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Productivity and capacity reduction: the case of a fishery

  • Kevin J. Fox
  • R. Quentin Grafton
  • Tom Kompas
  • Tuong Nhu Che

The paper presents the first ex-post analysis of profit and productivity of individual vessels following a vessel or licence buyback in a fishery. Using individual firm-level data for the period 1997-2000, the paper analyzes a “natural experiment" of the effects of a 1997 scheme to reduce fishing capacity in the South East trawl fishery of Australia. The scheme was unique in the sense that the buyback was implemented in a fishery managed by individual vessel tradeable harvesting rights rather than input controls. Using an innovative index method that decomposes the contributions of output prices, input prices, vessel size and productivity to relative profits, the economic performance of vessels is analyzed in the year of the buyback and for three years afterwards. Profits for all vessel classes rose over the period 1997-2000 following the 1997 buyback of 27 fishing licences, but some of the gains were due to a rise in output prices that were independent of the adjustment program. All vessel classes (small and large) also experienced substantial productivity gains immediately following the 1997 licence buyback with an average increase over all vessels of 39%. This increase, coincident with a decline in catch per unit of effort for key species, provides strong support that the buyback was successful at improving economic performance. Ongoing productivity improvements for small vessels over the period 1998-2000 following the buyback is attributed to the existence of individual tradeable harvesting rights in the fishery

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File URL: https://crawford.anu.edu.au/degrees/idec/working_papers/IDEC03-2.pdf
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Paper provided by International and Development Economics in its series International and Development Economics Working Papers with number idec03-2.

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Length: 24 pages
Date of creation: 2003
Date of revision:
Handle: RePEc:idc:wpaper:idec03-2
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  1. Fox, Kevin J & Kohli, Ulrich & Warren, Ronald S, Jr, 2002. "Accounting for Growth and Output Gaps: Evidence from New Zealand," The Economic Record, The Economic Society of Australia, vol. 78(242), pages 312-26, September.
  2. Diewart, W Erwin & Morrison, Catherine J, 1986. "Adjusting Output and Productivity Indexes for Changes in the Terms of Trade," Economic Journal, Royal Economic Society, vol. 96(383), pages 659-79, September.
  3. Weninger, Quinn & McConnell, K. E., 2000. "Buyback Programs in Commercial Fisheries: Efficiency Versus Transfers," Staff General Research Papers 1834, Iowa State University, Department of Economics.
  4. Fox, Kevin J. & Grafton, R. Quentin & Kirkley, James & Squires, Dale, 2003. "Property rights in a fishery: regulatory change and firm performance," Journal of Environmental Economics and Management, Elsevier, vol. 46(1), pages 156-177, July.
  5. James Kirkley & Catherine Morrison Paul & Dale Squires, 2002. "Capacity and Capacity Utilization in Common-pool Resource Industries," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 22(1), pages 71-97, June.
  6. Dupont, Diane P., 1990. "Rent dissipation in restricted access fisheries," Journal of Environmental Economics and Management, Elsevier, vol. 19(1), pages 26-44, July.
  7. Allen, Robert C & Diewert, W Erwin, 1981. "Direct versus Implicit Superlative Index Number Formulae," The Review of Economics and Statistics, MIT Press, vol. 63(3), pages 430-35, August.
  8. Sean Pascoe & Louisa Coglan, 2002. "The Contribution of Unmeasurable Inputs to Fisheries Production: An Analysis of Technical Efficiency of Fishing Vessels in the English Channel," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(3), pages 585-597.
  9. Holland, Dan & Gudmundsson, Eyjolfur & Gates, John, 1999. "Do fishing vessel buyback programs work: A survey of the evidence," Marine Policy, Elsevier, vol. 23(1), pages 47-69, January.
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