Fishery Economics
The role of economics in fishery regulation
Renewable Resources
ExamplesFisheries todayForests
CharacteristicsNatural growthCarrying Capacity
Motivation
Group Project: Otters eating lots of shellfish, south of Pt. Conception. Marine Fisheries Service considering removing otters, and you are doing a CBA on the policy. What is the damage the otters are causing and thus the value of restricting them to the north of Pt. Conception?
See http://www.bren.ucsb.edu/research/2001Group_Projects/Final_Docs/otters_final.pdf
Some terms we will use
Stock – total amount of critters -- biomass Natural growth rate (recruitment) – biologic
term Harvest – how many are extracted (flow) Effort – how hard fisherman try to harvest
(economic term)
Simple Model of Fish Biology
Exponential growth With constant growth rate, r: = rx x=aert
Crowding/congestion/food limits (drag) Carrying capacity: point, k, where stock
cannot grow anymore: x ≤ k As we approach k, “drag” on system
keeps us from going further Resource limitations, spawning location
limitations
Stock, x
t
t
xk
Put growth and drag together
time
Biomass(x)
x
“CarryingCapacity” (k)
xMSY
Stock that gives “maximumsustainable yield”
GrowthRate
Interpreting the growth-stock curveAKA: recruitment-stock; yield-biomass curves
x
Growth rate of population depends on stock size
low stock slow growthhigh stock slow growth
GR
dx/dt = g(x)
Introduce harvesting
x
H1
H2
H3
H1: nonsustainable extinctionH2: MSY – consistent with stock size Xb
H3: consistent with two stock sizes, xa and xc
xa is stable equilibrium; xc is unstable. Why??
xc xbxa
GR
Introduce humans
Harvest depends on How hard you try (“effort”); stock size; technology H = E*x*k
x
kEHx
kELx
H
k = technology “catchability”E = effort (e.g. fishing days)x = biomass or stock
Harvest for low effort
Harvest for high effort
Will stock grow or shrink with harvest?
If more fish are harvested than grow, population shrinks.
If more fish grow than are harvested, population grows. For any given E and k, what harvest level is just
sustainable?
This can be solved for the sustainable harvest level as a function of E: H(E) Solve (1) first for x(E) Substitute into (2) to get H(E)
Where k*E*x = g(x) (1)and
g(x) = H (2)
“Yield-effort curve”
H(E)
E
Gives sustainable harvest as a function of effort level
Notice that this looks likerecruitment-stock graph. This is different though it comes from recruitment-stock relation.
Introduce economics
Costs of harvesting effortTC = w•E
• w is the cost per unit effort
Revenues from harvestingTR = p•H(E)
• p is the price per unit harvest
Draw the picture
$
TR=p*H(E)
TC=w*E
E
MC=AC
MR$/E
E
w
Rentsto thefishery
EOAE*
Value of fisherymaximized at E*.Profits attract entryto EOA (open access)
Open Access vs.Efficient Fishery
AR
EMSY
Open access resource
Economic profit: when revenues exceed costs (not accounting profit)
Open access creates externality of entry. I’m making profit, that attracts you, you harvest fish,
stock declines, profits decline. Entrants pay AC, get AR (should get MR<AR)
So fishers enter until AR = AC ( TR = TC) But even open access is sustainable
Though not socially desirable What is social value of fish caught in open access
fishery? Zero: total value of fish = total cost of catching them
Illustration of equilibria
X
SustainableCatch
Maximum Sustainable Yield (Effort EMSY)
Efficient Catch (Effort E*)○
○
Open Access Catch(Effort EOA)
○
Note: efficient catchlets biology (stock)do some of the work!
Mechanics of solving fishery pblms (with solutions for specific functions)
Start with biological mechanics: G(X) = aX – bX2 [G, growth; X stock]
Harvest depends on effort: H=qEX Sustainable harvest when G(X) = H
First compute X as a function of E Then substitute for X in harvest equation to yield H(E) which will
depend on E only Costs: TC = c E Total Revenue TR=p*H(E) where p is price of fish Open access: find E where TC=TR Efficient access: find E where
Marginal revenue from effort (dTR/dE) equals Marginal cost (cost per unit of effort)
Example: NE Lobster Fishery
Bell (1972) used data to determine catch (lb. lobsters) per unit of effort (# traps), using 1966 data H(E) = 49.4 E - 0.000024E2
Price is perfectly elastic at $0.762/lb. Average cost of effort: $21.43 per trap Open access equilibrium: TC = TR
E=891,000 traps; H=25 million lbs. Compare to actual data: E=947,000;H=25.6 million lbs.
Maximum Sustainable Yield E=1,000,000 traps; H=25.5 million lbs.
Efficient equilibrium E=443,000 traps; H=17.2 million lbs.