Optimal management under institutional constraints

Determining a total allowable catch for different fleet segments in the northeast arctic cod fishery

Andries Richter, Anne Maria Eikeset, Daan Van Soest, Florian Klaus Diekert, Nils Chr. Stenseth

Research output: Contribution to journalArticleScientificpeer-review

Abstract

Many real world fisheries have an individual vessel quota system with restrictions on transferability of quota or entrance of new vessels into the fishery. While the standard economic reasoning is that these institutional constraints lead to welfare losses, the size of those losses and optimal second-best policies are usually unknown. We develop a dynamic bioeconomic model, in which a scientific body provides an optimal TAC given restrictions on (i) transferability between vessel segments and (ii) entrance of new vessels. Further, we also quantify welfare losses arising from not maximizing economic welfare, but physical yield—which is actually the case in many fisheries. We apply the model to the Northeast Arctic cod fishery, and estimate not only the cost and harvesting functions of the various vessel types, but also the parameters of the biological model as well as those of the demand function. This allows us to determine optimal second-best policies and quantify corresponding welfare effects for our case study fishery.
Original languageEnglish
Pages (from-to)811-835
JournalEnvironmental and Resource Economics
Volume69
Issue number4
DOIs
Publication statusPublished - Apr 2018

Fingerprint

gadoid fishery
vessel
fishery
quota system
welfare economics
Optimal management
Fisheries
Institutional constraints
Arctic
economics
cost
loss

Keywords

  • group quota
  • tradable permits
  • fleet segments
  • ITQs
  • dynamic optimization
  • second-best policy

Cite this

@article{e5f830c1160f49c3b4a8759816c7ee9b,
title = "Optimal management under institutional constraints: Determining a total allowable catch for different fleet segments in the northeast arctic cod fishery",
abstract = "Many real world fisheries have an individual vessel quota system with restrictions on transferability of quota or entrance of new vessels into the fishery. While the standard economic reasoning is that these institutional constraints lead to welfare losses, the size of those losses and optimal second-best policies are usually unknown. We develop a dynamic bioeconomic model, in which a scientific body provides an optimal TAC given restrictions on (i) transferability between vessel segments and (ii) entrance of new vessels. Further, we also quantify welfare losses arising from not maximizing economic welfare, but physical yield—which is actually the case in many fisheries. We apply the model to the Northeast Arctic cod fishery, and estimate not only the cost and harvesting functions of the various vessel types, but also the parameters of the biological model as well as those of the demand function. This allows us to determine optimal second-best policies and quantify corresponding welfare effects for our case study fishery.",
keywords = "group quota, tradable permits, fleet segments, ITQs, dynamic optimization, second-best policy",
author = "Andries Richter and Eikeset, {Anne Maria} and {Van Soest}, Daan and Diekert, {Florian Klaus} and Stenseth, {Nils Chr.}",
year = "2018",
month = "4",
doi = "10.1007/s10640-016-0106-3",
language = "English",
volume = "69",
pages = "811--835",
journal = "Environmental and Resource Economics",
issn = "0924-6460",
publisher = "Springer",
number = "4",

}

Optimal management under institutional constraints : Determining a total allowable catch for different fleet segments in the northeast arctic cod fishery. / Richter, Andries; Eikeset, Anne Maria; Van Soest, Daan; Diekert, Florian Klaus; Stenseth, Nils Chr.

In: Environmental and Resource Economics, Vol. 69, No. 4, 04.2018, p. 811-835.

Research output: Contribution to journalArticleScientificpeer-review

TY - JOUR

T1 - Optimal management under institutional constraints

T2 - Determining a total allowable catch for different fleet segments in the northeast arctic cod fishery

AU - Richter, Andries

AU - Eikeset, Anne Maria

AU - Van Soest, Daan

AU - Diekert, Florian Klaus

AU - Stenseth, Nils Chr.

PY - 2018/4

Y1 - 2018/4

N2 - Many real world fisheries have an individual vessel quota system with restrictions on transferability of quota or entrance of new vessels into the fishery. While the standard economic reasoning is that these institutional constraints lead to welfare losses, the size of those losses and optimal second-best policies are usually unknown. We develop a dynamic bioeconomic model, in which a scientific body provides an optimal TAC given restrictions on (i) transferability between vessel segments and (ii) entrance of new vessels. Further, we also quantify welfare losses arising from not maximizing economic welfare, but physical yield—which is actually the case in many fisheries. We apply the model to the Northeast Arctic cod fishery, and estimate not only the cost and harvesting functions of the various vessel types, but also the parameters of the biological model as well as those of the demand function. This allows us to determine optimal second-best policies and quantify corresponding welfare effects for our case study fishery.

AB - Many real world fisheries have an individual vessel quota system with restrictions on transferability of quota or entrance of new vessels into the fishery. While the standard economic reasoning is that these institutional constraints lead to welfare losses, the size of those losses and optimal second-best policies are usually unknown. We develop a dynamic bioeconomic model, in which a scientific body provides an optimal TAC given restrictions on (i) transferability between vessel segments and (ii) entrance of new vessels. Further, we also quantify welfare losses arising from not maximizing economic welfare, but physical yield—which is actually the case in many fisheries. We apply the model to the Northeast Arctic cod fishery, and estimate not only the cost and harvesting functions of the various vessel types, but also the parameters of the biological model as well as those of the demand function. This allows us to determine optimal second-best policies and quantify corresponding welfare effects for our case study fishery.

KW - group quota

KW - tradable permits

KW - fleet segments

KW - ITQs

KW - dynamic optimization

KW - second-best policy

U2 - 10.1007/s10640-016-0106-3

DO - 10.1007/s10640-016-0106-3

M3 - Article

VL - 69

SP - 811

EP - 835

JO - Environmental and Resource Economics

JF - Environmental and Resource Economics

SN - 0924-6460

IS - 4

ER -