A Bargain for Tuna Coaseian Solutions to Bigeye Bycatch Dan Ovando, Gary Libecap, Cody Wilgus, Lennon Thomas IIFET 2016, Aberdeen Scotland 1
Bigeye Background Why are we still overfishing WCPO bigeye tuna? F/FMSY of 1.5 B/BMSY of 1, but presumably headed down Overfishing established for over a decade Many similar environmental problems persist Economic incentives can provide solutions Bell et al. 2015 2
Bigeye Background total_catch 500 1,000 1,500 2,000 3
Bigeye Background WCPO bigeye tuna (BET) supplies 40% of global consumption Large adults caught by targeted line fishing Up to $10,000/MT Line caught targeted BET make up 50% of WCPO catches Other 50% juvenile bycatch in skipjack purse seine fishery 4
Bigeye Background Skipjack >>>> Bigeye 200000 MT of Tuna 150000 100000 Skipjack Targeted Bigeye Bycatch Bigeye 50000 0 US KR JP TW PG PH ID CN MH KI Flag 5
Bigeye Management BET and SKJ managed by Western and Central Pacific Fisheries Comission (WCPFMC) Seasonal FAD closures High Seas purse-seine closures Catch limits PNA countries operate vessel day scheme (VDS) Set cap of vessel days Sell vessel days to interested parties Despite these, bycatch remains What s the incentive for reform? 6
The Bargain What if bigeye tuna interests subsidized purchase of FAD-free days? VFDs in EEZs leased from PNA countries $10,000/VFD BET provides payments to PNA PNA uses payments to subsidize FAD-free SKJ days Is WTP WTA? 7
Methods 8
Methods WTP is the expected benefit relative to BAU WTP = T t=0 p BET l r targeted (y BET,bargain t y BET,BAU t )(1 + δ) t WTA is the expected loss in SKJ and BET catch relative to BAU T WTA = (p skj ps skj lost + p bet ps bet saved )(1 + δ) t t=0 where WTP & WTA = fun(f targeted, f bycatch ) We assume f targeted constant f bycatch a function of FAD-days removed 9
Methods Our goal is to translate FAD removals into bycatch removals And from there into changes in f f bargain = f bycatch + f targeted f bargain = (ybycatch today y bycatch )/MSY + y b today targeted today b today /MSY Assuming a constant f policy, we then project using surplus production model 10
Methods How do we get the change in catch per FAD removal? Limited published data, so turned to empirics fit using delta-gam y i = fun(fad i + Effort i + Region i + SST i...) y i = y i,fad=1 y i,fad=0 Repeat for BET and SKJ Select i FAD = 1, predict y i FAD = 0 Sort by ascending cost per unit BET Early exploration, but promising 11
Methods To summarize. 1. Get data from WCPFC 2. Estimate FAD effect 3. Project biomass and catch under BAU 4. Project biomass and catch under bargains 5. Calculate WTP, WTA, and surplus 12
Results 13
A Bargain is Possible! FAD removal creates 80% reduction in BET bycatch, 13% for SKJ FADs Bought None $15,000,000 All Bigeye Surplus $10,000,000 $5,000,000 $0 $ 5,000,000 $ 10,000,000 $0 $200 $400 $600 Annual payment per FAD Day 14
What about Conservation? FAD assocaited bycatch could rebuild up to 0.8 B/B MSY FADs Bought None $15,000,000 All Bigeye Surplus $10,000,000 $5,000,000 $0 $ 5,000,000 $ 10,000,000 0.6 0.7 0.8 0.9 1.0 B/Bmsy 15
Conservation Payments How much would additional conservation payments be? Conservation Payments FADs Bought None $1,000 $750 $500 $250 $0 0.6 0.7 0.8 0.9 1.0 B/Bmsy All 16
Could this work? 17
Sensitivity Blue = Positive, White = 0, Red = Negative 100% BET FAD Effect 75% 50% 25% 0% 0% 20% 40% SKJ FAD Effect 18
Feasibility The idea: BET subsidizes the purchase of FAD free vessel days from PNA countries We ve established a potential bargain Success depends on Transaction costs Property rights Neither perfect, but reason for optimism 19
Transaction Costs Proposed system minimizes transaction costs The vessel day system provides infrastructure Minimal additional transaction costs for SKJ Transaction costs concentrated between BET & PNA Limited # of BET beneficiaries PNA countries already coordinate Potential surplus for side payments to PNA to limit vessel days 20
Property Rights Can benefits be captured? ~80% of tuna in WCPO caught in EEZs Effectively limited entry fishery Vessel Day system creates weak property right 21
Property Rights PNA water cover major fishing grounds Substantial catches outside waters though Targeted BET Catch (mt) 500 1,000 1,500 2,000 PNA Country FALSE TRUE 22
Property Rights Targeted effort relatively stable 1e+06 Total Hooks 5e+05 Indonesia Vietnam Solomon Islands 0e+00 Vanuatu Paracel Islands Spratly Islands Japan Papua New Guinea Micronesia Palau 2000 2002 2004 2006 2008 2010 2012 2014 Year 23
Property Rights Bycatch effort increasing 125000 Indonesia 100000 PS FAD Days 75000 50000 25000 0 Papua New Guinea Palau Solomon Philippines Vietnam Islands Paracel Spratly Micronesia Tuvalu Islands 2008 2010 2012 2014 Year 24
Conclusions A Coaseian bargain seems feasible More work needed on FAD effect, risk, effort dynamics More detailed modeling and institutional design needed next FAD-free days can provide economic and ecological benefits Creates framework for conservation investment as well Coaseian bargain provides incentives for success 25
Thank You Special thanks to WWF, TNC, Gary Libecap, Cody Wilgus, and Lennon Thomas, Dale Squires Questions? 26
Bigeye Background Pons et al. 2016 27
Bigeye Background WCPO skipjack fishery supplies canned tuna to the world Use purse seines around Fish Aggregating Devices (FADs) Sells for $2,000/MT Mean bigeye tuna bycatch rate of ~5% (juveniles) 28
The Problem SKJ and BET parties have no incentive to reform Costs SKJ money with no benefit to them SKJ bycatch eats up BET conservation We propose a Coaseian solution to the problem 29
The Bargain Could this actually work? Leverages existing systems Lowers transaction costs 56% of BET bycatch in PNA EEZs Feasibility aside, WTP must be WTA First goal is to establish whether the numbers add up! 30
Who Gets Paid? 20000 MT of Tuna 15000 10000 Targeted Bigeye Bycatch Bigeye 5000 0 US TW PG KR ES PH MH JP CN ID Flag 31
Who Pays? 20000 MT of Tuna 15000 10000 Targeted Bigeye Bycatch Bigeye 5000 0 JP KR TW ID CN US PH PG ES MH Flag 32
Works Cited 33