Browsing by Subject "Catch shares"

In recent decades there has been a great deal of interest in using property rights-based management and economic instruments as a means to extract the same resources at a lower cost, while also meeting certain sustainability goals (e.g., biological targets in fisheries). However, these policies remain quite controversial and are even opposed by some of the very same stakeholders who would stand to gain some of these property rights. In fisheries, this issue has an additional dimension that has not received nearly as much attention as the biological outcomes or the cost savings associated with rights-based management: this is the fact that there are a number of differentiated product types--such as fresh instead of frozen, value-added products, etc.--that have the potential to generate more market value. This motivates a broad question as to what extent we can generate more value from the same fish and how rights-based policies such as catch shares interact with fishing behaviors and markets.

This dissertation--and the larger body of ongoing work from which these chapters are drawn--addresses this broad question through a series of specific ones: Do the theoretical underpinnings of revenue-side benefits hold true empirically across a range of catch share fisheries? Do we observe longer fishing seasons post-catch shares, and, if so, does this translate to higher prices/revenues for fishermen through improved market timing, reduced market gluts, and changes in the mix of fresh versus frozen products? Do fishermen respond to revenue-maximizing opportunities that vary not only across time and but also across space once catch shares afford them the flexibility to do so? How do fishermen trade off revenue- and cost-side incentives across target species in multispecies and mixed-management settings? And what do these underlying preferences and behavioral drivers tell us about predicted micro-level responses to new proposed policies? The ultimate goal of this work is to inform the design of rights-based and other management policies so as to maximize the value generated from the resource, and, in so doing, help to minimize the tradeoffs between economic and conservation goals.

The first paper systematically evaluates the theory that rights-based management can lead to higher revenues in fisheries through improved market timing. While follow-on work in Kaczan, Birkenbach, and Smith (2018) explicitly tests for increases in prices received by fishermen for their catch, this paper lays the groundwork by first testing the mechanism underlying hypothesized price increases: namely, that catch shares slow the "race to fish." By securing each individual's right to a portion of the total catch, catch shares theoretically remove the competitive incentives leading to compressed seasons and market gluts and instead give fishermen the opportunity to strategically time their catch to market demand. However, existing evidence of these outcomes comes from selected examples only. In this paper, we analyze natural experiments to test whether catch shares reduce racing in 39 U.S. fisheries. We compare each fishery treated with catch shares to an individually matched control before and after the policy change. We estimate an average policy treatment effect in a pooled model and in a meta-analysis that combines separate estimates for each treatment-control pair. Consistent with the theory that market-based management ends the race to fish, we find strong evidence that catch shares extend fishing seasons on average. This evidence informs the current debate over expanding the use of market-based regulation to other fisheries.

The findings in the first paper, though strong, present a puzzle: if seasons tend to expand for catch share-treated fisheries, why do we observe counter-examples among individual species in multispecies complexes? For example, the season for the New England cod fishery lengthens, but the corresponding season for New England haddock contracts, relative to matched controls. Single-species theory of catch shares and associated market incentives cannot account for these mixed results; thus, the second paper adapts existing theory to more nuanced multispecies settings. We generate predictions about within-season behavior in multispecies fisheries with individual fishing quotas, allowing features such as stock aggregations, effort constraints, and various demand schedule slopes. Numerical results show variation in harvest patterns, including season length, acceleration or delay of harvests, and sequencing individual species harvests. Specifically, we find: 1) harvests for species with downward-sloping demand tend to spread out; 2) spreading harvest of a high-value species can cause lower-value species to be harvested earlier in the season; and 3) harvest can be unresponsive or even respond negatively to biological aggregation when fishermen balance incentives in multispecies settings. We test these predictions using panel data from the Norwegian multispecies groundfish fishery and find evidence for all three.

The third paper dives deeper into the anomalies in the first and empirically tests the new theoretical predictions of the second in a real-world multispecies, mixed-management setting. While a growing body of work seeks to evaluate the impact of catch share programs and other fisheries policy interventions using treatment effects models, these approaches can only identify the net effects of the policy change and not the mechanisms underlying them. As a result, these models may have limited relevance for proposed new (out-of-sample) policies. To learn how catch shares influence micro-level decision-making on the water, we develop and estimate a structural discrete choice model of individual vessel behavior. This work seeks to improve our understanding of how catch shares--and the policies that they replace--influence species targets, timing of fishing activity, and the value generated from the resource. To allow study of inter-species substitutions in pre- and post-rationalization, we implement this model using fine-scale commercial fishing data from before and after the start of the Northeast Multispecies Sector Program. We predict stock-specific production at the vessel-day level in first-stage regressions and use these predictions in a second-stage discrete choice model of targeting decisions that controls for weather, costs, and prices. From this second stage we recover structural parameters that capture how policies affect micro-level incentives. We use these parameters to simulate the effects of removing input restrictions and replacing them with catch shares and to predict behavioral responses to alternative policy specifications.

While the first three papers explore how quota-holding fishermen respond to changing economic opportunities across time, the fourth asks the same question with respect to space. In theory, rights-based management allows fishermen to not only target fish when their value is highest, but also to land and sell them where they will fetch the highest price. But apart from generating potential revenue-side gains, landing decisions also matter to fishery managers looking to incorporate non-efficiency goals, such as equity- or community-focused initiatives, into their quota systems. For example, managers may implement price premiums at disadvantaged landing communities to support commercial fishing activity and the local businesses (e.g., restaurants and processors) that rely on it. Predicting the outcomes of such policies requires an understanding of how fishermen decide where to land their catch, which has received little attention relative to fishing location choices. In this paper, we develop a discrete choice model of landing site choices, using groundfish vessels in Finnmark, Norway as our empirical application. We find that, while fishermen are highly responsive to travel distance, expected revenues are not a consistent driver of landing location choices, which instead reveal a high degree of state dependence. These results suggest that policies altering price incentives to redistribute landings would not be sufficient to draw fishermen away from their preferred landing sites.

This dissertation presents three program evaluations in environmental and resource economics. In the first chapter, I ask whether rural roads can contribute to a reversal of tree cover loss. Prior literature shows roads to be strong drivers of deforestation; however, I hypothesize that in some settings the opposite relationship may hold. Roads may (1) increase the relative productivity of labor in non-agricultural sectors, reducing agricultural activity and allowing reforestation; (2) raise profits from forest management or plantations by linking markets, encouraging forest planting; and (3) provide access to imported fuel sources, reducing pressure on forests from firewood collection. I use a large-scale rural road construction program in India to explore these possibilities. I construct a nationwide, village-level panel, and estimate the impacts of roads on tree cover using a differences-in-differences approach. In aggregate I find that road construction contributed to tree cover expansion, in great contrast to the existing empirical road-forest literature. I also find considerable variation in road impacts across settings within India: frontier settings saw reductions in tree cover due to new roads, while less isolated settings with more established agriculture saw increases in tree cover.

In the second chapter, I apply similar quasi-experimental methods to a very different question: does rights-based fisheries management increase fish prices? Rights-based management, specifically “catch shares,” is known to extend fishing seasons by slowing the destructive “race to fish.” This reduces fishing costs. It may also increase fishing revenues, because longer fishing seasons reduce product gluts that depress prices. I test this hypothesis for the majority of U.S. catch share fisheries (all those with data available) using an individually matched control fishery for each treated, catch share fishery and a difference-in-differences approach. I find evidence for increased ex-vessel prices among fisheries that undergo season decompression; however, highly variable results suggest that there is a need for a richer theoretical understanding of transitions to rights-based management. I discuss effort substitution in multispecies fisheries systems as a possible explanation for this heterogeneity.

In the third chapter, I consider how environmentally beneficial actions can be incentivized by conditional payments (i.e. payments made in return for specific actions or outcomes) in collective land management settings. I use a framed field-lab experiment with participants from collective lands enrolled in a new payments for ecosystem services (PES) program in Mexico. I test the impact of increasing collective conditionality. Because social interactions are integral in collective decision-making, I also test the impact of PES design features that aim to improve group cooperation. Greater collective conditionality raised contributions, with higher impact on lower baseline contributors. Giving groups a way of participating in program rule-setting further improved their cooperation with those rules.