Regulation of Renewable Resources in Federal Systems: The Case of Fishery in th EU

The EU regulation of fisheries is decided in two levels. The level of the total allowable catch (TAC) for the most important species is decided every year by the Council of Minsters. The TACs are allocated to the Member States as quotas. The Member States determine who is going to harvest the quota. There is, however, an information problem associated with this structure. It does not take into account how efficient fishermen in different countries are. In this paper we model the information problem as an adverse selection problem and analyse an EU tax coupled to effort as an alternative to the TAC system. We work with the hypothesis that EU suffers from a fiscal illusion and includes tax revenue in the objective function in order to finance other, also inefficient, operations. Even in the light of these imperfections there are at least two reasons for recommending an EU tax. First, it can be used to correct part of the market failure associated with fishery. Second, it can be used to secure correct revealation of types in the light of asymmetric information.

Fisheries Management with Multiple Market Failures

Within fisheries it is well-known that several market failures exist. However, fisheries economists analyse these market failures separately despite the fact that the market failures arise simultaneously. In this paper several market fail-ures that arise simultaneously are analysed. A resource stock tax and a tax on self-reported harvest are considered as a solution to problems associated with the stock externality, measuring individual catches and stock uncertainty. Within a fisheries economic model it is shown that it will be in the interest of risk-averse fishermen to report a part of their catch even without a control pol-icy. In addition, it is shown that this tax structure can secure optimal expected individual catches and simulations show that the tax payment is very low. Thus, the tax system may be useful in practical fisheries management.Prices regulation, Quantity regulation, Asymmetric Information, Self-Reporting, Stock Tax and Harvest Tax

Moral Hazard Problems in Fisheries Regulation: The Case og Illegal Landings

This paper treats illegal landings as a moral hazard problem that arises, since individual catches are unobservable to society and hence private information. A tax/subsidy mechanism taking into account the asymmetric information problem is formulated as a solution to problems with illegal landings. The incentive scheme uses fish stock size as the tax variable, and can be seen as an alternative to a control policy. Rough estimates from a simulation study suggest that the incentive scheme is potentially useful. The incentive scheme also has potential application as an instrument to the solution of by-catch and discard problems.

MANAGEMENT OF FISHERIES IN THE EU: A PRINCIPAL-AGENT ANALYSIS

In this paper, an EU tax on fishing effort is studied as an alternative to the system of Total Allowable Catches (TACs). The analysis is conducted under imperfect information, and the hypothesis adopted is that the EU lacks information about the costs of individual fishermen. In light of this imperfection, there are at least two reasons for considering an EU tax. First, it can be used to correct part of the market failure associated with fisheries. Second, it can be used to secure correct revelation of fishermen types in light of asymmetric information.Resource /Energy Economics and Policy,

Moral Hazard Problems in Fisheries Regulation: The Case og Illegal Landings

This paper treats illegal landings as a moral hazard problem that arises, since individual catches are unobservable to society and hence private information. A tax/subsidy mechanism taking into account the asymmetric information problem is formulated as a solution to problems with illegal landings. The incentive scheme uses fish stock size as the tax variable, and can be seen as an alternative to a control policy. Rough estimates from a simulation study suggest that the incentive scheme is potentially useful. The incentive scheme also has potential application as an instrument to the solution of by-catch and discard problems

Fisheries Management with Multiple Market Failures

Within fisheries it is well-known that several market failures exist. However, fisheries economists analyse these market failures separately despite the fact that the market failures arise simultaneously. In this paper several market fail-ures that arise simultaneously are analysed. A resource stock tax and a tax on self-reported harvest are considered as a solution to problems associated with the stock externality, measuring individual catches and stock uncertainty. Within a fisheries economic model it is shown that it will be in the interest of risk-averse fishermen to report a part of their catch even without a control pol-icy. In addition, it is shown that this tax structure can secure optimal expected individual catches and simulations show that the tax payment is very low. Thus, the tax system may be useful in practical fisheries management

Regulation of Renewable Resources in Federal Systems: The Case of Fishery in th EU

The EU regulation of fisheries is decided in two levels. The level of the total allowable catch (TAC) for the most important species is decided every year by the Council of Minsters. The TACs are allocated to the Member States as quotas. The Member States determine who is going to harvest the quota. There is, however, an information problem associated with this structure. It does not take into account how efficient fishermen in different countries are. In this paper we model the information problem as an adverse selection problem and analyse an EU tax coupled to effort as an alternative to the TAC system. We work with the hypothesis that EU suffers from a fiscal illusion and includes tax revenue in the objective function in order to finance other, also inefficient, operations. Even in the light of these imperfections there are at least two reasons for recommending an EU tax. First, it can be used to correct part of the market failure associated with fishery. Second, it can be used to secure correct revealation of types in the light of asymmetric information

Technical Efficiency of the Danish Trawl fleet: Are the Industrial Vessels Better than Others?

Technical efficiency in the Danish trawl fishery in the North Sea is estimated for 1997 and 1998 by a stochastic production frontier model. This model allows noise when the frontier and the technical efficiency is found, which for fisheries is a reasonable assumption. The results show that the production frontier can be modelled by a translog function without time effects and a technical ineffi-ciency function. The type of fishery (industrial or consumption), size of vessel (greater or lesser than 60 GRT) and year give a good explanation for the ineffi-ciency in the fleet. The average technical efficiency is estimated to be 0.82. On average, industrial vessels have a higher technical efficiency than human con-sumption vessels, and smaller vessels have higher technical efficiency than lar-ger vessels. In sum, the analysis reveals that vessel larger than 60 GRT and fishing industrial species are the most efficient.Technical efficiency, stochastic production frontier, Danish trawl fishery

Ratcheting in Renewable Resources Contracting

Real life implies that public procurement contracting of renewable resources results in repeated interaction between a principal and the agents. The present paper analyses ratchet effects in contracting of renewable resources and how the presence of a resource constraint alters the “standard” ratchet effect result. We use a linear reward scheme to influence the incentives of the agents. It is shown that for some renewable resources we might end up both with more or with less pooling in the first-period compared to a situation without a resource constraint. The reason is that the resource constraint implies a smaller performance de-pendent bonus, which reduces the first-period cost from concealing information but at the same time the resource constraint may also imply that second-period benefits from this concealment for the efficient agent are reduced. In situations with high likelihood of first-period pooling, the appropriateness of applying lin-ear incentive schemes can be questioned.Political support function, political economy, environmental regula-tion, lobbyism, rent-seeking, taxation, auction, grandfathering, emission trad-ing, European Union, interest groups, industry, consumers, environmentalists