Productivity growth in natural resource industries and the environment: an application to the Korean tuna purse-seine fleet in the Pacific Ocean

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1 29 Produciviy growh in naural resource indusries and he environmen: an applicaion o he Korean una purse-seine flee in he Pacific Ocean Dale Squires Naional Marine Fisheries Service Souhwes Fisheries Science Cener 8604 La Jolla Shores Drive La Jolla, California 92037, USA dale.squires@noaa.gov Chris Reid Forum Fisheries Agency PO Box 629 Honiara, Solomon Islands chris.reid@ffa.in Yongil Jeon (corresponding auhor) Deparmen of Economics Cenral Michigan Universiy Sloan Hall 35 M. Pleasan, Michigan 48859, USA E- yjeon@mail.cmich.edu ABSTRACT Measures of mulifacor produciviy growh in naural resource indusries are biased unless he effecs on he environmen are aken ino accoun. This paper inroduces environmenal effecs ino an oupu-oriened Malmquis index of mulifacor produciviy growh o evaluae growh in produciviy, echnology and echnical efficiency for Korean purse-seine vessels ha fish for unas in he wesern and cenral Pacific Ocean.. INTRODUCTION An imporan issue for accurae measuremen of mulifacor produciviy (MFP) growh in many indusries is accouning for changes in he sae of he environmen. Environmenal effecs are paricularly imporan for indusries for and naural resources, such as agriculure, mining, foresry, fisheries and power generaion, ha are direcly affeced by he environmen. Environmenal changes can include shor-erm evens, such as precipiaion, emperaure and El Niño-Souhern Oscillaion episodes, medium-erm (decadal-scale evens), and long-erm climae change. These changes in he sae of he environmen are unpriced, so hey require reamen in MFP measures ha are differen from ha for priced inpus and oupus. Some aenion has been devoed o environmenal effecs on produciviy and economic growh in he environmenal, resource and produciviy lieraure, bu

2 30 Mehodological Workshop on he Managemen of Tuna Fishing Capaciy formal reamens in models of produciviy growh and echnical change have eiher overlooked environmenal effecs, or hese ideas have no been fully developed. Bleischwiz (200) provided a broad hisorical overview of he general subjec of naural resources, he environmen and produciviy growh. Grubler, Nakicenovic and Nordhaus (2002) considered produciviy growh, echnical change and he environmen in general. Jaffee, Newell and Savins (2002) discussed environmenal policy and echnical change, alhough a formal reamen of produciviy growh, including he impac of environmenal facors, was no fully developed. The chapers in Simpson (999) can be exended o explicily include naural resource socks and environmenal facors. Squires and Reid (200, 2002, 2003, 2004) esimaed Malmquis indices of MFP growh for vessels of he differen disan-waer and coasal flag saes in he una purse-seine fishery of he wesern and cenral Pacific Ocean (WCPO), accouning for changes in naural resource socks and he sae of he environmen, bu did no develop a formal reamen. Felhoven and Paul (2004) briefly surveyed environmenal variables in MFP measures for fisheries. Arrow e al. (in press) broadly discussed he environmen and naural resource socks in produciviy growh, and adjused he Solow (957) produciviy residual for changes in naural resource socks. In populaion dynamics lieraure, Freon (988) allowed environmenal variaion in he environmenal carrying capaciy and cachabiliy coefficien of surplus producion models, boh of which are oherwise consans. Measures of mulifacor produciviy growh in naural resource indusries are biased unless he effecs on he environmen are aken ino accoun. Disenangling produciviy growh from changes in naural resource socks was addressed by Lasserre and Ouellee (988, 99) for non-renewable resources and Squires (988, 992) for renewable resources. Murray (2004) developed a heoreical model of echnical change in naural resource indusries. McConnell and Srand (989) indicaed ha he change in biomass over ime is posiively relaed o he predeermined vecors of variables represening waer qualiy, implying ha improvemens in waer qualiy should increase he growh in biomass. The process of produciviy growh and echnical progress in indusries exploiing common resources, such as marine fisheries, can differ from ha in some oher naural resource indusries for which produciviy growh and echnical progress are viewed as enhancing he resource sock. For example, in he above-menioned common resources such as fisheries, produciviy growh and echnical progress simply increase he rae of exploiaion. Also, he coss of producing fores resources oday are no longer limied o he coss of exracion; he coss of planing, growing and harvesing are now a significan par of he oal cos of producing hese resources (Sedjo 999). In his regard, economic and produciviy growh in he fores secor are edging closer o agriculure and moving away from an indusry ha explois naural resources as hey are found in naure, i.e. as foresry moves from exploiing resources a he exensive margin o he inensive margin. This paper formally and empirically incorporaes unpriced environmenal effecs ino measures of MFP growh by inroducing sea-surface emperaure (SST) ino he sock-flow producion echnology for a renewable common resource, marine fish. Specifically, his paper develops oupu-oriened Malmquis indices of mulifacor Empirical sudies of naural resource indusries o evaluae produciviy growh and echnical change in naural resource indusries accouning for he resource sock include Squires (992), Jin e al. (2002) and Hannesson (2006), who used Tornqvis index numbers, and Lasserre and Ouellee (988), Campbell and Hand (998) and Squires and Grafon (2000), who all used economeric echniques. Kirkley e al. (2004) examined embodied echnical change, alhough wihou explicily accouning for he resource sock. Simpson (999), like many ohers who sudied produciviy and echnical progress in naural resource indusries, focused on exraced resources ha serve as inermediae oupus, raher han on he acual resource exploiaion phase. Fox e al. (2002) included resource socks in a decomposiion of profis.

3 Produciviy growh in naural resource indusries and he environmen 3 produciviy, echnical change and echnical efficiency, while accouning for changes in abundance of he fish socks and he sae of he environmen, such as he SSTs. We specify he sae of he unpriced environmen as a echnological consrain beyond he conrol of he individual firm, in a similar vein o he naural resource sock (Squires 992), so ha, following Gordon (954) and McFadden (978), i becomes a echnology shif variable. 2 We evaluae produciviy in a framework developed from he neoclassical heory of he firm for which here is a sock-flow producion echnology wih a common naural resource. 3 The paper demonsraes ha he oupuoriened Malmquis index approach, which does no necessarily require cos, revenue or price daa, is especially well suied o incorporae unpriced measures of fish socks and saes of he environmen, such as climae and ecosysem services (e.g. nurien flows and availabiliy). We evaluae produciviy growh for a micro-level panel (combined cross-secion and ime-series daa) of Korean purse-seine vessels ha fish for ropical unas (essenially a he plan level) harvesing common-pool skipjack (Kasuwonus pelamis), yellowfin (Thunnus albacares) and bigeye (T. obesus) unas in he Exclusive Economic Zones of he member counries of he Forum Fisheries Agency (FFA), using vessel-level daa for In general, here were precipious changes during in he enire una indusry, due o he inroducion of a major process innovaion, fishing on drifing fish-aggregaing devices (FADs) in 997, coupled wih a decline in fishing on free-swimming schools of una and on unas ha aggregae under flosam. 4 However, he focus of he Korean flee has remained largely on free-swimming schools of una and, o a lesser exen, on unas aggregaing under flosam. Only a small proporion of he oal fishing effor on unas associaed wih FADs is exered by he Korean flee. The quesion arises as o wheher he inroducion of FADs has had a subsanive effec on he MFP growh of he Korean flee. The paper finds ha, due o he limied adopion of his process innovaion (FADs) ino he Korean flee, MFP growh has been modes. I also demonsraes ha failure o accoun for he naural resource socks or he sae of he environmen leads o biased measures of MFP growh. 2. THE MALMQUIST PRODUCTIVITY INDEX The muliproduc firm s sock-flow producion echnology represened by oupu disance funcions is defined as: D (y,x,b,z ) = inf{λ>0(y,/λ,x,b ),S }. The disance represens he smalles facor λ by which o deflae oupu so as o be feasible or 2 Individual firms under open access, in mos insances, have a negligible impac upon common resource socks. Locaion decisions by individual firms can affec local densiies and availabiliy of common resource socks, paricularly for demersal (boom-dwelling) species or for hreaened and endangered species, bu no for highly-migraory species, such as he pelagic oceanic unas. Collecively, firms do impac he resource sock. Noneheless, wihin he radiional saic MFP framework based on he heory of he firm, he resource sock can be largely viewed as non-discreionary, raher han as an inpu under he conrol of he individual firm. The sae of he environmen is a echnological consrain, and hence non-discreionary, and no an inpu per se under he conrol of an individual firm. 3 For renewable resources, he approach is fundamenally saic, since i implicily assumes ha managemen decisions and exploiaion by individual firms do no measurably affec he resource sock over a shor period of ime. Thus, he approach is developed wihin he sandard produciviy lieraure framework, and is no explicily dynamic. 4 Fish-aggregaing devices (FADs) reduce searching ime for fish, since he fish naurally aggregae around he FADs, and he FADs may have radio beacons aached, which he vessels use o find he FADs. There have also been advances in he applicaion of sonar and saellie echnology (Iano 2003), which has conribued o MFP growh. The reduced searching ime lessens variable inpus or reduces fishing effor expended for any quaniy of fish caugh, or increases he cach for any level of variable inpu usage, hereby conribuing o produciviy growh. Also, he success raes for ses on floaing objecs, such as FADs and flosam, are greaer han hose for ses on free-swimming schools of unas, which have a higher incidence of zero-cach ses. In summary, more fish are caugh wih FADs for given variable inpu usage; less ime is spen searching for fish, and he average caches per se are greaer.

4 32 Mehodological Workshop on he Managemen of Tuna Fishing Capaciy producible wih given x, B and z under period- echnology. When here is a single good produced, D (y,x,b,z ) = y /f(x,b ). D (y,x,b,z ) is non-decreasing, homogeneous of degree-one in oupu, convex in y, non-decreasing in x and joinly coninuous in (y,x,b,z ), and i is he reciprocal of Farrell s radial measure of oupuoriened echnical efficiency (Färe and Primon 995). 5 The oupu disance funcion D + (y,x,b,z ) relaes observed oupu in ime o he maximum aainable wih period + echnology. The Malmquis MFP index, inroduced by Caves, Chrisensen and Diewer (982), uses disance funcions, and builds upon he work of Malmquis (953). The Malmquis oupu-oriened produciviy for period- echnology can be wrien: D ( y+, x+, B+, z+ ) M =. () D ( y, x, B, z ) M measures he MFP change beween wo daa poins by calculaing he raio of he disances of each daa poin relaive o a common echnology. If period + has a higher level of produciviy han is implied by he period- echnology, hen M>. 6 Since wo benchmark echnologies for periods and + are no necessarily non-neurally relaed or non-nesed, he geomeric mean is calculaed (Caves, Chrisensen and Diewer 982): / 2 D ( y+, x+, B+, z+ ) D+ ( y+, x+, B+, z+ M = (2) D ( y, x, B, z ) D+ ( y, x, B, z ) The righ side of Equaion (2) can be decomposed ino he produc of echnical efficiency change and echnical change (Nishimizu and Page 982, Färe e al. 994): M = D + ( y +, x +, B +, z D ( y, x, B, z ) + ) D ( y D+ ( y + +, x +, x +, B +, B +, z +, z + ) D ( y, x, B, z ) ) D+ ( y, x, B, z ) / 2 (3) The raio ouside of he brackes in Equaion (3) measures he change in relaive echnical efficiency he change in he disance of observed producion from bespracice producion beween periods and +. The erm wihin he brackes is an index of echnical change from period o +, and shows wheher he bes-pracice fronier relaive o he firm in quesion is improving, sagnan or deerioraing. 7 When any componen is larger (smaller) han uniy, here is improvemen (deerioraion). The bes-pracice firms esablish he producion fronier, and he Farrell echnical efficiency of all oher firms is measured relaive o his fronier. The ime series of daa hen allows for esimaion of echnical progress (movemen of he fronier esablished by he bes-pracice firms) and changes in echnical efficiency over ime (disance of he 5 Homogeneiy of degree one in oupus implies D (λy,x,b,z ) = λd (y, x,b,z ) for any λ > 0. 6 Suppose he daa poin in period + lay beyond he producion possibiliy fronier or feasible producion se defined by he period- echnology; hen D (y +,x +,B +,z + ) > (i.e.λ >)o deflae his daa poin o he fronier. Similarly, suppose he daa poin in period lay below he fronier or feasible producion se defined by he period- echnology; hen D (y, x,b,z ) < (i.e.λ <) o inflae his daa poin o he fronier. Then M = D (y +, x +,B +,z + ) D (y, x,b,z ) > 7 The echnical efficiency change indicaes wheher he observaion has goen closer or farher from he fronier over ime. The firs raio inside he bracke capures echnical change and evaluaes he shif in he fronier a he daa observed in period +, whereas he second erm capures ha shif evaluaed a he daa observed in period. Also, as observed by Färe, Grosskopf and Roos (995), he period and + indices are equivalen only if he echnology is Hicks oupu-neural, so ha he oupu disance funcions may be wrien as D (y, x,b,z ) = A()D(y, x,b,z ). Taking he geomeric mean avoids imposing his resricion or arbirarily choosing one of he wo echnologies.

5 Produciviy growh in naural resource indusries and he environmen 33 inefficien firms from he bes-pracice fronier) caching up (Nishimizu and Page 982, Färe e al. 994). 3. CAPACITY UTILIZATION AND CAPITAL UTILIZATION Produciviy measures can be biased if variaions in capaciy uilizaion (CU) or capial uilizaion are no aken ino accoun (Jorgenson and Griliches 968, Morrison 985). This discussion has focused on he flucuaion of economic aciviy over he business cycle, so ha flows of services from he capial sock are no always proporional o he capial sock iself. Wih highly mobile fish, an addiional spaial source of variaion is inroduced ino uilizaion of he capial sock, he variaion in ime spen by he capial sock he vessel, equipmen, and gear in searching for he resource prior o exploiaion. This addiional uilizaion, in urn, varies according o he flucuaions in demand, abundance and availabiliy of fish and changes in he environmen. The approach of Jorgenson and Griliches (968) incorporaes he uilizaion of capial by measuring capial in he producion echnology as uilized capial, raher han simply assuming ha capial services are proporional o he capial sock Calculaion of he Malmquis Produciviy Index To calculae he index, we calculae he four componen oupu disance funcions, which will involve four linear programming programs for each producer in each pair of adjacen ime periods. For example, he consan-reurns-o-scale and oupu-oriened linear programming specificaion used o calculae D (y,x,b,z ) for each firm k is (Färe, Grosskopf and Roos 995): [D ( y, x, B, z )] = max φ, λ φ, (4) subjec o: φy k + y λ 0 x λ 0 x k B k B λ 0 z k z λ 0 λ 0 where λ are inensiy variables which form he convex combinaions of observed inpus and oupus, biomasses of fish socks and environmenal variables, such as he SSTs, hereby forming he piecewise linear bes-pracice reference echnology. The inensiy variables provide he (variable) weighs given o each aciviy or observaion o which observed poins are compared. The remaining hree linear programming programs are simple varians of his disance funcion, [D + (y +,x +,B +,z + )], [D (y +,x +,B +,z + )], [D (y,x,b,z )] and [D + (y,x,b,z )]. 9 If here are K firms wih T ime periods, we need o calculae (3T-2) LPs for each firm (ha is K*(3T-2) LPs in he sample). The echnology and he associaed disance funcions are independen of he unis of measuremen. 8 Capial is a flow of services given by muliplying he capial sock by he amoun of uilizaion. This Jorgenson-Griliches (968) framework is based on capial uilizaion, raher han on capaciy uilizaion (CU). I assumes ha only a single sock of capial deermines capaciy, and does no recognize he imporance of fixiy for esablishing he value of capial (or oher fixed inpus). Insead, i direcly adjuss he quaniy of capial for uilizaion. Since here is uilizaion of a single capial sock, capaciy and capial uilizaion are basically he same. 9 See, for example, Färe e al. (994), Färe, Grosskopf and Roos (995) and Grosskopf (2003), who also discuss he issues associaed wih mixed-period disance funcions.

6 34 Mehodological Workshop on he Managemen of Tuna Fishing Capaciy TABLE Annual summary saisics of he daa per vessel, Variable Skipjack cach (onnes) Yellowfin and bigeye cach (onnes) , Vessel carrying capaciy (onnes) Days fished and searched Vessel carrying capaciy x days searched Sea-surface emperaure ( F) Skipjack biomass (onnes) Yellowfin biomass (onnes) Bigeye biomass (onnes) The sample consiss of 25 vessels for each year. F = ( C x.8) The values in he las hree lines are he averages of he exploiable biomasses for he fish available o he fishery for unas associaed wih floaing objecs and ha for free-swimming schools of unas. 3.2 Empirical specificaion The vecor of inpus, x, comprises he vessel s (plan s) capial sock, measured in carrying capaciy, and fishing effor, measured in he number of days spen searching for fish. Fishing effor is no ypical in producion analyses, bu i is consisen wih he way managers and fishery scieniss represen variable inpus (Kirkley, Squires and Srand 995). Fishing effor hus represens energy, maerials and labor inpus, and is used because more explici inpu measures, such as labor or fuel, are unavailable. 0 The flow of capial services is measured as he produc of carrying capaciy and fishing effor, following he Jorgenson-Griliches (967) approach o accoun for capial uilizaion. The measures of resource abundance are exploiable biomasses for all purse-seine vessels ha fish in he WCPO for skipjack, yellowfin and bigeye unas. Environmenal condiions are capured by measures of SST in degrees Fahrenhei, where SST affecs he aggregaion of unas in he PacificOcean (Sund, Blackburn and Williams 98). Oupu or cach is specified as onnes of yellowfin and/or bigeye unas as one oupu and onnes of skipjack una as he second oupu. Yellowfin and bigeye unas are no always recorded separaely, as he juveniles, which make up he majoriy of he purse-seine caches, are similar in appearance. The caches of yellowfin far excced hose of bigeye, so mixed caches of he wo species are ofen recorded as yellowfin. Hence, because of measuremen error, we linearly aggregaed yellowfin and bigeye caches ino one oupu. Skipjack are clearly disinguishable from yellowfin or bigeye, and he prices paid for skipjack are les han hose paid for yellowfin and bigeye, so he caches of his species are always recorded separaely Daa The analysis uses individual vessel-level daa and fishing effor daa for caches in he WCPO. The cach, fishing effor (number of days spen searching for fish), vessel carrying capaciy and esimaes of abundance of he hree species of una were provided by he Oceanic Fisheries Programme (OFP) of he Secrearia of he Pacific Communiy (SPC). The years during which a vessel fished were deermined from logshee daa held by he OFP. Insufficien informaion is available o deermine wheher carrying capaciy, which was iniially repored o he FFA, may have changed during he ime period covered ( ) so ha he carrying capaciies of he vessels were assumed o have been he same during each year, even hough some vessels may have been sreched o increase heir carrying capaciies). 0 Campbell and Hand (998) argue ha all inpus are effecively fixed once he vessel pus o sea. Cach, hen, depends on he inensiy of facor use during he ime period, which is measured by he number of ses made muliplied by he quaniy of he fixed facor, i.e. services flow.

7 Produciviy growh in naural resource indusries and he environmen 35 Exploiable biomass esimaes for he purse-seine fishery for skipjack, yellowfin and bigeye, unas, which were provided on a quarerly basis by he OFP, are based on he sock assessmens (Langley, Ogura and Hampon 2003, Hampon and Kleiber 2003 and Hampon e al. 2003). The quarerly esimaes were convered ino annual esimaes by summing he quarerly caches for each year. The vessel-level cach and effor daa, which are colleced by he OFP, perain o he operaions of he Korean flee hroughou he WCPO. The vessel carrying capaciy daa, also provided by he OFP, were combined wih he cach and effor daa o provide he panel daa se. The SSTs for each se of he nes are aken from he logbooks of Unied Saes purse-seine vessels ha operae wes of 50ºW laiude. The arihmeic average of hese SSTs for all ses of all vessels in all areas of he WCPO are used as mean annual SSTs. 2 In his secion we use he mehodology and daa oulined in he Secions 2 and 3 o esimae changes in he produciviy of he Korean una purse-seine flee operaing in he WCPO during following Equaion (3) Growh in produciviy, echnology and echnical efficiency The empirical resuls indicae ha he mean annual growh in MFP was marginally posiive a 0.3% (Table 2). 3 This MFP growh was due enirely o echnical change or process innovaion (3.4%), since here was mean echnical efficiency regresion of -3.0%. Thus, he managers or capains of he bes-pracice vessels coninued o innovae wih he adopion of improved vessel elecronics or brailing sysems, while he managers or capains of he oher vessels failed o keep up wih he innovaions of he bes-pracice vessels. The resuls also demonsrae he variabiliy of produciviy growh across vessels, even wihin he same flag flee. Technical change represens he adopion of process innovaions by he bespracice vessels of ha producion process. 4 Technical efficiency change represens he combined effecs of a leas wo facors. Firs, process innovaions, such as fishing for unas associaed wih FADs or improved brailing sysems end o diffuse a differen raes wihin a flee, so ha he change in echnical efficiency capures, in par, he Pers. com., John Hampon, Manager, Oceanic Fisheries Programme, Secrearia of he Pacific Communiy (2004). 2 Sea-surface emperaure (SST) was seleced, in par, due o daa availabiliy. The logbooks of he vessels conain SST records for almos every se. Temperaure affecs he locaion and growh of primary producers (phyo- and zooplankon) upon which forage fish (e.g. small pelagic fish) feed. In urn, predaors living higher on he food web, such as unas and billfishes, feed upon hese forage fish. Moreover, aggregaion of he componens of he food web occurs along emperaure breaks in he ocean. Tha is,variaion in he SSTs in he ocean are no always gradual; insead, here are abrup emperaure breaks. Oher environmenal variables were no readily available from his or oher daa sources. 3 Subracing from a number in a able gives average increase or decrease per annum for he relevan ime period and performance measure (Färe e al. 994). Muliplying by 00 hen gives he percenage of annual change. The resuls are repored as symmeric geomeric means, which is sandard for Malmquis produciviy measures and is wha is rouinely calculaed by wo of he bes-esablished sofware packages, DEAP and OnFron. I is also suggesed by economiss such as Coelli e al. (2005: ). We used OnFron, and simply applied is resuls, following convenional pracice. The asymmericallyweighed geomeric mean issue will be one for fuure research, as a referee suggess. 4 Masumoo e al. (2000) and Shono e al. (2000) observed ha mos of he inroducion or improvemen in vessel elecronics were made around , so ha much of hese innovaion effecs on produciviy growh may have already been accouned for by 997, which was he iniial year of he period covered by he sudy. Noneheless, alhough here have no been many advances in new ypes of elecronics in he las decade, significan improvemens have occurred in radiional gear, paricularly for sonar sysems ha are now closely inegraed wih GPS and Doppler curren readings and for SIMRAD sonar sysems in aemps o inegrae compuers o assis wih species and size discriminaions. The applicaion of saellie echnology has also played a role (Iano 2003). Anoher innovaion is he inroducion of Spanish syle brailing (he cach handling and processing sysem), in which caches are brailed direcly o recirculaing brine holds cooled o approximaely 9ºC by ammonia compressors and held in he same hold unil unloaded or ransshipped; his gives faser fishing operaions and he poenial for more ses per day and greaer caches before spoilage.

8 36 Mehodological Workshop on he Managemen of Tuna Fishing Capaciy Table 2 Annual decomposiion of mulifacor produciviy change accouning for capial uilizaion Technical efficiency change Technical change Mulifacor produciviy change Mean MFP and echnical efficiency change are calculaed relaive o a consan-reurns-o-scale echnology following Equaion (2), so ha is inerpreaion is ha i capures he change in maximal average produc beween and + (Grosskopf 2003). The annual values are geomeric means of individual vessel values, and he overall mean is he geomeric mean over he individual years. Table 3 Cumulaive (chained) mulifacor produciviy wih adjusmen for capial uilizaion Technical efficiency change Technical change Mulifacor produciviy change Table 4 Effecs of naural resource sock and sae of he environmen upon annual aggregae mulifacor produciviy (MFP) growh MFP MFP wihou resource sock MFP wihou environmenal effec MFP wihou resource and environmen Mean The annual values are geomeric means of individual vessel value, and he overall mean is he geomeric mean over individual years. rae of diffusion of he innovaion. (Diffusion occurs by number of vessels and, for FAD fishing, numbers of FADs deployed and ses on FADs by a given vessel.) For example, when diffusion is comparaively slow, he laggards will end o innovae more slowly han he bes-pracice vessels and hence will fall behind he expanding bes-pracice fronier defined by he innovaion (Nishimizu and Page 982). Second, echnical efficiency change is also, in par, capuring changes in learning by doing (such as finding fish) wih he diffused innovaion, i.e. gaining proficiency wih he diffused process innovaion. This noion of a dynamic componen o fishing skill exends he saic concep of fishing skill idenified by Kirkley, Squires and Srand (998) wih echnical efficiency. Cumulaed (chained) produciviy change during progressed by.4%. This produciviy progress was due enirely o cumulaive echnical change or process innovaion of 8.%, which ouweighed cumulaed echnical efficiency regression of 4.% (Table 3). Afer accouning for he effecs from varying environmenal condiions and he effecs of changes in resource abundance, he picure emerges of some vessels innovaing, hereby shifing ou o he bes-pracice fronier and oher vessels no innovaing or innovaing a a much slower rae. Comparaively lile learning akes place for he vessels failing o cach up wih he expanding bes-pracice fronier.

9 Produciviy growh in naural resource indusries and he environmen Malmquis mulifacor produciviy and CPUE Conrasing he Malmquis annual MFP growh, which conrol for he effecs of changes in SST and biomasses and include he effecs of all inpus, wih changes in he annual nominal values of cach per uni effor (CPUE). They are simple parial produciviy measures, providing srikingly dissimilar resuls (Figure ). (The CPUE values are caches per day of searching, and are based on he vessels ha are included in he daa se used in he analysis.) The nominal CPUE values for he period display large swings, as he nominal CPUE increased subsanially beween 997 and 998, declined beween 998 and 999 and hen increased again beween 999 and In conras, he MFP changes beween 997 and 2000 were much more mued, paricularly beween 997 and 998. The esimaed cumulaive MFP change during he period was.4%, ha is, i is esimaed ha he 2002 he MFP of he Korean purse seine flee was only.4% greaer han i was figure Annual changes in nominal CPUE and MFP of he Korean purse-seine flee in he WCPO during in 997. In conras, he nominal CPUE was abou 29% greaer in 2002 han in 997 (Figure 2). As previously oulined, he annual mean MFP growh for he Korean purse-seine flee during he period was marginally posiive a jus 0.3%. When he naural resource sock and environmenal condiion variables are excluded, he mean annual progress raes of aggregae produciviy are -0.3% and 0.3%, respecively. However, excluding boh he naural resource sock and he environmenal variables gives an annual progress rae of aggregae produciviy of.2%, illusraing he bias and misleading resuls ha would oherwise resul (Table 4). Accouning for changes in he abundance of naural resource socks and he sae of he environmen reduces he mean annual overall mulifacor produciviy growh from.2% o 0.3%. 4. CONCLUDING REMARKS This paper demonsraes ha measures of mulifacor produciviy growh in naural resource indusries are biased unless changes in he abundance of he fish socks socks and he effecs of changes in he environmen are aken ino accoun. Furhermore, all changes in inpus over ime mus be aken ino accoun o obain complee and unbiased measures of produciviy. Produciviy measures such as CPUE, which ha ake ino accoun only a single inpu (effor), provide incomplee measures of growh in produciviy over ime. This paper also presens a nonparameric mehod of measuring mulifacor produciviy, using a disance funcion, he Malmquis index, which readily accouns for unpriced changes in he resource sock and environmen, and which does no require cos daa. The approach was applied o a group of Korean purse-seine vessels ha fish for unas in he WCPO, where only modes growh of mulifacor produciviy was found, even hough he CPUE increased subsanially. Percenage change Index (997=00) CPUE MFP figure 2 Cumulaive changes in nominal CPUE and MFP of he Korean purse-seine flee in he WCPO during CPUE MFP

10 38 Mehodological Workshop on he Managemen of Tuna Fishing Capaciy Produciviy growh is one of he mos imporan, if no he mos imporan, deerminans of he growh in fishing capaciy over ime, and represens one of he key challenges o managing fisheries. Wihou accurae measures of produciviy growh in fishing indusries, he exen of he excess capaciy in global fisheries canno be properly assessed, and appropriae conservaion and managemen policies canno be formulaed. The resuls are also of considerable poliical imporance. The Republic of Korea, he Unied Saes and Japan, are high-cos producers of purse seine-caugh una in he WCPO, and heir coninued compeiiveness and hence coninued presence as flag-sae vessels depends, in par, on coninued produciviy growh. The lower-cos producers e.g. Chinese Taipei and he Peoples Republic of China, may oherwise overake hem, and hereby increase he he presence of hose flag saes in he WCPO. 5. ACKNOWLEDGEMENTS Commens, suggesions, and discussions wih indusry and governmen aendees from he members of he Forum Fisheries Agency and he Unied Saes are graefully acknowledged. The auhors are graeful o Colin Millar and John Hampon of he Secrearia of he Pacific Communiy for providing vessel daa and una biomass abundance measures, respecively. The auhors are also graeful o Cahy Morrison Paul for clarificaion of issues relaing o capial uilizaion and o Norm Baroo, Ron Felhoven, Frank Jensen, Jim Kirkley, Hans Lassen, Tim Lawson, Eric Thunberg, Niels Vesergaard, John Walden, members of he FAO Technical Advisory Commiee on Managemen of Tuna Fishing Capaciy and paricipans a seminars a Souhern Denmark Universiy, he Norwegian School of Economics and Business Adminisraion and he Danish Research Insiue of Food Economics for commens and suggesions on earlier versions of his paper. All errors remain he responsibiliy of he auhors. The resuls are no necessarily hose of he Naional Marine Fisheries Service or he Forum Fisheries Agency. 6. REFERENCES Arrow, K., Dasgupa, P., Goulder, L., Daily, G., Ehrlich, P., Heal, G., Levin, S., Mäler, K.-G., Schneider, S., Sarre, D. & Walker, B. in press. Are we consuming oo much? Jour. Econ. Perspecives. Bleischwiz, R Rehinking produciviy: why has produciviy focused on labour insead of naural resources? Envir. Res. Econ. 9 (): Caves, D.W., Chrisensen, L.R. & Diewer, E.W The economic heory of index numbers and he measuremen of inpu, oupu, and produciviy. Economerica, 50 (6): Campbell, H.F. & Hand, A.J Comparing he produciviy of US and Japanese purse seine flees operaing in he wesern Pacific una fishery. Ausralian Cenre for Agriculural Research, Technical Paper No. 8. Canberra, Ausralia. Coelli, T., Rao, D.S.P., O Donnell, C.J. & Baese, G.E An Inroducion o Efficiency and Produciviy Analysis, second ediion. Springer. Färe, R. & Primon, D Muli-Oupu Producion and Dualiy: Theory and Applicaions. Kluwer Academic Publishers, Dorrech, The Neherlands. Färe, R., Grosskopf, S., Norris, M. & Zhang. Z Produciviy growh, echnical progress, and efficiency change in indusrialized counries, Amer. Econ. Rev. 84 (): Färe, R., Grosskopf, S. & Roos, P Produciviy and qualiy changes in Swedish pharmacies. Iner. Jour. Prod. Econ. 39 (-2): Felhoven, R.G. & Morrison Paul, C.J Direcions for produciviy measuremen in fisheries. Mar. Policy, 28 (2): Fox, K., Grafon, R., Kirkley, J. & Squires, D Propery righs, produciviy, and profis in a common-pool resource. Jour. Envir. Econ. Manag. 46 ():

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