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Fishing industry borrows from natural capital at high shadow interest rates

Author

Listed:
  • Quaas, Martin F.
  • Froese, Rainer
  • Herwartz, Helmut
  • Requate, Till
  • Schmidt, Jörn O.
  • Voss, Rüdiger

Abstract

Fish stocks can be considered as natural capital stocks providing harvestable fish. Fishing at low stock sizes means borrowing from the natural asset. While fishing a particular quantity generates immediate profits and income, an interest rate has to be paid in terms of foregone future fishing income, as the fish stock's reproductive capacity remains low and fishing costs stay high. In this paper we propose to apply the concept of shadow interest rate to quantify the degree of overfishing. It incorporates the relevant biological and economic information and compares across fish stocks. We calculate the shadow interest rates for 13 major European fish stocks and find these rates to range from 10% to more than 200%. The concept of the shadow interest rate can be used to make the economic consequences of overfishing transparent and to evaluate the profitability of short-term catch reductions as investments in natural capital stocks.

Suggested Citation

  • Quaas, Martin F. & Froese, Rainer & Herwartz, Helmut & Requate, Till & Schmidt, Jörn O. & Voss, Rüdiger, 2012. "Fishing industry borrows from natural capital at high shadow interest rates," Ecological Economics, Elsevier, vol. 82(C), pages 45-52.
  • Handle: RePEc:eee:ecolec:v:82:y:2012:i:c:p:45-52
    DOI: 10.1016/j.ecolecon.2012.08.002
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Carpenter, Griffin & Kleinjans, Richard & Villasante, Sebastian & O’Leary, Bethan C., 2016. "Landing the blame: The influence of EU Member States on quota setting," Marine Policy, Elsevier, vol. 64(C), pages 9-15.
    2. Julia Hoffmann & Martin Quaas, 2016. "Common Pool Politics and Inefficient Fishery Management," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 63(1), pages 79-93, January.
    3. Barbara Hutniczak, 2014. "Increasing Pressure on Unregulated Species Due to Changes in Individual Vessel Quotas: An Empirical Application to Trawler Fishing in the Baltic Sea," Marine Resource Economics, University of Chicago Press, vol. 29(3), pages 201-217.
    4. repec:kap:enreec:v:67:y:2017:i:2:d:10.1007_s10640-015-9988-8 is not listed on IDEAS
    5. Gars, Johan & Spiro, Daniel, 2014. "Uninsurance through Trade," Memorandum 13/2014, Oslo University, Department of Economics.
    6. Visbeck, Martin & Kronfeld-Goharani, Ulrike & Neumann, Barbara & Rickels, Wilfried & Schmidt, Jörn & van Doorn, Erik & Matz-Lück, Nele & Ott, Konrad & Quaas, Martin F., 2014. "Securing blue wealth: The need for a special sustainable development goal for the ocean and coasts," Marine Policy, Elsevier, vol. 48(C), pages 184-191.

    More about this item

    Keywords

    Overfishing; Optimal resource management; Harvest-control rules;

    JEL classification:

    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q22 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Fishery
    • H82 - Public Economics - - Miscellaneous Issues - - - Governmental Property

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