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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
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    Cited by:

    1. 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.
    2. repec:kap:enreec:v:68:y:2017:i:2:d:10.1007_s10640-016-0017-3 is not listed on IDEAS
    3. 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.
    4. repec:eee:ecomod:v:220:y:2009:i:23:p:3404-3412 is not listed on IDEAS
    5. 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.
    6. 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.
    7. 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.
    8. Sanchirico, James & Holland, Daniel & Quigley, Kathryn & Fina, Mark, 2005. "Analysis of Flexibility Mechanisms for Quota-Catch Balancing in Multispecies Individual Fishing Quotas," Discussion Papers dp-05-54, Resources For the Future.

    More about this item

    Keywords

    Individual transferable quotas; stochastic cost frontier; fishery efficiency; International Relations/Trade; Q22; Q28;

    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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