Keywords: overfishing, voluntary vessel buy back programs, backward bending supply curve, offshore fisheries in Taiwan

Transcription

1 EVALUATION AND SIMULATION OF FISHING CAPACITY AND BACKWARD- BENDING SUPPLY OF THE OFFSHORE FISHERY IN TAIWAN Chin-Hwa Sun, Insiue of Applied Economics, Naional Taiwan Ocean Universiy, ABSTRACT In 22, he offshore and coasal fisheries only accoun for 9.9% and 7.3%, respecively, of he oal landing value. Since 978, he offshore harvess follows a downward rend, bu he number of fishing vessels, he oal vessel onnage, and he oal horsepower of vessels follow an seady increasing rend unil 992 when he overall resricion on he consrucion of fishing vessels was imposed. In order o mainain he susainabiliy of Taiwan s offshore fisheries socks and o avoid overfishing, he governmen has implemened a fisheries managemen policy which regulaes harvess by suspending fishing licenses, resricing consrucion of fishing vessels, and buying back used vessels in order o reduce he offshore flee size. The mos recen measure, announced on Dec. 24, 99, which is sill in effec, resrics he consrucion of all fishing vessels, excep for fish ranspor vessels over 2, ons. In addiion, he governmen adoped wo volunary vessel buy back programs in order o reduce he flee size in and 2-24, respecively. This sudy ries o examine wheher or no he curren offshore fishing indusry in Taiwan falls in a Pareo inferior siuaion wih smaller oupu and higher price, such as shown in he upper par of he backward bending supply. By using annual offshore fisheries harves and he oal onnage and horse power of fishing vessels for he period 953 o 22, his paper uilize he bioeconomic model presen in Sun (998) o simulae he backward bending supply curve under various fishing capaciy. A suggesion will also be provided o show how o reduce he fishing effor o mee he goals of conservaion and he viabiliy of he fishing indusry. Keywords: overfishing, volunary vessel buy back programs, backward bending supply curve, offshore fisheries in Taiwan

2 INTRODUCTION Since 978, he offshore harvess follows a downward rend, bu he number of fishing vessels, he oal vessel onnage, and he oal horsepower of vessels follow an seady increasing rend unil 992 when he overall resricion on he consrucion of fishing vessels was imposed. Such as shown in Figure, he offshore harvess, vessel numbers, oal vessel onnage, and oal horsepower in 993, were 5.5, 3.2, 7.8, and 35.2, respecively, imes of he level in 953. Since he average harves per vessel on has followed a decreasing rend afer 963, overcapializaion has become obvious (Sun, 998). In order o mainain he susainabiliy of Taiwan s offshore fisheries socks and o avoid overfishing, he governmen has implemened a fisheries managemen policy which regulaes harvess by suspending fishing licenses, resricing consrucion of fishing vessels, and buying back used vessels in order o reduce he offshore flee size Producion (, M.T.) Vessel Tonnage (, Ton) Number of Vessels ( Vessel) Horse Power (, H.P.) Cach per Ves. Ton (M.T./.5Ton) Figure Srucure of Powered Fishing Vessels of Offshore Fisheries (953-22) 2 Year Furhermore, a major revision of he Fisheries Ac in 99 gave he governmen he explici righ o adjus he fishing effor according o resource abundance. The governmen could limi he number of vessels, oal vessel onnage, fishing area, fishing period, and design all oher aspecs of fishing vessel managemen policy for he following reasons: () fisheries conservaion; (2) fisheries srucural adjusmen; and (3) resricions resuling from inernaional agreemens or cooperaion. 2

3 Four amendmens ha regulae he number of offshore fishing vessels in Taiwan were enaced in 967, 98, 989, and 99. For example, in 967, in order o preven any furher increase in he exising number of pair rawlers under 2 ons and oer rawlers under 2 ons, he Council of Agriculure applied measures o resric he consrucion of boh ypes of rawlers (Deparmen of Agriculure and Foresry 993). In 989, he Council of Agriculure furher amended he already exising fishing boa building resricions o accep only: una purse seiners over, ons, group purse seiners for mackerel, fish ransporing vessels of 2, ons and over, and facory vessels of 2, ons and over (Deparmen of Agriculure and Foresry 993). The mos recen measure, announced on Dec. 24, 99, which is sill in effec, resrics he consrucion of all fishing vessels, excep for fish ranspor vessels over 2, ons. In addiion o he overall resricion on he consrucion of fishing vessels, he governmen adoped wo volunary vessel buy back programs in order o reduce he flee size in and 2-24, respecively. The amoun of governmen expendiure and he number of vessels bough back in each period are shown in Figure 2. Noe ha 2,39 vessels were bough back during and he oal governmen expendiure reaches NT$,72 million (US$52.6 million). The purchase price of he vessel is based on price per gross on which is around NT$4,552 in Million NT$ 7, Amoun (Million NT$) 4 Number of Vessels Figure 2 Governmen Expendiure on Vessel Buyback Program ( and 2-23) Year Number of Vessels by Tonnage Class Figure 3 Number of Vessels Bough Back by Tonnage Class in Taiwan (2-23) Number of Vessels by Fishing Gear Long Line Trawl Gill Ne Miscellaneous Figure 4 Number of Vessels Bough Back by Fishing Gear in Taiwan (2-23) Number of Vessels in Various Regions Norh Eas Souh Remoe Islands Figure 5 Number of Vessels Bough Back by Region in Taiwan (2-23) Region 3

4 By using 993 values for echnological efficiency, Sun (998) prediced he required vessel onnage a MSY is,8 vessel ons. Comparing his o he acual vessel onnage for 993, which was 64,447 vessel ons, suggess ha he fishing capaciy is almos 4% overcapialized. Based on dynamic simulaions, Sun (998) showed ha a combinaion of imposing a ban on he consrucion of new vessels and he vessel reiremen and buyback program in is no sufficien o avoid he downward rend in harvess and he deerioraing sae of socks. In Sun s sudy, an analysis of he profi srucure of he offshore fisheries indicaes ha he average produc price and average cos are NT$66.3/kg and NT$98,522/vessel on, respecively, in 992. If he level of echnological efficiency is held consan a he 993 level, hen esimaes of fisheries harves, fishing effor, and resource sock level a Opimal Yield OY can be obained from he implici funcion heorem by simulaing Xand E nonlinearly o saisfy he capial heory in renewable resources (Clark, 985; 99) wih an 8% discoun rae. Even hough he second phase buyback program iniiaed in 2 which offers NT$8, o buy back he vessel, only 5 vessels accep he offers. Hence, a new scheme in he 2 buyback program was o se up a scheme o increase he price per gross on o NT$5, for vessels less han 5 gross on. However, he second sage buyback program implemened in 2 was sill no very successful as fishermen under raional expecaion were holding ou in waiing for higher paymen scheme o be inroduced in he near fuure. Only 28 vessels were bough back in 2. This promped he governmen o announce a new paymen scheme in 22 designed o speed up he buy back by offering a higher amoun in 22 bu he amoun would decrease in he subsequen years as follows: () NT$7, if purchased in 22, NT$6, in 23, and NT$5, in 24 for each gross on for vessels less han 5 ons; (2) NT$6, if purchased in 22, NT$5, in 23, and NT$4, in 24 for each gross on for vessels beween 6 o vessel on; (3) NT$5, if purchased in 22, NT$4, in 23, and NT$3, in 24 for each gross on for vessels beween o 2 vessel on, (4) NT$4, if purchased in 22, NT$3, in 23, and NT$2, in 24 for each gross on for vessels beween 2 o 5 vessel on, (5) NT$35, if purchased in 22, NT$25, in 23, and NT$2, in 24 for each gross on for vessels beween 5 o vessel on, (6) NT$8, if purchased in 22, NT$6, in 23, and NT$5, in 24 for each gross on for vessels over vessel on. (7) The oal paymen per vessel will no exceed 9.5 million for any vessel purchased, in 22, NT$8.5 million, in 23, NT$ and 7.9 million, in 24. Noe ha here are 25 vessels were bough back in 22 wih a oal value NT$65 million such as shown in Figure 2. Figure 3, 4 and 5 shown he number of vessels bough back by onnage class, fishing gear and region in Taiwan. I is ineresing o know he 22 buyback program was successful o arac all vessels in various onnage classes and mos of hem were long line and rawl fishery. However, will he Using a grid search conduced under he GAUSS saisics program. 4

5 vessel buy-back program improve he sock abundance in 22 comparing o he saus before he program in 99? By using he annual offshore fisheries harves and he oal onnage and horse power of fishing vessels for he period 953 o 22, his paper uilize he bioeconomic model presen in Sun (998) o examine wheher or no he offshore harves in 22 falls in a Pareo inferior siuaion han before he vessel buy-back program was issued in 99 wih less oupu under higher demand price, such as shown in Copes s sudy (97) ha siuaed in he upper par of he backward bending supply curve of he fishing indusry. ECONOMIC PERFORMANCE OF OFFSHORE FISHERIES AND AQUACULTURE Offshore fisheries are defined as powered vessels fishing wihin he Economic Exclusive Zone (EEZ) around Taiwan, which is under he Taiwan s jurisdicion by he Law of Fishery. Fishing vessels are mosly smaller han ons, which are owned by individual families or small-scale fishing companies, primarily operae in Taiwan s offshore fishery. Some of hese small-scale, individual vessels swich back and forh beween wo or more ypes of fishing gear, according o season and arge species. For arge species ha have a shor life cycle, such as he small subpelagics, he proporional represenaion of he differen species is fairly consan. The cos and revenue daa for he differen onnage classes of offshore fishing vessels were obained from he daabase released by he Annual Economic Survey of Offshore Fisheries and Aquaculure (Taiwan Fisheries Bureau, 2). The revenue and cos daa are used o approximae he revenue-cos raios for fishing vessels in he differen onnage classes. A weighed average revenue-cos raio is calculaed according o he disribuion of he offshore fishing vessels in he differen onnage classes as follows: R R2 R3 R4 R5 raio = A + A2 + A3 + A4 + A5 C C2 C3 C4 C5 where raio = weighed average revenue-cos raio; R i = average revenue per vessel on of he i h on class (NT$/vessel on); C i = average cos per vessel on of he i h on class (NT$/vessel on); A i = percenage of oal fishing vessel onnage represened by vessels he i h on class, where, 2, 3, 4, and 5 represen -5 ons, 5- ons, -2 ons, 2-5 ons, and 5- ons, respecively. In 22, he percenages of oal vessel onnage for he five onnage classes were 2.94%, 4.38%,.5%, 35.32%, and 46.3%, respecively (Table ). The average harves per vessel on was,726 kg, and he average harves value per vessel on was NT$7,883. When facoring ou he cos of equipmen, depreciaion and ineres cos of capial, he average cos per vessel on was NT$5,99 and he shor-erm variable cos 2 was NT$83,79. 2 According o he original daa source, his includes all direc and indirec coss. The annual variable cos per vessel on includes fuel, bai, ice, sal, waer, box/baske, food, fish marke adminisraion and fee, ransporaion and sorage charge, repair and replacemen of fishing gear, salary, and ineres cos of a revolving fund. 5

6 The revenue/cos raio for each of he five onnage classes ranges from.8 o.32, wih a weighed average of.4. This means ha he average fishing flee earns a profi. However, he revenue/cos raio declines as he vessel onnage increases, which illusraes he phenomenon of overcapializaion. While i may be rue ha smaller vessels are more profiable, i is also conceivable ha larger vessels could be more profiable if he fisheries were less exploied. The shor-erm revenue/cos raio, which is defined as he average revenue divided by he average variable cos, ranges from.34 o.9, wih a weighed average of.4. Thus, when average fixed coss (i.e., equipmen depreciaion and cos of ineres) are no aken ino accoun, which is no he case in he shor-run, he average fishing vessel earns a profi. The governmen will, herefore, have o provide very aracive vessel reducion incenives before fishermen will relinquish such lucraive, shor-erm fishing opporuniies. MODEL SPECIFICATION By using annual offshore fisheries harves and aggregae daa on fishing vessels for he period 953 o 993, Sun (998) esimaes he harves capaciy of Taiwan s offshore fishing flee under he maximum susainable yields and evaluaes differen legislaive sraegies designed o reduce he fishing flee. A generalized harves funcion which permis he esimaion of an unconsrained Cobb-Douglas producion funcion (Comiini and Huang 967; Hannesson 983; Tomkins and Bulin 975; Tsoa, Schrank and Roy 984) and he dynamic movemen of biomass funcions of he offshore fisheries are specified and esimaed. q α β = H (X, E ) = A E X Y () where Y is he offshore fisheries harves in period ; H( X,E ) is he harves funcion which depends on X and E. The variable X represens an assessmen of offshore fisheries resource sock; E represens he fishing effor, which is defined as oal vessel onnage of he offshore fisheries in period. The variable A represens he echnological efficiency of he offshore fisheries in period. Technological efficiency is defined as he improvemen of fishing gear, such as replacing engines wih more efficien ones o improve fishing yields. Finally, q, α, β are parameers which represen he scale elasiciies associaed wih echnological efficiency, fishing effor, and resource sock, respecively. Suppose ha he growh funcion of he fisheries resource sock in period is specified as a logisic growh funcion, G(X - ), which depends on he biomass of he fisheries in he previous period (Schaefer 954). Hence, he dynamic movemen of he fisheries resource sock is specified as follows: X X X = G(X ) H(X,E ) = rx ( ) Y (2) K where r is he inrinsic growh rae, and K is he environmenal carrying capaciy. Using (), a funcion for he resource sock of he fisheries in period -, (X - ) can be subsiued ino (2), so ha he resource sock of he offshore fisheries in period can be represened as a funcion of Y -, A -, and E - : 6

7 Y β r Y β X h, = ( + r) ( ) ( ) Y q q (3) α α A K E A E By subsiuing (3) ino (), he curren period harves funcion for offshore fisheries is specified as a funcion of he previous period s harves, Y -, echnological efficiency, A -, and fishing effor, E - : 2 β 2 q α Y β β = + r Y Y A E ( r)( ) ( ) Y q α q α (4) A E K A E The parameers esimaed by Sun (998) show ha he esimaed inrinsic growh rae (r) equals.32, he esimae of he environmenal carrying capaciy (K) is 3,45,995 ons, and q, α, and β are parameers which represen he scale elasiciies associaed wih echnological efficiency, fishing effor, and resource sock are equal.828,.522, and.7937, respecively. Wihou assuming a susainable harves o mainain consan biomass, i.e., X X, he acual harves will no equal o he growh by resricion, his paper simulae he hisorical biomass (X h, ) and subsiue i ino equaion () o simulae he hisorical harves (Y h, ), i.e., he yield is decided by he harves funcion. The hisorical pah of harves (Y h, ) is ploed agains he hisorical equilibrium price wihou assuming susainable harves under various echnological efficiency and fishing effor in each year, such as shown as hisorical harves pah in figure 6. If he hisorical biomass (X h, ) is subsiued ino he susainable growh funcion, G(X h, ), such as defined in equaion (2), we can simulae he harves (Y s, ), which is equal o he simulaed susainable growh and is he upper limi if here is a mandaory regulaion o mainain he susainabiliy of he biomass. In realiy, such as shown in Figure 6, he hisorical harvess are all greaer han he simulaed susainable growh under various price schemes in various years afer 97 and he simulaion resuls show ha he sock follows he declining rend since hen clearly, because here is no enough growh o suppor he harves o mainain he biomass unchanged. SIMULATION OF THE BACKWARD-BENDING SUPPLY CURVE UNDER VARIOUS FISHING CAPACITIES I is ineresing o idenify wheher he harves in 22 under he curren marke equilibrium price is sill economically overfishing. By using he parameer esimaed by Sun (998), we can examine wheher or no here exiss a backward-bending supply relaionship under each year s equilibrium condiion. Under he open access assumpion, he profi will be driven o zero and defined as follows, (X, Y ) = p Y c E = (5) hen he biomass will be lower o X OA, such as defined as follows, 7

8 = c β, α OA q p A E X (6) where (X, Y) is he offshore indusry ne benefi in period ; p Y is he revenue funcion; and c E is he cos funcion; p is he weighed average harves price (NT$/kg); and c is he average cos per uni of fishing effor (NT$/vessel on). By subsiuing X OA, ino he growh equaion, we can derivae Y OA, which defined he susainable harves level corresponding o various cos and price raio in various periods and i exhibis he characerisic of he backward-bending supply curve for he fishing capaciy in each year, A and E, as follows, c β X, c β q α p A E OA YOA, = rx OA, ( ) = r ( ) q α K p A E (7) K For example, during he ih year, he fishing capaciy (A i and E i ) and he cos per uni of effor (c ) is fixed in ha year, here exiss a backward-bending harves schedule corresponding o higher prices. Such as shown in Copes (97), he backward-bending supply curve reflecs he schedule ha fishermen s responds o various marke prices and he marke equilibrium is decided by boh he supply and demand schedule. Based on he average produc price he cos per uni of effor (c ) are 66.3 NT$/kg and NT$98,522/vessel on, respecively, he equilibrium harves in 993 is sill siuaed in he backward-bending poion of he supply curve in figure 6. Since he average produc price is NT$78.84/kg and he average operaion cos is NT$5,99 per vessel on, he price-cos raio in 22 is higher han he cos-price raio in 993 and here exiss even larger pressure o explore he resource which leave less biomass sock as defined in equaion (5), i.e., even hough he governmen had adoped wo volunary vessel buy back programs in order o reduce he flee size during and 2-24, i.e., he bioeconomic equilibrium siuaion in 22 is even worse han he siuaion in 993. The economically overfishing phenomenon would call for he need of a furher resriced managemen scheme o avoid overexploiing he biomass. Conclusion and Discussion The governmen in Taiwan has recenly insiued a comprehensive program o remunerae fishermen for volunarily reducing fishing effor in accordance wih he bullein of In reward for closing fishery season procedure. The program has been running since Sepember, 22 wih an annual budge of approximaely US$2 million. All kinds of fishing vessels ha covers all ocean fisheries in Taiwan wih valid fishing licenses, excep illegal recreaional and over 3 years vessels. The vessels shall have days of fishing aciviies and sum 2 days of suspending fishing 8

9 aciviies in he fiscal year or have days of fishing aciviies and coninue 6 days of suspending fishing aciviies in he fiscal year. To dae, he program has no been very successful, as he paymens offered o fishermen for curbing fishing aciviies are so low which are no sufficienly aracive and here are only 2% of he vessels are volunary o fulfill he requiremen. One way o make he program work is o resric i o a few seleced fisheries wih special environmenal and resource consideraions. By concenraing on a few fishing aciviies, he program could be redesigned o provide sufficien incenives o reduce he fishing effor furher. 2 8 Price (NT$/kg) Hisorical Harves Pah Susainable Growh Equilibrium in 96 Equilibrium in 97 Equilibrium in 99 Equilibrium in 993 Equilibrium in 22 Equilibrium in 22 Equilibrium in Equilibrium in Equilibrium in 96 Equilibrium in Figure 6 Simulaion of he Backward-Bending Supply Curve under Various Offshore Fishing Capaciy in Taiwan Harves (,M.T.) REFERENCES Clark, C.W., 985, Bioeconomic Modeling and Fisheries Managemen. MD: John Wiley & Sons. 9

10 , 99, Mahemaical Bioeconomics. MD: John Wiley & Sons. Comiini, S., and D.S. Huang, 967, A Sudy of Producion and Facor Shares in he Halibu Fishing Indusry. Journal of Poliical Economy 75: Copes, P. 97, The Backward-Bending Supply Curve of The Fishing Indusry, Poliical Economy, p Hannesson, R., 983, The Bioeconomic Producion Funcion in Fishery: A Theoreical and Empirical Analysis. Canadian Journal of Fisheries and Aquaic Sciences 4: Sun, C.H., 998, Opimal Number of Fishing Vessels for Taiwan s Offshore Fisheries: A Comparison of Differen Flee Size Reducion Policies. Marine Resource Economics 4: Tomkins, J.M., and J.A. Bulin., 975, Theoreical and Empirical Approach o Fisheries Economics. American Journal of Agriculural Economics 26:5-25. Tsoa, E., W.E. Schrank, and N. Roy, 984, Generalizing Fisheries Model: An Exension of he Schaefer Analysis. Canadian Journal of Fisheries and Aquaic Science 42:44-5. Taiwan Fisheries Bureau, , Fishing Vessel Yearbook, Deparmen of Agriculure and Foresry, Provincial Governmen of Taiwan, Taiwan: Republic of China. Various Issues.,953-22, Fisheries Yearbook in Taiwan Area. Deparmen of Agriculure and Foresry, Provincial Governmen of Taiwan, Taiwan: Republic of China. Various Issues., , Repor of he Vessel Reiremen Program. Deparmen of Agriculure and Foresry, Taiwan: Republic of China, Various Issues., 22, Annual Economics Survey of Offshore Fisheries and Aquaculure in Taiwan. Deparmen of Agriculure and Foresry, Taiwan: Republic of China.

11 Table Offshore Fisheries Producion, Revenue, and Cos in Taiwan, 22 Average Yield per Vessel Ton (Kg./Ves. Tons) (O) Average Revenue per Vessel Ton (NT$/Vessel Tons) (A) Average Cos per Vessel Ton (NT$/Vessel Tons) (B) Average Variable Cos per Ves. Ton (NT$/Vessel Tons) (C) Revenue-Cos Raio (D) Shor Term Revenue- Cos Raio (E) Percenage of Toal Ton (F) under 5 Tons,56 259,6 96, 36, % 5 - Tons 2,276 83,467 57,333 24, % - 2 Tons,342 46,6 34,6 9, % 2-5 Tons,62 26, 6,857 9, % 5 - Tons,867 89,64 8,37 64, % Weighed Average,726 7,883 5,99 83, a. Annual Economics Survey of Offshore Fisheries and Aquaculure in Taiwan, 22, Taiwan Fisheries Bureau. b. (D i ) = (A i ) / (B i ), (E i ) = (A i ) / (C i ) c. Fisheries Yearbook in Taiwan Area, 22, Taiwan Fisheries Bureau. d. 5 Weighed average of percenage of oal onnage, he formula equals o ( k i fi), where k=(a), (B), (C), (D), (E); i=, 2, 3, 4, or 5; i = represens vessels under 5 ons; 2 represens vessels approx. 5 - ons; 3 represens vessels approx. - 2 ons; 4 represens vessels approx. 2-5 ons; and 5 represens vessels approx. 5 - ons.