“ Deep-Sea Fisheries Qualify as Endangered”

1. “Deep-Sea Fisheries Qualify as Endangered” • In 1960s and 70s, shelf fisheries collapsed, shift from shelf to deep sea is now exhausting late-maturing species that recover only slowly • 5 species of deep-sea fish decline over 17 year period in northwest Atlantic to qualify as critically endangered • Biologists perceive this as urgent collapse • Why are deep sea fish vulnerable? Late maturation, extreme longevity, low fecundity, slow growth • Conclusion: conservation measures are necessary and lack of knowledge must not delay appropriate initiatives (ex: establishing deep-sea protected areas)

2. “Rapid Worldwide Depletion of Predatory Fish Communities” • Prerequisite for restoration is understanding of composition and abundance of unexploded fish communities, relative to exploited ones • Paper estimates trajectories of entire communities and estimates global rates of decline for large predatory fishes in shelf and oceanic ecosystems • Result: industrialized fisheries reduced community biomass by 80% within 15 years, • Declines of large predator fish will have serious consequences for ecosystems • 1st evidence of general pronounced declines of entire communities across widely varying ecosystems • Effects: • Top down effects – what happens when predators are gone? • Possibility of extinction • Compromise sustainability of fishing

3. “Economic Theory of a Common Property Resource: The Fishery” by Scott Gordon • Part 1: Biologists venturing into (murky) economic territory • At time of paper, great deal know about biology of commercial fish species but little about economic characteristics • Basic questions unknown: effect of fishing on stock of fish in sea (if there even is an effect) • They came up with a “modern” formulation of the fisheries problem in terms of largest sustainable catch, but neglected costs of fishing

4. Part 2: Economic Theory of Fishery • Graph: production function of effort • Important theoretical point: fishery is not private property, thus rent yield by fishery is not capable of being appropriated by anyone • Thought experiment: 2 different fishing grounds

5. “Structure of a Contract and Theory of a Non-exclusive Resource” by Cheung • Externalities due to absence of the right to contract • No contract governing resource use => alters constraint of competition and affects resource allocation • Contract stipulates: • Distribution of income among participants • Conditions of resource use

6. Ex: in Marine Fisheries, right to use fishing ground is non-exclusive, right to contract is absent • Result: intensity of fishing affected, cost of policing higher, affects decisions pertaining to planting and maturity • A product with a low cost of guarding will be preferred • Why do market contracts not exist? b/c of absence of exclusive rights or b/c transaction costs are prohibitive? • Why do exclusive rights not exist? b/c of legal institutions or b/c policing costs are prohibitive?

7. In equilibrium, average product of fishing effort = wage rate (marginal factor cost) • => no rent for fishing ground! • How is it possible the marginal product of fishermen labor be lower than the wage rate? Under private ownership, MP = wage, with no contracts fishermen enter industry as long as residual is positive (analogous to Cournot Duopoly). Thus number of fishermen goes to infinity, each supplying a tiny amount of effort. • Assumption: homogenous fishermen, but in real world, different productivities, costs to entry, institutional arrangements to limit entry (boat unions, legal restrictions).

8. “Contracting Problems and Regulation: the Case of the Fishery” by Johnson and Libecap • Texas Shrimp Fishery • Status: overcapitalized and catch per unit is falling • Conflict btw on shore and inshore fishermen and btw inshore and Vietnamese refugee fishermen • Regulations are incomplete, rent dissipation is uncontrolled • Contracting costs high among heterogeneous fishermen (vary in fishing skill)

9. Part 1: Private agreements in absence of government support • Dilemma: government frowns upon monopoly controls, desires common use by all citizens (egalitarian) • Fishermen resort to: • Informal contracts (unenforceable) • Fishermen Unions – structured arrangement to restrict outsiders and police compliance, fix prices (violation of Sherman anti-trust laws)

10. Part 2: Heterogeneity Implications • Without heterogeneity, all fishermen have an equal ability, net gains from effort controls are evenly spread out and rules are quickly adopted • With heterogeneity of fishermen with respect to skill, limits on individual effort are extremely costly to agree and enforce (prevented both voluntary agreements and political mobilization in seeking government regulation) • Uniform quotas draws opposition from more productive fishermen • What are pros and cons of quotas, taxes, other management tools?

11. Part 3: Detail on Regulation in Texas Shrimp Fishery • Since property rights and limiting entry were historically denied, catch enhancing policies are popular among politicians b/c they avoid controversial allocation schemes • Ex: season closures, gear restrictions, min shrimp size. Are these optimal? • Ex: taxes, quotas, other internal effort controls to protect stock of shrimp. Why are these unsupported by fishermen?