fisheries science and political expediency: can the two be reconciled?
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Fisheries Science and Political Expediency: Can the Two be Reconciled?. Ragnar Arnason. An address at the FAME workshop Social and natural science in marine renewable resources. University of Southern Denmark June 6-8 2007. Organization of Talk. The fisheries management problem - PowerPoint PPT PresentationTRANSCRIPT
Fisheries Science and Political Expediency:Can the Two be Reconciled?
An address at the FAME workshop
Social and natural science in marine renewable resources
University of Southern Denmark June 6-8 2007
Ragnar Arnason
Organization of Talk
I. The fisheries management problem
II. Who is responsible?
III. Why fisheries mismanagement?
IV. A possible solution
V. Main conclusions: Summary
Section I.The fisheries management problem
The global (marine) fishery(FAO data)
• Substantial stock overexploitation(Stocks: 2/3 of stocks≤MSY, 1/3 severely depleted)
• Excessive fishing capital(Global fleet 20-25 m. GRT; 2-3 times needed)
• Excessive fishing effort(Approximately 2 times what is optimal)
• Little net economic benefits(Losses 5-10 billion USD; most fishermen are poor)
Global Fisheries Rents LossGlobal Fisheries Rents Loss
Sustainable global fishery: Current and profit maximizing outcomes
Current
Profit maximization
Difference (optimal –current)
Fishing capital 22 m. GRT 8 m. GRT -14 m. GRT Fishing effort 13.9 m. GRT 7.3 m. GRT -6.6 m. GRT
Harvest 85 m. mt 93 m. mt. +8 m. mt. Biomass 123 m. mt 254 m. mt. +131 m.mt.
Profits -5.3 b. USD 41.6. b.USD 46.9 b.USD Rents 0 b. USD 50.8 b. USD 50.8 b. USD
0 10 200
100q effort( )
cost effort( )
effort CurrentOptimal
Global fishery: IllustrationGlobal fishery: Illustration
Global fishery: Another view
0 200 4000
50
100Sustainable revenues and costs
Revf x( )
Cf x( )
x xBiomass
Growth,
yield
Current
Optimal
Individual fisheries
• Pretty much the same applies to individual fisheries– Few exceptions (less than 1/5 of global fisheries)
Global fisheries mismanagement of great proportions!
Section IIWho is responsible?
Governments are responsible!!• Have (formal) fisheries management powers
– Over time have usurped rights to (ocean) fisheries– This is demonstrated by historical research (A. Scott, England,
the colonies, Denmark, Iceland, USA etc.)
• Have taken (at least ”de facto”) ownership of many/most natural resources– Sovereignty powers– Environment, many commercial resources (e.g. land), wild
animals etc.
• No-one else has management powers
Why have governments mismanaged?-- Four hypotheses -
1. Lack of fisheries science understandingNo – Well known for over 50 years
(Warming 1911, Gordon 1954, Scott 1955 etc.)
Plenty of material, arguments and pleadings
Much better understood that many other fields of science into which money is poured
2. Lack of fisheries management understanding
No – Well known for over 25 years(Scott 1955, Christy 1973, Arnason 1977, Mploney and Pearse 1979)(Evidence: Holland, Iceland 1976, New Zealand 1982 ….etc.)
Four hypotheses (cont)
3. Lack of data No - Do not really need much data for reasonable
management (basically MSY and MSYx will do fine)
- For most fisheries, ample data available
4. Lack of will (political will)!
This hypthesis I cannot reject!
Example: The Icelandic cod fishery
• Economically very important
• Very well researched and understood
• Nevertheless, poorly managed
• Management history– Pre 1976: Almost no management (inadequate national control)
– 1976-78: TAC regime– 1978-84: Effort/capital restrictions– 1984-90: ITQ/effort limitations mix– 1991-04: ITQs with exceptions (small vessels) – 2004-?: ITQs
Problems withgovernments as fisheries managers
• Information problems– Must collect a great deal of data from the fishery
(i) Fishers’ profit functions(ii) Fish stocks
– Much of these data exist within the fishing industry
• Incentive problems(i) Perverse incentives(ii) Misalignment of benefits and costs(iii) Rent-seeking
Icelandic cod:Actual vs. optimal harvest
0,00
200,00
400,00
600,00
800,00
1000,00
0 500 1000 1500 2000
Biomass (1000 mt)
Gro
wth
an
d h
arve
st σ=0
σ=0,5x
Static optimal
Surplus growth
Actual harvest
Icelandic cod:Catch rule (set 1995)
-100
0
100
200
300
400
500
0 200 400 600 800 1000 1200 1400 1600 1800 2000
Fishable biomass (1000 mt.)
HF
F
Vöxtur stofns 25% aflaregla Hagkvæm aflareglal Enginn hagnaður
25% catch rule
Optimalrule
Icelandic cod:Actual vs. optimal harvesting
0
200
400
600
800
1000
1200
1400
1978 1982 1986 1990 1994 1998 2002
Har
vest
(10
00 m
t)
Actual harvest Static optimal 1-d feedback
Conclusions
• At least for Icelandic cod, governments are unwilling to do good fisheries management
• It had (i) strong theory (ii) lot of good research and (iii) lot of empirical evidence
• Nevertheless chose to do bad management
• Icelandic case probably exemplifies other fisheries around the world
Section III
Why?
Why choose to mismanage?
Focus on two reasons:
1. Perverse (inappropriate) incentives
2. Misalignment of benefits and costs
Basic premises
i. Government ={Politicians, civil servants}
ii. Both seek to maximize their own benefits
iii. Their benefits include power as well as income (usually go hand in hand)
iv. Politicians need to– be able to allocate benefits (patronage, public funds in
various forms)– Satisfy their special constituencies
Otherwise they are not re-elected
Perverse incentives
• The holders of government power– Are interested in their own welfare– Are supposed to manage fisheries– They bear few consequences of their management – They do not benefit (at least not directly) from
good fisheries management – They are normally not punished for poor fisheries
management
So perverse incentives!
Political cost-benefit calculationof improved fisheries management
• Benefits:– Voters grateful?– A thorny problem gone?
• Costs:– Some losers (workers, suppliers, regions. …Losers are hateful; seek
to punish. The press invariably supports them)
– No more patronage to allocate (supports, funds => weaker political power)
– Reduced size of bureaucracies– Uncertainty (of the outcome of a new controversial action)
An unattractive proposal – bad project
Democratic decision making:A simple example
• Exogenous flow of benefits: y(t)
• Share of population: z(t)
• Share of government: y(t)-z(t)
• Utility functions: V(z(t)), U(y(t) - z(t))
• Social welfare W(v,u)
• Elections at time T
• Terminal value to government S(T), s´(t)= z(t)
• Holders of government maximize their present value of benefits
Assuming simple functional forms (logrithmic utility functions) the following can
be derived:
Time
z
T
Socially optimal
Political allocation
(0)
1 r T
y
e
Misalignment of benefits and costs
Distribution of Costs
Narrow Wide
Narrow I II Distribution of benefits Wide III IV
Fisheries management belongs to box I !
• Virtually every policy has winners and losers• Losers of improved fisheries management (suppliers, workers,
certain regions, certain distributers, some government groups)• Gainers (fishery capital owners, crews, some government groups)
Section IV
A solution
Give fisheries management rights to fishers
No (few) perverse incentives Benefits and costs better aligned
Coase type of an efficient solution possible !!(Really a Nash co-operative solution to the bargaining game)
What form should the rights take
• Many possibilities– Group rights (community of fishers)– Sole owner rights– Individual rights (e.g. ITQs, TURFS, shares)
• Must be high quality (Coase)– Exclusivity– Security– Durability– Tradability
Specific examples
• Shares in total benefits (like shares in a company)
• Individual transferable quotas (ITQs)
Both can be pretty strong property rights
Shares in total benefits
Total benefits: V(a), a=vector of management actions
Individual benefits: (i)=s(i)V(a)
Max (i)=Max s(i)V(a)=s(i)Max V(a) Max V(a)
So, each share-holder will want to maximize the total value of the fishery!
ITQs(A bit more complicated)
• Total benefits: V(Q), Q=time path of total quota• Individual benefits: (i)=b(i)V(Q), all i (identical apart
from scale)
So, each ITQ-holder will want to maximize the total value of the fishery!
Max (i)=Max b(i)V(Q)=b(i)Max V(Q) Max V(a)
Can generalize this result!
What has been demonstrated
• Fishers’ rights to manage themselves may result in efficiency– That will almost always lead to large stocks– That will generallyfacilitate accommodation of other
interests– It will usually not be regarded as fair
• Under certain arrangements (shares, ITQs) it probably will
• Clearly, a favourable outcome can be helped by the proper arrangement of rights and negotiation
Section V
Conclusions
• Huge global fisheries mismanagement
• Governments are responsible
• Objective reasons for that outcome– Perverse incentives and misaligned costs/benefits– Fundamental and lasting problem with government Not a question of bridging a gap between science and politicians
• By-pass the government problem by giving fisheries management rights back to fishers
• Need to research the best arrangment for that – Closed shop– Coercive powers– Cost recovery (tax) powers
END