and aquaculture affected? Can bio-fuels be derived from fish oil to offset diesel price increases; is there interest?Can bio-fuels be derived from fish oil to offset diesel price increases; is there interest?

Bycatch How Can One Manage or Allocate Bycatch to Maximize Value? Bycatch is a limiting factor in many target fisheriesBycatch is a limiting factor in many target fisheries Bycatch is allocated to sectors and gear groupsBycatch is allocated to sectors and gear groups What incentives can be used to decrease bycatch?What incentives can be used to decrease bycatch? Pollock fishery has a salmon bycatch cooperative agreementPollock fishery has a salmon bycatch cooperative agreement Participants share real-time bycatch information with SeaState Inc.Participants share real-time bycatch information with SeaState Inc. SeaState compiles information and makes recommendations about where to fishSeaState compiles information and makes recommendations about where to fish Vessels who ignore recommendations or have excessive bycatch are penalized and cannot fish in prime fishing groundsVessels who ignore recommendations or have excessive bycatch are penalized and cannot fish in prime fishing grounds Bycatch reports are published showing vessels with most bycatchBycatch reports are published showing vessels with most bycatch Fines may be levied against those not adhering to the rulesFines may be levied against those not adhering to the rules

Bycatch The pollock system doesn’t value bycatch at the marginThe pollock system doesn’t value bycatch at the margin A tradable bycatch system could allow bycatch to be used in its highest valued useA tradable bycatch system could allow bycatch to be used in its highest valued use The marginal value of a bycatch is (probably) not equal across sectors and gear groupsThe marginal value of a bycatch is (probably) not equal across sectors and gear groups Some species (e.g. salmon) may have higher value as bycatch than in their target fisheriesSome species (e.g. salmon) may have higher value as bycatch than in their target fisheries Would require initial allocationsWould require initial allocations May provide perverse incentives to develop a historyMay provide perverse incentives to develop a history

Protected Species How is industry impacted by protected species measures? How are profits affected by the loss of fishing choices through MPAs? Where will fishermen redistribute effort? How are fishing costs affected by having to fish in different areas? How are other commercial endeavors impacted? Shipping and transportation Oil and gas exploration/development

Aquaculture How will wild capture fisheries be impacted by the supply of aquaculture? How much effort should be spent on marketing? What is the WTP on behalf on industry? Should AK specialize in wild fisheries or experiment with mariculture? What are the environmental risks for the ecosystem and existing stocks? Can aquaculture production be used as a hedge against fuel price or stock fluctuations? How susceptible is the value of AK fisheries to expanded supply of substitute products?

Stock Fluctuations Pollock quota has been dropping and is likely to fall again next year Composition of the 2 million ton cap may begin to look much different Pollock will not eat up as much of the 2 million tons In particular, arrowtooth flounder population is flourishing Where will fishing effort redistribute? What will be the market impacts of increased landings of non-pollock groundfish? Will any new problems (bycatch, protected species, etc.) arise with effort increase in other fisheries?

Down the Road: Climate Change Climate Change will Alter the Bering Sea Ecosystem in Myriad of Ways The spatial distribution of fish populations is likely to change The productivity and population of species will likely change Some may even be threatened (e.g. shellfish and acidification) May see a complete loss of sea ice in the summer Will affect ecosystem productivity and timing Will open up shipping routes and could generate further environmental repercussions

Climate Change (cont.) Fishermen will have to adapt strategies Change target species Change fishing locations Change vessel capital if fishing occurs further out Location of deliveries may shift to reflect fish abundance Will deliver near grounds Traditional fishing communities may no longer be hubs for marine commerce Our current tools and Fisheries Management Plans were devised for the system we have observed in the last few decades… What happens when the system changes?

Conclusion Many of the decisions made by researchers, regulatory analysts and fishery managers require an idea of how fishermen and processors will behave Modelers make assumptions about objectives, costs, earnings Information for researchers is scarce One then estimates impacts and/or devises policies based on those assumptions and outcomes Accurate predictions are hard to generate Especially when there is uncertainty over states of nature Methods to evaluate likely outcomes or behavior under various sets of rules or conditions are a welcome tool! May be able to make informed predictions with less information