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Asset Pricing in Created Markets for Fishing Quotas

Author

Listed:
  • Newell, Richard
  • Papps, Kerry
  • Sanchirico, James

Abstract

We investigate the applicability of the present-value asset pricing model to fishing quota markets by applying instrumental variable panel data estimation techniques to 15 years of market transactions from New Zealand’s individual fishing quota market. In addition to the influence of current fishing rents (as measured by lease prices), we explore the effect of market interest rates, risk, and expected changes in future rents on quota asset prices. Controlling for these other factors, the results support a fairly simple relationship between quota asset and contemporaneous lease prices. Consistent with theoretical expectations, the results indicate that quota asset prices are positively related to declines in interest rates, lower levels of risk, expected increases in future fish prices, and expected cost reductions from rationalization under the quota system. However, the magnitude of some interrelationships is muted relative to what theory suggests, possibly due to measurement error.

Suggested Citation

  • Newell, Richard & Papps, Kerry & Sanchirico, James, 2005. "Asset Pricing in Created Markets for Fishing Quotas," Motu Working Papers 292894, Motu Economic and Public Policy Research.
    • Handle: RePEc:ags:motuwp:292894
    DOI: 10.22004/ag.econ.292894
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    Cited by:

    1. D. Radi & F. Lamantia & G.I. Bischi, 2025. "Benefits and Perils of Integrated Data Systems in Managing Sustainable Fishing Quotas," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 88(11), pages 2845-2883, November.
    2. Estelle Cantillon & Aurélie Slechten, 2024. "Market Design for the Environment," NBER Chapters, in: New Directions in Market Design, pages 31-63, National Bureau of Economic Research, Inc.
    3. Aaron Hatcher, 2022. "A Model of Quota Prices in a Multispecies Fishery with “Choke” Species and Discarding," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 82(4), pages 825-846, August.
    4. repec:isu:genstf:202502111727480000 is not listed on IDEAS
    5. Rickard, Amelia & Wagner, Jeffrey & Schull, Jonathan, 2017. "Observations on the technology and economics of digital emissions," Technology in Society, Elsevier, vol. 48(C), pages 28-32.
    6. Kastoryano, Stephen & Vollaard, Ben, 2022. "Nautical Patrol and Illegal Fishing Practices," Discussion Paper 2022-016, Tilburg University, Center for Economic Research.
    7. McDermott, Shana M. & Finnoff, David C. & Shogren, Jason F. & Kennedy, Chris J., 2021. "When does natural science uncertainty translate into economic uncertainty?," Ecological Economics, Elsevier, vol. 184(C).
    8. repec:ags:aaea22:335749 is not listed on IDEAS
    9. Alan Randall, 2021. "Resource Scarcity and Sustainability—The Shapes Have Shifted but the Stakes Keep Rising," Sustainability, MDPI, vol. 13(10), pages 1-16, May.
    10. Kastoryano, Stephen & Vollaard, Ben, 2023. "Unseen annihilation: Illegal fishing practices and nautical patrol," Journal of Environmental Economics and Management, Elsevier, vol. 122(C).
    11. Byrne, Conor & Oostdijk, Maartje & Agnarsson, Sveinn & Davidsdottir, Brynhildur, 2024. "The Transitional Gains Trap in Grandfathered Individual Transferable Quota Fisheries," Ecological Economics, Elsevier, vol. 215(C).
    12. Guo, Xinyu & Kedagni, Desire & Weninger, Quinn, "undated". "Strategic underproduction and ownership limit policy in cap-and-trade," ISU General Staff Papers 202112212129530000, Iowa State University, Department of Economics.
    13. Pascoe, Sean & Scheufele, Gabriela, 2025. "Monetising fisheries provisioning services from multispecies fisheries in ecosystem accounts: introducing rent revenue shares," Ecosystem Services, Elsevier, vol. 76(C).
    14. Richard T. Woodward & Amanda Stronza & Elizabeth Shapiro‐Garza & Lee A. Fitzgerald, 2014. "Market‐based conservation: Aligning static theory with dynamic systems," Natural Resources Forum, Blackwell Publishing, vol. 38(4), pages 235-247, November.
    15. Philippe Bontems & Celine Nauges, 2018. "Production choices with water markets and risk aversion: the role of initial allocations and forward trading," Post-Print hal-02349932, HAL.
    16. Alisher Tleubayev & Tinoush Jamali Jaghdani & Linde Gotz & Miranda Svanidze, 2021. "The relationship between trade policies and macroeconomic adjustments in the Russian cheese market integration," Journal of New Economy, Ural State University of Economics, vol. 22(3), pages 44-68, October.
    17. Jeffrey Wielgus & Monica Grasso & Charles Colgan & Jennifer Zhuang & Sarah Siegel & Joseph Conran & Tadesse Wodajo, 2024. "Natural Capital Considerations for an Extension of the US Marine Economy Satellite Account," NBER Chapters, in: Measuring and Accounting for Environmental Public Goods: A National Accounts Perspective, pages 219-241, National Bureau of Economic Research, Inc.
    18. Moor, Jordan & Asche, Frank & Ropicki, Andrew J., 2023. "Renewable resource market responses under rights-based management: linkages in Gulf of Mexico fisheries," 2023 Annual Meeting, July 23-25, Washington D.C. 335749, Agricultural and Applied Economics Association.
    19. Reimer, Matthew N. & Abbott, Joshua K. & Haynie, Alan C., 2022. "Structural behavioral models for rights-based fisheries," Resource and Energy Economics, Elsevier, vol. 68(C).
    20. Tleubayev, Alisher & Jamali Jaghdani, Tinoush & Götz, Linde & Svanidze, Miranda, 2021. "The relationship between trade policies and macroeconomic adjustments in the Russian cheese market integration," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 22(3), pages 44-68.
    21. Asproudis, Elias & Filippiadis, Eleftherios, 2021. "Bargaining for Community Fishing Quotas," MPRA Paper 107409, University Library of Munich, Germany.
    22. Mani Rouhi Rad & Taro Mieno & Nicholas Brozović, 2022. "The Role of Search Frictions and Trading Ratios in Tradable Permit Markets," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 82(1), pages 101-132, May.

    More about this item

    Keywords

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    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
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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