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Can property rights solve Can property rights solve fisheries collapse?fisheries collapse?
Christopher Costello*Christopher Costello*Associate Professor – Resource EconomicsAssociate Professor – Resource Economics
Bren SchoolBren School
Advisory Board Address: April 11, 2007Advisory Board Address: April 11, 2007
* [email protected]: Environmental Defense
Fisheries are DecliningFisheries are Declining
• Ecological collapseEcological collapse– BiodiversityBiodiversity– Productive capacity Productive capacity – Ocean healthOcean health
• Economic collapseEconomic collapse– Lost jobsLost jobs– Working waterfrontsWorking waterfronts– Economic valueEconomic value
Worm et al. 2006. Science.
Economics 101: IncentivesEconomics 101: Incentives
• Open Access FisheriesOpen Access Fisheries– Entry until no further Entry until no further
incentive incentive
• Managed FisheriesManaged Fisheries– Excessive investmentExcessive investment– Race to fishRace to fish– Destructive fishing Destructive fishing
technologytechnology– Short seasonsShort seasons– Poor quality productPoor quality product
• Stocks decline, Economic Stocks decline, Economic value is lostvalue is lost– Costs ~$75B to make $70B Costs ~$75B to make $70B
in Revenue in Revenue Fishing Effort
EconomicReturn
Cost
Revenue
E*
Max Economic Profit from fishing effort, E*
An Alternative: An Alternative: Dedicated Dedicated AccessAccess
Taxis in NYC…Taxis in NYC…
• Assign “dedicated access privileges”Assign “dedicated access privileges”
• Securitize an asset for the fishermanSecuritize an asset for the fisherman– Platform for investment, trade Platform for investment, trade
• Economic TheoryEconomic Theory: : Have your fish and eat them tooHave your fish and eat them too
• Recent reports provides strong supportRecent reports provides strong support– Biodiversity, economic returns, stability, jobsBiodiversity, economic returns, stability, jobs– By 2015: $140B/yr revenue, $90B/yr profitBy 2015: $140B/yr revenue, $90B/yr profit
Catch SharesCatch Shares
• Individual Transferable Individual Transferable QuotasQuotas
• Can lease/sell rightCan lease/sell right• Scientific ChallengesScientific Challenges
– Set quotaSet quota– Allocate permitsAllocate permits– Establish trading rulesEstablish trading rules
• AK Halibut, Canada AK Halibut, Canada groundfish, NZ groundfish, NZ fisheries, Iceland fisheries, Iceland fisheriesfisheries
0 100 200 300 400 500 600 700 800 900 10000
50
100
150
200
250
Stock
Gro
wth
T
t
hdtecEph
hKxrxx
0
)(max
)/1(
Spatial Property RightsSpatial Property Rights
• ““Territorial User Territorial User Rights in Fishing” Rights in Fishing” (TURFs)(TURFs)
• Incentive to preserve Incentive to preserve stockstock
• Scientific Challenges:Scientific Challenges:– Match ecology and Match ecology and
economicseconomics
• Distinct from Distinct from marine marine protected areasprotected areas
• Used extensively in Used extensively in
Japan, Chile, MexicoJapan, Chile, Mexico
James Watson: F3 Biocomplexity
Vizcaino, Baja California
Santa Barbara Channel, CA
CooperativesCooperatives
• Group of fishermen Group of fishermen cooperate on:cooperate on:– Harvest Harvest – MonitoringMonitoring– MarketingMarketing
• Governance & Governance & bioeconomicsbioeconomics– Co-managementCo-management
• Lobster - Baja CaliforniaLobster - Baja California• Sea Urchins – San DiegoSea Urchins – San Diego• Geoduck Clam - CanadaGeoduck Clam - Canada
Producción de Langosta FEDECOOP
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1970 1975 1980 1985 1990 1995 2000 2005
Temporada de Pesca
Kg
FEDECOOP: Mario Ramade
FEDECOOP: Mario Ramade
From Science to SolutionsFrom Science to Solutions
• Sustainable Fisheries Group Sustainable Fisheries Group
• ““Barefoot Ecology”Barefoot Ecology”
• ““Biocomplexity” researchBiocomplexity” research
• Ocean Governance - GSDOcean Governance - GSD
• California’s Ocean Protection CouncilCalifornia’s Ocean Protection Council– California Fisheries Fund ($2M to $17M)California Fisheries Fund ($2M to $17M)
Policy QuestionsPolicy Questions
• Privatizing the oceans? Presents a paradox:Privatizing the oceans? Presents a paradox:– More public control, less security in rightsMore public control, less security in rights– Less security in rights, less investmentLess security in rights, less investment
• Private sector investment?Private sector investment?– New financial instruments New financial instruments – Political viability?Political viability?– Attractive to investors?Attractive to investors?
• Further Questions?Further Questions?
Photo: Environmental Defense