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Market and Rent Dissipation in Regulated Open Access Fisheries

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Abstract

Using a model of regulated open access resource use with markets, we illustrate the potential complexity of interactions between markets, product quality, excess effort, and regulatory behavior in fisheries. Our model assumes two product types, one of which is processed and storable. The model describes the equilibrium that results when effort responds to open access incentives and when regulators respond to effort growth by mitigating its potential harmful effects on biomass safety. We use numerical simulations to demonstrate a mechanism by which market growth leads to the diversion of raw inputs into the inherently inferior market. The result is a scenario in which rents are dissipated not only because excessive inputs raise costs, but also because inferior product types reduce revenues. We conclude with an illustrative decomposition of rent gains into revenue and cost savings gains from rationalizing a hypothetical fishery, demonstrating the potential significance of market-side rents.

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... These practices, and particularly the shorter season, had socio-economic impacts in fishing communities as fishhouses and processors operate in short seasons with capital being idle for the reminder of the year (Cojocaru et al., 2019). This has also led to alternative supply chains being served and often lower valued product forms being produced Homans & Wilen, 2005). ...
... Costello et al. (2008) show that fisheries managed with catch shares tend to be in better shape than fisheries with other management systems. Recent empirical evidence and modelling of economic performance emphasize that transitioning from competitive fishing to rights-based management improves economic outcomes by extending fishing seasons, reducing market gluts, increasing dockside prices and lowering the costs of fishing associated with the race to fish (Abbott et al., 2010;Andersen et al., 2010;Birkenbach et al., 2017Birkenbach et al., , 2020Costello et al., 2016;Gómez-Lobo et al., 2011;Grafton et al., 2006;Homans & Wilen, 2005;Newell et al., 2005;Pincinato et al., 2022). ...
... Harvest rights explain more variation in economic outcomes than access rights, but less variation than national governance conditions and infrastructure (Figures 2 and 3; Tables S4-S5). Harvest rights incentivize fishers to slow the race to fish by giving fishers secure rights to future benefits and thus leading to longer fishing seasons, fewer market gluts and greater profits through more stable supply chains and value added (Birkenbach et al., 2017;Essington, 2010;Homans & Wilen, 2005). Harvest rights are only weakly associated with social and environmental outcomes in fisheries based on the results. ...
Article
There is growing recognition that fisheries should be managed for all three pillars of sustainability: economic, social and environmental sustainability. Limited quantitative evidence exists on factors supporting social sustainability, much less factors that contribute to multiple dimensions of sustainability. To develop a broader understanding of the factors that influence the performance of fishery management systems in environmental, economic and social pillars, we examine 11 input factors conjectured to contribute to successful fisheries using a global dataset of 145 fisheries case studies. The analysis indicates that management approaches are cross‐cutting and contribute to multiple dimensions of sustainability to varying extents. Importantly, factors exogenous to fisheries management can be as important as fisheries management, suggesting collaboration of fisheries institutions with other public and private institutions is important for sustainable fisheries development.
... Individual fishing quotas (IFQs) are generally thought to increase ex-vessel prices by ending the "race to fish" and changing the structure of the output market (Squires, Kirkley, and Tisdell 1995;Grafton 1996;Homans andWilen 1997, 2005). 1 Market gluts caused by derby fishing can also result in diversion of high-quality (fresh) products into a low-quality (frozen) market (Homans and Wilen 2005). Ex-vessel prices increased following the implementation of individual quotas in many fisheries (Gauvin et al. 1994;Casey et al. 1995;Herrmann 1996;Tveteras, Paredes, and Peña-Torres 2011;Brinson and Thunberg 2016). ...
... Individual fishing quotas (IFQs) are generally thought to increase ex-vessel prices by ending the "race to fish" and changing the structure of the output market (Squires, Kirkley, and Tisdell 1995;Grafton 1996;Homans andWilen 1997, 2005). 1 Market gluts caused by derby fishing can also result in diversion of high-quality (fresh) products into a low-quality (frozen) market (Homans and Wilen 2005). Ex-vessel prices increased following the implementation of individual quotas in many fisheries (Gauvin et al. 1994;Casey et al. 1995;Herrmann 1996;Tveteras, Paredes, and Peña-Torres 2011;Brinson and Thunberg 2016). ...
... Individual fishing quotas (IFQs) are generally thought to increase ex-vessel prices by ending the "race to fish" and changing the structure of the output market (Squires, Kirkley, and Tisdell 1995;Grafton 1996;Homans andWilen 1997, 2005). 1 Market gluts caused by derby fishing can also result in diversion of high-quality (fresh) products into a low-quality (frozen) market (Homans and Wilen 2005). Ex-vessel prices increased following the implementation of individual quotas in many fisheries (Gauvin et al. 1994;Casey et al. 1995;Herrmann 1996;Tveteras, Paredes, and Peña-Torres 2011;Brinson and Thunberg 2016). ...
Article
Management of the “General Category” component of the US Atlantic sea scallop (Placopecten magellanicus) fishery changed from open access with a soft, or target, catch limit, to limited access with a hard catch limit, to individual fishing quotas (IFQs) in just three years. Two differences-in-differences (DiD) models are used to examine the causal effects of management on price and revenue. A hedonic price model finds that the IFQ program had minimal direct effects on prices. A landings composition model finds that the IFQ program increased landings of the largest scallops. The Limited Access fleet, which lands most of the scallops in the region and is managed primarily with input controls, serves as a control for both models. Our policy simulation finds that IFQs increased revenues by 2.6% compared to hard catch limits. However, the IFQ program did not increase revenues relative to the regulated open-access system.
... The fact that local species tend to be sold in fresh product forms ) and that some outlets have a significant preference for stable supply , can further amplify the market impact and community impact of misalignments between production and consumption. In some fisheries the production is frozen or preserved because of a short fishing season due to biological migration patterns (Pettersen and Asche 2020) or the regulatory system (Homans and Wilen, 2005), thereby reducing prices and income. Extending a harvest season is an approach to improve the market potential for fishers or aquaculture producers, but how effective it will be in generating more revenue depends on the demand patterns (Birkenbach et al. 2020;Kumar et al., 2021). ...
... For instance, the Maine urchin fishery is timed with the peak export market to Asia (Miller 2021). Seasonal closures to fishing create volatility in species availability and price (Dahl and Oglend 2014) and may prevent more valuable market segments from being served (Homans and Wilen 2005;Pincinato et al. 2022). The magnitude of these impacts will also be influenced by potential substitutes and other demand characteristics (Garlock et al., 2020;Birkenbach et al. 2020;Asche et al. 2022a). ...
Article
Seasonality is a natural feature of wild caught fisheries that introduces variation in food supply, and which often is amplified by fisheries management systems. Seasonal timing of landings patterns and linkages to consumption patterns can have a potentially strong impact on income for coastal communities as well as import patterns. This study characterizes the relationship between seasonality in seafood production and consumption in the United States by analyzing monthly domestic fisheries landings and imports and retail sales of farmed and wild seafood from 2017 to 2019. Analyses were conducted for total seafood sales, by product form, by species group, and by region of the United States. The data reveal strong seasonal increases in consumption around December and March. Seasonal increases in consumption in Spring and Summer occurred in parallel with domestic fishing production. Domestic landings vary by region, but most regions have peak fishing seasons between May and October. Alaska has the largest commercial fishery in the United States and seasonal peaks in Alaska (July/August, February/March) strongly influence seasonality in national landings. Misalignment between domestic production and consumption in some seasons and species groups creates opportunities for imports to supplement demand and lost opportunities for domestic producers.
... Individual fishing quotas (IFQs) provide harvesting rights that alter fishers' incentives toward maximizing profits for their quota instead of maximizing their share of the catch (Grafton et al. 2006). The benefits of removing the competitive race to fish can appear in at least three dimensions: cost can be reduced (Grafton 1996), the harvest season can be extended (Homans and Wilen 1997), and generating higher-quality products can increase ex-vessel prices and possibly also harvesting costs (Homans and Wilen 2005). Moreover, when the IFQs are transferable, there are incentives to reduce overcapacity (Arnason 1990), although the incentives are limited when the transferability is restricted because of social considerations (Kroetz, Sanchirico, and Lew 2015). ...
... Individual fishing quotas (IFQs) provide harvesting rights that alter fishers' incentives toward maximizing profits for their quota instead of maximizing their share of the catch (Grafton et al. 2006). The benefits of removing the competitive race to fish can appear in at least three dimensions: cost can be reduced (Grafton 1996), the harvest season can be extended (Homans and Wilen 1997), and generating higher-quality products can increase ex-vessel prices and possibly also harvesting costs (Homans and Wilen 2005). Moreover, when the IFQs are transferable, there are incentives to reduce overcapacity (Arnason 1990), although the incentives are limited when the transferability is restricted because of social considerations (Kroetz, Sanchirico, and Lew 2015). ...
... Regulators in many countries have adopted Rights Based fisheries management as a means of addressing the problem of open access and excess capacity 1 inherent in common property fisheries. Rights Based fisheries management holds the potential of improved efficiency, productivity and profitability (Arnason et al. 2008). 2 Numerous theoretical economic papers have developed the structural foundation and defined the possibilities for capturing rent and improving the production process within a Rights Based management system (Dupont and Grafton 2001;Homans and Wilen 2005;Arnason 2011;World Bank 2017;World Bank and FAO 2009;Arnason et al. 2018). Success of the new strategy depends on setting biologically sustainable total catch levels (TAC), internalizing externalities associated with open access and allowing market incentives to guide access, timing and quality of catch. ...
... For blue whiting and capelin, there is a significant shift towards the higher priced consumption market in the last period. We suspect that improved handling and storage capability has supported this value shift (Homans and Wilen 2005). Figure 2 shows fish stocks development over the period 1994-2013 for six major species, for the purse seine fleet. ...
Article
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Regulators in many countries have adopted individual quotas as a means of dealing with the open access problem inherent in fisheries. The Norwegian Purse Seine fishery has evolved over the last 40 years from an open access fishery to a Rights Based management system with individual vessel catch quotas assigned to all major fish species. Regulations do allow for merging vessel quota. The purpose of this paper is to employ an index approach to decompose vessel revenues and costs by factor components. The index approach can measure the importance of prices, output and regulatory changes impacting productivity and provides insight into changes in a mature IVQ fishery. The current study uses a large individual vessel data set for the period 1994–2013. Results show that over time output prices have been the main drivers associated with increased revenues. We correlate output prices with an evolving IVQ fishery, and changes in harvest and demand conditions. Ongoing capital investment, not offset by increased harvest, has seen productivity decline in the early periods of the study but some recovery towards the end of the period.
... The first-movers are, however, well-positioned when it comes to exploiting the institutional changes that will expectedly take place to protect the snow crab resource for the firms (see Fig. 1). To protect the fishers against a race to fish (Homans and Wilen, 2005), the owner of the natural resource, i.e., the Norwegian State, has historically initially distributed quotas to fishers for free (Johnsen and Jentoft, 2018). However, this is conditioned upon the fact the players must have a track record of fishing and are still active fishers, as required by the Norwegian Participation Act of 1999. ...
... Introduction of ITQs (e.g., based on the snow crab vessels' catch history) has the potential to increase the firms' future profitability, making it easier to obtain external financing to streamline operations and reduce the race to fish (Homans and Wilen, 2005). Furthermore, an ITQ regime will create barriers of entry, and thus protect incumbent firms (Porter, 2008). ...
Article
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When the first Norwegian commercial catch of snow crabs was taken in the Barents Sea in 2012, an unexpected opportunity arose to create a new, profitable natural resource-based industry. However, hidden under the surface were massive biological, technological, and institutional uncertainties. This study first explores what motivated the entrepreneurs to invest in an industry exposed to extreme uncertainty and which firm and vessel resources were necessary to operate. The findings uncovered that most of the entrepreneurs had already exited another fishery with a profit. Thus, they were looking for new attractive business opportunities where they could apply resources and capabilities already accumulated. Furthermore, this study asks if there have been any survival-threatening challenges so far in the industry. The findings show that increased competition and the Russians closing the Loophole dramatically changed the opportunities for profitable fishing. Finally, the study discusses whether the players have the potential to gain a sustained institution-based first-mover advantage (FMA), i.e., a gratis fishing quota. It is argued that the snow crab vessels have positioned themselves into a historical stream of events, which can, at best, give rise to a gratis institutional protection of a valuable natural resource. Thus, if the vessels are allocated free individual transferable quotas, they will secure a sustained FMA, as a similar event is unlikely to occur in the future. Finally, in the paper, findings and implications are discussed.
... Timing of catch within the fishing year can have important implications for revenues generated by the fishery, product forms, and response of the fishery to policy changes (Grafton et al. 2000;Homans and Wilen 2005;Smith et al. 2008;Huang and Smith 2014). Some theoretical and empirical bioeconomic models have demonstrated the importance of within-season incentives-including biological conditions, stock effects, discounting, seafood markets, and congestion externalities-in determining these catch patterns (Clark 1980;Boyce 1992;Fell 2009;Valcu and Weninger 2013). ...
... Saithe and haddock landings are statistically less spread out than cod but comparable to each other + p < 0.10; *p < 0.05; **p < 0.01; ***p < 0.001 England haddock contracted (Birkenbach et al. 2017). Single-species theory of IFQs and associated market incentives predicts the average effect but cannot account for these mixed results (Homans and Wilen 2005). By modeling the period prior to allocating IFQs as one in which harvesters make sequentially myopic decisions, the mechanisms in the same model developed above can account for the possibility that some fisheries experience season compression while others experience decompression. ...
Article
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Fishers face multidimensional decisions: when to fish, what species to target, and how much gear to deploy. Most bioeconomic models assume single-species fisheries with perfectly elastic demand and focus on inter-seasonal dynamics. In real-world fisheries, vessels hold quotas for multiple species with heterogeneous biological and/or market conditions that vary intra-seasonally. We analyze within-season behavior in multispecies fisheries with individual fishing quotas, accounting for stock aggregations, capacity constraints, and downward-sloping demand. Numerical results demonstrate variation in harvest patterns. We specifically find: (1) harvests for species with downward-sloping demand tend to spread out; (2) spreading harvest of a high-value species can cause lower-value species to be harvested earlier in the season; and (3) harvest can be unresponsive or even respond negatively to biological aggregation when fishers balance incentives in multispecies settings. We test these using panel data from the Norwegian multispecies groundfish fishery and find evidence for all three. We extend the numerical model to account for transitions to management with individual fishing quotas in multispecies fisheries. We show that, under some circumstances, fishing seasons could contract or spread out.
... With the two sources of sardines (domestic fishery and imports) and the two different final markets (canned and fresh), the degrees of substitution and price transmission are of substantial interest. It is well known that in a poorly managed fishery, fishing effort increase strongly when revenues increase (Homans and Wilen, 1997), and the potential revenue is influenced by which market is being served (Homans and Wilen, 2005;Smith, 2012). Hence, as there is a high fishing effort level, and no quota set for the Brazilian sardine stock, increased sardines prices due to limited supply from lower landings can reinforce the poor state of the stocks. ...
... In all estimated equations, the number of lags is chosen using the Schwartz Information Criterion (SIC). While this potentially allows for some autocorrelation, it is generally preferable with a somewhat limited data set to avoid over-parameterization of the model (Hamilton, 1994). ...
... With the two sources of sardines (domestic fishery and imports) and the two different final markets (canned and fresh), the degrees of substitution and price transmission are of substantial interest. It is well known that in a poorly managed fishery, fishing effort increase strongly when revenues increase (Homans and Wilen, 1997), and the potential revenue is influenced by which market is being served (Homans and Wilen, 2005;Smith, 2012). Hence, as there is a high fishing effort level, and no quota set for the Brazilian sardine stock, increased sardines prices due to limited supply from lower landings can reinforce the poor state of the stocks. ...
... In all estimated equations, the number of lags is chosen using the Schwartz Information Criterion (SIC). While this potentially allows for some autocorrelation, it is generally preferable with a somewhat limited data set to avoid over-parameterization of the model (Hamilton, 1994). ...
Article
Seafood imports have increased strongly in emerging economies during the last decades. However, the impacts of increased imports on price determination process, local fishers’ income and fish stocks have received limited attention. This paper presents a market integration and price transmission analysis for the Brazilian sardine market, comprising the fresh and canned sardines segments, to shed light on these issues. Imports currently supply about one-half the sardines in the Brazilian market, and even more when the domestic fishery landings are low. The results suggest not only a fully integrated market but also a complete price transmission in both sardine value chains. Hence, import competition with domestic fisheries limit price increases in the domestic fishery and reduce fishers’ income and fishing effort. However, the canneries, consumers and fish stocks are better off.
... To address this issue, diverse options to manage access to the ocean and its resources exist. These options include for example models that suggest regulating the sea by combining instruments like quotas or harvest seasons with the behaviour of the industry including fishing capacity, biological factors such as biomass level and other factors such as market changes (Homans 1997;Homans and Wilen 2005). Individual Transferable Quotas (ITQs) are another example of tools that are used to manage access to fisheries and are designed to provide, to their owner, exclusive and transferable rights of a given portion of the total allowable catch of fish. ...
Thesis
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This thesis aims to expand knowledge regarding the socio-economic and political aspects of the western Indian Ocean (WIO) tuna fisheries at different levels - local, national, regional. The thesis was written at a time when ocean-based activities are high on the agenda of governments and other stakeholders in a wave of interests for the blue economy, including in Africa and in the Indian Ocean. With increasing signs of collapse of some tuna stocks in the WIO, the thesis unveils the complexities of managing fishing activities of a highly valuable and mobile marine species such as tuna. To this end, the research answers the question: How do socio-economic and political processes shape the management of tuna fisheries in the Western Indian Ocean? To respond to this question, I will look at three aspects: narratives around the state of tuna resources, access politics and regionalism. A political ecology approach is used for the research. Political ecology as a field of study pays particular attention to politics in its attempt to understand human-environment interactions. The study focuses on three countries in the WIO: Madagascar, Mauritius and the Seychelles. These countries were used to build a regional perspective. The thesis is based on empirical data collection and analysis, notably of documents regarding the fisheries, semi- structured interviews, and observations of fishing activities, landing at ports and decision- making during regional meetings. The thesis makes three main arguments. Regarding the state of tuna resources, the thesis demonstrates that local fishers have developed strong discursive claims that they use to contest exploitation by industrial actors. Industrial actors, on the other hand, perceive themselves as unjustly accused of being the main responsible for overfishing in the region. In the case of tuna fisheries in the WIO, discursive power is not only exercised by usual powerful actors; small-scale fishers have built over the years a powerful narrative of tuna being overfished, with the support of actors such as NGOs and the media. As for access politics, the thesis highlights that while rights-based mechanisms set the foundations for the possibility of equal access to the fish through various legal arrangements, structural mechanisms present a clear picture of unbalanced and unequal access between the various actors of the fishery. These power relations and conflicts are aggravated by the materiality of the tuna resources and the western Indian Ocean. The thesis also argues that local and national stakeholders in the fishery are at different times and spaces both winners and losers; the foreign industrial actors are consistent winners; and the fish - or its sustainability - a consistent loser. With respect to regionalism, the thesis unravels the importance of both local socio-economic contexts, geopolitical interactions and their role in advancing or not regional cooperation and identity. It also shows that capitalist exploitation of the resources involving geopolitical actors strongly influences regional management and use of the resources. For regionalism to truly exist in the WIO, building stronger links between countries, the WIO people and through tuna fisheries is essential. For the WIO countries to continue to benefit from tuna fisheries, three action points are needed: take management measures that prioritise the long-term sustainability of tuna instead of political and economic interests; assess the impact of various types of tuna fisheries on livelihoods, food security and the state of resources; and promote regional initiatives that highlight the shared socio-economic and cultural values of tuna in the WIO region.
... In a natural resource context, rent dissipation can occur when open-access resources are over-extracted, leading to economically unsustainable use (e.g., Walker et al., 1990). For biological resources like fish, rent dissipation can also lead to collapse of the resource and even extinction (e.g., Homans and Wilen (2005). Gordon (1954)'s groundbreaking analysis of fishery grounds introduced his rent dissipation model, which sought to incorporate the concept of equilibrium into fisheries production analysis [1][2][3]. ...
Article
Full-text available
Despite apparent efficiency concerns, the use of agricultural insurance as a policy tool has surged in rural China. Its use offers a natural experiment to assess both economic theory of property rights and agricultural policy effectiveness, and to revisit the rent dissipation model that was originally developed to explain the role of property rights in unsustainable fisheries harvest decisions. We focus on evidence of resource overpricing behavior in the context of subsidized agricultural insurance, including evidence of a theoretically-expected increasing rent pattern. Our results reinforce the importance of transactions costs as a driver of economic inefficiency and highlight the role of social costs as an important factor to explicitly consider when designing agricultural policy. In particular, when employing the formal policy mechanism of rural agricultural insurance, we suggest that informal risk-bearing arrangements can be leveraged to reduce social costs behind apparent overpricing behavior and increase land users’ welfare consistent with intended policy goals.
... conflicts. Fisheries provides a classic case of open access dilemma [1], where market failures could arise because agents inabilities to prevent rent dissipation [2]. Most recent studies emphasized the capacity of local organizations to manage CPR through collective action. ...
Article
Fisheries as a common-pool resource (CPR) provides a classic case of open access dilemma: competition for yields is often fierce and the absence of access management could lead to conflicts. Availability, quality, and diversity of fishery resources in sufficient quantities are the foundation of fisheries management for present and future generations. Indonesia’s governing body, or more broadly, the governance, should be the moving force in producing policy outcomes involving coordination of conservation efforts to regulate extractive uses of natural resources. This paper briefly reviews the Indonesian fisheries policy as a CPR, its indicators, and its implication for the local fishing ecosystem.
... The improvement of the quality of landings in a pooling system was also reported in Sakai et al. [48]. Other studies find similar quality improvements in catch share fisheries [26,6]. ...
... This is often a challenge for aquaculture producers in the US, where the harvest is dependent on the growth cycle (Surathkal and Dey 2020; Hanson 2020). The parallel to fisheries with a race to fish is obvious (Anderson 2002;Homans and Wilen 2005). Garlock, Nguyen, et al. (2020) discuss in the case of US aquaculture production how potential production faces three competitive scenarios: it can create new market segments, it can win market share from domestic wild fish, and it can win market share from imports. ...
Article
The US is the world’s largest seafood importer by value, with an increasing share of imports composed of farmed seafood. Despite numerous policy initiatives, production and growth in the US aquaculture sector is limited, and there is a significant literature discussing potential explanations. In this paper the recent success of imported Branzino is used to show that the market is not a constraint. Branzino is a portion-sized white-fleshed fish primarily farmed in the Mediterranean, with no obvious equivalents produced in the US. Since the turn of the century, imports have grown from zero to almost 10,000 metric tons, a quantity that would have made it the fourth largest farmed fish species if produced in the US, and all is imported fresh. From 2015 when the quantities became more significant, the species entered the large whitefish market, although with a significant price premium relative to tilapia, the largest species in this market, indicating that the opportunity to create separate niches in the seafood market is limited.
... Catch-shares management defines a fishery-wide total allowable catch (TAC) and then allocates transferable shares of that catch to vessel owners or other fishery participants. This governance approach has a robust record of improving the economic efficiency of fisheries, with economists and fisheries scientists documenting a variety of benefits from catch shares including more cost-efficient harvesting, longer seasons, increases in product quality, safer working conditions, reduced stock variability, and better tracking of management targets (1)(2)(3)(4)(5)(6). ...
Article
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Significance Rights-based management reforms in fisheries have attracted controversy regarding the unequal distribution of their economic benefits, but systematic quantitative evidence has been lacking due to data limitations. Our research leverages a longitudinal dataset to compare payments to captains, crew, vessel owners, and owners of harvest quota in the Bering Sea crab fisheries both before and after implementing individual transferable quotas (ITQs). This paper provides a fishery-wide accounting of returns to these diverse stakeholder groups at the vessel level. The results underscore the importance of considering the distribution of payments to different stakeholders within each vessel as well as heterogeneity in payments across vessels. Our approach provides a model for collecting and analyzing data on distributional outcomes for other fisheries.
... Fisheries dynamics emerged as a research area by the 1960s [19,20] and still thrives today. Examples of recent applications include a model that shows what happens when effort responds to open access incentives and when regulators respond to increasing effort by mitigating its potential harmful effects on biomass safety [21]; modification of the Beverton-Holt formulation [19] to allow study of populations experiencing a seasonally fluctuating environment, compared to a carrying capacity assumed constant year-round [22]; and a model that shows how investments in substitutability by augmenting the stock of knowledge affect the value of natural capital [23]. ...
Article
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The objective is to provide an interpretive reading of the literature in resource scarcity and sustainability theory from the nineteenth century to the present time, focusing on shifts that have occurred in problem definition, conceptual framing, research tools applied, findings, and their implications. My reading shows, as one would expect, that the discourse has become more technical and the analysis more sophisticated; special cases have been incorporated into the mainstream of theory; and, where relevant, dynamic formulations have largely supplanted static analysis. However, that is barely scratching the surface. Here, I focus on more fundamental shifts. Exhaustible and renewable resource analyses were incorporated into the mainstream theory of financial and capital markets. Parallels between the resources and environmental spheres were discovered: market failure concepts, fundamental to environmental policy, found applications in the resources sector (e.g., fisheries), and renewable resource management concepts and approaches (e.g., waste assimilation capacity) were adopted in environmental policy. To motivate sustainability theory and assessment, there has been a foundational problem shift from restraining human greed to dealing with risk viewed as chance of harm, and a newfound willingness to look beyond stochastic risk to uncertainty, ambiguity, and gross ignorance. Newtonian dynamics, which seeks a stable equilibrium following a shock, gave way to a new dynamics of complexity that valued resilience in the face of shocks, warned of potential for regime shifts, and focused on the possibility of systemic collapse and recovery, perhaps incomplete. New concepts of sustainability (a safe minimum standard of conservation, the precautionary principle, and planetary boundaries) emerged, along with hybrid approaches such as WS-plus which treats weak sustainability (WS) as the default but may impose strong sustainability restrictions on a few essential but threatened resources. The strong sustainability objective has evolved from maintaining baseline flows of resource services to safety defined as minimizing the chance of irreversible collapse. New tools for management and policy (sustainability indicators and downscaled planetary boundaries) have proliferated, and still struggle to keep up with the emerging understanding of complex systems.
... tonnes if discount rate is increased from 1% to 10% (Fig. 3). The optimum dynamic strategy for a fishery can differ depending on the prevailing rate of discount at a time or at a place [46,47]. The discount rate determines the potential value of future fishing benefits; therefore, increasing the discount rate could promote unsustainable fishing activities and harvesting. ...
Article
Hilsa (Tenualosa ilisha), the choicest table fish of Indian subcontinent, provides livelihood for 2.5 million fishermen of Bangladesh and 0.46 million fishermen of West Bengal (WB), India. Hilsa fishery contributes around 1% to the GDP of Bangladesh. Years of over-exploitation of Hilsa fishery through open access has led to an unprecedented decline in Hilsa stock in recent decades. The study aims to investigate the economic efficiency and existing management practices of Hilsa fisheries of WB (India) and Bangladesh. The Gordon-Schafer surplus production model was used to derive a deterministic bio-economic model on Hilsa fishery from the catch-effort-cost-price data of WB (India) and Bangladesh collected between 2002 and 2015. Hilsa populations of two countries have a similar growth rate (r = 0.224). Hilsa catchability coefficient (q) of Bangladesh is 0.000003553, which is about 20 times lower than WB (India) where it is 0.00007147. Fishing effort and Hilsa yield are not significantly associated with each other in WB (India) but in Bangladesh fishing effort has significant positive impact on Hilsa yield. If effort is increased by 1%, the yield in WB (India) may decrease by −1.12% whereas in Bangladesh the same may increase by 8.48%. Results indicate variable habitat conditions and biology of Hilsa are possibly more important for Hilsa yield of Bangladesh compared to WB (India). A 10–20% discount rate is sustainable option for Hilsa fisheries of WB (India) and Bangladesh. The stock reduction analysis demonstrates that WB (India) stock is severely overfished while Bangladesh stock exhibits stability in the overfishing zone. A trans-boundary management of Hilsa fishery is recommended which includes forming a joint scientific council, joint monitoring and facilitating data availability, imposing similar discount rates, ban periods, mesh sizes, and introduction of effort and landing taxes.
... As discussed by Costello et al. [10] and Hilborn and Ovando [11], open access is not conducive for healthy fish stocks or stock recovery. It is expected that poor environmental status and weak fisheries management systems also limit economic performance as poorer stock status increases harvesting costs and limits market opportunities [10,31,[33][34][35]. Given the three pillars of sustainability are positively correlated, it is not surprising that Africa also scores poorly in the social dimension. ...
Article
The Fishery Performance Indicators is a data collection tool that allows collection of comparable fisheries data in the environmental, economic and community pillars even under data poor circumstances. In this paper, data collected for 35 fisheries in 14 African countries are analyzed and compared to global averages. Similar to a previous global analysis, the different pillars of sustainability were positively correlated. The results are even more pronounced for Africa than globally. The only exception is the relationship between environment and community pillars in Africa, which is statistically insignificant, and this is also the case for open access fisheries globally. The average scores in Africa are lower than global average scores in all dimensions, which is not unexpected given the high number of open access fisheries. However, factors that are not fisheries specific may be more important for this result, suggesting that a country’s governance, economic conditions, and development status are important for fisheries performance.
... Catch shares generally slow the race to fish (ibid.). A slower fishing pace also promotes targeting of higher-quality fish that are sold fresh at better prices over a longer period of the season [46]. By making individual catch shares transferable, divisible, and permanent (i.e., ITQs), Grafton [28] argued that it is in the quota holders' interest to preserve the fish stocks since larger stocks mean more profitability for the fishermen. ...
Article
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In fisheries, formal institutions are intentionally implemented to protect the stock of fish and to better adjust the fleet's catch capacity to the resource base. The present study, however, explores how the same institutions also influence competitive forces that shape industry attractiveness and the profitability of fishing boats. The empirical context is a sample of Norwegian seagoing purse seiners during a period that saw the introduction of two different individual transferable quota (ITQ) variants, the so-called unit quota system (UQ) system and the structural quota (SQ) system. The study analyses and compares the profitability of the vessels before ITQs were implemented in Norway (1985-1995), then under the original UQ regime (1996-2004), and finally under the present SQ regime (2005-2018). The findings disclose that the average profit margin was 8.8% in the pre-quota period, 20.6% in the UQ period and 24.3% in the SQ period. The differences between the pre-quota period and the two quota periods were significant (p < 0.000), whereas the difference between the two different quota periods were not (p = 0.068). Thus, the findings of this study draw a picture of an economically thriving industry after the introduction of ITQs. The paper argues that the significant profitability improvements achieved is rooted in the institutions that are established, which provide the players with essentially free and protected access to a common and valuable fish resource. Finally, implications of the findings are discussed.
... (Anderson, 1977;Clark, 1975;Gordon, 1954;Hannesson, 1993;Walden, 2014), the mechanism of its formation and the impact on profit and on economic efficiency continue to be the subject of discussions (see e.g. Homans, 2003). Fishing rent can be calculated as the difference between the market value of fishery products and the costs associated with its production and sale (Clark, 1990), i.e. it is identical to profit. ...
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The purpose of the research is to find the reasons that led to unusually high profitability in Russian fisheries in 2014-2016. The analysis showed that the main driver of profitability growth is the growth of domestic prices for fish and fish products, which outstripped the overall food inflation. Governmental support for fishing led to a rapid increase in fishing rent, which was almost entirely appropriated by fishing companies. But such a basis for the growth of Russian fishing is unstable in the medium and long term.
... This may be further complicated by the fact that fishing vessels often hold quotas for several different species with sometimes overlapping seasons which may lead to inefficiency because fishers may choose to fish too much of some species relative to other species, as found by Asche and Roll (2018) for the Norwegian trawler fleet. This indicates that fishery management excessively focused on input restrictions and profitability in the harvesting sector may result in landings of fish of reduced quality, which may affect negatively the opportunities for value-adding and marketing in subsequent links in the value chain (Larkin and Sylvia, 1999;Homans and Wilen, 2005). Thus, regulators risk missing out on the FAO's request to utilize fish stocks in a way that contributes to the nutritional, social and economic value of wild fish stocks (Food and Agriculture Organization (FAO, 2018). ...
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This study explores trade-offs between fish quality, fishing efficiency, costs and profitability across three different vessel groups in the Norwegian groundfish fishery, that is, vessels fishing with bottom trawls, longlines and Danish seines. The results of hedonic price analysis at the ex-vessel level of the value chain indicate substantial differences in fish quality as Atlantic cod caught with longlines obtain price premiums of 15.0 % and 12.6 % compared with bottom trawling and Danish seining, respectively, holding other variables constant. For haddock, longlining obtains a price premium of 20.0 % compared with Danish seining and 13.3 % compared with bottom trawling. However, despite better quality and prices, the costs of fishing are substantially higher for longliners than for bottom trawlers and Danish seiners, which explains the differences in profitability favoring the more technically efficient bottom trawlers and Danish seiners. Policy implications are discussed considering trade-offs between fish quality, ex-vessel prices and vessel profitability. In a highly regulated fishery such as the Norwegian groundfish fishery, with individual vessel and vessel group quotas based on historical fishing rights, policy intervention is important for optimal use of limited fish stocks but is not necessarily straightforward.
... In particular, one would expect it is harder for exporters of 2. Better control with the production process facilitates targeting more valuable markets and product forms. This can also be observed as a consequence of improved management in fisheries as exemplified by Pacific halibut (Homans and Wilen 2005) and Icelandic cod (Knútsson, Kristofersson, and Getson 2016). ...
... In addition, the live-stored cod gives a price premium 1 There are, of course, a number possible explanations for this. For instance, Homans and Wilen [64] show how a race to fish leads to the higher price fresh market not being served for Pacific halibut, and Asche and Smith [12] provide a more general discussion with respect to the relationship between regulatory system, markets and quality. 2 This is a challenge in many markets for all fish. For instance, Shamshak et al. [65] discuss how cod and most other wild species is declining in importance in the U.S. market, and is replaced by farmed fish. ...
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A R T I C L E I N F O Keywords: Live storage Cod farming Wild-caught quality model Business model portfolio A B S T R A C T This study describes three fundamental quality-enhancing business models in the Norwegian cod industry, which challenge the traditional and dominant volume-focused wild catch model: a quality-enhancing Live storage model, a quality-enhancing Farm raised model, and a Wild-caught Quality model. Furthermore, the study explores whether the models are sustainable based on their performance over almost two decades along three critical dimensions: capability to counteract seasonal fluctuations, ability to obtain a premium price, and growth potential. Finally, the paper outlines managerial and political implications of the findings.
... The issue of rent creation and distribution in open-access fisheries has not received much scholarly attention. Instead, since the seminal paper by Gordon (1954), it has generally been assumed that the economic rent will dissipate as an inevitable consequence of openaccess fisheries (Hannesson 1981;Homans and Wilen 2005). The rent dissipation will normally be caused by either a build-up of excessive inputs, which raises the costs on the production side, or more inferior product types, which leads to lower revenues on the This thesis also shares the view that rent creation and distribution is possible in openaccess fisheries. ...
... For this reason, in most cases, these resources are regulated: harvest is limited by regulation. This regulation gives rise to rents that are reflected in the high value of fishing quotas (Homans and Wilen, 2005;Andersen et al., 2010;Arnason, 2012). Fish and forest resources are thus examples of regulation rents. ...
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Economic rents have long been identified as an efficient tax base. In addition, the recent literature documents that rent income is highly concentrated and that rents are quickly increasing. Rent taxation thus seems attractive for reasons of both efficiency and equity. Nevertheless, rent taxation remains a marginal topic in research and policy making. In a systematic review of the neoclassical literature on different rent types, we find that some types of rents reflect inefficiencies and should thus be minimized, while others reward investments and should be supported in line with social welfare. What remains for taxation are land rents, one of the few true scarcity rents. Land rents have significant potential to improve the efficiency of the tax system. We then begin to develop a comprehensive theory of land rent taxation by identifying relevant efficiency and equity effects. The interaction of many of these effects remains unexplored, which might explain policymakers' hesitation in using land taxes to date.
... Indicators of socioeconomic outcomes measure how the human component of the fishery, including fishers, fishworkers, other stakeholders, and fishing communities, is faring as a result of fishery management institutions. Implementing or improving fishery management affects the economic and social dimensions of fisheries in myriad ways, and while improving the biological sustainability of a fishery can also result in improvements across economic and social dimensions [8][9][10][11][12][13], tradeoffs are frequently required between or among certain economic and social objectives (e.g., Refs. [14,15]). ...
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As linked social-ecological systems, evaluating the socioeconomic outcomes of fisheries management is essential to understanding fishery performance. While a number of tools have been developed in recent years to evaluate social and economic outcomes of fisheries, many require extensive data collection, making them difficult to implement on a large scale, while others rely on existing data, limiting their applicability to data-limited fisheries. Additionally, socioeconomic objectives of fisheries are likely to differ substantially between fisheries of different scales operating in different geographic and socio-cultural contexts, making the development of universal indicators and comparing results between fisheries challenging. This paper describes a novel tool for evaluating and tracking fishery management socioeconomic outcomes by linking outcomes directly to management objectives. Indicators of these outcomes are scored by key informants and weighted according to the importance of particular fishery management objectives, resulting in standardized scores of fishery management outcomes. The resulting scores can be compared between fisheries and tracked over time. This tool was tested in two disparate fisheries on the U.S. West Coast and in Sinaloa, Mexico. Results of testing demonstrate that the outcomes generated similar scores, although the primary objectives of each were very different, permitting comparison of the performance of the two fisheries. The results for the West Coast groundfish fishery were groundtruthed using existing data to assess reliability of survey scores. This tool furthers the landscape of fishery evaluation by enabling comparison of performance among dissimilar fisheries and by facilitating the rapid assessment of social outcomes of fisheries management.
... Regulated open access refers to the imposition of biologically motivated regulations on fishers, who would otherwise enter and exit harvesting at will [11]. A number of modeling approaches have explored the economic implications for regulating an open access fishery, based on limiting the total catch through restricting entry and season length [11][12][13][14]. A common assumption is that the allowable quota on harvesting is set relative to the biomass of the fish population [13]. ...
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This paper explores how regulation of an open access fishery influences the value of a coastal habitat that serves as breeding and nursery grounds. A model of the fishery supported by a coastal wetland is developed, which includes a quota rule that restricts harvest to a fixed proportion of the current stock. The model is applied to mangrove-dependent shellfish and demersal fisheries in Thailand. The value of the welfare effects associated with a change in a supporting coastal habitat is influenced significantly by whether or not the regulatory quota can adjust in response to these changes. Welfare losses are considerably higher when the quota is fixed as opposed to when it can be adjusted. With the restriction in place, effort cannot change to offset the decline in biomass, and as a result, there is a much larger fall in harvest. In addition, the welfare losses are much larger for the shellfish compared to the demersal fisheries. The analysis illustrates that imposing a regulatory rule on an open access fishery has important implications for valuing any linkage between coastal breeding and nursery habitat and a near-shore fishery.
... However, this is just the first step in the seafood supply chain. As demonstrated by Homans and Wilen (2005), which supply chain is served can have substantial impact on fishers' income. More important for fisheries policy is that where the fish are landed strongly influences the impact of the industry in terms of jobs and economic activity in coastal communities. ...
Article
A vast literature in fisheries economics focuses on drivers of fishers' behavior with limited attention given to what happens once the fish are landed. This often strongly contrasts with a main policy focus on coastal communities, with fisheries management as an additional instrument in supporting livelihoods. This study shows that the number of Norwegian landing plants has been reduced in recent decades, and that quantity landed, annual plant operation time, and attracting smaller vessels decrease the probability of exit. Interestingly, plants in communities with additional landing locations have lower probabilities of exit, pointing to an industry cluster effect. © 2019 by the Board of Regents of the University of Wisconsin System.
... Processing plants also have to preserve and distribute large volumes within limited capacity and time [19]. This process is similar to the value destruction due to the race to fish described by Ref. [20]. Hence, the focus on CPUE, low cost based on the migration pattern of the cod and a fleet dominated by small vessels has institutionalized a volume logic in both harvesting and post-harvesting processing in the cod industry. ...
Article
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Wild cod is a scarce and valuable natural resource. However, cod fishing along the coast of northern Norway has largely been about fishing as much as possible with the least possible resource effort, and thereby at the lowest cost. This traditional volume logic is rooted in biology, meteorology, and small scale capture technology. The logic is further enhanced by new large scale capture technology and a raw fish market where quality differences essentially are not reflected in the price of the fish. The intention of this paper is to address the extent to which the institutional framework in the Norwegian cod fisheries encourage or moderate this volume logic. In the paper fishing gear usage and the post-harvest industries’ product mix the last decade are analyzed. The findings show that the volume logic is still at work although this result in reduced quality of the catch landed, a product mix dominated by low-end products, and limited socio-economic value creation. This institutionalized volume logic is highly resistant to change. Moreover, the paper address how a competing and more customer-oriented quality logic can help create greater export values in Norwegian cod fisheries. Finally, implications are highlighted for how institutional measures can moderate the dominant volume logic and strengthen the emerging quality logic more in line with key policy objectives for Norwegian cod fisheries.
... Several studies have examined the margins of change associated with catch shares (27)(28)(29)(30)(31), including the effects of limits on quota transferability within catch-share programs, which are often implemented to meet social objectives (32); however, with few exceptions (7,21), these studies focus only on the fishery (or fisheries) in which catch shares were implemented and generally do not consider the potential implications of leakage. In contrast, we estimate the scope of leakage (i.e., the set of impacted fisheries), changes in participation beyond the catch-share fishery, and changes in economic connectivity that coincide with catch-share implementation. ...
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Significance Ecosystem-based fisheries management provides a framework for incorporating ecological linkages between fisheries into policymaking. However, relatively little attention has been given to economic linkages between fisheries: If fishers consider multiple fisheries when deciding where, when, and how much to fish, there is potential for management decisions in one fishery to generate spillover impacts in other fisheries. We evaluate changes in participation and economic connectivity of fisheries following the implementation of Alaska’s catch-share programs. Catch shares are increasingly used worldwide and typically implemented and evaluated on a single-fishery basis. We provide evidence that changes beyond the catch-share fishery have occurred, suggesting that spillovers should be considered when designing and evaluating catch-share policies.
... Like other catch share systems, IFQ management attempts to counteract the harmful economic incentives associated with the race-tofish. It does so by focusing individual harvesters on increasing their profit per pound by improving market timing and handling practices to get the highest prices (Homans & Wilen, 2005) and by minimizing harvesting costs. ...
Article
Wild capture fisheries produce 90 million tonnes of food each year and have the potential to provide sustainable livelihoods for nearly 40 million people around the world (http://www.fao.org/3/a-i5555e.pdf). After decades of overfishing since industrialization, many global fish stocks have recovered, a change brought about through effective management. We provide a synthetic overview of three approaches that managers use to sustain stocks: regulating catch and fishing mortality, regulating effort and regulating spatial access. Within each of these approaches, we describe common restrictions, how they alter incentives to change fishing behaviour, and the resultant ecological, economic and community‐level outcomes. For each approach, we present prominent case‐studies that illustrate behaviour and the corresponding performance. These case‐studies show that sustaining target stocks requires a hard limit on fishing mortality under most conditions, but that additional measures are required to generate economic benefits. Different systems for allocation allow stakeholder communities to strike a locally acceptable balance between profitability and employment.
... Based on Apr 2004-Apr 2016 median monthly values, Spanish retail fresh hake prices were more than twice as high as the respective domestic wholesale prices, more than three times higher than harbour prices, and nearly eight times higher than port-sale prices of frozen hake from the three south Atlantic exporters. However, these differences do not take into account product changes across, and partly within, levels of the market chain(Homans and Wilen 2005). ...
Article
Determinants of vessel efficiency and vertical/horizontal price transmissions in consumer markets are key elements for assessing the viability of a fishery, particularly for a small fishery-dependent economy. An open issue also concerns whether vessel efficiency levels influence export prices. The paper sets off with a review of evidence from other countries, followed by hypotheses for the Falkland Islands. To test these hypotheses, the analysis first applies a stochastic frontier model accounting for latent skipper skills, to a monthly 2008–2016 panel of fishing vessels operating in the Islands. Using estimated vessel inefficiency by licence type as a proxy indicator of product quality and extra costs of transhipment, the study moves on to examine price adjustments of Falkland hake and other finfish sold at Spanish ports vis-à-vis two major south Atlantic hake supplier countries—Argentina and Namibia—and local traders. Lastly, based on full sample and rolling widow regressions on 2004–2016 monthly data, the analysis formulates and estimates threshold autoregressive models for the hake value chain in Spain, as the largest European port-of-entry and market for fresh and frozen hake, including from the Falklands. Once different output frontiers are accounted for, vessels with licences for hake as their main target do not outperform, in terms of technical efficiency, less-valued finfish vessels. Besides evidence of increasing integration within supplier and consumer markets, econometric results suggest some degree of price ‘leadership’ by Namibian hake exporters and asymmetric behaviour in short-run price adjustments by Spanish retailers. However, producer and consumer markets turn out to be weakly interlinked.
... The larger vessels are generally managed by IFQs, with various degrees of transferability. This tend to increase value as harvest season is expanded in fisheries managed with individual vessel quotas [13], a feature that allow optimization along more margins to reduce cost as well as target more valuable markets [25,6,14,37]. In addition, it is well known that fishing is risky and the hours are inconvenient. ...
Article
Fishers are often perceived to be poor, and low income levels are used to justify subsidies and other types of direct and indirect income support to maintain coastal communities. In this study fishers’ income levels are investigated in four Nordic countries; Denmark, Iceland, Norway and Sweden for different types of fishers and vessels and in comparison to alternative occupations. The most important result is that fishers in these countries are doing relatively well, and only in Sweden is the fishers’ average income level below the average national income. Within the fleets, there are substantial differences. Owners of coastal vessels tend to have the lowest income, and also lower than crews. Owners as well as crews on larger vessels tend to do much better and in the largest fishing nations, Iceland and Norway, they do especially well.
... 659 Consistent catch management strategies will be favored in fisheries where daily processing capacity is 660 exceeded in abundant years, or spikes in catch lead to the erosion of product value (cf. Homans and 661 Wilen 2005). Further, even if total revenue increases under a management strategy, stabilizing catch 662 may minimize downside risk, the risk of catches so low that some participants become vulnerable to 663 bankruptcy, or are put in a position where they need to sell their fishing assets to deal with personal 664 financial shocks. ...
Article
We develop an economically sophisticated management strategy evaluation for four sockeye salmon (Onchorhynchus nerka) fishing districts in Bristol Bay, Alaska, to evaluate whether proposed increases in escapement goals — the number of fish allowed up each river to spawn — could improve fishery outcomes for the industry and the region. Higher escapements increase average runs toward biological maximum sustainable yield, but this is driven by infrequent years of very abundant runs. Our economic model shows processors do not add capacity in response to infrequent abundant runs. Therefore, interannual variance in district-specific catch increases because years with little or no fishing become more frequent to meet higher escapement in low-run years, but industry cannot capture greater value in the high-run years. In abundant runs, processors shift available labor to focus on high-volume, lower-margin products; in very abundant years, insufficient processing capacity allows additional fish to escape. Mobile driftnet vessels that can move to rivers experiencing high runs each year benefit, but district specialists in the small boat and set-net fleets are more vulnerable to years with little or no catch.
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In recent years, the approach to wild-caught fisheries management has expanded beyond traditional single-fishery management. This article examines potential market failures within the fisheries sector that may arise because of a failure to account for key features of wild-caught fisheries and that can be addressed by an expanded scope. These market failures include multiple species caught together, multiple fisheries targeting the same stock, and other ecological and socioeconomic interconnections within ecosystems. We also examine market failures that may arise when external factors such as climate change and species invasions are not considered in fisheries management policy or if policies do not consider multisector use of seascapes, linkages between water pollution and fisheries, and market failures that cut across fisheries and nonfishery sectors and involve the underprovision of publicly available data and a lack of information sharing along the supply chain. We find that policies that address these market failures typically have distributional effects; that is, there will be winners and losers, even if aggregate efficiency increases. We conclude that research and policy design need to explicitly consider equity-efficiency trade-offs when seeking to address market failures, and we propose policy and research priorities that support the sustainability of wild-caught seafood.
Article
The need for effective fishery management is growing worldwide due to the overexploited status of many fishery resources. While co-management between the government and fishers is considered a viable option, the performance of such a management is not well understood. This study describes the historical context, the current situation, and the price changes associated with the mackerel (chub mackerel Scomber japonicus, blue mackerel Scomber australasicus) purse seine fishery management in Japan’s EEZ waters of the North Pacific Ocean. This fishery is unusual in that an industry organization plays a major role in managing the total allowable catch (TAC) set by the government. Notably, the organization voluntarily introduced vessel-level monthly catch limits (CL) in 2007. This co-management system has been effective in adhering to the TAC. Moreover, we examine the price changes associated with the CL management by using difference-in-differences design where the prices in ports where vessels under the CL management land and where they do not are compared before and after 2007. Results indicate that the introduction of this management is associated with an increase in their mackerel price by 21.335 yen/kg (s.e. = 10.397), which virtually eliminated the price gaps with mackerel in other regions in Japan. Controlling for income, export price, and time trends do not change our result quantitatively. However, further study is needed to clarify the causal impact of the CL management, as the common trend assumption is likely to hold but the stable unit treatment value assumption is likely not in our setting.
Article
This paper examines an extreme voluntary cooperation institution called ‘pooling system’ which is designed to manage the Danish seine fishery in the Muroran region, Hokkaido, Japan. This institution requires all vessels to fish together and to share the revenue. This paper examines the historical context in which this unique management was established, details of current management practices, and their impact on the ex-vessel price and productivity of the fishery. Using a difference-in-differences design, we show that the pooling system raised the price of walleye pollock (Gadus chalcogrammus), the main target species, by around 24%, while it also raised the total landings per net by around 25%. The price increase is likely due to quality improvement, while the productivity increase is likely due to improved spatial allocation of fishing efforts. We argue that the existence of this unique management system for more than two decades is largely due to these large economic benefits. In addition, the small number of vessels and owners has played a major role in facilitating consensus building and discouraging shirking. Finally, the existence of a skipper with strong leadership was fundamental to the establishment of this system.
Article
The relation between fisheries subsidies and their effects on the level of resource extraction is widely discussed in extant literature. However, in addition to impacts on the level of fishing, the various types of subsidies can generate different incentives for greenhouse gas emissions, a subject that is still little explored. Thus, this article aims to evaluate the influence of fishing subsidies on the sector's CO2 emissions. It is worth noting that three groups of subsidies were evaluated, the beneficial (Good), the capacity-enhancing (Bad) and the ambiguous (Amb), classified by Sumaila et al. (2010), who proposed such a division based on the negative effects on sustainability of fish stocks. To this end, an annual data panel was constructed for 14 developed countries from 2005 to 2012. The Dynamic Panel method was adopted as empirical strategy as well as the estimator proposed by Everaert and Pozzi (2007) to correct possible biases associated with micronumerosity in dynamic models. The results indicate that Bad subsidies generally point to increased CO2 emissions. Amb subsidies, which are not clearly defined in the literature, have no significant relationship with emissions. Finally, Good subsidies are also inversely related to CO2 emissions from the fishing industry.
Technical Report
The effectiveness of place branding for value addition and improved pricing of fish species, usually done to benefit small-scale fishers in developing countries, is pivoted on a range of institutional, social, and ecological factors. The recent plan proposed by the Bihar State Department of Animal and Fish Resources has suggested place branding of fish species from different rivers of the Gangetic plains in the state. This plan’s motive of bringing direct profits to local fishers is well intended, but needs to account for the fact that in Bihar, riverine capture fisheries are open-access and with weak institutional control, and witness long-term conflicts over access to fishing areas. Importantly, the selection of some fish species for branding and its consequences can threaten endangered biodiversity, such as the Ganges River Dolphin, India’s National Aquatic Animal. This report explains in detail why the plan to brand the “Bachwa” fish from the Ganga River, is likely to have potentially damaging effects on biodiversity conservation efforts and fisheries management. We also suggest that the plan for the branding of Bachwa fish should be cancelled. We recommend some alternatives that may be considered in future plans for place branding of riverine fish species.
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The initial stage of the emerging Norwegian snow crab (SC) industry was characterized by excessive optimism, and this case study explores whether the early entrants have gained sustainable first-mover advantages. Unfortunately, the investments have not been profitable as the firms made a yearly average negative profit of more than 10% in the period examined. Accordingly, the early entrants have so far suffered first-mover disadvantages. Nevertheless, the modest economic start may be bad at predicting the future wealth-creating potential. This, however, will require the SC population of the Barents Sea to increase sharply. It will also require that the nations involved in fishing SC agree on the distribution of the total quota between them. Another institutional requirement is that a system of catch shares (e.g. individual tradeable quotas) is introduced in the Norwegian SC fishery to protect the strategic position of the players from outside intruders, and also efficiently block the rivalry between them. The SC fishers are engaged in an extremely risky business with a significant financial loss potential. In addition to risks related to the resource base and to national and international regulations, there are large risks associated with how SCs in the Barents Sea can be best captured, processed and sold. As a consequence, the firms participating in SC fishing need significant financial reserves to cover any future losses. Without such reserves, they must either choose to withdraw from the industry and consider the inflicted losses as sunk cost as some have already done, or they will risk bankruptcy.
Thesis
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Le contexte étudié est celui d'un système irrigué qui connaît une pénurie en eau structurelle. La thèse compare différentes règles d'allocation de l'eau et de taxation lorsqu'on tient compte des inévitables marges de manoeuvre dont disposent les irrigants, notamment en ce qui concerne la surface mise en culture, l'équipement ou la stratégie d'irrigation. Ces marges de manoeuvre peuvent engendrer une interdépendance entre les agriculteurs : les interactions qui en découlent sont déterminées à l'équilibre. De façon très générale, on peut définir des règles d'allocation de type ex ante, où chaque agriculteur reçoit une quantité d'eau indépendante de ses choix et de ceux des autres agriculteurs, et des règles de type ex post qui distribuent l'eau en fonction des choix effectués. Si les règles de type ex post permettent de bien valoriser l'eau sur l'ensemble du système irrigué et peuvent organiser un partage efficace du risque, elles créent aussi par la même occasion des interactions stratégiques qui aboutissent à un sur-assolement. Une comparaison est faite entre règles ex ante et ex post, avec des agriculteurs qui n'ont pas la même capacité à valoriser l'eau lorsque la ressource à partager est connue, et avec des agriculteurs d'aversions au risque différentes lorsque la ressource est incertaine. De plus, quand le coût d'audit du respect des allocations est important, le Gestionnaire doit mettre en regard l'acquisition de plus d'information pour diminuer l'importance de ces interactions, et le coût d'acquisition de cette information. Ces questions sont appliquées sur deux terrains d'étude : de petits périmètres irrigués en Tunisie centrale gérés par des associations d'irrigants, et le bassin de l'Adour dans le Sud-Ouest de la France, où la culture intensive du maïs provoque des tensions sur la ressource pendant l'été.
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This paper studies the role of middlemen in open-access fisheries and how the organization of the supply chains affects resource exploitation and the level and distribution of economic rent. Imperfect competition among middlemen can help ensure that fish stocks are not depleted, which is typically the case in open-access fisheries with competitive markets. Middlemen with market power can also induce higher economic rent for the supply chain in total, but these rents mainly benefit the middlemen. The supply chains of inshore anchovy and offshore skipjack tuna fisheries in Vietnam are used as empirical examples. The analysis shows that in the anchovy supply chain, the middlemen have insignificant market power and the stock is being overexploited. In the skipjack tuna supply chain, the middlemen have oligopsony power and the stock is higher than the level that produces maximum sustainable yield.
Chapter
Smart Mixes for Transboundary Environmental Harm - edited by Judith van Erp March 2019
Article
With the widespread implementation of catch shares (i.e., rights-based fisheries management) at the end of the twentieth century, economists have begun to examine empirical evidence about their performance. Yet despite documented positive outcomes and predicted gains from wider adoption of this approach, catch shares face persistent political opposition and criticism in the noneconomics literature. The debate surrounding catch shares focuses on equity, industry consolidation, nonlocal ownership of quotas, employment, and other impacts on fishing communities, but the evidence on both sides has been largely anecdotal. To inform this debate, it is important for economists and other researchers to produce rigorous analyses that quantify the effects of catch shares on employment, the distribution of economic value in the harvest and processing sectors, and other indicators of community well-being. We assess catch shares to identify research needs and guide policymakers. Using examples from the experiences of the United States and Argentina with rights-based fisheries, we demonstrate that a key challenge for researchers and policymakers is accounting for multiple species, globalization of seafood markets, and climate change. We urge policymakers to consider these forces and their impacts, along with available empirical evidence, when evaluating fisheries management options that balance efficiency and equity goals. © The Author(s) 2019. Published by Oxford University Press on behalf of the Association of Environmental and Resource Economists. All rights reserved. For permissions, please email: [email protected]
Article
This paper assesses the potential for rent generation in the North Sea herring fishery. The assessment distinguishes between rents and intra-marginal profits-the sum of which constitutes variable profits in the fishery. A bioeconomic model combining fish population dynamics and the economics of the fishery is constructed to allow the computation of these different components of profits. In order to assess the dynamics of both rents and intra-marginal profits, the model is computed under various assumptions with regard to price, costs, and discount rates. Potential total profits are measured at £88 to £89 million annually, of which rents make up about £87 million with intra-marginal profits measured in the order of only £2 million. The study further shows that, in this fishery, rent is dissipated mainly due to excess effort but also due to suboptimal stock size.
Article
The main focus in the inefficiency literature is on suboptimal input use and how this causes increased costs, due to technical and allocative inefficiency. Production or cost functions are then typically used to describe the underlying technology of the firm. The possible revenue loss, due to lower than maximum production levels and suboptimal output mix, has received substantially less attention. By using a revenue function to measure inefficiency, the focus, model and estimation technique presented in this article differ from those of previous studies. A shadow revenue model is used to decompose revenue inefficiency into its technical and allocative components, in which the allocative inefficiency is due to a suboptimal output mix. The approach is illustrated using panel data of Norwegian whitefish trawlers. The results reveal large inefficiencies, with respect to output levels as well as output mix, indicating that this can be an important part of the picture when investigating economic inefficiency. To identify the determinants of revenue inefficiency, we conduct a second-step regression, in which technical and allocative inefficiency is regressed upon a set of explanatory variables. The inefficiencies are partly explained by the management system and fleet structure.
Article
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A model of the commercial fishery, incorporating the microeconomic decisions of individual vessel operation, is developed and employed to predict the consequences of various methods of regulation, including: (i) total catch quotas; (ii) vessel licenses; (iii) taxes on catch (or effort); (iv) allocated catch (or effort) quotas. Among the principal predictions of the analysis are: (a) total catch quotas do not improve the economic performance of an open-access fishery; (b) limited entry results in distortion of inputs unless every input is controlled; (c) taxes and allocated transferable catch quotas are theoretically equivalent to one another in terms of economic efficiency, and both are capable in principle of optimizing exploitation of the common-property fishery.Key words: economics, fishery regulation, management, quotas, licenses, taxes, fishermen's quotas, common-property resource
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This paper illustrates how conjoint analysis can be used to model preference for food products, and applies the technique to the study of fresh and frozen salmon preference among buyers from two intermediary wholesale levels in New England. The degree of preference for specific attributes and levels of the products is compared. The paper also evaluates the performance and predictive validity of a traditional additive conjoint model, a hybrid model estimated using both ordinary least squares, and a maximum likelihood hybrid two-limit Tobit model.
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Economic analyses of individual transferable quota (ITQ) fisheries management traditionally have focused on the harvesting sector. However, harvester decisions impact the economic performance of co-dependent processing firms. This paper incorporates both sectors in an analysis of the effect of ITQs on commercial fisheries. Results show that, as a consequence of season elongation under a harvester-only allocation of fishing rights, capital nonmalleability implies that processor quasi-rents will be redistributed to harvesters. These losses could promote political gridlock and jeopardize adoption of an ITQ policy unless they are fully compensated or unless redistribution is avoided by a policy-superior initial allocation of rights to both harvesters and processors.
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Competition among processing firms is analyzed in a fishery that is managed under a total allowable catch constraint. Firms compete first in the ex-vessel market for round fish and then in the downstream consumer market. Nash equilibrium prices are characterized at each stage of the vertical market. When the number of processors is sufficiently large, equilibrium prices are approximately Walrasian. The ex-vessel price is close to the processor marginal valuation of the round fish and the consumer price clears the total quantity of processed fish. Implications for market structure, conduct and performance, and fisheries management policy are drawn.
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We suggest a model for a market, the Marseille wholesale fish market, in which purchases do not correspond to standard competitive demand. We use nonparametric methods to detect the properties of price-quantity relations which reveal ‘strategic demand’. Our data over three months include price quantity details of each transaction for each fish, and the identities of the buyers and sellers. The observed distributions of prices are stable over time, thus the market can be treated as a repeated game. Strategic demand curves are obtained by local fitting. They are downward-sloping at the aggregate level but not in general at the individual level. Thus regularities are generated by aggregation rather than derived from individual behaviour.
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A system of individual transferable quotas (ITQs) was introduced into the southern bluefin tuna (SBT) fishery in 1984. This was the first such management system to be introduced in Australia and among the first worldwide. Its introduction marked a radical departure from traditional management regimes based on limiting the number of boats allowed to operate and other input controls. Because ITQs are a potential management option for many other fisheries, their success or otherwise in improving the economic performance and prospects of the SBT fishery is likely to have ramifications for the future direction of fisheries management in Australia. The impact of the ITQ scheme on fishery profitability is assessed in relation to the expected outcomes of alternative management programs if they had been introduced instead of ITQs. A model that draws together the major biological, physical, and economic relationships in the fishery provides a framework for this analysis.
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The individual transferable quota (ITQ) system for wreckfish (Polyprion americanus) in the south Atlantic will be an important test of the practical merits of individual quota management for finfish fisheries in the United States. This paper describes the wreckfish ITQ program in detail and discusses difficulties encountered in its development. Beyond providing information on the practical constraints of setting up ITQs to managers contemplating ITQs for other fisheries, another goal is to evaluate the degree to which the wreckfish ITQ program is accomplishing its resource conservation, economic, and conflict reduction objectives. Analysis of data and experiences over the one and one-half year period during which the wreckfish ITQ has been in place are provided. Linked to the discussion of accomplishing objectives is an evaluation of the degree that consolidation has taken place and the tradeoff between efficiency goals and concerns over monopoly power.
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"Technology is not the answer to the population problem. Rather, what is needed is 'mutual coercion mutually agreed upon'--everyone voluntarily giving up the freedom to breed without limit. If we all have an equal right to many 'commons' provided by nature and by the activities of modern governments, then by breeding freely we behave as do herders sharing a common pasture. Each herder acts rationally by adding yet one more beast to his/her herd, because each gains all the profit from that addition, while bearing only a fraction of its costs in overgrazing, which are shared by all the users. The logic of the system compels all herders to increase their herds without limit, with the 'tragic,' i.e. 'inevitable,' 'inescapable' result: ruin the commons. Appealing to individual conscience to exercise restraint in the use of social-welfare or natural commons is likewise self-defeating: the conscientious will restrict use (reproduction), the heedless will continue using (reproducing), and gradually but inevitably the selfish will out-compete the responsible. Temperance can be best accomplished through administrative law, and a 'great challenge...is to invent the corrective feedbacks..to keep custodians honest.'"
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The chief aim of this paper is to examine the economic theory of natural resource utilization as it pertains to the fishing industry. It will appear, I hope, that most of the problems associated with the words “conservation” or “depletion” or “overexploitation” in the fishery are, in reality, manifestations of the fact that the natural resources of the sea yield no economic rent. Fishery resources are unusual in the fact of their common-property nature; but they are not unique, and similar problems are encountered in other cases of common-property resource industries, such as petroleum production, hunting and trapping, etc. Although the theory presented in the following pages is worked out in terms of the fishing industry, it is, I believe, applicable generally to all cases where natural resources are owned in common and exploited under conditions of individualistic competition.
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In this article, I report the results of a study of the prices paid by individual buyers at the Fulton fish market in New York City. In principle, this is a highly competitive market in which there should be no predictable price differences across customers who are equally costly to service. The results indicate that different buyers pay different prices for fish of identical quality. For example, Asian buyers pay 7% less for whiting than do white buyers, a result which is inconsistent with the model of perfect competition.
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This paper discusses the economics of the commercial fishing industry under the hypothesis of independent harvesting and processing sectors (although the possibility of integration is also discussed briefly). The analysis is based on an explicitly dynamic fishery model. The competitive and monopsonistic cases are discussed in detail and compared with the social welfare optimum. The implications for governmental regulation are also investigated.
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By reviewing the current demand literature for fish and meat, it is apparent that several inadequacies arise from the problems of market delineation or aggregation errors. Inappropriate aggregation may lead to biases in price elasticities and associated specification problems with respect to identifying substitutes. Formal separability tests allow for identification of appropriate aggregation levels and the relevant products or market boundaries in a systematic manner. A formal demand system for fish and meat can thus be estimated with one data set over various aggregations with the appropriate demographic arguments. The present article tests for separability (and thus relevant substitutes/complements) by estimating different demand systems over different aggregation levels for fish and meat with an identical retail level household data set for the Canadian market.
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The population problem has no technical solution; it requires a fundamental extension in morality.
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Relationships between prices of goods have held interest within economics in at least two areas - market integration and product aggregation. There is a close relationship between market integration and aggregation, although this has not received much attention in the more recent literature. This relationship may increase the usefulness of market integration studies. In this paper, these relationships are developed and illustrated by an application to the world salmon market. It is shown that the Law of One Price holds for an international market with five salmon species. This result has significant implications for the world salmon market regarding both product aggregation in demand analyses and international trade policy.
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A new method is introduced and applied to the British Columbia halibut fishery to analyze changes in productivity of firms harvesting a natural capital stock. The index-number technique decomposes the contributions of output prices, variable input prices, fixed inputs and productivity to firm profits, adjusted for changes in the natural capital stock. An application of the method is given using micro-level data from a common-pool resource. The indexes provide a ready-made comparison of all firms to the most profitable firm per unit of resource stock. Benchmarking with the decompositions also allows firms and regulators to improve overall industry performance by allowing them to analyze what components are contributing most to (relative) economic profits.
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This paper develops a model of regulated open access resource exploitation. The regulatory model assumes that regulators are goal oriented, choosing target harvest levels according to a safe stock concept. These harvest quotas are implemented by setting season lengths, conditioned on the industry fishing capacity. The industry enters until rents are dissipated, conditioned on season length regulations. Harvest levels, fishing capacity, season length, and biomass are determined jointly. Using parameter estimates from the long-regulated North Pacific Halibut fishery, predictions of these variables from the regulated open access model are compared to predictions that arise from the Gordon model.
Article
In this paper the Crutchfield and Pontecorvo conjecture that a monopsonistic processing sector would induce efficient use of a common property resource is analysed. It is shown that if the harvesting sector consists of a large number of firms with identical convex technologies, then the conjecture is correct. In addition, sufficient conditions are found under which the stationary resource stock with a monopsonistic processing sector is greater than the efficient size. /// Le contrôle monopsoniste d'une ressource renouvelable en propriété commune. Dans ce mémoire, l'auteur analyse la conjecture de Crutchfield et Pontecorvo à savoir qu'un secteur monopsoniste de traitement d'une ressource en propriété commune engendrerait une utilisation efficace de la ressource. On montre que si la récolte de la ressource est faite par un grand nombre de firmes utilisant des technologies convexes identiques, la conjecture est confirmée. De plus il est possible d'établir les conditions suffisantes qui font que le stock stationnaire de la ressource quand existe un secteur monopsoniste de traitement s'avère plus grand que le niveau de stock dicté par les impératifs de l'efficacité.
Economic Aspects of the Pacific Halibut Fishery, US Dept. of Interior The Economics of Marine Resources and Conservation Policy
  • J Crutchfield
  • A Zellner
J. Crutchfield, A. Zellner, Economic Aspects of the Pacific Halibut Fishery, US Dept. of Interior, Bureau of Commercial Fisheries, USGPO, 1962; Reprinted as J. Crutchfield, A. Zellner, The Economics of Marine Resources and Conservation Policy, University of Chicago Press, Chicago, 2003.
Marketing losses regulated open access fisheries, in "Fisheries Economics and Trade: Proceedings of the Sixth Conference
  • J E Wilen
  • F R Homansj
  • Catanzano
J. E. Wilen and F. R. Homans, Marketing losses regulated open access fisheries, in "Fisheries Economics and Trade: Proceedings of the Sixth Conference" (J. Catanzano, Ed.) IFREMER- SEM (1994).
The Economics of Marine Resources and Conservation Policy
  • J Crutchfield
  • A Zellner
Intrinsic fish characteristics and intraseasonal production efficiency
  • Larkin
Fisheries and the processing sector
  • Clark
Property rights in a fishery
  • Fox
Household demand for fish and meat products
  • Salvannes