Input subsidies and the depletion of natural capital: Chinese distant water fishing

Gabriel Englander, Jihua Zhang, Juan Carlos Villaseñor-Derbez, Qutu Jiang, Mingzhao Hu, Olivier Deschenes and Christopher Costello

Journal of Environmental Economics and Management, 2025, vol. 130, issue C

Abstract: Input subsidies in natural resource sectors are widely believed to deplete the natural capital on which these sectors depend. However, estimating the causal effect of subsidies on resource extraction has been stymied by identification and data challenges. China’s fishing fleet is the world’s largest, and in 2016 the government changed its fuel subsidy policy for distant water vessels to one that increases with predetermined vessel characteristics. Regression discontinuity estimates imply a long-run equilibrium elasticity of fishing hours with respect to fuel subsidies of 2.2, though these estimates exhibit only modest precision according to randomization inference. Back-of-the-envelope calculations suggest that reducing Chinese distant water fuel subsidies by 50% could increase fish stocks across ocean regions by a median of 5.5%.

Keywords: Chinese fishing; Fuel subsidies; Overfishing (search for similar items in EconPapers)
JEL-codes: H23 O13 Q22 Q28 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:130:y:2025:i:c:s0095069625000117

DOI: 10.1016/j.jeem.2025.103127

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