Mark Herrmann

An Econometric Market Model for the Pacific Halibut Fishery

The Alaska and British Columbia fishery for Pacific halibut has undergone substantial restructuring over the last decade, from a regulated open-access no-holds-barred derby that largely relied on frozen inventories to satisfy market demand, to a slow-paced individual quota-based fishery that has reorganized supply chains to deliver high-quality fresh product throughout a protracted season. We have developed a simultaneous equation model of the markets for Pacific halibut and used simulations based on our model to examine: (i) linkages between harvest and revenue; (ii) ex-vessel price and revenue-induced consequences of the Alaska IFQ program; (iii) likely ex-vessel price and revenue effects of the proposed elongation of the halibut season; and (iv) potential effects of the emergence of competing supplies from halibut aquaculture.

The Alaska Salmon Enhancement Program: A Cost/Benefit Analysis

In May 1991, the Alaska Senates Special Committee on Domestic and International Commercial Fisheries initiated the first review of the states salmon enhancement program since its inception 20 years ago. As part of this review, a cost/benefit analysis of the States enhancement program for salmon was performed with cooperation from the Fisheries Research Enhancement Division of the Alaska Department of Fish and Game. The main results are that the additional producers surplus generated by the pink and sockeye hatchery programs are estimated to be less than the costs of running these programs. Eliminating the entire pink or sockeye salmon programs is estimated to increase net benefits by about 8% and 6%, respectively. A 15% increase in either program is estimated to result in a reduction in net benefits and a 15% decrease in either program is estimated to result in a slight increase in net benefits. Estimates of the confidence intervals for net benefits suggest that the gains from the elimination of either the pink program or the sockeye program are statistically different from zero. However, changes of plus or minus 15% of current hatchery production are found not to statistically affect net benefits.

Extending Federal Crop Insurance Programs to Commercial Fisheries: The Case of Bristol Bay, Alaska, Sockeye Salmon

Abstract This paper analyzes the feasibility of extending the U.S. Department of Agricultures crop insurance program to the Bristol Bay, Alaska, capture fishery for sockeye salmon Oncorhynchus nerka. The impetus for this program has been a string of poor sockeye salmon fishing seasons followed by a series of disaster declarations in western Alaska. The mission of the Risk Management Agency, for whom this analysis was prepared, is to help stabilize the agricultural sector, not to provide disaster payments that offset permanent industry shifts by assuring producers some historical (but no longer attainable) production or revenue levels. Without a contemporaneous effort to restructure and rationalize the program of limited entry, the proposed crop insurance program for Bristol Bay cannot provide meaningful relief to a maladaptive industry that is beleaguered by excessive costs and increased competition.

Using an International Econometric Model to Forecast Alaska Salmon Revenues

As Alaska prices tumbled in the 1990s, Alaskas Senate Special Committee on Domestic and International Commercial Fisheries requested a comprehensive review of the Alaska salmon enhancement program. As part of this review, a revenue analysis was performed to examine the effects of various salmon enhancement production levels on future revenue generated to salmon fishers working in Alaska waters. The results were then used in a cost/benefit analysis of the states enhancement program for sockeye, chinook, coho, chum, and pink salmon. This report focuses on the two most important Alaska salmon species, sockeye and pink. Results of the revenue analysis indicate that for sockeye salmon, future revenues would increase if output from salmon enhancement were expanded. For pink salmon, revenues would decrease if salmon enhancement were expanded and increase if salmon enhancement were scaled back. However, a complete elimination of the pink hatchery program would decrease revenues. For both species, there are important regional differences.

Applying Almon-Type Polynomials in Modelling Seasonality of the Japanese Demand for Salmon

Polynomial approximations of the Almon-type are used to model seasonality of demand in the Japanese salmon market. The approach allows the modelling of demand structures with seasonally-varying slopes and levels. The estimation results are compared to a previous demand analysis using dummy variables to represent seasonal patterns.

The Effects of Chilean Coho Salmon and Rainbow Trout Aquaculture on Markets for Alaskan Sockeye Salmon

Abstract A simultaneous-equation equilibrium model of international salmonid markets is used to examine the combined effect of variability in the landings of Alaskas sockeye salmon Oncorhynchus nerka and increases in the production of Chiles Atlantic salmon Salmo salar, coho salmon O. kisutch, and rainbow trout O. mykiss on Alaskas sockeye salmon exvessel prices and revenues. While Atlantic salmon, coho salmon, and rainbow trout from Chile and sockeye salmon from Alaska are not identical commodities, they compete in many of the same domestic and international markets, and Alaskas earnings in those markets have declined as Chiles production has increased. Although Alaskas average annual harvests have remained nearly constant, Alaskas production is now a small percentage of the total salmonid production in a world that eats significantly more salmonids than it did 25 years ago. Nevertheless, our model indicates that sockeye salmon prices continue to be sensitive to interannual variations in the quant...

An International Supply and Demand Model for Alaska Snow Crab

The Alaska snow crab fishery has increased in commercial importance as the king and Tanner crab stocks have declined. The commercial success of snow crab has led to a rejuvenation of the Alaska Crab fleet. This success has led to important economic questions about snow crab markets. This paper is the first to econometrieally model the world snow crab markets and addresses the specific question of whether a 400 million pound harvest in 1992 would have enhanced gross receipts to the Alaska snow crab fleet. The results do not support industrys concern that a 1992 400 million pound harvest would have depressed gross fishery returns.

A Revenue Analysis of the Alaska Pink Salmon Fishery

Abstract The Alaska salmon industry is suffering from declining prices due to an increasing supply of salmon worldwide, This has led to a much-needed economic evaluation of the Alaska salmon enhancement program and especially of the hatchery system for pink salmon Oncorhynchus gorbuscha. An econometric model of world salmon markets was used to evaluate possible future pink salmon enhancement production scenarios, as requested by the Alaska State Legislature and the Alaska Department of Fish and Game, Results of this model, based on point estimates, indicate that if pink salmon production for enhancement were decreased, revenues to pink salmon fishers in Alaska would rise, although there would be regional differences. However, a complete elimination of the Alaska salmon enhancement program would decrease revenues.

Allocative Consequences of Pot Limits in the Bristol Bay Red King Crab Fishery: An Economic Analysis

Abstract Alaskas Bristol Bay fishery for red king crab Paralithodes camtschaticus is an example of a high-value, high-effort fishery characterized by short seasons and difficult in-season management. Pot limits are viewed as one potential way of reducing management problems. Two pot limit schemes were considered here: fixed pot limits, where each vessel is limited to the same number of pots, and proportional reduction requirements, where each vessel must reduce its number of pots (determined by past registration) by the same percentage. Production functions relating vessel performance to pot numbers were estimated. These models were subsequently employed in model simulations to evaluate potential effects various pot limit regulations may have on fleet performance, Results of this study suggest that the 1992 decision of the Alaska Board of Fisheries to implement a fixed limit of 250 pots per vessel in the Bristol Bay red king crab fishery (a decision that since has been revoked) may have conflicted with t...

Estimated Economic Impacts of Potential Policy Changes Affecting the Total Allowable Catch for Walleye Pollock

Abstract Walleye pollock Theragra chalcogramma accounts for approximately 1 of every 20 kg of world landings of fish, shellfish, and crustaceans. There has, however, been little formal market analysis of walleye pollock. In this paper, an international econometric demand and supply model is constructed and estimated for walleye pollock caught in the waters off Alaska. The Japanese market for surimi was the most important modeled factor in determining exvessel prices for Alaska pollock. Model simulations were employed to investigate potential revenue effects of changes in the total allowable catch. In the short run, policy decisions that increase harvest from 1993 levels would also increase revenues to the pollock harvesting sector. In 1993, exvessel revenues would have continued to increase until harvest levels reached 1.7 million metric tons, at which point revenues would have started to decline. Likewise, decreases in harvest from 1993 levels would have lowered exvessel revenues.