Dan Holland: Economics and the Allocation of Fishery Resources

We know there's a high degree of uncertainty about how specific fisheries will be affected by climate change. We're pretty sure some will decline while others increase. Fisherman have a limited ability to respond to change -- slow to setup and develop ability to fish for a different species. Slow changes can be responded to, but quick and dramatic changes in productivity will hurt people, because our human structures and regulations don't permit rapid change.

Our fisheries have become more specific, because of excess fishing capacity. Regulation to limit fisheries has created specialized fishermen, less diversified.

Dan Holland runs us through the history of groundfish fishery access (driven by litigation by the Conservation Law Foundation). There is a system of A, B, and C days -- only active fishermen got A days, which are really the most usable days. B days are for special access programs. C days can't be used for the foreseeable future -- it's almost the effect of removing someone's permit. Further access restrictions are being contemplated in the Gulf of Maine.

Lobster management followed a different course: restrictions on the lobster fishing was geographically based, to allow for more local management. People can only fish within a little box; if the lobster fishery goes down in a geographic zone, a fisherman is screwed -- limited ability to switch zones. Scallop, red crab, and herring fisheries have been limited, too. This means that people who make a living by fishing have had to specialize in one particular species.

Although lobster landings in Maine have been going up since the late 1980s, it is flat or going down in MA and RI, and it's unlikely to go up forever.

How do we protect people who depend on marine resources for their living when they are not diversified and are therefore highly susceptible to the fluctuations of a particular species? The risk is coming -- how do we mitigate that risk?

• individual transferable quotas?
• fishing cooperatives that have access rights to multiple fisheries?

Both alternatives represent a major cultural change, and wouldn't be popular. Human culture change won't necessarily follow the same timeline of fishery population change or climate change.

Dan ends with a discussion of the international context. Fish don't recognize international borders, and populations cross borders. Optimal management requires cooperation. Game theory done by economists can help inform these sort of multilateral agreements. But changing conditions for herring stock are going to put agreements on cooperation under strain (especially because as Lew and Kevin pointed out, the science doesn't make it easy to distinguish long term trends versus shorter term fluctuations). The US and Canada have only recently developed agreement on how to share stocks of cod, haddock, and yellowtail flounder on the Georges Bank. Herring is jointly assessed but not formally shared. We need economists to work together with politicians to look at the economic forces that might drive such sharing agreements.

Conclusion: New England fishermen are tightly constrained and locked in to single fisheries. But fisheries are connected -- changes in regulation or environment at one fishery will have an impact on the others. There will be cultural resistance to changing one fishery unless there's a corresponding change in diversification of the people who rely on single fisheries for their living. We need to look at regulatory models that will encourage diversification in the face of great uncertainty and risk. We also need robust international cooperation: fisheries regulation has to be international in scope. Economic game theory will be important in hammering out solutions.



Dan's PowerPoint presentation is also available online.