Rögnvaldur Hannesson

Marine Reserves: What Would They Accomplish?

A marine reserve is defined as a subset of the area over which a fish stock is dispersed and closed to fishing. This paper investigates what will happen to fishing outside the marine reserve and to the stock size in the entire area as a result of establishing a marine reserve. Three regimes are compared: (i) open access to the entire area, (ii) open access to the area outside the marine reserve, and (iii) optimum fishing in the entire area. Two models are used: (i) a continuous-time model, and (ii) a discrete-time model, both using the logistic growth equation. Both models are deterministic equilibrium models. The conservation effect of a marine reserve is shown to be critically dependent on the size of the marine reserve and the migration rate of fish. A marine reserve will increase fishing costs and overcapitalization in the fishing industry, to the extent that it has any conservation effect on the stock, and in a seasonal fishery it will shorten the fishing season. For stocks with moderate to high migration rates, a marine reserve of a moderate size will have only a small conservation effect, compared with open access to the entire area inhabited by a stock. The higher the migration rate offish, the larger the marine reserve must be in order to achieve a given level of stock conservation. A marine reserve of an appropriate size would achieve the same conservation effect as optimum fishing, but with a smaller catch.

Optimal harvesting of ecologically interdependent fish species

Abstract The optimal exploitation of a two-species predator-prey system is considered, using Lotka-Volterra-type equations. Due to the density-dependence of ecological efficiency, both species should be harvested simultaneously over a range of relative prices. Beyond the limits of this price range, either the prey species should be utilized indirectly by harvesting the predator, or the predator should be eliminated to maximize the prey yield. Neglecting harvesting costs, the simultaneous harvest of prey and predators requires that a unit of prey biomass increase in value by being “processed” by predators. Certain results from single-species fishery models are shown not to apply to multispecies models. These are as follows: (i) Optimal regulation of a free access fishery may call for subsidizing instead of taxing the harvest of predator species. (ii) Increasing the discount rate may, at “moderate” levels, imply that the optimal standing stock of biomass increases instead of decreasing. (iii) A rising price or a falling cost per unit fishing effort of a species may raise and not lower the optimal standing stock of that species.

Fishery dynamics: a North Atlantic cod fishery

a constant proportion of the fish stock. Discounting is shown to imply a longer fishing season, and only in special cases should the stock be depleted to an uneconomic level as quickly as possible. Then the relative merits of periodic and sustained fishing of a stock consisting of several cohorts are studied by simulating a Beverton-Holt model of a cod fishery. The impact of cost, discounting, and natural fluctuations on the time-pattern of fishing is discussed, as well as the practicability of periodic fishing.

Tests for market integration and the law of one price : the market for whitefish in France

This paper examines the relationship between causality models and cointegration models in testing for price integration and the Law of One Price (LOP). In our review, we show that cointegration models, which allow for nonstationarity in prices, are a natural extension of the traditional causality methods and not an alternative approach. Hence, the two approaches investigate the same economic hypotheses; however, the choice of modeling method depends on the time series properties of the data. An empirical analysis is provided using prices from the whitefish market in France. With nonstationary price data, the causality approach over rejects the hypothesis of the LOP, whereas conintegration models provide evidence for a well-integrated whitefish market. A generalized version of the composite commodity theorem holds, and prices of most whitefish species can be aggregated into a single commodity price index.

Costs of fisheries management: the cases of Iceland, Norway and Newfoundland

This paper reports on the results of an investigation of management costs in the fisheries of Iceland, Newfoundland and Norway and discusses them in a more general framework. Management costs are defined as costs necessary to overcome the problems associated with common property. The question of whether management costs should be paid by industry is discussed, as is the likely effect of user pay on the efficiency with which management is provided. Since management has public goods characteristics, it is likely that there is an unavoidable role for government in providing these services. The question of who pays for it is separate, and recovering costs from industry has both efficiency and optimal taxation aspects. A greater involvement in management by industry further raises the question of compatibility between the industrys interests and the public interest. Measured as percent of gross value of fish landings the management costs are by far highest in Newfoundland (15-25%), lowest in Iceland (about 3%), with Norway in the middle (about 10%). Management costs thus appear to be substantial and quite variable. This gives rise to three conclusions. First, when calculating optimal harvesting and investment paths one must take the management costs of implementing these paths explicitly into account. Second, what is the economic efficiency of management? Could the same level of benefits be produced at lower costs? Third, can fisheries management expenditures of the magnitude discussed be justified in the sense that the benefits exceed the costs?

Searching for price parity in the European whitefish market

The purpose of this paper is to test for price parity across different species of whitefish in the European Union. Price parity is defined by a system of cointegrated prices and would be evidence of a single European market for whitefish. Whitefish are of interest because EU fishers receive the largest share of their income from these fish species. Notwithstanding the single market policy of the EU, by establishing national and regional associations to stabilize or increase the local price of fish, fishers operate as if the European market is made up of separate submarkets with price being determined largely within each submarket. If whitefish markets were price cointegrated such associations would be largely ineffective. In that case, what are required are regulations that encompass the European market.

On Prices of Fresh and Frozen Cod Fish in European and U.S. Markets

The purpose of this paper is to test for price linkages among European (France, Germany, and U.K.) and U.S. prices of whole fresh cod and frozen cod fillets. In testing for a cointegrated system, we use both the two-stage Engle-Granger and Johansen procedures. Short-run price dynamics are measured using an error-correction model. Based on monthly import price observations from 1980 to 1992, the empirical results show no long-run price relationships for fresh cod between European and U.S. markets, but we do measure long-run price linkages for frozen cod fillets. Within Europe the markets for both fresh and frozen cod product are well integrated. The U.S. fresh cod market is distinct and separate from European markets, while the U.S. frozen cod market shows no short-run links to European markets. There is weak evidence for a long-run international market in frozen cod fillets.

Aquaculture and fisheries

The interrelations between aquaculture and fisheries are discussed in a simple two-species system of feed fish and edible fish which can either be caught wild or farmed. Equilibria under three regimes are considered, open access, maximization of returns from each species in isolation, and global maximization. It is shown that the overfishing problem arising under open access would not be significantly ameliorated by aquaculture; the latter leads ultimately to overexploitation of feed fish. Maximizing rents from feed fish and edible fish in isolation would lead to suboptimal results, an untimely expansion of aquaculture and less total supply than possible at high enough prices. The dynamic effects of falling production costs and rising prices of edible fish are analyzed for the case of open access in capture fisheries.

Renewable resources and the gains from trade

The Brander-Taylor small, open-economy model of trade in a renewable resource and other goods is modified to allow for diminishing returns in the other goods sector. It is shown that opening up for trade may result in steady-state gains from trade, even when there is open access to the resource and the country does not specialize fully in resource extraction. It is also shown that transition to optimal management, with price-taking behaviour, may result in a welfare loss.

How to set catch quotas: Constant effort or constant catch?

Abstract This paper considers whether the total allowable catch from a fish stock should be a fixed annual quantity or based on constant fishing effort. It consists of two parts, a theoretical part and an empirical part based on data from the Arcto-Norwegian cod stock. In the theoretical part it is shown that realistic cost and revenue functions have opposite effects on whether a constant quota or a constant effort yields the highest expected profit. A concave revenue function implies that a constant quota will be preferable, while a stock-dependent unit cost of landed fish has the opposite implication. The empirical part investigates how large the difference between the average profit yielded by the two strategies is likely to be, on the basis of some stylized facts about the Arcto-Norwegian cod stock. The size of this stock fluctuates considerably over time, due mainly to fluctuations in the size of year classes. Spectral analysis indicates cyclical movements, and so a sine curve was used to generate recruitment cycles. The difference in average profit yielded by the two harvest strategies is very small in most cases, or of the order of 1–2%. This result is relatively robust with respect to alternative specifications of the cost and the revenue functions, but a maximum difference of 20% was produced by a non-stock-dependent unit cost of fish and a kinked revenue function, where catches exceeding a certain quantity are worthless.