Fishery Economics

1
Fishery Economics

• The role of economics in fishery regulation

2
Renewable Resources

• Examples
• Fisheries ? today
• Forests
• Characteristics
• Natural growth
• Carrying Capacity

3
Motivation

• Group Project Otters eating lots of shellfish,
  south of Pt. Conception. Marine Fisheries
  Service considering removing otters, and you are
  doing a CBA on the policy. What is the damage
  the otters are causing and thus the value of
  restricting them to the north of Pt. Conception?
• See http//www.bren.ucsb.edu/research/2001Group_Pr
  ojects/Final_Docs/otters_final.pdf

4
Some terms we will use

• Stock total amount of critters -- biomass
• Natural growth rate (recruitment) biologic term
• Harvest how many are extracted (flow)
• Effort how hard fisherman try to harvest
  (economic term)

5
Simple Model of Fish Biology
Stock, x

• Exponential growth
• With constant growth rate, r
• rx ? xaert
• Crowding/congestion/food limits (drag)
• Carrying capacity point, k, where stock cannot
  grow anymore x k
• As we approach k, drag on system keeps us from
  going further
• Resource limitations, spawning location
  limitations

t
k
x
t
6
Put growth and drag together
Biomass (x)
Carrying Capacity (k)
Growth Rate
x
xMSY
time
Stock that gives maximum sustainable yield
7
Interpreting the growth-stock curveAKA
recruitment-stock yield-biomass curves
Growth rate of population depends on stock
size low stock ? slow growth high stock ? slow
growth
GR
dx/dt g(x)
x
8
Introduce harvesting
H1
GR
H2
H3
x
xc
xa
xb
H1 nonsustainable ? extinction H2 MSY
consistent with stock size Xb H3 consistent
with two stock sizes, xa and xc xa is stable
equilibrium xc is unstable. Why??
9
Introduce humans

• Harvest depends on
• How hard you try (effort) stock size
  technology
• H Exk

k technology catchability E effort (e.g.
fishing days) x biomass or stock
Harvest for high effort
H
kEHx
kELx
Harvest for low effort
x
10
Will stock grow or shrink with harvest?

• If more fish are harvested than grow, population
  shrinks.
• If more fish grow than are harvested, population
  grows.
• For any given E and k, what harvest level is just
  sustainable?
• This can be solved for the sustainable harvest
  level as a function of E H(E)
• Solve (1) first for x(E)
• Substitute into (2) to get H(E)

Where kEx g(x) (1) and g(x) H (2)
11
Yield-effort curve
Gives sustainable harvest as a function of
effort level
H(E)
Notice that this looks like recruitment-stock
graph. This is different though it comes from
recruitment-stock relation.
E
12
Introduce economics

• Costs of harvesting effort
• TC wE
• w is the cost per unit effort
• Revenues from harvesting
• TR pH(E)
• p is the price per unit harvest
• Draw the picture

13
Open Access vs. Efficient Fishery
TCwE

Rents to the fishery
TRpH(E)
E
/E
Value of fishery maximized at E. Profits attract
entry to EOA (open access)
MR
AR
w
MCAC
E
E
EOA
EMSY
14
Open access resource

• Economic profit when revenues exceed costs (not
  accounting profit)
• Open access creates externality of entry.
• Im making profit, that attracts you, you harvest
  fish, stock declines, profits decline.
• Entrants pay AC, get AR (should get MRltAR)
• So fishers enter until AR AC (? TR TC)
• But even open access is sustainable
• Though not socially desirable
• What is social value of fish caught in open
  access fishery?
• Zero total value of fish total cost of
  catching them

15
Illustration of equilibria
Maximum Sustainable Yield (Effort EMSY)
Sustainable Catch
?
?
Efficient Catch (Effort E)
?
Note efficient catch lets biology (stock) do
some of the work!
Open Access Catch (Effort EOA)
X
16
Mechanics of solving fishery pblms (with
solutions for specific functions)

• Start with biological mechanics
• G(X) aX bX2 G, growth X stock
• Harvest depends on effort HqEX
• Sustainable harvest when G(X) H
• First compute X as a function of E
• Then substitute for X in harvest equation to
  yield H(E) which will depend on E only
• Costs TC c E
• Total Revenue TRpH(E) where p is price of fish
• Open access find E where TCTR
• Efficient access find E where
• Marginal revenue from effort (dTR/dE) equals
• Marginal cost (cost per unit of effort)

17
Example NE Lobster Fishery

• Bell (1972) used data to determine catch (lb.
  lobsters) per unit of effort ( traps), using
  1966 data
• H(E) 49.4 E - 0.000024E2
• Price is perfectly elastic at 0.762/lb.
• Average cost of effort 21.43 per trap
• Open access equilibrium TC TR
• E891,000 traps H25 million lbs.
• Compare to actual data E947,000H25.6 million
  lbs.
• Maximum Sustainable Yield
• E1,000,000 traps H25.5 million lbs.
• Efficient equilibrium
• E443,000 traps H17.2 million lbs.