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Efficiency Costs of Social Objectives in Tradable Permit Programs

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  • Kailin Kroetz
  • James N. Sanchirico
  • Daniel K. Lew

Abstract

Objectives of tradable permit programs are often broader than internalizing an externality and improving economic efficiency. Many programs are designed to accommodate community, cultural, and other nonefficiency goals through restrictions on trading. However, restrictions can decrease economic efficiency gains. We use a policy experiment from the Alaska halibut and sablefish tradable permit program, which includes both restricted and unrestricted permits, to develop one of the few empirical measurements of the costs of meeting nonefficiency goals. We estimate that restrictions are reducing resource rent in the halibut and sablefish fisheries by 25% and 9%, respectively.

Suggested Citation

  • Kailin Kroetz & James N. Sanchirico & Daniel K. Lew, 2015. "Efficiency Costs of Social Objectives in Tradable Permit Programs," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 2(3), pages 339-366.
    • Handle: RePEc:ucp:jaerec:doi:10.1086/681646
    DOI: 10.1086/681646
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    3. Reimer, Matthew N. & Haynie, Alan C., 2018. "Mechanisms matter for evaluating the economic impacts of marine reserves," Journal of Environmental Economics and Management, Elsevier, vol. 88(C), pages 427-446.
    4. Reimer, Matthew N. & Rogers, Anthony & Sanchirico, James, 2024. "Adaptive Systems for Climate-Ready Fisheries Management," RFF Working Paper Series 24-06, Resources for the Future.
    5. Watson, Brett & Reimer, Matthew N. & Guettabi, Mouhcine & Haynie, Alan, 2021. "Commercial fisheries & local economies," Journal of Environmental Economics and Management, Elsevier, vol. 106(C).
    6. Jardine, Sunny L. & Fisher, Mary C. & Moore, Stephanie K. & Samhouri, Jameal F., 2020. "Inequality in the Economic Impacts from Climate Shocks in Fisheries: The Case of Harmful Algal Blooms," Ecological Economics, Elsevier, vol. 176(C).
    7. Garlock, Taryn M. & Asche, Frank & Akpalu, Wisdom & Amaechina, Ebele Chinelo & Chukwuone, Nnaemeka Andegbe & Hutchings, Ken & Lokina, Razack & Tibesigwa, Byela & Turpie, Jane & Eggert, Håkan, 2020. "Fisheries Performance in Africa: An Analysis Based on Data from 14 Countries," EfD Discussion Paper 20-24, Environment for Development, University of Gothenburg.
    8. Maogang Tang & Ruihan Zhang & Zhen Li & Baijun Wu, 2021. "Assessing the impact of tradable discharge permit on pollution reduction and innovation: micro-evidence from Chinese industrial enterprises," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(11), pages 16911-16933, November.
    9. Standal, Dag & Sønvisen, Signe Annie & Asche, Frank, 2016. "Fishing in deep waters: The development of a deep-sea fishing coastal fleet in Norway," Marine Policy, Elsevier, vol. 63(C), pages 1-7.
    10. Holzer, Jorge & McConnell, Kenneth, 2023. "Extraction rights allocation with liquidity constraints," Resource and Energy Economics, Elsevier, vol. 71(C).
    11. Keita Abe & Linda Nøstbakken & Mads Fjeld Wold, 2024. "Quota Consolidation in Norwegian Coastal Fisheries," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 87(5), pages 1295-1326, May.
    12. Nielsen, Rasmus & Hoff, Ayoe & Waldo, Staffan & Hammarlund, Cecilia & Virtanen, Jarno, 2019. "Fishing for nutrients – economic effects of fisheries management targeting eutrophication in the Baltic Sea," Ecological Economics, Elsevier, vol. 160(C), pages 156-167.
    13. Anna M. Birkenbach & Andreea L. Cojocaru & Frank Asche & Atle G. Guttormsen & Martin D. Smith, 2020. "Seasonal Harvest Patterns in Multispecies Fisheries," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 75(3), pages 631-655, March.
    14. Andries Richter & Anne Maria Eikeset & Daan Soest & Florian Klaus Diekert & Nils Chr. Stenseth, 2018. "Optimal Management Under Institutional Constraints: Determining a Total Allowable Catch for Different Fleet Segments in the Northeast Arctic Cod Fishery," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 69(4), pages 811-835, April.

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    More about this item

    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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