1. Dept. of Economics U NIVERSITY of A LASKA A NCHORAGE Voluntary Approaches to Transitioning from Competitive Fisheries to Rights-Based Management: An Experimental Analysis or Bringing the Field into the Lab Gunnar Knapp Jim Murphy

2. Dept. of Economics U NIVERSITY of A LASKA A NCHORAGE Evolution of fisheries management institutions InstitutionCharacteristicsProblem Open-Access (Common Pool) No regulationOver-fishing (“Tragedy of the Commons”)

3. Dept. of Economics U NIVERSITY of A LASKA A NCHORAGE Evolution of fisheries management institutions InstitutionCharacteristicsProblem Open-Access (Common Pool) No regulationOver-fishing (“Tragedy of the Commons”) Regulated Open-Access Limit on total catchRace for fish; Excess inputs

4. Dept. of Economics U NIVERSITY of A LASKA A NCHORAGE Evolution of fisheries management institutions InstitutionCharacteristicsProblem Open-Access (Common Pool) No regulationOver-fishing (“Tragedy of the Commons”) Regulated Open-Access Limit on total catchRace for fish; Excess inputs Limited entry Input restrictions Race for fish; “Capital stuffing” of unrestricted inputs

5. Problems with Limited Entry Management in Alaska’s Bristol Bay Salmon Fishery... Race for Fish  Fishermen get in each other’s way competing for the best place to catch fish (“Derby fishing) (Photograph by Bart Eaton)

6. Although boats are restricted to 32’ in length, over time fishermen have built wider and taller boats in an effort to catch a larger share of the available fish. Boat costs have increased without any corresponding increase in catches. Old 32’ boat (1970s)New 32’ boat (1990s) (Photograph by Norm Van Vactor) Problems with Limited Entry Management in Alaska’s Bristol Bay Salmon Fishery... “Capital Stuffing”

7. Evolution of fisheries management institutions InstitutionCharacteristicsProblem Open-Access (Common Pool) No regulationOver-fishing (“Tragedy of the Commons”) Regulated Open-Access Limit on total catchRace for fish; Excess inputs Limited entry Input restrictions Race for fish; “Capital stuffing” of unrestricted inputs Rights-BasedLimits on individual catches (Individual quotas) Allocation issues (who gets the quotas?) Transition issues

8. Our Research Focus: Voluntary Transition to Rights-Based Management  APPROACH: Divide the total quota between a derby fishery and a rights-based fishery Give fishermen a choice between fisheries Base quotas on the number of fishermen choosing each fishery  LOGIC: Opportunity to demonstrate benefits “Win-win” Reduced opposition  QUESTION: Does voluntary transition lead to easier and quicker adoption?

9. Experimental Methodology

10. Basic math of the derby fishery problem: pprice of harvest q i individual harvest x i input choice c i (x i ) cost function Standard profit max:

11. Maximizing profits in a derby pprice of harvest q i individual harvest x i input choice c i (x i ) cost function Standard profit max:  i skill Q aggregate quota where: Share of total harvest

12. Potential experimental approach: Nonlinear social dilemma payoff table

13. Concerns about payoff tables  We don’t live in a world of payoff tables A lot of numbers, hard to read Too abstract??  Frames how a person should think about the game May affect extent of cooperative behavior  How to address heterogeneity of fishing skill?

14. Harvesting experiment  8 subjects per group  20 cups of beans in large bowl  Revenue is $1/cup.  Subjects need to purchase “gear” to harvest the beans. Select a measuring cup Larger gear costs more.

15. Experiment supplies 20 cups of pinto beans Measuring scoops Subjects harvest beans by scooping them into a pitcher on the floor

16. Gear (measuring cups)

17. Round Treatment 1 Treatment 2 Treatment 3 PracticeSkill 1 2 3 4 Derby 5 6 7 8 Choice between Derby & Individual Quota 9 10 11 12 13 14 Skill 15 16 Experiment Summary: 3 treatments 4 sessions per treatment 16 rounds per session

18. Derby video

19. An unanticipated but interesting result: Significant rent dissipation occurs as beans are spilled Mean = 27% $5.40 per period spilled (= $0.68/person)

20. There is wide heterogeneity in “fishing” skill, highly correlated across rounds

21. We can predict catch shares accurately as a function of “skill” and cup choices (we can estimate catch functions)

22. Rent dissipation occurs through capital stuffing: Subjects choose scoops larger than 1/8 cup “Nash” Prediction (with homogeneous subjects): 1/2 cup if no spills 1/3 cup if 25% spilled

23. Derby Earnings – Rents are almost fully dissipated Mean = $0.15 17% were < 0

24. Derby Summary Predicted (with no spills, subject homogeneity)Mean Observed Harvest / person2.501.81 (73%) Spills are an externality Cup size1/2 cup (cost=2.19)  1/3 cup (mean cost=1.66) Earnings0.31 (16% efficiency) 0.15 (8% efficiency)

25. IFQ video

26. Voluntary transition: hypotheses  Given the option to choose between a competitive fishery and a quota fishery, some but not all subjects will choose the quota fishery  Over time, the number of subjects choosing the quota fishery will increase  Average gear use (harvest cost) will be lower in both the quota and the competitive fishery than in a competitive-only fishery  Average profits will be higher in both the quota and the competitive fishery than in a competitive-only fishery

27. RESULTS: Some but not all subjects chose the quota fishery. Over time, the number of subjects choosing the quota fishery increased.

28. RESULTS: Average gear use (harvest cost) are lower in the quota fishery and (in later periods) in the competitive fishery

29. RESULTS: Average profits are higher in both the quota and the competitive fishery than in a competitive-only fishery