This article looks at government policies to correct the externality ofoverfshing. A negative externality of production is a spillover efect due toproduction that has a negative impact on a third party. This is market failure,whereresources arenot allocatedefcientlyor inthebest interests ofsociety.The rimary !ndustry "inistry has lowered the #uota of fsh for recreationalfshermen from $ to % and increased the minimum si&e to reduce the amountthat can be caught. This is an externality because fsh are a common accessresource, goodswhichnooneowns. eoplewill unsustainablyusetheseresources for their own beneft. As a result, the next generation of fshermen,a third party, is impacted negatively. Also, due to scarcity, the consumers ofthe next generation are also afected because they must face higher pricesof fsh.The amount of the externality is shown by the arrow between the "' and"('. The e#uilibrium price isand the #uantity is ). *owever, the sociale#uilibrium is shown byopt and ) opt, meaning that currently, "' doesnote#ual the"(', somarketfailurehasoccurredandresourcesarenotefciently allocated. !n this case, fsh is underpriced and overproduced. Theshaded area shows the welfare loss due to the overallocation of resources tothe production of fsh. As the government wants resources to be allocatedefciently, they must correct the externality.Thegovernment hasdecreased fshing #uotas tomake itmoredifcult tocatch smaller fsh and correct the externality.A #uota limits the number of fsh that can be caught per day, so recreationalfshermenproducefewer fshper day, loweringsupplyandshiftingthesupply +"', curve leftward, to "('. !n doing this, the current e#uilibriumprice and #uantityand ) will also shift toopt and ) opt. The externalityandwelfarelosshavebeeneliminated, andresourcesarenowefcientlyallocated.-nfortunately, this may not work as planned..irstly, it is difcult to measure the amount of the externality, soimplementing an accurate #uota will also be difcult. The government optedto decrease the #uota to % instead of / per day, possibly because they wereunsure of the cost of the externality.Also, as shown by the article, the #uota is aimed at recreational fshermen,not fshingcompaniesthatproducemuchmorethanthem. Thesefshingfrms contributetooverfshingmorethanrecreational fshermen, sothe#uotawill not beefectiveinreducingthenumberof snapper caught orcorrecting the externality. As "andy 0upenga says,1they2re reducingpeople2s abilitytocatchfshfor somethingthat2s not goingtomakeamaterial diference.3 !t would be more efective to implement it on fshingfrms to limit their catches, which would have a more noticeable efect on theproblemof overfshing. The government could be limiting recreationalfshermen only, because fsheries are a ma4or industry they do not want tolose.Thus, the government2s implementation of a #uota in this situation will notbe very efective at reducing the production of fsh.Another option is implementing a tax on the earnings of fshing frms. Thefshing frms are discouraged from supplying fsh, so the supply curve shiftsto the left until it is e#ual to "('.Thetaxhasthesameresult asthe#uota, withsocial e#uilibriumbeingreached and the correction of the externality, but has additional advantages..irstly, the government now earns tax revenue, which it can spend on otherbenefcial sectorsof theeconomy. Therevenueearnedisshownbytheshaded area.Also, this policy is targeted at the large fshing frms who contribute the mostto unsustainable overfshing, so it would be more efective in correcting theexternality.*owever, it faces the same weaknesses the #uota,in that itisdifcult tomeasuretheamount of theexternalityandcalculateataxrate. Also, itsufers from the disadvantage in that if the supply of fsh is inelastic, a hightax rate would be needed to cause noticeable changes in the supply of fsh.5uetofrmsfacinghigher costs, somefshingemployeesmaybefred.'onsumers will be afected because they have to face higher prices of fsh,which increases when #uantity supplied decreases..urthermore, this policy internalises the externality, because it is now paidfor by the producers themselves.6verall, thetaxis moreefectivebecauseit corrects theexternalitybytargeting the right party and generates government revenue.%78 wordsMiddle ground in snapper quota cutsRecreational fishers will now be able to catch seven snapper a day, after the Government abandoned plans to slash the quota from nine to three.But the fishers will now have to catch bigger fish - and they are not happy.Primary Industries inister !athan Guy said this afternoon the limit reduction was needed because recreational fishers in the upper !orth Island"s east coast had been catching well above the set allowance in recent years.#he announcement follows ministry consultation on how to manage and rebuild !ew $ealand"s northern snapper population, which has %collapsed% alarmingly in recent years.#he process spar&ed outrage among recreational fishers due to a plan to cut the daily catch to three.'ishers will now be allowed to catch seven snapper a day, measuring () centimetres long - up from *+cm.#housands of submitters emailed the Government opposing the original quota cut, with many furious at the perceivedhypocrisy of changing recreational limits while commercial quotas went largely untouched.#he reaction to today"s decision was swift.andy ,upenga, spo&eswoman for recreational fishing advocacy group -ega.ea, said the reduced limit and bigger si/e was unfair.%#hey0re reducing people0s ability to catch fish for something that0s not going to ma&e a material difference on the rebuild of the fishery,1 she said.2#hree centimetres may not sound li&e much but 3) per cent of people fish from the shore and it will ma&e a huge difference to them.14ngler 'orsyth #hompson said the decision was %utterly disgraceful".%It0s a blatant disregard for normal people of !ew $ealand.1#he changes relate to what is called the .napper 5 'ishery area, which runs from the top of eastern !orthland to the Bay of Plenty.#he fishery is one of the most heavily used by recreational anglers in !ew $ealand and the inistry for Primary Industries said it was those fishers who were pushing the number of snapper into danger..ince 566+ recreational fishers in the area had been allowed to ta&e *77) tonnes a year. But on average for the last five years the recreational catch has been estimated at ((87 tonnes a year.Recreational fishers believe they have been unfairly landed with the responsibility of rebuilding the snapper stoc&. .ince 5697 they have had four cuts to their bag limits and si/e. :ommercial fishing limits have remained largely unchanged since 5698.;uring the consultation, there were three ma