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The social cost of fishery subsidy reforms

José-María Da-Rocha (), Javier García-Cutrín (), Raul Prellezo () and Jaume Sempere ()
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José-María Da-Rocha: ITAM and Universidad de Vigo
Javier García-Cutrín: Universidad de Vigo
Raul Prellezo: AZTI

Authors registered in the RePEc Author Service: Jose Maria Da Rocha

Serie documentos de trabajo del Centro de Estudios Económicos from El Colegio de México, Centro de Estudios Económicos

Abstract: This paper analyzes the impact of reducing a subsidy on fuel in a general equilibrium model for a fishery with heterogeneous fishing plants (vessels). It considers the impact of the stock effect, which determines the participation of fishing plants in a likely increased stock abundance. In equilibrium, the productivity of the fleet is endogenous as it depends on the stock of fish along the equilibrium path. The model concludes that any impact of a fuel subsidy drop will depend on the stock effect. If that effect is large, fishing firms will benefit from the stock recovery and the elimination of the subsidy will increase future returns on investment. The model is particularized to industrial shrimp fisheries in Mexico. It is shown that the complete elimination of a subsidy increases biomass, capitalization, marginal productivity, and consumption and reduces inequality when the effect of the induced increase in the stock is considered. However, if that effect is not considered capital and consumption decrease, and inequality increases, increasing the social costs of a fuel subsidy drop.

Keywords: subsidies; general equilibrium model; fisheries; social costs (search for similar items in EconPapers)
JEL-codes: Q22 Q28 (search for similar items in EconPapers)
Date: 2017-04
New Economics Papers: this item is included in nep-dcm and nep-res
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