Price Uncertainty, Expectations Formation and Fishers' Location Choices

This paper deals with the effects of uncertain output prices upon fishers' location choices. It employs ARIMA models to construct the price forecasts used by fishers in a model which generates expected profits for three fishing locations in the British Columbia salmon fishery. A random utility model of fishing location choice is then estimated using two different sets of regressors. The first is expected seasonal profit and its variability. The second is expected wealth and its variability, where expected wealth is taken to be the sum of the known preseason wealth and the expected profitability of a given fishing location. Results show that expected profitability is a significant determinant of fishing location choice but that expected wealth plays an even bigger role. This suggests that there is a type of wealth or stock effect present in decisions made by fishers. The results also provide evidence that the variability of profits or wealth is generally a less significant component in regard to fishing location choice. In fact, some fishers thrive on greater variability, thereby providing some evidence of the risk loving behaviour typically attributed to fishers. This is not the case, however, for all fishers since some are found to be risk-neutral and even risk-averse. Given the finding that fishers do respond to economic incentives, one policy implication concerns the ability of fisheries managers to alter the dispersion of fishers over fishing locations via the adjustment of the economic incentives by means of differential royalty taxes. A second policy implication results from the finding of risk-loving behavior. This calls into question models that assume risk-averse behaviour and predict a dominance of crop-sharing contracts over wage contracts.Uncertainty, location choice, random utility, risk preferences, Environmental Economics and Policy, Production Economics,

MULTI-SPECIES INDIVIDUAL TRANSFERABLE QUOTAS: THE SCOTIA-FUNDY MOBILE GEAR GROUNDFISHERY

Few studies examine the economic effects of individual harvesting rights in multi-species fisheries. Using costs and earnings data from a multispecies individual transferable quota (ITQ) fishery in Nova Scotia, before and after the introduction of harvesting rights, the effects on inputs, outputs, prices, and vessel exit are examined. The results provide insights about the management of multi-species ITQs.Resource /Energy Economics and Policy,

Buried Treasure: The Economics of Leak Detection and Water Loss Prevention in Ontario

On average approximately 13% of the water that is withdrawn by Canadian municipal water suppliers is lost before it reaches final users. This is an important topic for several reasons: water losses cost money, losses force water agencies to draw more water from lakes and streams thereby putting more stress on aquatic ecosystems, leaks reduce system reliability, leaks may contribute to future pipe failures, and leaks may allow contaminants to enter water systems thereby reducing water quality and threatening the health of water users. Some benefits of leak detection fall outside water agencies’ accounting purview (e.g. reduced health risks to households connected to public water supply systems) and, as a result, may not be considered adequately in water agency decision-making. Because of the regulatory environment in which Canadian water agencies operate, some of these benefits-especially those external to the agency or those that may accrue to the agency in future time periods- may not be fully counted when agencies decide on leak detection efforts. Our analysis suggests potential reforms to promote increased efforts for leak detection: adoption of a Canada-wide goal of universal water metering; development of full-cost accounting and, pricing for water supplies; and co-operation amongst the provinces to promulgate standards for leak detection efforts and provide incentives to promote improved efficiency and rational investment decision-making.The authors thank two reviewers for their comments, Alan Feder of Fuseforward, Inc. for valuable information on leak detection methods and Tianshu Wang for assistance with calculations found in this report

Using Economics to Understand the Implications of Wildfires: An Alberta Case Study

Les régions forestières du nord et de l’ouest de l’Alberta comptent environ 88 % de l’eau de surface utilisée par la population de l’Alberta. Il est essentiel de comprendre les risques associés aux changements dans la qualité de l’eau et les liens avec les forêts de montagne. Un des risques principaux concerne les feux de forêt, puisque ces incidents libèrent de nombreux contaminants dans les eaux de surface. Ces contaminants se déplacent ensuite en aval pour atteindre les réseaux d’adduction d’eau et peuvent entraîner une gamme de conséquences légères (p. ex., hausses des coûts d’exploitation) ou plus graves (fermeture de services d’approvisionnement et importation d’eau). De récentes hausses dans l’intensité des feux de forêt, ainsi que l’augmentation de la demande provinciale en eau ont mené au besoin d’évaluer les risques liés aux feux de forêt pour les systèmes de traitement et d’approvisionnement d’eau municipale en aval. Le projet modélise l’amplitude et la probabilité des feux de forêt dans les régions riches en eau de source en Alberta et combine des modèles de feux/transport de l’eau avec des modèles des coûts liés aux services d’eau afin de réaliser une analyse des coûts-avantages des stratégies de gestion existantes et futures, dans le but ultime d’améliorer la sécurité de l’eau potable

A pilot project to develop an integrated Canadian hydro-economic model

Governments in Canada currently do not have the capacity to analyze the two-way relationship between economic activities and hydrologic conditions at the river basin level. Canada also does not have an integrated hydro-economic computer model for practical policy and decision-making towards sustainable water use. This project will demonstrate the feasibility and efficacy of developing such integrated models. Furthermore, the model will provide governments with new ways to assess both the implications of economic development strategies on water resources and the implications of water allocation policies on local economic activity

Using Economics to Understand the Implications of Wildfires: An Alberta Case Study

Forested regions in northern and western Alberta provide approximately 88% of surface water supplies to Alberta’s population. It is critical that the risks associated with changes in water quality and the connections to upland forests are understood. One of the key risks arises from wildfires as these disturbances release a variety of contaminants into surface waters. These contaminants travel downstream to water utilities and may result in a range of possible outcomes from less severe (small change in operating costs) to more severe (shut-down of water utility and importation of water supplies). Recent increases in the magnitude of wildfires, along with increased provincial water demand, have resulted in a need to evaluate wildfire risk to downstream municipal drinking water supply and treatment systems. The project models the magnitude and likelihood of wildfire occurrences in source water regions in Alberta and combines fire/water transport and water utility cost models in order to undertake a cost-benefit analysis of existing and future management strategies for drinking water security

Réactions de la demande en eau des ménages aux méthodes de conservations liées aux prix et non liées aux prix

Le Canada possède d’abondantes ressources d’eau : environ 7 % de l’eau fraîche renouvelable du monde pour moins de 1 % de la population mondiale. Cependant, la pression exercée sur la ressource ne cesse de grimper. En effet, les retraits d’eau annuels ont augmenté de près de 90 % au cours des 20 dernières années, faisant du Canada le deuxième consommateur d’eau par habitant au monde. Les gestionnaires des services d’eau veulent mettre en place des stratégies de conservation qui assureront une utilisation plus durable des réserves d’eau disponibles, en particulier face à la variabilité croissante des précipitations attribuable aux changements climatiques. Ils ont de plus en plus recours à des méthodes liées aux prix (augmentation du prix de l’eau) plutôt qu’à des méthodes plus traditionnelles non liées aux prix (restrictions estivales en matière de consommation d’eau) pour encourager la conservation. Cependant, il existe peu d'information sur la réaction de la demande des consommateurs face aux changements dans les prix. Ce projet de recherche vise entre autres à établir l’efficacité de méthodes liées aux prix pour réduire la consommation d’eau. Un deuxième enjeu ciblé par cette recherche concerne la façon d’intégrer, d’une part, la réaction aux prix dans la capacité de prédire la demande future en eau et, d’autre part, des flux de rentrées qui financeront l’entretien et l’amélioration des infrastructures à l’avenir