Presentation for Environmental Economics
Detailed Analysis About Policies Promoting Sustainable Fishery
EC371 - Group#2
INSTRUCTOR: Dr. Ekaterina Gnedenko
Jianke Jiang, Huruiqi Yang, Zehao Cao
Catalog
Meta Analysis;
Data Collection;
Data Analysis;
01
Background
Presenting a Problem Statement
02
Learned Theory Revision
Flashback on the open-access resource and terminology of market maximum sustainable yield
04
Summary and Discussion
Conclusion on our findings & Q&A
03
Analysis & Extension
Meta analysis on different policies that promote sustainable fishery
2
Background
EC371 - Group#2
PART 01
I: Introduction - Overfishing Do Exists
Ritchie, Hannah, and Max Roser(2023)
Link, and Watson(2019)
单位是ton/km^2
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Theory Revision
EC371 - Group#2
PART 02
I: Introduction - Maximum Sustainable Yield
Fishes is known as an open access resource with the characteristics of non-excludable but divisible, which can induce fishers overfishing and depleting fishing stocks(E1)
To prevent ecological collapse of fishery while maximizing the potential output, government aims to maintain the fish yield at maximum sustainable yield(MSY).
maximum sustainable yield: the maximum amount of surplus growth of a fish harvested keeping it at a constant stock size. According to Hannesson(2008), the surplus growth of a fish has a logistic growth function of its population, forming a bell shape graph. As Fishing effort is negatively related to fish stock, the general relationship of fishing effort and growth of a fish can be concluded as figure 2. Therefore determining the effort reaching for maximum sustainable yield.
Figure 1
Figure 2
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Eco-Labeling
Demand-side policy internalies the positive externalities associated with sustainable fishing techniques
Quotas
Setting a fixed share of stock that a fisher can harvest; It can be transferable or not based on relative legislation
License
Setting laws granting rights to fish to some fishers while banning others. The license are sold for a set fee
Additional Restriction
Adding additional restriction mechanism like banning large boats and sophisticated equipment or prohibit fishing fishes under certain length
Innovation & Education
Educating consumers
Sustainable Technology innovations
Taxation & Subsidies
Direct fiscal policies influencing fishers’ and consumers’ decision.
I: Introduction - Policy Instruments
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Policy Analysis
EC371 - Group#2
PART 03
II: Lit. Review - License
In the recreational fishing market in Pennsylvania, there is significant evidence showing raising prices in all kinds of fishing permits reduced the number of licenses purchased. (Richard, 2016)
However, demand for Residential fishing licenses was inelastic.(Sutton et al.) In order to achieve sustainable fishing by establishing licenses, the price needs to be set high enough.
However, governments cannot set license fee too high, as more fishers will start to disregard such regulations or policies(Sievanen et al.).
MC’
https://www.sciencedirect.com/science/article/pii/S0959378016300073#bib0370
Sutton, S. G., Stoll, J. R., & Ditton, R. B. (2001). Understanding anglers’ willingness to pay increased
fishing license fees.
Human Dimensions of Wildlife,
6(2), 115–130. doi:10.1080/
108712001317151958
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II: Lit. Review - License
Specialized fishing licenses, which limit fishers to specific types of fisheries, can help in retaining the overall fish population. Stoll (2016)
This approach contrasts with general licenses, which allow fishers to harvest a broad range of fishery resources. Less lucrative fisheries are fished less while the profitable ones are over-exploited
While specialized licenses help in conserving diverse fish species by controlling overfishing, they also lead to a concentration on more profitable fish types. This selective fishing can be destructive as it targets specific species, potentially leading to imbalances in marine biodiversity.
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Lit. Review - Subsidy
What are subsidies?
Loans
Tax incentive
Grants
What are the major subsidies currently exist?
capacity enhancing subsidies
beneficial subsidies
ambiguous subsidies
Capacity enhancing subsidies
Lower cost of fuels
Lower ship cost
Anything that lowers the cost of fishing and to increase the output of fishers.
Beneficial subsidies
Subsidies for research and development
Aims for sustainable development
Ecological development
Subsidies
Research Paper #1: Subsidy makes minor differences
There are little differences between biomass with and without subsidy in both economic case and ecological case. As shown in the graph. This means the choice of profit optimization or sustainable development is what matters.
“The biomass of hake, haddock, whiting, Nephrops, Norway pout, herring, plaice and sole showed very little difference when optimising with or without subsidies”
“The main changes occurred when optimising for profit”
Research Paper #2: Subsidy increases biomass
lnCatchit = α0 + α1lnSubsidyit + βXit + λi + νt + μit
“On average, for each 1% increase in the amount of fishery subsidies would reduce the fishery catch by 3.8%”
The subsidy was given based on a fishing moratorium system where in summer three major fishing areas in China “Bohai Sea, Yellow Sea, and East Sea” forbids fishing activity to let the biomass recover.
III. Individual Transfer Quota
What is ITQ?
- An Individual Transfer Quota (ITQ) is a quota imposed on individuals or firms by a governing body that limits the production of a good or service. (Chap 4 & 18)
- If the holder of a quota does not produce the maximum amount as set out by the quota, they may transfer the remaining portion to another party.
For example, the allowable cod catch each year is set equal to 20% of the “catchable biomass” of the stock. As the health of the cod fishery has improved, the allowable catch has increased—from 130,000 tons in 2007 to over 270,000 tons in 2020. (H&R)
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III. Effect of ITQ through Data
Figure 1 indicates the annual fish catch relative to mean catch in New Zealand
Fish catch is measured as annual catch divided by the mean catch over the stock's time series. A value greater than one means annual catch is higher than average over the entire time period.
From the figure 1, can we find in which year, the Quota was settled and how was its effect?
- it is obvious.
From Fiona and Mark’s articles, they gives us two important historical events. The first one is the concept of ITQ floats since 1984, and the second event is by1999 quota was available for 180 fish stock.
But is quota always effective?
Figure 1
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III. Limitation of ITQ through Data
This graph shows the ratio between total catch and total allowable catch by species in New Zealand.
Initial allocations of ITQs are typically free and based entirely or mostly on past catches, therefore fishers will rationally attempt to inflate their catch history, termed ‘fishing for history’. Basing quota allocation on catch history will also encourage speculative entry to fisheries while deterring vessels from exiting until ITQs have been introduced.
“In theory, these actions cause the pre-ITQ fishery to slide to a worse state than the bioeconomic equilibrium (higher effort, lower biomass, and lower profits than alternative fisheries)” - (Dinesen 2017)
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III. Limitation of ITQ
Effect of a quota adjustment restriction on quota fluctuation
According to the economic theory, the technology innovation will increase the output.
Over time, advances in technology will lead to an increase in the amount of fish caught if quotas is no adjustment restriction.
“Fig. 1 illustrates the relative annual change in quota (Qt − Qt−1)/Qt−1, when the quota is not restricted. The relative annual change in quota ranges from -0.17 to 0.37 and has a standard deviation of σ = 0.08. That is, the volatility in quota change is large and results in overcapacity. ”
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VI: Extension - Time Latency & Significance of Policy Persistency
Persistent policy enforcement on Rebuilding plan supervising sustainable fishery is necessary to induce efficient and healthy sustainable fishery. (Melnychuk, 2021)
The immediate effect of rebuilding plans induces sharp decline in the amount of fish caught without seeing any rebound from the biomass. However, consistent enforcement of rebuilding plan does have significant result on the biomass increase with less decrease in the fishing pressure.
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Summary & Discussion
EC371 - Group#2
PART 04
VI. Summary
1
Inelasticity of License Market
The inelasticity and potential lack of fishers’ cooperation makes licensing makes the license an ineffective way to control overfishing, but is a good method for generating income for other policies’ enforcement
2
Capacity enhancing subsidy
Targeting on increasing fishing capacity, subsidize fishermen on fuels they buy, to reduce the total cost for them to stay longer on the ocean negatively impact the environment and the biomass
3
Beneficial subsidy
Subsidies on investing in research and development on fishing industry including monitoring the change in biomass. aim to have sustainable development of the fishing industry and eco friendly
4
Setting a Feasible Quota is a goal
Quota is to set a maximum amount of allowable catch, but quantity will fluctuate with changing of time, environment and human effects. That the ITQ system strengthens supervision will achieve the goal of sustainability
5
Economic Benefit for Fishermen from Quota
An advantage of the ITQ system, from the point of view of the fishers, is that the revenues from the fishery remain with the fishers who hold the ITQs, rather than being collected by the government as in the case of a license fee.
6
Persistency is Crucial
Persistent effort on promoting sustainable fishery is necessary in order to see the outcome of the policies
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Thank You for Listening
EC371 - Group#2
PART 05
References
Branch, Trevor A. “How Do Individual Transferable Quotas Affect Marine ...” Wiley Online Library, 18 Feb. 2009, onlinelibrary.wiley.com/doi/10.1111/j.1467-2979.2008.00294.x.
Chai, P., Hu, Q., & Wei, X. (2021). Influence of fishery subsidies on fishing: Empirical test based on China’s provincial panel data. Fishes, 6(3), 40. https://doi.org/10.3390/fishes6030040
Dinesen, Grete E., et al. “Individual Transferable Quotas, Does One Size Fit All? Sustainability Analysis of an Alternative Model for Quota Allocation in a Small-Scale Coastal Fishery.” Marine Policy, Pergamon, 10 Nov. 2017, www.sciencedirect.com/science/article/pii/S0308597X1730146X#s0090.
Gibbs, Mark T. “The Historical Development of Fisheries in New Zealand with Respect to Sustainable Development Principles.” The Electronic Journal of Sustainable Development, vol. 1, no. 2, 2008, pp. 23–34.
Heymans, J. J., Mackinson, S., Sumaila, U. R., Dyck, A., & Little, A. (2011). The impact of subsidies on the ecological sustainability and future profits from North Sea Fisheries. PLoS ONE, 6(5). https://doi.org/10.1371/journal.pone.0020239
Link, Jason S., and Reg A. Watson. “Global ecosystem overfishing: Clear delineation within real limits to production.” Science Advances, vol. 5, no. 6, June 2019, https://doi.org/10.1126/sciadv.aav0474.
McCormack, Fiona. “Sustainability in New Zealand’s Quota Management System: A Convenient Story.” Marine Policy, Pergamon, 30 June 2016, www.sciencedirect.com/science/article/pii/S0308597X16303785#s0055.
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References
Ritchie, Hannah, and Max Roser. “Fish and Overfishing.” Our World in Data, 28 Dec. 2023, ourworldindata.org/fish-and-overfishing.
Sievanen, Leila, et al. “Weeding through assumptions of livelihood approaches in ICM: Seaweed farming in the Philippines and Indonesia.” Ocean & Coastal Management, vol. 48, no. 3–6, Jan. 2005, pp. 297–313, https://doi.org/10.1016/j.ocecoaman.2005.04.015.
Steinbach, D. (2016). A sustainable future for fisheries: how fiscal policy can be used to achieve SDG 14. International Institute for Environment and Development. http://www.jstor.org/stable/resrep16692
Stoll, Joshua S., et al. “How access to Maines fisheries has changed over a quarter century: The cumulative effects of licensing on resilience.” Global Environmental Change, vol. 37, Mar. 2016, pp. 79–91, https://doi.org/10.1016/j.gloenvcha.2016.01.005.
Sutton, Stephen G., et al. “Understanding anglers’ willingness to pay increased fishing license fees.” Human Dimensions of Wildlife, vol. 6, no. 2, Apr. 2001, pp. 115–130, https://doi.org/10.1080/108712001317151958.
Van Dijk, Diana, et al. “An Adjustment Restriction on Fish Quota: Resource Rents, Overcapacity and Recovery of Fish Stock.” Environmental and Resource Economics, vol. 67, no. 2, 4 Jan. 2016, pp. 203–230, doi:10.1007/s10640-015-9983-0.
Yap, Helen. “Faculty opinions recommendation of historical overfishing and the recent collapse of coastal ecosystems.” Faculty Opinions – Post-Publication Peer Review of the Biomedical Literature, 8 June 2010, https://doi.org/10.3410/f.3527968.3227070.
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