Fishing quota markets

In 1986, New Zealand responded to the open-access problem by establishing the world's largest individual transferable quota (ITQ) system. Using a 15-year panel dataset from New Zealand that covers 33 species and more than 150 markets for fishing quotas, we assess trends in market activity, price dispersion, and the fundamentals determining quota prices. We find that market activity is sufficiently high in the economically important markets and that price dispersion has decreased. We also find evidence of economically rational behavior through the relationship between quota lease and sale prices and fishing output and input prices, ecological variability, and market interest rates. Controlling for these factors, our results show a greater increase in quota prices for fish stocks that faced significant reductions, consistent with increased profitability due to rationalization. Overall, this suggests that these markets are operating reasonably well, implying that ITQs can be effective instruments for efficient fisheries management.     

The effects on welfare of the imposition of individual transferable quotas on a heterogeneous fishing fleet

This paper examines the determination of effort levels, the rental price of quotas and the number of participants in a fishery managed with a total allowable catch and individual transferable quotas. How these variables change is determined for three phases of the management process. Potential participants in the fishery are assumed to be heterogeneous in their catching capabilities so that almost all active fishers earn positive net profits from fishing activities. It is shown that these quasirents are reduced during any of the management phases considered here. The impact of free allocations of permanent quota rights on fishers’ welfare is also considered. This may increase the welfare of all fishers if the allocation is based on catch history. However, an example is provided where the welfare of some highliners is reduced when the allocation is based on effort history.     

Non-compliance and the quota price in an ITQ fishery

This paper examines the effects of non-compliance on quota demands and the equilibrium quota price in an ITQ fishery. I show that whereas lower quota prices are implied unambiguously by expected penalties which are a function of the absolute violation size, the expectation of penalties based upon relative violations of quota demands can, under certain conditions, produce higher quota prices than in a compliant quota market. If there are both compliant and non-compliant firms in the fishery, the result would then be a shift in quota demand from compliant to non-compliant firms, rather than the reverse. The findings are generally applicable to quota markets in other industries, including pollution permit markets.     

Private aquaculture and commercial fisheries: Bioeconomics of salmon ranching

This paper shows that common property problems associated with open access salmon ranching in the absence of a commercial fishery result in inefficiency characterized by overstocking. The presence of an open access fishery presents additional common property problems which will inhibit the development of fish ranching. At prices where salmon ranching does occur, the open access commercial fishery will tend to overexploit the natural fish stock to a greater extent than if there were no salmon ranching. It is shown that there exists a range of prices where both fish stocks can coexist with open access. However, there is a limit price above which the natural stock will be driven to extinction through overfishing stimulated by stock from salmon ranchers. The range of prices under which both species can coexist can be increased through either restrictions of fishery effort or reducing the catchability of aquacultured stock. Cooperative management of both aquaculture and commercial fishing results in profits from both activities and will not cause extinction of the natural fish stock.     

Malthusian overfishing and efforts to overcome it on Kenyan coral reefs

This study examined trends along a gradient of fishing intensity in an artisanal coral reef fishery over a 10-year period along 75 km of Kenya's most populated coastline. As predicted by Malthusian scenarios, catch per unit effort (CPUE), mean trophic level, the functional diversity of fished taxa, and the diversity of gear declined, while total annual catch and catch variability increased along the fishing pressure gradient. The fishery was able to sustain high (approximately 16 Mg x km(-2) x yr(-1)) but variable yields at high fishing pressure due to the dominance of a few productive herbivorous fish species in the catch. The effect of two separate management strategies to overcome this Malthusian pattern was investigated: fisheries area closure and elimination of the dominant and most "competitive" gear. We found that sites within 5 km of the enforced closure showed significantly lower total catch and CPUE, but increased yield stability and trophic level of catch than predicted by regression models normalized for fishing effort. Sites that had excluded illegal beach seine use through active gear management exhibited increased total catch and CPUE. There was a strong interaction between closure and gear management, which indicates that, for closures to be effective at increasing catch, there must be simultaneous efforts at gear management around the periphery of the closures. We propose that Malthusian effects are responsible for the variation in gear and catch and that active management through reduced effort and reductions in the most competitive gear have the greatest potential to increase the functional and trophic diversity and per-person productivity.     

Redistribution of benefits but not detection in a fisheries bycatch‐reduction management initiative

Reducing the capture of small fish, discarded fish, and bycatch is a primary concern of fisheries managers who propose to maintain high yields, species diversity, and ecosystem functions. Modified fishing gear is one of the primary ways to reduce by‐catch and capture of small fish. The outcomes of gear modification may depend on c ompetition among fishers using other similar resources and other gears in the same fishing grounds and the subsequent adoption or abandonment of modified gears by fishers. We evaluated adoption of modified gear, catch size, catch per unit effort (CPUE), yield, and fisher incomes in a coral reef fishery in which a 3‐cm escape gap was introduced into traditional traps. There were 26.1 (SD 4.9) fishers who used the experimental landing sites and 228(SD 15.7) fishers who used the control landing sites annually over 7 years. The size of fish increased by 10.6% in the modified traps, but the catch of smaller fish increased by 11.2% among the other gears. There was no change in the overall CPUE, yields, or per area incomes; rather, yield benefits were redistributed in favor of the unmodified gears. For example, estimated incomes of fishers who adopted the modified traps remained unchanged but increased for net and spear fishers. Fishers using escape‐gap traps had a high proportion of income from larger fish, which may have led to a perception of benefits, high status, and no abandonment of the modified traps. The commensal rather than competitive outcome may explain the continued use of escape‐gap traps 3 years after their introduction. Trap fishers showed an interest in negotiating other management improvements, such as increased mesh sizes for nets, which could ultimately catalyze community‐level decisions and restrictions that could increase their profits.     

Effects of Fisheries Closures and Gear Restrictions on Fishing Income in a Kenyan Coral Reef

Abstract: The adoption of fisheries closures and gear restrictions in the conservation of coral reefs may be limited by poor understanding of the economic profitability of competing economic uses of marine resources. Over the past 12 years, I evaluated the effects of gear regulation and fisheries closures on per person and per area incomes from fishing in coral reefs of Kenya. In two of my study areas, the use of small‐meshed beach seines was stopped after 6 years; one of these areas was next to a fishery closure. In my third study area, fishing was unregulated. Fishing yields on per capita daily wet weight basis were 20% higher after seine‐net fishing was stopped. The per person daily fishing income adjacent to the closed areas was 14 and 22% higher than the fishing income at areas with only gear restrictions before and after the seine‐net restriction, respectively. Incomes differed because larger fish were captured next to the closed area and the price per weight (kilograms) increased as fish size increased and because catches adjacent to the closure contained fish species of higher market value. Per capita incomes were 41 and 135% higher for those who fished in gear‐restricted areas and near‐closed areas, respectively, compared with those who fished areas with no restrictions. On a per unit area basis (square kilometers), differences in fishing income among the three areas were not large because fishing effort increased as the number of restrictions decreased. Changes in catch were, however, larger and often in the opposite direction expected from changes in effort alone. For example, effort declined 21% but nominal profits per square kilometer (not accounting for inflation) increased 29% near the area with gear restrictions. Gear restrictions also reduced the cost of fishing and increased the proportion of self‐employed fishers.     

Analysis of the eastern Pacific yellowfin tuna fishery based on multiple management objectives

Vector optimization techniques were used to generate arbitrary segments of a policy frontier for a dynamic yellowfin tuna (Thunnus albacares) fishery model assuming fixed technology and considering four policy objectives: minimizing dolphin mortality, minimizing incidental catch (all species except dolphins), maximizing sustainable yield, and minimizing biological risk for the yellowfin tuna stock. Results show that along the policy frontier: (1) reducing incidental dolphin mortality increases the incidental catch of other species in a nonlinear way; (2) yield increases (subject to a biomass precautionary level) can only be obtained at the expense of higher levels of dolphin mortality and incidental catch; (3) biological risk increases as the level of tunas caught increases, but this increase depends on the type of fishery (longline fishing and three different modes of purse-seining: log-sets, dolphin-sets or school-sets) that dominates the fishing effort; (4) there is an indirect relationship between the dolphin mortality levels and those of biological risk; (5) there is a direct relationship between the incidental catch levels and biological risk. Catch obtained with dolphin-sets dominates the Pareto-optimal solutions with highest dolphin mortality levels but is associated with lower biological risk, whereas catch obtained with log-sets dominates in Pareto-optimal solutions with higher incidental catch and higher biological risk. In general, trade-offs or shadow prices among objectives are not linear, indicating that marginal costs vary along the policy frontier. Results of the trade-off analysis may provide useful information for decision-makers and other policy actors. Complete information about the preferences of the decision-makers regarding the objectives is necessary to recommend a specific management policy.     

Historical spatial reconstruction of a spawning‐aggregation fishery

Aggregations of individual animals that form for breeding purposes are a critical ecological process for many species, yet these aggregations are inherently vulnerable to exploitation. Studies of the decline of exploited populations that form breeding aggregations tend to focus on catch rate and thus often overlook reductions in geographic range. We tested the hypothesis that catch rate and site occupancy of exploited fish‐spawning aggregations (FSAs) decline in synchrony over time. We used the Spanish mackerel (Scomberomorus commerson) spawning‐aggregation fishery in the Great Barrier Reef as a case study. Data were compiled from historical newspaper archives, fisher knowledge, and contemporary fishery logbooks to reconstruct catch rates and exploitation trends from the inception of the fishery. Our fine‐scale analysis of catch and effort data spanned 103 years (1911–2013) and revealed a spatial expansion of fishing effort. Effort shifted offshore at a rate of 9.4 nm/decade, and 2.9 newly targeted FSAs were reported/decade. Spatial expansion of effort masked the sequential exploitation, commercial extinction, and loss of 70% of exploited FSAs. After standardizing for improvements in technological innovations, average catch rates declined by 90.5% from 1934 to 2011 (from 119.4 to 11.41 fish/vessel/trip). Mean catch rate of Spanish mackerel and occupancy of exploited mackerel FSAs were not significantly related. Our study revealed a special kind of shifting spatial baseline in which a contraction in exploited FSAs occurred undetected. Knowledge of temporally and spatially explicit information on FSAs can be relevant for the conservation and management of FSA species.     

Commercial fisheries under price uncertainty

The deterministic models applied in economics of fisheries are extended to comprise price uncertainty and risk aversion among the fishing units. It is proved that in the open-access fishery both the total fishing effort and the number of fishing units are reduced as the variance of the price increases; that the total fishing effort may be smaller in the open-access fishery than in the optimal fishery at a high variance; that only a fixed producer price system can create a first-best optimum, and that a tax on revenue is more efficient than both fishing unit quotas or tax on catch.     

Poaching, enforcement, and the efficacy of marine reserves.

Marine reserves are promoted as an effective supplement to traditional fishery management techniques of harvest quotas and effort limitation. However, quantitative fishery models have ignored the impact of noncompliance (poaching). Here we link a model of a harvested fish population to a game-theoretic representation of fisherman behavior to quantify the effect of poaching on fishery yield and the enforcement effort required to maintain any desired level of reserve effectiveness. Although higher fish densities inside reserves will typically entice fishermen to poach, we show that the initial investment in enforcement efforts provides the greatest return on maintaining the benefits of the reserve to the fishery. Furthermore, we find that poaching eliminates the positive effect of fish dispersal on yield that is predicted by traditional models that ignore fisherman behavior. Our results broaden a fundamental insight from previous models of marine reserves, the effective equivalence of the harvest quota and reserve fraction, to the more realistic scenario in which fishermen attempt to maximize their economic payoffs.     

Equilibrium Prices in a Vertically Coordinated Fishery

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.     

Exploring fisheries strategies for the western English Channel using an ecosystem model

An ecosystem model of the western English Channel ecosystem in 1994 was used to explore the effects of the use of a fishing policy optimization routine on profits, number of jobs and ecosystem structure. The optimization for single objective led to the specialization of the fishing fleet, with some fleet types being almost excluded. The profits and mainly the job optimizations led to big changes in the ecosystem structure, with loss of diversity, but the overall biomass of all vertebrate groups represented in the model increased considerably. For the objective focusing on ecosystem structure, there was an increase in biodiversity, with many long-lived groups predicted to increase, although the overall vertebrate biomass suffered just a small increase. An “ideal” mixed policy configuration was found when slightly greater weight was given to ecosystem structure than was given to profits and jobs. This scenario led to an overall reduction in effort but also to increased profits and biodiversity, while keeping the number of jobs at the same level as the baseline estimates. The results of the optimizations showed that the average trophic level of the catches is quite resistant to changes in the underlying system structure. On the other hand, despite the high level of aggregation of the model structure, a biodiversity index estimated by the model presented large changes as a function of the weights placed on the single policy functions, reflecting the changes in the system structure. The output of the application of the fishing optimization presented here should be considered in qualitative rather than in quantitative terms as an aid and part contribution to the complicated discussions on future long term management actions. Nonetheless it points to an overall reduction in fishing capacity, an objective widely accepted within the scientific community, while keeping the fishery in a profitable state.     

An economic analysis of sardine fishing in the Gulf of Valencia (Spain)

The optimal management of a particular fishery is illustrated. Using data describing previous fishery exploitation, relevant biological and economic relationships are estimated, then the optimum levels of catches, effort, and stock are calculated. The prices that, if implemented, would ensure the current efficient exploitation of the fishery are also calculated. Finally, the welfare gains that can be achieved by a movement from the freemarket equilibrium to the socially optimum solution are demonstrated.     

Assessment of the state and management of the cephalopod trawl fishery resources in Greek waters

The cephalopod trawl fishery in Greek waters is reviewed in relation to fishing effort for 1964–1981. The mean annual (1964–81) catch of cephalopods amounted to 1348 tons. Total landings of cephalopods are very well described by the exponential⁹ and linear²⁹ surplus yield models, according to which optimum fishing effort, maximum sustained yield and optimum catch per unit of fishing effort range between 120000–150000HP, 1586–1630 tons and 10–13kgr/HP respectively. In addition, the analysis revealed that cephalopod resources were slightly overfished (according to the linear model) during 1975–1981. Hence, authorities must take immediate measures for the protection and rational management of cephalopod resources in Greek waters. Possible alternative measures are discussed in the text.     

Socioeconomic Factors that Affect Artisanal Fishers' Readiness to Exit a Declining Fishery

Abstract:  The emerging world crisis created by declining fish stocks poses a challenge to resource users and managers. The problem is particularly acute in poor nations, such as those in East Africa, where fishing is an important subsistence activity but high fishing intensity and use of destructive gear have resulted in declining catches. In this context developing effective management strategies requires an understanding of how fishers may respond to declines in catch. We examined the readiness of 141 Kenyan fishers to stop fishing under hypothetical scenarios of declines in catch and how socioeconomic conditions influenced their decisions. As expected, the proportion of fishers that would exit the fishery increased with magnitude of decline in catch. Fishers were more likely to say they would stop fishing if they were from households that had a higher material style of life and a greater number of occupations. Variables such as capital investment in the fishery and the proportion of catch sold had weak, nonsignificant relationships. Our finding that fishers from poorer households would be less likely to exit a severely declining fishery is consistent with the literature on poverty traps, which suggests the poor are unable to mobilize the necessary resources to overcome either shocks or chronic low-income situations and consequently may remain in poverty. This finding supports the proposition that wealth generation and employment opportunities directed at the poorest fishers may help reduce fishing effort on overexploited fisheries, but successful interventions such as these will require an understanding of the socioeconomic context in which fishers operate.     

A free lunch in the commons

We derive conditions under which raising costs through a regulatory constraint or a fully expropriated tax can increase the profits arising from a common-pool resource. The basic model assumes a fixed number of identical agents with linear costs selling in a single period at an exogenous price. A necessary and sufficient condition for a cost increase to be profitable is that aggregate output from the resource be locally convex in aggregate effort. We also show that cost increases can be profitable even if price is endogenous, agents are heterogeneous, entry is costless, or agents are playing a Markov-perfect equilibrium of a dynamic game. We also discuss more general welfare implications of the result along with its relation to existing results for a Cournot oligopoly.     

When are no-take zones an economically optimal fishery management strategy?

Discussions on the use of marine reserves (no-take zones) and, more generally, spatial management of fisheries are, for the most part, devoid of analyses that consider the ecological and economic effects simultaneously. To fill this gap, we develop a two-patch ecological-economic model to investigate the effects of spatial management on fishery profits. Because the fishery effects of spatial management depend critically on the nature of the ecological connectivity, our model includes both juvenile and adult movement, with density dependence in settlement differentiating the two types of dispersal. Rather than imposing a reserve on our system and measuring its effect on profits, we ask: "When does setting catch levels to maximize system-wide profits imply that a reserve should be created?" Closing areas to fishing is an economically optimal solution when the value derived from spillover from the reserve outweighs the value of fishing in the patch. The condition, while simple to state in summary form, is complex to interpret because it depends on the settlement success of the dispersing organisms, the nature of the costs of the fishing, the economic and ecological heterogeneity of the system, the discount rate, and growth characteristics of the fish population. The condition is more likely to be satisfied when the closed area is a net exporter of biomass and has higher costs of fishing, and for fish populations with density-independent settlement ("adult movement") than with density-dependent settlement ("larval dispersal"). Rather surprisingly, there are circumstances whereby closing low biological productivity areas, and even sometimes low cost areas to fish, can result in greater fishing profits than when both areas are open to fishing.     

Optimal fishery policy with artificial enhancement through stocking: California's white sturgeon as an example

Although optimal fishery policy has been derived from different kinds of economic and biological models, the interaction of fishing policy with artificial stocking policy has not been explicitly considered. We here determine optimal size limits, fishing effort, and stocking rate for three cases of interest: (1) recruitment-limited population, pre-recruitment stocking; (2) adult biomass-limited population, post-recruitment stocking; and (3) adult biomass-limited and recruitment-limited population, post-recruitment stocking. Results show that lower size limits should be set at the size at which the current market value exceeds the total future value of an individual, both to the fishery and to reproduction. Imposition of upper size limits is rarely optimal. Stocking is advisable when the hatchery cost times the relative contribution of stocking to recruitment is less than the contribution to the value of the catch. Optimal policy ranges from infinite effort at a specific size limit with maximum stocking when the cost of stocking is zero, to lower values of size limit and effort as stocking costs increase, the amount of stocking decreases, and more natural reproduction is optimal. Thus, as hatchery costs decline (or value of captured fish increases), optimal stocking/fishery policy varies from an unstocked fishery to a “put and take” fishery. The results are applied to the sturgeon fishery in the San Francisco Bay Estuary as an example. They imply that a reduced lower size limit and greater fishing mortality together with stocking would be optimal, but that current levels are conservative. The stocking decision depends critically on the values of parameters that are currently poorly known, such as: hatchery costs, survival to the fishery and the mechanisms controlling the sturgeon population.     

Models of fish school size in relation to environmental productivity

A simple energy-balance model, relating energetic requirements of fish schools to food production, was used to predict shoal sizes. Lower limits to school size are unlikely to be set by food but rather by predation. Upper limits depend on both food and school behavior, being greater for schools that break up to feed than for schools that remain continuously cohesive. Faced with a decreasing food supply, a school could either break into smaller schools or change behavior, increasing the area available for foraging. The models suggest that environmental productivity needs to be considered when examining fishery statistics such as (catch per unit effort), where maximum catch may be limited by maximum school size.