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Markets, pooling and insurance for managing bycatch in fisheries

  • Holland, D.S.
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    Bycatch is a nearly universal problem for fisheries, and it is increasingly common to place strict limits on allowable bycatch either on individuals or an industry sector. Individual bycatch quotas strengthen individual incentives to avoid bycatch and may reduce the likelihood that the bycatch cap will limit target species catch. However, in cases where bycatch is highly uncertain and variable, individual quotas and markets may be subject to high price variability and may fail to allocate quota efficiently. In some cases such as sea turtles, marine mammals, rare seabird and certain fish species, the allowable take may be less than one per permit holder. There are a number of reasons to believe that a transferable quota market may not function effectively in these cases. I explore the implications of stochasticity and uncertainty of bycatch for valuing quota in an individual bycatch quota system. I explore the degree to which a quota market increases expected profit and reduces individual risk relative to simply having a non-transferable individual bycatch quota, and how pooling approaches and possibly market insurance can be used to reduce financial risk for fishermen associated with uncertain bycatch.

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    Article provided by Elsevier in its journal Ecological Economics.

    Volume (Year): 70 (2010)
    Issue (Month): 1 (November)
    Pages: 121-133

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    Handle: RePEc:eee:ecolec:v:70:y:2010:i:1:p:121-133
    Contact details of provider: Web page: http://www.elsevier.com/locate/ecolecon

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    1. Miles S. Kimball, 1989. "Precautionary Saving in the Small and in the Large," NBER Working Papers 2848, National Bureau of Economic Research, Inc.
    2. Kerr, Suzi & Sanchirico, James & Newell, Richard, 2002. "Fishing Quota Markets," Discussion Papers dp-02-20, Resources For the Future.
    3. Singh, Rajesh & Weninger, Quinn, 2009. "Bio-Economies of Scope and the Discard Problem in Mulitple Species Fisheries," Staff General Research Papers 12839, Iowa State University, Department of Economics.
    4. Herrera, Guillermo E., 2005. "Stochastic bycatch, informational asymmetry, and discarding," Journal of Environmental Economics and Management, Elsevier, vol. 49(3), pages 463-483, May.
    5. Sanchirico, James N. & Holland, Daniel & Quigley, Kathryn & Fina, Mark, 2006. "Catch-quota balancing in multispecies individual fishing quotas," Marine Policy, Elsevier, vol. 30(6), pages 767-785, November.
    6. Abbott, Joshua K. & Wilen, James E., 2009. "Regulation of fisheries bycatch with common-pool output quotas," Journal of Environmental Economics and Management, Elsevier, vol. 57(2), pages 195-204, March.
    7. Singh, Rajesh & Weninger, Quinn, 2009. "Bioeconomies of scope and the discard problem in multiple-species fisheries," Journal of Environmental Economics and Management, Elsevier, vol. 58(1), pages 72-92, July.
    8. Boyce, John R., 1996. "An Economic Analysis of the Fisheries Bycatch Problem," Journal of Environmental Economics and Management, Elsevier, vol. 31(3), pages 314-336, November.
    9. Daniel S. Holland, 2007. "Managing environmental impacts of fishing: input controls versus outcome-oriented approaches," International Journal of Global Environmental Issues, Inderscience Enterprises Ltd, vol. 7(2/3), pages 255-272.
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