Economics for Fisheries Management

R. Quentin Grafton, James Kirkley, Dale Squires

• Publisher: Routledge
• Year: 2017
• Print ISBN: 9780754632498
• eBook ISBN: 9781351941839
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Many of the world's fisheries face major challenges including overfishing, overcapacity and low returns. Using recent developments in microeconomic theory and with numerous case studies and examples, this book shows how to measure efficiency, productivity, profitability, capacity of fishing fleets and how to improve fisheries management. The book will prove invaluable to researchers, students and professionals interested in understanding the problems in fisheries and how they may be overcome.

Chapter 1
The Economics of Fishing and Fisheries Economics

Historically, the emphasis was given to the fish. More recently, it has been seen to be necessary to pay more attention to the complex of social, economic, and political factors that drive the behavior of fishermen as individuals and fisheries as systems.

Peter Larkin (1978, p. 57) in Fisheries Management – An Essay for Ecologists.

1.1 Introduction

Many of the world’s fisheries are challenged by a combination of overcapacity, overharvesting, habitat damage and poor economic returns. For the first time ever it appears the world’s total harvest of fish from wild stocks is in decline because of over-fishing (Hilborn et al. 2003). The challenge is such that over a decade ago the Food and Agricultural Organization of the United Nations noted ‘… many conservatively-targeted quota management systems have failed, even for proprietary resources of EEZs,…’ (FAO 1993, p. 37).

In an attempt to address these difficulties managers are looking for innovative ways to address the ‘tragedy of the commons’ whereby individuals operating in their own self interest overexploit a common-pool resource which is open to all (Hardin 1968). At the forefront of ‘new’ thinking about fisheries is the so-called ecosystem approach (Pikitch et al. 2004) that places a much greater weight on integrating management across fisheries and maintaining healthy ecosystems (habitats, biodiversity, resilience to shocks, etc.).

While an integrated approach to fisheries is helpful, and new approaches are most certainly required to prevent further declines (Pauly et al. 2002), without careful attention by regulators to fisher incentives little will be accomplished. We contend that the biggest barrier to sustaining fisheries is not our ignorance of marine ecosystems, nor is it a lack of goodwill from those involved in fishing. Rather, the stumbling block to better fisheries management is a profound lack of understanding of the behavior of the oceans’ greatest predator – the commercial fisher.

This chapter, and indeed the entire book, is about how to understand and how to analyze fisher behavior from an economic perspective. Too frequently managers are perplexed by the lack of support by fishers for necessary cuts in the Total Allowable Catch (TAC). If fishers protest against cuts in the current TAC, even when this imposes significant risks for the sustainability of the stock, a fisheries economist would not presume that fishers are acting irrationally. Rather, she would examine what are the incentives and motivation for fishers to act in such a myopic fashion. For example, in the New England groundfish fisheries many commercial fishers oppose cuts in the TACs despite the fact that lower catches for a while would likely result in higher catches in the future. This is not irrational behavior, but simply fishers responding to incentives. Given that the New England groundfish fisheries are primarily regulated by input controls, especially limits on days at sea, if the currently active fishers ‘stinted’ or lowered their harvests they would have little assurance that they would be the beneficiaries of such conservation (Hilborn et al. 2005). Indeed, with a large amount of latent effort and vessels not currently active in the fishery, but which would have the necessary licences to enter the fisheries should it become profitable to do so, it makes little sense for existing fishers to support catch reductions that impose real short-term costs for very little expected future benefit.

Our contention is that a much greater attention to fishers, their incentives and how regulations affect fisher behavior will pay handsomely in terms of more sustainable fishery outcomes. Obviously other approaches are also required to promote sustainability, such as the use of marine reserves (Grafton et al. 2005), but a greater focus on fishers will go a long way to support healthy marine ecosystems and improve the economic performance of fisheries.

In this chapter we present a model of the economics of fisheries that describes why many fisheries are overexploited from both a biological and economic perspective. We also explain what we mean by fisheries economics, and briefly describe the principal approaches we will use in this book to measure and analyze fisher behavior and fishery performance.

1.2 An All Too Common Tragedy

The history of fishing is replete with examples of fisheries that have been exploited to commercial extinction (Schiermeier 2002). The basic cause is not the rapaciousness of fishers, but principally arises from the characteristics of fisheries – harvests are rivalrous, fish are fugitive and thus are difficult to ‘own’ and manage, and fisheries are subject to irreducible uncertainties. The rivalry in fishing comes from the fact that fishers harvest from a resource limited in size such that what one fisher catches today cannot be caught tomorrow by somebody else. This is sometimes called the ‘common-pool’ problem because each fisher is using a common resource in which the yield, at a given stock size, is more or less fixed by nature.

In a fishery if a skipper decides not to harvest until later, he potentially benefits all other competing skippers. In general, it would be in the interests of all those who fish to agree to restrict their catch to prevent overexploitation. Such a cooperative outcome, however, is difficult to enforce and ‘shirking’ is likely in large-scale fisheries prosecuted by many vessels. In such fisheries, each vessel has an incentive to ‘free ride’ once a deal has been struck, by increasing harvest while others are reducing theirs. The problem with fishing is that it is difficult to prevent or exclude others from using the resource. Unlike with land, for example, a fence cannot be placed around fish in the sea and the costs of excluding other users are much higher than with many terrestrial resources.

The absence of one, property rights over the fish, two, effective management of the resource, three, cooperation among harvesters and four, ‘free’ entry into a fishery by outsiders is commonly called an open access resource. In open access, the harvesting costs imposed on others are not taken into account by fishers when they make their decision as to how much fish to catch. These costs include less fish for others to catch, but may also encompass habitat damage, and also congestion costs if vessels all try to catch fish at the same locations at the same time. Such costs are what economists call negative externalities and suggest that, in the absence of management, ownership or controls on fishing, there will be too much fishing, and too many fish harvested. In essence, this is what has come to be called the ‘tragedy of the commons’.

The policy action proposed to prevent the ‘tragedy of the commons’ in fisheries has been to restrict access to fishing grounds, and to limit the Total Allowable Catch (TAC) by fishing fleets. The goal has been to prevent over-fishing and ensure sustainable harvesting. Despite a huge expenditure by regulators totalling billions of dollars to determine stock sizes and the appropriate TAC, there have been several spectacular stock collapses. One of the largest and most recent was the northern cod fishery off the coast of Newfoundland and Labrador in the early 1990s, which is still at a tiny fraction of even its depleted size in the 1980s. Stock collapses are the most extreme examples of management mistakes, but they exist in one form or another in most fisheries.

A principal cause of collapses, and other problems in fisheries, is the lack of appropriate incentives and institutions that encourage fishers to behave in a sustainable way. The consequences of poor institutions include a lack of resilience – characterized by a poor ability of fish stocks to bounce back following a downturn or a negative environmental event – and also habitat damage, poor average returns to fishers, conflicts among fishers and undesirable fishing practices.

1.3 An Economic Perspective of Fisheries Management

The traditional approach to ‘managing’ fisheries has been to place the fish before the fisher. In many fisheries, the number one priority has been to maintain fish stocks, and it was presumed that by controlling fishing effort this goal could be achieved. Re...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contents
• List of Figures
• List of Tables
• Foreword
• Preface
• Acknowledgements
• List of Abbreviations
• 1 The Economics of Fishing and Fisheries Economics
• 2 Data for Economic Analysis of commercial Fisheries
• 3 Measurement and Analysis of Efficiency in Fisheries
• 4 Understanding and Measuring Capacity in Fisheries
• 5 Measuring Productivity and Decomposing Profits in Fisheries
• 6 Economics for Fisheries Management
• Glossary
• Index