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Harvest Efficiency and Discards under Harvest Uncertainty and Trading Frictions

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  • Singh, Rajesh
  • Weninger, Quinn

Abstract

We study harvesting efficiency and the problem of discards under harvest uncertainty in a fishery that is managed with quotas. With only idiosyncratic harvest uncertainty, we show that frictionless post harvest quota trade can achieve full efficiency and eliminate quota-overage discards completely. In the absence of such trade, we deduce an ad-valorem tax/subsidy that eliminates discards while delivering a desired aggregate harvest target. Alternatively, we show that a hybrid policy, i.e., a combined quota and landings fee, can implement a manager's aggregate target harvest level efficiently and without discards. When harvest shocks, in addition, have a fishery-wide common component, post-harvest quota trading per se cannot eliminate discards; policy intervention in the form of either landing taxes or a hybrid scheme is needed. Given the prevalence of trading restrictions in many quota-managed fisheries worldwide, our paper offers important policy advice.

Suggested Citation

  • Singh, Rajesh & Weninger, Quinn, 2012. "Harvest Efficiency and Discards under Harvest Uncertainty and Trading Frictions," Staff General Research Papers Archive 35039, Iowa State University, Department of Economics.
  • Handle: RePEc:isu:genres:35039
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    File URL: http://www2.econ.iastate.edu/papers/p15039-2012-04-03.pdf
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    References listed on IDEAS

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    1. Neary, J. P. & Roberts, K. W. S., 1980. "The theory of household behaviour under rationing," European Economic Review, Elsevier, vol. 13(1), pages 25-42, January.
    2. Stavins Robert N., 1995. "Transaction Costs and Tradeable Permits," Journal of Environmental Economics and Management, Elsevier, vol. 29(2), pages 133-148, September.
    3. Boyce, John R., 1996. "An Economic Analysis of the Fisheries Bycatch Problem," Journal of Environmental Economics and Management, Elsevier, vol. 31(3), pages 314-336, November.
    4. Squires, Dale, 1987. "Fishing effort: Its testing, specification, and internal structure in fisheries economics and management," Journal of Environmental Economics and Management, Elsevier, vol. 14(3), pages 268-282, September.
    5. Herrera, Guillermo E., 2005. "Stochastic bycatch, informational asymmetry, and discarding," Journal of Environmental Economics and Management, Elsevier, vol. 49(3), pages 463-483, May.
    6. Holland, D.S., 2010. "Markets, pooling and insurance for managing bycatch in fisheries," Ecological Economics, Elsevier, vol. 70(1), pages 121-133, November.
    7. 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.
    8. Squires, Dale & Campbell, Harry & Cunningham, Stephen & Dewees, Christopher & Grafton, R Quentin & Herrick, Samuel F & Kirkley, James & Pascoe, Sean & Salvanes, Kjell & Shallard, Bruce & Turris, Bruce, 1998. "Individual transferable quotas in multispecies fisheries," Marine Policy, Elsevier, vol. 22(2), pages 135-159, March.
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    Cited by:

    1. Rajesh Singh & Quinn Weninger, 2017. "Cap-and-trade under transactions costs and factor irreversibility," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 64(2), pages 357-407, August.
    2. Singh, Rajesh & Weninger, Quinn, 2012. "Harvesting uncertainty and discards in multiple-species fisheries," Staff General Research Papers Archive 35428, Iowa State University, Department of Economics.

    More about this item

    Keywords

    Trading frictions; discards; Harvest randomness; catch-quota imbalance;

    JEL classification:

    • Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation

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