fisheries management

FISHERIES MANAGEMENT economic effi ciency and the concept of ‘maximum economic yield’

Tom Kompas • Given the problems with open access re- also requires that industry has an effective prop- sources, as well as the effectiveness of mod- erty right to the harvest, one that removes the ern fi shing technology, there are few fi sheries, incentive for a wasteful and ineffi cient ‘race to if any, that will not be both overexploited and fi sh’. For most fi sheries, a system of individual unprofi table unless they are managed effec- transferable quota (ITQ) is the best instrument to tively. For a fi shery to be economically effi - ensure this outcome. cient requires that management targets be set correctly, enforced effectively and delivered in a least cost and incentive compatible manner. Economic effi ciency in a fi shery From the economist’s point of view, the defi - • An effi cient outcome is important not only nition of economic effi ciency in a fi shery is because it protects fi sh stocks and guarantees straightforward. Concentrating on sustainable sustainability, but also because it assures that yields alone, economic effi ciency occurs when resources will be allocated to the fi shery cor- the sustainable catch or effort level for the rectly and in a way that maximises the returns fi shery as a whole maximises profi ts, or creates from fi shing. Ineffi cient fi sheries are plagued the largest difference between total revenues and by low profi ts and excessive boat capital the total costs of fi shing. This point is referred or fi shing capacity, with the all too familiar to as ‘maximum economic yield’ (MEY). For outcome of ‘too many boats chasing too few profi ts to be maximised it must also be the case fi sh’. that the fi shery applies a level of boat capital and other resources in combinations that minimise The traditional ‘command and control’ ap- the costs of harvest at the MEY catch level. The proaches to fi sheries management — ones that fi shery, in other words, cannot be overcapital- focus on input restrictions and total catch limits ized and vessels must use the right combinations — fail to provide the incentives for those who of such inputs as gear, engine power, fuel, hull fi sh to do so effi ciently and in a manner that gives size, and crew to minimise the cost of a given industry a long term stake in the future of the harvest. fi shery. These approaches often result in consid- There are several things to note about MEY erable effort creep and excessive and wasteful at the outset. First, for most practical discount competition, with both inappropriate levels rates and costs, MEY will imply that the equi- and combinations of inputs used to catch fi sh. librium stock of fi sh is larger than that associ- Maximising economic yield requires not only ated with ‘maximum sustainable yield’ (MSY), setting catch and effort levels appropriately, it as shown in the following section. In this sense the economic objective of MEY is more ‘conser- • Tom Kompas • +61 2 6272 2020 • [email protected] vationist’ than MSY and should in principle help

152 australiancommodities • vol. 12 no. 1 • march quarter 2005 fisheries management protect the fi shery from unforseen or negative Maximum economic yield environmental shocks that may diminish the fi sh A population. $ Second, the catch and effort levels associated Total cost with MEY will vary, as will profi ts, with a change High stocks in the price of fi sh or the cost of fi shing. This is as Low stocks it should be. If the price of fi sh increases it pays to exploit the fi shery more intensively, albeit at $R yields still less than MSY. If the cost of fi shing Total revenue rises, it is preferable to have larger stocks of fi sh $C and thus less effort and catch. Finally, as long as the cost of fi shing increases with days fi shed, as it generally will, MEY as $ a target will always be preferred to MSY and EMEY EMSY Effort of course to any catch or effort level that corre- Maximum economic yield (MEY) is the difference between the dollar sponds to stocks that are smaller than those asso- amounts of revenue and costs at the optimal effort level, or $R less $C. Note that MEY occurs at effort levels less than effort at maximum ciated with MSY. The reason is simple. Regard- sustainable yield and thus at stock levels that are larger than those less of what happens to prices and costs, targeting associated with MSY. catch and effort at MEY will always ensure that profi ts are maximised. Profi ts may be relatively nominal days fi shed. The total revenue curve is low when the price of fi sh is low and the cost drawn from a biological stock–recruitment rela- of fi shing is high, but profi ts will still be maxi- tionship, translated into effort units, showing the mised. With a biological target of MSY alone, relationship between effort and yield in dollar however, it is quite possible that profi ts will amounts. The larger is effort the smaller is stock be very small or even zero. The fi shery would size. Every point along this curve represents an thus be sustainable at MSY but not commercial, effort and yield combination that is sustainable, much less effi cient. A target where profi ts from with effort at MSY generating the largest total fi shing are zero cannot be a good target. revenue. The total cost curve is taken as the total cost of fi shing, assumed to be increasing and linear in effort, for convenience. Illustrating MEY MEY in fi gure A occurs at the effort level EMEY

The management structure, stock level and na- and corresponding value of catch $R that creates ture and extent of fi shing effort that generates the largest difference between the total revenue MEY depends on a combination of biological and total cost of fi shing, thus maximising profi ts, and economic factors. In particular, it depends given by the difference between $R and $C. The on the relationships between harvest, stocks and value of EMEY will change given a change in the recruitment and on the way in which fi shing price of fi sh, which shifts the total revenue curve behavior, revenue and costs relate to those up or down, or the cost of fi shing, which rotates factors. A simplifi ed representation of these the total cost curve. relationships is given in fi gure A, where it is Given prices and costs, fi gure A illustrates a assumed that there is no uncertainty about the point made above, namely that targeting MSY state of nature (more complete descriptions of will in this case generate very small profi ts. With bioeconomic models can be found in Grafton et a small increase in the cost of fi shing, these could al. 2004 and Hannesson 1993). easily go to zero — if so, this would replicate a Figure A illustrates a typical production- common property or open access equilibrium surplus model for the fi shery as a whole, even though a management regime was in place expressed in terms of the relevant economic and operating. relationships. The vertical axis is simply dollar Note as well that a profi t maximising move- amounts and the horizontal measures effort as ment away from effort at MSY toward effort at australiancommodities • vol. 12 no. 1 • march quarter 2005 153 fisheries management

MEY implies a smaller value of harvest. This over, as long as the right instruments to facili- is often the case with overexploited fi sheries tate adjustment are in place — instruments that — maximising profi ts requires less effort and allow for trade in secure and specifi c property smaller catches. The reason of course is that rights, such as the right to a share of harvest — it decreases in effort, which also increases the stock follows that decreasing the size of an overex- of fi sh in the future, decrease the cost of fi shing ploited fi shery will make no one worse off and more than the corresponding fall in revenue. many better off by compensating those that leave Nothing has been said until now about boat the fi shery for their lost income, while providing numbers. Indeed, the graph basically assumes more profi t for those that remain in the fi shery. that all boats are the same and there is a rough That is the nature of an optimal position given correspondence between boats and nominal by MEY. days fi shed. In this context it is natural to assume Attempts to extend resource use and partic- that a move from MSY to MEY would imply a ularly employment well beyond MEY are com- decrease in boat numbers, with catch per unit of mon, and often disastrous. Experience in Can- boat increasing. It is also the nature of an optimal ada’s Atlantic fi sheries provides a striking ex- result that those that lose from a reduction in boat ample. Subsidies provided by the Canadian Gov- numbers can be more than compensated for by ernment — with a specifi c mandate to maximise the increased profi ts that MEY generates, at least employment levels in the industry — greatly in principle. In any case, it is easy to see that extended the amount of resources applied to effi ciency requires that at MEY the measure of these fi sheries. Indeed, even as early as 1970 it effort corresponds with a total boat capital in the was ‘estimated that Canada’s commercial catch fi shery that is just suffi cient to obtain the required in 1970 could be harvested by 40 per cent of the catch at minimum cost. Thousands of boats each boats, half as much gear and half the number of

fi shing a day could generate EMEY but clearly that fi shers’ (Atlantic Groundfi sh Fisheries 1997, pp. excess capacity would be ineffi cient. 14–15). This is wasteful in itself, but dwindling stocks and the eventual collapse of the Atlantic fi sheries Why MEY? — in large part caused by overfi shing — even It has already been shown that MEY generates further increased the government’s burden to maximum profi ts and that this outcome is guar- maintain incomes. In 1990, for example self- anteed regardless of the price of fi sh or the cost employed fi shers received $1.60 in unemploy- of fi shing. Also, MEY is ‘conservationist’ in the ment insurance benefi ts for every dollar earned sense that stocks will be larger than at MSY, and in the fi shery, and the ‘adjustment programs’ this in itself can confer enormous benefi ts to the associated with the collapse of the fi sheries fi shery and its ecosystem. It would also protect cost the Canadian taxpayers over C$3 billion in the fi shery against large negative shocks to the the 1990s alone (Atlantic Groundfi sh Fisheries fi sh population, since larger stock levels gener- 1997, pp. 14–22). ally imply greater resilience in the face of these shocks. But there is another, equally compelling, What is wrong with input controls? reason for pursuing MEY: resource allocation. For management of a fi shery to be effective in

Effort levels larger than EMEY would imply more the sense that catch and stocks are maintained at boats, days at sea, gear, crew, bait and all of the desired levels, there must be either direct or indi- other inputs used in fi shing — resources that rect control over catches. Management through could be used instead in alternative employment. output controls involves explicit catch targets This is what economists mean by effi ciency in and direct enforcement of those targets. Manage- general terms — for the economy as a whole. ment through input controls also involves some If too many resources are being expended in implied catch target. The fact that the catch fi shing, too few are being used elsewhere. More- target is sometimes only vaguely defi ned is one

154 australiancommodities • vol. 12 no. 1 • march quarter 2005 fisheries management of the reasons that input management regimes All of this can be nicely illustrated by a look at are often not successful. the Australian northern prawn fi shery, providing The real problem, however, is the inability a good example of how input controls and the of input controls to control effort in the fi rst resulting ‘race to catch’ can generate very inef- place. The moment control of a particular input fi cient outcomes. Over the past thirty years the becomes the policy instrument, operators have fi shery has been managed by a series of input an incentive to substitute other inputs in a way controls, including seasonal closures, a move that will change the relationship between effort from quad to twin nets, engine power and hull and catch. As well, technological advance and limits and, most recently, gear reductions and improvements in knowledge provide other back- restrictions. In all cases the limits to fi shing ground reasons for the relationship to change, power have been temporary at best. Indeed, A- constantly. unit (a rough measure of hull capacity and engine A manager relying on input controls is in power) limits in place in the 1990s resulted in constant competition with the imagination, a clear substitution toward unregulated inputs, energy and inventiveness of each operator in specifi cally gear. This substitution is illustrated the fi shery and the full technological backup of in fi gure B, where average headrope gear length a modern economy. Effort creep is inevitable. clearly increased throughout most the 1990s,

In terms of fi gure A, attempting to target EMEY while A-units fell. can only be successful in the very short run, The implication of this countermovement in with effort creep moving the fi shery to the right A-units and gear is twofold. First, restricting A- and thus dissipating profi ts, or decreasing the units in fact did not control effort, since boats distance between total costs and revenues. simply increased effort by using other inputs, More important to the general lack of success including gear, more intensively. Second, the of input management regimes are two charac- forced change in input combinations, inducing teristics of the incentives that they provide for boat owners to use different proportions of gear operators in the fi sheries. First, as mentioned, to A-units resulted in considerable loss in boat controls on one or more inputs provide an imme- effi ciency throughout the fi shery (Kompas and diate incentive for operators to substitute uncon- Che 2002). In the banana prawn section of this trolled inputs. Second, input control regimes fi shery, technical effi ciency for the fl eet as a provide no sense of ownership or stewardship of whole fell from 75 per cent in 1994 to 68 per the fi sheries resource. There are no guarantees cent in 2000 (Kompas, Che and Grafton 2004). in any input control management regime except For individual operators in the fi shery, the aggre- the right of access to the fi shery under certain gate response to input restrictions thus led to guidelines. Operators are encouraged by these rules to compete for catch within those guidelines, Input substitution in the northern and if one operator refuses to expand effort, B prawn fishery while others do, that operator will be worse Average A-units Average gear length off. Unfortunately, if all operators increase per boat effort, all are made worse off through a fall in 430 26 profi ts and the fi shery remains overexploited — the proverbial ‘tragedy of the commons’. 420 24 The management response in this environment is to continuously and repeatedly fi nd ways to cut effort (for example, gear reductions, area 410 22 and seasonal closures, vessel buyback schemes, etc.), ‘winding the fi shery down’ over time to a small number of boats or days fi shed, all making no. m zero (or near zero) profi ts. 1988 1991 1994 1997 2000 australiancommodities • vol. 12 no. 1 • march quarter 2005 155 fisheries management much lower profi ts than would otherwise have only four years for effort creep to overcome the been realised. initial fall in fi shing power in response to the Each of the changes made in the management imposed move from quad to twin gear in 1987. regime in the northern prawn fi shery — seasonal The recent removal of A-unit restrictions in favor and area closures, A-unit restrictions and most of gear reductions will logically imply, given recently gear reductions — was made in recog- the race to fi sh incentive, that boat owners will nition that the system it replaced had failed to now increase the size of their vessels and engine constrain effective effort and the inevitable power, spurring more and deeper compensatory effort creep suffi ciently to protect prawn stocks. cuts in gear (or some other input) in the future. Where effective effort was reduced by manage- Inevitably the fi shery ‘winds down’. ment change, the primary reduction was short Total days fi shed in 2002 were already 55 per lived. cent of the 1998 level and far below the fi shery This outcome, and one of the primary reasons peak in days in 1983. Recent estimates show that for it, is illustrated in fi gure C. Fishing power, MEY in the tiger prawn component of the fi sh- measured as the average catching ability of a eries is roughly 60 per cent and 30 per cent below boat in a day’s fi shing (compared with a 1970 actual days for 2000 and 2001, respectively, and base — the fi gures used are those denoted ‘basic about 28 per cent below actual days in the 2003 high’ by CSIRO, see Dichmont et al. 2003) has fi shery. In other words, even the recent short- risen rapidly and consistently over time. The ening of the season and further large reductions rise in fi shing power is the result of continuous in gear units have not been suffi cient to ensure improvements in technology, input combina- economic effi ciency or MEY (Rose and Kompas tions and knowledge. 2004). The acquisition of improved scientifi c knowl- edge of the fi shery, along with the observation of declining catches has made it increasingly clear Implementing MEY over the past few years that prawn stocks are not If targeting EMEY in fi gure A with input controls being conserved and catches and effort are not to obtain MEY is not effective or even desirable, being controlled. the alternative is to target catch at (for example)

Although the combination of recent policy the value $R. It is important to recognise, how- changes appears to have temporarily slowed the ever, that aggregate catch controls can be just as increase in fi shing power as well as contributing ineffective as input controls, resulting in ‘race to to a rapid fall in total days fi shed, experience fi sh’ behavior. Even if the total amount of catch suggests that this will only be temporary. It took is fi xed, there is still an incentive for boat owners to overinvest in fi shing capacity in order to obtain a larger share of the catch, again moving Fishing power and effective effort in the fi shery past EMEY. C the northern prawn fishery With effort creep an inevitable outcome of 160 input controls, in any circumstance, economists 600 thus argue for catch controls combined with an 140 500 ITQ system to obtain or implement MEY. ITQs 120 confer an individual, transferable, harvesting 400 100 right so that each vessel is guaranteed a share 80 of the catch. The immediate impact of this, of 300 Fishing power Effective 1970 60 course, is to remove any ‘race to fi sh’ incentive 200 days fished 40 (except where fi shing results in stock depletion 100 over the course of the season, implying that even 20 though there is a catch entitlement it will be index ’000 days less costly to catch ‘earlier’ in the season when 1972 1978 1984 1990 1996 2002 stocks are more abundant, or ahead of other

156 australiancommodities • vol. 12 no. 1 • march quarter 2005 fisheries management vessels. This problem is usually addressed by will thus be willing to pay more for quota, with setting seasonal closures correctly or through the resulting transfer of quota from high to low quota dated by period — for example, weekly marginal cost producers increasing economic — with a market for trade across periods.) effi ciency overall — essentially fi shing inputs Where there is no incentive to race to fi sh, are distributed to those who use them best. there is no reason for effort to increase beyond In other cases, quota trade allows vessels to

EMEY, and MEY can be effectively targeted. The compensate for catches that are larger or smaller regulator simply needs to set total allowable than planned or prior quota holdings. These effi - catch (TAC) correctly. ciency gains (or what amount to cost reductions) ITQs have been in place and have worked well can be substantial, even in fi sheries where the for decades in fi sheries throughout the world, TAC is not binding in aggregate. In the Austra- including New Zealand, Iceland, the United lian south east trawl fi shery, for example, where States, Australia and Canada (Hannesson 2004). TAC undoubtedly does not correspond to MEY These schemes have generally established, as (Gooday 2004), the cost savings from quota in the British Columbia halibut fi shery, signifi - trades are estimated to be 1.8–2.1 cents a kilo- cant gains, not just in cost savings but also in gram for every 1 per cent increase in the volume enhanced revenues (Grafton, Squires and Fox of quota traded (Kompas and Che 2005). 2000). Second, instead of investing in boat capacity Along with creating effective property rights to catch fi sh before others do, with a guaranteed to fi sh, ITQs confer a number of other related harvesting right, boat owners can instead concen- benefi ts. First, since these rights are tradable, trate on investments that lower the per unit costs market forces will generally distribute quota of fi shing. This is a major benefi t. With input among fi shers that value the right most highly. controls, technological change — new boats, a Vessels that have lower marginal costs of fi shing better engine, more effi cient gear, try nets, GPS, etc — is harmful in the sense that the resulting effort creep through increased fi shing power lowers fi shery profi ts and endangers stocks. In Box 1: Impact of uncertainty some cases, input restrictions are in fact designed to prevent the very adoption of such new tech- Setting effort creep aside, it should be noted that nologies, that under other circumstances may in a deterministic world (with no uncertainty) there would be no difference in outcomes be benefi cial or effi ciency enhancing, simply to between a catch or effort control, as long as the control effort. correspondence between input restrictions and With output controls and ITQs alternatively, effort levels is known exactly and is perfectly boat specifi c technological change is good, in enforceable. With uncertainty, and again that it lowers the costs of fi shing and increases setting effort creep aside, in cases where there profi ts, with no effect on stocks or the cost of is more variance in the stock–recruitment rela- fi shing of any other vessel in the fl eet that does tionship than in catch per unit of effort (CPUE), not yet adopt the new technology. effort controls will be preferred. If there is A third benefi t of ITQs is that a good number more variance in CPUE relative to the stock– of area and seasonal closures, common to input recruitment relationship, then output or catch controlled fi sheries, can be done away with. controls will dominate, generating less vari- ance in profi ts. For the tiger prawn component Spawning stocks must naturally be protected of the northern prawn fi shery, the latter is the and marine reserves can almost always be case — output controls are the preferred instru- justifi ed even on economic grounds (Grafton, ment (Kompas and Che 2004). A clear evalua- Kompas and Lindenmayer 2005), but area and tion of all of the specifi c, or detailed, alternative seasonal closures used to simply limit effort fi shery management instruments is contained are unnecessary under an ITQ system and often in Gooday (2004). economically harmful in any case. By elimi- nating these controls, vessels can fi sh when the australiancommodities • vol. 12 no. 1 • march quarter 2005 157 fisheries management weather permits and perhaps more importantly from fi shing). However, highgrading occurs in match the harvest throughout the year to market only some circumstances. Those circumstances conditions, generating the highest price for their are often predictable. As well, provided that catch. In general, unlike with input restrictions, highgrading can be estimated, the TAC can be output controls and ITQs allow fi shers to choose matched with desired mortality. Unless the rela- the right mix of inputs, and the time and manner tionship between fi shing costs and the price to fi sh — all of which is cost reducing and effi - differential between grades changes substan- cient. tially, the match will be valid over time. A fi nal benefi t of ITQs is that they allow for There can be no doubt that waste occurs autonomous adjustment of the fi shing fl eet, with through highgrading, but that is simply a cost operators voluntarily able to ‘cash out’ by selling of management to be assessed against the other their quota to more profi table vessels. Indeed, if costs of management, as well as the benefi ts — implemented correctly, an output control and and compared to the costs and benefi ts of other ITQ system that targets MEY will generate the management instruments. More importantly, largest possible (marketable) asset value for the level of highgrading enters the manage- those who have the right to fi sh, refl ected in a ment decision once only. Since the incentive to high price for each unit of quota. Fishers are thus highgrade is a function of the cost of fi shing and compensated for exiting the fi shery, without the the price differential between grades, it is not need for government intervention. This is in something that increases over time in a way that stark contrast to input controlled and overcapi- erodes the practical meaning of a catch quota, or talised fi sheries where fi shers lobby heavily for in the way in which effort creep subverts input government vessel-buyback schemes, which are controls (Rose and Kompas 2004). costly and often are only temporarily effective at When considering variations in stock abun- reducing capacity. dance, the traditional arguments against catch For catch controls and ITQs to be successful controls (and with it ITQs) are clear. With output there must be adequate monitoring and enforce- controls, managers face a problem in setting the ment. This too can be costly, although there is no TAC when abundance varies between seasons necessary reason for this cost to be a government and is unknown at the beginning of the season. responsibility. Under an ITQ system, fi shers are By setting the TAC too high the manager runs keen to protect their secure property rights and the risk that fi shing pressure on stocks will be it is not uncommon for monitoring to be at least excessive if a low abundance season occurs. partially funded by industry (Grafton et al. 2005). By setting the TAC more conservatively, the Even when government pays for monitoring and manager guarantees the loss of potential profi ts enforcement, this cost is likely to be comparable if the season is one of high abundance. Indeed, to the cost of monitoring and enforcing effort not only is the problem well recognised, it is controls, not to mention the cost of any resulting often cited as a primary reason for preferring effort creep that goes with input restrictions. input controls. Similar arguments can be made about prob- What is not so well recognised, however, is lems with highgrading and variations in stock that essentially the same problem affects the abundance. Highgrading will most likely occur setting of input controls. To set effort at the in long lived or fast growing species where the optimal level, the manager needs information price differential between high and low grade on abundance, catch per unit effort, the value fi sh is relatively large. With highgrading, a key of catch and the cost of effort. Setting input difference between input and output controls is controls too tightly leads to loss of potential in the relationship between the policy instrument profi ts in seasons of high abundance. Setting and the policy objective. For output controls, input controls too generously leads to excessive the possibility of highgrading means that the investment and effort and excessive catch. The policy instrument (TAC) may not always match long term consequences are pressure on future the policy objective (a given level of mortality stocks and dissipation of potential profi t.

158 australiancommodities • vol. 12 no. 1 • march quarter 2005 fisheries management

In principle, the type of information needed Under such a system, technological change to make an effi cient choice using input controls lowers the cost of fi shing, rather than endan- does not vary much from that needed to make the gering stocks through increased fi shing power. In choice using output controls. There is really no addition, by providing a secure and easily trans- argument for input controls on this basis. Careful ferable property right, ITQs result in increased assessments of stock abundance, including capital values to fi shing entitlements. Quota where needed, fi shery independent surveys and passes from high to low marginal cost producers, pre-season and in-season sampling, are manda- increasing effi ciency, and maximising fi shery tory under any management regime. If the cost profi t generates the largest possible asset value of obtaining this information does vary under for quota holders. Lowering the TAC when condi- different regimes, or with different management tions warrant also results in relatively seamless instruments, a case has to be made in terms of a and autonomous fi shery adjustment through the comparison of these costs, against all the other exchange of quota holdings, generally passed to costs and benefi ts of alternative management more effi cient vessels that can afford to pay rela- systems. tively more for each unit of quota. In some cases, ITQs can be more costly to administer and enforce than other schemes and Concluding remarks highgrading will always be a concern. However, Economic effi ciency in a fi shery, or pursuing the establishment of private property rights with MEY, is important. It not only helps protect the ITQs, and the desire to protect them, also gener- fi sh population, by ensuring that stock levels are ates incentives for self policing and conserva- larger than those associated with the traditional tion. The cost of an ITQ system must also be MSY target, it also guarantees that resources compared with the costs associated with alter- will be allocated to the fi shery correctly and in native management regimes. The cost of effort a manner that maximises profi t. Management creep under an input-restricted management regimes that attempt to extend the amount of regime (in addition to the cost of monitoring resources devoted to the fi shery beyond MEY and enforcement), for example, can be far more only generate a system with excess boat capital excessive than the cost of any comparable rights and lower returns from fi shing. based fi shery. In many cases — especially those where input restrictions fail to prevent effort creep — the fi shery simply ‘winds down’ to a state where References total fi shing days are severely limited and asset Atlantic Groundfi sh Fisheries, 1997, Report of values and profi ts are low, with industry repeat- the Auditor General of Canada to the House edly calling for government assistance or some of Commons, Minister of Public Works and sort of vessel buyback scheme to restore profi t- Government Services, Ottawa. ability. Dichmont, C., Bishop, J., Venables, B., Sterling, Implementing MEY requires that a system D., Penrose, J., Rawlinson, N. and Eayers, of effective property rights to harvest be estab- S. 2003, A New Approach to Fishing Power lished. Aggregate input or output controls alone Analysis and its Application in the Northern are not suffi cient to prevent a ‘race to fi sh’. Prawn Fishery, CSIRO Marine Research Given the inevitable problem with effort creep Report Prepared for the Australian Fish- in input controlled fi sheries, ITQs combined eries Management Authority and Fisheries with a TAC set by management to target MEY is Resources Research Fund, Canberra, August. the best option for most fi sheries. With a secure Gooday, P. 2004, Economic Aspects of Fish- property right to catch, there is no longer a ‘race eries Policy, ABARE Report Prepared for the to fi sh’ incentive, since catch is assured, and thus Australian Government Department of Agri- no tendency toward overcapitalisation in the culture, Fisheries and Forestry, Canberra. fi shery. australiancommodities • vol. 12 no. 1 • march quarter 2005 159 fisheries management

Grafton, R.Q., Squires, D. and Fox, K.J. 2000, Kompas, T. and Che, N. 2002, A Stochastic ‘Private property and economic effi ciency: a Production Frontier Analysis of the Austra- study of a common-pool resource’, Journal of lian Northern Prawn Fishery, ABARE Law and Economics, vol. 43, pp. 679–713. Report to Fisheries Resources Research Fund, ——, Adamowicz, W., Dupont, D., Nelson, Canberra. H., Hill, R.J. and Renzetti, S. 2004, The —— and —— 2004, A Bioeconomic Model of Economics of the Environment and Natural the Australian Northern Tiger Prawn Fishery: Resources, Blackwell, London. Management Options Under Uncertainty, ——, Kompas, T. and Lindenmayer, D. 2005, ABARE Report to the Fisheries Resources ‘Marine reserves with ecological uncertainty’, Research Fund, Canberra, August. Bulletin of Mathematical Biology, in press. —— and —— 2005, ‘Effi ciency gains and cost ——, Arnason, R., Bjørndal, T., Campbell, reduction from individual transferable quotas: D., Campbell, H.F., Clark, C.W., Connor, A stochastic cost frontier for the Australian R., Dupont, D., Hannesson, R., Hilborn, R., south east fi shery’, Journal of Productivity Kirkley, J., Kompas, T., Lane, D., Munro, G. Analysis, in press. R., Pascoe, S., Squires, D., Steinshamn, S.I., ——, —— and Grafton, R.Q. 2004, ‘Technical Turris, B.R. and Weninger, Q. 2005, ‘The effi ciency effects of input controls: evidence incentive-based approach to sustainable fi sh- from Australia’s banana prawn industry’, eries management’, Working Paper, APSEG, Applied Economics, vol. 36, pp. 1631–41. Australian National University, Canberra. Rose, R. and Kompas, T. 2004, Management Hannesson, R., 1993, Bioeconomic Analysis of Options for the Australian Northern Prawn Fisheries, Halsted Press, New York. Fishery: An Economic Assessment, ABARE —— 2004, The Privatization of the Oceans, Report to the Fisheries Resources Research MIT Press, Cambridge, Massachusetts. Fund, Canberra, August.

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