The Economics of Fisheries Management and Marine Conservation

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The Economics of Fisheries Management and Marine
Conservation R. Quentin Grafton and Tom
Kompas Crawford School of Economics and
Government Australian National University
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Why regulate a fishery?

• Common property and the race to fish.
• The inevitable consequence of the race to fish
  over-capitalization, falling profits and stock
  depletion or overfishing.
• Regulation Licence restrictions, output/effort
  controls, input restrictions, seasonal/area
  closures, ITQs.
• Goal Provide a secure property right, guaranteed
  share of a sustainable harvest, maximum profits
  and autonomous/voluntary adjustment.
• Right target and the right instrument.

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Maximum Economic Yield (MEY)

• MEY A sustainable catch or effort level that
  creates the largest difference between
  (discounted) total revenues and the total costs
  of fishing.
• For profits to be maximized it must also be the
  case that the fishery applies a level of capital
  and other resources in combinations that minimize
  the costs of harvesting at the MEY catch level.

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Why MEY as a target?

• Maximizes fishery profits, regardless of changes
  in the price of fish or cost of fishing.
• Improves international competitiveness.
• Resilience to economic shocks.
• Conservationist in most cases stock size is
  larger than that associated with MSY.
• Provides added resilience and other environmental
  benefits.
• Proper resource allocation
• Prevents over-capitalization, falling
  incomes/asset values and expensive adjustment
  programs.

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MEY results in the Southeast Trawl Fishery
(Kompas and Che 2006)



Species

B/B

B/B

h

h

h

MSY
(steady



(TAC
)

(
in
2004)

state)

Orange roughy
/
E
astern

1.15

1.29

703

520

600

Orange roughy
/
Cascade

1.47

1.64

995

665

1
,
600

Spotted warehou

1.08

1.30

4
,
117

3
,
114

4
,
100

Ling
(trawl)

1.29

1.80

1
,
397

914

1
,
073

Flathead

1.03

1.05

3
,
850

2
,
980

3
,
200

Blue grenadier







normal

year

1.25

1.32

9,000

6,590

8,650


shooting year



10,450

7,650









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MEY and MSY of the Western and Central Pacific
big eye tuna
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MEY and MSY of the Western and Central Pacific
yellow fin tuna
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Further considerations

• Transition and steady state outcomes
• Speed of adjustment
• Planning horizon
• Target vs. Instruments
• Rate of discount

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Implementing MEY whats wrong with input
controls?

• Inability to control effort creep or fishing
  power inevitable race to fish behaviour and
  over-capitalization.
• Wrong input combinations and lower profits.
• Perpetual cuts in effort, non-voluntary
  adjustment, differential impact on operators.

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Input substitution (NPF)
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Problems in the NPF

• Inability to control effort creep.
• Property rights are not secure.
• Frequent (non-voluntary) structural adjustment,
  with or without an MEY target.
• Falling profits and regulation that increases the
  cost of fishing.
• Fall in prawn prices, increase in harvest costs
  (esp. fuel and management changes).
• Too many boats, chasing too few prawns.

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Implementing MEY with rights-based harvesting

• Output controls (TAC) combined with ITQs are the
  preferred instrument for most fisheries.
• ITQs transferable right to a share of the (MEY
  target) harvest.

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Why ITQs?

• No race to fish incentive, no tendency to
  over-capitalize.
• Technological change lowers the costs of fishing
  and does not threaten stocks.
• Efficiency gains quota trade from high to low
  marginal cost vessels compensation for catches
  larger than anticipated.
• Fishers choose the mix of inputs and when to
  fish.
• With MEY target autonomous (voluntary) fishery
  adjustment.

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Implementing Property Rights in western and
central Pacific

• High-seas fisheries, EEZs and RFMOs
• Restricted access
• Country quotas
• Fisheries allocations

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Concluding remarks

• Need to consider both the biology and economics
  for effective management.
• Need the right instrument and the right target.
• MEY is conservationist.