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Eric BosseMicro Theory11/28/2015

Prof. Debashis Pal“Tragedy of the Commons: an in-depth look at

over fishing across the world”

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With advancements in technology and medicine, population growth

since the industrial revolution has increased at a rapid pace. To

balance this increase in population, world food supplied have

increased dramatically, and with advances in preservatives and

introduction of the refrigerator and freezer, along with wage growth

and economies of scale, have lead food prices to become more

economically affordable then before these advances. However, this

increased demand has not led efficient outcomes for all parties,

particularly in the fishing sector. Increases in the demand for fish

has led many economic and ecological problems. Tragedy of the commons

as it is often used, is the main issue in the overfishing dilemma that

the world faces. For example, data coming from the Law that’s Saving

Americas Fisheries, there has been a “150% Increase in value of Alaska

seafood exports, 2000-2011” (Crockett 5).

It is easy in today’s world to point fingers at someone, and this

scenarios is no different. Those may blame the fisherman for this

problem. This is not the case, because fisherman are just acting

rationally. Consider that the demand for fish attracts profits. When a

potential new entrant sees fisherman obtaining profits, those new

fisherman will enter the market. Due to fairly low barriers to entry,

requiring a boat, nets, payments of workers, aren’t that expensive

relative to the payout, and they can attempt to earn a living doing

that. From there, other potential fisherman will try to enter the

fishing market until long run economic profits equal zero, much like

any other business or market.

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The problems it, they are all pulling from the same place. There

is a finite amount of fish swimming in the ocean at any given time.

Pulling those fish out of the ocean for consumption, limiting the

number of fish available for breeding and reproduction to replenish

fish populations. This can lead to other issues, such as disrupting

the ecosystem and the food chain. Nobody can point blame at the

sharks, they’re thinking rationally as well, they also have to eat.

Coming from the NOAA Fisheries Status of Stocks 2014, “U.S. fisheries

play an important role in the nation’s economy… Fisheries Economics of

the United States that commercial and recreational fisheries

contribute $199 billion per year to the U.S. economy and support 1.7

million jobs”, indicating that fisherman are an important part of our

nation’s economy”

Below is a model distinguishing the problem with over fishing.

Setting the total quantity of fish used of fishing at Q, and the

number of firms in the market at X, and the amount of fish pulled for

each X at Y. Total fish production becomes F. From there we derive the

basic equation

F=(X*Y) (1)

Using the 1.7 million jobs would be inaccurate number for our

model because it’s doubtful one person is working on a boat all by

themselves. An article posted by Branden Eastwood on

MatadorNetwork.com suggests that 6 total people work on a boat at one

time. 1.7million/6=283,333, rounding to 283,500 for simplicity. This

is the number of firms in our model.

F= (283,500*Y) (2)

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It is unknown the exact population for all the possible fish in

the ocean. Therefore finding an exact number of Q is impossible.

However we can state that at any given point that Q is a fixed number.

From there we can see that our third equation shows how world fishing

stocks can be depleted, by looking at Tf = Total Fishing Reserves

Tf=Q-F (3)

Equation 2 can be substituted into 3, creating equation 4, which

looks at the number of total fish produced looking at firms and their

productions.

Tf=Q-(283,500*Y) (4)

As referenced previously, Q is constant, and firms have low

barriers to entry, meaning the X, or 283,500 number can increase. With

increases in efficiency in fishing, there could be increases in the

pull for each fisherman. This could lead to decreases in the total

fish reserves left in the ocean.

From a standpoint of the fisherman, they know if they choose to

not participate in the fishing market, other firms who do participate

in the market will obtain those fish that the firm that left could

have obtained for themselves. Say, there were 283,400 firms, then the

total level of fish reveres would decrease because there are less

firms pulling, but it is not a one for one decrease because the firms

who stayed are pulling the fish the 100 who left could have pulled.

The average pull for each firm, designated as Q/X, increases as

firms leave the market, and decrease as firms enter. If X decreases

from 283,500 to 283,400, the average pull for a fisherman increases,

giving incentive for other firms to enter the market to replace those

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who left. This further brings down the average of fish pulled for each

firm. Knowing that, firms wouldn’t want to leave the market because if

they try to reenter after leaving, they will pull less than they did

before.

Due to the market equilibrium of fisherman and the demand for

fish being higher than the supply of fish in the ocean, there becomes

the issue of tragedy of the commons. The ocean has no distinct

property rights, other than a counties shores, theoretically anyone

can pull from the limited resources and contribute to the problem.

One attempt to limit the amount of fish pulled from the ocean was

set up by the Fishery Conservation and Management Act of 1976, where

they extended national jurisdiction of a nations shore to 200 miles of

the coast. Doing this set parameters as to how far out a fisherman can

legally pull from. Creating the cap of 200 miles limits how many

fished can be pulled from the ocean. Before the property rights were

established, boats could go out far out into the oceans to pull fish.

Now that the cap has been set, there can only be so many fish pulled

from that particular stretch of 200 miles that it decreases how bad

the problem could be, reducing the scope of the issue. Fish have the

potential to migrate do different parts of the ocean if one particular

section is constantly being used for taking those recourses, being one

step ahead of the fisherman.

Other forms of government intervention occur as well, in ways

that may not be beneficial to fish populations. In an attempt to

protect workers from economic conditions and to stabilize those

markets, governments set up programs to help workers in an event some

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natural disaster occurs or there’s some oil spill that affects that

workers income. The following is such a government program, set up

much like farmers subsidies to keep them producing crops.

“The Fishermen's Contingency Fund (FCF) was established to

compensate fishermen for economic and property losses caused by oil

and gas obstructions on the U.S. Outer Continental Shelf. The fund was

established in the U.S. Department of the Treasury, without fiscal

year limitation, as a revolving fund comprised of assessments paid by

offshore oil and gas interests. Compensation for economic loss is

based on 50 percent of gross income lost, rather than loss of

profits.” (Fisherman).

This program more or less helps insure half of the wages of

a fisherman in the event they are prevented from working from an

outside source. Since the probability of a natural disaster affecting

fisherman occurring is relatively low, say µ, their expected value of

fishing increases. Say that median salary of a fisherman is 33,430 as

of 2012, coming from the Bureau of Labor Statistics, and assuming the

probability of natural disaster is µ, the expected value of a

fisherman’s salary is µ*(33430/2)+(1- µ)*(33430) (BLS). Pulling from

Table 2 of the Oil-Spill Risk Analysis published by the Bureau of

Ocean Energy Management in July of 2013, comes a variety of

probabilities different oil spills that could possibly affect

fisherman (Ji 16). A table is created below to show the different

expected values of a fisherman’s salary.

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Below it can be shown graphically, as the probability of an oil

spill increases, the lower the wage drops.

0.11 0.13 0.18 0.25 0.34 0.880

5000100001500020000250003000035000

Expected Value of protected vs non-protected wages of fisherman

Wages Protected Wages Not Protected

Probability of Oil spill

Expe

cted

Val

ue o

f Sal

ary

Notice how the protected wages are higher than those are not. At

any µ, the fisherman are more or less risk adverse. Their expected

value for participating without the government assurance of protecting

their salaries, fisherman will not leave the fishing market and

continue to fish. This could possibly lead to more people entering the

fishing market because being protected by the government if there was

such a disaster or something effecting their wages, they have a sort

of safety net that most other jobs don’t provide. This prevents any

limitations on new entrants into the market. Because the fishing

market is extremely competitive with low barriers to entry, there no

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large firms dominate the market. Therefore, it’s possible that many

new entrants could come in and pull fish resources from the ocean and

sell them. With low barriers on who can fish, it’s possible that the

governments protection of fisherman’s wages could encourage

overfishing by allowing new entrants into the market.

There are some out there that argue that if fisherman are assure

a long term and exclusive right to fishing, they will act in the same

way that farms will. The argument is that fisherman are not confident

that their jobs are going to last no longer than any other job in the

market. There becomes a lot of uncertainty that comes from this,

therefore they do not know how long they have until their job is

likely to stay around. Rationally thinking, they are most likely going

to maximize their utility, in this case salary, as long as they can

until they no longer can.

Farmers didn’t learn immediately that they had to rotate crops

to ensure that a specific plant was not pulling all of the nutrients,

minerals, and elements from the ground. The same logic is going to

apply to fisherman, since there has only been large quantities of

fishing jobs since the beginning of the 20th century. Large scale

Fishing, compared to farming, is relatively new. The market may not be

achieving long run equilibrium. Demand has increased since 1994, while

supply has decreased. There’s only a finite number of fish in the

ocean, pulling some out that could repopulate is going to lead to

lower long run supplies. So until policymakers can find a way to limit

the amount of fish being pulled from the ocean without affecting

fisherman’s salaries and income, the fisherman have no incentive to

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deviate from their fishing jobs. Their best options would be to

continue to fish until they no longer can fish, whether that be when

they are retired or the world’s fish supply runs out.

In the time since the original article was published in the

Economist in 1994, global fish stocks have decreased even further.

Deriving from an article published in the weekly journal Nature in the

year 2000, a variety of authors speak about the effects of over

fishing, including “Global production of farmed fish and shellfish has

more than doubled in the past 15 years”. They go on to state that

“Between 1987 and 1997, global production of farmed fish and shellfish

(collectively called 'fish') more than doubled in weight and value, as

did its contribution to world fish supplies”. This can only make

fishing stocks lower with no indication of increasing populations.

Another point they make in the article goes as follows,

“Aquaculture production, meanwhile, has surged, particularly

during the past 10–15 years. Farmed fish supplies totaled 29 Mt in

1997, compared with 10 Mt a decade ago1. Such growth helps to explain

current patterns in ocean fish capture; between 1986 and 1997, 4 of

the top 5, and 8 of the top 20 capture species were used in feed

production for the aquaculture and livestock industries”.

Furthering the evidence that the worlds fish stocks have

decreased. Intuitively, this makes sense. There are only a finite

amount of fish in the ocean, and with fisherman pulling more and more

to meet increased demand due to higher preference and populations.

This does not only happen in the United States, as “The production of

carp has increased markedly in Asia (mainly China) for local or

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regional consumption by relatively low-income households. In contrast,

increased volumes of salmon, shrimp and other high-value species have

been marketed mainly in industrialized countries”, indicating that

overfishing is a world problem, subject to more than just the oceans

surrounding the US.

Even though the problem of overfishing has increased since 1994,

there has been progress in attempts to limit overfishing and

repopulate fish communities. Another bill passed in 1976 the Magnuson-

Stevens act was enacted to help preserve world fishing stocks and

limit over fishing. After a revision in 2006, we see results of their

work, in “a new report by the National Research Council says 43

percent of overfished populations have been rebuilt already or will be

rebuilt within a decade. And if we continue to allow the Magnuson-

Stevens Act to work, another 31 percent of these populations are on

track toward rebuilding as well”. The MSA has had revisions and

reauthorizations since 1976, keeping up with the times.

To go along with that, in 2007, Annual Catch limits were set to

prevent overfishing, which in turn helps our ecosystem and it overall

better for the world. In the annual report to Congress on the status

of overfishing, it states that “Congress enacted a requirement to use

annual catch limits (ACLs) to end and prevent overfishing. The use of

ACLs has been successful to date and stock assessments show that the

number of stocks subject to overfishing continues to decline”. These

policy limits set how much fish can be pulled by fisherman to sell.

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Their Progress is shown in Table A, where we see declines in

overfishing and overfished aquatic life. We see that since the program

was established, overfishing has steadily decreased. Table B

reinforces the progress of the ACL’s and the MSA’s policy. Since those

programs and policies have been implemented, we see decreases in

overall overfishing, and fishing stocks have recovered from where they

were. These policies and government interventions have shown to be

effective in the attempt to eliminate over fishing. Table A comes from

NOAA Fisheries “Status of Stocks 2014” while Table B come from it’s a

Keeper: the Law that Saving American Fisheries, the Magnuson-Stevens

Fishery Conservation and Management Act. Both recognize the effect of

ACL’s on overfishing and their subsequent restrictions on the market.

Table A

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Table B

Reviewing which policies showed effectiveness of such policies,

it’s safe to say that establishing the ACL’s showed an immediate

effect of implementation of those policies. Coming from the NOAA

Fisheries web page on ACL’s they state that “By the end of 2014, 91

percent of annual catch limits were not exceeded and only 9 percent

were exceeded. There are a number of reasons to explain why catch may

exceed an annual catch limit in any given year”. The data supports it,

as the tables show decreases in the amount of fish stocks that are

being overfished or experience overfishing. Economic theory supports

this, if you limit the supply that fisherman are allowed to pull from

by fixing the quantity that can they can pull from, this will create a

new equilibrium. Assuming a constant demand function for fish, the

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price will increase, possibly deterring some from purchasing some fish

products. The following diagram shows more recent results of deterring

overfishing

These results are directly impacted by the ACLs set, showing

impacts 7 years later. The ACLs were effective due to them setting a

clear objective for fisherman to understand. It is unclear what the

repercussions of a firm who participates in overfishing, but it can be

assumed that government regulations strictly limit those who do

overfish, to the point where there a handful that could slip through

the cracks. With that being said, we can see direct results of the

limiting the quantity of fish produced.

Previously it was considered a market failure because the long

term quantity of fish was not equal to the long term price of fish.

The government then intervenes by setting the quantities, thus setting

a cap and allowing the market to become corrected as fish stocks begin

to recover.

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As much as these policies are effective, there are some policies

did not do much to the effect of preventing overfishing. Once again

referring to The Law that’s Saving America’s Fisheries, come the

following statement,

“For the first 20 years of U.S. fishery management, the law

broadly mandated that the councils prevent overfishing. But neither

the law nor agency guidelines included a specific and effective set of

tools for ensuring that the councils or the National Oceanic and

Atmospheric Administration’s Fisheries Service actually halted the

practice. Without a clear requirement for firm catch limits,

accountability measures, or action in keeping with scientific advice,

chronic overfishing reached crisis proportions in many U.S. fisheries”

Polices set forth in the 1970’s to the 1990’s did not set

distinct goals and objectives for overfishing, this left the oceans

open because there was no concrete rules and restrictions for

fisherman to follow (Crockett 12). There were more instances after the

passing of the Sustainable Fisheries Act in 1996, where poor

management led no signs of improvement in overfishing.

The reasons why these policies were ineffective were the fact

that they were unclear of what objectives were going to be set with

the restrictions. From the stand point of a fisherman, if you’re told

that your job is going to be restricted, but there comes no regulation

or repercussion if they do participate in over fishing, then they are

essentially losing utility or losing income they could have made if

they choose to obey those laws. This isn’t so much of an ineffective

policy due to how it affects fisherman’s output in preventing

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overfishing, but how the policy is effective at doing absolutely

nothing at all.

Although the polices set in between 1976 and 2006 were created in

an effort to lower overfishing, their lack of goals, management plans,

and limitations led to increases in overfishing, as seen in the

article in Nature Weekly. Thus giving fisherman no economic reason to

continue to pull from the oceans and increasing the tragedy of commons

issue. Until limitations and restrictions with backing from the

federal government, can the negative externality of overfishing be

adjusted to set stable long term fish populations to support the

demand of different types of fish around the world.

Appendix

From the Bureau of Ocean Energy Management, reporting to the US

Department of the Interior, (Ji 16)

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Works Cited

Bolen, Ellen. 2013. “U.S. Is Successfully Ending Overfishing and We

Can’t Afford to Stop Now”. Ocean Currents. Ocean Conservancy. 9

September 2013. Web.

<http://blog.oceanconservancy.org/2013/09/09/u-s-is-successfully-

ending-overfishing-and-we-cant-afford-to-stop-now/>

Bureau of Labor Statistics. 2014. “Fishers and Related Fishing

workers”. Occupational Outlook Handbook. United States Department

of Labor. Web. <http://www.bls.gov/ooh/farming-fishing-and-

forestry/fishers-and-related-fishing-workers.htm>

Christian-Albrechts-Universitaet zu Kiel. 2015 "Economic development

drives world-wide overfishing." ScienceDaily. ScienceDaily, 9

September 2015. Web.

<www.sciencedaily.com/releases/2015/09/150909130619.htm>.

Crockett, Lee and Chris Dorsett. 2013. “ It’s a Keeper, The Law that’s

Saving Americas Fisheries: The Magnuson-Stevens Fishery

Conservation and Management Act”. The Pew Charitable Trusts.

The Ocean Conservancy.

<http://www.oceanconservancy.org/our- work/fisheries/ff-msa-report-

2013.pdf>

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Overfishing: Consequences at the Commercial Level”. DUJS. Web.

<http://dujs.dartmouth.edu/winter-2012/the-threats-of-

overfishing-consequences-at-the-commercial-level#.VmYyPvmDGkq>

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Eastwood, Branden. 2014. “What’s it like to work on a Commercial

Fishing Boat in Alaska”. Matador Network. Matadornetwork.com.

Web. <http://matadornetwork.com/notebook/like-work-commercial-

fishing-boat-alaska/>

“Fisherman’s Contingency Fund” Benefits.Gov. Financial Services

Division of Federal Contingency Fund. 2015. Web.

<http://www.benefits.gov/benefits/benefit-details/2700%20>

Hardin, Garrett. 1968. “The Tragedy of the Commons”. The Garrett

Hardin Society. Science. Web.

<https://canopy.uc.edu/bbcswebdav/pid-14492452-dt-content-rid-

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Mexico Outer Continental Shelf (OCS) Lease Sales, Eastern

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Bureau of Ocean Energy Management. US Department of the Interior.

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tml>

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.htm>

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