KONSTANDINA KOUTSOUBA PhD Candidate ATHANASIOS KAMPAS Assistant Professor

1. KONSTANDINA KOUTSOUBA PhD Candidate ATHANASIOS KAMPAS Assistant Professor DEPT. OF AGRICULTURAL ECONOMICS AND DEVELOPMENT AGRICULTURAL UNIVERSITY OF ATHENS Utilizing different bargaining frameworks to solve the riddle of the initial allocation of fishing quotas: the case of the Mediterranean Swordfish

2. International Fisheries Resources • Stocks freely accessible to more than one nations • Non efficient use of the available fish stocks, open-access conditions prevail • Lack of a «global government» • Two thirds of the species managed by RFMOs have been depleted, overfished or both, (Cullis-Suzuki & Pauly, 2010) • 1982, Third United Nations Convention on the Law of the Sea (UNCLOS III) • Adoption of the Exclusive Economic Zone for each nation • Issue left opened: the international fisheries resources Need for further cooperation

3. International Environmental Agreements • Basic tool for cooperation • Result and desired outcome of a bargaining process • Main characteristics: i) Self-enforcing and ii) Stable Basic issues of the bargaining process: Level of Total Allowable Catch (TAC) Initial allocation of TAC

4. Defining the goal • The issue at stake: ‘Who gets what?’ (Hoel and Kvalvik, 2006) • The goal: Acceptable & Fair initial allocation

5. The case of the Mediterranean Swordfish • Characteristics of the species • Highly migratory fish • Unique (genetically )fish stock • Widely distributed in the Mediterranean, • Spawning is confined to certain areas • Characteristics of the fishery • Landings ～11,000 to 16,000 tones • Thirteen countries have officially reported catches of Mediterranean Swordfish in year 2008. • Spain, Italy, Greece and Morocco, countries with the greatest number of catches

7. Management Issues • International Commission for the Conservation of Atlantic Tunas(ICCAT) • From 21 countries, only three countries, Turkey, Israel and Libya have not signed the UNCLOS agreement while Syria although that it signed it, it has not yet ratified it. • To date, it has not been assigned a Total Allowable Catches. • Threat: In 2009 Tserpes et al. reported a crucial reduction of stock spawning biomass that is estimated from 24% to 38% during the last twenty years.

8. The set up of the Game The Hypothesis Nations engaged in the fishing of the Mediterranean Swordfish are willing to cooperate, setting as goal to limit the total catches of the stock by the hypothetical percentage of 20% The theoretical question Which would have been then, the most appropriate way, to allocate shares among them? The Game N= 2 agents, A= EU countries and B= Non-EU countries • 5 different allocation rules considered • 2 different bargaining frameworks examined • The Nash bargaining solution • The Kalai-Smorodinsky solution

9. The five allocation rules (1) 5 different allocation rules determine agents’ pay-offs di,the initial claim D=Σdi , total amount of the unregulated catches p, represents the proportion of the agreed reduction in the unregulated catches ei stands for the individual TAC • TAC=E=Σei=(1-p)Σdi,=(1-p)D

10. The five allocation rules (2) 5 different allocation rules determine agents’ pay-offs • Equal Proportional Rule (R1) the demand of each player is equally reduced by the percentage of the agreed reduction • Constrained Equal Award Rule (R2) the available amount E (TAC in this case) is split equally provided that no one gets more that its individual claim where a =E / N where N stands for the number of agents

11. The five allocation rules (3) • Constrained Equal Loss Rule (R3) the loss D-E is equally shared provided that no one gets a negative share • Pineles Rule (R4) each player is getting half of its claim and the remaining quantity is equally distributed • Allocation Rule based on historical data (R5) where μi is the long-run average of fish catches

12. Τhe data Reference year 2007 Hypothetical goal • p=20% reduction of total catches • E=11.362 tns available for sharing among the two players

13. Solutions: applying the rules

14. The Nash bargaining Nash approach If uA, uB are the utilities for players 1 and 2 respectively, and tA, tB the corresponding threat points

15. Τhe Nash bargaining solution Nash product obtained for each rule Solution obtained based on the Nash approach SN= R4, Pineles Rule= (7328.25, 4033.75)

16. Τhe Kalai-Smorodinsky bargaining solution Solution obtained based on Kalai-Smorodinsky approach SK( CAK, CBK) = (7839, 3523) using euclidian distance SK = R5, based on historical data = (7681, 3681)

17. Results • The two bargaining approaches examined resulted in different outcomes • The rule obtained under Nash bargaining is the Pineles Rule • The Kalai-Smorodinsky results in an allocation rule based on historical data • The choice of a methodology determines the result

18. Limitations • Threat point equals to zero • Symmetric bargaining power • Restriction of a game with two agents ….working further!!!

19. Related literature • Bjørndal, T. and Munro, G.R. (2003). “The Management of High Seas Fisheries”. In H.Folmer and T. Tietenberg (Eds.): The International Yearbook of Environmental and Resource Economics 2003/2004. Cheltenham, UK: Elgar, pp 1-35. • Armstrong, C., W., (1994). "Cooperative solutions in a transboundary fishery: The Russin-Norwegian co-management of the Arcto-Norwegian cod stock." Marine Resource Economics 9: 329-351 • Inarra, E., Skonhoft, A. (2008). "Restoring a fish stock: A dynamic bankruptcy problem “ Land Economics 84(2): 327-339. I thank you