ESM 204
Assignment #6
Management of Fisheries in Costa Rica
Background: The Government of Costa Rica is concerned about the health of one of its most important
fisheries, in the Gulf of Nicoya on the Pacific side of the country.
Your task. The Government of Costa Rica needs your help in managing their fisheries. In particular,
they are considered levying a tax per metric ton of fish landings and want recommendations on what the
level of the tax should be and your analysis of the consequences of that tax. Prepare your
recommendations in a memo to the Fish Minister (max 1 page), with supporting appendices.
Data. You have been provided with a dataset on annual fishing activity in the Gulf of Nicoya on the
Pacific coast of Costa Rica. This was Costa Rica’s most important fishery during the 1970s and 1980s,
accounting for two-thirds of the country’s fishing fleet and a third of its total marine landings. The data
are drawn from a 1991 report by the World Resources Institute (Washington, DC) and the Tropical
Science Center (San José, Costa Rica), Accounts Overdue: Natural Resource Depreciation in Costa Rica.
The spreadsheet contains data for 19 years, 1970-88. Columns C-E contain data on landings (“catch”) of
fish, sharks, and fish and sharks combined. The data are in metric tons. Column G contains data on the
average price received by fishermen when they sell fish and sharks. These data are in colones/kg (not
metric tons) and are in nominal (undeflated) terms.
Columns I-Q contain data on the fishing fleet. Artisanal, not commercial, vessels comprised most of the
fleet during the 1970s and 1980s. Artisanal fisherman used three main types of boats: botes and pangas,
which are both small, simple craft that make day trips, and lanchas, which are larger and more powerful
and stay out at sea for several days at a time. Columns I-K contain data on the number of vessels of each
type.
Botes are often oar-powered, while pangas and lanchas have motors. Columns M-O contain data on the
average motor power per vessel, in kilowatts. Oar-powered botes were assumed to have 75 percent of the
power of a bote with a 1-kw motor.
Column Q contains data on total fishing cost for the entire fleet. The data are in colones are in nominal
terms. Total cost includes both operating cost (mainly fuel, ice, and the opportunity cost of fishermen’s
time, set equal to government unemployment payments) and capital costs (depreciation of fishing vessels
and gear).
Finally, column S contains data on the consumer price index in Costa Rica, which can be used to convert
nominal prices and costs to real (deflated) values. It is expressed as an index, with a value of 1.00 in
1988.
Questions to be addressed in appendices to your memo:
PART I: Understanding the data (30 points)
Provide the Minister with background on landings, effort, catch per unit effort costs, revenue and rents.
Present your results graphically with some interpretation. To do this, you may want to proceed through
several steps:
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ESM 204
Assignment #6
Landings. Prepare a line chart that plots total landings (fish & sharks) and landings of just fish against
year. How do the trends in the two data series compare?
Effort. Fishing effort depends on the number of vessels, motor power, and other vessel characteristics
that affect the number of fish caught per unit of time. Calculate total fishing effort for each year by
multiplying the number of vessels of each type (i.e., botes, pangas, lanchas) by the corresponding average
motor power (the nominal power of botes and pangas will need to be reduced by 9% to reflect their lower
efficiency and thus converting them to “lancha-kw-equivalents”), and summing up. Divide each value in
this effort variable by the value in 1970. This yields an index that equals 1.00 in 1970. Do the same for
the total number of vessels. Prepare a line chart that plots the effort index and the boat index against year.
How do the trends in the two data series compare? What explains the difference(s)?
Catch per unit effort. Calculate catch per unit effort (= total landings/effort; CPUE) for each year. Use
the actual values of effort, not the index. Prepare a line chart that plots CPUE against year. How would
you describe the trend in CPUE?
Costs. Calculate total fishing cost in real terms for each year, using the CPI to convert from nominal
colones to real colones.. Also calculate average total cost (= total cost / effort) in real terms for each year.
(Use the actual values of effort, not the index, in this calculation.)
Revenue, Calculate average fish price in real terms for each year (i.e., divide average price by the CPI).
Calculate total revenue (= price  landings  1000, to convert price from kg to metric tons) in real terms
for each year.
Rents. Prepare a line chart that plots total revenue and total cost against year. Based on this chart, do you
think the fishery was being managed optimally at the end of the period? What do we call the difference
between total revenue and total cost?
PART II: Estimating the catch-effort relationship (20 points)
Determine the functional relationship between catch per unit effort and effort. Interpret your results. To
accomplish this, you may want to proceed through several steps.
Background: A common model of the relationship between catch (C) and effort (E) is Fox’s model:
C = E  ea+bE.
This can be rewritten with CPUE (= C/E) as the dependent variable:
C/E = ea+bE.
Taking the natural logarithm of each side converts this to a form that we can readily estimate:
ln(C/E) = a + bE.
(1)
An alternative model that is even more straightforward to estimate is the quadratic:
C = b1E + b2E2.
(2)
You will estimate both specifications and compare them.
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ESM 204
Assignment #6
The Data. Prepare a scatter (XY) plot of catch (vertical axis) against effort (horizontal axis). Does the
scatter plot appear consistent with textbook catch-effort diagrams?
Regression 1. First calculate ln(C/E). Then regress ln(C/E) on E. That is, estimate equation (1) above.
Are the coefficients a and b statistically significant? Include your answer in the “Regression 1”
worksheet, and type “Task 12” before it.
Regression 2. Regress C on E and E2. That is, estimate equation (2). Note: in the “Input” section of the
“Regression” menu, check the box before “Constant is zero.” This will cause the program not to
include an intercept term in the regression. Are the coefficients b1 and b2 statistically significant?
Goodness of fit. Prepare a line chart that plots these fitted values (using the regression equations), as well
as the actual values, against year. Do this for both regressions. Which equation, (1) or (2), do you think
fits the actual values of catch more closely?
PART III: Evauating the tax (30 points)
You now must calculate the desirable tax per ton of fish landed, and evaluate the tax. Also calculate the
maximum sustained yield (MSY), the open access level of fishing (OA), and the maximum economic
yield level of fishing (MEY). Use the coefficients from Regression 2.
MSY. Calculate the effort level that achieves the maximum sustained yield (MSY) catch level. Note that
you need to calculate just a single number, not a number for each year, and that you only need to calculate
effort, not catch. How does this value compare to the actual values during 1970-88?
OA. Calculate the mean values of deflated fish price (in colones/kg) and deflated average total cost (in
colones/lancha-kw) for the 1970-88 period. Calculate the effort level associated with open access (OA).
(Hint: be sure that both price and catch are expressed in metric tons.) How does it compare to the actual
values during 1970-88? Is this finding consistent with your plot of total revenue and total cost?
MEY. Now calculate the effort level that achieves maximum economic yield (MEY). (Hint: again, be
sure that both price and catch are expressed in metric tons.) How does it compare to the actual values
during 1970-88? Calculate the corresponding MEY catch level. What is the value of the difference
between total revenue associated with the MEY catch and total cost associated with the MEY effort?
Landings tax. Suppose the Costa Rican government had decided to discourage overfishing and achieve
the MEY effort level by levying a tax on every metric ton of fish landings. What should the level of this
tax be, in colones/kg (deflated)? How large (in percentage terms) is this tax relative to the mean deflated
price of fish during 1970-88?
Part IV: Summary Memo to Fish Minister (20 points).
Be concise, use good English, and convey what you need to convey. Maximum length: 1 page.
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