fisheries fisheries

efficient harvestsefficient harvests

• biologybiology

• economiceconomic

biological dimensionbiological dimension

• Schaefer model (1957)Schaefer model (1957)

• abstracting from water temp / abstracting from water temp / quality, age structure, etc.quality, age structure, etc.

• relationship btw. growth of popn and relationship btw. growth of popn and size of popnsize of popn

growth as a function of stockgrowth as a function of stock

carrying capacity vs. minimum viable popncarrying capacity vs. minimum viable popn

• : carrying capacity / natural : carrying capacity / natural equilibriumequilibriumstable, movements away set forces in stable, movements away set forces in

motion back towards itmotion back towards it

• : minimum viable popn: minimum viable popnbelow growth is negativebelow growth is negativeunstable unstable

•to right, growth to natural equilibriumto right, growth to natural equilibrium

•to left, decline to extinctionto left, decline to extinction

S

S

““sustainable yield”sustainable yield”

• catch growth rate each period, catch catch growth rate each period, catch and population can be maintained and population can be maintained foreverforever

• S*: “maximum sustainable yield” S*: “maximum sustainable yield” (MSY)(MSY)– yields maximum growthyields maximum growth– largest catch that can be perpetually largest catch that can be perpetually

sustainedsustained

economics: efficient yieldeconomics: efficient yield

• is MSY synonymous with efficiency? is MSY synonymous with efficiency? (no)(no)

• for efficient solution: maximize net for efficient solution: maximize net benefits from use of resourcebenefits from use of resource

• need to include costs and benefits of need to include costs and benefits of harvest, not just quantityharvest, not just quantity

• examine static efficient sustainable examine static efficient sustainable yield (largest annual net benefit)yield (largest annual net benefit)

3 assumptions3 assumptions

• price of fish constantprice of fish constant

• MC fishing effort constantMC fishing effort constant

• fish caught per unit effort is fish caught per unit effort is proportional to size of population proportional to size of population (smaller popn, fewer fish caught per (smaller popn, fewer fish caught per unit effort)unit effort)

efficient sustainable yieldefficient sustainable yield

efficient fishing effortefficient fishing effort

• TR follows Schaefer model since price TR follows Schaefer model since price constantconstant

• TC linear since MC effort constantTC linear since MC effort constant

• Em: further effort reduces sustainable catch Em: further effort reduces sustainable catch and revenue for all years (MSY)and revenue for all years (MSY)

• net benefit: vertical distance btw B & Cnet benefit: vertical distance btw B & C

• Ee: efficient effort, where net benefits Ee: efficient effort, where net benefits maximizedmaximized MB (slope of TB) = MC (slope of constant TC curve)MB (slope of TB) = MC (slope of constant TC curve)

efficient fishing effortefficient fishing effort

• effort > Ee inefficient, since additional cost effort > Ee inefficient, since additional cost exceeds value of fish obtainedexceeds value of fish obtained

• MSY not efficient unless MC effort = 0 (why?)MSY not efficient unless MC effort = 0 (why?)

• efficient level of effort LESS than MSYefficient level of effort LESS than MSY

• efficiency implies LESS harvesting and efficiency implies LESS harvesting and LARGER populationLARGER population

efficient vs. market allocationefficient vs. market allocation

• with well-defined property rights, with well-defined property rights, sole owner of fishery would max sole owner of fishery would max profit by increasing effort until profit by increasing effort until MR=MC MR=MC – harvest at Ee (efficient)harvest at Ee (efficient)

• but…fisheries typically OPEN ACCESSbut…fisheries typically OPEN ACCESS

open access solutionopen access solution

• sole owner of fishery chooses to not expend sole owner of fishery chooses to not expend > Ee because to do so reduces profit of > Ee because to do so reduces profit of fishery (personal loss)fishery (personal loss)

• if unrestricted access, decision to expend > if unrestricted access, decision to expend > Ee reduces total profit, but not to individual Ee reduces total profit, but not to individual fisherfisher

• in open access, Ec effort (net benefits zero)in open access, Ec effort (net benefits zero)

fishery prisoner’s dilemmafishery prisoner’s dilemma

Fisher BFisher B

Fisher AFisher A Fish more!Fish more! Fish lessFish less

Fish more!Fish more! 2,22,2 4,14,1

Fish lessFish less 1,41,4 3,33,3

Note: Payoffs in thousands $ (A, B)

too much effort! policy responsestoo much effort! policy responses

• increase MC– require fishing farther from shore, increase MC– require fishing farther from shore, use smaller nets, boats, or motors use smaller nets, boats, or motors – but artificially increasing cost inefficientbut artificially increasing cost inefficient

• total allowable catch – restrictions on effort or total allowable catch – restrictions on effort or size of catch size of catch – monitoring, enforcement difficult, also creates race to monitoring, enforcement difficult, also creates race to

catchcatch

• individual transferable quotas –quotas allocated, individual transferable quotas –quotas allocated, then tradethen trade– no race, allows most efficient fishers to buy rights from no race, allows most efficient fishers to buy rights from

inefficient fishersinefficient fishers

Sample problemSample problem

• Costs fisher $20 to fish salmonCosts fisher $20 to fish salmon• Salmon sells for $10 Salmon sells for $10 • Harvest rate given X fishers is S = 30X-Harvest rate given X fishers is S = 30X-

22X2

• How many people will go fishing, how How many people will go fishing, how many salmon will be caught, and what many salmon will be caught, and what are total profits underare total profits under– Open accessOpen access– Limited entry (how many fishers should be Limited entry (how many fishers should be

allowed to maximize profit?)allowed to maximize profit?)