Property Rights, Governance, and Incentives: The Economics of Fisheries Management. Bryan Leonard

Transcription

1 Property Rights, Governance, and Incentives: The Economics of Fisheries Management Bryan Leonard September 30, 2014

2 Outline Motivation Crash Course in Fishery Economics Tragedy of the Commons MSY vs. MEY Property Rights Solutions Individual Transferable Quotas (ITQs) Territorial Use Right Fisheries (TURFs) The Challenge of High Seas Fisheries Status of U.S. Fisheries Possible A rmatives Negative Strategies Sources

3 Outline Motivation Crash Course in Fishery Economics Tragedy of the Commons MSY vs. MEY Property Rights Solutions Individual Transferable Quotas (ITQs) Territorial Use Right Fisheries (TURFs) The Challenge of High Seas Fisheries Status of U.S. Fisheries Possible A rmatives Negative Strategies Sources

4 Motivation - The Resolution Resolved: The United States federal government should substantially increase its non-military exploration and/or development of the Earth s oceans.

5 Motivation - The Resolution Reduction of overfishing explicitly mentioned in topic paragraph Discussion of topicality in Forensics Quarterly Increase can be qualitative Fisheries management constitutes development of the oceans Case ideas for fisheries management in Forensics Quarterly Prevent roll-back of Magnuson-Stevens Act Increase/fund scientific research Broaden the focus of current (successful) management e orts ITQs Marine Protected Areas Several possible policies to reduce illegal fishing

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7 Motivation - Fishery Facts U.S. fishing resulted in $199 billion in sales in stocks subject to overfishing 40 stocks classified as overfished 34 stocks rebuilt since 2000 Table : Recent Trends (in thousands of dollars) Year Jobs Total Revenue ,029,542 3,895, ,196,683 4,511, ,233,204 5,338, ,270,141 5,099,456

8 Outline Motivation Crash Course in Fishery Economics Tragedy of the Commons MSY vs. MEY Property Rights Solutions Individual Transferable Quotas (ITQs) Territorial Use Right Fisheries (TURFs) The Challenge of High Seas Fisheries Status of U.S. Fisheries Possible A rmatives Negative Strategies Sources

9 Key Terms Maximum Sustainable Yield: Catch which maintains population with maximum growth rate (only harvest individuals which would be added to the population) Overfishing: Harvest rate exceeds rate which maintains MSY Overfished: Biomass level jeopardizing ability to produce MSY TAC: Total allowable catch (regulatory limit in a given fishing season) LAPP: Limited Access Privilege Programs some sort of property rights-based fisheries management

10 The Tragedy of the Commons Individual use of a resource reduces productivity for everyone Individuals only consider private benefits and costs! overuse Popularized by Hardin (1968), original idea by H. Scott Gordon (1954) in the context of fisheries Think of adding cows to a pasture (classic example from Hardin) Can be even worse for dynamic resources (like fish)

11 The Tragedy of the Commons

12 Open Access Fisheries In open access, entry continues until all economic profits are dissipated (in theory) Most small-scale, artisanal fisheries High-liners still earn profit

13 Fisheries Management To be e ectively managed, a fishery needs A scientifically-determined, fully enforced TAC Controls on bycatch the unintentional killing of fish and other ocean life Conservation of important marine habitat

14 Limited Entry Fisheries With limited entry, economic profits are dissipated along other margins Race to fish Over-capitalization Unsafe conditions/hours Many U.S. fisheries can be characterized this way

15 Key Ideas Without formal property rights, fishers incur added costs to claim output Sometimes helpful to think of a fishery as an investment fund No incentives to invest if you don t own the return on your investment Other margins of dissipation can have big consequences for other species

16 Outline Motivation Crash Course in Fishery Economics Tragedy of the Commons MSY vs. MEY Property Rights Solutions Individual Transferable Quotas (ITQs) Territorial Use Right Fisheries (TURFs) The Challenge of High Seas Fisheries Status of U.S. Fisheries Possible A rmatives Negative Strategies Sources

17 Individual Transferable Quotas (ITQs) Set Total Allowable Catch (TAC) Assign rights to shares of the TAC Allow free trading of these rights Property rights to a fixed output reduce the need to race

18 Ecological Benefits Benefits of ITQs TAC based on conservation goals Reduces ghost-fishing Reduces by-catch Gives fishers vested interest in long-run health of the fishery 1 Economic Benefits of ITQs Year-round fishing! higher prices Internalize production externalities (at least partially) No need to over-capitalize Safer working conditions 1 Depending on the security of ITQ rights

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22 Problems with ITQs Some fishers get bought out Possible negative employment e ects Monopolization/concentration In U.S., ITQs are use rights only (subject to expropriation/termination) Failure of eco-system based management? Often take 5-10 years to set up Can be costly to set up

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24 Territorial Use Right Fisheries (TURFs) Assign exclusive rights to harvest in a particular location Usually have some limits on tenure (20 years) Work well for species that do not migrate and require investment

25 Can be di Issues with TURFs cult to reconcile with broader legal framework Require clear delineation of seafloor rights Tenure needs to match species characteristics (see Costello and Ka ne 2007)

26 Examples of TURFs Spiny Lobster fishery in Mexico Rapid natural growth rate Require relatively short tenure to induce conservation behavior Abalone fishery in Mexico Slow natural growth rate Need both long tenure and high probability of renewal to prevent overexploitation

27 The Challenge of High-Seas Fisheries Nations only have sovereign jurisdiction within 200-mile EEZ Some species especially tuna migrate hundreds of miles and are harvested in multiple EEZs and on the high seas UNCLOS essentially allows any nation to harvest from any high-seas fishery Global commons: conservation e orts within one EEZ can be captured by distant-water fishing nations

28 Global Tuna Catch:

29 Prospects for High Seas Fishery Management Some success stories Straddling stocks: U.S.-Canada halibut and salmon fisheries, Australia-New Zealand Orange Roughy Fishery, Argentine-Uruguayan Shared Fishing Zone Parties to the Nauru Agreement Key is the ability to exclude potential entrants At odds with UNCLOS Can relate to larger geopolitical confrontations (Barents Sea)

30 Outline Motivation Crash Course in Fishery Economics Tragedy of the Commons MSY vs. MEY Property Rights Solutions Individual Transferable Quotas (ITQs) Territorial Use Right Fisheries (TURFs) The Challenge of High Seas Fisheries Status of U.S. Fisheries Possible A rmatives Negative Strategies Sources

31 The Magnuson-Stevens Act Vests management authority in 8 regional councils New England, mid-atlantic, South Atlantic, Caribbean, Gulf of Mexico, Pacific, North Pacific, and Western Pacific Work under the guidance of National Marine Fisheries Service (NMFS) and the National Oceanic and Atmospheric Administration (NOAA) Must adhere to 10 national standards Prevent overfishing, achieve maximum economic yield, avoid bycatch, promote safety, etc. 24 fisheries currently use catch shares Set to expire at the end of this year, currently awaiting a vote on the floor of the House

32 Ecological Trends in U.S. Fisheries

33 Economic Trends U.S. Fisheries

34 Jobs in U.S. Fisheries

35 Status of U.S. Fisheries: The Good News Magnusson amendments mandate an end to overfishing and catch limits (i.e. TACs) for all Federally managed species. 90% of US landings (by volume) are in assessed stocks The percentage of assessed stocks subject to overfishing has fallen from 70% in 1998 to about 20% in 2010 Approximately 20 stocks have been rebuilt since 2007 Most stocks healthy in the North Pacific Overfished populations now recovering in New England, the South Atlantic, and Gulf; relatively stable elsewhere Close to 50% of total U.S. landings by weight are managed under catch-shares 140 species including demersals, pelagics, and crustaceans, in 24 di erent fisheries

36 NGO Involvement in U.S. Fisheries EDF focuses on catch share implementation across the US Pew and NRDC focus on several issues including habitat protections and EBM Ocean Conservancy, TNC and Oceana all combine a national policy focus with regional fisheries experise GMRI works on New England fisheries expertise Ecotrust works on the Pacific Northwest, etc. General focus on defending current rebuilding provisions in the MSA reauthorization and maintaining council focus Also some advocacy for catch share implementation at the regional level

37 U.S Fisheries: Bad News We currently lack stock assessment data for 300+ stocks, and have choke stocks 2, which will create political pain in implementing MSA measures Most state fisheries lack TACs Recreational fishing is largely unregulated and a major issue in some regional fisheries Many anadramous fisheries (Atlantic Salmon, Pacific Salmon outside AK, sturgeon) are in poor shape, particularly in their southern ranges Partially due to onshore processes and behaviour (pollution, damns, etc.) Few systematic habitat protections are in place. The Marine Sanctuaries program has little e ect on fisheries. 2 When fishing is halted on a choke species, fishermen whose gear is capable of catching these fish must also stop fishing for other species

38 Overfished Stocks, June 2014

39 Overfishing, June 2014

40 Outline Motivation Crash Course in Fishery Economics Tragedy of the Commons MSY vs. MEY Property Rights Solutions Individual Transferable Quotas (ITQs) Territorial Use Right Fisheries (TURFs) The Challenge of High Seas Fisheries Status of U.S. Fisheries Possible A rmatives Negative Strategies Sources

41 Possible A rmatives Renew Magnusson-Stevens Act (HR 4742) Passed committee in the house May not pass before November elections Increase funding and support for scientific research Petition to Obama to open dialogue with Cuba International action to close the high seas (RFPC is open new, in wake of White and Costello 2013) Federal management of state fisheries Ecosystem-based management and/or MPAs Market for whales? Make ITQs permanent

42 Advantages Large-scale ecological impacts of fisheries collapse Political will for other high-seas policies? Benefits to local and U.S. economies Food security

43 Outline Motivation Crash Course in Fishery Economics Tragedy of the Commons MSY vs. MEY Property Rights Solutions Individual Transferable Quotas (ITQs) Territorial Use Right Fisheries (TURFs) The Challenge of High Seas Fisheries Status of U.S. Fisheries Possible A rmatives Negative Strategies Sources

44 Inherency Negative Strategies Broad-based support for ITQs Most U.S. federal stocks are well-managed and/or recovering Obama just created a huge MPA in California Solvency Some fisheries may be over the brink ITQ schemes have to be carefully (and perhaps locally) constructed to provide proper conservation incentives Labor-market and other local economic impacts Need for ecosystem-based management Onshore environmental e ects on fisheries Politics disadvantage

45 Some Sources PERC: Best source for economics of fisheries and market-based approaches Environmental Defense Fund: Good scientific and economic research on the benefits of ITQs NOAA: Data on stock status, management e orts, etc. World Bank: High-seas fisheries management e orts California Environmental Associates: Data on U.S. and global fisheries, policy