Environmental Economics

Apparently famous sports economists are famous among fisheries economists

Where I am today.  At lunch, this was overheard (paraphrased):  Whether it's Whitehead et al, or Haab et al, you guys are cited all the time.  

Catch shares slow the fisheries frenzy: Some confirmatory evidence

Guest Post by David Kaczan, Anna Birkenbach, and Marty Smith

Economists regularly turn to one famous example when making the case for property rights in fisheries: Alaskan halibut.

In the early 1990s, the halibut derby was madness. At the approved moment, thousands of boats would race each other out of Alaskan harbors. They would spend a short designated period, just a few days, battling dicey weather in the Gulf of Alaska, dropping as many lines as their crew could handle, and filling their holds to the brim. For those who were successful, this race offered the riches of a gold rush. For those left behind, it was an expensive exercise in sleeplessness and danger.

As class after class of natural resource economics students learns, this crazy dash was a classic tragedy of the commons. Fishers competed with each other to secure as much of the catch for themselves as they could. And they were also racing the authorities. As soon as the season’s total allowable catch was reached – often just 24 hours after starting – the fishery was closed to preserve stock for the following year.

Starting in 1994, individual rights to specified proportions of the total allowable catch – “catch shares” – were allocated to fishers. The need to race was mitigated. Today the season is a relatively calm, months-long endeavor.

Not surprisingly, given anecdotes like this, economists have long felt themselves on secure ground when advocating for catch shares in fisheries management. Yet despite wide acceptance, the hypothesis that catch shares slow the race to fish has not been systematically tested across fisheries.

In a paper published in Nature this week, we attempt to fill that gap. Our analysis is broad and conceptually simple: we consider every U.S. fishery that underwent a transition to catch share management and for which monthly data are available (N=39). Using a difference-in-differences strategy, we compare the season length changes in catch share-treated fisheries to those in hand-matched controls – fisheries that did not undergo catch share implementation at the same time.

Many of these catch share fisheries are well known to lovers of American seafood: scallops from the mid-Atlantic, cod from New England, and red snapper from the Gulf of Mexico. Catch share fisheries represent around one third of the total U.S. catch.

The overall picture – the average treatment effect – shows that across the U.S. catch shares work as we expect them to. With fewer incentives to race, seasons lengthen. Fishers take around one extra month on average to bring in the harvest. This is good news: Fresh fish becomes available for longer, bad weather is avoided, overinvestment in gear is mitigated, fish stocks are protected, employment is stabilized, and safety improves dramatically.

To fisheries economists, the result is not surprising. But for the sake of current policy debates, rigorous evidence that the race slows, in fisheries across the country, is timely.

The nation’s primary federal fisheries legislation, The Magnuson-Stevens Fishery Conservation and Management Act, is up for reauthorization. Competing amendments currently before Congress highlight the fact that catch shares are far from broad acceptance.  The House’s bill places strong limits on new catch share programs. A competing bill, currently in the Senate, does not. Lawmakers in North Carolina and South Carolina are also moving to restrict new catch shares. While one paper cannot alleviate all the concerns driving these proposed bills, it helps to be able to point to the benefits.

For those already well-versed in the tragedy of the commons, more interesting, perhaps, are the exceptions to the expected result: some seasons actually become more compressed post-catch shares.

We hypothesize that these effects arise due to substitution of effort within multispecies fisheries. Fishers may speed up catch of minor species to leave time for more careful pursuit of other, higher value species. Pinning this down rigorously is the subject of ongoing work.

Another component of ongoing work is the potential effect of catch shares on fishers’ revenues. If the harvest is spread throughout the year, can fishers avoid market gluts, target fresh product markets, and thus get better prices? Frances Homans and James Wilen modeled this more than a decade ago. If broadly supported empirically, it would mean more value from the same fish for communities across the country.

So there’s plenty of work left to do on catch shares, and plenty of challenges in their implementation - but the evidence in favor of these policies’ benefits continues to build.

Some empirical evidence on the benefits of catch shares in commercial fisheries

AKA individual transferable quotas:

But derby-style fishing means commercial fishermen are sometimes forced onto the water in stormy weather or before their boats can be properly maintained. Miss the window to catch fish, and for some, it can mean the difference between keeping their businesses afloat or not.

But over the last decade or so, a different kind of fisheries management program known as catch shares has been gaining ground. The idea here is to allot fishermen a portion of the catch ahead of time, and allow them to fish until they reach it. Proponents claim catch shares create incentives for fishers to slow down, eliminating the need to race each other to fish.

A new study published online Wednesday in the journal Nature proves they're right.

"This is the first time we see broad systematic evidence that catch shares are slowing the race to fish," says study co-author Martin Smith, professor of environmental economics at the Nicholas School of the Environment at Duke University.

Researchers looked at monthly data from 39 federally managed commercial fisheries (worth a combined $402 million) such as Pacific halibut, Atlantic cod, New England haddock, Gulf of Mexico red snapper and more, which operate under catch share programs. The researchers then compared that to data from a similar control fishery that did not operate under a catch share program. They found that under a catch share program, harvesters — on average — took an extra month to fish.

That was a surprise, says Andrew Rosenberg, director of the Center for Science and Democracy at the Union of Concerned Scientists.

"When you think about it, a month [longer] means fishermen made decisions about not fishing in bad weather and took their trips when it was safer. That probably meant it saved lives and reduced injuries," says Rosenberg, a former deputy director of the National Marine Fisheries Service. ...

Indeed, other studies have found that catch share programs do reduce risky behavior by fishermen.

And slower fishing has benefits for consumers, too: Some of the seafood we like best can be found fresh more frequently at seafood counters. ...

Despite the benefits, catch shares can be incredibly controversial. Opponents argue that such programs essentially privatize a shared public resource. They say it forces consolidation of the fishing fleet; pushes smaller fishermen out of business; prompts worries over non-local ownership of fishing quotas; and can negatively impact fishing communities.

Right now, opponents in North Carolina are fighting to keep catch shares out of their region. Last week, state Sen. Bill Rabon introduced legislation opposing the introduction of catch share programs. In March, South Carolina lawmakers adopted a resolution opposing catch shares in their region as well.

via www.npr.org

Good ol' North Carolina always gets the good national press.

Also, see the guest post by David Kaczan, Anna Birkenbach, and Marty Smith. 

 

My presentation at the "NC's Coastal Conference"

So, I always make light of the fact that I'm doing coastal and marine research and my affiliation is in the mountains. So, my joke is that I'm from that "prestigious, marine science institution, Appalachian State University." It might receive a bit of a chuckle but I imagine folks give me a pat on the back for the effort at the making of some levity. This time I'm making even more effort. After my introduction with the phrase in quotes I'll then advance to slide 2 and explain that I've never included a visual aid and here it is ... "You can see the marine science institute right on the water on the left." 

Anyway, here are my slides: Economic Value of Coastal Tourism[*.pdf]. 

I'm discussing a range of critical issues

"RePEc launches Top 5 Journal in Economics"

The RePEc blog:

Many academic departments in economics require from their junior faculty to publish in top 5 journals in order to gain tenure or get promotions. The top departments ask for several such articles, lower ranked ones may ask for only one. However, the space available in those journals is very limited, a couple hundred articles a year. Given that many already tenured faculty publish in those journals, the space for the newcomers is very scarce and few junior professors can count on top 5 journals for their tenure hopes.

This problem has become worse, as more and more departments strive for such impossible requirements, in part because they are forced to keep up with requirements in the other sciences of their university, where articles are much shorter and journals publish more frequently, thus making it easier to get top publications. Without intervention, economics may get into the situation of choking itself by making it impossible for most department to grant tenure to faculty.

In light of this upcoming catastrophe, RePEc is happy to come to the rescue with the launch of a new journal that will be accepting submissions from junior faculty aspiring for tenure, the

Top 5 Journal in Economics

will start today with volume 104 and a special issue on the Economics of Fisheries. For submissions and more information about the journal, click here.

They had me going until the part of about fisheries economics. Any idiot knows that fisheries economics is a joke.

"The Impact of the Affordable Care Act in NC's Commercial Fisheries" #NAAFE2017

Christina Weigand and Scott Crosson (to be presented at the NAAFE Forum 2017 at 5:30 La Paz time):

NAAFE conference poster preview. I'm sure yall can read this on your phones easily. pic.twitter.com/fn47Ac9O5M

— Scott Crosson (@FishEcon) March 17, 2017

Here is the abstract:

We provide an initial look at our follow up study on the impact of the Affordable Care Act (ACA) on U.S. commercial fisheries.  Earlier work found that In the years immediately preceding the passage of the ACA, North Carolina’s commercial fishermen were more likely to purchase health insurance coverage on the private market if they worked in a more dangerous environment or were more highly vested in fishing.  Our preliminary results show that North Carolina’s commercial fishermen are indeed purchasing health insurance through the ACA in significant numbers.  Insurance coverage has risen overall, although some fishermen are still choosing to remain uninsured.  We provide early estimates on the size of the ACA subsidies and changes in fishing behavior and investment.

"Marine Recreational Fishing and the Social Cost of Carbon"

I've been wanting to write this paper since the EPA/DOE workshop on the SCC:

The Impact of Climate Change on Marine Recreational Fishing with Implications for the Social Cost of Carbon 

John Whitehead, Appalachian State University
Daniel Willard, Environmental Defense Fund

Abstract

We estimate the effects of temperature and precipitation on marine recreational fishing days over a 20 year time period. The data are from the National Survey of Fishing, Hunting and Wildlife-Associated Recreation. Our results suggest that temperature and precipitation have positive effects on marine recreational fishing days in the United States. To determine changes in economic value we simulate the effects of climate change on fishing days with changes in U.S. average temperature and precipitation developed from climate models. We use benefit transfer to estimate the value of fishing days. Considering a 4.5F temperature change and a 7% precipitation change, we find that marine recreational fishing days will increase by 27% and the welfare change is $2.5 billion. This suggests that impacts of climate change on marine recreational fishing could have implications for accurate estimation of the social cost of carbon.

Whitehead, John and Willard, Daniel (2016) "The Impact of Climate Change on Marine Recreational Fishing with Implications for the Social Cost of Carbon," Journal of Ocean and Coastal Economics: Vol. 3: Iss. 2, Article 7.
DOI: http://dx.doi.org/10.15351/2373-8456.1071

via cbe.miis.edu

And now that it is published it doesn't friggin' matter!

What does the Trump Administration have against Sea Grant? If anything, Sea Grant is all about creating jobs in depressed communities (i.e., commercial fishing is like coal mining)

Leaked White House memos suggest the Trump administration is planning deep spending cuts at @NOAA and the @EPA: ($) https://t.co/XbtYgW3KGb pic.twitter.com/hJfc7btpUN

— Science Magazine (@sciencemagazine) March 10, 2017

Daily demand and supply: "Price spikes for jumbo shrimp blamed on Gulf of Mexico dead zone"

Marty presented this at App State back in 2013:

The study's researchers captured the hypoxia effects by reviewing the month-to-month price changes of various market sizes of shrimp. They compared that data to the periods when low-oxygen conditions were present.

In a telephone interview, Smith said researchers have known for years that low oxygen levels in water stresses individual fishery species such as shrimp, including causing them to grow less quickly. "That will concentrate more smaller individuals in the population, and they also tend to aggregate on the edges of the hypoxic areas," he said.

That creates what he calls a "burning building effect" that shrimpers use to their advantage. "The shrimp swim out of the hypoxic area but bunch up just outside, like if you were running out of a burning building to get clear but stay nearby," he said.

Shrimpers tend to fish in those locations as the effects of hypoxia occur. That results in the capture of both the smaller shrimp and the larger shrimp in greater numbers than if they were fishing in the hypoxia-affected areas.

The researchers monitored the price of different market sizes of shrimp between 1990 and 2010, from the largest shrimp category (1 to 15 shrimp per pound) to the smallest (50 to 67 per pound). "The price of large shrimp rises higher because fewer large shrimp are caught when there's a bad hypoxia year, so there's upward pressure," Smith said. "But they can also end up with even more small shrimp, causing the price of small shrimp to go down."

In the past, researchers attempted to measure the effects of hypoxia by tracking landings -- the number of shrimp caught -- at different locations along the coast. But that did not take into account the response of shrimpers to hypoxia: They fish for shrimp where species congregates, outside the hypoxic areas.

The new study looks at the prices of different size shrimp with an understanding of where they're caught and other factors that add to their purchase price. For instance, shrimpers who target shrimp outside hypoxic areas might be using more diesel fuel to reach the location. And when the the response of foreign markets to higher large shrimp prices is added in, hypoxia's effect on prices becomes more clear, Smith said.

via www.nola.com

The paper was published in PNAS. Here is the "significance" paragraph from the abstract page:

Coastal hypoxia is a growing problem worldwide, but economic consequences for fisheries are largely unknown. We provide evidence that hypoxia causes economic effects on a major fishery that was once the most valuable fishery in America. Our analysis is also a breakthrough in causal inference for coupled human-natural systems. Although establishing causality with observational data is always challenging, feedbacks across the human and natural systems amplify these challenges and explain why linking hypoxia to fishery losses has been elusive. We offer an alternative approach using a market counterfactual that is immune to contamination from feedbacks in the coupled system. Natural resource prices can thus be a means to assess the significance of an ecological disturbance.

Here is my favorite part of the paper: