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An Inverse Demand System for New England Groundfish: Welfare Analysis of the Transition to Catch Share Management

  • Lee, Min-Yang A.
  • Thunberg, Eric M.
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    In 2010, the Northeast groundfish fishery transitioned from an effort-control system (Days-at-Sea) to an output-control system (catch shares). Simultaneously, a large decrease in aggregate catch was imposed in order to achieve biological objectives. This research examines the welfare effects of the transition to catch-share management by combining an inverse demand model for groundfish with a simulation based model of supply. The Generalized Differential Inverse Demand System is estimated for groundfish and imports using monthly data from 1994-2011 using a Generalized Method of Moments estimator. The estimated parameters are combined with simulated landings derived from a counterfactual policy scenario had ef- fort controls been retained instead of the catch share system. The simultaneous management change to catch shares and reduction in aggregate catch reduced consumer welfare by approximately $11M. A counterfactual policy in which the Days-at-Sea system was adjusted to meet the catch reductions would have reduced consumer welfare by approximately $37M; this finding is robust to instrument choice in the demand model. Because the 2010 fishing regulations and the counterfactual regulations were designed with the same conservation goals, the difference, approximately $26M, can be attributed to the change in management institution. Finally, reversion to the Days-at-Sea regulatory structure would reduce consumer welfare by approximately $25M from the current (2010) levels.

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    File URL: http://purl.umn.edu/123879
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    Paper provided by Agricultural and Applied Economics Association in its series 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington with number 123879.

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    Date of creation: 2012
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    Handle: RePEc:ags:aaea12:123879
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