William E. Schrank

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?

U.S. Demand for Selected Groundfish Products, 1967–80

The expansion of national fisheries jurisdiction to the two-hundred-mile limit enabled maritime nations to allocate increased shares of the fish catch off their shores to their own fishermen. The Atlantic groundfish catches of Canada and the United States are sold primarily on the American market. A Nerlovian inventory adjustment-price expectations model is estimated for the American demand for groundfish. Income and price elasticities are perverse. The ability of the American market to absorb the increased anticipated catches are therefore limited, and benefits of extended fisheries jurisdiction will be lost unless marketing arrangements are substantially changed.

The Concept of Subsidies

As if to underscore the point, in July of that year the Canadian Minister of Fisheries and Oceans declared a two-year moratorium on the northern cod stock of Newfoundland, one of the worlds great fisheries and traditional supplier of 10% of the worlds Atlantic cod. It is now seven years later and the fishery was opened in a limited way during the summer of 1999. Stock failures have since led to a host of fishing closures and partial closures, most notably of U.S. groundfish in areas of the Georges Bank. Perusal of the FAOs chartbook on trends and catches since 1970 shows that many of the worlds major commercial catches, particularly of demersal species, have shown a secular decline during the past quarter century (Stamatopolous 1993). The point has been emphasized in a more recent FAO document noting:

The Identification of Economic Base Industries, with an Application to the Newfoundland Fishing Industry

The contribution of an industry to GDP is typically measured by its value added. However, casual observation suggests that some industries play a greater role in overall economic activity than this measure indicates. Observations of this kind have in particular been applied to resource industries and have given rise to the concept of the economic base. Unfortunately, empirical and econometric verification of the concept of a base industry has been limited. This paper outlines a theory of base industries, develops a methodology for identifying economic base industries and measuring their impact, and applies this methodology to the fishing industry of Newfoundland. (JEL C32, Q22)

An inshore fishery: A commercially viable industry or an employer of last resort

Abstract Traditional fisheries often coexist tenuously with modern economies. Within Canada, Newfoundland has a heavily subsidized groundfishery. Despite repeated crises and innumerable studies, the commercially unviable fishery continues to support too many fishermen because the industrial society in which the fishery is embedded provides few employment alternatives. Society can “muddle through,”; hoping that demographic or political changes will solve the problem, or can eliminate subsidies, letting fishermen fend for themselves, or systematically reduce the size of the industry. Action must ultimately be taken; governments will not subsidize the industry forever, and continued overfishing can lead to the complete closure of the fishery. This article describes the historical and economic framework of the Newfoundland fishery, the crises it has faced over the past twenty‐five years, and the public debate over its future. Although the details are specific to Newfoundland, a similar story could be told of ...

A small core fishery:: a new approach to fisheries management

A new approach to fisheries management is suggested. Recognizing the great uncertainty and variability that affects the supply of fish, combined with the immobility of capital and labor in the industry, a small core fishery should be maintained with the capacity to catch only the quantity of fish that it would be safe to catch as the stock approaches the lower limits of its natural cycle. When fish are abundant, the excess would be auctioned to risk takers who have neither a permanent commitment to, nor multi-year fishing rights in, the fishery.

The cost to government of maintaining a commercially unviable fishery: The case of newfoundland 1981/82 to 1990/91

The commercial fishery for northern cod off Newfoundland has been closed since 1992. Since then, the recreational “food fishery”; has also been closed, as have the fisheries for many additional cod and other groundfish stocks. The Newfoundland fisheries had been commercially unviable for many years before the closures. This article records the federal and provincial governments’ financial outlays (expenditures, transfer payments to individuals, subsidies, net equity purchases, and net loans) on the fishery during the decade following 1981. Special emphasis is placed on the cost of the financial restructuring of the industry in the mid‐1980s, net unemployment insurance payments, and social overhead capital expenditures.

The Newfoundland Fishery and Economy Twenty Years after the Northern Cod Moratorium

JEL Codes: Q2, N5, H7

Canadian government financial intervention in a marine fishery: The case of newfoundland, 1972/73–1980/81

Abstract Trade in fish products between Canada and the United States has been the subject of extensive legal activity in the latter country. United States fishing interests have repeatedly attempted to utilize provisions in U.S. law and in the General Agreement on Tariffs and Trade (GATT) to have countervailing duties imposed on imports of Canadian fish products, the prices of which are alleged to be artificially depressed by Canadian government financial support of the industry. This paper summarizes the state of U.S. and international law on countervailing duties, and surveys recent legal activity on the matter. It then presents hitherto uncollected evidence on government financial support of a major Canadian fishery, the Newfoundland groundfishery. It is found that the total value of expenditures was equal to 31 percent of the value of total fish products in 1980/81. However, subsidies as defined by the U.S. International Trade Administration, in accordance with U.S. law and the GATT, amounted to only ...

Employment Prospects in a Commercially Viable Newfoundland Fishery: An Application of 'An Econometric Model of the Newfoundland Groundfishery'

An econometric model is utilized to simulate the effects of a policy change in which government financial assistance to a major Canadian marine fishery is withdrawn and the industry is placed on a commercially viable basis. Under near-ideal conditions of marketing and harvesting, harvesting employment would fall drastically, from approximately thirty thousand fishermen under the current regime to approximately six thousand. There would be a concomitant fall in seasonal fish plant employment, and a severe fall in those federal transfer payments (e.g., unemployment insurance) which are currently generated by extensive seasonal employment in both harvesting and processing sectors of the fishery. The policy analysis consists of simulations with a prototype econometric model which integrates the demand, processing, and harvesting sectors of the fishery. The essential components of the 1,000-equation model are described.