Marine Resources

Madalena Barbosa nautical picks April, 2012 Index Common Property Fishery of N selfsame(a) slanting vass model .. 2 1. a) Biological Stock Equilibrium without Harvest .. 2 1. b) Maximum sustain equal to(p) Yield .. 2 1. c) dissipate vex Equilibrium . 5 1. ) optimal Economic Equilibrium 6 1. e) Comparison between Maximum Sustainable Equilibrium and both Open entranceway Equilibrium and best Economic Equilibrium .. 8 1. f) Assuming a schooling fishery . 9 2. Different doable policies . 11 2. ) match Allowable Catches 11 2. b) essay and growth measurees 13 2. c) Individual Transferable Quotas ITQs .. 15 3. Recommendation avouchment for the polity decision ITQs .. 16 Figure 1Growth and Harvest as plump of strain size Figure 2Sustainable revenue, total costs and illuminate benefit of search suit. 8 Figure 3 Growth and Harvest as agency of entrepot size for an Open Access equilibrium and a set TAC . 11 Figure 4 Sustainable revenue, total costs and entirenes s revenue and total costs for the TAC aim of fishing travail. . 2 Figure 5 Use of restorative evaluatees on driving force stop equate tender and private costs . 14 Figure 6 Use of separateive taxes on harvest that can equate affectionate and private revenues. . 15 oceanic Resource guidance Assignment 2 1 Common Property Fishery of N identical fishing vessels model Biological growth start out for the resource stock ? = 1? ? = ? ? Graham-Schaefer payoff answer (linear case of the Coob-Douglas production affair) clear function Condition Where, 0? = ? ? ? S(t) stock (biomass) of economically valuable fish at time t.E(t) suit is an index measure of the quantity of inputs applied to the task of fishing at time t. Intrinsic growth rate of the resources stock r = 0,8/Year Natural carrying Capacity (maximum valuate for S) k=50. 000 gross tons Catchability co effectual q = 0,0002/hour fishing Price per building block of output p = cc/ton comprise per unit of stew c=400 / hour fishing Maximum Effort per vessel = 100 hours fishing 1. a) Biological Stock Equilibrium without Harvest In this situation the growth in the stocks doesnt exist so that ? =0 = = 50. 000 1. b) Maximum Sustainable YieldIn order to calculate the values that maximise sustainable harvest for this fishery, we need to compute the harvest home function that depends on movement (Shaefer Yield Effort Curve) and after that, to maximize fruit for parturiency so that we ar able to compute the different sustainable values. Marine Resource way Assignment 2 2 First we backing the Graham-Shaefer production function into the biological growth function of the stock and find outed, = 1? ? In a steady-state equilibrium = = are as counterbalanced by the removals from the stock through harvesting). Also and .The solution of the previous 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 find Shaefer Yield Effort Curve ? = = = ? 1? ? ? ? Schaefer Yield Effort Curve This equation is quadratic in E so for high levels of effort the yield is zero. So, if the effort level is higher than the critical level, > towards extinction. ? , the yield is zero and the population leave alone be driven maximise Shaefer Yield Effort Curve to find the highest value of Effort that can 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 fishery substitute Emsy and Hmsy in Graham-Shaefer production function and solve it for S, = ? 4 = 2 ? 4 Note that the resource stocks at MSY is on-half of the natural carrying capacity. The solution for the maximum sustainable yield is wedded by the fo llowing values of Effort, harvest and stock = 2 ? = 0,8 ? 50. 000 ? 4 50. 000 = ? 2 0,8 ? 0,0002 = . 0 2 = ? = = = 2 4 ? ? = = = . . Now that we have calculated the level of effort corresponding to the maximum sustainable yield, EMSY, we can estimate the necessary equilibrium authorise, as it is the one that with the maximum effort per vessel, EMAX, equals the EMSY. = 2. 000 ? 100 ? ? = ? The equilibrium fleet under sustainable harvesting is composed of 20 identical fishing vessels. ? = = Marine Resource anxiety Assignment 2 4 1. c) Open Access Equilibrium To characterize the Open-Access Equilibrium we take cardinal main assumptions 1. The steady-state equilibrium for the biological growth function is true and 2.It is also true the steady-state equilibrium delineate for all sustainable rents. = =0 ? =0 With these two equations we have the property right condition of open-access and the genial welfare optimum. That is, the comparative statics to compare the optimal open-access levels of effort, resource stock, yield, and rents with the companionable 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 profits per vessel on an Open Access equilibrium are as we already stated before equal to zero, = = ? = 200 ? 6. 400 ? 400 ? 3. 200 ? Profit leave behind be zero for severally individual firm and, consequently, for all the firms competing in this market which makes instinct once we are in the situation where companies can freely enter or exiting the market (similar to ameliorate competition).The solution for the O pen-Access equilibrium is inclined by the following values of Effort, harvest and stock = = ? = ? = ? . = 1? 1? ? ? = = , , ? , ? , ? , 1? 1? ? , ? , ? . ? ?. . = . = . 1. d) Optimal Economic Equilibrium The static, steady-state optimal economic level of effort, for the individual, that also maximizes the friendly welfare for society is found 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 val ues 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 range of a function 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. viosterol. 000 E(Eff) E(MSY) E(OA) contribute Revenue, fall Cost and Profit (/hour fishing) 2. 000. 000 1. cholecalciferol. 000 1. 000. 000 500. 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 last(a) benefit of fishing effort.From the previous figures we can easily see that, < < The MSY policy target is the best in a social read of view. 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(prenominal) effort to capture an intermediate level of fish, keeping the highest possible level of stock.This is why, economically, efficiency is the best solution, because it go away allow future generations to capture similar quantities once preservation of stock is taken into account and to boot getting the higher rent. Furthermore 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 again important to note that i) In this case, as ? =2 ? = 200 ? 2 ? 400 = 0 between exploiting or not the stock available. = 0 under all values of effort, we have a situation of in variation Marine Resource Management Assignment 2 ii) Here, as aban tangle with this market and no effort will be given ( = 0). The stock will not be utilise at all and initial stock will remain equal to final stock. iii) ? =3 ? = 200 ? 3 ? 400 = 200 ? =1 ? = 200 ? 1 ? 400 = ? 200 < 0, firms will not have every 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 take 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 Incentive engine block and Incentive Management. Regarding Incentive Blocking we can have management instruments that encourage effort and and harvest reductions by blocking them. For example, Total Allowable Catches (TACs), gear restrictions, like engine power dressations, constrain fishing seasons, limi t entry with buy-back schemes (licenses) or just increase the real cost of harvest through regulations. Incentive Adjusting pursuits to right the fisher incentives to make them compatible with societys lasts.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 peculiar(prenominal) 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 this 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 writhe in equilibrium, closure 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 gistive measure, but in an economical point of view it has its issues. The lean for fishing enterprises is to move towards an over-investment in equipment and labor in order to increase their share of the common TAC. It causes a major disruption in the seasonal pattern of a fishery as fishermen rush to obtain their share of the quo ta. Often vessels increase in size and add engine power both to exercise 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 over majusculeization (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 that the stock levels will turn 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 wrong 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 backbreaking 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 conjecture bring marginal private costs into alignment with marginal social costs. Using taxes the managers reduce 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 said 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 trim back 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 shift 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 only 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. 2 80. 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 interesting 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 abject social group. 2. c) Individual Transferable Quotas ITQs The ITQs are an improved version of the TACs policy. It allocates a specific quota to each individual (ex. a vessel, a corporation, etc. ) consistent with property rights theory. With this kind of policy fishermen dont need to race against each other.We will proceed with short run rights, where fishermen own a shar e of harvest. The quota is computed from the previous established level for TAC and the fleet capacity, in this case we are handout 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 ensure 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-efficient fisher does the fishing. If = 0, ? As St varies l will be adjusted and the quota market prices established. In a palmy 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 capitali zation. 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 spread the fishing season and it incentives for mutual enforcement control.But all of its potential can be wasted if a nigh(a) 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