Your exams: graded, yes, but I
forgot them at home.
Did you all get the readings? Yes?
1
Thursday: 12-30, Fares
Hall
2
Fisheries and other
Chapter 14
3

Biological populations: a class of renewable resources called
interactive resources: the size of the resource stock (population) is
determined jointly by biological considerations and by actions
taken by society


4
Postharvest size of pop – determines the availability of resources for
the future
Rate of harvest has intertemporal effects

What is meant by an ‘efficient sustainable level of harvest’?

Is efficiency a sufficiently strong criterion to avoid extinction?

How well do our institutions fulfill those criteria?
Biological dimension

A particular relationship between growth of fish pop
and size of fish population;

abstract from environmental influences and age
structure of population

Natural equilibrium (Ś): population size that would
persist in the absence of outside influences

Stable equilibrium: movements away from this
population level set forces in motion to restore it


5
How?
K
Biological dimension

Minimum Viable Population (S): level of population
below which growth in population is negative;
unstable

Sustainable yield: catch level equals the growth rate
of the population


6
As long as the population size remains constant, growth
rate (catch level) will remain constant as well
Maximum sustainable yield population (S*): pop size
that yields max growth; largest catch that can be
perpetually sustained
Efficient Allocations
Biological Dimension—The Schaefer model
14-7

The Schaefer model posits an average relationship
between the growth of the fish population and the
size of the fish population.

The shape of the graph (Figure 14.1) shows the range
of population sizes where population growth leads to
population increases and a range where population
growth will lead to stock decreases.
Relationship between the Fish Population and Growth:
Biological Dimension—The Schaefer model
S*: maximum sustainable yield pop
Why is G(S*) the MSY for S* pop?
14-8
9

Is the MSY synonymous with efficiency?

NO

Why?

Efficiency: maximizing the net benefit from the use
of resource; need to include the “costs of harvesting”
plus benefits

Let’s start by defining the efficient SY w/o
discounting
Static Efficient Sustainable Yield

The static-efficient sustainable yield = catch level that,
if maintained perpetually, would produce the largest
annual net benefit.

*Assumptions of the economic model* are:




14-10
The price of fish is constant and does not depend on the amount
sold.
The marginal cost of a unit of fishing effort is constant.
The amount of fish caught per unit of effort expended is
proportional to the size of the fish population.
The static-efficient sustainable yield allocation
maximizes the constant net benefit.
Efficient Sustainable Yield for a Fishery
Em = further
efforts
reduce catch
and revenue;
corresponds
with MSY
Ee =
efficient
level of
effort:
MB=MC
14-11
• Since marginal costs are assumed constant, total cost is a straight line from the origin. Net
benefit is the vertical distance between benefits and costs. Maximum net benefit is at point Ee
where the vertical distance is maximized and where the marginal benefit (slope of the total
benefit function) equals marginal cost (slope of the total cost function).
•The maximum sustainable yield is not equal to the static efficient yield unless the marginal
cost of additional effort is zero. The efficient level of effort is less than that necessary to harvest
the maximum sustainable yield and thus is associated with higher population sizes.
• A change in the marginal cost of effort (due to a change in technology, or a regulation, for
example) would cause the total cost curve to rotate. Lower marginal costs would cause a
rotation to the right. Higher marginal costs would cause a rotation to the left.
14-12
Efficient Sustainable Yield for a Fishery
Ec = infinite
r; net
benefits
equal zero;
no value is
received
from future
allocations
Ee =
efficient
level of
effort:
MB=MC
14-13
Dynamic Efficient Sustainable Yield

The dynamic-efficient sustainable yield incorporates
discounting.




14-14
The dynamic efficient sustainable yield will equal the static efficient
sustainable yield if the discount rate equals zero. Why?
 Static efficient sustained yield: allocation that maximizes the
identical
Higher discount rates mean higher costs (foregone current income)
to the resource owner of maintaining the stock.
With an infinite discount rate, net benefits equal zero.
Extinction could occur if the growth rate is lower than the discount
rate and if the costs of extracting the last unit are sufficiently low.
Efficient Sustainable Yield for a Fishery
Ec = infinite
r; net
benefits
equal zero;
no value is
received
from future
allocations
Ee =
efficient
level of
effort:
MB=MC
14-15
Would a dynamically efficient management
scheme lead to extinction of the fishery?
16

Benefit from extracting the very last unit would have
to exceed the cost of extracting that unit (including
the costs on future generations)

As long as the population growth rate exceeds the
discount rate, this will not be the case. If the growth
rate is lower than the discount rate, extinction can
occur – if costs of extracting the last unit are
sufficiently low
Biomass rate of growth …
17

Why does the biomass rate of growth have anything
to do with whether or not an efficient catch profile
leads to extinction?

Rates of growth determine the productivity of
conservation efforts

With high rates of growth, future generations can be
easily satisfied; when the rate of growth is very low,
it takes a large sacrifice by current generations to
produce more fish for future generations
Actual fisheries differ from
the standard model…
18

1) – harvesting marginal costs are typically not
constant; rather they increase as the remaining stock
decreases

2) - since prices are not constant, the size of the
harvest can – and does - affect prices
Appropriability and Market Solutions

A sole owner of a fishery would have a well-defined
property right to the fish and would want to
maximize his or her profits.


14-19
Profit maximization will lead to the static-efficient
sustainable yield.
Ocean fisheries are typically open-access resources.
Thus, no single fisherman can keep others from
exploiting the fishery.
FIGURE 14.3
Market Allocation in a
Fishery (1 of 2)
14-20
FIGURE 14.3
Market Allocation in a
Fishery (2 of 2)
14-21
14.3
Market
Allocat
ion in a
Fishery
14-22

Open-access creates two kinds of external costs:


14-23
Contemporaneous external costs are the costs imposed on the
current generation from overfishing. Too many resources (boats,
fishermen, etc.) are committed to fishing.
Intergenerational external costs are the costs imposed on the
future generation from the exploitation of the stock today.
Overfishing reduces stocks and thus future profits.

Unlimited access creates property rights that are not welldefined.

With free-access, individual fishermen have no incentive
to “save” the resource.

Open-access and common-pool resources are not
synonymous.
Public Policy Toward
Fisheries

14-24
Aquaculture is the controlled raising and harvesting of fish.

Fish farming involves cultivating fish over their lifetime.

Fish ranching involves holding fish in captivity for the first few years of
their lives.
FIGURE 14.4 Global
Capture and Aquaculture
Production
14-25
FIGURE 14.5 Chinese
Capture and Aquaculture
Production
14-26
FIGURE 14.6 China’s
Rising Share of
Aquaculture
14-27

14-28
Raising the real cost of fishing through regulation is
another policy option.

Raising the marginal cost of effort results in a lower
harvest and higher stock sizes.

While the policies may result in an efficient catch, they
are inefficient because the efficient level of catch is not
caught at the lowest possible cost.

Technological innovations have lowered the cost of
fishing, offsetting the increases imposed by regulations.
FIGURE 14.7 Effect of
Regulation
14-29

14-30
Taxes also raise the real cost of fishing, but do so in
an efficient manner.

Unlike regulations, the tax can lead to the static-efficient
sustainable yield allocation because the tax revenues
represent transfer costs and not real-resource costs.

Transfer costs involve the transfer of resources from one
part of society to another.

For the individual fisherman, however, a tax still
represents an increase in costs.
Individual Transferable Quotas (ITQs)

14-31
An efficient quota system will have the following
characteristics:

The quotas entitle the holder to catch a specified volume
of a specified type of fish.

The total amount of fish authorized by the quotas
should be equal to the efficient catch level for that
fishery.

The quotas should be freely transferable among
fishermen.
with Individual
Transferable Quota
Systems
14-32
Subsidies and Buy Backs

One of management options to reduce overcapacity.

14-33
Payments used to buy out excess fishing capacity are
useful subsidies, but if additional capacity seeps in over
time, they are not as effective as other management
measures.

14-34
Marine protected areas and marine reserves are areas
that prohibit harvesting and are protected from other
threats such as pollution.

Marine protected areas are designated ocean areas
within which human activity is restricted.

Marine reserves protect individual species by preventing
harvests within the reserve boundaries.
The 200-Mile Limit

14-35
The 200-Mile Exclusion Zone is an international
policy solution that has been implemented.

Countries bordering the sea now have ownership rights
that extend 200 miles offshore. Within the 200-mile
limit, the countries have exclusive jurisdiction.

This ruling protects coastal fisheries, but not the open
ocean.