Escolar Documentos
Profissional Documentos
Cultura Documentos
SALMON FISHERY
Area Licensing
Resulted in Stacking of licenses
Congestion externalities continued
CAPITAL STUFFING
Increased use of capital in fisheries
managed by limited entry
The destructive forces of open access are
transformed from attracting too many firms
to attracting too much capital per firm
Incentives of limited entry:
The cost-of-capital effect, the innovation effect,
ending the cross- substitution effect, or the
consumption effect
Ref: Townsend, On Capital Stuffing in Regulated
Fisheries, Land Economics, Vol. 61, No. 2 (May, 1985),
pp. 195-197
CAPITAL STUFFING
Restricted entry more stable & higher incomeinvestment is less risky- cost of capital is lower- incentive
to increase their use of capital
Marginally greater incentives for innovation under limited
entry - Under competition, the gains from innovation are
shared with a larger pool of firms - lower costs that arise
from innovation will tend to attract more firms encourage greater capital use by increasing the size of the
firm
Increase in utility function of the fisherman-consumer Additional investment (for ex- ample, in radar, sonar,
direction-finding equipment and the like) is an investment
in human comfort and safety - Income tax system
subsidizes this consumption
POLICY GOALS
Economically Efficient Use
Extent of rent dissipation
Ease of enforcement of regulations
Degree of flexibility
Preservation of the fishery
Number of Viable Runs
Equitable Distribution of costs and benefits
among stakeholders
Current license holders
Aboriginal fisheries
Taxpayers
Political Feasibility
POLICY ALTERNATIVES
POLICY ALTERNATIVES
Individual Transferable Quota Scheme
Fixed quotas as per %age shares of Salmon total
annual catch (TAC)
Certainty
Risk associated with fluctuations in harvest
1. ECONOMICALLY EFFICIENT
Curren HarvestingUSE
RiverIndividual
Impact
on Rent
Dissipati
on
t Policy Royalties
and
License
Auction
Specific
Auctioned
Monopolies
Transferable Quota
Scheme
Poor
Large
Negativ
e NPV
Capital
stuffing
outweig
hs
benefits
of buybacks
Excellent
Lowest cost
fish catching
regime; long
term property
rights
Good However, it
depends upon studies
conducted abroad.
GoodPreserve
more
potential
rent;
Eliminate
incentives of
CS b/c
partial
reduction in
fishing
costs;
Encourage
gradual
transfer of
licenses to
fishers
Certain researchers
disagree (Boyce 1992,
Costello & Deacon,
2007, Valcu &
Weninger, 2013) as
congestion
externalities continue
2. PRESERVATION OF FISHERIES
Impact on
Number of
Viable
Runs
Current
Policy
Harvesting
Royalties
and License
Auction
RiverSpecific
Auctioned
Monopolies
Individual
Transferable
Quota
Scheme
Very poor
high risks
Poor
Endangers
specific fish
stocksRoyalty tax
A price
mechanism
which runs
the risk of
costs
because of
information
asymmetry
Lack of
quotas and
opening
restrictions (it
will raise
GoodIncentive of
maximizing
NPV for
Monopoly
owners- Low
information
asymmetry
costs
Good provided
share quotas
used TAC
remains at
present level
of catch
3. EQUITABLE DISTRIBUTION
Current
Policy
Harvesting
Royalties and
License Auction
RiverSpecific
Auctioned
Monopolies
Individual
Transferable
Quota
Scheme
Fairness
to
current
license
Holders
Nominally
fair but not
so in
practice as
rent is
Defacto
property
rights at
nominal
prices
Excellent
incumbents
get ITQs with
low tax rates
and rents
would also
accrue
Fairness
to
Aborigin
al
Fishers
Nominally
fair but not
so in
practice as
rent is
Good subsidy to
acquire licenses
Good fixed
percentage of
monopolies
given to
aboriginals
Excellent
Hold
commerical
fishing
licenses
EQUITABLE DISTRIBUTION
Current
Policy
Harvesting
Royalties and
License Auction
RiverSpecific
Auctioned
Monopolies
Individual
Transferable
Quota
Scheme
Excellent
Generation of
revenues through
auction of
royalties and
reduction in
expenditure from
monitoring as the
fishing capacity is
reduced
Excellent
River
monopolies
act as low
cost regime
for catching
the fish- high
auctions
Dependent
High
administrativ
e costs v. 5
percent
collection on
TAC
4. POLITICAL FEASIBILITY
Current
Policy
Likelihoo High in
d of
place
Successf
ul
Adoption
Harvesting
Royalties and
License Auction
RiverSpecific
Auctioned
Monopolies
Individual
Transferable
Quota
Scheme
Highattractive to
incumbent
fishers
RECOMMEDNATION
Individual Transferable Quota Scheme
Uncertainty
River Specific Exclusive Ownership v.
Harvesting Royalties and License Auction
High rent dissipation as small boat removed and low
cost technology
Low cost of enforcement
Preservation of stock
Fairness to all stakeholders
Recommended:
Ownership