1 / 15

AGEC/FNR 406 LECTURE 27

AGEC/FNR 406 LECTURE 27. Fisheries, Part II. Static-efficient sustained yield. Gordon model (simplest approach) Goal: determine a catch level that provides the largest net benefit

graham
Download Presentation

AGEC/FNR 406 LECTURE 27

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. AGEC/FNR 406 LECTURE 27 Fisheries, Part II

  2. Static-efficient sustained yield Gordon model (simplest approach) Goal: determine a catch level that provides the largest net benefit Solution: find output level where marginal cost and marginal benefit are equal (i.e. where the distance between total revenue and total cost is at a maximum)

  3. Assumptions, part 1: Benefits: Benefit determined by total revenue: TR = P * Q P = Price Market price reflects value to society Price per unit of catch is constant (fishery represents small portion of the overall market) Q = Quantity Catch per unit of fishing effort is proportional to population

  4. Assumptions, part 2: Costs: Cost determined by total cost: TC = FC + VC (But here we ignore fixed cost (FC) which is a “sunk” cost) Variable cost (VC) determined by “fishing effort” VC = labor + equipment + fuel + depreciation, etc. Total cost proportional to effort. For given amount of effort, yield (Y) is proportional to population (X)

  5. Four steps required: 1. Map the effort-catch relationship 2. Convert sustainable yield function to effort-based relationship 3. Create total revenue (benefit) function by multiplying catch*price 4. Combine total revenue and total cost to find optimal level of effort (MB=MC)

  6. YE3 Catch (C) E3 > E2 > E1 YE2 Catch rises with effort and pop. YE1 Fish population (X) Step 1: map pop & effort into catch Start with yield-effort relationship(Kahn, Figure 10.6)

  7. Catch (C) C2 C3 C1 E1 E2 E3 Fishing effort (E) Step 2: effort and sustainable yield As effort increases…catch rises then falls.Why? Higher catch reduces pop growth.

  8. G2 Growth of population (G) G1 X1 K X2 Fish population (X) increasing  Effort (E) increasing Compare with Logistic Growth Function(Kahn, figure 10.1) Same shape, but x-axis is reversed

  9. Step 3: compute total revenue Total Revenue = Catch x Price C2 Catch (C) C3 TR C1 E1 E2 E3 Fishing effort (E)

  10. Step 4: add total cost to find E* Total Revenue = Catch x Price } C* TR-TC TR E* Fishing effort (E) TC Catch (C)

  11. Summary of static-efficient sustained yield model Efficient catch occurs where MC = MR MC is slope of cost curve MR is slope of revenue curve Observations Efficient catch less than maximum sustainable catch (exception is where MC = 0) Efficient catch leads to larger population level than maximum sustainable catch.

  12. Application #1: Technology change Read “The Fish Crisis” Impact of better fishing technology? Drives down the cost of fishing. Impact on level of catch? Impact on population?

  13. Cost-reducing technologyeffort increases, catch rises, population falls TC C** C* Catch (C) TR E* E** Fishing effort (E)

  14. Application #2: open access What does “open access” mean? Fishery open to all who “can afford to fish” Someone can afford to fish as long as TR equals or exceeds TC Maximum total effort is where TC = TR Economic rent (profit) dissipated at this point This level of effort is greater than efficient level where MC = MR (Relate “Fishy Economics” to the graph)

  15. Open access As long as TR>TC, new fishermen enter fishery… Result: effort increases, catch falls, population falls TR =TC C* C** TR E* E** Fishing effort (E) TC Catch (C)

More Related