Citation Information: Iowa State University, Department of Economics, Working Paper No. 12014, August 2012.
Authors: Rajesh Singh, Quinn Weninger
Abstract: We develop a stochastic general equilibrium framework that facilitates performance evaluation of quota- and non-quota-based management plans in fisheries exposed to socially costly bycatch of non-market species. We examine harvesting behavior, bycatch, and bio-economic performance in a stochastic production environment with and without observability of bycatch, and with and without trade in harvest quotas and bycatch caps. Our results suggest that a precise implementation of a socially optimal plan is only possible if bycatch is observable and a market for trade in fish quotas and bycatch cap functions costlessly. Non-quota-based regulations, which can be implemented without observability, do not achieve first-best bycatch avoidance and therefore raise fishing costs. The Gulf of Mexico longline reef fish fishery is examined to demonstrate key policy insights from our model.