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Fisheries: The steady-state model. Richard T. Woodward Department of Agricultural Economics Texas A&M University r-woodward@tamu.edu Phone: 979-845-5864 . What is an open-access good and why does it lead to inefficiencies?.

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fisheries the steady state model
Fisheries: The steady-state model

Richard T. Woodward

Department of Agricultural Economics

Texas A&M University

r-woodward@tamu.edu

Phone: 979-845-5864

what is an open access good and why does it lead to inefficiencies
What is an open-access good and why does it lead to inefficiencies?
  • An open access resource is a limited resource that appears to each individual to be limitless.
  • Individuals use the resource without taking into account the effect that their use has on others.
  • Which property right characteristic fails?
slide4

Growth in the Fish

Stock (tons)

Fish Stock

(tons)

slide5

Growth in the Fish

Stock (tons)

Fish Stock

(tons)

slide6

Growth in the Fish

Stock (tons)

Fish Stock

(tons)

slide7

Growth in the Fish

Stock (tons)

Fish Stock

(tons)

slide8

Growth in the Fish

Stock (tons)

Fish Stock

(tons)

slide9

Growth in the Fish

Stock (tons)

Natural Equilibrium

Fish Stock

(tons)

slide10

a. Suppose there are no fishermen in the lake and the lake's initial stock is one ton. Approximately what would be the stock in each of the next 5 years?

b. Approximately what would be the stock after 100 years (i.e., what is the biological equilibrium)?

slide11

When fishing begins, the growth is taken out (harvested) instead of adding to the stock in the next period

Growth in the Fish

Stock (tons)

Sustainable yield (Y(E0))

Fish Stock

(tons)

slide12

Growth in the Fish

Stock (tons)

More effort

Y(E1)

Y(E0)

Fish Stock

(tons)

slide13

Growth in the Fish

Stock (tons)

Medium effort level  high harvests

High effort level  low harvests

Low effort level  low harvests

Y(E3)

Y(E2)

Y(E1)

Y(E0)

Y(E4)

Fish Stock

(tons)

slide14

Now assume that one boat comes into the fishery after it has reached its biological equilibrium. This boat can, in any given year, harvest 40% of the stock. What would be the stock after harvests and growth next year (assume harvests and growth take place simultaneously).

  • Approximately what would the stock be after 4 years?
slide15

2 boats can harvest 60% of the stock.

  • 3 boats can harvest 70% of the stock.
  • Approximately what would the stock be after 4 years?
slide16

Maximum Sustainable Yield (MSY)

Sustainable Harvests

(tons)

Quantity of

Fishing Effort

slide17

Sustainable Revenue ($’s)

Revenue

Quantity of

Fishing Effort

slide18

Benefits and Costs of

Fishing Effort ($’s)

Costs

Revenue

Quantity of

Fishing Effort

slide19

Benefits and Costs of

Fishing Effort ($’s)

Costs

Sustainable Resource Rents

Revenue

Quantity of

Fishing Effort

slide20

Costs

Benefits and Costs of

Fishing Effort ($’s)

MR = MC

R(Ee)

Rents

C(Ee)

Revenue

Ee

Quantity of

Fishing Effort

slide21

Rent elimination in an Open Access Fishery(a.k.a The Tragedy of the Commons)

Costs

Benefits and Costs of

Fishing Effort ($’s)

Revenue

Ee

Eo

Quantity of

Fishing Effort

slide22

Costs

Benefits and Costs of

Fishing Effort ($’s)

Rents

Revenue

Ee

Em

Eo

Quantity of

Fishing Effort

solutions to the tragedy of the commons
Limiting the season or otherwise making fishing more difficult (e.g., unreasonable restrictions on equipment or very short open seasons)Solutions to the “Tragedy of the Commons”
slide27

Inefficiently high Costs

Benefits and Costs of

Fishing Effort ($’s)

Efficient Costs

Waste

Revenue

Em

Ec

Quantity of

Fishing Effort

slide30

Benefits and Costs of

Fishing Effort ($’s)

Costs after Tax

Costs

Tax Revenue

Revenue

Ee

Em

Ec

Quantity of

Fishing Effort

solutions to the tragedy of the commons31
Limiting the season or otherwise making fishing more difficult

Taxing effort

Establishing common ownership over the fishery (fishery cooperatives, 200 mile limit)

Individual transferable quotas

Solutions to the “Tragedy of the Commons”
slide32

Costs

Benefits and Costs of

Fishing Effort ($’s)

Rents

Revenue

Effort level determine by the group or otherwise limited

Quantity of

Fishing Effort

Ee

why is fisheries management so difficult
Uncertainty (People don’t trust other people’s estimates)

Politics

Enforcement

The simple models don’t describe a complex world

Bycatch

Why is Fisheries Management so Difficult?
summary
Summary
  • Biological growth and biological equilibrium
  • MSY, MEY, and open-access equilibrium
  • Open access  Common property
  • Efficient policies: taxation, establishing ownership over the resource, ITQ’s
  • Inefficient policies: making life difficult for fishermen
  • Fisheries management is difficult, complicated and important!