Journal of Agricultural Economics
doi: 10.1111/1477-9552.12064
On the Allocation of Possible EU Total
Allowable Catches (TAC) for the
Mediterranean Swordfish: An Envy-Free
Criterion and Equitable Procedure
Athanasios Kampas1
(Original submitted February 2013, revision received December 2013, accepted
January 2014.)
Abstract
This paper examines the allocation of entitlement rights for the management of common property resources. In particular, the case of allocating a Total Allowable
Catch quota for the Mediterranean swordfish is examined as a case study. The
proposed approach comprises three steps. First, there is a bargaining procedure
between the European Union (EU) and the rest of the International Commission for
the Conservation of Atlantic Tunas (ICCAT) countries. As soon as an initial agreement is possible, the EU considers various equitable rationing methods to allocate its
share to the European Member States. These rationing methods draw upon two
different streams of the literature, bankruptcy and ‘burden sharing’. Finally, the
European Member States reach a fair agreement through minimising an envy-free
index. The allocation rule which is defined as the weighted average of equal proportion and equal share rationales represents the best compromise solution.
Keywords: Bankruptcy rules; bargaining; common property resources; envy-free
indices; fairness; initial allocation; Mediterranean Sea; swordfish; total allowable
catch.
JEL classifications: Q22, Q34, Q50.
1. Introduction
The Common Fisheries Policy (CFP) of the European Union (EU) includes a variety
of conservation measures, which primarily involve limits in the quantity of fish
catches along with so-called ‘technical measures’.2 These ‘technical measures’ refer to
1
Athanasios Kampas is with the Department of Agricultural Economics and Rural
Development, Agricultural University of Athens, Iera Odos 75, Athens, 11855, Greece. E-mail:
tkampas@aua.gr for correspondence. The author is indebted to the three anonymous referees
and David Harvey (Editor) for comments and suggestions that significantly improved the
original text. Any remaining errors are those of the author.
2
EU regulation 850/98.
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Athanasios Kampas
restrictions on the technology used (fishing gear), restrictions on the minimum landing
sizes, by-catch rules, and closed areas and seasons (Frost and Andersen, 2006). Fish
catch limitations expressed as Total Allowable Catch (TAC) represent the cornerstone
of the CFP (Quin, 1983; Karagiannakos, 1996; Schwach et al., 2007).
In 1982 the TAC were recognised as a regulatory instrument by the Montego Bay
International Convention for the Law of the Sea, and the next year were adopted by
the EU (Lequesne, 2004).3 The CFP sets the TACs through a complex process which
involves interactions among numerous agents and bodies such as the European Commission, the Scientific, Technical and Economic Committee for Fisheries (STEFC),
the Regional Advisory Council, the European Council, the fishing industries and various Non-Governmental Organisations (NGOs) (Da Rocha et al., 2012).
There are two types of TAC: (i) the analytical TAC, which are estimated on the
basis of scientific data (scientific recommendations from the International Council for
the Exploitation of the Sea, ICES); (ii) the estimated TAC, where the necessary scientific data are missing. The majority of TAC are estimated (Karagiannakos, 1996). It is
noteworthy that there is a clear north/south and Atlantic/Mediterranean divide concerning the distribution of TAC in the EU waters. TAC prevails in the northern
waters (the European part of the Atlantic) while they are almost absent in the southern waters (Mediterranean Sea).
The annual setting of TACs by the European Council is a political economy exercise in which scientific rationality confronts political realities (Lequesne, 2004). The
CFP de facto determines TACs on the basis of a reference point termed ‘precautionary
biomass’, which is defined as 30% of the unexploited stock size (Khalilian et al.,
2010). However, such scientific advice is systematically ignored by the European Ministers as TACs on average have been set 48% higher than such an advice (Khalilian
et al., 2010). One explanation of such a discrepancy between the proposed and the
adopted TAC is that the European Council is restricted by short-term political pressures. Hence, it is not surprising that the TAC setting is often considered as the most
politicised aspect of the CFP (Franchino and Rahming, 2003), which shapes the lack
of institutional success of fisheries management under CFP (Schwach et al., 2007).
Since the 1990s it has been recognised that TACs are inefficient as a single instrument to control overfishing (Lequesne, 2004). Therefore, a consensus has emerged
that they should be used in conjunction with other regulatory measures such as gear
restrictions and/or closed fishing areas. For example, Stefansson and Rosenberg
(2005) found that clear conservation benefits can be achieved by coupling a quota system with additional control measures such as closed areas. Similar conclusions were
reached for the Atlantic swordfish TAC (Neilson et al., 2013). Detailed criticism of
the ‘TAC machine’, a term coined by Schwach et al. (2007), can be found in Khalilian
et al. (2010) and Villasante et al. (2011). Despite the severe criticisms of the ‘TAC
machine’, the last CFP reform recognised the need to maintain the TAC system until
the next policy reform (Da Rocha et al., 2012).
Hannesson (1991) argues that the division of a TAC is a simple matter once the
total catch has been agreed. On the contrary, we think that such a statement underestimates the crucial issue of the likely distributional impacts induced by different allocation methods. Suffice to say that the extent of these distributional impacts
determines the perceived fairness of various allocation methods and hence shapes
3
Article 3 of EU Regulation 170/83.
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their likely acceptability. Thus, in line with Aranda et al. (2006), we argue that the
(initial) allocation of shared stocks is arguably the most complex issue in the management of common property resources, which surprisingly has not received the proper
attention in the relevant literature.
Nevertheless, in other parts of the literature, where quotas (or permits) represent
constraints in the production process, a typical criterion to evaluate different allocation rules is to assess the likely welfare impacts induced by various rules (Rose and
Stevens, 1993; Leach, 2009; Golombek et al., 2013).
The distribution of the TAC to the EU Member States is based on the notion of
‘relative stability’ under which national stocks are determined in accordance with the
quantities of fish caught during a reference period. Under such a principle, each Member State could expect their fishing industry to retain its position relative to other
Member States. In other words, the principle of relative stability represents a mechanism by which the status quo is preserved (Symes, 1997). Zajac (1995) argues that
‘. . .the retention of the status quo is considered a right whose removal is considered
unjust’, which represents one of six propositions codified by Zajac in his attempt to
define economic injustice.
One of the major objections against the principle of ‘relative stability’ is that it
punishes previous cessation of fishing (Serdy, 2011). Such a cessation, either voluntary or otherwise, may be a problem for a country’s re-entry to fishing. Likewise,
by reversing the previous argument, it can be claimed that ‘relative stability’
rewards overfishing. If the introduction of TAC is anticipated, fishing countries
have the incentive to overfish in order to obtain greater catch shares in the postTAC period.
Although Morin (2000) eloquently shows that the principle of ‘relative stability’
contradicts two fundamental EU rules, namely the right of establishment and the free
movement of workers, he is sceptical about its abolition since, as he argues, there is
no genuine alternative. Such an argument is only valid as long as the prime decision
rule for TAC allocation is the preservation of the status quo. Nevertheless, other criteria are equally legitimate, where legitimacy is defined as ‘the acceptance and justification of a shared rule by a community’ (Bernstein, 2005). Fairness represents an
alternative legitimate criterion, which may apply to TAC allocation. As Lowe (2007)
argues ‘fairness and realism must rank among the most important desiderata for
States engaging in the search for a negotiated solution to a dispute between them’.
Despite the fact that there is no general accepted compliance theory for International
Environmental Agreements (IEAs) (Mitchell, 2003), fairness, according to Grossen
(2004), provides the conceptual tool to manage the tension between change and order
in such agreements. Moreover, it enhances the effectiveness of IEAs (Andresen and
Hey, 2005). The limitations of fairness as a guiding principle for the International
Law are discussed by Tasioulas (2002).
The concept of fairness in this study is operationalised through the envy-free criterion, which is a purely ordinal measure of distributive justice (Arnsperger, 1994).
Although it seems a common practice among economists to characterise an allocation
of resources as fair if it is ‘envy free’, see for example Corch
on and Iturbe-Ormaetxe
(2001), Fleurbaey (2008), Herreiner and Puppe (2009) and Thomson (2011), the
concept of envy free is not immune to criticism (LeGrand, 1991; Rescher, 2002).
To date, there is no TAC for Mediterranean swordfish, although this is quite likely
to be addressed soon. The TAC setting in the Mediterranean Sea falls within the
responsibility of the International Commission for the Conservation of Atlantic
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Tunas (ICCAT). ICCAT is one of the oldest regional fishing management organisations (RFMOs), and is in charge of the conservation of tunas and tuna-like species in
the Atlantic Ocean and its adjacent seas. In 2001, the Commission adopted ‘Criteria
for the Allocation of Fishing Possibilities’ to facilitate the decision-making concerning
TAC allocation (ICCAT, 2001). However, the complexity of the proposed criteria is
striking (McDorman, 2005), in addition to the complication that they are not legally
binding (Henriksen and Hoel, 2011). For simplicity and brevity, we ignore this complexity here by following a normative approach under which ICCAT members are
assumed to adopt a cooperative procedure to distribute the gains from cooperation.
The likely TAC for the Mediterranean swordfish is based on a recent stock
assessment by ICCAT, in which it is stated that the stock has been assessed as
‘overexploited’ (ICCAT, 2010). In addition, Oceana4 has recently called for the establishment of a TAC limit by cutting the average declared catch by 20% (Anonymous,
2010).
The paper builds on the idea of a two-tier system proposed by Grafton et al. (2010)
to frame a cooperative procedure of allocating a Mediterranean swordfish TAC.
According to this system, ICCAT establishes a TAC through bargaining and then
allocates non-transferable and permanent country shares to member countries. In
turn, each ICCAT member can either use their annual allocations or trade them with
other ICCAT members.
A possible and feasible TAC allocation is examined here as a three-step procedure.
The first step consists of the bargaining process between the EU and the non-EU
Mediterranean countries (Algeria, Morocco, Tunisia and Turkey). The outcome of
the initial agreement is that a Mediterranean TAC is allocated between the EU and
the non-EU countries. This represents the cooperative procedure adopted by the
ICCAT members.
The EU then has to decide how to allocate its share to its Member States. The next
step examines a number of ‘equitable’ allocation rules, beyond the ‘relative stability’
rule. Here, this paper combines two streams of the literature that deal with the issue
of sharing natural resources. The first one originates from the bankruptcy literature,
the case in which the amount of the resource to be allocated is lower than the agents’
claims. The second stream of the literature, which is burgeoning, refers to the issue of
‘burden sharing’. For example, such an issue dominates the discussions about how the
costs of climate change policies can be allocated.
Finally, the EU countries seek consensus in the third step by minimising an envy
index as a means of selecting the appropriate (fair) rationing rule. Details of the proposed approach are presented in the next section. Modelling assumptions and the case
study of the Mediterranean swordfish are given in section 3, while section 4 discusses
the derived results and section 5 concludes.
2. An Approach to Allocating EU TAC
The proposed method of allocating TACs comprises three steps. First, the EU
acts as a single body in the process of establishing a TAC among the ICCAT
countries (Karagiannakos, 1996). The collective choice through which conflicting
4
Oceana is the largest international organisation focused solely on ocean conservation, protecting marine ecosystems and endangered species (http://oceana.org).
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interests are reconciled involves bargaining between the EU and the non-EU countries. Our proposed procedure is based on an analysis that is restricted to cooperative solutions (Figure 1). There are some strong grounds for presuming that a
cooperative agreement is possible in this case. First, the Mediterranean Sea is
semi-enclosed, within the provisions of Article 122 of the 1982 UN Law of the
Sea Convention which requires close cooperation among all coastal States in the
region (Frank, 2007). Second, the Mediterranean Sea involves 21 countries where
only 10 of them, Algeria, Cyprus, France, Greece, Italy, Malta, Morocco, Spain,
Tunisia and Turkey, have harvested almost all the Mediterranean swordfish stock
for the last 20 years. Note that all these ten countries are ICCAT contracting parties, which are obliged to comply with agreed conservation measures. With very
few exceptions, such as tuna, Mediterranean fishing is characterised by the scarcity
of fleets from outside countries (Su
arez de Vivero and Rodrıguez Mateos, 2002).
In such a reality, major problems that dominate high seas fisheries, namely the
free entry issue (Bjørndal et al., 2000) and the new member concern (Pintassilgo
and Costa Duarte, 2001), become less important.
A third factor which may facilitate a cooperative solution is the presence of a
cooperative spirit among Mediterranean countries. The cooperative basis for the
management of the Mediterranean Sea initiated in 1975 with the launch of the Mediterranean Action Plan (MAP), which along with a number of legal instruments is
collectively known as the ‘Barcelona System’ (Suarez de Vivero and Rodrıguez Mateos, 2002). Furthermore, in 1995, the EU introduced the Euro-Mediterranean Partnership (EMP) arrangement, which aimed at fostering cooperation between the EU
and 12 Mediterranean countries (Xenakis, 2000). More recently, a similar initiative
has been launched by the Paris Summit in 2008, the Union for the Mediterranean,
with the aim of promoting stability and prosperity throughout the Mediterranean
region (Khatib, 2010). It is also noteworthy that the Mediterranean region was the
first Programme region under the auspices of the United Nations Environment Programme (UNEP) (Sands, 2003). While those initiatives can by no means be
described as successful, since there is no simple answer as to whether an international regime is effective according to Frantzi (2008), these agreements reflect a rhetoric in favour of cooperation and regional integration among the Mediterranean
countries.
Figure 1 presents the sequence of these three steps that may be used to assess the
Meditteranean countries’ TAC.
As soon as a cooperative solution is possible through bargaining, a set of likely allocation methods is considered in allocating the quota to the respective countries. In
turn, the choice of the best ‘compromise’ allocating method is determined via the
envy-free criterion.
2.1. Step one: A cooperative solution for establishing Mediterranean TAC
Let N = {1, 2, . . ., n} be a finite set of agents which includes all the fishing countries that historically used to fish in the Mediterranean Sea. A cooperative bargaining problem for the group consists of two sets of payoff profiles, S and d.
The set Scomprises every possible agreement, usually known as the feasible payoff
set. By contrast, the set d represents the situation where an agreement is not possible, usually referred to as disagreement or threat point. Among various cooperative solutions, Nash is the best-known bargaining rule, according to which, the
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Athanasios Kampas
Figure 1. The rationale of the proposed allocation procedure
Nash bargaining solution is the payoff profile that maximises agent gains from
cooperation. Formally, it is defined as:
max
x2IðS;dÞ
n
Y
ðxi di Þ:
ð1Þ
i¼1
The Nash rule requires that each bargaining partner prefers an agreement to disagreement, or formally the cooperative solution belongs to the individually rational
set, I(s, d) ={x 2 S | x ≥ d}. While the majority of the textbooks on game theory
define the payoffs in equation (1) in terms of utility (see for example Friedman, 1990;
and Myerson, 1991), bargaining problems can be easily defined as ‘pie allocation
problems’, where payoffs in such a context refer to physical quantities (Serrano, 1997;
Lerner, 1998; Rasmusen, 2001; Ansink and Weikard, 2009).
When bargaining partners have different bargaining powers, the Nash rule is modified as:
max
x2IðS;dÞ
n
Y
ðxi di Þqi ;
ð2Þ
i¼1
where qi denotes the bargaining power of partner i and
logðmax
n
Q
ðxi di Þqi Þ ¼ max logð
i¼1
n
Q
ðxi di Þqi Þ ¼ max
i¼1
n
P
P
qi ¼ 1. Given that
i
qi logðxi di Þ, the asymmet-
i¼1
ric Nash Rule defined in equation (2) can be substituted by the following problem:
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EU TAC for the Mediterranean Swordfish
max
x2IðS;dÞ
n
X
7
qi logðxi di Þ
i¼1
w:r:t xi di ; &
X
ð3Þ
xi ¼ TAC
i
The first paper which applied bargaining solutions in fisheries was Munro (1979).
There is a stream of relevant literature which emphasises the use of side-payments to
support cooperation, for example Munro (2009) and Calcott and Petkov (2012).
However, given that such an issue is still controversial (see Finus, 2001; and Harstad,
2008) and not directly related to the objective of this paper, we opt to ignore side payments. It should be stressed, however, that other cooperative solutions are also possible. Armstrong (1998), for example, considers the Kalai-Smorondinsky and the
Salukvadze solutions along with the Nash one. Recent developments of applied game
theory in fisheries are covered in a thorough review by Bailey et al. (2010).
2.2. Step two: Examining possible rationing rules of allocating the European TAC
It is convenient to consider the unregulated fish catches as the vector of each country’s
initial claims, c, where c 2 Rnþ and the ith component of c, denoted by ci, represents
the
P unrestricted fish catch by country i, in the baseline year, for example, 2010. Hence,
ci denotes the total unregulated fish catch or the total claims from all fishing couni2N
P
P
tries. Consequently, the total allowable catches are TAC ¼
ri ¼ ð1 aÞ
ci , while
i2N
i2N
P
ci denotes the total required reduction in the fishing quantities of the baseline
a
i2N
year and ri stands for the regulated catch of the ith country.
Table 1
Definitions of the parameters used in Stage 2
Symbol
Definition
ci
c1
c~i
ri
N
a
ci
vi
ei
bi
mi
qi
h
li
di
^
x
si
qi
The initial (unrestricted) fish catch of country i
The lowest initial (unrestricted) fish catch
The long run average fish catch of country i
The restricted fish catch of country i
The cardinality of the set (ICCAT Mediterranean countries)
The % reduction of the unrestricted total catches
The vessels share of country i
The number of authorised vessels of country i
The fishing employment of country i
The fishing employment share of country i
The minimal (fishing) rights of country i
The new (fishing) rights of country i
A real number h 2 [0, 1]
The coastline length of country i
The share of coastlines of country i
The coastline share of the N countries (over the total Mediterranean)
The per capita income of country i (expressed as purchasing power)
The share of long run average fish catch of country i
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The rationing of TAC to the participating countries is arguably the most crucial
issue in designing a (voluntary) fishing management plan in the case of Mediterranean
swordfish. The reason is that any agreement is much more likely to be stable if the
involved agents perceive it as fair (Wood, 2011). To this end, the paper examines a
long list of proposed ‘equitable’ allocation rules drawing from two major strands of
the relevant literature: ‘bankruptcy’ (Hougaard, 2009) and ‘burden-sharing’ rules
(Rose et al., 1998). According to Brams and Taylor (1996) an ‘equitable’ allocation
rule does not necessarily assign equal shares to the involved agents but shares in proportion to their entitlements (needs, demands or claims). Table 1 gives the list of the
symbols used in what follows.
2.2.1. Bankruptcy rules (based on current catches)
The first allocation rule examined is the Equal Proportional Rule (EPR), which is
probably the best known method, in which proportionality is often taken as the definition of fairness for claims problems (Thomson, 2003). Each country reduces its current catch by the same agreed proportion, so the EPR is defined as:
ri ¼ ð1 aÞci :
ð4Þ
From the ‘bankruptcy’ literature we consider the following rules. The first rule is
the Constrained Equal Award (CEA). The CEA is defined as:
where x ¼ ð1 aÞ
P
ri ¼ minðci ; xÞ
ð5Þ
ci =N [ 0. The rationale of CEA is that every country receives
i2N
the same amount as P
long as this amount does not exceed the country’s claim. Forci =N, then each and every country receives the same amount
mally, if ci [ ð1 aÞ
P i2N
P
equal to ð1 aÞ
ci =N. On the contrary, if ci \ð1 aÞ
ci =N then the ith country
i2N
i2N
receives
theP amount
ci
andP the
remaining
countries
receive
P
P
P
rj ¼ ð1 aÞ
cj =ðN 1Þ, where
cj þ ci ¼
ci and
r j þ ci ¼
ri .
j2Nfig
i2N
j2Nfig
j2Nfig
i2N
Inarra and Skonhoft (2008) examined such a rule for distributing TAC concerning the
North East Atlantic Norwegian cod.
Another similar rule is the Constrained Equal Loss (CEL). The CEL is defined as:
where wi ¼ ci a
P
ri ¼ maxf0; wi g
ð6Þ
ci =N [ 0. The rationale of the CEL is that every country receives
i2N
its claim, cP
i, and the required reduction is allocated equally to all countries. Formally,
if ci [ a
ci =N, then each and every country receives the amount equal
i2N
P
P
ci =N. On the contrary, if ci \a
ci =N then the ith country receives a
r i ¼ ci a
i2N
i2N
zero
amount,
ri = 0,
and
the
remaining
P
rj ¼ cj ða
ci ci Þ=ðN 1Þ, where j 2 N {i}.
countries
receive
i2N
Another characteristic rule from the ‘bankruptcy’ literature is the Pineles (PN). The
PN is defined as:
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EU TAC for the Mediterranean Swordfish
"
ri ¼ ci =2 þ ð1 aÞ
X
ci i2N
X
#
ðci =2Þ
ð7Þ
N:
i2N
The rationale of the Pineles rule is that each country gets half of its claim and the
resulting required reduction is then distributed equally (Thomson, 2003).
In turn, we consider a number of ad hoc modifications of the Pineles rule. Instead
of the equal allocation in equation (7) we may use a variety of other rationales based
on countries’ shares of authorised vessels or fishing employment. So, first, we have the
Modified Pineles 1 (MPN1). The MPN1 is defined as:
"
#
X
X ri ¼ ci =2 þ ð1 aÞ
ci ci 2 ci :
ð8Þ
i2N
i2N
The rationale of the MPN1 rule is that each country is getting half of its claim and
the resulting
P reduction is distributed according to the countries vessels share ci, where
ci ¼ mi =
mi and vistands for the number of authorised vessels of the ith country. The
i2N
Modified Pineles 2 (MPN2) utilises the shares of fishing employment
instead of the
P
ei where ei stands
authorised vessels, so in equation (8) instead of ci it uses bi ¼ ei =
i2N
for the fishing employment in the ith country.
The last ‘bankruptcy’ rule is the Adjusted Proportional (AP). The AP is defined as:
"
#
X
X
ri ¼ mi þ ð1 aÞ
ci m i qi :
ð9Þ
i2N
i2N
The AP rule first gives each country its minimal right, mi, and then allocates the
remainder according to the countries’ new claims, qi. The minimal right of country i is
defined as the maximum of zero and the difference between the P
amount to
Pdivide and
the claims of the other countries, that is mi ¼ maxf0; ð1 aÞ
ci cj g, and
i2N
i2Nfig
P
the new claim of country i is qi ¼ ðci mi Þ= ðci mi Þ. The rule was initially proi2N
posed and characterised by Curiel et al. (1987). The AP rule is a generalisation of the
‘contested garment’ principle from the Jewish Talmud5 (Dagan and Volij, 1993).
Finally, in line with Weikard et al. (2006) we examine a convex combination of the
Equal and the Proportional sharing rules (E&P). Such a method allocates a proportion h of TAC equally and the rest (1 h) according to the equal-proportional rule.
The E&P is defined as:
5
Hougaard (2009) presents the ‘contested garment’ principle with the following example. Suppose two agents negotiate over the division of a good. Agent A demands the entire piece, while
agent B demands half of it. According to the ‘contested garment’ principle the fair allocation
should be three-fourths (to the one who demands the entire piece) and one-fourth (to the one
demanding half of the piece). The rationale is as follows: Only half of the piece is contested and
both agents have an equal right to this half. Consequently, the half is split in two equal pieces
(yielding one-fourth of the piece to each agent). But the other half of the piece is not contested
since only one agent makes a claim for this. Hence, this agent gets that half piece for herself,
resulting in the allocation above described that is three-fourths, one-fourth.
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Athanasios Kampas
X !
X X
ri ¼ ð1 hÞð1 aÞ
ci n þ h ci
ci ð1 aÞ
ci :
i2N
i2N
ð10Þ
i2N
While there might be a variety of rationales in choosing h, in our case study we
opted for h = 0.5. Jimenez-Gomez and Peris (2012) defined the scalar h as:
( "
!
! #)
X
X
X
X
h ¼ max 0;
ci ð1 aÞ
ci Nc1
ci
ci Nc1
ð1 aÞ
ð11Þ
i2N
i2N
i2N
i2N
where c1 is lowest claim of all countries. The resulting allocation rule obtained by
plugging equation (11) into equation (10) is termed by the authors as amin Egalitarian
rule (A-min).
2.2.2. Burden sharing rules
The second set of the rationing methods examined in this paper draws upon the proportionality principle as applied in various international environmental agreements
(see for example Ringius et al., 1998; and Kontogianni et al., 2006). Yaari and BarHillel (1984) discuss various justifications under which concerns over fairness may
embrace the proportionality principle. For the purpose of our analysis we applied the
proportionality principle to the main criteria listed by ICCAT (2001).
One of the most obvious rules to allocate TAC is proportional to the country’s
coastline (CL). It has now become well established that an essential element of maritime boundary delimitation is the calculation of the relative lengths of the relevant
coastlines (Van Dyke, 1996; McIntyre, 2013). The CL rule is defined as:
"
#
X
ri ¼ ð1 aÞ
c i di
ð12Þ
where di ¼ li
P
i2N
li and li stands for the coastline length of the ith country.
i2N
Given that the total Mediterranean coastline,PMC, is longer than the
P sum of the
^¼
li we define x
li =MC and
coastlines of the involved countries, MC [
i2N
adjusted the CL rule as:
"
^ ð1 aÞ
ri ¼ x
X
#
"
^ ð1 aÞ
ci di þ ð1 xÞ
i2N
i2N
X
#
ci bi :
ð13Þ
i2N
The resulting rule is termed adjusted coastline rule 1 (ACL1) and its rationale is to
^ TAC according to li and the remaining quantity according
allocate the amount of x
to the shares of fishing employment, bi. A variant of ACL1 is ACL2 in which the
remaining quantity is distributed on the basis of vessel share, ci.
The allocation which is proportional to agent’s affordability is very often considered as a rationale for quota allocation (Rose et al., 1998). In our context, such an
allocation rule divides the total amount of the required reduction of fish catches
according to the shares of the country’s income, si, under the non-negativity restriction. The ability to pay rule (ATP) is defined as:
ri ¼ maxf0; pi g
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EU TAC for the Mediterranean Swordfish
where pi ¼ fci xi ða
P
ci Þg [ 0 and vi ¼ si =
i2N
P
11
si .
i2N
Another proportional rule is the allocation on the basis of the fishing employment
shares (EM) (Matthıasson, 1992). The EM rule is defined as:
!
X
ri ¼ ð1 aÞ
ci bi :
ð15Þ
i2N
Total TAC is allocated to the involved countries according to the employment
shares bi. Another proportional rule considered by Matthıasson (1992) is the one that
is based on the number of vessels (VES). The VES is defined as:
!
X
ri ¼ ð1 aÞ
ci ci :
ð16Þ
i2N
The last allocation rule examined is the one that uses the shares of long-run average
catches of the involved countries. Such a rule which uses the historical data on fish
catches is defined as:
!
X
ri ¼ ð1 aÞ
c i qi :
ð17Þ
P
i2N
where qi ¼ c~i =
c~i and c~i is the long-run average fish catch of the ith country. This
i2N the rationale of the relative stability used by the EU.
type of rule mimics
Finally, we note that both the Nash bargaining (Chun and Thomson, 1988) and the
allocation rules examined in this paper are resource monotonic (Dagan et al., 1997;
Moulin, 2002); that is to say that all partners are affected in the same direction when
the TAC changes.6 This property ensures the stability of a solution in cases where
TAC is changed.
2.3. Step three: An envy-free criterion for seeking consensus
Being envy-free, according to which every agent is satisfied with their own allocation
and does not prefer another’s allocation, is a central part of the economic theory of
fairness (Zhou, 1992; Arnsperger, 1994; Brams and King, 2005). The rationale of the
envy-free criterion can be adequately captured by two indices, namely the envious
intensity and the envied intensity (Fleurbaey, 2008). The envious intensity, denoted as
EV1, represents the total amount of TAC (beyond what is already allocated) that
should be given to a group of countries in order to make them non-envious. The EV1
is calculated by the following steps:
1 For every possible allocation scheme and for every pair of countries (i, j) compute
the number qij = ri rj which represents the lowest amount of external resource
(fish) that should be given to i in order to prevent it from envying j, provided that
qij < 0. When qij ≥ 0 country i does not envy country j.
2 For every possible allocation scheme and every country, computePthe number
ξi = min qij and then sum over all countries to calculate the
Pnumber vi . Finally,
the envious intensity, EV1, is given by the number minð vi Þ. An iallocation is
ranked as envy-free when it minimises the envious intensity. i
6
This point was brought to our attention by an anonymous referee.
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12
Athanasios Kampas
Similarly, the envied intensity, denoted as EV2, represents the total amount of
external resource that should be taken away from a group of countries so none is
envied by the others. The EV2 is calculated
P directly analogously with the EV1 when
qij ≥ 0 and it is given by the number minð max qij Þ. Likewise, an allocation is ranked
i
as envy-free when it minimises the envied intensity.
3. Case Study and Assumptions
Swordfish (Xiphias gladius) is considered as a highly migratory species and is widely
distributed throughout the Atlantic Ocean and Mediterranean Sea. The Mediterranean stock is considered isolated from the Atlantic stock, and the two stocks are different in terms of growth rate and sexual maturity (Anonymous, 2009). Catches of
Mediterranean swordfish have stabilised around 15,000 tonnes in the last 15 years,
primarily caught with surface drifting longlines. The progressive decrease in mean size
and mean age of catches reflects the fact that swordfish is overfished (Lleonart, 2008).
The catching of swordfish, both as a targeted fishery and as by-catch, is prohibited by
ICCAT in the Mediterranean during the period between 1 October and 30 November
each year (FAO, 2010).
Until recently, apart from the 2 months closure, there was no specific management regime for Mediterranean swordfish although various technical measures,
such as minimum landing size and fishing licence control systems, have been institutionalised to ease fishing pressure on the stock (Tserpes et al., 2009). The need
for a sustainable Mediterranean swordfish management plan has become more
urgent since the Mediterranean stock has been assessed as overexploited (ICCAT,
2010). The main priorities of such a management plan are: first, to establish a total
allowable catch limit by cutting the total unregulated catches by a specific proportion, a, and second, to allocate the TAC to the fishing countries. Oceana have suggested that a value of a = 20% represents a prudent management scenario
(Anonymous, 2010).
The disagreement point in the bargaining process is taken to be a 6-month closure
of fishing. Even though such a scenario results in important initial losses in annual
landings, it is shown to be quite beneficial in the long run for the spawning stock biomass (SSB). Tserpes et al. (2009) have estimated that with a 6-month closure, the
swordfish stock will attain maximum sustainable yield levels within a period of
20 years. However, such a measure would result in a 35% reduction in fish landings
in the first year of its implementation (Tserpes et al., 2009). So if the Mediterranean
countries fail to reach an agreement concerning the Oceana scenario of 20% catch
reduction, then a 6-month closure should be introduced to alleviate the harvesting
pressure on swordfish stock. For our purposes, individual threat points can be taken
as a 35% reduction of the unregulated fish catches. It can also be assumed that the
shares of authorised vessels of the EU countries determine their relative bargaining
powers. While there might be other ways to determine the relative bargaining powers,
we follow the ICCAT suggestion that the countries’ shares of authorised vessels satisfactorily capture the interests, the fishing patterns and the fishing practices of the
involved countries (ICCAT, 2001).
According to the latest ICCAT stock assessment (ICCAT, 2011), the countries
examined in this paper (Table 2) harvest 99.9% of total catches.
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998
28,225
12
$8,320
624
826
648
1,126
17
$21,962
31
86
Cyprus
13,676
30,196
819
$27,580
1,494
1,325
Greece
645
25,459
317
$29,619
78
20
France
7,600
60,700
6,625
$21,004
6,022
7,605
Italy
253
539
584
$4,628
423
156
Malta
584
70,000
481
$29,661
1,610
1,915
Morocco
2,714
100,000
90
$34,341
1,792
1,318
Spain
Sources: *Coastline: EU countries: Su
arez de Vivero and Rodrıguez Mateos (2002); non-EU countries: Sea around Us (2012).
†
Fishing sector employment: EU countries: Regional Advisory Council (2008); non-EU countries: Earth Trends (2012).
‡
Authorised vessels: Anonymous (2010).
§
Gross National Income per capita (expressed as purchasing power): United Nations Development Programme (2009).
¶
Catches: ICCAT (2011).
Coastline Km*
Fishing sector employment†
Authorised vessels‡
Gross National Income per capita§
Swordfish catches (2010)¶
Swordfish catches average (1982–2010)¶
Algeria
Table 2
Mediterranean fishing countries’ profile
1,148
53,000
397
$7,979
1,016
395
Tunisia
5,326
110,230
201
$13,359
334
317
Turkey
EU TAC for the Mediterranean Swordfish
13
14
Athanasios Kampas
Table 3
Bargaining results between EU and non-EU countries
Bargaining partners
EU
Algeria
Morocco
Tunisia
Turkey
Total
Quota allocation
%
8,170.4
407.6
1,151.1
746.9
261.3
10,737.6
76.1
3.8
10.7
7.0
2.4
4. Results and Discussion
The result of the bargaining procedure among the ICCAT Mediterranean countries is
given in Table 3. The results were obtained by solving the nonlinear programming
problem defined by equation (3) using the dataset from Table 2 and assumptions
about the disagreement discussed in the previous section.
As is clear from Table 3, the EU gets the majority of the Mediterranean fishing
quotas. The share of quotas allocated to the EU through bargaining equals 76.1%.
Such an outcome leaves the EU better off both in comparison to the current year situation, where the EU’s share is 73.2%, and also in comparison to the long-run average
catches (1982–2010) where the EU’s share amounts to 75.1%.
As soon as the initial allocation of fishing quotas has been arranged between the
EU block and the rest of the (non-EU) Mediterranean countries, the question is how
the European countries will decide to allocate this share between them. To this end,
we assume that it is quite reasonable to examine a variety of rationing rules described
in section 2 and the results are given in Table 4.
The situation depicted in Table 4 is that no single allocation rule is preferable to all
countries. Cyprus and Malta are likely to prefer the allocation rule which is the
weighted average of the equal proportion and the equal share methods (E&P). Greece
is in favour of the allocation rule which is proportional to coastlines. France and
Spain would favour the allocation rule which is proportional to fishing employment,
while Italy finds itself better off under the allocation rule which uses historical data.
So, at first glance, EU countries find themselves with divergent maximal claims as
defined under the various allocation rules examined in Table 4. Nevertheless, a
mutual decision concerning the preferable allocation rule of rationing the EU fishing
quotas involves a compromise. This simply means that the countries may be willing to
set aside their maximal demand and agree upon a ‘second best’ choice, as soon as this
choice satisfies some minimum requirements. The rationale being that a group decision is possible if the envy between the members of the group is minimised. To this
end we examine the indices of envious intensity,EV1, and envied intensity, EV2,
described in section 2. Table 5 and Table 6 present the estimated envy-free indices.
An interesting result emerges from Tables 5 and 6. The allocation rule which is
defined as the weighted average of the equiproportional and equal shares is the rationing method that achieves minimum envy allocation.
It is noteworthy that the E&P rule represents the weighted average of two focal
rationales in the sharing problems. The first rationale put forward by the equal shares
method can be seen as a ‘leftist’ approach since it modifies the existing relative
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Cyprus
Greece
Italy
France
Malta
Spain
Total
Country
25.7
1,240.5
5,000.2
64.8
351.2
1,487.9
8,170.4
EPR
31.0
1,494.0
4,352.4
78.0
423.0
1,792.0
8,170.4
CEA
0.0
1,103.9
5,631.9
0.0
32.8
1,401.9
8,170.4
CEL
557.2
1,288.7
3,552.7
580.7
753.2
1,437.7
8,170.4
PN
22.0
1,062.0
5,558.8
160.9
436.1
930.6
8,170.4
MPN1
34.5
1,356.5
3,786.3
450.6
234.8
2,307.6
8,170.4
MPN2
21.4
1,029.1
5,502.4
53.7
291.4
1,272.4
8,170.4
AP
693.7
1,301.1
3,181.0
713.2
856.5
1,424.8
8,170.4
E&P
31.0
1,241.0
4,985.9
69.9
355.2
1,487.4
8,170.4
A-MIN
Allocation rules
191.7
4,327.0
2,635.6
184.3
56.6
775.3
8,170.4
CL
139.0
3,303.3
2,384.1
495.8
57.3
1,791.0
8,170.4
ACL1
Possible allocation rules for the European swordfish quotas
Table 4
127.5
3,032.1
4,016.0
229.0
242.6
523.2
8,170.4
ACL2
0.0
1,095.0
5,593.5
0.0
119.1
1,362.9
8,170.4
ATP
47.8
1,532.2
1,949.0
1,034.7
58.6
3,548.3
8,170.4
EM
16.4
791.7
6,404.3
306.4
564.5
87.0
8,170.4
VES
64.5
1,038.4
5,850.5
20.2
132.2
1,064.6
8,170.4
HIS
EU TAC for the Mediterranean Swordfish
15
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4,649.0
3,512.3
21,830.9
Malta
Spain
Total
0.0
4,935.5
France
Italy
4,974.5
3,759.7
Greece
EPR
Cyprus
Country
17,944.0
2,560.4
3,929.4
4,274.4
0.0
2,858.4
4,321.4
CEA
25,542.7
4,230.0
5,599.0
5,553.9
0.0
4,528.0
5,631.9
CEL
13,146.0
2,115.0
2,799.5
2,972.0
0.0
2,264.0
2,995.5
PN
25,182.3
4,628.2
5,122.7
5,397.9
0.0
4,496.8
5,536.7
MPN1
14,547.7
1,478.8
3,551.5
3,335.7
0.0
2,429.8
3,751.9
MPN2
24,844.2
4,230.0
5,211.1
5,448.7
0.0
4,473.4
5,481.1
AP
10,915.5
1,756.1
2,324.5
2,467.7
0.0
1,879.9
2,487.2
E&P
21,745.0
3,498.4
4,630.7
4,916.0
0.0
3,744.9
4,954.9
A-MIN
Allocation rules
17,791.7
3,551.7
4,270.5
4,142.8
1,691.4
0.0
4,135.3
CL
The index of envious intensity EV1
Table 5
11,649.3
1,512.2
3,246.0
2,807.5
919.2
0.0
3,164.3
ACL1
15,925.8
3,492.8
3,773.4
3,787.0
0.0
984.0
3,888.5
ACL2
25,390.4
4,230.6
5,474.4
5,593.5
0.0
4,498.5
5,593.5
ATP
13,119.2
0.0
3,489.7
2,513.6
1,599.3
2,016.1
3,500.5
EM
30,255.2
6,317.3
5,839.7
6,097.8
0.0
5,612.6
6,387.8
VES
26,932.8
4,785.9
5,718.3
5,830.4
0.0
4,812.1
5,786.0
HIS
16
Athanasios Kampas
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Cyprus
Greece
Italy
France
Malta
Spain
Total
Country
0.0
1,214.8
4,974.5
39.0
325.5
1,462.2
8,016.0
EPR
0.0
1,463.0
4,321.4
47.0
392.0
1,761.0
7,984.4
CEA
0.0
1,103.9
5,631.9
78.0
32.8
1,401.9
8,248.4
CEL
0.0
731.5
2,995.5
23.5
196.0
880.5
4,827.0
PN
0.0
1,039.9
5,536.7
138.9
414.1
908.6
8,038.2
MPN1
0.0
1,322.0
3,751.9
416.1
200.3
2,273.1
7,963.4
MPN2
0.0
1,007.7
5,481.1
32.4
270.0
1,251.1
8,042.3
AP
0.0
607.4
2,487.2
19.5
162.7
731.1
4,008.0
E&P
0.0
1,210.0
4,954.9
38.9
324.2
1,456.4
7,984.4
A-MIN
Allocation rules
CL
135.1
4,270.5
2,579.0
127.7
0.0
718.7
7,831.0
The index of envied intensity, EV2
Table 6
81.7
3,246.0
2,326.8
438.4
0.0
1,733.7
7,826.5
ACL1
0.0
2,904.6
3,888.5
101.5
115.1
395.7
7,405.5
ACL2
0.0
1,095.0
5,593.5
0.0
119.1
1,362.9
8,170.4
ATP
0.0
1,484.4
1,901.2
986.9
10.9
3,500.5
7,883.9
EM
0.0
775.3
6,387.8
290.0
548.1
70.6
8,071.8
VES
44.3
1,018.2
5,830.4
0.0
112.1
1,044.4
8,049.4
HIS
EU TAC for the Mediterranean Swordfish
17
18
Athanasios Kampas
inequalities of the countries’ entitlements. By contrast, the proportional sharing can
be interpreted as a ‘rightist’ approach since it preserves such relative inequalities. The
terms ‘rightist’ and ‘leftist’ are due to Kolm (1976).
The above result simply stresses the fact that a fair compromise solution to allocating rights or entitlements for a local common has a straightforward meaning. A normative acceptable solution requires a fine balance between the ‘rightist’ and ‘leftist’
rationales. Notwithstanding the substantive content of a fair compromise, it must be
understood within the framework of the power balance in a region. Fairness is not
something that can be accomplished in a vacuum. Fair outcomes to become operational must be accepted by the powerful and be satisfactory to the weak (Louka,
2006). However, in reality, it is commonly supposed that power relationships between
the involved states are, very often, the major determinant of resource allocation outcomes (Henriksen and Hoel, 2011).
5. Conclusions
This paper has examined the important issue of the initial allocation of fishing quotas
for the management of common property resources. As an example, the allocation of
fishing rights for the Mediterranean swordfish is examined as a case study. Our
approach comprises three steps. First, there is a bargaining procedure between the
EU and the rest of the fishing countries. As soon as an initial agreement is possible,
the EU considers various equitable rationing methods to allocate its share to the
European Member States. Finally, the European Member States reach a fair
agreement through minimising envy.
The main result obtained is that the preferred allocation rule is identified as the
weighted average of equiproportional and equal share rationales. In other words, the
minimum envy criterion selects the allocation rule which compromises the two polar
cases: a) the egalitarian rationale (equal shares), and b) the preservation of the status
quo (equal proportional reduction). In addition, the selected allocation rule is easy to
implement and characterised by the resource monotonicity property (it is unaffected
by changes in the total TAC).
Finally, we need to acknowledge one important limitation in this research. It examines exclusively cooperative solutions, which appears to reflect the nature of potential
negotiations about Mediterranean swordfish catches. This point merits further analysis. Our analysis, nevertheless, is not restricted to fishing but can easily be applied to
other common property resources, such as communal land and water, only with
minor adjustments. Previous literature either focuses on game theoretic approaches
(see, for example, Mukhopadhyay, 2004; and Van den Brink et al., 2012) or on
sharing rules (see, for example, Matthıasson, 1992; and D’Exelle et al., 2012).
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