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Net loss: A cost-benefit analysis of the Canadian Pacific salmon fishery

  • Richard Schwindt

    (Faculty of Business Administration, Simon Fraser University.)

  • Aidan Vining

    (Faculty of Business Administration, Simon Fraser University.)

  • Steven Globerman

    (Faculty of Business Administration, Simon Fraser University.)

This article applies cost-benefit analysis to the Canadian Pacific commercial salmon fishery. It demonstrates that government policies to preserve the fishery have resulted in higher net social costs than would have resulted from a "do nothing" policy, notwithstanding the rent dissipation associated with unconstrained resource exploitation. The value of landings and the private costs of the harvest over a cycle (1988-1994) are calculated. On average, fishers extracted rents of C$34.7 million (in constant 1995 Canadian dollars) annually. The public costs of enhancing the resource and organizing and policing the harvest are estimated. When these costs are included in the calculation, net benefits drop to an average of negative C$55.6 million annually. This translates into a net present value (NPV) of the salmon fishery of negative C$784. The effects on NPV of both modest policy changes implemented in 1996-1997 and of a more dramatic but credible fleet rationalization program are provided. The results indicate that further policy change is called for. More generally, the study shows that policy reform that would significantly benefit both the private sector (through reduced rent dissipation) and the public sector (through reduced government expenditures) can be surprisingly difficult. © 2000 by the Association for Public Policy Analysis and Management.

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Article provided by John Wiley & Sons, Ltd. in its journal Journal of Policy Analysis and Management.

Volume (Year): 19 (2000)
Issue (Month): 1 ()
Pages: 23-45

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Handle: RePEc:wly:jpamgt:v:19:y:2000:i:1:p:23-45
Contact details of provider: Web page: http://www3.interscience.wiley.com/journal/34787/home

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  1. Wade, Robert, 1987. "The Management of Common Property Resources: Collective Action as an Alternative to Privatisation or State Regulation," Cambridge Journal of Economics, Oxford University Press, vol. 11(2), pages 95-106, June.
  2. MacRae, C Duncan, 1977. "A Political Model of the Business Cycle," Journal of Political Economy, University of Chicago Press, vol. 85(2), pages 239-63, April.
  3. H. Scott Gordon, 1954. "The Economic Theory of a Common-Property Resource: The Fishery," Journal of Political Economy, University of Chicago Press, vol. 62, pages 124.
  4. John Mikesell, 1978. "Election periods and state tax policy cycles," Public Choice, Springer, vol. 33(3), pages 99-106, January.
  5. Boardman, Anthony E. & Mallery, Wendy L. & Vining, Aidan R., 1994. "Learning from ex ante/ex post cost-benefit comparisons: the coquihalla highway example," Socio-Economic Planning Sciences, Elsevier, vol. 28(2), pages 69-84.
  6. Weingast, Barry R & Shepsle, Kenneth A & Johnsen, Christopher, 1981. "The Political Economy of Benefits and Costs: A Neoclassical Approach to Distributive Politics," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 642-64, August.
  7. Anthony Scott, 1955. "The Fishery: The Objectives of Sole Ownership," Journal of Political Economy, University of Chicago Press, vol. 63, pages 116.
  8. Richard C. Bishop, 1973. "Limitation of Entry in the United States Fishing Industry: An Economic Appraisal of a Proposed Policy," Land Economics, University of Wisconsin Press, vol. 49(4), pages 381-390.
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