Decentralized regulation of a common property renewable resource industry with irreversible investment

The effectiveness of output controls for rationalizing a common property renewable resource has been called into question by the theoretical work of J. R. Gould [Economica, Nov., 383–402 (1972)]. A proper examination of this question requires an intertemporal analysis, one that takes into account that asymmetries between persistent factors of production (“immaleable capital”) and factors that are instantaneously consumed (“labor” or ldharvest effort”). We present here a nonlinear intertemporal model of a renewable resource industry, under conditions of irreversible capital investment, and undertake to analyze its dynamics, both at open access and under centralized optimal management. We then examine the theoretical possibility of decentralized regulation by Pigouvian taxes, and reconsider the proposition of Gould.     

An Economic Analysis of the Fisheries Bycatch Problem

Bycatch is the incidental take of a species that has value to some other group. This paper compares open access and individual transferable quota equilibria to the equilibrium in which the joint value of the fisheries is maximized. The open access induced problems can be corrected by an individual transferable quota system only if both the target species and the bycatch species have tradable quotas, and only if the bycatch species does not have existence value. There exists a range of the bycatch-to-target species harvest levels for which the total harvest of each will be exactly taken by a given technology, even under open access. However, there may not even exist a unique open access equilibrium if bycatch is allocated by “rule of capture.” Prohibitions on the sale of bycatch reduce the bycatch level, but they also reduce social welfare.     

Optimal harvesting of ecologically interdependent fish species

The optimal exploitation of a two-species predator-prey system is considered, using Lotka-Volterra-type equations. Due to the density-dependence of ecological efficiency, both species should be harvested simultaneously over a range of relative prices. Beyond the limits of this price range, either the prey species should be utilized indirectly by harvesting the predator, or the predator should be eliminated to maximize the prey yield. Neglecting harvesting costs, the simultaneous harvest of prey and predators requires that a unit of prey biomass increase in value by being “processed” by predators. Certain results from single-species fishery models are shown not to apply to multispecies models. These are as follows: (i) Optimal regulation of a free access fishery may call for subsidizing instead of taxing the harvest of predator species. (ii) Increasing the discount rate may, at “moderate” levels, imply that the optimal standing stock of biomass increases instead of decreasing. (iii) A rising price or a falling cost per unit fishing effort of a species may raise and not lower the optimal standing stock of that species.     

Effects of Carbon Taxes in an Economy with Prior Tax Distortions: An Intertemporal General Equilibrium Analysis

This paper analyzes the costs of carbon taxes in a model that recognizes interactions between this tax and pre-existing taxes. First we examine the extent to which costs of a U.S. carbon tax are reduced when its revenues finance cuts in income taxes. Such use of revenues significantly reduces, but does not eliminate, the overall policy costs. The positive overall costs reflect the carbon tax′s focus on intermediate inputs and its relatively narrow base in comparison with income taxes. We also examine the sensitivity of the carbon tax′s costs to the level of pre-existing taxes. For any given use of revenues, welfare costs rise significantly with pre-existing tax rates, indicating that models disregarding pre-existing taxes may substantially understate the costs of new environmental tax initiatives.     

A criterion validity test of the contingent valuation method: comparing hypothetical and actual voting behavior for a public referendum

This study pursues external validation of contingent valuation by comparing survey results with the voting outcome of a Corvallis, Oregon, referendum to fund a riverfront improvement project through increased property taxes. Survey respondents hypothetically make a voting decision—with no financial consequences—on the upcoming referendum. The survey sample consists of respondents verified to have voted in the election. We use available precinct-level election data to compare the proportion of “yes” survey and referendum votes as well as estimate voting models and mean willingness to pay (WTP) based on the two sets of data. We find that survey responses match the actual voting outcome and WTP estimates based on the two are not statistically different. Contrary to similar studies, our statistical results do not depend on re-coding the majority of “undecided” survey responses to “no.” Furthermore, such a re-coding of responses may be inappropriate for our data set.     

A social benefit-cost analysis of mandatory deposits on beverage containers

This paper presents a social efficiency analysis of mandatory deposits on beverage containers. Five kinds of resource effects are identified, evaluated and added up: (1) litter (both pickup and “eyesore” costs); (2) solid waste collection; (3) container costs; (4) production and distribution costs; and (5) consumer convenience. It is shown that the desirability, on efficiency grounds alone, of mandatory deposits is not indisputable; it depends critically on one's evaluation of (1) the average value of the time it takes consumers to return empty containers and (2) the average value of the “eyesore” benefit of a dramatically reduced (i.e., by around three-fourths) volume of beverage container litter.     

The optimal pricing of pollution when enforcement is costly

We consider the pricing of a uniformly mixed pollutant with a model of optimal, possibly firm-specific, emissions taxes and their enforcement under incomplete information about firms’ abatement costs, enforcement costs, and pollution damage. We argue that optimality requires an enforcement strategy that induces full compliance by every firm, except possibly when a regulator can base the probabilities of detecting individual violations on observable correlates of violators’ actual emissions. Moreover, optimality requires discriminatory taxes, except when a regulator is unable to use observable firm-level characteristics to gain some information about the variation in firms’ abatement costs or monitoring costs.     

Putting free-riding to work: A Partnership Solution to the common-property problem

The common-property problem results in excessive mining, hunting, and extraction of oil and water. The same phenomenon is also responsible for excessive investment in R&D and excessive outlays in rent-seeking contests. We propose a “Partnership Solution” to eliminate or at least mitigate these excesses. Each of N players joins a partnership in the first stage and chooses his effort in the second stage. Under the rules of a partnership, each member must pay his own cost of effort but receives an equal share of the partnership's revenue. The incentive to free-ride created by such partnerships turns out to be beneficial since it naturally offsets the excessive effort inherent in such problems. In our two-stage game, this institutional arrangement can, under specified circumstances, induce the social optimum in a subgame-perfect equilibrium: no one has a unilateral incentive (1) to switch to another partnership (or create a new partnership) in the first stage or (2) to deviate from socially optimal actions in the second stage. The game may have other subgame-perfect equilibria, but the one associated with the “Partnership Solution” is strictly preferred by every player. We also propose a modification of the first stage which generates a unique subgame-perfect equilibrium. Antitrust authorities should recognize that partnerships can have a less benign use. By organizing as competing partnerships, an industry can reduce the “excessive” output of Cournot oligopoly to the monopoly level. Since no partner has any incentive to overproduce in the current period, there is no need to deter cheating with threats of future punishments.     

Foraging in the seed-harvester ant genus Pogonomyrmex: are energy costs important?

Energy intake and expenditure on natural foraging trips were estimated for the seed-harvester ants, Pogonomyrmex maricopa and P. rugosus. During seed collection, P. maricopa foraged individually, whereas P. rugosus employed a trunk-trail foraging system. Energy gain per trip and per minute were not significantly different between species. There was also no interspecific difference in energy cost per trip, but energy cost per minute was lower for P. maricopa foragers because they spent on average 7 min longer searching for a load on each trip. Including both unsuccessful and successful foraging trips, average energy gain per trip was more than 100 times the energy cost per trip for both species. Based on this result, we suggest that time cost incurred during individual foraging trips is much more important than energy cost in terms of maximizing net resource intake over time. In addition, because energy costs are so small relative to gains, we propose that energy costs associated with foraging may be safely ignored in future tests of foraging theory with seed-harvesting ant species.     

Trade-Offs in the Design of Fishery Closures: Management of Silky Shark Bycatch in the Eastern Pacific Ocean Tuna Fishery

Abstract:  Bycatch—the incidental catch of nontarget species—is a principal concern in marine conservation and fisheries management. In the eastern Pacific Ocean tuna fishery, a large fraction of nonmammal bycatch is captured by purse-seine gear when nets are deployed around floating objects. We examined the spatial distribution of a dominant species in this fishery's bycatch, the apex predator silky shark ( Carcharhinus falciformis ), from 1994 to 2005 to determine whether spatial closures, areas where fishing is prohibited, might effectively reduce the bycatch of this species. We then identified candidate locations for fishery closures that specifically considered the trade-off between bycatch reduction and the loss of tuna catch and evaluated ancillary conservation benefits to less commonly captured taxa. Smoothed spatial distributions of silky shark bycatch did not indicate persistent small areas of especially high bycatch for any size class of shark over the 12-year period. Nevertheless, bycatch of small silky sharks (<90 cm total length) was consistently higher north of the equator during all years. On the basis of this distribution, we evaluated nearly 100 candidate closure areas between 5°N and 15°N that could have reduced, by as much as 33%, the total silky shark bycatch while compromising only 12% of the tuna catch. Although silky sharks are the predominant species of elasmobranchs caught as bycatch in this fishery, closures also suggested reductions in the bycatch of other vulnerable taxa, including other shark species and turtles. Our technique provides an effective method with which to balance the costs and benefits of conservation in fisheries management. Spatial closures are a viable management tool, but implementation should be preceded by careful consideration of the consequences of fishing reallocation.     

A laboratory study of auctions for reducing non-point source pollution

Non-point source pollution, such as nutrient runoff to waterways from agricultural production, is an environmental problem that typically involves asymmetric information. Land use changes to reduce pollution incur opportunity costs that are privately known to landholders, but these changes provide environmental benefits that may be more accurately estimated by regulators. This paper reports a testbed laboratory experiment in which landholder/sellers in sealed-offer auctions compete to obtain part of a fixed budget allocated by the regulator to subsidize abatement. In one treatment the regulator reveals to landholders the environmental benefits estimated for their projects, and in another treatment the regulator conceals the potential projects’ “environmental quality.” The results show that sellers’ offers misrepresent their costs more for high-quality projects when quality is revealed, so total abatement is lower and seller profits are higher when landholders know their projects’ environmental benefits. This suggests that concealing this information may improve regulatory efficiency.     

Saturday effects in tanker oil spills

This paper documents a “Saturday effect” in the timing of tanker oil spills—certain types of spills happen much more frequently on this day than one would expect if the spills were uniformly distributed. The phenomenon is restricted to Europe and North America, and is associated with “vessel guidance” accidents—groundings, collisions, and rammings. Eliminating the Saturday effect would reduce tanker oil spills by around 163,000 gallons per year. Several policy responses are considered, including a Saturday harbor tax. A lower bound for an efficient tax is estimated to be $780 for a 20 million gal cargo.     

Do microbial processes regulate the stability of a coral atoll's enclosed pelagic ecosystem?

Complex marine ecosystems contain multiple feedback cycles that can cause unexpected responses to perturbations. To better predict these responses, complicated models are increasingly being developed to enable the study of feedback cycles. However, the sparseness of ecological data often limits the direct empirical parameterization of all model parameters. Here we use a Bayesian inverse analysis approach to synthesize empirical data and ecological theory derived from published studies of a coral atoll's enclosed pelagic ecosystem (Takapoto Atoll, French Polynesia). We then use the estimates of flux magnitudes to parameterize probabilistic compartment models with two forms of heterotrophic consumption: (1) “bottom-up” donor-controlled heterotrophic consumption and (2) “top-down” mass-action heterotrophic consumption. We explore how the flux magnitudes affect the ecosystem's stability properties of resilience, reactivity, and resistance under both assumptions for heterotrophic consumption. The models suggest that the microbial uptake of dissolved organic carbon (DOC) regulates the long term rate of return to steady state following a temporary or pulse perturbation (resilience), and the cycling of carbon between abiotic pools and heterotrophic compartments regulates the short-term response (reactivity). In the bottom-up process model, the sensitivity of steady state masses following a sustained or press perturbation (resistance) is highest for the DOC pool following a sustained change to the microbial uptake rate of DOC. Further, a change in the microbial uptake of DOC propagates through the ecosystem and affects the steady state values of zooplankton. The analysis suggests that the food web is highly dependent on the recycling between the abiotic and biotic carbon pools, particularly as mediated by the microbial consumption of DOC, and this recycling determines how the ecosystem responds to perturbations.     

Putting Longline Bycatch of Sea Turtles into Perspective

Abstract:  Although some sea turtle populations are showing encouraging signs of recovery, others continue to decline. Reversing population declines requires an understanding of the primary factor(s) that underlie this persistent demographic trend. The list of putative factors includes direct turtle and egg harvest, egg predation, loss or degradation of nesting beach habitat, fisheries bycatch, pollution, and large-scale changes in oceanographic conditions and nutrient availability. Recently, fisheries bycatch, in particular bycatch from longline fisheries, has received increased attention and has been proposed as a primary source of turtle mortality. We reviewed the existing data on the relative impact of longline bycatch on sea turtle populations. Although bycatch rates from individual longline vessels are extremely low, the amount of gear deployed by longline vessels suggests that cumulative bycatch of turtles from older age classes is substantial. Current estimates suggest that even if pelagic longlines are not the largest single source of fisheries-related mortality, longline bycatch is high enough to warrant management actions in all fleets that encounter sea turtles. Nevertheless, preliminary data also suggest that bycatch from gillnets and trawl fisheries is equally high or higher than longline bycatch with far higher mortality rates. Until gillnet and trawl fisheries are subject to the same level of scrutiny given to pelagic longlines, our understanding of the overall impact of fisheries bycatch on vulnerable sea turtle populations will be incomplete.     

Entitlements, missing markets, and environmental uncertainty: Reply

At one level Dore and Ward seem intent on immunizing received doctrine. They say that I did not prove that rights violated Nozick's principles of justice, and that I did not prove that missing markets were the problem. More telling, they allege I did not prove that my story was better than the particular story favored by Dore and Ward. That is, they argue that : “ … there is an alternative approach, based on the theory of public economics, which is indeed operational.”³ They then use the bulk of their comment to explain and defend this alternative model. They hope to convince the reader that the model of “public economics” survives intact in the face of my alternative model. To the extent that their model allows one to define the problem away, it is not difficult to see why they find it so compelling.More seriously, Dore and Ward fail to make a coherent argument about the concept of rights and duties and the logic of a particular rights structure that happens to prevail. They seem concerned that my article was tampering with some sacred social construct—the status quo rights structure—and that my article threatened the received wisdom of both “public economics” and Paretian-Walrasian bliss. Indeed, theirs seems to be a genuine fear that if economists release their grip on the certitude of received orthodoxy the floodgates will be open to all manner of bumbling regulators seeking to shift rights and wealth positions across generations. My article is apparently threatening because it seems to suggest that the received wisdom may, at times, be misleading.     

A stochastic model for estimating sustainable limits to wildlife mortality in a changing world

Human-caused mortality of wildlife is a pervasive threat to biodiversity. Assessing the population-level impact of fisheries bycatch and other human-caused mortality of wildlife has typically relied upon deterministic methods. However, population declines are often accelerated by stochastic factors that are not accounted for in such conventional methods. Building on the widely applied potential biological removal (PBR) equation, we devised a new population modeling approach for estimating sustainable limits to human-caused mortality and applied it in a case study of bottlenose dolphins affected by capture in an Australian demersal otter trawl fishery. Our approach, termed sustainable anthropogenic mortality in stochastic environments (SAMSE), incorporates environmental and demographic stochasticity, including the dependency of offspring on their mothers. The SAMSE limit is the maximum number of individuals that can be removed without causing negative stochastic population growth. We calculated a PBR of 16.2 dolphins per year based on the best abundance estimate available. In contrast, the SAMSE model indicated that only 2.3–8.0 dolphins could be removed annually without causing a population decline in a stochastic environment. These results suggest that reported bycatch rates are unsustainable in the long term, unless reproductive rates are consistently higher than average. The difference between the deterministic PBR calculation and the SAMSE limits showed that deterministic approaches may underestimate the true impact of human-caused mortality of wildlife. This highlights the importance of integrating stochasticity when evaluating the impact of bycatch or other human-caused mortality on wildlife, such as hunting, lethal control measures, and wind turbine collisions. Although population viability analysis (PVA) has been used to evaluate the impact of human-caused mortality, SAMSE represents a novel PVA framework that incorporates stochasticity for estimating acceptable levels of human-caused mortality. It offers a broadly applicable, stochastic addition to the demographic toolbox to evaluate the impact of human-caused mortality on wildlife.     

Managing conflicts between economic activities and threatened migratory marine species toward creating a multiobjective blue economy

Harnessing the economic potential of the oceans is key to combating poverty, enhancing food security, and strengthening economies. But the concomitant risk of intensified resource extraction to migratory species is worrying given these species contribute to important ecological processes, often underpin alternative livelihoods, and are mostly already threatened. We thus sought to quantify the potential conflict between key economic activities (5 fisheries and hydrocarbon exploitation) and sea turtle migration corridors in a region with rapid economic development: southern and eastern Africa. We satellite tracked the movement of 20 loggerhead (Caretta caretta) and 14 leatherback (Dermochelys coriacea) turtles during their postnesting migrations. We used movement‐based kernel density estimation to identify migration corridors for each species. We overlaid these corridors on maps of the distribution and intensity of economic activities, quantified the extent of overlap and threat posed by each activity on each species, and compared the effects of activities. These results were compared with annual bycatch rates in the respective fisheries. Both species’ 3 corridors overlapped most with longline fishing, but the effect was worse for leatherbacks: their bycatch rates of approximately 1500/year were substantial relative to the regional population size of <100 nesting females/annum. This bycatch rate is likely slowing population growth. Artisanal fisheries may be of greater concern for loggerheads than for leatherbacks, but the population appears to be withstanding the high bycatch rates because it is increasing exponentially. The hydrocarbon industry currently has a moderately low impact on both species, but mining in key areas (e.g., Southern Mozambique) may undermine >50 years of conservation, potentially affecting >80% of loggerheads, 33% of the (critically endangered) leatherbacks, and their nesting beaches. We support establishing blue economies (i.e., generating wealth from the ocean), but oceans need to be carefully zoned and responsibly managed in both space and time to achieve economic (resource extraction), ecological (conservation, maintenance of processes), and social (maintenance of alternative livelihood opportunities, alleviate poverty) objectives.     

Averting expenditure and the cost of pollution

The paper considers the relationship between the willingness to pay for environmental quality and averting expenditures—that is, the costs of measures undertaken in efforts to counteract the consequences of pollution. The models used assume perfect mobility among locations with different levels of environmental quality. The major results are: (1) Averting expenditures are not in general a good measure of willingness to pay; (2) averting expenditures are not always even a lower bound on willingness to pay; (3) even when averting expenditures are a lower bound, the difference between the level of such expenditures and willingness to pay cannot be attributed to the unavertible “aesthetic” consequences of pollution.     

An analysis of joint costs in a managed forest ecosystem

This paper analyzes the tenability of line item budgeting and independently determined output costs for a managed forest ecosystem. The general problem of cost allocation in a joint production system is discussed as one of choosing paths of integration. A production structure is hypothesized for describing a managed forest ecosystem and its characteristics of “jointness” are discussed. Finally, an empirical case example is presented which indicates that cost estimates and associated means of production which result from single output costing procedures and from joint costing procedures may be significantly different in a managed forest ecosystem.     

Conservation of Marine Megafauna through Minimization of Fisheries Bycatch

Abstract: Many populations of marine megafauna, including seabirds, sea turtles, marine mammals, and elasmobranchs, have declined in recent decades due largely to anthropogenic mortality. To successfully conserve these long‐lived animals, efforts must be prioritized according to feasibility and the degree to which they address threats with the highest relative impacts on population dynamics. Recently, Wilcox and Donlan (2007, Frontiers in Ecology and the Environment) and Donlan and Wilcox (2008, Biological Invasions) proposed a conservation strategy of “compensatory mitigation” in which fishing industries offset bycatch of seabirds and sea turtles by funding eradication of invasive mammalian predators from the terrestrial reproductive sites of these marine animals . Although this is a creative and conceptually compelling approach, we find it flawed as a conservation tool because it has narrow applicability among marine megafauna, it does not address the most pervasive threats to marine megafauna, and it is logistically and financially infeasible. Invasive predator eradication does not adequately offset the most pressing threat to most marine megafauna populations—fisheries bycatch. For seabird populations, fisheries bycatch and invasive predators infrequently are overlapping threats. Invasive predators have limited population‐level impacts on sea turtles and marine mammals and no impacts on elasmobranchs, all of which are threatened by bycatch. Implementing compensatory mitigation in marine fisheries is unrealistic due to inadequate monitoring, control, and surveillance in the majority of fleets. Therefore, offsetting fisheries bycatch with eradication of invasive predators would be less likely to reverse population declines than reducing bycatch. We recommend that efforts to mitigate bycatch in marine capture fisheries should address multiple threats to sensitive bycatch species groups, but these efforts should first institute proven bycatch avoidance and reduction methods before considering compensatory mitigation.