The TunaDolphin Controversy

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The Tuna-Dolphin Controversy

• Part B

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Total Economic Value and Dolphins

• Total economic value comprised of use and non-use
  values
• Use Values
• Sensory contact with the environment
• Use value comprised of both direct (consumptive)
  and indirect (non-consumptive) use values

3
Total Economic Value and Dolphins

• Direct Use Value
• Direct sensory contact
• Use of dolphins to find yellowfin tunas
• Indirect Use Value
• Indirect sensory contact
• Ecosystem services provided by dolphins
• Eco-tourism (if any) provided by dolphins

4
Total Economic Value and Dolphins

• Non-Use Values
• Existence and option value
• Existence Value
• Value pertaining to continued existence of
  dolphins for their own sake
• Option Value
• Any value dolphins may have in future for
  potential benefits obtained

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Dolphins as Mixed Good

• Dolphins protected by AIDCP gives a public good
• Non-exclusive use by non-rivalry
• Setting on dolphins by purse seine vessels to
  find large yellowfin tunas is common resource
• Non-exclusive use and rivalry since some mortality

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Dolphins as Mixed Good

• Hence, combined common and public use gives a
  mixed good
• Also called an impure public good

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Optimal Use of Mixed Goods
Marginal benefits of private use of common
resource
Marginal benefits of public good
Primarily direct use value
Primarily existence value
Increasing private use
Increasing public use
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Optimal Use of Mixed Goods
Marginal benefits of private use of common
resource
Marginal benefits of public good

• Marginal benefits of public good
• use grows over time as societys
• GDP grows
• Initially, no value given to
• dolphins as public good

Increasing private use
Increasing public use
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Dolphin Mortality Limits (DMLs)

• 1998 Agreement on International Dolphin
  Conservation Program
• Entered into force February 15, 1999
• Ratified by 4 states as required
• Ecuador, Mexico, Panama, Costa Rica
• Subsequently ratified by
• El Salvador, Honduras, Nicaragua, Peru, Venezuela

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Dolphin Mortality Limits (DMLs)

• Created form of international common property in
  resource stocks of 4 dolphin species owned by
  the IATTC
• Legally binding treaty under international law

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Dolphin Mortality Limits (DMLs)

• 1998 Agreement on International Dolphin
  Conservation Program
• Total dolphin mortality of 5,000 maximum
• Per stock dolphin mortality limits
• 100 observer coverage
• Distribute DMLs among states to agreement in
  proportion to number of vessels

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Dolphin Mortality Limits (DMLs)

• 1998 Agreement on International Dolphin
  Conservation Program
• States in turn allocate DMLs among their
  individual flag vessels
• If a vessel exceeds its DML, penalty of excess
  (over DML) plus additional 50 of that excess in
  subsequent years

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Dolphin Mortality Limits (DMLs)

• 1998 Agreement on International Dolphin
  Conservation Program
• Technology standards of backdown procedure,
  Medina panel, no sundown sets, captain training
  programs

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Dolphin Mortality Limits at Vessel Level
Yellowfin tuna
Catch of yellowfin tuna and dolphins before DML
at vessel level
Binding DML
Dolphin
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Dolphin Mortality Limits at Vessel Level
Yellowfin tuna
Catch of yellowfin tuna and dolphins before DML
at vessel level
Non-binding DML
Dolphin
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Four Main Characteristics of Use and Property
Rights

• 1. Universality
• 2. Exclusivity
• Durability
• 3. Transferability
• Divisibility
• 4. Security

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DMLs and Use Rights

• DMLs are weak form of use right
• Exclusive use for limited duration of one year
• Not transferable from one vessel to another
• Divisible in that unit is dolphin (rather than
  pairs, scores, etc.)

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DMLs and Property Rights

• Universality refers to the limitations and
  obligations over the use of the rights not
  covered by the other characteristics
• DMLs are not a pure property right in that the
  vessels do not own the DMLs, but instead simply
  use them for one year

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DML Transferability and Equi-marginal Principle

• The absence of transferability among vessels
  (subject to an overall DML) means that tuna
  harvesting and dolphin mortality mitigation is
  not economically efficient
• i.e. it is not cost-efficient
• Equimarginal Principle
• Aggregate abatement or protection costs ( the
  sum across firms) are minimized when marginal
  abatement costs are equalized across polluting
  firms

20
DML Transferability and Equi-marginal Principle

• Introducing transferability also allows markets
  for biodiversity to develop
• In essence, allowing transferability strengthens
  the use or property right
• Environmental groups can express their wilingness
  to pay for existence value to purchase DMLs and
  remove dolphin mortality from the fishery

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Efficiency and Equi-marginal Principle

• Marginal protection cost functions for two
  vessels A B

Marginal Costs

• MCB MCA for given
• performance standard
• Not cost-effective
• Violates equimarginal
• principle

MCB
MCB
MCA
MCA
Quantity of Protection or Abatement
Vessel DML
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Efficiency and Equimarginal Principle

• Marginal protection cost functions for two vessels

Marginal Costs of Protection

• Equimarginal principle
• MCB MCA for differential
• production standard across vessels

MCB
MCA
MCA MCB
Quantity of Protection or Abatement
DMLA
DMLB
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Who has the property right?

• Critical question with Coase Theorem and property
  rights
• Who has the property right, the polluter or the
  pollutee?
• Who pays, the vessel (polluter) or society,
  representing dolphins (pollutee)?

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Who has the property right?

• If fisher has the property right and if economic
  value other than direct use value from tuna
  consumption is sufficiently high, then gainers
  from more dolphin-safe fishing can, in principle,
  potentially pay the fishers to adopt improved
  harvesting procedures and still be better off

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Eco-labeling for existence value
Create a market for sustainability
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Purse Seining and Bycatch Ecological Trade-Offs

• or No Free Lunch

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Purse Seining and Bycatch

• Bycatch from not only dolphin fishing, but from
  setting on schools, logs, and FADs
• Bycatch for dolphin fishing is 100 pounds of
  animals per net set. Virtually 100 pounds are
  dolphin.
• Bycatch for school fishing is 5,000 pounds per
  set

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Purse Seining and Bycatch

• Bycatch for log and FAD fishing is 20,000 pounds
  per set.
• Bycatch consists of shark, turtles, small tunas,
  etc.

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Purse Seining and Bycatch

• About 10,000 dolphin sets are made each year. If
  all 10,000 were shifted to school fishing,
  50,000,000 pounds of bycatch would occur if all
  were shifted to log fishing, 200,000,000 pounds
  of other marine organisms would be lost.
• The reduction in the sustainable yield of tuna in
  the area will be 30.

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Purse Seining and Bycatch

• These would be exchanged for not killing
  approximately 3,000 dolphins per year out of an
  estimated population of 10,000,000.

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Tuna discards
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• As estimated by the scientists of the IATTC,
  10,000 sets of purse seine nets around immature
  yellowfin tuna found swimming in schools, will
  cause the deaths of eight dolphins 2.4 million
  small tuna 2100 mahi mahi 12,220 sharks 530
  wahoo 270 rainbow runners 1010 other small
  fish 1440 billfish and 580 sea turtles.

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• Ten thousand sets of purse seine nets around
  immature tuna swimming under logs and other
  debris will cause the deaths of 25 dolphins 130
  million small tunas 513,870 mahi mahi 139,580
  sharks 118,660 wahoo 30,050 rainbow runners
  12,680 other small fish 6540 billfish 2980
  yellowtail 200 other large fish 1020 sea
  turtles and 50 triggerfish.

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• Ten thousand sets of purse seine nets around
  mature yellowfin swimming in association with
  dolphins, will cause the deaths of 4000 dolphins
  (0.04 percent of a population that replenishes
  itself at the rate of two to six percent per
  year) 70,000 small tunas 100 mahi mahi 3 other
  small fish 520 billfish 30 other large fish
  and 100 sea turtles. No sharks, no wahoo, no
  rainbow runners, no yellowtail, and no
  triggerfish and dramatic reductions in all other
  species but dolphins.

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Ecological Trade-Offs in the Eastern Tropical
Pacific
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Assumptions for Discussion

• Assume tuna will be caught in the EPO and eaten
• If not by you, then by millions of school kids
  who eat tuna sandwiches
• Working class Mexicans, for whom tuna is a wage
  good

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Questions

• 1. What kind of purse seine fishing?
• What is the bycatch?
• What are the species and ecological
• trade-offs?
• Floating object?
• School?
• Dolphin?

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• 2. If only school (unassociated) sets, which
  minimize bycatch, then what happens to overall
  supply of tuna for consumption and to prices?
• Who bears the burden?
• School kids?
• Working class?
• What happens to real incomes and nutrition?

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Which purse seine set type has the greatest
ecological impact?
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• FAD discards are in deep waters, so fall to
  bottom of ocean and not available to surface
  ecosystem
• Takes 300 years to recycle and become available
  to surface ecosystem

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Which gear type, purse seine or longline?

• If longline, then sea birds and sea turtles are
  incidental mortality.
• Save dolphins, sea turtles, or sea birds?
• Purse seiners are capital intensive and owned by
  larger companies or state companies.
• Longliners are smaller and more likely owned by
  smaller companies.

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Which is more important, flipper or an endangered
sea turtle or endangered albatross?

• What types of values do we place on each?
• Anthropogenic? Other?
• Values expressed through democratic or other type
  of political process?
• Are values of all citizens equally important?
• What if Red State citizens dont care?
• Prices formed through market activity?
• Most profitable set type and only use values
• Total economic value?

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Which ecosystem do we degrade?

• Where do we get the protein? From grains and
  soybeans in mono-cultured, chemical farms in the
  great plains or river basins of the world?
• What about those ecosystems?

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Which ecosystem do we degrade?

• Trade-offs are not just within an ecosystem, such
  as EPO, but between ecosystems on a global scale
  because of globally inter-connected markets

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Which ecosystem do we degrade?
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Theres No Free Lunch

• Only trade-offs among ecologically damaging
  choices