Optimal Management Under Institutional Constraints: Determining a Total Allowable Catch for Different Fleet Segments in the Northeast Arctic Cod Fishery

Abstract

Many real world fisheries have an individual vessel quota system with restrictions on transferability of quota or entrance of new vessels into the fishery. While the standard economic reasoning is that these institutional constraints lead to welfare losses, the size of those losses and optimal second-best policies are usually unknown. We develop a dynamic bioeconomic model, in which a scientific body provides an optimal TAC given restrictions on (i) transferability between vessel segments and (ii) entrance of new vessels. Further, we also quantify welfare losses arising from not maximizing economic welfare, but physical yield-which is actually the case in many fisheries. We apply the model to the Northeast Arctic cod fishery, and estimate not only the cost and harvesting functions of the various vessel types, but also the parameters of the biological model as well as those of the demand function. This allows us to determine optimal second-best policies and quantify corresponding welfare effects for our case study fishery.

Global connectivity and cross-scale interactions create uncertainty for Blue Growth of Arctic fisheries

“…Surprisingly, empirical findings show the opposite [87,88], meaning that coastal vessels are less vulnerable to fluctuations in resource conditions. This is illustrated in Fig.…”

“…Cod prices have been volatile and have been largely mirroring total harvests, because demand could only meet such increase in supply at low prices. It has been estimated that each 1% increase in cod harvests lower export prices by 0.5% [88]. This may result in the paradoxical situation that higher quotas actually lower fishery profits [88].…”

“…It has been estimated that each 1% increase in cod harvests lower export prices by 0.5% [88]. This may result in the paradoxical situation that higher quotas actually lower fishery profits [88]. .…”

“…. The effect of stock-output elasticity for coastal vessels and trawlers (simulated data with parameters from Richter et al [88] a) The simulated annual catches for one vessel (coastal vs. trawler) that is operating at the optimal scale of intensity (in tonnagedays). A trawler catches much more than a coastal vessel, but its harvests are more dependent on biomass levels.…”

Ocean warming and acidification may drag down the commercial Arctic cod fishery by 2100

“…Our contribution to this strand of literature is twofold: First, we provide a very relevant case study. The Northeast Arctic cod (Gadus morhua) is the world's largest cod stock supporting one of the commercially most valuable fisheries with a long history [31][32][33]. The effect of rising temperatures on Northeast Arctic cod recruitment has so far been positive [21][22], and likely has supported stock management and assisted in stock recovery over recent years.…”