Managing the Fishery

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
(ct)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
Fishing Areas - Cooperativas
PNA
PUR
BP
BT
EMAN
CSI
Pacific Ocean
LR
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)