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Efficiency Gains and Cost Reductions from Individual Transferable Quotas: A Stochastic Cost Frontier for the Australian South East Fishery

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  • Kompas, Tom
  • Che, Tuong Nhu

Abstract

In this paper efficiency gains and associated cost reductions from increases in traded quota are estimated with a stochastic cost frontier for the Australian South East Trawl Fishery (SETF). Estimation of this frontier also provides key information on the relative importance of input costs in the SETF, returns to scale, variations in costs as a result of trade in quota and the economic performance of each fishing vessel, year to year. Final estimations indicate that increases in the volume of quota traded have resulted in considerable efficiency gains and cost reductions in the SETF, ranging from 1.8 to 3.5 cents per kilogram for surveyed vessels for every one per cent increase in the volume of quota traded, or 1 to 2.4 per cent of total variable costs, with considerable gains also accruing to crew and skipper in the form of larger payments. Mean vessel efficiency is relatively high in the SETF, estimated at over 90 per cent, and increases further to 92 per cent over the sample period with increased trades in quota.

Suggested Citation

  • Kompas, Tom & Che, Tuong Nhu, 2003. "Efficiency Gains and Cost Reductions from Individual Transferable Quotas: A Stochastic Cost Frontier for the Australian South East Fishery," 2003 Conference (47th), February 12-14, 2003, Fremantle, Australia 57907, Australian Agricultural and Resource Economics Society.
    • Handle: RePEc:ags:aare03:57907
    DOI: 10.22004/ag.econ.57907
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    Cited by:

    1. José-María Da-Rocha & Jaume Sempere, 2017. "ITQs, Firm Dynamics and Wealth Distribution: Does Full Tradability Increase Inequality?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 68(2), pages 249-273, October.
    2. Zafer Kanik & Serkan Kucuksenel, 2013. "The Promise of Transferable Fishing Concessions on EU Fisheries," ERC Working Papers 1312, ERC - Economic Research Center, Middle East Technical University, revised Dec 2013.
    3. Dennis Fixler & Ryan Greenaway-McGrevy, 2012. "Valuation of Near-Market Endogenous Assets," BEA Working Papers 0083, Bureau of Economic Analysis.
    4. Little, L. Richard & Punt, André E. & Mapstone, Bruce D. & Begg, Gavin A. & Goldman, Barry & Williams, Ashley J., 2009. "An agent-based model for simulating trading of multi-species fisheries quota," Ecological Modelling, Elsevier, vol. 220(23), pages 3404-3412.
    5. Pascoe, Sean & Hutton, Trevor & Hoshino, Eriko & Sporci, Miriana & Yamasaki, Satoshi & Kompas, Tom, 2020. "Effectiveness of harvest strategies in achieving multiple management objectives in a multispecies fishery," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 64(3), July.
    6. Ronald Felthoven & William Horrace & Kurt Schnier, 2009. "Estimating heterogeneous capacity and capacity utilization in a multi-species fishery," Journal of Productivity Analysis, Springer, vol. 32(3), pages 173-189, December.
    7. Péreau, J.-C. & Doyen, L. & Little, L.R. & Thébaud, O., 2012. "The triple bottom line: Meeting ecological, economic and social goals with individual transferable quotas," Journal of Environmental Economics and Management, Elsevier, vol. 63(3), pages 419-434.
    8. Daniel Solís & Larry Perruso & Julio del Corral & Brent Stoffle & David Letson, 2013. "Measuring the initial economic effects of hurricanes on commercial fish production: the US Gulf of Mexico grouper (Serranidae) fishery," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 66(2), pages 271-289, March.
    9. Blane Lewis, 2006. "Local government taxation: An analysis of administrative cost inefficiency," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 42(2), pages 213-233.
    10. Felthoven, Ronald G. & Horrace, William C. & Schnier, Kurt E., 2006. "Estimating Heterogeneous Primal Capacity and Capacity Utilization Measures in a Multi-Species Fishery," 2006 Annual meeting, July 23-26, Long Beach, CA 21276, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    11. Kanik, Zafer & Kucuksenel, Serkan, 2014. "Transferable Fishing Concessions and EU Fisheries," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 183092, European Association of Agricultural Economists.
    12. Kevin J. Fox & R. Quentin Grafton & Tom Kompas & Tuong Nhu Che, 2006. "Capacity reduction, quota trading and productivity: the case of a fishery ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 50(2), pages 189-206, June.
    13. Kiyama, Shoichi & Yamazaki, Satoshi, 2022. "Product switching and efficiency in a declining small-scale fishery," Ecological Economics, Elsevier, vol. 193(C).
    14. 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.
    15. Nazneen K. Chowdhury & Tom Kompas & Kaliappa Kalirajan, 2010. "Impact of control measures in fisheries management: evidence from Bangladesh's industrial trawl fishery," Economics Bulletin, AccessEcon, vol. 30(1), pages 765-773.
    16. Sanchirico, James & Holland, Daniel & Quigley, Kathryn & Fina, Mark, 2005. "Analysis of Flexibility Mechanisms for Quota-Catch Balancing in Multispecies Individual Fishing Quotas," RFF Working Paper Series dp-05-54, Resources for the Future.
    17. Solís, Daniel & del Corral, Julio & Perruso, Larry & Agar, Juan J., 2014. "Evaluating the impact of individual fishing quotas (IFQs) on the technical efficiency and composition of the US Gulf of Mexico red snapper commercial fishing fleet," Food Policy, Elsevier, vol. 46(C), pages 74-83.
    18. Keisaku Higashida & Kenta Tanaka & Shunsuke Managi, 2011. "Is the behavior of fishers rational under Individual Transferable Quotas (ITQs) regimes? An Experimental Approach," Discussion Paper Series 73, School of Economics, Kwansei Gakuin University, revised Aug 2011.

    More about this item

    Keywords

    International Relations/Trade;

    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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