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Managing the Fishery

Managing the Fishery. How can we regulate the fishery to avoid problems of open access?. 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.

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Managing the Fishery

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  1. Managing the Fishery How can we regulate the fishery to avoid problems of open access?

  2. 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 (bycatch), etc (another consequence of open access) • Technology may improve, so management must keep up.

  3. How to 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, fairness, distributional) • Many failures, some successes

  4. Some management alternatives • Limits on catch • Harvest quotas (for whole fishery) • Individual transferable quotas (ITQ, IFQ) • Marine reserves (area closures) • Harvest tax • Limits on effort • Season closures • Ex-vessel tax • Regulated entry (licenses) • Regulated efficiency (gear) • Effort tax • Internalization of externalities • Cooperatives • TURFs Notice: Many of these are “property rights” solutions

  5. 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

  6. Tax on Catch TC $ Total revenue [pH(E)] decreases with tax (t) on catch to (p-t)H(E) TR Effort Efficient fishery OA with tax OA without tax Tax on catch: reduces open access equilibrium; right tax moves effort level to efficient amount of effort

  7. Tax on Effort TC= cE $ Total costs increase with tax (t) on effort to (c+t)E TR Effort Efficient fishery OA with tax OA without tax Tax on effort: reduces open access equilibrium; right tax moves effort level to efficient amount of effort

  8. Transferable quotas on catch • Quota levels must be set at efficient catch level • Must be transferable among fishers • Value of quota is effectively the same thing as a tax on catch • Efficiency requires observation of stock (difficult)

  9. Transferable Quotas on Effort TC $ TR Effort Issue effort permits OA without tax Transferable quotas on effort: reduces effort to efficient level

  10. Individual Transferable Quotas • Regulator sets “total allowable catch” (TAC) based on many factors. • 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)

  11. 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

  12. 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? • TAC based on imperfectly observed stock

  13. Alaskan Halibut • Historically used season closures • Prior to adoption of ITQ, season 1 day • Poor fish quality, excessive investment for harvest, frozen most of year. • ITQ 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

  14. Cooperatives/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 • TURFs: Territorial User Rights (spatial property rights) • Good when few spatial externalities

  15. Baja California

  16. 29.00 28.80 28.60 28.40 28.20 28.00 27.80 27.60 27.40 27.20 27.00 26.80 26.60 26.40 26.20 -116.00 -115.60 -115.20 -114.80 -114.40 -114.00 -113.60 -113.20 Fishing Areas - Cooperativas PNA PUR BP BT EMAN CSI LR Pacific Ocean PROG PA

  17. Resource “Concessions” • Give exclusive access for 20 years • Good chance of renewal if “stewardship” can be proven • Same principle in reauthorization of MSFCMA (Magnusson) • Reluctant to relinquish control? Make property right insecure • This induces the wrong behavior.

  18. Economics of Marine Reserves • Marine reserves implemented for a variety of reasons • What are their economic impacts? • Could reserves ever increase rents to a fishery? • YES! E.g. • Source/Sink • Increasing returns to scale (fecundity)

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