Fishing technology and rent dissipating
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Fishing technology and rent dissipating. Anders Skonhoft Dep. of Economics NTNU. 1.Introduction. FAO statistics: 9% of the world fish stocks are depleted 18% overexploited 47% fully exploited 21% moderately exploited Average for the world. Much more dramatic in

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Fishing technology and rent dissipating

Fishing technology and rent dissipating

Anders Skonhoft

Dep. of Economics NTNU


1 introduction

1.Introduction

  • FAO statistics:

    • 9% of the world fish stocks are depleted

    • 18% overexploited

    • 47% fully exploited

    • 21% moderately exploited

      Average for the world. Much more dramatic in

      traditional fishing grounds (e.g. EU coastal

      waters)


Fishing technology and rent dissipating

  • Reasons

    • Institutional structure

      • Both within nations

      • External factors (straddling stocks, migration, etc.)

    • Valuable fish stocks

      • More valuable stock: always higher exploitation pressure

    • Highly efficient fishing technology


Fishing technology and rent dissipating

  • More efficient fishing technology

    • Individual beneficiary (at least in the short term)

    • Collectively disaster; depressed fish stocks as well as depressed profitability for the industry as a whole ???

    • Short-term vs. long-term

    • Institutional structure of pivotal importance


Fishing technology and rent dissipating

  • In general: More efficient production, new products: The well-known riving forces behind increased material welfare.

  • Pioneering studies: Solow(1956), Abramovitz (1956): 75% of productivity growth due to technological improvement (TFP growth)

  • Confirmed by numerous later studies with much better data

  • Also sector studies, i.e., agriculture.

    • Much of the same picture, see, e.g., Hayami and Ruttan 1985


Fishing technology and rent dissipating

  • In what follows:

    • Technological change/efficiency improvement in a fishery.

    • Stylized model/reasoning within the institutional structure of ‘unregulated common property type’.

      In many fisheries (not at least in developing countries, and in large inland fisheries) still the prevailing management scheme

    • What happens when fishing technology becomes more efficient? Stock, harvest, rent…

    • What type of remedies??

      • Changing institutional structure?

      • Input control?


2 some evidence

2.Some evidence

  • Post-war period rapid progress in fishing technology

    • Larger boats

    • Better equipped

    • New synthetic materials

    • New finding equipment and techniques

    • Etc, etc…


Fishing technology and rent dissipating

  • Dramatic reduction in number of fishermen (in Norway and elsewhere)

  • Capital stock fluctuating…

  • Catch fluctuating

  • Total factor productivity growth (TFP) Norway:

    0.8% per year (1961-2004) (Hannesson 2006)

    Correcting for lower fish stocks: Higher


Fishing technology and rent dissipating

  • But large problems with these calculations!!

  • But the broad picture clear


3 technological change and the regulated fishery

3.Technological change and the regulated fishery

  • Basic insight from the Gordon-Schaefer model (sole owner equilibrium fishery), or PV-rent maximizing (social planner model) of more efficient harvesting technology:

    • More effort use

    • Smaller stock (but no problems….Xmsy, or..)

    • Larger rent

  • So everything works well!!

  • More efficient technology is an unmixed bless


Fishing technology and rent dissipating

Gordon-Schäfer model

TC

TR

Stock

Xmey


4 the unregulated fishery

4. The unregulated fishery

  • Many fisheries still exploited in an unregulated manner (remember: few regulations (at least quota setting) in any fisheries until the beginning of the 1980’s)

  • ‘Open-access’ model has served as a benchmark for many years (e.g., Gordon 1954, Homans and Wilen 1997).

  • Stylized model: Total rent dissipating. Means: zero-rent for an efficient as well as an inefficient technology. New capacity (vessels) flows in and out.


Fishing technology and rent dissipating

  • Here a more general approach: The fishermen are exploiting a fish stock in a myopic profit maximizing manner.

  • Myopic exploitation (…short sighted and neglecting the future…) and no value is imposed on the stock (zero shadow price)

  • Widely used exploitation scheme. Baland and Platteau (1996): ‘unregulated common property’. See also e.g., Bromley (1991).

  • Not only in fisheries; grazing exploitation (i.e., Saami reindeer herding), wildlife exploitation, etc.

  • Important feature: The number of fishermen (or capacity) fixed; local common, no entry), but lack of norms, regulations, etc.


Fishing technology and rent dissipating

  • Model:

    • Population growth

    • Catch function

      q ‘catchability coefficent’. Technology parameter (‘TFP’)

    • The fishermen aims to

      maximisze short-run profit


Fishing technology and rent dissipating

  • h: Contingent upon cost/price ratio, scale properties…and harvesting efficiency (q)

  • Non-linear first order difference equation. Possible oscillations and unstability, but harvesting stabilizes (cf. May 1976).

  • Possible expansion path:


Fishing technology and rent dissipating

  • Fish stock expansion paths


Fishing technology and rent dissipating

  • Rent (profitability) expansion paths


Fishing technology and rent dissipating

  • What is going on here?

    • More efficient technology means smaller fish stock in the short-term as well as the long-term

    • More efficient technology yields highest rent in the short-term, but lowest in the long-term

    • The dynamic system will for realistic parameter values (intrinsic growth rate of the fish, etc.) settle down an equilibrium where total harvest=natural growth


Fishing technology and rent dissipating

  • Long-term equilibrium results:

    • Stock size, harvest,… and rent depending on harvesting efficiency (q)


Fishing technology and rent dissipating

  • Equilibrium rent and efficiency

Rent

Efficiency q


Fishing technology and rent dissipating

  • Improved technology/efficiency mixed bless!! It may increase as well dissipate the rent.

  • Remarkable result. Remember improved efficiency is assumed to be cost free (‘manna from heaven’).

  • The myopic nature of the fishery drives the result, but also externalities. The theory of the second best (Lipsey and Lancaster 1956)


Fishing technology and rent dissipating

  • Rent, efficiency and number of harvesters

Rent

n2>n1

n1

n2

Efficiency q


Fishing technology and rent dissipating

  • Rent, efficiency and value of harvest

Rent

p2>p1

p1

p2

Efficiency q


5 conclusion

5. Conclusion

  • Simple model with stylized institutional structure

  • But holds in many instances.

    • Fisheries in developing countries

    • Open seas fisheries

    • Quasi-regulated fisheries (quota cheating, etc.)

  • Myopic exploitation instead of long-term considerations

  • Then new technology mixed bless!

  • New technology a possible disaster in the long-term.


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