Alaskan fishing community revenues and the stabilizing role of fishing portfolios

Sethi, Suresh A.; Reimer, Matthew N.; Knapp, Gunnar

doi:10.1016/j.marpol.2014.03.027

Cited by 51 publications

(48 citation statements)

References 30 publications

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“…Our models focused on species diversity as a possible predictor of revenue and revenue variability while controlling for effort. For consistency with previous analyses (10,13,14,29,35,43), we calculated effective species diversity for permit holder i and time (year) t as the inverse of Simpson's concentration index λ (21,22) [this index is also referred to in economics as the Herfindahl-Hirschman Index (44)] weighted by revenue R:…”

Section: Methodsmentioning

confidence: 99%

“…The most effective option to reduce revenue variability via diversification-purchasing additional permits-is also expensive, often limited by regulations, and therefore unavailable to many. the majority of research examining the effects of diversification on revenue does so at aggregate levels that combine individuals [e.g., counties or communities (10,13,14)]. Thus, key uncertainties remain about the relationship among diversity, fishing revenue, and fishing revenue variability at the level of the individual.…”

Section: Significancementioning

confidence: 99%

“…To simultaneously understand the effect of species diversity within fisheries catches on individual revenue and revenue variability, we develop a hierarchical variance function regression model (18,19). Our model builds on results from vessel (10), fleet (2), and community-level (13,14) variability, and, although we model revenue variability, we herein equate revenue variability with financial risk for consistency with Kasperski and Holland (10). [More specifically, variability is one component of risk.…”

Section: Significancementioning

confidence: 99%

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Benefits and risks of diversification for individual fishers

Anderson

Ward

Shelton

et al. 2017

Proc. Natl. Acad. Sci. U.S.A.

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Individuals relying on natural resource extraction for their livelihood face high income variability driven by a mix of environmental, biological, management, and economic factors. Key to managing these industries is identifying how regulatory actions and individual behavior affect income variability, financial risk, and, by extension, the economic stability and the sustainable use of natural resources. In commercial fisheries, communities and vessels fishing a greater diversity of species have less revenue variability than those fishing fewer species. However, it is unclear whether these benefits extend to the actions of individual fishers and how year-to-year changes in diversification affect revenue and revenue variability. Here, we evaluate two axes by which fishers in Alaska can diversify fishing activities. We show that, despite increasing specialization over the last 30 years, fishing a set of permits with higher species diversity reduces individual revenue variability, and fishing an additional permit is associated with higher revenue and lower variability. However, increasing species diversity within the constraints of existing permits has a fishery-dependent effect on revenue and is usually (87% probability) associated with increased revenue uncertainty the following year. Our results demonstrate that the most effective option for individuals to decrease revenue variability is to participate in additional or more diverse fisheries. However, this option is expensive, often limited by regulations such as catch share programs, and consequently unavailable to many individuals. With increasing climatic variability, it will be particularly important that individuals relying on natural resources for their livelihood have effective strategies to reduce financial risk. diversity-stability relationship | Bayesian variance function regression | income variability | natural resource management | ecological portfolio effects I t can be difficult for individuals to sustain a livelihood from natural resource extraction. These livelihoods tend to have high annual variability in income relative to other professions (1, 2). In addition to income variability from economic sources, such as changes in demand or prices, individuals dependent on natural resources are also subject to biological and environmental variability (3). For example, drought and flooding are a major source of risk for agricultural food security and farmers' incomes (4), and catastrophic disease outbreaks and wildfires increase risk for the logging industry (5).Individuals who rely on natural resources for income develop strategies to reduce income variability. For example, farmers may diversify their crops or include off-farm income sources to buffer against environmental and market shocks, as well as longterm climatic trends and seasonality (6-8). However, otherwise well-intentioned regulations may limit how individuals diversify, or may incentivize against diversification. For instance, crop subsidies in the United States may incentivize some farms ...

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Section: Methodsmentioning

confidence: 99%

Section: Significancementioning

confidence: 99%

Section: Significancementioning

confidence: 99%

See 1 more Smart Citation

Benefits and risks of diversification for individual fishers

Anderson

Ward

Shelton

et al. 2017

Proc. Natl. Acad. Sci. U.S.A.

View full text Add to dashboard Cite

show abstract

“…Kasperski and Holland (1) showed that greater diversification can substantially reduce variation in interannual revenue and also the risk of having very low revenues relative to a vessel's own average revenues. Sethi et al (11) found that Alaskan communities with larger and/or more diverse fishing portfolios experienced lower variability of fishing revenues. Cline et al (12) found that Alaskan fishing communities with more diversified fishing portfolios were able to maintain or increase fishing revenues in the face of major long-term regime shifts, while those with less diversified portfolios suffered declines in revenues, suggesting that diversification may be a good hedge against climate change-driven shifts in fisheries productivity.…”

mentioning

confidence: 99%

Impact of catch shares on diversification of fishers’ income and risk

Holland

Speir

Agar

et al. 2017

Proc. Natl. Acad. Sci. U.S.A.

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Many fishers diversify their income by participating in multiple fisheries, which has been shown to significantly reduce year-to-year variation in income. The ability of fishers to diversify has become increasingly constrained in the last few decades, and catch share programs could further reduce diversification as a result of consolidation. This could increase income variation and thus financial risk. However, catch shares can also offer fishers opportunities to enter or increase participation in catch share fisheries by purchasing or leasing quota. Thus, the net effect on diversification is uncertain. We tested whether diversification and variation in fishing revenues changed after implementation of catch shares for 6,782 vessels in 13 US fisheries that account for 20% of US landings revenue. For each of these fisheries, we tested whether diversification levels, trends, and variation in fishing revenues changed after implementation of catch shares, both for fishers that remained in the catch share fishery and for those that exited but remained active in other fisheries. We found that diversification for both groups was nearly always reduced. However, in most cases, we found no significant change in interannual variation of revenues, and, where changes were significant, variation decreased nearly as often as it increased.diversification | risk | catch shares | fisheries

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“…Recognizing the need for diversity in fisheries management, many have argued that a 'portfolio approach' to management should be adopted such that ecological (Baldursson and Magnusson, 2014;Edwards et al, 2004;Figge, 2004) and economic (Kasperski and Holland, 2013;Sethi et al, 2014) diversification is maintained (or enhanced). Calls for a portfolio approach to managing risk are particularly evident in fisheries economics that builds off the literature on investment optimization (Markowitz, 1971).…”

Section: Introductionmentioning

confidence: 99%