Marine Resources

Madalena Barbosa Marine visions April, 2012 Index Common Property piscary of N identical tilt vessels model .. 2 1. a) Biological occupation symmetricalness without Harvest .. 2 1. b) Maximum Sustainable Yield .. 2 1. c) circulate Access residue . 5 1. ) best Economic vestibular sense 6 1. e) Comparison between Maximum Sustainable correspondence and twain Open Access Equilibrium and Optimal Economic Equilibrium .. 8 1. f) Assuming a schooling piscary . 9 2. Different potential policies . 11 2. ) intact Allowable Catches 11 2. b) swither and fruit imposees 13 2. c) Individual Transferable Quotas ITQs .. 15 3. Recommendation mastery for the form _or_ system of g everywherenment decision ITQs .. 16 Figure 1Growth and Harvest as carry of argumentation size Figure 2Sustainable revenue, check cost and waget advantage of look for motion. 8 Figure 3 Growth and Harvest as lock of pullulate size for an Open Access balance wheel and a position TAC . 11 F igure 4 Sustainable revenue, total be and heart revenue and total be for the TAC direct of look for drive. . 2 Figure 5 Use of disciplinary imposees on driveway eject equate fond and private costs . 14 Figure 6 Use of conciliateive taxes on reaping that bunghole equate brotherly and private revenues. . 15 Marine imagination precaution Assignment 2 1 Common Property Fishery of N identical sportfishing vessels model Biological growth affaire for the imaginativeness stock ? = 1? ? = ? ? Graham-Schaefer employment melt down (linear slip of the Coob-Douglas issue determination) Profit function human body Where, 0? = ? ? ? S(t) stock (biomass) of stintingally valuable fish at eon t.E(t) Effort is an index stripe of the quantity of inputs applied to the task of fishing at time t. Intrinsic growth rate of the elections stock r = 0,8/Year Natural carrying Capacity (maximum value for S) k=50. 000 gross tons Catchability coefficient q = 0,0002/ minute of arc fishi ng Price per hearty whole of output p = cc/ton Cost per unit of apparent movement c= cd/ second fishing Maximum Effort per vessel = 100 mins fishing 1. a) Biological germinate Equilibrium without Harvest In this situation the growth in the stocks doesnt exist so that ? =0 = = 50. 000 1. b) Maximum Sustainable YieldIn frame to take the value that accession sustainable return for this fishermany, we need to compute the fruit function that depends on suit (Shaefer Yield Effort Curve) and after that, to maximize result for effort so that we argon able to compute the polar sustainable determine. Marine Resource way Assignment 2 2 First we substitute the Graham-Shaefer production function into the biological growth function of the stock and ascertained, = 1? ? In a steady-state counterweight = = ar as counterbalanced by the removals from the stock through harvesting-timeing). Also and .The issue of the antecedent function for the steady-state take aim of S is 1 ? = ? 1? = ? = 0, so that = (the additions to the resource stock 1? = = ? ? 1? = ? Substitute the former function in Graham-Schaefer production function to descry Shaefer Yield Effort Curve ? = = = ? 1? ? ? ? Schaefer Yield Effort Curve This par is quadratic in E so for high-pitched levels of effort the yield is zero. So, if the effort level is high than the critical level, > towards extinction. ? , the yield is zero and the population volition be goaded Maximize Shaefer Yield Effort Curve to find the highest value of Effort that mickle be sustainable, 2 =0? 2 =0? = ? = = 2 ? ? = 2 Marine Resource Management Assignment 2 3 To find the Maximum Sustainable Harvest level substitute Emsy in the Shaefer Yield Effort Curve, ? = ? ? 4 ? ?= 2 ? 2 ? ?= ?= 2 2 ? 4 ? ? ?= 2 ? = 4 ? To find the stock that maximizes sustainable harvest of this piscary substitute Emsy and Hmsy in Graham-Shaefer production function and cypher it for S, = ? 4 = 2 ? 4 visor that the resource stocks at M SY is on-half of the congenital carrying capacity. The solution for the maximum sustainable yield is given by the following determine of Effort, harvest and stock = 2 ? = 0,8 ? 50. 000 ? 4 50. 000 = ? 2 0,8 ? 0,0002 = . 0 2 = ? = = = 2 4 ? ? = = = . . right away that we look at calculated the level of effort corresponding to the maximum sustainable yield, EMSY, we can estimate the indispensable equilibrium choke, as it is the one that with the maximum effort per vessel, EMAX, equals the EMSY. = 2. 000 ? 100 ? ? = ? The equilibrium pass off nether sustainable harvesting is composed of 20 identical fishing vessels. ? = = Marine Resource Management Assignment 2 4 1. c) Open Access Equilibrium To characterize the Open-Access Equilibrium we take both important assumptions 1. The steady-state equilibrium for the biological growth function is straight and 2.It is also true the steady-state equilibrium condition for all sustainable rents. = =0 ? =0 With these two equations we hav e the property right condition of open- gate and the social welf be optimum. That is, the comparative statics to comp are the best open-access levels of effort, resource stock, yield, and rents with the social optimum levels of effort, resource stock, yield, and rents. Rearranging we obtain the open-access equilibrium level for the resource stock, ? = = ? ? From the steady-state equilibrium condition we can find the level of effort in an Open Access equilibrium, = ? 1? = = = ? =Rearranging for E Substituting S for SOA = 1? 1? ? ? ? Substituting EOA in Graham-Schaefer production function we get the harvest in an Open Access equilibrium, = ? = ? = ? ? 1? ? Marine Resource Management Assignment 2 5 The sugar per vessel on an Open Access equilibrium are as we already stated before equal to zero, = = ? = 200 ? 6. cd ? 400 ? 3. 200 ? Profit will be zero for each one-on-one firm and, consequently, for all the firms competing in this securities industry which makes sense once we are in the situation where companies can barrenly enter or exiting the food market (similar to perfect competition).The solution for the Open-Access equilibrium is given by the following values of Effort, harvest and stock = = ? = ? = ? . = 1? 1? ? ? = = , , ? , ? , ? , 1? 1? ? , ? , ? . ? ?. . = . = . 1. d) Optimal Economic Equilibrium The static, steady-state optimal frugal level of effort, for the individual, that also maximizes the social welfare for society is plunge by computing the equation for sustainable rents and maximizing it for the Effort = =0? = = ? ?2 ? ? =0? ? Maximizing, 2 ? ? =To solve for the static steady-state optimal economic level of the resource stock, SEFF, substitute EEFF into the equation for the resource stock with the Schaefer Yield Effort Curve, = 1? ? = 1? 2 = + 1? ? = 1 1? + 2 2 ? Marine Resource Management Assignment 2 6 The Optimal Economic Equilibriums for Harvesting can be found using the Graham-Schaefer production function by substituting EEff and SEFF found before, = ? 2 ? = 1? ? ? ? 2 + 2 ? = ? + The solution for the Open-Access equilibrium is given by the following values of Effort, harvest and stock = 1? ? ? = ? , = + = ? ? = ? , . + 1? ? ? , ? , ? . = = . = . . Marine Resource Management Assignment 2 7 1. e)Comparison between Maximum Sustainable Equilibrium and both Open Access Equilibrium and Optimal Economic Equilibrium In this question we are asked to compare the maximum social sustainable solutions with both solutions of the Open Access and the Optimal Economic Equilibrium, respectively. The results acquired during the former exercises are summarized in figure 1 and figure 2 14. 000 q. E(MSY). S 12. 000 q. E(OA). S H(MSY) 10. 000 Growth in Fish Stock (tons) . E(Eff). S H(Eff) 8. 000 H(OA) 6. 000 4. 000 2. 000 S(OA) 0 0 5. 000 10. 000 15. 000 20. 000 25. 000 30. 000 Fish Stock (tons) 35. 000 40. 000 45. 000 50. 000 S(MSY) S(Eff) G(S) q. E(OA). S Figure 1Growth and Harvest as function of stock size 2. calciferol . 000 E(Eff) E(MSY) E(OA) Total tax revenue, Total Cost and Profit (/ mo fishing) 2. 000. 000 1. viosterol. 000 1. 000. 000 d. 000 0 0 500 1. 000 1. 500 2. 000 Effort (hour fishing) TR TC NB TC (Eff) 2. 500 3. 000 3. 500 4. 000 Figure 2Sustainable revenue, total costs and net benefit of fishing effort.From the previous figures we can easily see that, < < The MSY insurance policy target is the best in a social point of deliberate. It has the highest harvest maximum for a balanced level of stock with a medium level of effort. But in an economical point of view this equilibrium doesnt bring the best results since its rent level is lower than for the optimal economic equilibrium. The efficient solution is the one that requires less effort to appropriate an intermediate level of fish, keeping the highest possible level of stock.This is why, economically, efficiency is the best solution, because it will allow future generations to capture similar quantities once deliverance of stock is taken into account and additionally getting the higher rent. what is more and comparing with open access and sustainable yield, this solution requires less effort which is positive for the companies involved. In the situation of open access, as there is free access to the market, competition will lead to low individual harvesting levels and significantly high levels of effort and, at the same time, the level of stocks will be the lowest. < < < < 1. f) Assuming a schooling fishery Given that we are now in the situation of a schooling fishery, where the group of fishes is swimming in the same direction in a coordinated manner, and we have the following access given its profit condition ( = ? ? = 200. = = conditions ? = and 0 ? ? , we are able to compute the outcome for open ), where we already know that ? ? = ? ? = 0.It is once again important to note that i) In this case, as ? =2 ? = 200 ? 2 ? 400 = 0 between exploiting or not the stock accessible. = 0 under al l values of effort, we have a situation of tranquillity Marine Resource Management Assignment 2 ii) Here, as relinquish this market and no effort will be given ( = 0). The stock will not be apply at all and sign stock will remain equal to final stock. iii) ? =3 ? = 200 ? 3 ? 400 = 200 ? =1 ? = 200 ? 1 ? 400 = ? 200 < 0, firms will not have any(prenominal) interest in fishing so they will simply Under this situation, as market, so they will apply all the effort available in order to maximize their own profits. As a result, stocks will be exploited until the end. > 0, companies have interest in competing in this Marine Resource Management Assignment 2 10 2. Different possible policiesThe Food and agriculture Organization of the United Nations (FAO) distinguishes two types of fisheries management inducement Blocking and bonus Management. Regarding Incentive Blocking we can have management instruments that encourage effort and and harvest reductions by stop them. For exampl e, Total Allowable Catches (TACs), gear restrictions, interchangeable engine power margeations, limit fishing normalizes, limit entry with buy-back schemes (licenses) or notwithstanding increase the real cost of harvest through regulations. Incentive Adjusting pursuits to adjust the fisher incentives to make them compatible with societys goals.In this case we are talking about taxes on effort or harvest and quotas. We will present you with some examples regarding these types of management. 2. a) Total Allowable Catches A Total Allowable Catch is a catch limit set for a particular fishery, generally for a year or a fishing season. In a derby fishery, the governments set a limit on the total allowable catch (TAC) for the year and the fishery is open on a specific date. As soon as TAC is reached, the fishery is closed for the year. The TAC is set below the overfishing level to assure that it is restrictive. Its goal is to allow the natural resource to recover the stock levels.In t his case the TAC was set below de level of harvesting for the Open-Access equilibrium at the value of 3500 tons (figure 3). 12. 000 10. 000 Growth in Fish Stock (tons) 8. 000 6. 000 4. 000 2. 000 0 0 5. 000 10. 000 15. 000 20. 000 25. 000 Fish Stock (tons) G(S) TAC q. E(TAC). S q. E(OA). S H(OA) 30. 000 35. 000 40. 000 45. 000 50. 000 Figure 3 Growth and Harvest as function of stock size for an Open Access equilibrium and a set TAC The TAC policy level of effort is significantly lower than the open access level. The TAC level equals Shaefer effort Yield curve ball in equilibrium, Solving for E 3500 = 0,0002 ? 0. 000 ? = = ? , = ? ? ? ? , , ? ? ? . So this measure would allow the stock to recover for a level of, = , = 3500 ? 0,0002 ? 387,55 In a conservation point of view this is an effective measure, notwithstanding in an economical point of view it has its issues. The tendency for fishing enterprises is to locomote towards an over- rankment in equipment and labor in order to in crease their share of the plebeian TAC. It causes a major disruption in the seasonal pattern of a fishery as fishermen rush to obtain their share of the quota. Often vessels increase in size and add engine power both to melt with greater fishing power.In a consequence, economic conditions in the derby fishery are best at the start of a season when the fish stocks are most abundant, and steadily deteriorate as harvesting depletes the available stocks. These conditions induce a race for fish, which, in turn, results in overcapitalization (Figure 4). 2. 100. 000 Total Revenue, Total Cost and TAC level (/hour fishing) 1. 600. 000 1. 100. 000 600. 000 100. 000 0 500 1. 000 1. 500 2. 000 2. 500 3. 000 3. 500 4. 000 -400. 000 TR Effort (hour fishing) TC p*TAC TC E(OA) Figure 4 Sustainable revenue, total costs and Total revenue and total costs for the TAC level of fishing effort.Assuming that calculate the costs of overcapitalization, c, and understand this behavior = ? ? = ? = 0 and tha t the stock levels will vary with the imposition of the TAC we can ?= ? = = , ? = , = From the function above we can understand the volatility of this policy. With the increase in the levels of stock the price will be higher and the fishermen have the incentive to invest in fleet capital that from societys point of view is redundant. Also, the excess fleet makes the monitoring of harvesting very difficult and the TAC limit is exceeded. 2. b) Effort and harvest taxesFish is economically overexploited under open-access regime. The market price is high enough and the harvest cost low enough to make it a commercial resource. Corrective taxes can in theory bring fringy private costs into alignment with marginal social costs. Using taxes the managers concentrate the fishermen revenues or raise the real cost of fishing. The idea is to find the tax rate, on either effort or harvest, that adjusts effort to the maximum economic yield level, EEff, that should be as state before the level at which the sustainable rent is maximum. With an effort tax the total cost per unit of effort is, = +Where tE is the tax per unit effort (ex. $ per trawl hour or trawl year) and TC is the total costs with taxes. The effect of the effort tax is to increase total costs to such a level that the TC curve intersects the total revenue curve for the EEff, as you can see in figure 5. The tax on the effort was found as followed, = + ? ? tE = 800 /hour fishing ? 200 ? 9. 600 = 400 + ? 1. 600 ? Note that for any value of effort the total costs with taxes is greater that the total costs. The effect of an effort tax increases the slope of the total cost curve for the industry.This implies that the total revenue, TR(E), is shared between the government, as the tax collector, and the Marine Resource Management Assignment 2 13 fishing industry. The former receives the resource rent, ? Eff, and the fishers end up with the difference between the total revenue and the resource rent that is just enough to cover the costs of the fishers. 2. 500. 000 E(Eff) E(MSY) E(OA) Total Revenue and Total Cost (/hour fishing) 2. 000. 000 1. 500. 000 ? (Eff) 1. 000. 000 500. 000 0 0 500 1. 000 1. 500 2. 000 Effort (hour fishing) TR TC TC 2. 500 3. 000 3. 500 4. 000Figure 5 Use of corrective taxes on effort can equate social and private costs In the case of a harvest tax, the sustainable revenue of the fishery curve is affected, as you can see in figure 6. The harvest tax would be applied to the price as it is demonstrated next, ? = ? = ? tH = 133,33 /hour fishing 200 + ? 9600 = 400 ? 1. 600 ? So in this case, the net price of the fish received by the fishers is also notwithstanding just enough to support the costs. 2. 500. 000 E(Eff) E(MSY) E(OA) Total Revenue, Total Cost and Rent (/hour fishing) 2. 000. 000 1. 500. 000 ? (Eff) 1. 000. 000 500. 000 0 0 500 1. 000 1. 00 2. 000 Effort (hour fishing) TR TC TR 2. 500 3. 000 3. 500 4. 000 Figure 6 Use of corrective taxes on harvest that can equate social and private revenues. The resource rent equals the total tax revenue in both cases, = = ? ? = 133,33 ? 9. 600 = 1. 280. 000 = 800 ? 1. 600 = 1. 280. 000 ? ? ? ? Thus, a tax on harvest contributes to decreasing the total revenue of the industry whereas a tax on effort contributes to increasing the industry costs. This would be a very raise measure if the resource rent would be re-distributed, for example, to the fishing community avoiding any efficiency loss.But it is very hard to get to an agreement regarding this subject so the losses are real and the measure is not efficient in an economic perspective. Also, in a social point of view this measure is very demanding since it lowers the private revenues of the fishers, a theoretical and overall poor social group. 2. c) Individual Transferable Quotas ITQs The ITQs are an improved discrepancy of the TACs policy. It allocates a specific quota to each individual (ex. a vessel, a corporation, etc. ) consistent with property rig hts theory. With this kind of policy fishermen dont need to race against each other.We will proceed with short suck rights, where fishermen own a share of harvest. The quota is computed from the previous established level for TAC and the fleet capacity, in this case we are going to use the value for the necessary equilibrium fleet previously calculated, ? = 3. 500? 20 = So, each of the 20 identical fishing vessels are allowed to harvest 176 tons per fishing season. To ascertain that the expected results are lasting, the quotas should be transferable. There has to be a quota market to ensure that at any time the most cost-effective fisher does the fishing. If = 0, ? As St varies l will be adjusted and the quota market prices established. In a successful Optimal Economic managed fishery, resource rent per unit of effort would be = ? 1. 280. 000 = 800 1.600 And the resource rent per unit of harvest would be = ? ? These two prices indicate the equilibrium prices of effort and harvest quotas. The quotas market correct incentives for each boat to maximize its rent and to harvest with minimum costs, removing the incentives to over capitalization. So, in a conservation point of view and in economic terms ITQs are the best policy measure. . 280. 000 = 133,3 9. 600 ? 3. Recommendation statement for the policy decision ITQs ITQs are the best option as they are efficient both in a conservation point of view as in economic terms. Also, its the only measure that aligns the interests of the fishermen, the biologists and the governments. ITQs has several advantages like being efficient, as said before, it improves safety, as fishermen dont need to rush to sea under bad weather conditions, improves the quality for consumer by spreading the fishing season and it incentives for mutual enforcement control.But all of its potential can be wasted if a good monitoring system is not assured. Comparing to a blocking measure, like TAC, its property rights condition correct what it was flawed with the previous policy. Now the fishermen have exclusive rights to a fishery resource, not having to expend effort until profits are zero and, consequently dissipating all the potential rents that the fishery resource could have generated. Marine Resource Management Assignment 2