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The social cost of fishery subsidy reforms

Author

Listed:
  • José-María Da-Rocha

    (ITAM and Universidad de Vigo)

  • Javier García-Cutrín

    (Universidad de Vigo)

  • Raul Prellezo

    (AZTI)

  • Jaume Sempere

    (El Colegio de México)

Abstract

This paper analyzes the impact of reducing a subsidy on fuel in a general equilibrium model for a fishery with heterogeneous fishing plants (vessels). It considers the impact of the stock effect, which determines the participation of fishing plants in a likely increased stock abundance. In equilibrium, the productivity of the fleet is endogenous as it depends on the stock of fish along the equilibrium path. The model concludes that any impact of a fuel subsidy drop will depend on the stock effect. If that effect is large, fishing firms will benefit from the stock recovery and the elimination of the subsidy will increase future returns on investment. The model is particularized to industrial shrimp fisheries in Mexico. It is shown that the complete elimination of a subsidy increases biomass, capitalization, marginal productivity, and consumption and reduces inequality when the effect of the induced increase in the stock is considered. However, if that effect is not considered capital and consumption decrease, and inequality increases, increasing the social costs of a fuel subsidy drop.

Suggested Citation

  • José-María Da-Rocha & Javier García-Cutrín & Raul Prellezo & Jaume Sempere, 2017. "The social cost of fishery subsidy reforms," Serie documentos de trabajo del Centro de Estudios Económicos 2017-02, El Colegio de México, Centro de Estudios Económicos.
    • Handle: RePEc:emx:ceedoc:2017-02
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    File URL: https://cee.colmex.mx/dts/2017/DT-2017-2.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    subsidies; general equilibrium model; fisheries; social costs;
    All these keywords.

    JEL classification:

    • Q22 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Fishery
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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