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Chapter 14

Chapter 14. Renewable Common-Pool Resources: Fisheries and Other Commercially Valuable Species. FIGURE 14.1 Relationship between the Fish Population and Growth. Underlying Assumptions. Assumptions of the economic model are: price of fish = constant (price-taker) marginal cost = constant.

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Chapter 14

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  1. Chapter 14 Renewable Common-Pool Resources: Fisheries and Other Commercially Valuable Species

  2. FIGURE 14.1 Relationship between the Fish Population and Growth

  3. Underlying Assumptions • Assumptions of the economic model are: • price of fish = constant (price-taker) • marginal cost = constant. • amount of fish caught per unit of effort is proportional to the size of the fish population.

  4. 3 Possible Solutions • 1. Open (unregulated) Fisheries (Ec) • Catch until total costs exceed revenues (up to zero profits) => ATC(Q) = TotRev(Q) = P*Q • 2. Maximum Sustainable Yield(MSY) (Em) • Largest “harvest” that can be sustained every year (harvest = replacement rate) • Biologist solution • 3. Economically Efficient (Eo) • Maximize Economic Value (MC(Q) = MR(Q)

  5. FIGURE 14.2 Efficient Sustainable Yield for a Fishery

  6. Raising the real cost of fishing through regulation is another policy option. • Raising the marginal cost of effort results in a lower harvest and higher stock sizes. • While the policies may result in an efficient catch, they are inefficient because the efficient level of catch is not caught at the lowest possible cost. • Technological innovations have lowered the cost of fishing, offsetting the increases imposed by regulations.

  7. Policy Options • Command and Control (Regulation) • Set Quota for number of fish that can be caught • Ignores differences in costs/efficiency of fishermen • Can lead to over capacity (too many boats, too big) • Discarded catch/by-catch issues • Tradable permits (ITQs) • Determine optimal “harvest” and number of licenses to be issued • Divide quota/target by number of license = #fish caught per license • Auction or grandfather licenses • Allow owners to trade (one-year, or multi-year) • Multi-species/by-catch • Taxes • Per unit tax on the #fish caught

  8. Individual Transferable Quotas (ITQs) • An efficient quota system will have the following characteristics: • The quotas entitle the holder to catch a specified volume of a specified type of fish. • The total amount of fish authorized by the quotas should be equal to the efficient catch level for that fishery. • The quotas should be freely transferable among fishermen.

  9. Taxes also raise the real cost of fishing, but do so in an efficient manner. • Unlike regulations, the tax can lead to the static-efficient sustainable yield allocation because the tax revenues represent transfer costs and not real-resource costs. • Transfer costs involve the transfer of resources from one part of society to another. • For the individual fisherman, however, a tax still represents an increase in costs.

  10. FIGURE 14.7 Effect of Regulation

  11. TABLE 14.1 Countries with Individual Transferable Quota Systems

  12. Subsidies and Buy Backs • One of management options to reduce overcapacity. • Payments used to buy out excess fishing capacity are useful subsidies, but if additional capacity seeps in over time, they are not as effective as other management measures.

  13. Marine protected areas and marine reserves are areas that prohibit harvesting and are protected from other threats such as pollution. • Marine protected areas are designated ocean areas within which human activity is restricted. • Marine reserves protect individual species by preventing harvests within the reserve boundaries.

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