RFMOs and the New Member
Problem: From Theory to Policy
Gordon Munro
University of British Columbia, Vancouver; University of
Portsmouth, UK
GTP 8, Riverside, CA
July, 2011
Introduction
This paper is about Practice, not about new
developments in Theory
marked shortage of equations
Designed to answer the 2008 question of
Albiac, Sánchez-Soriano and Dinar:
“--- has game theory developed sufficiently to
assist in evaluating policies in improving
management of shared natural resources and
amenities?”
Quick answer –
YES ! at least in fisheries
Changing Opinions
• At GTP 6 and GTP 7, I argued that game theory
has great relevance to the management of
internationally shared fisheries, but also argued
that game theory (GT) concepts poorly
understood by policy makers.
• little influence on policy -much work to be done
• Now seeing clear signs that GT concepts are, in
fact, having an influence on policy makers in this
area; that our work is beginning to pay off.
• the long lag between advances in GT and impact on policy
RFMOs Reviewed
• Previous paper in this session has shown that
Regional Fisheries Management Organizations
(RFMOs) designed to manage fishery resources
to be found both in EEZs and adjacent high seas
– explicitly include coastal states and so called distant
water states (DWFSs) - e.g. Japan, Spain
• Key international treaty law – 1982 UN
Convention on Law of the Sea; 1995 UN Fish
Stocks Agreement (1995 UNFSA)
– particularly the latter
Unregulated Fishing and Free
Riding
• Under 1995 UNFSA, a RFMO open to all states
with “real” interest in relevant fishery(ies).
• No state to fish in high seas under RFMO
jurisdiction, unless it abides by RFMO
management plans
– but ambiguity of international treaty law, has led to
unregulated fishing in RFMO high seas areas
– free riding, pure and simple
– the GT message about consequences of rampant
unregulated fishing has got through to policy makers
– vigorous measures now being taken to curb such
fishing
– move to customary international law
The New Member Problem
• Left with New Member problem – under 1995
UNFSA, “charter” members of a RFMO have to
be prepared to welcome prospective new
members, who agree to abide by RFMO
management regime.
• Legal experts in the 1990s maintained that new
members must be given “just and reasonable”
share of the economic returns from the RFMO
fisheries
– an example – a tuna RFMO – Western and Central
Pacific Fisheries Convention (WCPFC)
WCPFC
• WCPFC covers the largest concentration of
tropical tuna stocks in the world – extensive
DWFS activity – traditional DWFSs – USA,
Japan, China, Taiwan, ROK
• After Convention negotiated, prospective “new
members” appeared from the other side of the
Pacific expressing a “real” interest in the
resources- Mexico, Panama, Ecuador
– how to explain emergence of new members: Answershifting comparative advantage
– issue not yet resolved
The New Member Problem
Analyzed
• Kaitala and Munro were the first to analyze the
New Member Problem in1997 – a simple model
• 2 member RFMO, coastal state, C, and DWFS, D1,,
rebuilding a fishery resource - target biomass reached at t =
TR >0. No harvesting until t = TR Then faced with flood of new
members. Pure symmetry; Nash egalitarian rule for sharing
global payoff. Denote “just and reasonable” equal share as ω
– PV of economic returns from fishery discounted back to TR..
• can find a number of new members such that:
J  ( x (0), E
i
N
C

, E D1  e
N
  TR

• where LHS denotes Threat Point payoffs of “charter”
members, i=C, D1, x denotes biomass level, N denotes noncooperation, and δ the common discount rate.
The K - M Inequality
• The K-M inequality implies that influx of new members
could completely undermine the RFMO cooperative
game.
– implicit free riding ,or what we might now call the public good
problem
• Li (1998) countered with Fair Sharing rule.
– drop symmetry assumption and Nash egalitarian rule and take a
c-game approach. K- M inequality would not hold – new
members granted allocations based on their contributions to the
“economic pie”
– Li rule does not work with large numbers, which is typical of
RFMOs – “ in the end full utilization of the stock might have to be
declared” (Li, 1998) – contrary to the spirit of the 1995 UNFSA
The Waiting Period Solution
• Let new members into the “club”, but inform
them that will have to go through a waiting
period, before receiving any payoff.
– in practice, RFMOs do have cooperating nonmembers – 2nd class citizenship – transition
• Analytically issue unresolved. Pintassilgo and
Costa-Duarte (2000) argue that the waiting
period can work; K&M have counter example, in
which the waiting period solves nothing.
– if P & C-D are right, then have to say that a solution
that works only from time to time will not do
Transferable Membership Solution
• What this solution really comes down to is
having the “charter” members being allocated
national harvest quotas, which they can
sell/lease, in all or part, to new members
• New members would then effectively have to
“buy” their way in. The K-M inequality would then
not hold – “charter” members have de facto
collective property rights to resource(s)
– the approach is fully compatible with international law
– Pintassilgo and Costa-Duarte (2000) assess the three
solutions that we have discussed and declare the
Transferable Membership to be the most efficient.
What Has Been Done Up to This
Time?
• The two most common solutions to
the new member problem:
– 1.declare resources to be fully
utilized – “slam the door” on new
members (recall Li’s Fair
Allocation rule)
• guaranteed to intensify unregulated
fishing problem
– 2. grant new members harvest
allocations ,which are then added
on to existing TAC(s)
• excellent chance of intensifying
resource overexploitation
Independent Panel on RFMO
Governance
• London based 2006/2007Independent Panel
(IP) established due to recommendation of
OECD High Seas Task Force
– IP’s report (Chatham House Report) now used
extensively by OECD
• IP report, inter alia, recommends that:
– “in each RFMO, members should seek means of
accommodating new members that will not
undermine --- the RFMO, such as allowing new
members to purchase or lease fishing
opportunities from existing RFMO members”
• how was this recommendation arrived at?
Commission for the Conservation
of Southern Bluefin Tuna (CCSBT)
• One RFMO, in which the Transferable
Membership solution is being seriously
discussed, is the CCSBT –centered on Australia
and NZ
• resource in need of extensive rebuilding
• RFMO plagued with new members – previously granted
allocations added on to TAC –expected results
– From recent OECD case study on the CCSBT: “--quota trading may occur in the not too distant
future.---it makes sense where the stock is being
rebuilt and there is no scope to increase global
TAC for states wishing to enter the fishery ---- “
– Once one RFMO adopts the solution, others certain to
follow.
http://www.fao.org/fishery/rfb/ccsbt/en#Org-GeoCoverage
Some Conclusions
• GT does have very useful insights into the
management of internationally shared fishery
resources
• Eventually, these insights make their way into
policy circles – but be prepared for long lags. K
& M, for example, first wrote about the new
member problem in 1993!
• There remain some unresolved GT new member
problems – go back to K&M, 1997.
Payoff
D1, D2
A2
A1
TP2
Pareto Frontier
TP1
0
Payoff C
TP1 – Threat point payoff – C and D1
TP2 – Threat point payoff – C and D2
A1, A2 – cooperative solution payoffs
Effect of New Member, D2, Buying Out D1