Dynamic Integrated Model for Assessing Fisheries: Discard Bans as an Implicit Value-Added Tax

Jose Da Rocha, Javier García-Cutrín (), María-José Gutiérrez, Raul Prellezo () and Eduardo Sanchez ()
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Javier García-Cutrín: Universidade de Vigo
Raul Prellezo: AZTI
Eduardo Sanchez: Universidade de Santiago de Compostela

Environmental & Resource Economics, 2021, vol. 80, issue 1, No 1, 20 pages

Abstract: Abstract Integrated economic models have become popular for assessing climate change. In this paper we show how these methods can be used to assess the impact of a discard ban in a fishery. We state that a discard ban can be understood as a confiscatory tax equivalent to a value-added tax. Under this framework, we show that a discard ban improves the sustainability of the fishery in the short run and increases economic welfare in the long run. In particular, we show that consumption, capital and wages show an initial decrease just after the implementation of the discard ban then recover after some periods to reach their steady-sate values, which are 16–20% higher than the initial values, depending on the valuation of the landed discards. The discard ban also improves biological variables, increasing landings by 14% and reducing discards by 29% on the initial figures. These patterns highlight the two channels through which discard bans affect a fishery: the tax channel, which shows that the confiscation of landed discards reduces the incentive to invest in the fishery; and the productivity channel, which increases the abundance of the stock. Thus, during the first few years after the implementation of a discard ban, the negative effect from the tax channel dominates the positive effect from the productivity channel, because the stock needs time to recover. Once stock abundance improves, the productivity channel dominates the tax channel and the economic variables rise above their initial levels. Our results also show that a landed discards valorisation policy is optimal from the social welfare point of view provided that incentives to increase discards are not created.

Keywords: Integranted económica models; DICE-RICE; Bayesian models; DYNARE; Discard ban; Age structured models; 91B76; 92D25 (search for similar items in EconPapers)
JEL-codes: C61 Q22 Q28 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s10640-021-00576-8

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