Value and economic impact of fuel subsidies on the Mexican fishing industry

Daniel A. Revollo-Fernández, Stuart Fulton and Sara Chávez Sánchez

Applied Economics, 2025, vol. 57, issue 50, 8379-8391

Abstract: Fuel is an important input in the fishing industry’s activities, and fuel subsidies are aimed at generating more competitiveness and encouraging development. Nevertheless, they can also create incentives for fishers to exert more effort, thereby resulting in overexploitation. This paper estimates the economic value of fuel used by the Mexican fishing industry based on the elasticity of production with respect to fuel (εC) and the value of the marginal product (ρC) through the Cobb-Douglas and Trans-Log production function. The εC and ρC were estimated to be 0.52 and USD 3.1, respectively, with the latter contributing to only 8.3% of the fuel subsidy. Furthermore, a direct relationship is evident when observing the trends and the differences in means of the average price of fishery landings and the number of subsidies between 2011 and 2019. That is, the higher the prices and/or subsidies, the higher the levels of extraction. These results have important implications for fuel management and its relationship with the extraction of fishery resources, especially in countries where a subsidy policy is applied in an attempt to support the sector, but which at the same time can have a negative impact on fishery resources.

Date: 2025
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DOI: 10.1080/00036846.2024.2399814

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