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Fishery Economics. The role of economics in fishery regulation. Renewable Resources. Examples Fisheries  today Forests Characteristics Natural growth Carrying Capacity. Motivation.

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fishery economics

Fishery Economics

The role of economics in fishery regulation

renewable resources
Renewable Resources
  • Examples
    • Fisheries  today
    • Forests
  • Characteristics
    • Natural growth
    • Carrying Capacity
motivation
Motivation
  • Group Project: Otters eating lots of shellfish, south of Pt. Conception. Marine Fisheries Service considering removing otters, and you are doing a CBA on the policy. What is the damage the otters are causing and thus the value of restricting them to the north of Pt. Conception?
  • See http://www.bren.ucsb.edu/research/2001Group_Projects/Final_Docs/otters_final.pdf
some terms we will use
Some terms we will use
  • Stock – total amount of critters -- biomass
  • Natural growth rate (recruitment) – biologic term
  • Harvest – how many are extracted (flow)
  • Effort – how hard fisherman try to harvest (economic term)
simple model of fish biology
Simple Model of Fish Biology
  • Exponential growth
    • With constant growth rate, r:
    • = rx  x=aert
  • Crowding/congestion/food limits (drag)
    • Carrying capacity: point, k, where stock cannot grow anymore: x ≤ k
    • As we approach k, “drag” on system keeps us from going further
    • Resource limitations, spawning location limitations

Stock, x

t

k

x

t

put growth and drag together
Put growth and drag together

Biomass

(x)

“Carrying

Capacity” (k)

Growth

Rate

xMSY

x

time

Stock that gives “maximum

sustainable yield”

interpreting the growth stock curve aka recruitment stock yield biomass curves
Interpreting the growth-stock curveAKA: recruitment-stock; yield-biomass curves

Growth rate of population

depends on stock size

low stock  slow growth

high stock  slow growth

GR

dx/dt = g(x)

x

introduce harvesting
Introduce harvesting

H1

GR

H2

H3

x

xc

xa

xb

H1: nonsustainable  extinction

H2: MSY – consistent with stock size Xb

H3: consistent with two stock sizes, xa and xc

xa is stable equilibrium; xc is unstable. Why??

introduce humans
Introduce humans
  • Harvest depends on
    • How hard you try (“effort”); stock size; technology
    • H = E*x*k

k = technology “catchability”

E = effort (e.g. fishing days)

x = biomass or stock

Harvest for high effort

H

kEHx

kELx

Harvest for low effort

x

will stock grow or shrink with harvest
Will stock grow or shrink with harvest?
  • If more fish are harvested than grow, population shrinks.
  • If more fish grow than are harvested, population grows.
  • For any given E and k, what harvest level is just sustainable?
  • This can be solved for the sustainable harvest level as a function of E: H(E)
    • Solve (1) first for x(E)
    • Substitute into (2) to get H(E)

Where k*E*x = g(x) (1)

and

g(x) = H (2)

yield effort curve
“Yield-effort curve”

Gives sustainable harvest

as a function of effort level

H(E)

Notice that this looks like

recruitment-stock graph. This

is different though it comes

from recruitment-stock relation.

E

introduce economics
Introduce economics
  • Costs of harvesting effort
    • TC = w•E
      • w is the cost per unit effort
  • Revenues from harvesting
    • TR = p•H(E)
      • p is the price per unit harvest
  • Draw the picture
slide13

Open Access vs.

Efficient Fishery

TC=w*E

$

Rents

to the

fishery

TR=p*H(E)

E

$/E

Value of fishery

maximized at E*.

Profits attract entry

to EOA (open access)

MR

AR

w

MC=AC

E*

EOA

E

EMSY

open access resource
Open access resource
  • Economic profit: when revenues exceed costs (not accounting profit)
  • Open access creates externality of entry.
    • I’m making profit, that attracts you, you harvest fish, stock declines, profits decline.
  • Entrants pay AC, get AR (should get MR<AR)
    • So fishers enter until AR = AC ( TR = TC)
  • But even open access is sustainable
    • Though not socially desirable
  • What is social value of fish caught in open access fishery?
    • Zero: total value of fish = total cost of catching them
illustration of equilibria
Illustration of equilibria

Maximum Sustainable Yield (Effort EMSY)

Sustainable

Catch

Efficient Catch (Effort E*)

Note: efficient catch

lets biology (stock)

do some of the work!

Open Access Catch

(Effort EOA)

X

mechanics of solving fishery pblms with solutions for specific functions
Mechanics of solving fishery pblms (with solutions for specific functions)
  • Start with biological mechanics:
    • G(X) = aX – bX2 [G, growth; X stock]
  • Harvest depends on effort: H=qEX
  • Sustainable harvest when G(X) = H
    • First compute X as a function of E
    • Then substitute for X in harvest equation to yield H(E) which will depend on E only
  • Costs: TC = c E
  • Total Revenue TR=p*H(E) where p is price of fish
  • Open access: find E where TC=TR
  • Efficient access: find E where
    • Marginal revenue from effort (dTR/dE) equals
    • Marginal cost (cost per unit of effort)
example ne lobster fishery
Example: NE Lobster Fishery
  • Bell (1972) used data to determine catch (lb. lobsters) per unit of effort (# traps), using 1966 data
    • H(E) = 49.4 E - 0.000024E2
  • Price is perfectly elastic at $0.762/lb.
  • Average cost of effort: $21.43 per trap
  • Open access equilibrium: TC = TR
    • E=891,000 traps; H=25 million lbs.
    • Compare to actual data: E=947,000;H=25.6 million lbs.
  • Maximum Sustainable Yield
    • E=1,000,000 traps; H=25.5 million lbs.
  • Efficient equilibrium
    • E=443,000 traps; H=17.2 million lbs.