Fisheries: The steady-state model
Richard T. Woodward
Department of Agricultural Economics
Texas A&M University r-woodward@tamu.edu
Phone: 979-845-5864

What is an open-access good and why does it lead to inefficiencies?
• An open access resource is a limited resource that appears to each individual to be limitless.
• Individuals use the resource without taking into account the effect that their use has on others.
• Which property right characteristic fails?

A full day’s work for an
Indian fisherman

Growth in the Fish
Stock (tons)
Fish Stock
(tons)

Growth in the Fish
Stock (tons)
Fish Stock
(tons)

Growth in the Fish
Stock (tons)
Fish Stock
(tons)

Growth in the Fish
Stock (tons)
Fish Stock
(tons)

Growth in the Fish
Stock (tons)
Fish Stock
(tons)

Growth in the Fish
Stock (tons)
Natural
Equilibrium
Fish Stock
(tons)

2.5
2
1.5
1
0.5
0
0 1 2 3 4 5
Stock (tons)
6 7 8 a. Suppose there are no fishermen in the lake and the lake's initial stock is one ton. Approximately what would be the stock in each of the next 5 years?
b. Approximately what would be the stock after 100 years
(i.e., what is the biological equilibrium)?
9

Growth in the Fish
Stock (tons)
When fishing begins, the growth is taken out
(harvested) instead of adding to the stock in the next period
Sustainable yield ( Y ( E 0 ))
Fish Stock
(tons)

Growth in the Fish
Stock (tons)
More effort
Y ( E 1 ) Y ( E 0 )
Fish Stock
(tons)

Growth in the Fish
Stock (tons)
Medium effort level
 high harvests
High effort level
 low harvests
Y ( E 4 )
Y ( E 3 ) Y ( E 2 ) Y ( E 1 ) Y ( E 0 )
Low effort level
 low harvests
Fish Stock
(tons)

2.5
2
1.5
1
0.5
0
0 1 2 3 4 5
Stock (tons)
6 7 8 9
•Now assume that one boat comes into the fishery after it has reached its biological equilibrium. This boat can, in any given year, harvest
40% of the stock. What would be the stock after harvests and growth next year (assume harvests and growth take place simultaneously).
• Approximately what would the stock be after 4 years?

2.5
2
1.5
1
0.5
0
0 1 2 3 4 5
Stock (tons)
•2 boats can harvest 60% of the stock.
6 7
•3 boats can harvest 70% of the stock.
• Approximately what would the stock be after 4 years?
8 9

Sustainable Harvests
(tons)
Maximum
Sustainable
Yield (MSY)
Quantity of
Fishing Effort

Sustainable Revenue ($’s)
Revenue
Quantity of
Fishing Effort

Benefits and Costs of
Fishing Effort ($’s)
Costs
Revenue
Quantity of
Fishing Effort

Benefits and Costs of
Fishing Effort ($’s)
Sustainable
Resource
Rents
Costs
Revenue
Quantity of
Fishing Effort

R ( E e )
Benefits and Costs of
Fishing Effort ($’s) MR = MC
Rents
C ( E e )
E e
Costs
Revenue
Quantity of
Fishing Effort

Rent elimination in an Open Access Fishery
(a.k.a The Tragedy of the Commons )
Costs
Benefits and Costs of
Fishing Effort ($’s)
E e
Revenue
E o
Quantity of
Fishing Effort

Benefits and Costs of
Fishing Effort ($’s)
Rents
Costs
E e E m
Revenue
E o
Quantity of
Fishing Effort

3
2.5
2
1.5
1
0.5
0
0
Example
Cost per boat = $0.95
Output Price = $1
0.5
1 2.5
Costs
Sustainable Revenue
3 1.5
Boats
2 3.5

The Gulf of Nicoya, Costa Rica

Solutions to the “Tragedy of the
Commons”
• Limiting the season or otherwise making fishing more difficult (e.g., unreasonable restrictions on equipment or very short open seasons)

Benefits and Costs of
Fishing Effort ($’s)
Waste
Inefficiently high Costs
Efficient
Costs
Revenue
E m E c
Quantity of
Fishing Effort

Solutions to the
“Tragedy of the Commons”
•
Limiting the season or otherwise making fishing more difficult
•
Taxing effort

Benefits and Costs of
Fishing Effort ($’s) Costs after Tax
Costs
Tax
Revenue
E e E m
Revenue
E c
Quantity of
Fishing Effort

Solutions to the
“Tragedy of the Commons”
•
Limiting the season or otherwise making fishing more difficult
•
Taxing effort
•
Establishing common ownership over the fishery (fishery cooperatives, 200 mile limit)
•
Individual transferable quotas

Benefits and Costs of
Fishing Effort ($’s)
Rents
Costs
Revenue
E e
Effort level determine by the group or otherwise limited
Quantity of
Fishing Effort

Why is Fisheries Management so
Difficult?
• Uncertainty
(People don’t trust other people’s estimates)
• Politics
• Enforcement
• The simple models don’t describe a complex world
• Bycatch

The Problem of Bycatch

World Fish Utilization

100
91.7 92.0 93.5 93.9 87.3 93.2 94.8
80
60
40
20
0
1994 1995 1996 1997 1998 1999 2000
Source: FAO 2000 Yearbook of Fishery Statistics: Summary tables
Freshwater
Marine

Summary
• Biological growth and biological equilibrium
• MSY, MEY, and open-access equilibrium
• Open access 
Common property
• Efficient policies: taxation, establishing ownership over the resource, ITQ’s
• Inefficient policies: making life difficult for fishermen
• Fisheries management is difficult, complicated and important!