U5123854

EMDV8078-Weekly Assignment

EMDV8078: Introduction to Environmental and Resource Economics

Weekly assignment: Tutorial 9/week 10 (Semester 1, 2012)

Fisheries

Assignment questions: Q1: Is the efficient level of fish catch effort above or below that which gives the maximum sustainable yield?
According to fish biology, the fish stock with increasing growth rate (r>0) will continue to increase until it reach maximum growth rate (or maximum sustainable yield) and eventually reaches stock carrying capacity where growth rate equal zero at natural equilibrium point. Then, in the absence of outside influence, the natural equilibrium process remains stable and eventually restore the population growth back (in case stock decrease). However, due to some external forces that distort the natural stability and cause the stock below the stock size called the minimum viable population, the species will become extinct due to negative growth rate.
C /Reve ost nue or b enifit $ Tocal Cost MB 0 =

MB =S of TC MC lop =

Total Net benefit

Total revenue/B enifit

Ee

Em

F ishingE ffort

When the catching equalizes the maximum sustainable yield where all MB from the catch is exhausted until zero to reach the maximum catch amount at Em where beyond that point will cause less yield due to decline fish growth. Illustrated in static model graph( assuming that fish price and MC of catching effort is constant, catch per unit of effort is proportional to the size of the stock), Em (Maximum Sustainable Yield) is not efficient because it does not maximise NET benefit. At point Ee (Economic Efficiency level of effort) where MC= MB, the total net benefit (Net (benefit = Total Benefit Total Cost) ) is at its maximum, also the amount of catch is less than at point Em due to less level of effort. Increasing effort beyond Ee means more effort yields lower extra benefit than the extra costs (MB<MC) and conversely below Ee, MB > MC, which encourage fisherman to increase more effort. Efficient level of fish catch effort is better or above the efficiency at Maximum

U5123854

EMDV8078-Weekly Assignment

sustainable yield because it provide better net benefit with less catching effort. Efficiency implies not only that the catch must be at the efficient level, but also it must be extracted at the lowest possible cost However, market demand and price will be the other factors for fishing decision in the real world. Q2: Would you advocate restrictions on the size of trawlers being used in an off-shore fishery? Why? Trawlers/draggers are kind of commercial fishing method that potentially overexploits the fish stock. To cope with this unsustainable fishing and declining stock, the government may impose restriction on size the trawlers in an attempt to increase the cost of fishing effort and reducing the amount of fishing. This policy is not efficient and will not reduce overfishing problem because with smaller draggers, the fisherman will increase the labours, numbers of boats and machines to catch the same amount of price, therefore increasing Total cost and shrinking net benefit.
TC2 C /Revenue or benifit ost $ TC1

NB2 NB1

Total revenue/Benifit

Ee

F ishingEffort

In this graph, to get the same amount of catch at Ee, fishermen need to increase cost at TC2, where NB2 < NB1. This policy makes income of fisherman suffers and will not reduce amount of catch. Technology innovation will be a another problem of overharvesting since it can reduce the effort and cost of fishing, thereby offsetting the restriction imposed by the regulation. Other policies provide betters efficiency. Fishing tradable quota where quotas held by all

fishermen should be equal to the efficient catch for the fishery is more flexible measure to control the fishing activities since the government and buy and sell quota on market. Fishing Tax provides a better solution even it still increase the fishing cost which is transferred to Tax revenue for the society. Promotion of aquaculture is also profitable solution to reduce over-fishing problem.