On Catch Discarding in Fisheries

This paper examines the economics of catch discarding in fisheries. To study this issue a simple dynamic fisheries model is constructed. On the basis of this model it is demonstrated that in a differentiated fishery discarding of catch may be socially optimal. The paper goes on to show that individual firms in a free access, competitive fishery employ the socially optimal discarding rule. In contrast, the individual transferable quota (ITQ) fisheries management regime tends to generate an excessive incentive for discarding catch. The problem, however, does not appear to derive from the ITQ .system as such. Rather, it seems to depend on the imperfect application of the system to real fisheries. The concept of a discarding function is defined and it is shown that at least within the framework of the model employed the discarding function for an ITQ fishery dominates the one for free access, competitive fisheries. Numerical examples are provided. Finally, possible remedies of the discarding problem are briefly discussed.Fisheries economics, ITQs. discarding, highgrading, discarding function, differentiated fishery, Environmental Economics and Policy, Production Economics, Resource /Energy Economics and Policy,

The Icelandic Individual Transferable Quota System: A Descriptive Account

This paper provides a brief description of the evolution and current structure of the individual quota system (IQ) in the Icelandic fisheries. This particular fisheries managerial system was introduced at different times in different fisheries — in the herring fisheries in 1976, in the capelin fishery in 1980 and the demersal fisheries in 1984. Since 1990 all Icelandic fisheries have been subject to a uniform system of individual transferable quotas (ITQs). The paper discusses the social and economic impetus for the initial adoption of the ITQ fisheries system in the various fisheries, sketches its subsequent development and describes the key elements of the current system. Assessments of the economic impact of the ITQ system are presented in the last part of the paper. Although a definitive study of this impact is not available, the various indicators presented generally indicate an improvement, sometimes substantial one, in the economic efficiency of the fisheries in question.Individual transferable quotas, fishery management, economic impact and performance, Environmental Economics and Policy, Production Economics,

Advances in Property Rights Based Fisheries Management: An Introduction

Environmental Economics and Policy, International Relations/Trade,

THE NORWEGIAN SPRING-SPAWNING HERRING FISHERY: A STYLIZED GAME MODEL

This paper presents an empirically based, game-theoretic model of the exploitation of the Norwegian spring-spawning herring stock, also known as the Atlanto-Scandian herring stock. The model involves five exploiters; Norway, Iceland, the Faroe Islands, the EU, and Russia and an explicit, stochastic migratory behavior of the stock. Under these conditions Markov Perfect (Nash) equilibrium game strategies are calculated and compared to the jointly optimal exploitation pattern. Not surprisingly, it turns out that the solution to the competitive game is hugely inefficient, leading very quickly to the virtual exhaustion of the resource. The scope for cooperative agreements involving the calculation of Shapley values is investigated. Although the grand coalition of all players maximizes overall benefits, such a coalition can hardly be stable over time unless side payments are possible.Resource /Energy Economics and Policy,

Efficiency Advantages of Grandfathering in Rights-Based Fisheries Management

We show that grandfathering fishing rights to local users or recognizing first possessions is more dynamically efficient than auctions of such rights. It is often argued that auctions allocate rights to the highest-valued users and thereby maximize resource rents. We counter that rents are not fixed in situ, but rather depend additionally upon the innovation, investment, and collective actions of fishers, who discover and enhance stocks and convert them into valuable goods and services. Our analysis shows how grandfathering increases rents by raising expected rates of return for investment, lowering the cost of capital, and providing incentives for collective action.Fishing rights, property rights, allocating fishing rights, grandfathering fishing rights, auctions of fishing rights, fisheries rent

Costs of Fisheries Management: Theoretical and Practical Implications

This paper considers the costs of fisheries management. It starts by reviewing the costs of fisheries management in Iceland, Newfoundland and Norway. The outcome of this study, as well as information from other countries, indicates that fisheries management costs are generally quite substantial relative to the value of landed catch. It follows that the common practice of ignoring fisheries management costs in the derivation of optimal fisheries rules and the actual design of fisheries policy is generally erroneous, perhaps seriously so. The necessary modifications of the usual fisheries optimality conditions are derived and the quantitative implications discussed. The existence of significant fisheries management costs obviously raises the issue of the most efficient provision of these services. How much fisheries services should be provided, by whom and who should pay the cost? The last part of the paper deals with this type of questions. Although not many general results seem to be readily available, it appears that efficiency would generally be served by a diminished role of the central government in this area

Fisheries Rents: Theoretical Basis and an Example

The concept of natural resource rents is much used in the natural resource and fisheries economics literature. It is therefore somewhat surprising that in this same literature it is difficult to find a clear definition of either natural resource rents or fisheries rents. Possibly, as a result, the concept is often loosely employed and in some texts it appears to be taken to be virtually synonymous with profits. This paper begins by attempting to provide a definition of the concept of natural resource rents in general and fisheries rents in particular that is both unambiguous and in conformance with the more traditional concept of economic rents as originally proposed by D. Ricardo in the early 19th century. On this basis, the paper goes on to elucidate the properties of the fisheries rents function and how it depends on the rate of harvesting, stock level and, indeed, fisheries management. With the theory clarified, the paper discusses the practicalities of estimating resource rents on the basis of empirical data and what steps need to be taken in order to obtain such estimates. The estimation of rent loss, since it unavoidably compares actual rents with potential ones both of which typically evolve over time, poses a different set of problems. These are discussed in the paper and options suggested. Finally, mainly for illustrative purposes, the global ocean fishery is used as an example of the estimation of rent loss in fisheries

On the Economic Distortion of Pure Resource Rent Taxation

It is often taken for granted that taxation of rents is economically nondistortive. In certain areas of natural resource use, e.g. oil extraction and fisheries, this nondistortion principle has been used to justify taxation of what is regarded as resource rents. This paper challenges the view that such taxation is generally nondistortive. Within the framwork of a general model of natural resource extraction, the paper argues that taxation of resource rents will in general affect the time profile of natural resource extraction. The paper, moreover, argues that through its impact on exit and entry, resource rent taxation will generally affect the number and composition of firms in the industry and may in this way have a secondary efficiency impact

Rents and Rents Drain in the Icelandic Cod Fishery

This paper estimates current resource rents being generated in the Icelandic cod fishery and compares them to the maximum sustainable attainable ones. For this purpose a simple aggregative model of the cod fishery is specified and empirically estimated. It is found that in spite of the cod stock being in a fairly depressed state, substantial economic rents are currently being generated in this fishery. No doubt this is primarily due to the effects of the ITQ system in this fishery. Current rents, however, are only about a third of the rents that would pertain in a profit maximizing sustainable position of this fishery. Thus, compared to the maximum, the Icelandic cod fishery appears to be subject to significant rents loss. Most of the rents gain from the current position of the fishery to the profit maximizing sustainable position is due to an increased cod stock. A much smaller part is due to reduced fishing effort