MEASURING PRODUCTIVITY AND ITS COMPONENTS FOR FISHERIES: THE CASE OF THE ALASKAN POLLOCK FISHERY, 1994–2003

Abstract Traditional productivity measures have been much less prevalent in fisheries economics than other measures of economic and biological performance. It has been increasingly recognized, however, that modeling and measuring fisheries' production relationships is central to understanding and ultimately correcting the repercussions of externalities and poorly designed regulations. We use a transformation function production model to estimate productivity and its components for catcher–processors in the Bering Sea and Aleutian Islands pollock fishery, before and after the introduction of a cooperative system that grants exclusive harvesting privileges and allows quota exchange. We also recognize the roles of externalities from pollock harvesting by incorporating data on climate, bycatch, and fish biomass. We find that productivity has been increasing over time, that many productive contributions and interactions of climate, bycatch, and fishing strategies are statistically significant, and that regulatory changes have had both direct and indirect impacts on catch patterns and productivity.     

Over-aging — Are present-day human populations too old?

This paper investigates the problem of an “optimum population” concerning age structures in a 3-period OLG-model with endogenous fertility and longevity. The first-best solution for a number-dampened total social welfare function, including Millian and Benthamite utilitarianism as two extreme cases, identifies the optimal age structure, which generally fails in laissez-faire economies. As individuals do not internalize the effect of longevity on life-cycle income, they over-invest in health. Additionally, they choose a non-optimal number of offspring. A calibration exercise for 80 countries emphasizes that the over-aging of populations crucially depends on social preferences and on observed age structures. Interestingly, it appears that, unlike taxes on health expenditures, taxes or subsidies on children to decentralize the first-best solution are sensitive to social preferences. Still, with the introduction of sufficiently large positive externalities of health expenditures or of individuals who do not fully internalize the effect of health efforts on longevity, taxes might become subsidies on health efforts to avoid an under-investment in longevity.     

CREATION OF MARINE RESERVES AND INCENTIVES FOR BIODIVERSITY CONSERVATION

Abstract Despite a number of benefits, marine reserves provide neither incentives for fishermen to protect biodiversity nor compensation for financial loss due to the designation of the reserves. To obtain fishermen's support for marine reserves, some politicians have suggested that managers of new marine reserves should consider subsidizing or compensating those fishermen affected by the new operations. The objective of this paper is to apply principal–agent theory, which is still infrequently applied to fisheries, to define the optimal reserve area, fishing effort, and transfer payments in the context of symmetric and asymmetric information between managers and fishermen. The expected optimal reserve size under asymmetric information is smaller than that under symmetric information. Fishing efforts encouraged with a transfer payment are always less compared to those without payment. This reflects the fact that as the manager induces the fishermen to participate in the conservation program, the fishermen will take into account their effects on fish stock by decreasing their effort. Examples are also supplied to demonstrate these concepts.     

AN ANALYSIS OF TRANSITION FROM LIMITED ENTRY TO TRANSFERABLE QUOTA: NON-MARSHALLIAN PRINCIPLES FOR FISHERIES MANAGEMENT

Static analysis shows that individual transferable quotas (ITQs) can dramatically increase economic efficiency comparable to a limited entry (LE) management by releasing excess capital. However, the transition from LE to ITQ management presents further efficiency questions. This paper shows that the rate of retirement of excess capital is determined by the opportunity cost of holding ITQ harvest rights on cost inefficient vessels. While restructuring is immediate with perfect foresight, delayed exit occurs with uncertainty and low opportunity costs of holding ITQ. Nearly cost-efficient fishers anticipate increasing their payoff by waiting for higher ITQ prices, e.g., game theoretic principles rather than static Marshallian principles apply. The results raise policy questions about allocating ITQ to incumbent fishers at no charge. The Mid-Atlantic surf clam and ocean quahog fishery which switched from LE to ITQ management in 1990 is analyzed as a case study. Results show that a large surplus was possible but unattained under LE management but also that adjustment has been slow and costly, consistent with the results of this paper.     

MODELING A RIGHTS‐BASED APPROACH FOR MANAGING HABITAT IMPACTS OF FISHERIES

ABSTRACT. Limiting adverse consequences of fishing on essential fish habitat has emerged as a key fishery management objective. The conventional approach to providing habitat protection is to create MPAs or marine reserves that prohibit all or certain types of fishing in specific areas. However, there may be more cost‐effective and flexible ways to provide habitat protection. We propose an individual habitat quota (IHQ) system for habitat conservation that would utilize economic incentives to achieve habitat conservation goals cost‐effectively. Individual quotas of habitat impact units (HIU) would be distributed to fishers with an aggregate quota set to maintain a target habitat “stock.” HIU use would be based on a proxy for marginal habitat damage. We use a dynamic, explicitly spatial fishery and habitat simulation model to explore how such a system might work. We examine how outcomes are affected by spatial heterogeneity in the fishery and the scale of habitat regulation. We find that the IHQ system is a highly cost‐effective means of ensuring a given level of habitat protection, but that spatial heterogeneity and the scale of regulation can have significant effects on the distribution of habitat protection.     

THE EFFECTS OF ITQ IMPLEMENTATION: A DYNAMIC APPROACH

ABSTRACT. This paper investigates the intertemporal effects of introducing Individual Transferable Quota, ITQ, fishery management programs on stock size, fleet size and composition, and returns to quota holders and to vessel operators. Theoretical analysis is conducted using a specific version of a general dynamic model of a regulated fishery. It is demonstrated that the effects will differ depending upon the prevailing regulation program, current stock size, and existing fleet size, composition and mobility and upon how the stock and fleet change over time after the switch to ITQs. The paper expands upon previous works by modeling the dynamics of change in fleet and stock size and by allowing for changes in the TAC as stock size changes, by comparing ITQs to different regulations, and by allowing the status quo before ITQ implementation to be something other than a bioeconomic equilibrium. Specific cases are analyzed using a simulation model. The analysis shows that the annual return per unit harvest to quota owners can increase or decrease over the transition period due to counteracting effects of changes in stock and fleet size. With ITQs denominated as a percentage of the TAC, the current annual value of a quota share depends upon the annual return per unit of harvest and the annual amount of harvest rights. Because the per unit value can increase or decrease over time, it is also possible that the total value can do the same. Distribution effects are also studied and it is shown that while the gains from quota share received are the present value of a potentially infinite stream of returns, potential losses are the present value of a finite stream, the length of which depends upon the remaining life of the vessel and the expected time it will continue to operate.     

Setting expediting repair policy in a multi-echelon repairable-item inventory system with limited repair capacity

Inventory systems with limited repair capacity are affected by congestion externalities, caused by use of a shared service. There is incompatibility between individual and system optimisation in considering congestion externalities. Three models are described that investigate the congestion effect in a multi-echelon inventory system which has two modes of repair, each with a limited repair capacity. An expanding repair policy employed by the bases in order to choose which repair mode to use is described and compared with different expediting policies related to congestion externalities. The expanding repair policy that considers congestion externalities was found to lead to better system performance measurement than an expanding policy with no congestion. The results of the numerical experiment indicate that the model that ignores congestion externalities—that is, the model that measures each base as an individual—leads to poorer performance measurement for every expediting repair policy, and particularly for the optimal expediting repair policy.     

Regional economic impacts of fish resources utilization from the Barents Sea: Trade-offs between economic rent,employment and income

A multi-objective programming model has been developed to investigate the trade-offs among regional employment, regional income, and economic rent of the North Norwegian cod fisheries in the Barents Sea, where all vessels are regulated by an individual quota system. Fishery managers are confronted with the problem on how best to allocate the total allowable catch (TAC) among four vessel groups. It is apparent that depending on how fishery managers view the importance of each objective, the desirable allocation of TAC will differ. Therefore, the trade-offs information can be very useful to fishery managers indicating the relative “expensiveness” of trading one objective with another. Decision maps are generated depicting how the trade-offs between two objectives are affected by the third objective. Compromise solutions taking into account all three objectives will allocate the TAC to satisfy the maximum capacity of both the factory trawlers and the small-scale vessels with the remaining TAC distributed to the coastal fleet and fresh fish trawlers.     

Unequal connections

Empirical work suggests that social and economic networks are characterized by an unequal distribution of connections across individuals. This paper explores the circumstances under which networks will or will not exhibit inequality. Two specific models of network formation are explored. The first is a playing the field game in which the aggregate payoffs of an individual depend only on the number of his links and the aggregate number of links of the rest of the population. The second is a local spillovers game in which the aggregate payoffs of an individual depend on the distribution of links of all players and the identity of neighbors. For both class of games we develop results on existence and characterize equilibrium networks under different combinations of externalities/spillovers. We also examine conditions under which having more connections implies a higher payoff.     

ENTRY AND EXIT OF LABOR AND CAPITAL IN A FISHERY

ABSTRACT. Exit and entry of fishermen, as well as vessels, is modeled explicitly. If the speed of exit and entry of fishermen is less than instantaneous the wage rate varies with the fortunes of the fishing firms and affects the endogenous labor supply creating a second transmission mechanism from profits to effort. There are realistic cases where this mechanism has important effects on the stability of the dynamic system and on the effects of taxes (subsisdies) on the size of the fish stock. If labor supply depends negatively on the wage rate, the immediate effect of an increase in the tax rate is to increase effort and harvest. This condition makes it also more probable that the dynamic system is unstable. In those cases where the dynamic system is unstable the increase in the tax rate increases overexploitation not only in the short‐term but also in the long‐term.     

CONFLICT AND COOPERATION IN UTILIZING A COMMON PROPERTY RESOURCE

Noncooperative games are used to demonstrate that, while free riding is always an option, the “tragedy of the commons” is not inevitable. When the decision to cooperate or free ride is considered in a dynamic setting, there is no intermediate case where some cooperate and others free ride. The game is only stabilized in either full cooperation or full defection. The important factor in obtaining a cooperative outcome is the critical number of players that decide to cooperate. The concept of commitment is used to demonstrate the necessary and sufficient conditions for full cooperation. Although the analysis is based on a shared water resource, it can be extended to other natural resources with common costs and private benefits, especially in the cases where there are no international authorities or treaties that internalize the externalities involved in privatizing the resource.     

FISHERY SHARE SYSTEMS,ITQ MARKETS,AND THE DISTRIBUTION OF RENTS

Although, in most commercial fisheries, fishing crews are remunerated under a share system, the implications of share systems for individual transferable quotas markets have received relatively little attention. In this paper, we model the impact of extending crew shares of vessel operating costs to include payments for quota. Allocative efficiency is maintained as long as any share system is adopted consistently across the entire fleet. Making crews bear a share of quota costs, however, simply inflates the quota price: at market equilibrium the vessel owner's profit share is unaffected. Crews lose out if the vessel is leasing quota in, but gain if the vessel owner is a net seller of quota. We also consider the outcome if only net purchasers of quota involve crews in the cost of quota. Here, all vessel owners benefit, while all crews see a reduction in their earnings. These results are illustrated with a simple numerical example.     

Multicriteria analysis vs. externalities assessment for the comparative evaluation of electricity generation systems

Attributing costs to the environmental impacts of energy production and use could greatly assist in environmental planning because monetary values are capable of directly influencing energy decisions without changing the rules of the market. Despite the considerable progress made recently in the valuation of environmental externalities there is still an open debate about the reliability of the estimated damage costs. This paper is aimed at comparing the external costs calculated for a number of power plants using different energy sources with the outcome of a multicriteria analysis where environmental impacts are expressed in physical terms or on a qualitative scale. Similarities and disparities in the obtained rankings are identified and clarified on the basis of the fundamental principles of the two approaches. It is concluded that, although external costs do not accurately reflect the traditional value system of individual decision makers, they give suitable price signals and thus help in eliminating distortions of the current energy market.     

DEA-based predictors for estimating fleet size changes when modelling the introduction of rights-based management

The introduction of individual transferable quotas (ITQs) into a fishery is going to change not only the amount of catch a fleet can take, but often also changes the fleet structure, particularly if total allowable catches are decreased. This can have an impact on the economic, social and environmental outcomes of fisheries management. Management Strategy Evaluation (MSE) modelling approaches are recognised as the most appropriate method for assessing impacts of management, but these require information as to how fleets may change under different management systems. In this study, we test the applicability of data envelopment analysis (DEA) based performance measures as predictors of how a fishing fleet might change under the introduction of ITQs and also at different levels of quota. In particular, we test the assumption that technical efficiency and capacity utilisation are suitable predictors of which boats are likely to exit the fishery. We also consider scale efficiency as an alternative predictor. We apply the analysis to the Torres Strait tropical rock lobster fishery that is transitioning to an ITQ-based management system for one sector of the fishery. The results indicate that capacity utilisation, technical efficiency and scale efficiency are reasonable indicators of who may remain in the fishery post ITQs. We find that the use of these measures to estimate the impacts of lower quota levels provides consistent fleet size estimates at the aggregate level, but which individual vessels are predicted to exit is dependent on the measure used.     

AN INDICATOR FOR ECOSYSTEM EXTERNALITIES IN FISHING

Ecosystem externalities arise when one use of an ecosystem affects its other uses through the production functions of the ecosystem. We use simulations with a size‐spectrum ecosystem model to investigate the ecosystem externality created by fishing of multiple species. The model is based upon general ecological principles and is calibrated to the North Sea. Two fleets are considered: a “forage fish” fleet targeting species that mature at small sizes and a “large fish” fleet targeting large piscivorous species. Based on the marginal analysis of the present value of the rent, we develop a benefit indicator that explicitly divides the consequences of fishing into internal and external benefits. This analysis demonstrates that the forage fish fleet has a notable economic impact on the large fish fleet, but the reverse is not true. The impact can be either negative or positive, which entails that for optimal economic exploitation, the forage fishery has to be adjusted according to the large fish fishery. With the present large fish fishery in the North Sea, the two fisheries are well adjusted; however, the present combined exploitation level is too high to achieve optimal economic rents.     

Individual transferable vessel quotas and efficient restructuring of the primary harvesting sector

Over the last three decades most of the world's fisheries have been subject to management programs that have tried to limit the use of key fishing inputs. Inevitably, these restrictions have proven ineffective at preventing rent dissipation and stock depletion. More noteworthy is that fishers have subverted the intentions of these restrictions by adjusting the primary harvesting technology. This has led to an inefficient industrial structure characterized by capital stuffing on the part of each vessel, excess employment, an inefficient mix of vessels in the fleet, and too many vessels altogether.A promising means of encouraging more efficient primary harvesting is the individual transferable vessel quota that allocates a given catch to each vessel, thereby giving an incentive to catch the quota at least cost. This paper examines efficiency gains and potential industry restructuring from the introduction of an ITVQ into a fishery that was previously subject to input restrictions.Using data from the British Columbia salmon fishery, this paper estimates restricted cost functions for each of four different vessel types and simulates the operations of a market for ITVQs. The demand for quota comes from individual vessels and is found by differentiating the cost function with respect to the shadow price of quota. The market for quota is in equilibrium when the total demand for quota is equal to the fixed supply of quota set by the government. This implicitly defines the equilibrium quota rental price. Results show that the ITVQ could generate unit rental prices for quota between 31 and 93 cents per pound (18–53% of the average landed price).Using this simulated price, each vessel's costminimizing strategy is defined and both low cost vessels (those that will buy quota) and high cost vessels (those that will sell quota and exit the fishery) are identified. Quota trades between the two groups result in efficiency gains. These include reduced capital stuffing, exit of less efficient vessel types, attainment of economies of scale, and an efficient composition of vessel types in the fleet. In aggregate these gains lead to an estimate of annual resource rent that is approximately equal to one third of the value of the catch.     

激励销售与准确预测的薪酬机制设计

由于销售人员具有比厂商更多的销售信息，厂商在制定生产计划时需要参考来自销售人员的市场预测。传统的薪酬机制在引导销售人员如实上报预测量方面存在严重不足。Gonik机制虽然可以部分地弥补这一不足，但仍然要由厂商先提供参考定额和相应奖金数值。本发展了一种不需要厂商提供参考定额值而直接由销售人员自己参与提出定额确定奖金并努力销售的薪酬机制。章论证了它的有效性，并导出了在设计合同参数时，需要注意的一些规则和约束，对实际操作有一定的指导意义。     

Optimal production run time for a deteriorating production system under an extended inspection policy

A deteriorating production system is subjected to random deterioration from an in-control state to an out-of-control state with a general shift distribution. In order to reduce the defective items, part inspection policy, under which production inspections are performed only at the end of the production run, and full inspection policy are both considered in the literature. Moreover, the former dominates the latter. Since the product produced towards the end of a production cycle are more likely to be defective, it can further economize the inspection costs that they are directly reworked without inspection. In this paper, we propose an extended product inspection policy for a deteriorating production system. Product inspections are performed in the middle of a production cycle, and after the inspection, all products produced until the end of the production run are fully reworked. Based on the model, we show that there exists a production run time and a corresponding unique inspection policy such that the expected total cost per item per cycle is minimized. Finally, numerical examples are provided to illustrate our extended inspection policy, and indicate that such product inspection model will reduce the quality-related cost than part inspection does.     

可再生能源配额制与碳排放权交易并行实施的政策效果

中国将同时实施可再生能源配额制与碳排放权交易,并以售电商为配额制的考核主体。本文建立两级供应链模型分析两者相互作用的政策效果。研究结果表明,引入碳排放权交易将导致火电价格上涨与可再生能源电力价格下降,有利于实现两者在同一价格水平竞争。然而,碳排放权交易亦将造成零售电价上涨,电力需求减少,且变化幅度与碳排放权价格和减排成本成正比。若配额比例与售电商差异性提高,在不影响环境成本内化于火电批发价格的同时,可降低售电商的转嫁成本。从而减小了可再生能源电力价格降幅与零售电价涨幅,并平抑碳排放权价格与减排成本上涨造成的电价与需求波动。     

PAST AND FUTURE MANAGEMENT OF A COLLAPSED FISHERY: THE BAY OF BISCAY ANCHOVY

Abstract We analyze the efficiency of the international management of the Bay of Biscay anchovy. While a sharing agreement between France and Spain has been in place since 1992, the fish stock collapsed in 2005 and the fishery closed from 2005 to spring 2010. We consider differences in production technologies between both countries and calibrate our model using data from 1987 to 2009. Our results suggest two sources of rent dissipation under the existing sharing agreement: inefficient quota allocation and production inefficiencies due to inflexible national regulations. We discuss several alternatives to improve management.