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Harvest Efficiency and Discards under Harvest Uncertainty and Trading Frictions

  • Singh, Rajesh
  • Weninger, Quinn

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.

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File URL: http://www.econ.iastate.edu/sites/default/files/publications/papers/p15039-2012-04-03.pdf
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Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 35039.

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Date of creation: 02 Apr 2012
Date of revision:
Publication status: Forthcoming in Journal of Environmental Economics and Management
Handle: RePEc:isu:genres:35039
Contact details of provider: Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
Web page: http://www.econ.iastate.edu
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  1. 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.
  2. 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.
  3. 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.
  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. Stavins Robert N., 1995. "Transaction Costs and Tradeable Permits," Journal of Environmental Economics and Management, Elsevier, vol. 29(2), pages 133-148, September.
  6. 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.
  7. Herrera, Guillermo E., 2005. "Stochastic bycatch, informational asymmetry, and discarding," Journal of Environmental Economics and Management, Elsevier, vol. 49(3), pages 463-483, May.
  8. Holland, D.S., 2010. "Markets, pooling and insurance for managing bycatch in fisheries," Ecological Economics, Elsevier, vol. 70(1), pages 121-133, November.
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