ECONOMICS 620

Allegheny College

Meadville, Pennsylvania

16335

The Economic Sustainability of United States Fisheries

Michael S. Meiran

April 6th

, 2016

The Economic Sustainability of United States Fisheries

by

Michael S. Meiran

Submitted to The Department of Economics

Project Advisor: Stephanie Martin

Second Reader: Hoa Nguyen

Date: April 6th

, 2016

I hereby recognize and pledge to fulfill my responsibilities as defined in the Honor Code and to

maintain the integrity of both myself and the College as a whole.

Michael S. Meiran

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Acknowledgements

First, I would like to thank my advisors in the process, my first reader: Ms. Stephanie

Martin and my second reader Ms. Hoa Nguyen. With the support provided by both of you, this

research experience was not only enjoyable and eye opening but very enriching. I will carry this

experience with me for the rest of life into all of my endeavors and I sincerely thank you for

making this possible.

Next I would like to thank my Dad. No matter what you have been there for me since day

one of kindergarten until the completion of this research project. You have given me the support

I need to succeed in the things I want to accomplish in this life. From every single football game,

to move in days here at school you have been there every single step along the way and I hope I

make you proud through the completion of this research project and achievement of my degree.

Last, I would like to thank my friends. I have the best friends in the world and all the

motivation I’ve ever needed has come from the support I feel from you on a daily basis. Thank

you to my friends Christian, Brandon, Ben, Alex, Nick, Chris, Patrick, and Colin for always

being there. Next, thank you to my housemates and teammates for always being there for me;

Chris, Lucas, Josh, and Clayton. And thank you to Zach and Nick for always spending those long

nights in Quigley hall working on the countless projects we have completed over the last 4 years.

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Table of Contents

Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

Abstract. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v

I) Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

II) Literature Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

III) Theoretical Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

IV) Empirical Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

V) Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34

References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

About the Author . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .vi

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List of Figures

Figure 4.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Figure 4.2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Figure 4.3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29

Figure 4.4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

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List of Tables

Table 4.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Table 4.2. . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

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Abstract

The goal of this study will be to look at the economics of efficient sustainable fisheries

management to determine the best practice of increasing sustainability in both the recreational

and commercial fishing sectors. Over the past 30 years, global fish populations and ecosystems

have been on a decline. This has been attributed to pollution, habitat destruction and

unsustainable fishing methods. These resources do not only have ecological implications for

many different species of wildlife but economic implications for many different governments,

societies and private institutions. By looking at ecosystem approaches and incentive based

approaches, the goal is to conclude a strategy to reverse the effects of unsustainable fishing

practices and to provide policy implications to introduce a change into way the fishing industry

and fishing practices operate as a whole in the United States.

“As an ocean farmer, my job is not to be an ocean hero. My job is not to save the

seas. My job is to have the seas save us”

-Bren Smith, 2013

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Chapter I: Literature Review

I) Introduction:

Marine ecosystems all over the world are in decline, and many species populations have

been squandering to remain at the same levels. Currently in the US, there are 94 species of

marine life that are considered extremely endangered. This is alarming because fisherman may

only be targeting certain species, but don’t think about the impacts that their harvests on the

ecosystem as a whole. Unsustainable fishing practices are the leading cause of ecosystem decline

(Hannesson 2002) and must be addressed.

It has been found that these problems have arisen from six principal factors:

Inappropriate incentives, high demand for limited resources, poverty, inadequate knowledge,

ineffective governance, and interactions between fishery sectors and other aspects of the

environment. (FAO 2002) Not only do all of these problems have to be addressed for reasons of

ecology and destruction of wildlife, but because of the economic implications that ride the coat

tails of unsustainable practices. If these industries go away because marine life is wiped out and

ecosystems are destroyed; a decline in revenue for governments across the world, a decline in

revenue for private companies and the loss of jobs for millions of commercial fishermen are at

stake. The fishing industry is big business all over the world, but in the US in 2012, 5.6 billion

dollars’ worth of revenue was generated from the processing of both finfish and shellfish within

US borders. When looking at other economies: In Australia, over the past ten years, the

Australian federal government has committed over 60 million dollars towards fisheries research

and ecologically sustainable development. They have also implemented detailed scientific

fishery management plans that incorporate strong stakeholder involvement, and have also

expanded their National representative System of Marine Protected Areas. (McLoughlin and

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Findlay 2005) In Ireland, similar action has been taken to protect fishing and the fishing industry.

Taking seabed into account, Ireland is one of the largest countries in the EU, and has one of the

largest sea to land ratios (10:1) in the EU. By comparing US sustainability policy to that of other

fisheries globally, a more perfect strategy for governing sustainable fishing practices in the US

can be achieved.

This study aims to explore the gap between the declining marine ecosystems being

exhibited in the US and the sustainable/unsustainable practices that are in play, as well as the

economic impacts that are a result of this gap. When looking at the issue of sustainability, the

Tragedy of the Commons theory will be explored to explain unsustainable fishing practices.

Brought together with the previous theory, property rights and a general equilibrium model will

also be used to show how to fix the issues that have led to unsustainable fisheries in the US.

Finally, empirical analysis of time series data will be implemented to show how the practices in

use over the past few decades have impacted US fisheries, as well as policy implications that

should come about due to these facts.

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II) Literature Review:

To explore the Health of US fisheries, policy both past and present must be explored.

The Fishery conservation and management act was implemented in 1976. Also known as

Magnuson Fishery Conservation and Management Act, it created the National Oceanic and

Atmospheric Association and delegated the power to oversee fishing activities in federal waters

to the NOAA. (NOAA, 2012)

According to the NOAA:

“[The Magnuson-Stevens Fishery Conservation and Management Act] is the primary law governing marine

fisheries management in U.S. federal waters. First passed in 1976, the Magnuson-Stevens Act fosters long-term

biological and economic sustainability of our nation's marine fisheries out to 200 nautical miles from shore. Key

objectives of the Magnuson-Stevens Act are to: Prevent overfishing, Rebuild overfished stocks, Increase long-term

economic and social benefits, Ensure a safe and sustainable supply of seafood” (NOAA, 2016)

The MSA also created Regional Fishery Management Councils comprised of Federal and State

officials, including the National Fish and Wildlife Service, as well as eliminating foreign fishing

in US water and promoting domestic growth within the fishing industry. (FWS, 2016) In 1996,

the Magnuson-Stevens Act was reformed due to alarming rates of dropping fishing populations

to focus less on promoting fishing to promoting conservation. (OEP, 2011) The next year, the

MSA was forced to reevaluate policies due to the “Status of Fisheries of the United States Report

to Congress” done by the National Marine Fisheries Service that outlined the issues dealing with

US fisheries t the time, and reporting that 86% of all species were overfished at the time. The

MSA was again reformed in 2007 when President George W. Bush signed into law an

Amendment to the act implementing strong policy to end overfishing of all species. (The White

House, 2007) The next major milestone for policy reform occurred in 2010 when the New

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England Regional Fisheries Management Council implemented new policy that changed the way

New England groundfish fisheries (dealing with species such as cod and haddock) were

managed, creating sectors of fishermen that governed total catch limits, replacing the old system

of limiting the number of days fishermen could fish. The latest reform to the MSA was in 2012

when Congress completed the goal set forth in 2006 to create science based total catch limits that

are adequate for sustaining US fisheries for years to come. The comprehensive reform of the

MSA coupled with research done by organizations like the NOAA overtime leads to promising

results for the future.

Going hand in hand with fisheries management reform, Fisheries Economics of the

United States 2012 is a longitudinal study from 2003 to 2012 that had the goal of providing the

American public with descriptive statistics on economic impacts of the seafood industry,

commercial fisheries landings, revenue and price trends; angler expenditures and economic

impacts of recreational fishing, recreational catch, effort and participation rates; as well as

employer and non-employer establishment, payroll, employees and annual receipt information

for fishing related industries. Sources of information form this study were obtained from many

sources including the Fisheries Statistics Division, Office of science and technology, National

Oceanic and Atmospheric Association (NOAA) fisheries; Alaska Fisheries Science center,

NOAA Fisheries; Alaska Department of Fish and Game; California Department of Fish and

Game; Oregon Department of Fish and Wildlife; Pacific Coast Fisheries Information Network

(PacFIN), Texas Department of Parks and Wildlife Department; and Western Pacific Fisheries

Information Network (WPacFIN). The analysis used in this report has been generated from two

separate IMPLAN models of the Economics and Sociocultural Analysis Division, Office of

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Science and Technology, NOAA Fisheries. Other data was obtained from the US Census Bureau,

Bureau of Economic Analysis, and the Bureau of Labor Statistics. (NOAA, 2012)

All data collected for this study has been obtained through NOAA databases that provide

statistics through reported harvests and catch methods as well as outlining the regions of the

United States from which that data was obtained from the 1980’s through 2015 reported data.

The 2012 NOAA report goes on to outline the picture of the impact fishing has had on the US

and the fishing industry as a whole in the US according to statistics, as well as highlighting data

across all regions of the US and the impact fishing has had on those areas. The impactful nature

of the 2012 NOAA study comes from an overview of fishing across more than a decade in the

United States and gives insight into what can be done to prevent further destruction of habitats

across the US and beyond. (NOAA, 2012)

In order to create a more comprehensive study, looking at fishery policies globally is

essential to determine the downfalls and triumphs of US fishery policy. Reforming the Common

Fisheries Policy is a report that was done by the European Commission, Maritime Affairs and

Fisheries sector. The Common Fisheries Policy (CFP) was enacted by the European Union (EU)

and does many things including setting quotas for which member states are allowed to catch

what amounts of each type of fish, as well as encouraging the fishing industry by various market

interventions. In the report, it outlines some problems of the CFP that have led to unsustainable

fishing practices and what should be done to change these policies to make them more

sustainable economically and ecologically.

In the report, it outlines what reforms should be taken:

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“Take action against over-fishing and [act] in favour of the sustainable management of fish,

Ensure productivity of fish stocks to maximise long-term yield, Multi-annual plans governed

by ecosystem approach, Simplified rules and decentralised management, System of transferable

fishing concessions, Measures beneficial to small-scale fisheries, Ban on discards, New

marketing standards and clearer labelling, Better framework for aquaculture, EU financial

assistance to support sustainability objectives, Up-to-date information on state of marine

resources, International responsibility.” (European Commission, 2015)

Through these reforms, the goal of this report and subsequent action is outlined as such:

“By bringing fish stocks back to sustainable levels, the new Common Fisheries Policy (CFP)

aims to provide EU citizens with a stable, secure and healthy food supply for the long term. It

seeks to bring new prosperity to the fishing sector, end dependence on subsidies and create new

opportunities for jobs and growth in coastal areas. At the same time, it fosters the industry’s

accountability for good stewardship of the sea” (European Commission, 2015)

The new policy that arises from the CFP would directly affect fishing practices and overall

ecosystem health. (European Commission, 2015) When looking at the goals and practices

associated with the CFP, there is a clear lineage to what the US has outlined they would like to

achieve in fisheries management and what the EU has defined in the CFP as adequate reform to

fisheries policy in their sector.

Australia also possesses a fishery that is one of the largest in the world and has proposed

similar solutions to obtaining sustainability in Australian national fisheries Incentive-Based

Approaches to Sustainable Fisheries, is a report done by the Economics and Environment

Network of the Australian National University (ANU); and has outlined issues, especially in

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Australia that have come about due to unsustainable fishing practices, and what approaches must

be taken to remedy the situation. In the report, the failures of traditional target-species

management that have led many to propose an ecosystem approach to fisheries to promote

sustainability are outlined.

The Australian report argues that an ecosystem approach is necessary to approach the

situation, especially to account for fishery-ecosystem interactions, but by itself is not sufficient to

address important factors contributing to unsustainable fisheries. The study also outlines

inappropriate incentives bearing on fishermen, and the ineffective governance that frequently

exists in commercial, developed fisheries, managed primarily by total harvest limits and input-

controls. They contend that much greater emphasis must be placed on fisherman motivation

when managing fisheries. Using evidence from more than a dozen natural experiments in

commercial fisheries, they argue that incentive-based approaches that better specify community,

individual harvest, or territorial rights and also price ecosystem services coupled with public

research, monitoring and effective oversight promote sustainable fisheries. (Grafton, et. All,

2005)

Ecological Economics; Economics of biodiversity and sustainable fisheries management

also outlines the fact that Marine ecosystems are complex, and many marine species are

ecologically interdependent. As a result, losing a species could produce a cascading effect on

other species. They argue that fishery scientists advocate an ecosystem-based approach to fishery

management to meet long-term sustainable goals. The Ecological Economics paper models the

complex interrelationships among species and the relationship between biomass growth and

phenotypic diversity. They have found that the equilibrium stock and catch/yield levels are

overestimated when diversity is not accounted for. Consequently, it is argued that if species are

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diverse, fishery policy based on single fishery management could overestimate catch potentials

and potentially results in biological overfishing and stock collapse, which is what has occurred in

to the North Sea Cod fishery in Alaska. (Akpalu, et. All, 2009)

An article from Nature, International weekly journal of science, called: Towards

Sustainability in World Fisheries looks as well at a holistic approach to fisheries management,

based on historical evidence that has led to the decline of fishery sustainability, going along with

the report from Ecological Economics. This article outlines similar approaches of how to address

fisheries based on ecosystem development. In the article, it is argued that fisheries have rarely

been ‘sustainable’. Rather, fishing has induced serial depletions, long masked by improved

technology, geographic expansion and exploitation of previously spurned species lower in the

food web. With global catches declining since the late 1980s, continuation of present trends will

lead to supply shortfall, for which aquaculture cannot be expected to compensate, and may well

exacerbate entire ecosystems. Reducing fishing capacity to appropriate levels will require strong

reductions of subsidies. Zoning the oceans into unfished marine reserves and areas with limited

levels of fishing effort would allow sustainable fisheries to be possible, based on resources

embedded in functional, diverse ecosystems. (Pauly, et.all, 2002)

Derived from this research, there are many failures of previous fisheries management and

legislation that have caused the decline of global fisheries over the past two decades. To start,

“total catch limits” have caused direct ecosystem depletion. Total catch limits cause fishermen to

“race” against other fishermen to catch as many fish as they can as quickly as possible to fill

their daily, weekly, monthly, or seasonal quotas. This decreases sustainability because it wipes

the ecosystem clean of certain species of fish that are in season for a certain period of time until

the population can rejuvenate. This is a problem because often daily catch limits are set too high,

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and wipe out too many members of the same species to the point where time in between seasons

is too small to allow the population of certain species to rejuvenate. An example of this is in

Canada’s Northern cod fishery. Because of concerns by the regulator of Canadian fisheries that

reduced harvests would generate bankruptcies and unemployment, coupled with uncertainties

over the status of stocks (Department of Fisheries and Oceans, 2004), overestimation of stocks

and recruitment resulted in total catch limits being set too high, which ended up being a major

contributor to stock collapse in the 1990s. (Walters and Maguire, 1996) In order for fisheries to

remain sustainable, accurate total catch limits must be set by governing bodies, backed by

complete research to ensure both the sustainability of both fishing industries and ecosystems.

This problem becomes even more complex because even though the NOAA governs all federal

fisheries, it is often left to each individual state to decide how total harvest limits are set.

The next conclusion I have found is looking at an ecosystem approach to addressing

sustainable fishery management. This theory goes hand in hand with evaluating total catch limits

and ensuring that the ecosystem is not wiped out. It seems that most scholars deem it important

to control population of different species of fish rather than a single species because they are all

intertwined. Therefore if one species has a collapse in population, it causes the ecosystem as a

whole to decline. In order to address these issues, some solutions have been proposed. First,

Marine reserves and “No Take” areas must be implemented in more frequency to increase

abundance, size and biodiversity of fish and to increase resiliency to ecological shocks. This will

ultimately lead to an increase in profitability over time, even if harvest limits are diminished at

first and profitability is diminished initially. Next, enforcement of the elimination of “by-catch”

can increase health of an ecosystem, and also lead to increased profitability of an ecosystem over

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time. Last, preventing habitat destruction is key, because it also increases health of the ecosystem

and will increase abundance and size of species. (Akpalu, et. All, 2009)

Last, the research conducted points to an Incentive-based approach, outside of ecosystem

management that will lead to more sustainable fisheries globally. Not only must total catch limits

be set appropriately, but fishermen of the greatest marine predator and other species must be

incentivized to fish sustainably. The first approach to this is to allow for better territorial rights

for fishermen. Fishermen, whether they are commercial, or fishing for private consumption as

some long standing communities have done historically, must be allowed to exclude others from

fishing on their fishing grounds for survival through profitability and long term fishery health.

This could be done through stricter licensing requirements for commercial fishermen that

designate only certain individuals can purchase these licenses accompanied with regulations they

must follow. When looking at private consumption, certain rights could be handed down from

governments to give special privilege to groups that have property rights on certain fisheries.

This approach puts the long term costs of overexploitation of resources on the shoulders of the

fishermen who hold the special privileges. Through collective action, better enforcement of the

policies in place would cause the ones who burden the long term cost to ensure that the fisheries

are managed properly. This would also solve the allocation problem of who gets to fish in certain

areas and overexploitation of ecosystems as a whole would be decreased.

An encouraging fact is that many fishermen are starting to realize the effects of their

actions. Bren Smith is the creator and prime implementer of the GreenWave initiative. Smith is a

3D Ocean Farmer that is pushing for sustainability in US fisheries. He has been a commercial

fishermen for the better part of 30 years and by his own admittance has divulged that he

previously used unsustainable fishing practices in order to gain a profit, admitting to dumping

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sometimes over 10,000 pounds of dead by-catch back into the ocean after wiping whole

ecosystems clean. The GreenWave initiative focuses on polar opposite practices. (Smith, 2013)

3D Ocean Farming is a revolutionary sustainable fishing practice that focuses on using

shellfish and seaweed to rejuvenate ecosystems, provide habitats for fish species and ultimately

make a profit, all the while creating zero pollution, and protecting stocks from being depleted by

natural disasters and other events. Smith claims that over nitrification of oceans due to pollution

from things like farming are causing dead zones in ocean waters today that are devoid of oxygen

and life, but by farming oysters, which filter up to 30-50 gallons of water a day and clear the

nitrogen from the water, this pollution is a non-factor and the oceans are able to thrive. Coupled

with this, growth of seaweed has many positive externalities such as creating an artificial reef

system, protection from storm surges and natural disasters, filtering carbon from the atmosphere,

creating biofuel, creating fertilizer and substantiating a blue-green economy. (Smith, 2013)

Smith argues, as coral reefs disappear, there's no foundation for ecosystems to be built

around. The farms attract over 150 species back from places which were once barren patches of

ocean that are turned into thriving ecosystems. Farm function as storm surge protectors that stand

in the way between things like hurricanes as they pummel the shore line to reduce the amount of

destruction exhibited. The farms also grow kelp that soaks up 5 times the amount of carbon out

of the atmosphere as land based plants, which smith calls the "sequoia of the sea" to create a

sustainable carbon sequestration plant to slow climate change. Kelp is also used as biofuel which

Smith explains that a network of kelp farms totaling half the size the state of Maine could replace

all the oil in the United States, and in a one acre area, 2000 gallons of biofuel a year can be

grown all with zero inputs because it requires no fresh water, no fertilizer, no arid land, which

Smith claims “making it the most sustainable form of food in the world and a sustainable source

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of biofuel.” Last, kelp is used as fertilizer. By capturing the nitrogen polluted into the ocean,

coupled with the Yale sustainable food project which uses the kelp produced it to grow

vegetables, the nitrogen leaches back into the ocean, is captured again and thus a closed nitrogen

farming loop is created. Smith argues, that through this process, a blue-green economy is created

that creates employment. Smith argues that “anybody with 20 acres and a boat, about 50,000

dollars in the US can start their own farm and be up and running the first year.” (Smith, 2013)

With the implications of Bren Smith’s type of sustainable ocean farming practices, this

can be proposed as a solution to not only cleaning up polluted zones of the ocean but ensuring

the continued sustainability of US fisheries for decades in the future.

In conclusion, this study points to a two pronged approach of looking at fishery

management: ecosystem control and incentive based approaches towards sustainable fishing.

Looking ahead to chapter two, this study will look at current economic theories that can be

applied to solving the issues facing unsustainable fishing practices in the US and further looking

at how the long term profitability of US fisheries can be preserved.

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III. Theoretical Analysis

When looking at fishery management, the topics that will be explored are ecosystem

control and fishermen incentives. Based on these approaches to creating and maintaining

sustainable fisheries, the fundamental theory that will be used is The Tragedy of the Commons as

it relates to sustainable fishing practices. As well as exploring this, looking at property rights of

fishermen and certain groups that use fishing as their main source of income, as well as looking

at general equilibrium theory to explain why certain fisheries are unsustainable and how to

control the factors involved is of utmost importance.

The tragedy of the commons theory was first introduced by Garrett Hardin in his paper

“The tragedy of the Commons” in 1968. In his paper, he argues that “the commons” is a situation

where all have an equal opportunity to use the resources provided, but because of an infinitely

increasing population, the destruction of “the commons” is inevitable. The management of “the

commons” falls on morality of the actors using these resources. In order to preserve the resources

within the commons, governments and laws are used to regulate how these resources are

allocated. Hardin then goes on to say that failures in preservation occur because governments are

subject to outside forces like corruption that prevent the ultimate goal of utility maximization for

all, which is unobtainable because although laws are easy to put into place, they are difficult to

enforce because, regardless of laws, every individual will seek to maximize their own utility,

unless the laws make the cost of maximizing utility too great. He then brings the idea of “the

conscience” into the argument by proposing that the conscience is not a governing body in the

fact that the commons is mostly enjoyed by the conscience-less individual who only cares about

personal utility maximization, which is why laws are required. He gives the example of

“taxation” to support this theory by explaining that if taxation were voluntary based on “the

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conscience” individuals who were “conscience-less” would reap the benefits of the commons

without paying taxes, while those with a “conscience” would pay taxes to enjoy the benefits of

diminished utility. He concludes his argument by saying that man must agree on mutual coercion

to prevent the universal ruin of the commons. (Hardin, 1968)

The problem facing fisheries management is that, fisheries are a common-property

resource. Feeny, Hannah and McEvoy use the definition of a common-property resource, taken

from Berkes as: “A class of resources for which exclusion is difficult and joint use involves

subtractability”. Based on this definition, The Tragedy of the commons can be applied to the

efficiency of contemporary fisheries management. In his Paper, “Toward an Interactive Theory

of Nature and Culture: Ecology, Production, and Cognition in the California Fishing Industry”,

McEvoy sums up Hardin’s theory by restating his assumption: “ As Hardin saw it, when

competing users shared resources in common, the inevitable fate is annihilation”. (McEvoy,

1987) he then goes on to say that fisheries are the “classic instance of the commons tragedy”.

(McEvoy, 1987) Fisheries are often the subject of very high economic competition that often do

not conform to boundaries of property rights or legal jurisdiction.

Fisheries are also ecologically volatile and are affected by a range of different factors

from weather to human interaction. As one member of an ecosystem is impacted, it has

cascading effects on the rest of the ecosystem based biological interdependence. In their study,

Akpalu argues that if there is greater phenotypic diversity within an ecosystem, and by

implementing an ecosystem model of fisheries management, effort levels of fishermen could be

reduced because ecosystems will be allowed to thrive through the conservation of all species.

This means that higher profits would be yielded based on reduction of costs, and stocks would

grow to preserve the fishery’s health long term. If stock quotas are set too high, ecosystems are

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knocked out of balance and effort in the long run for fishermen will be greater and health of the

ecosystem will be diminished. (Akpalu, 2009) Because of these factors, fisheries are resources

that are easily depleted if harvesters do not leave sufficient stock behind to regenerate future

supplies. (Mcevoy. 1987) Human interaction with the ecosystem in question has a large impact

on the survival and robust nature of the ecosystems in which they fish because policy

implications dealing with even a small part of the ecosystem can have cascading effects on all

organisms living within that ecosystem.

As well as describing “the commons”, Hardin uses Adam Smith’s invisible hand to show

the nature of why “the commons” is inevitably doomed for annihilation. (Hardin, 1968) Adam

smith’s, well known work “An Inquiry into the Nature and Causes of the Wealth of Nations” is

applicable to almost all aggregate economic problems faced in the economic realm today, and it

also applies to fishery management. Hardin uses Smith’s theory to highlight that if all individuals

act in their own rational best interest, this does not contribute to sustaining the commons as a

whole. The “tragedy” arises from a rational unlimited want for resources but only a finite supply,

and once the tipping point is reached, then there is no utility for all. (Hardin, 1968) (Smith, 1776)

based on this theory, if all fishermen try to maximize their economic utility, it will lead to

ultimate depletion of resources. Governments and regulations aim to solve this problem, but have

failed because fish populations have been on the decline for the past two decades.

The Tragedy of the Commons can be applied to contemporary fisheries management by

evaluating producer incentives. The commons in this framework is any fishery in question that is

publicly shared and utilized by both commercial and recreational fishermen. In this example, the

producers may want to fish sustainably in order to preserve their livelihood in the long run, but

cannot do so because they must make a short term profit, creating the negative externality of

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ecosystem depletion. To solve this problem, fishermen incentives and exclusionary rights must

also be evaluated to determine what should be done to fix this problem.

Public fisheries around the world are known as “Common Property Resources”.

(Schlager, Ostrom, 1992) Schlager and Ostrom define “Common Property Resources” as

“property owned by a government, property owned by no one, or property owned by a

community of resource users. (Schlager, Ostrom, 1992) the term can also be used to describe

“any common-pool resource used by multiple individuals regardless of the type of property

rights involved.” (Schlager, Ostrom, 1992) Operational activities dealing with these types of

resources are constrained and made predictable by operational-level rules regardless of the

source of the rules that constrain them. The “rules” being talked about here are generally agreed

upon and enforced prescriptions to the resource that require, forbid, or permit specific actions for

more than a single individual. (Schlager, Ostrom, 1992)

Examples of these “rules” can include anything from specifying the type of fishing

equipment allowed in certain fisheries or allowing permits to fish on certain grounds. (Schlager,

Ostrom, 1992) Grafton et. All argue, “the key to IAF [sustainable fisheries] is to provide

harvesters with long-term and secure rights that are legally enforceable, and with corresponding

duties by non-owners to not interfere with the exercise of these rights.” The issue facing how

these regulations are set is complex because there must be enough permits so that they are

efficient in allowing for the industry to thrive while still preserving the ecosystem, they must

please collective bargaining groups, and they must be cost efficient so producers can make a

profit. If regulations are set correctly, Grafton et. All also believe, “Secure and durable

harvesting or territorial rights, in most cases, provide fishers with the incentive to one, protect

the value of their assets and, two, obtain the greatest possible sustainable flow of benefits from

17

fishing.” In order for regulations to be effective, fishermen must bear the long term cost of

unsustainable fishing practices. (Grafton et. All, 2009)

When addressing sustainable fisheries management and the ecosystem approach, the

emphasis has been on select species management, rather than dealing with the incentives given

to fishermen. In order to create more sustainable fisheries, In their work, “Incentive-Based

Approaches to Sustainable Fisheries” Grafton et. all argue that the long term costs of

unsustainable fishing practices must fall on the shoulders of the individuals using the resources

so that they are incentivized to fish sustainably. (Grafton, et. All, 2005) That means that

fishermen that use the resources should be able to exclude individuals or practices that create an

unsustainable environment when it comes to the resources in question.

Schlager and Ostrom offer the example of Lobster fisheries in Maine as an example of

this principle. Today, the state of Maine owns the lobster fisheries off it’s coast, but it was not

always like that. Prior to 1920, the entire coast of Maine was divided into “fiefs”, where

fishermen would only fish off the coast of the harbors with which they were associated. These

fishermen decided how these grounds would be managed: who would be allowed to fish there

and what kind of equipment would be used to harvest a catch, but they could not sell or lease

these rights to others. In order to enforce these rules, they would destroy the gear of whoever

would violate these principals. After new technology and the shape of the coastline changed over

time, this began to change. The invention and installation of motors allowed for fishermen to go

further offshore, and would allow them to fish in rougher waters, not constrained to fishing

solely when it was calm. Because of this, fishermen were inclined to infringe on others fishing

grounds because there was more profit to be gained. Because of this, the situation turned into a

full scale war to compete against others for profit, still being dealt with through gear destruction.

18

In turn, most of the competitors gear was getting destroyed so fishermen decided it would be

better to mix than fight.

The reasoning for the type of behavior exhibited can be explained by using the Coase

theory of incentives. The lobstermen were incentivized to give up their individual property

rights, in order to gain an advantage through sharing the property amongst each other. The

fishermen opted for the control of the fisheries to be controlled by the state, regulating the

fishery holistically, based on open fishing seasons that have led to a stable yield rate, even when

not self-regulated. (Schlager, Ostrom, 1992) These regulations are an example of how proper

collective property rights of fishermen in these areas cause the long term effects of impractical

fishing practices to be diminished, because of a collective need for well-defined property rights.

In the Coase theorem, RH Coase explains that because of negative externalities, actors would

rather work together in certain situations than fight against each other to reach a common

solution. (Coase, 1960) Lobster fishermen decided that instead of collectively destroying each

other, it was in the common best interest of all to work together.

In order to provide more perfect fisheries management, public oversight through

collective action is the most viable option to ensure regulations are correctly handed down and

followed. (Grafton et. All, 2009) Regulations imposed on commercial fishermen create “rights”

of certain individuals or groups being permitted to use or to exclude others from the resource or

resources in question. (Schlager, Ostrom, 1992) There are three types of rights that are defined as

such: Management Rights: The right to regulate internal use patterns and transform the resource

by making improvements. Exclusion Rights: The right to determine who will have an access

right, and how that right may be transferred. And last, Alienation Rights: The right to sell or

lease either or both of the previously described collective choice rights. (Schlager, Ostrom, 1992)

19

This is important because when it comes to public fisheries; it is the governments that create the

property rights and hand them down to the fishermen. These rights impact the fisheries in

question because it determines the amount of fishermen that are on those grounds as well as the

amount of effort they put into harvesting their catch. This can cause major implications of

resource depletion if not properly managed, and must be closely evaluated so the rights of

fishermen ensure long term sustainability.

As well as defining property rights, accurate costs must be imposed on these fishermen to

ensure ecological conservation. An example of this is the 1998 Agreement on the International

Dolphin Conservation Program in the Eastern Tropical Pacific. (Grafton et. All, 2009) In order to

incentivize fishermen to watch their by-catch while commercially fishing for yellowfin tuna as to

not deplete the ecosystem, a regulation was imposed that if a certain number of dolphin kills had

been recorded in the act of fishing, that vessel must cease all fishing activities, causing fishermen

to bear the cost of ecosystem depletion. Total dolphin mortality was decreased by around 75%.

(Grafton et. All, 2009)

Another issue facing regulation is determining the number of permits given to fishermen

to achieve favorable results. This could potentially be mitigated through fishermen incentives as

well. Grafton et. All argue that through the use of transferable Habitat Impact Units (HIU’s), that

would proxy marginal habitat damage associated with different gear and habitats, the total

number of HIUs would be set to ensure a desired level of habitat protection, enforced with a

vessel monitoring system that would track each vessels location and rate of movement,

fishermen would have the incentive to take into account the impact of fishing on habitats because

HIUs would be scarce and tradable. Those who exceed their initial allocation of HIUs would be

required to purchase more units that would increase their fishing costs, while those who have

20

HIUs left over after fishing could sell or lease them to others at a profit, creating a market for

sustainability that is equitable based on the amount of habitat destruction one vessel causes.

(Grafton et. All, 2009)

Last, a general equilibrium model can be applied to Contemporary fisheries management.

Jiang uses their study to explain that because of population growth and advancements of

technology when it comes to harvesting, this has caused the decrease in fish populations

globally, especially in developing countries. (Jiang, 2010) Jiang argues that there are three

factors of production in this model: a wild fish stock, land, and labor. (Jiang, 2010) Jiang states:

“When the relative price of fish is lower than the fishery entrance price, there is no activity in the

capture fishery because fishermen’s marginal cost of producing fish is higher than the fish price as

described in the capture fishery section. However, there is activity in aquaculture always as long as the

relative price of fish is positive. The potential viability of the capture fishery in an equilibrium including

manufacturing goods depends upon whether land is sufficiently scarce relative to labor.”

This points to the fact that as long as fishermen are making a profit, the equilibrium model

suggests that the fishermen will produce, as long as entry into the market is less than the cost of

fishing. This is evident in Jiang’s conclusions:

“Population growth and technological improvement in aquaculture have opposite impacts on

wild fish stocks. Population growth raises fish prices and reduces wild fish stocks, while technological

progress in aquaculture reduces fish prices and increases wild fish stocks. Therefore, the direction of

change in the wild fish stock depends on which factor dominates. While both population growth and

technological improvement in aquaculture enhance fish production in aquaculture, the harvest in the

capture fishery may rise or fall.”

21

These factors pointed out by Jiang suggest that the tragedy of the commons theory and

that well defined property rights associated with fish harvest are contributing to habitat depletion

and reduced fish stocks. (Jiang, 2010)

In order to improve US fisheries, more perfect policy must be implemented as derived

from this analysis. Based on the tragedy of the commons theory, if fishermen incentives are not

addressed, habitat destruction is imminent, and fishery health will not improve. Coupled with

this, in order to incentivize producers to fish sustainably, property rights for fishermen must be

adequately set to ensure a market of sustainability that is available to all producers within the

commercial fishing industry. In order to create this market, the correct price and availability of

permits to fish sustainably must be available, and negative incentives towards fishing

unsustainably must be implemented through policy handed down by a public governing body. If

these results are achieved, fishermen will fish sustainably based on the general equilibrium

model as long as they are still able to make a profit doing so. Moving forward in this study,

empirical analysis will be performed to evaluate the health of US fisheries over time and to

address what should be done to ensure sustainability and profitability of the US fishing industry.

22

IV) Empirical Analysis

In order to assess the current and future economic viability of US fisheries, empirical

analysis based on the theories discussed in the previous chapter has been chosen in order to

address the issues at hand. All data collected for this study has been provided by the National

Oceanic and Atmospheric Association (NOAA) and is in a time series format. According to the

NOAA: “the data is used by state, regional and federal fisheries scientists and managers to

maintain healthy and sustainable fish stocks”, and is efficient in determining health and viability

of all US fisheries (NOAA, 2015). Based on the data collected, I have determined these variables

are crucial in performing an accurate assessment of fish stocks within the US and will be

adequate in performing a comprehensive economic analysis of sustainable fishing practices:

harvestunreleased – Variable for total reported number of species harvested and not released through

recreational methods in a given year. Indicates angler education as well as ecosystem health based on

reported harvestings being released unharmed back into the ecosystem.

harvestreleased – Variable for total reported number of species harvested and released through recreational

methods in a given year. This indicates the amount of species being depleted from the ecosystem and

overall ecosystem health.

revenue – Variable for total revenue generated through commercial methods of fishing. This shows the

economic impacts of ecosystem depletion over time based on fluctuations of revenue.

year – Variable for the year in which data was collected. Used to identify trends over time as to why

fisheries have reacted to changes and can determine how to better address fisheries in the long run.

totalanglertrips – Variable for total number of reported recreational angler trips in a given year. This shows

the effort level that recreational fishermen are exerting for catching the amount of fish harvested and can

determine ecosystem health through examining the number of species harvested per trip.

coastal – Variable for the total number of coastal fishing licenses purchased in a given year. This indicates

the number of anglers that participate in fishing activities and explains total harvest numbers.

commercialweight- Variable for total harvest weight of all commercial fishing activities in a given year.

Used to determine ecosystem health based on the amount of fish harvested on a yearly basis.

fcma- Dummy variable used to show the years in which US fisheries management was operating under the

fcma, pre 1996.

msa- Dummy variable used to show the years in which US fisheries management was operating under

MSA reform policies after 1996.

msaandnmfs- Dummy variable used to show the years in which US fisheries management was operating

under MSA and NMFS reform policies after 1997.

msa2007- Dummy variable used to show the years in which US fisheries management was operating under

MSA reform policies after 2007.

nereform- Dummy variable used to show the years in which US fisheries management was operating under

New England Regional Fisheries Management Council reform after 2010.

msamilestone- Dummy variable used to show the years in which US fisheries management was operating

under MSA reform policies after 2012.

23

When building a model, each variable that plays an important role in determining

economic and ecological health of US fisheries was taken into account. The first two analysis

chosen to determine the health of US fisheries were the total number of species released

(harvestreleased) and species unreleased (harvestunreleased). The data collected for these

variables is based on recreational fishing numbers only, because the NOAA does not report

species released and species unreleased numbers for the commercial fishing industry. This is so

because often there are not any released species during commercial fishing activities and any

undesired species that are either not the correct size or correct species are dumped back into the

ocean as dead by-catch. (Akpalu, 2009). It is expected that as more numbers of species are

released over time, overall ecosysytem health will increase and the opposite as more are

harvested and not safely put back into the ecosystem.

Last, revenue itself will be looked at as a dependent variable. Revenue, based on harvest

numbers and weight determines the long term value of US fish stocks as a viable source of

income for fishery related businesses as well as the aggregate economy of US fisheries. It is

assumed that if revenue is increasing, so is the health and viability of US fisheries. In order to

provide a clearer picture of the fishing industry as a whole, all data collected for this analysis is

based on commercial fishing numbers because revenue generated by the fishing industry comes

through the commercial catch and sale of species at market value. Any revenue generated from

private fishing endeavors is usually through the sale of licenses which are governed by the

individual states that sell them.

24

The table that follows summarizes the data that has been collected:

Figure 4.1: Summary Statistics

Variable Obs Mean Standard

Deviation

Min Max

harvestunreleased 331 19332572.72 23356162.26 117328 95000000

harvestreleased 287 23990354.90 29203701.83 48664 110000000

revenue 34 3662655246 859721711.50 2323202016 5523722562

totalanglertrips 169 12867942.69 7312059.35 350568 26000000

year 365 1998.69 10.07 1981 2015

coastal 154 1646880.34 819043.34 83837 3300000

commercialweight 34 8783886644 1400980571 6021394099 10266970060

fcma 365 0.39 0.49 0 1

msa 365 0.027 0.16 0 1

msaandnfms 365 0.30 0.46 0 1

msa2007 365 0.0027 0.052 0 1

nereform 365 0.066 0.25 0 1

msamilestone 365 0.115 0.32 0 1

*All values estimated from NOAA data

First, looking at the minimum and maximum results for all variables, there is a large

discrepancy in numbers from the beginning year (1981) and the final year data was collected

(2015). This means that reporting of statistics has gotten much better over time, because the

number of fishermen has not drastically risen by this rate since the early 80’s, although the

number of Coastal and Non-Coastal licenses purchased across the nation has risen in the same

time period. Also, the number of fish harvested and released has drastically risen since the

beginning of this study. Looking at this fact, it is expected that ecosystem health has increased

because of better fisherman education over time and heightened awareness towards preserving

ecosystems. This can also show that harvest limits have gotten stricter over time to preserve

ecosystem health so fishermen are releasing more of their catch. Also, because not all variables

have the same amount of observations in the model, this may cause some results to appear as if

they are not significant. For example, based on yearly totals of revenue, there are only 34

observations, but it is expected that revenue will have changed over time along with the amount

25

of fish harvested and sold at market value. In order to account for this, direct comparison of

variables has been used to show strong relationships between connecting factors.

Regression analysis has been chosen to generate the most perfect results to analyze the

health of US fisheries. Regression analysis is a statistical method for determining the strength of

relationships between variables. It is relevant in determining the present and future economic

viability of US fisheries because there are many different factors that attribute themselves to the

health of US fisheries. By looking at a comprehensive model of the factors included in the

regression model, a more perfect picture of how to address US fisheries can be achieved.

The first regression model observed was for total harvest unreleased. The model used is

as follows:

harvestunreleased= β0 + β1year + β2totalanglertrips + β3coastal + β4fcma + β5msa + β6msaandnmfs+ β7msa2007

+ β8nereform+ β9msamilestone

The results are as follows:

Figure 4.2: Total Harvest Unreleased

Variable P-value Coefficient*

year 0.000 -596339.10

totalanglertrips 0.000 2.69

coastal 0.550 -1.25

fcma 0.179 -4855610

msa 0.126 -5943718

msaandnmfs 0.254 -2376728

msa2007 0.832 2033722

nereform 0.922 249403.80

msamilestone 0.087 3990434

constant 0.000 1200000000

Number of Observations: 365

F ( 9, 355) : 199.60

R- Squared: 0.8350

Adjusted R-Squared 0.8308 *All Coefficient values estimated to two significant figures

In order to properly represent the data obtained, the model chosen for total harvest

unreleased includes all variables that pertain only to recreational fishing. Recreational fishing has

26

been proven to have less of an impact on ecosystem degradation than commercial fishing

because of the differing methods used in commercial and recreational fishing. In order to get a

full view of the fishing landscape, it has been deemed important to take a look at recreational

fishing as an indicator of ecosystem health. Although recreational isn’t as harmful, catch

numbers fluctuate with the health of the ecosystem in which is fished.

Initially looking at the results obtained, it appears that year in which harvest was obtained

(year), the amount of trips anglers take in a given year (totalanglertrips), and the most recent

MSA legislation reform (msamilestone) all significantly affect total harvest unreleased based on

a 90% confidence level.

The year in which the species were harvested and released back into the ecosystem alive

makes sense based on fishing policy over time. As research on the subject has gotten better,

stricter catch limits have been imposed upon fishermen in order to preserve ecosystems. This

allows fish more time to grow and as they get older create more and bigger offspring, allowing

for ecosystem rejuvenation. As catch limits become stricter, and ecosystems begin to rebound, it

is expected that there will be more fish that have not grown to be within legal size limits when

caught, so legally, they must be thrown back by fishermen, or fishermen face a penalty

depending on the grounds they are fishing on, creating the negative coefficient on year.

A similar principle can be applied when looking at total angler trips. As fishermen input

more effort into their fishing practices with more fish thriving in a rebounding ecosystem, it is

expected that they catch more fish; so one would expect the coefficient on total angler trips to be

positive. This is a good sign for rebounding ecosystem health. Even though more fish are being

taken out of the ecosystems in question, they must be meeting the regulations set forth by the

27

governing bodies in control of the fisheries in question. Because of the MSA milestone reform in

2012, total catch limits across the nation are backed by scientific research. This means that the

size of the fish being taken out of the ecosystems in question have been scientifically deemed big

enough to be sustainable based on their size and age. (Fisheries, 2014)

The 2012 milestone reform policy is also statistically significant with a positive

coefficient for unreleased species. This shows as well how it is possible that regulations and

reform based on research are working to create thriving ecosystems that allow for the harvest of

more species being taken out of the ocean. Although this data is only from recreational fishing

reports, the implications for the commercial industry are promising. The policies in question

affect all fishermen and all fishermen must abide by the regulations set forth, as well as

regulations set forth by the individual governing bodies they are fishing under. As more research

is done and more accurate catch limits and stricter penalties for breaking these laws are enforced,

ecosystems as a whole will most likely continue to come back.

When looking at the non-significant results, the signs are as expected. Based on the

number of coastal licenses sold, there have been more fish released back into the ecosystem. This

is accurate, also based strict regulations. As more fishermen enter into the fishery, even if

fisheries are rebounding, the number of legal fish in the ecosystems in question does not support

the number of fishermen engaging in fishing activities, so even if fishermen are catching more

fish, they must release more of their catch.

When looking at the insignificant results based on policy reform, the signs are also

expected. As policy reform gets stricter over time to support ecosystem health, more fish will be

released back into the ecosystem. This is true except for the New England reform policies and

28

the 2007 MSA reform. This could indicate multiple events. First, either both reform policies

were not strong enough to have an effect on ecosystem health. Second, the New England reform

policy did not have a large effect on overall catch numbers because it is only for one region of

the country. Or, last, ecosystems have rebounded, allowing for more fish to be taken out of the

ecosystems as a result of both policies being good for ecosystem health and more fish being

caught that meet legal requirements.

Comparing these results to the theories discussed in Chapter two, it appears as if

ecosystem management systems based on strict catch limits for a number of diverse species is

contributing to rebounding species population numbers and rebounding ecosystems. Fishermen

incentives are also being addressed, at least on the recreational level based on reform policy that

tightens up regulations on the types and size of species being caught and the penalties that go

along with killing an unlawful sized member of an ecosystem.

Going hand in hand with total harvest unreleased, looking at total harvest released is

valueable to see if the predictions based on the data are coming true. The model used for total

harvest released is as follows:

harvestreleased= β0 + β1year + β2totalanglertrips + β3coastal + β4fcma + β5msa + β6msaandnmfs+ β7msa2007 +

β8nereform+ β9msamilestone

29

The results are as follows:

Figure 4.3: Total Harvest Released

Variable P-value Coefficient*

year 0.153 247774.7

totalanglertrips 0.000 2.73

coastal 0.133 3.51

fcma 0.579 2238372

msa 0.694 1703212

msaandnmfs 0.282 2502838

msa2007 0.918 1107732

nereform 0.764 -849676

msamilestone 0.205 3299801

constant 0.000 0.000000049

Number of Observations: 365

F ( 9, 355) : 240.50

R- Squared: 0.8591

Adjusted R-Squared 0.8555 *All Coefficient values estimated to two significant figures

In comparison to looking at unreleased numbers, there are not as many significant values.

The lone significant value is based on total angler trips (totalanglertrips). The coefficient is

positive which indicates a few things. First, this means that more fish are being released back

into the ecosystem. This is opposite of what was shown in the initial regression analysis on total

harvest unreleased. This points to the conclusion that overall, per trip, more fish are being caught

by recreational anglers, which is an indicator of improving ecosystem health, which is promising.

The reasoning for this is also because of fishing policy reform. As shown by the non-significant

values based on policy reform, over time, more fish have been released. By looking at a direct

comparison of total harvest released to year, it becomes clear that because of stricter regulations,

harsher penalties and better angler education, there have been rising number of released fish over

time, coinciding with strict policy reform over the past 30 years.

30

Table 4.1

The Graph clearly shows an upward linear trend beginning in the late 80’s of more fish being

released over time, which has contributed to rebounding ecosystem health, most likely due to

policy reform.

The last regression analysis performed looks at revenue generated through commercial

fishing practices. This analysis does not take recreational fishing into account and instead

focuses solely on the commercial fishing industry. In order to formulate the most perfect model,

the Variable commercialweight has been generated that takes into account total catch weight of

the commercial fishing industry. There is no NOAA data for total catch numbers for the

commercial fishing industry because often, total catch numbers are not reported and instead total

catch weight is reported. This can be misleading because reported numbers can also include by

catch that is discarded dead back into the ocean, which is alarming, especially when it can be

thrown back into the ocean in the tens of thousands of pounds. (Smith, 2013) With that being

said, the regression analysis will hopefully predict what can be done to maximize both profit and

ecosystem health.

31

The model used for total revenue is as follows:

revenue= β0 + β1commercialweight + β2year + β3fcma + β4msa + β5msaandnmfs+ β6msa2007 + β7nereform+

β8msamilestone

The results are as follows:

Figure 4.4: Revenue

Variable P-value Coefficient*

commercialweight 0.000 0.42

year 0.655 -1517864

fcma 0.154 -113000000

msa 0.167 -117000000

msaandnmfs 0.032 -97900000

msa2007 0.791 -55500000

nereform 0.358 50900000

msamilestone 0.286 53900000

constant 0.649 3100000000

Number of Observations: 365

F ( 9, 355) : 1243.13

R- Squared: 0.9654

Adjusted R-Squared 0.9647 *All Coefficient values estimated to two significant figures

When looking at the results, there are two significant values. First, when looking at total

commercial weight of fish caught, it is expected that the coefficient would be positive. there are a

few contributing factors to this notion. First, based on market value of fish, the weight which is

caught and the price of fish at the market the time they are sold is how revenue is determined.

Second, this can determine the economic sustainability of the market for the future. Based on the

trend of revenue increasing over time, if the health of the fisheries in question is sustained, the

economic implications for millions of jobs of commercial fishermen, jobs in the food and

processing industries and jobs for scientists studying these habitats is promising. The upward

trend is shown on this graph:

32

Table 4.2

As shown, there is an upward trend of revenue from the early 80’s up to 2014. As stated, this

could be contributed to fluctuating prices and inflation, but if the trend continues and fisheries

remain profitable for fishermen, the economic sustainability of these fisheries is in good shape,

so policy must dictate the preservation of this economic resource.

The only other significant variable in the model is for MSA and NMFS reform from

1997. The negative coefficient on this is telling. This shows that at this point in time, fisheries

policy was not contributing to revenue generated through the harvest of species commercially.

The 1997 legislation is significant because it demonstrated a clear shift in policy from focusing

on getting individuals involved in fishing to focusing on conservation in fishing. The negative

significant results implicate that this policy had a great effect on the landscape of commercial

fishing and caused empirical changes.

Even though the results were not significant, there is a clear shift in the sign of the

coefficients dealing with policy reform. As stated above, the negative impact on revenue

33

incurred by policy changes in 1997 shows that policy reform had not done enough to shift the

landscape of commercial fisheries. This was the case of all policy up through 2010. For all the

policies implemented in 2010 or after, there is a positive coefficient for revenue. This can be

explained by increased fishery health as well. The regulations that were imposed in 2010 created

harvesting limits in New England that allowed for fishermen to govern themselves as they see fit.

This has shown increasing results in ecosystem health. not only has it caused the ecosystem to

rebound, but it has caused more efficiency based on revenue, causing a switch in the sign of the

coefficient on policy to become positive. The same story can be told for the 2012 MSA reform.

Because of more efficient governance, revenue has been increased in the commercial fishing

industry because of better policy that has led to increased ecosystem health, which points to

economic viability of US fisheries in the future.

In conclusion, regression analysis has been used to determine what should be done to

improve and nurture US fisheries to ensure their long term economic and ecological health. It has

been surmised that in order for fisheries to become and remain sustainable, adequate policy

decisions regarding US fisheries must be streamlined to look at the needs of all stakeholders

involved. It was the goal of this chapter to create the most perfect analysis by looking at

implications of fishing both on the recreational and commercial level to create a broad picture of

what the fishing landscape looks like in the United States currently. It has been shown that US

fisheries are on the rebound in terms of both economic and ecological health, which is promising

when trying to evaluate long term sustainability of the fishing industry, both commercially and

recreationally in the US.

34

V) Conclusion

The goal of this study was to determine the economic sustainability of United States

fisheries based on both theoretical and empirical analysis. A combination of both biological and

economic implications, it is a complex issue that has many solutions that boil down to strong

policy on the issue. In order for the preservation of the ecosystems in question to be achieved, it

is important that when law makers amend and create new policy on the issue they take into

account fishermen incentives, ecological depletion, fishing methods based on common fishing

practices, territorial rights and property rights and the economic implications overfishing has on

the entire economy of the United States.

In order to perform the most perfect analysis, these things were all taken into account. It

has been shown that while fish populations were on the decline at the beginning of this study,

leading to ecosystem degradation, species being caught has shown positive improvement due to

correct policy implementation. As well as ecosystem health, the economic landscape also looks

promising. If more is done to continue to regulate the fishing industry more closely, there is

much promise for the future when it comes to economic sustainability of US fisheries.

Looking forward, there is much more that can be done to make policy more efficient. The

2012 MSA reforms took a large step in the right direction when it comes to long term

sustainability, by taking scientific research into account when setting total catch limits, rather

than just looking at the economic implications. Based on this principle, more scientific research

should be done in order to preserve ecosystems globally.

A solution to this issue should be more government subsidies for programs like Bren

Smith’s 3D ocean farming program. In the literature review chapter of this study, there was

35

much time spent outlining the economic and ecological sustainability of the 3D Ocean farming

program set up to grow mollusks and seaweed to create many positive externalities. If more

programs like 3D Ocean farming were to come about, then the sustainability problem faced by

the fishing industry would be eliminated, millions of jobs could be created and producers could

shift from traditional fishing methods to more sustainable methods. In order to foster the growth

of such programs, the federal government would be able to shift money being spent on

conservation efforts to subsidize programs such as sustainable 3D Ocean farming, causing more

sustainable practices without increasing the burden on tax payers.

The fishing industry in the United States is big business. If it were to cease to exist,

millions of jobs would be lost, there would not be food on the tables of many US citizens, the

great past time of the sport of fishing would be lost, and the economy would take a massive hit.

It is important that legislators understand the implications of fishing legislation and the impact it

has on the American people, regardless of whether or not they fish for recreation, eat fish or use

any ocean based products. The hopes of this study were to shed light on the fallacies of past

regulations in order to preserve the natural resources of the ocean that drive the economy for

centuries to come.

36

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About The Author:

Michael S. Meiran is a Managerial Economics Major that also completed minors in Political

Science and Education at Allegheny College in Meadville, PA. Michael was a three year letter

winner for the Allegheny Gator football team, playing on the Offensive Line his entire career. In

his free time he is an avid fisherman and conservationist. Upon completing his graduation from

Allegheny College, Michael plans on pursuing a career as a College Football Coach as well as

earning his MBA.