Types of management means to control individual decision makers

Management means to control individual decision makers may be separated along two dimensions as shown in the four field table below.

Modern fisheries management usually include combinations of two or more of the four categories presented in the table. While the first bioeconomists in the mid 50ies argued for the use of taxation (indirect control of input and/or effort), direct management means have shown to be easier to introduce and maintain. A list of several common management means are found here.

Long and short term properties

Normally (not to say always) management is first introduced after a long period of open access to the fishery. According to bioeconomic theory, assuming a standard model as in the previous lectures, a normal profit is earned by the participant in such fisheries. It is no additional profits (super normal profit) which justify the introduction of specific resource taxation. On the contrary: In an open access situation stock fluctuations will lead to profits below the normal and a demand of subsidies to cover such losses. Such subsidies are typically easier to introduce than to remove (barb effect), as it is difficult to measure when or if the situation of negative natural variation justifying the subsidies in the first place is changed.

On the other hand: If the fishers earn a profit above the normal, it will eventually increase the efficiency and thereby the total fishing pressure, effectively wasting the resource rent. In this situation it is possible to argue that tax on input or output (resource rent taxation) is sensible.

In an open access situation where the fishers earn a normal profit, it seems to be easier to introduce direct control that indirect control. There are obvious political reasons for this. However, if the direct management means contribute in reducing the fishing pressure and thereby releasing resource rent, increased effort is likely to follow. In the short run therefore the direct control seems to have the best properties in order to reduce fishing pressure, but if this regulation is successful taxation seems to be necessary if the situation of resource rent collection should last.

Tax on effort

Tax on harvest

Tax on catch could be examined as in the case of effort, by moving the focus from the cost to therevenue equation. Let now T symbolise the tax on unit of catch. The total revenue then is

TR(E) = (p-T) H(E)

p being the market price per unit of harvest (H). Again the taxation is indicated by red curve and line (in the figure on the right hand side). As seen from the figure the reduced revenue contribute in reducing the effort by moving the new open accessequilibrium to the ledt.

Limited entry

Limited entry could be imposed in a number of different ways, e.g. by licensing a limited number of fishing boats, by allowing a limited number of fishing days, closed season regulations, marine protected areas etc. The idea is to directly reduce the fishing effort and consequently achieving to collect resource rent. It is a major problem to measure effort and change in effort efficiency over time. The most critical problem however, is that a successful regulation most probably will undermine the positive effects by pushing resource rent back into building up even higher capacity of harvesting.Quota regulation

Quota regulation is together with technical regulations probably the most common management means. TAC (Total Allowable Catch) regulation has some attractive properties which have mad this type of regulation widespread. But quota regulations include more than the straight forward TAC-control. A TAC regulation could also be implemented in a number of different ways. A global TAC (without rules of distribution on participants) will create a rush for fishing where eventually the gain of the regulation (in terms of collected resource rent) is spent on building up more overcapacity related to what is needed in order to catch the quota. Individual catch quotas (IFQ; Individual Fishing Quota or IVQ; Individual Vessel Quota) were introduced in order to avoid this problem. By the introduction of these quotas a new problem emerges, namely: How to allocate the quotas? It has been argued by many economists that if these quotas are made transferable (ITQ; Individual Transferable Quotas) an optimal quota allocation could be obtained.

TAC without allocation

is a situation where the national TAC is not allocated and an open access situation exists until the TAC is reached and the fishery closes. The fishers respond by acquiring more gear and larger vessels so that they can catch more before the TAC is reached. The result is an intense race for fish, and thereby a wasteful catch production. Essentially the resource rent which could be obtained given successful TAC regulation is wasted on overusing input factors and increased overcapacity.

Allocated TAC

There are many ways to distribute shared of TAC on participants in the fishery. The shares may be given for free or sold in a market. The fishing rights (share of total quota) could be made transferable of illegal to trade. The rights could be limited in time and area or have no such limitations.The economic properties of the different quota systems will naturally vary a lot. In a market solution (by auctions or other methods of selling quota rights) the cost of obtaining a fishing right in a perfect market will equal the present value of resource rent which could be collected by the right.

A selection of FAO Documents on Fisheries Management

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Tax on effort corresponds to increasing the unit cost of effort. The total cost of fishing effort then is

TC(E) = (a +T) E

a being the previous unit cost of effort (includingopportunity costs of the input factors in effort production), E the fishing effort and T the unit tax on effort.

The figure to the left shows how this brings the intersection between the average revenue (AR) and marginal costs (MC) to occur at a lower level of fishing effort (lower panel). The previous costs are given by the green lines, while the new costs after taxation are shown as red lines. The distance between the green and red lines in the lower panel corresponds to the unit tax of effort.

Fisheries management