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

Andries Richter (), Anne Maria Eikeset, Daan Soest, Florian Klaus Diekert and Nils Chr. Stenseth
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Andries Richter: University of Oslo
Anne Maria Eikeset: University of Oslo
Daan Soest: Tilburg University
Florian Klaus Diekert: University of Oslo
Nils Chr. Stenseth: University of Oslo

Environmental & Resource Economics, 2018, vol. 69, issue 4, 811-835

Abstract: 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.

Keywords: Group quota; Tradable permits; Fleet segments; ITQs; Dynamic optimization; Second-best policy (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:kap:enreec:v:69:y:2018:i:4:d:10.1007_s10640-016-0106-3