Resource Economics - Fall 2017
Christian Traeger
September 2017
Christian Traeger Resource Economics, UiO, Fall 2017 1
Renewable Resources
Fishery Economics
Christian Traeger Resource Economics, UiO, Fall 2017 2 Natural Resource Classifications
Natural resources can be classified as Renewable Resources: can regrow (replenish themselves). Usually biotic (living) resources. Fish, timber,... Non-renewable Resources: cannot regrow (at least within timescale relevant to human activity). Usually geological resources. Oil, coal, minerals, ...
Another classification Exhaustible: Scarce resources are exhaustible. Mostly used for non-renewables. Yet, also fish stocks are exhaustible. Inexhaustible: Resources that are available in (almost) unlimited supply (e.g. sunlight, wind,..)
Christian Traeger Resource Economics, UiO, Fall 2017 3
Fisheries
We analyze fisheries as an example of renewable resources a resource with particularly interesting dynamic behavior an economically important renewable resource a resource inviting substantial improvement in its management
If we had more time, we would next study forestry economics
Both are important because of sustainable use value and preservation value. We focus on use value. We discuss some aspects of valuation and preservation of tropical forests in ECON4910 - Environmental Economics (spring).
Christian Traeger Resource Economics, UiO, Fall 2017 4 FISHERIES - What are we talking about? How much do we catch and what do we use it for?
2014 Total World Capture: 93 (Marine: 82; Inland: 12) 2014 Total World Aquaculture: 74 (= farmed)
source: FAO’s SOFIA 2016 report (http://www.fao.org/3/a-i5555e.pdf)
SOFIA = The State of World Fisheries and Aquaculture
Christian Traeger Resource Economics, UiO, Fall 2017 5
MARINE FISH CATCHES A word of caution - numbers and uncertainty
Pauly and Zeller (2016) FISHERIES - What are we talking about? Where do we catch (most) fish?
source: http://worldoceanreview.com/wp-content/uploads/2010/10/k6 wk fangmengen regionen
Christian Traeger Resource Economics, UiO, Fall 2017 7
FISHERIES - What are we talking about? Who is catching (most) fish?
source: FAO’s SOFIA 2016 report (http://www.fao.org/3/a-i5555e.pdf)
Christian Traeger Resource Economics, UiO, Fall 2017 8 FISHERIES - What are we talking about? Which species?
source: FAO’s SOFIA 2016 report (http://www.fao.org/3/a-i5555e.pdf)
Christian Traeger Resource Economics, UiO, Fall 2017 9
FISHERIES - What are we talking about? State of world fisheries
source: FAO’s SOFIA 2016 report (http://www.fao.org/3/a-i5555e.pdf)
Christian Traeger Resource Economics, UiO, Fall 2017 10 FISHERIES
Some questions we will address 1 What is overfishing? 2 Why does overfishing occur? 3 How to regulate marine fisheries to prevent overfishing?
Christian Traeger Resource Economics, UiO, Fall 2017 11
Economic analysis of (over)fishing in a nutshell
Benefits of catching fish revenue from selling fish on market consumer surplus employment opportunities in fishery
Costs of catching fish direct cost of fishing effort (capital, labor) opportunity costs (“shadow price”) of catch: no further growth of individual fish reduced future stock size decreases future fishing benefits
When overfishing usually second item falls short in benefit-cost analysis.
Christian Traeger Resource Economics, UiO, Fall 2017 12 FISHERIES - What are we talking about? Norway is a major fish exporter
source: FAO’s SOFIA 2016 report (http://www.fao.org/3/a-i5555e.pdf)
Christian Traeger Resource Economics, UiO, Fall 2017 13
FISHERIES - What are we talking about? Norway’s catch in 2016
source: https://www.ssb.no/en/fiskeri
Christian Traeger Resource Economics, UiO, Fall 2017 14 FISHERIES - What are we NOT talking about? Value from keeping the fish in the sea! Example: Whale watching
source: http://worldoceanreview.com/en/wor-4-overview/how-the-sea-serves-us/the-bounty-of-the-sea/3/
Christian Traeger Resource Economics, UiO, Fall 2017 15
FISHERIES - What are we NOT talking about? Value from keeping the fish in the sea! Example: Snorkling & Diving. Guesstimate by DEMA: Contribution of industry to US GDP: 11 Bill. USD
source: http://www.dema.org/store/download.asp?id=7811B097-8882-4707-A160-F999B49614B6
Christian Traeger Resource Economics, UiO, Fall 2017 16 The Biomass Model
of Fish(eries)
Christian Traeger Resource Economics, UiO, Fall 2017 17
The Biomass Model of Fish(eries)
Biological resources in general and fish in particular reproduce Key requirement for optimal management is understanding of resource’s regeneration capabilities We model fish as biomass:tonsoffish It is our state variable St
In particular We neglect age structure We neglect interactions across species (or at least do not model them explicitly) More advanced models do not...
Christian Traeger Resource Economics, UiO, Fall 2017 18 Net Growth
Growth rate of biomass St constant r > 0 for small stock sizes (exponential growth) decreasing with stock size: “Density dependence” (competition, predation, etc.)
simplest assumption: growth rate decreases linearly with St St+1 − St r St = r − St = r 1 − (1) St K K
r: growth rate at St =0
K: carrying capacity (for St = K no more growth) This prominent example is called the logistic growth model
(Net growth = difference between fish (in tons) born minus fish (in tons) dying
Christian Traeger Resource Economics, UiO, Fall 2017 19
GROWTH OF FISH STOCK − St rSt 1 K rSt t S − +1 t S fish stock growth
0
0 S ∗ K fish stock St
r: intrinsic growth rate (growth rate at St =0) K: carrying capacity
Christian Traeger Resource Economics, UiO, Fall 2017 20 GROWTH OF FISH STOCK t S K fish stock
S ∗
St St St 0 0 time t
Christian Traeger Resource Economics, UiO, Fall 2017 21
BIOMASS MODELS
In general: St+1 = St + g(St )
biomass growth function g(St ) assumption 1: the growth function is positive for stocks that are not too small or too large: an Smin ≥ 0andan Smax > Smin exist such that g(Smin)=0 g(Smax)=0 g(St ) > 0forallSt ∈ (Smin, Smax) assumption 2: the growth function is globally concave: g (St ) < 0forallSt ∈ (Smin, Smax)
Christian Traeger Resource Economics, UiO, Fall 2017 22 WESTERN AND CENTRAL PACIFIC BIG EYE TUNA
source: Froese and Pauly (2011)
Christian Traeger Resource Economics, UiO, Fall 2017 23
WESTERN AND CENTRAL PACIFIC BIG EYE TUNA
0.16 0.14 0.12 0.1 0.08 0.06 0.04 0.02 growth of big eye tuna [100000 t] 0012345678 current biomass of big eye tuna [100000 t] ρ S ζ St −ψ ( t ) g(St )= − St 1 − e κ St 1+β κ
source: Grafton et al. (2007), Hampton et al. (2003)
Christian Traeger Resource Economics, UiO, Fall 2017 23 WESTERN AND CENTRAL PACIFIC YELLOWFIN TUNA
source: Froese and Pauly (2011)
Christian Traeger Resource Economics, UiO, Fall 2017 24
WESTERN AND CENTRAL PACIFIC YELLOWFIN TUNA
0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1
growth of yellowfin tuna [100000 t] 00 5 10 15 20 25 30 35 current biomass of yellowfin tuna [100000 t] ρ S ζ St −ψ ( t ) g(St )= − St 1 − e κ St 1+β κ
source: Grafton et al. (2007), Hampton et al. (2003)
Christian Traeger Resource Economics, UiO, Fall 2017 24 ATLANTIC MENHADEN
source: Froese and Pauly (2011)
Christian Traeger Resource Economics, UiO, Fall 2017 25
ATLANTIC MENHADEN
2 − γ g(St )=r1 St + r2 St r3 St
r1 =4.36, r2 =0.0008, r3 =0.38, γ =1.36.
source: Tahvonen (2008)
Christian Traeger Resource Economics, UiO, Fall 2017 25 PACIFIC HALIBUT
source: Froese and Pauly (2011)
Christian Traeger Resource Economics, UiO, Fall 2017 26
PACIFIC HALIBUT