Regulation of fisheries bycatch with common-pool output quotas

Many fisheries around the world are plagued with the problem of bycatch--the inadvertent harvesting and discard of non-targeted species. Bycatch occurs when targeted and non-targeted species coincide in the same habitat and gear is imperfectly selective. One of the prevailing methods of controlling bycatch is the common-pool quota system. Under this system, biologists set total allowable catches (TACs) for both the targeted and non-targeted species, and the fishing season is closed when one of these TACs binds. We develop a predictive model of a renewable resource that is regulated with this kind of common-pool quota system. The model demonstrates that the equilibrium will generally be characterized by excessive discards, shortened seasons, and foregone target species harvest. These results occur even with very efficient (low bycatch) fishing gear. We examine the sensitivity of our predictions to changes in technological parameters and degrees of spatial correlation of target and non-target species. Finally, we derive the optimal bycatch penalty function and describe its significance in light of various policy options available to regulators.