zaterdag 29 december 2012

Mapping marine economics (4): Fishers are not alone anymore

One of the major attractions of Scheveningen (if you can pronounce that you've successfully adapted to Dutch culture) is a 360 degrees painting by the Dutch painter Hendrik Willem Mesdag. It depicts the North Sea coast near Scheveningen in the nineteenth century, long before its neighbouring city, The Hague, absorbed this coastal fishing village in one big agglomeration. Mesdag created an illusion that worked surprisingly well: there appears to be depth in the painting and you feel like standing on a dune watching over the beach, or looking down on the village with its neat little houses, or the villas where rich city folk spent their free time. What is also striking is the dominance of fishing, together with transport, in the coastal zone. You see some sunbathers, but they are easily outnumbered by fishers and other workers in the fishery, such as the horsemen towing the bomschuiten (flat-bottomed fishing vessels, a bit like the pink).

How different is it nowadays. International trade has mushroomed. We have largely replaced sails and steam engines by combustion engines running on oil and gas, scattering drilling platforms all over the North Sea to get to the stuff. Wind is making a come-back as wind turbines are forming entire forests in the open sea. Meanwhile, fishing has become something to limit rather than promote: in Mesdag's days the British scientist Thomas Henry Huxley called fishery resources "inexhaustible", but for numerous stocks we have actually found those limits and are now concerned about crossing them. And we're not only concerned for edible species, but also for marine life in general: enter marine protected areas.

So many uses, so many users, so little resource
Like the North Sea, many marine and coastal ecosystems have many different uses, many different users, and many different ways to meet the users' needs. Mangrove forests provide coastal protection, a nursery ground for wild fish, a source of juvenile shrimp for extensive shrimp farming systems, and a fascinating ecosystem to float through for tourists. Likewise, other coastal ecosystems like mudflats and coral reefs provide a variety of goods and services to a variety of users. And none of these biomes are limitless.

Given this variety of uses it is not surprising that policy makers need to make many tradeoffs. How far are we willing to limit fishing for an extra gigawatt of wind energy? How do we trade off port capacity against tourism? Does the income generated by an extra hectare of intensive shrimp aquaculture offset the loss in biodiversity and coastal protection?

All these examples are tradeoffs between uses, but also within one and the same use policy makers have to make difficult choices. What is worse, a small flood every year or a big flood every ten years? How do we rebuild fish stocks if local communities depend so much on fishing that they cannot miss a single year of it?

Note that simply putting a price tag on services may not be enough: the average per hectare value of a mangrove forest may be low when the forest is large, but once we have cut most of it the last few remaining hectares will be much more valuable. Moreover, aggregating monetary values over all stakeholders and over time may give you a single figure (the net present value), but this simplicity obscures problems of poverty and income distribution. So we may need to consider the entire tradeoff.

Tradeoff analyses and bioeconomic modelling
I have done tradeoff analyses of dairy farming and biodiversity conservation in my PhD thesis, and I recently submitted a paper with a former MSc student of ours, Matteo Zavalloni, and fisheries ecologist Paul van Zwieten where we analyze the tradeoff between shrimp aquaculture and mangrove conservation in a coastal area in Viet Nam. Both analyses are spatially explicit, i.e. we analyze not only how much of something can or should be done, but also where. The "where" question is quite important as many uses of marine areas (shipping, fishing, aquaculture) have a spatial dimension.

So this will be one of my major focus points: developing tools to make quantitative tradeoff analyses of coastal and marine ecosystems. I'm very much a bioeconomic modeller. I guess it's the geek in me: I've always been terrible at practical technical stuff (the holes my house's walls and the crappy paint jobs on my window panes bear witness to that), but I enjoy the patient development of a complicated quantitative model, or an insightful analytical model. I also enjoy the interdisciplinary nature of this work: you need to collaborate intensively with other scientists, mainly ecologists, to do it right.

vrijdag 7 december 2012

The Stapel affair: it is worse than we thought

After Diederik Stapel was caught cooking the scientific books, three committees investigated the extent of the fraud in their universities (Amsterdam, Groningen, Tilburg), and how it was possible that Stapel committed his fraud on such a massive scale. The report came out last week, and I find its content no less than shocking. And then I'm not just referring to what they found Stapel did, or how the universities where he did it never suspected anything. What shocked me most was the conduct of the other researchers. Worse even, many admitted to these practices without the slightest notion they were doing something wrong.

Repeat the experiments until you get the results you want
Suppose your hypothesis says that X leads to Y. You divide your test subjects into two groups: a group that gets the X treatment and a control group that gets no treatment. If your hypothesis is correct the treatment group should show Y more often than the control group. But how can you be sure the difference is not a coincidence? The problem is that you can never be certain of that, so the difference should be so large that a coincidence is very unlikely. Statisticians express this through the 'P-value': if your hypothesis is not true, the probability that you get these results is estimated by the P-value. In general scientists are satisfied if this P-value is lower than 5%. Note that this means that if the hypothesis were not true, you still have a 1 in 20 chance of getting results that suggest it is!

So here is the problem. Some of the interviewees in the Stapel investigation argued it is perfectly normal to do several experiments until you find an effect large enough for a P-value lower than 5%. Once you have found such a result, you report the experiment that gave you this result and ignore the other experiments. The problem here is that any difference you find can be due to coincidence. If you do two experiments, you have a chance of about 1 in 10 that at least one of them gives a P-value lower than 5% if the hypothesis is not true; if you do three experiments, the chance is about 1 in 7. This strategy must have given a lot of false positives.

Select the control group you want
No significant difference between the treatment group and the control group in this experiment? No sweat, you still have data on the control group in an experiment you did last year. After all, they are all random groups, aren't they? So you simply select the control group that gives the difference you were looking for. Another recipe for false positives.

Keep mum about what you did not find
Another variety is that you had three hypotheses you wanted to test, but only two are confirmed (ok, technically hypotheses are not confirmed - you merely reject their negation). So what do you do? You simply pretend that you wanted to test these two all along and ignore the third one.

Select your outliers strategically
Suppose one of your test subjects scores extremely low or high on a variable: this person could be an exception who cannot be compared to the rest of your sample. For instance, somebody scores very high on some performance test, and when you check who it is it turns out that this person has done the test before. This is a good reason to remove this observation from your dataset because you are comparing this person to people who do the test for the first time. However, two things are important here: (1) you should explain that you excluded this observation, and why; and (2) you should do this regardless of its effect on the significance of your results. It turned out that many interviewees (1) did not report such exclusions in their publications; and (2) would only exclude an observation if doing so would make their results 'confirm' their hypothesis.

And all this seemed perfectly normal to some
But as I said earlier, the most troubling observation is that the interviewees had no idea that they were doing anything wrong. They said that these practices are perfectly normal in their field - in fact, in one occasion even the anonymous reviewer of an article requested that some results be removed from the article because they did not confirm their hypothesis!

The overall picture emerges of a culture where research is done not to test hypotheses, but to confirm them. Roos Vonk, a Dutch professor who, just before the whole fraud came out, had announced 'results' from an experiment with Stapel 'showing' that people who eat meat are more likely to show antisocial behaviour, argued on Dutch television that an experiment has "failed" if it does not confirm your hypothesis. It all reeks of a culture where the open-minded view of the curious researcher is traded for narrow-minded tunnel vision.

Don't get me wrong here: the committee emphasizes (as any scientist should) that their sample was too small and too selective to draw any conclusions about the field of social psychology as a whole. Nevertheless, the fact that the committee observed this among several interviewees is troubling.

But the journals are also to blame, and there we come to a problem which I am sure is present in many fields, including economics. Have a sexy hypothesis? If your research confirms it the reviewers and the editor will crawl purring at your feet. If your research does not confirm it they will call your hypothesis far-fetched, the experimental set-up flawed, and the results boring. It's the confirmed result that gets all the attention - and that makes for a huge bias in the overall scientific literature.

vrijdag 30 november 2012

(Almost) three days of (almost) night

This is as light as it gets where I was this week:

The location is Tromsø, Norway. I was there the last few days to discuss the effect of climate change on arctic fisheries. Interestingly, this effect is not necessarily negative - for the Norwegians, that is. Stocks like mackerel may move northwards, making more mackerel available to Norwegian fishers at the expense of more southern less northern fleets (like the Dutch). Other effects may be that arctic stocks become more productive, and as stocks get larger they can also be found in places where they weren't before. So the University of Tromsø gathered together fisheries economists from Norway, Denmark and Iceland (adding a stray Dutch aspiring fisheries economist and a Mexican professor) to discuss what the economic effects may be, where these effects take place, and how economists can analyse these effects.

My highlights from this meeting:
  • Much of the research in this domain is descriptive: what is happening, and what may happen in the future? This concerns issues varying from what fishers do, where they will fish and how intensively, to the willingness of countries to cooperate in fisheries policy when stocks move northwards.
  • Prescriptive research - which routes should be kept open, where should marine protected areas be allocated - is scarce. I was one of the few participants presenting such research, and even that was about Vietnamese mangrove forests (not exactly arctic) and Dutch agri-environment schemes (not exactly marine or arctic). Juan Carlos Seijo had a very nice presentation about where to allocate a marine protected area in an ecosystem where the commercial fish originates from a particular (nursery) area. Not very surprisingly, one should protect the nursery area from fishing, but if you take into account what fishers do the effect of the allocation also depends on whether the nursery lies close to the fishing port or far away from it.
  • Norwegians are delightfully unapologetic about hunting and whaling. I can't blame them: they have plenty of fish, minke whale and game, and as far as I can see they manage these stocks fairly well. Meanwhile, the Dutch get squeamish about whether we should cull deer (but hunting is cruel), let them starve (which is even crueler), or risk hitting them on the highway (would you like a deer in your windscreen?).
  • All the more surprising that the Dutch hunted whales, seals, and other cuddly arctic fauna on a large scale before the Norwegians did.
  • Norwegian is a very efficient language. "Hello how are you today?" is "hej"; "thank you very much" is "takk". Why waste energy on redundant syllables?
Tromsø is a fascinating place. After Murmansk it is the largest city above the polar circle, and around this time of the year the sun does not rise - you get some twilight between 10am and 2pm, that's it. The city is proud of its arctic hunters (like Wanny Woldstad) and explorers (like Roald Amundsen). But I admit I'm glad to have some sunlight again.

zondag 18 november 2012

Mapping marine economics (3): Why do we overfish?

Let's face it: it's silly. The UN's Food and Agricultural Organization estimates that about 30% of global fish stocks could have higher yields if they were fished less intensively. Think about it: spend less fuel, labour and capital on fishing, and catch more fish, not less, as a result - what's not to like? So why are these stocks overfished?

It's the diagnostic question: what are the economic drivers of natural resource depletion? In fact, it's one of the oldest questions in the profession, and the answer is also one of the oldest concepts: the tragedy of the commons. The ecologist Garret Hardin introduced this term in Science in 1968, illustrating it with an example of a pasture commonly owned by several herdsmen. For each herdsman gaining an extra sheep will reap benefits available to that herdsman alone (wool, meat), while the costs are borne by all herdsmen (less grass available for other sheep). The result: too many sheep, too little grass. If the pasture were privately owned by one herdsman, this herdsman would reap all the benefits and suffer all the costs, so he would probably have a smaller herd of sheep than in the commons case.

The argument also applies to the fishery: the benefits of catching one fish go to the fisher catching it, whereas some of the costs (the loss of the offspring this fish could have produced) are borne by all fishers. In fact, fisheries scientists were already aware of this when Hardin published his article. The economist Scott Gordon showed in the Journal of Political Economy in 1954 that an open access fishery will be fished at a much higher rate than optimal.

Note the dates here: the most fundamental insights in this domain were introduced more than 40 years ago. Has nothing happened since? Of course the insights have been refined further, and there is a lot of game theoretic analysis happening that you could interpret as diagnostic research. When do countries cooperate in international fisheries policy - and when don't they although they should? What is the bargaining position of a single state (say, Mauritania) in establishing the access fee of a long-distance fishing vessel?

But the more intriguing, and growing insight is that many commons, in Hardin's definition, are actually managed quite well. The political scientist Elinor Ostrom (who sadly passed away this year) has described many examples of common property (water resources, grazing land, and so on) where the single user refrains from increasing his or her individual benefit at the expense of other users. Even worse: there are examples of such resources where the trouble really started when the government intervened, assuming it needed to solve the commons problem!

So what happened here? It seems (and I admit with some embarrassment that it always takes a non-economist to remind economists of this) human behaviour is driven by more than a calculated self-interest. Many common pool resources are shared by people who are friends or relatives of each other, their kids play with the kids of other users, or their older children may marry those of other users. Ostrom's research showed that many communities of common pool resource users have developed rules of what they consider 'reasonable' use. Use more than your fair share, and you will have to explain yourself to your in-laws, your neighbours, and so on. The rules lead to a management that may not be strictly optimal, but it is certainly sustainable, and probably better than the Tragedy described by Hardin. And when governments introduced legislation to govern the use of the resources, this legislation conflicted with the older informal rules, making matters worse rather than better: formal rules have a nasty habit of crowding out informal rules.

So what should marine resource economists do with these new insights? It's a difficult subject. So far the research into the role of social norms and informal rules has been very descriptive, with very few insights that can be generalized to the majority of cases. I know a few economists who try to understand how these informal rules evolve: surely a society that has developed the wrong informal rules eventually destroys itself. So you can model this evolution in a manner similar to how ecologists apply game theory to the evolution of species. But how much of that research yields insights that we can apply today remains to be seen, and I'm no evolutionary economist.

Therefore, the research I'm doing in this domain will probably remain limited to a few game theoretic analyses. In VECTORS we analyse how fishing treaties between EU member states (and non-EU countries like Norway) may collapse when stocks move northward with their preferred climate zones. (Actually, Adam Walker is doing this with Hans-Peter Weikard.) In BESTTuna we will analyse the bargaining position of Pacific island nations, and their willingness to cooperate in a common tuna fisheries policy. Hopefully this research will tell us more about the possibilities and impossibilities of managing cross-boundary fish resources through international treaties.

donderdag 15 november 2012

Science publishing works in mysterious ways

  • Is it (according to Web Of Knowledge, that is) "Environment and Development Economics" but "Environmental & Resource Economics"?
  • Do publishers offer fancy templates for LateX files that violate their own journals' guidelines for authors?
  • Does Web Of Knowledge abbreviate "Resource and Energy Economics" to "Resour Energy Econ", and "Energy Economics" to "Energ Econ"? (Note the savings in characters in the latter title: six characters! That'll save the rainforest.)
Indeed, why abbreviate journal titles at all?

dinsdag 13 november 2012

Mapping marine economics (2): Economic value of coastal and marine ecosystems

How bad is our current state of coastal and marine resources?

This question may get you browsing the websites of IUCN, Wetlands International, or other NGOs, looking for data on historical trends in coral reefs, endangered fish species, and so on. But whether and how fast coral reefs disappear is only half the answer to this question. Note that the question asks: how bad is it? So when we know the rate at which coral reefs are disappearing, the next question should be: how bad is it that they are disappearing?

It's what I call the nasty question: why do you want to protect the environment? The question sounds insulting, criminal even, as it seems to ignore a self-evident fact: surely the environment deserves protecting? But 'protecting the environment' can mean many things, ranging from eliminating emissions of substances that cause cancer (good) to saving the smallpox virus from extinction (not so good). I wrote in an earlier post that given the choice between tsetse flies and human beings, my sympathy is with the latter. In other situations, however, the choice is not so clear. Conserving sharks may sound like a laudable goal, but how many lethal shark attacks are we willing to accept? There are many such trade-offs in coastal and marine policy: mangrove conservation versus shrimp farming, wind energy versus fishing, port development versus tourism. We can't escape making explicit in what ways, and to what extent, ecosystems are important to us.

That does not necessarily mean putting a price tag on everything. If you want to argue that coral reefs are sacred, or that whales have a right to exist, and you can convince a majority of voters in your country of that view, go ahead. I may not agree with you personally (I'm more of a humanist), but professionally I have just as little to say about that as my fiddle teacher can fix my car. However, if we are talking about economic importance - how much do ecosystems contribute to human welfare - then I can give you a number of reasons why conserving coastal and marine ecosystems may be a good idea after all:
And so on. (Edward Barbier has written a very nice overview of the goods and services provided by coastal ecosystems. Best of all, it is free!) What economists do in this kind of issues is estimating how much coral reefs, mangrove forests, marine fisheries systems, and so on, contribute to human welfare - and yes, we try to express that contribution in dollars, euros, or other currency. This is done for two reasons. The most-cited reason is that if we don't make these estimates, policy makers may assume the economic value of such ecosystems to be zero. Although I see the merit in showing the importance of coastal ecosystems in a way that makes it possible to compare this value to the value of, say, laptop computers or refrigerators, I still see a danger that such 'raising awareness science' degrades into advocacy. In my view, the most legitimate reason to express the value of ecosystem goods and services in monetary terms is that big public projects, like development of ports or aquacultural areas, need to be appraised by the best information available. That means that a cost-benefit analysis of such projects should consider not only the costs of building the port and the income generated by using it, but also the effect it will have on, say, the damage suffered when the next tsunami comes along.

A lot of work has been done in this respect, and a lot of work still remains, as Barbier's article demonstrates. But I'm not going to do it. I have done valuation studies in the past, and occasionally I supervise students doing valuation surveys. But if you want to really make your mark in this domain you need to do nothing else, and I'm too much of a modelling person to focus on surveys and the statistics that go with them.

vrijdag 26 oktober 2012

That's all I'm going to say about the 100 cod story

I know, a lot has been said already about the nonsensical story that there is only 100 cod left, but there is one thing I hadn't even noticed back then. The Telegraph gave its article the following title:
Just 100 cod left in North Sea
Then the subtitle said:
Overfishing has left fewer than 100 adult cod in the North Sea, it was reported.

This is different than "100 cod" - not all are adult. Perhaps the author changed his or her mind as he/she went along writing the article. Perhaps by fewer than 100 adults he/she meant to say something like 98 adults, which leaves 2 juveniles... Nevermind. The caption under the figure in the article said:
Not a single cod aged over 13 was caught in the North Sea last year.

Most cod is mature before the age of six.

woensdag 24 oktober 2012

This time they don't even pretend otherwise

I'm usually not a conspiracy type of guy but googling for images to visualize 'carbon sink' I came across this story:
...British artist Chris Drury thought his commentary on the connection between the coal industry and dead trees would merely generate some polite on-campus debate in Cheyenne.
By day three of construction, the mining industry was accusing the university of ingratitude towards one of its main benefactors – in what some have seen as a veiled threat to cut funding.
I usually detest the lame arguments on both sides of the climate debate ("you're only a skeptic because you're paid by the oil industry", "you're only a warmist to rake in more research money"), but what to think of these statements?
"They get millions of dollars in royalties from oil, gas and coal to run the university, and then they put up a monument attacking me, demonising the industry," Marion Loomis, the director of the Wyoming Mining Association, told the Casper Star-Tribune. "I understand academic freedom, and we're very supportive of it, but it's still disappointing."

Then two Republican members of the Wyoming state legislature joined in, calling the work an insult to coal. The subject of university funding also came up.

"While I would never tinker with the University of Wyoming budget – I'm a great supporter of the University of Wyoming – every now and then, you have to use these opportunities to educate some of the folks at the University of Wyoming about where their paychecks come from," Tom Lubnau, one of the state legislators, told the Gillette News-Record.
I love the sculpture, by the way. More of the artist here.

donderdag 18 oktober 2012

Yes, sometimes I agree with the critics of PES - but not always

Richard Conniff puts some question marks over PES in this piece. Most of it draws from an earlier article by Kent Redford in Conservation Biology, so let me go over the arguments laid out (rephrased in my own words - hoping I get it right) in this article. Be prepared: I actually agree with most of it, although I wholeheartedly disagree with some of it.

PES risks crowding out moral justifications for conservation
This is a risk. The risk is similar to the risk associated with social cost-benefit analysis, namely that the difference between monetised costs and benefits will become the only decision criterion so that non-economic arguments lose their voice in the political debate. This was the case when the USA (under Reagan) adopted its notorious Executive Order 12291, which stated that "Regulatory action shall not be undertaken unless the potential benefits to society for the regulation outweigh the potential costs to society." No wonder this put a stop to a lot of environmental policy, the benefits of which are most difficult to quantify. So yes, we should keep reminding our students, including economics students, that money is not the only argument in public decisions.

Pro-PES conservationists wrongly believe that all ecosystem services are good
Let me add to that: they even believe ecosystem services are good enough, i.e. good enough to justify conservation. But ecosystem services might not be good enough, and in that sense pro-PES conservationists should be careful what they wish for. But there the article makes an interesting statement (and now I do quote):
Nevertheless, not all ecosystem processes sustain and fulfill human life. Processes such as fire, drought, disease, or flood work against this goal, yet they are vital for ecosystem function, structuring landscapes, and providing vital services and regulatory functions to nonhumans. There is a danger that an economically driven focus on those “services” that are valuable to humans in their nature, scope, and timing may lead to calls to “regulate” ecosystem services to times and in flows that match human needs.
I would like to see Mr Redford explain to Zimbabwean farmers why they should learn to live with themselves, their children, and their cattle getting sick or even dying from sleeping sickness. I'm sure tse tse flies are valuable for some reptile species I should have heard of, but in this case my sympathy is with Homo Sapiens.

Some services may be better provided by species with nasty side-effects
Of course you should take into account nasty side effects, and then the outcome may be that you should still, or should not, use that exotic turbo species to provide the service. Indeed, you may not know the side effects, so precaution is mostly warranted in such cases.

PES may become an incentive to engineer ecosystems towards service provision, which may have nasty side effects
See above. Engineering an ecosystem towards provision of a single service can indeed increase the ecosystem's brittleness, like monoculture is efficient on the short term but very vulnerable to disease on the long term.

The methods currently used to establish monetary value are problematic
Tell me about it: the economic literature is rife with reasons why putting a price tag on nature can go wrong. But here is another interesting quote from the article:
Where markets do exist, the value of the services from different ecosystems will not reflect their diversity, but their desirability to human consumers.
Now we get to the hidden assumption made by a lot of biologists: ecosystem value = ecosystem diversity. This is a gap between biology and not just economics, but all of social science: social scientists argue that 'value' is, well, a value judgement - something that cannot be established objectively, period. Conservationists like to say we should preserve nature because it has 'intrinsic value', but what they should really be saying is that they think, or feel, or find that nature has intrinsic value. I hate to say this, but nature having intrinsic value is not a fact; it's an opinion. A very valid opinion, but there are many others in this whole conservation debate and the way it is being pushed by conservationists smacks of a dictatorial sort of self-righteousness.

PES can have terrible repercussions for (mostly poor) locals
Absolutely. One of the driving forces of deforestation is that nobody knows who owns the forest: is it the state, is it the logging company, or is it the native tribe living in it? Assign any of these three the property rights over the forest and this new rightful owner has the right to exclude all the others. And he will do so, especially when there is money to made! The new allocation may be efficient according to our economics textbooks but it may come at the price of unimaginable social disruption in the lives of local communities.

Property rights may not be able to deal with climate impacts
The argument is like this: if you assign property rights over some species to some owner, this owner may have a strong incentive to stop the species from wandering off when its climate zone starts shifting. Of course, in a well-working market, this owner would be better off buying land elsewhere to let his species neatly follow the change in climate zones, blah blah blah. But land markets are notorious for their institutional problems. Land use regulations, spatial externalities, transaction costs, and all kinds of other problems will throw sand in the machine. This is an interesting issue I hadn't thought of before. It reflects an interaction between institutional-economic problems and ecological dynamics I might want to look deeper into.

One on the house: paying people not to do nasty stuff
I didn't find the argument in the article, nor in Conniff's piece, but it is a problem: a lot of PES is actually paying people not to be nasty. For instance, Conniff gives an example of Vittel-Nestlé paying farmers to not pollute the environment. But pollution is a negative externality: it is a cost imposed by farmers on Vittel. Paying farmers to stop polluting may solve Vittel's problems on the short term, but it still artificially boosts the farming sector to a size bigger than optimal. The whole world might be better off with farmers doing their business in places where they do less damage, but this solution will actually draw farmers to this area: they get paid not to pollute, what more do you want?

PES is a neoliberal sellout of our democracy to big business
Of course I save the best for last: it is the remark made by the man I would love to see in a cage fight with James Delingpole. Of course I am talking about George Monbiot:
When governments and PES proponents talk about employing marketplace solutions instead of traditional regulatory approaches, [Monbiot] says, “what they are really talking about is shrinking democracy, shrinking public involvement in decision making, shrinking transparency and accountability. By handing it over to the market you are in effect handing it over to corporations and the very rich,” and to “a very plutocratic” decision-making process.
There you have it: more market inevitably means less democracy. Of course, everybody knows you can only have a fully functional democracy under socialism, isn't it?

zondag 23 september 2012

Why economists argue with ecologists (5): The Suzuki fallacy

I quit smoking when I was about 30 years old. It is an unhealthy habit, of course, but I also disliked the idea of being dependent on my stock of tobacco. One of the few things I miss about smoking, however, is the excuse to go outside during a break and have a fag and a chat with a few likeminded nicotinists. So occasionally I go outside with the addicts and have the chat without the fag.

I did this a while ago with an ecologist who started a long complaint about economists' ignorance of the limits of our planet. Economists, he claimed, refer to environmental problems as 'externalities': they think the environment is external, i.e. irrelevant, to the economy. I tried to convince him how he misunderstood what externalities are, pointing to his sigarette. It may be his own choice to light a cigarette, or something between him and his dealer to buy a pack of cigarettes, but I also had to inhale his smoke. The damage that he thus inflicted on me was a negative externality: a cost that did not show up on his mental 'balance sheet'. Perhaps, if he had to pay a tax for each of my lost lung cells he would have made a different choice. (You know what they say: nobody is purer than an ex-prostitute.)

I doubt whether I convinced him, but in any case his comment had me thinking. Where did he get this ludricous idea that the economic term 'externality' means 'irrelevant'? After all, every introductory microeconomics book has a chapter on how externalities are a form of market failure. Then I saw the following clip:

My toes still cringe when I watch this - it's just too embarrassing. When he talks about ecosystem services:
All of the things that nature does for us, for nothing. Pollination, for example, or a forest that takes carbon dioxide out of the air and puts oxygen back in, or that holds the soil and prevent erosion.
That's the point where I would have expected an explanation that these services are unpriced, and that we should make those services visible in the market place. For instance, by putting a price on them in public decisions, or by levying environmental taxes, or through paying the owners of the ecosystems for the services they provide. But somehow he got it into his head that
All those services that nature performs, economists call them "externalities". And what that means is: "they got nothing to do with the economy. We don't put a price on them, they are irrelevant."
The speaker, David Suzuki, is a famous environmentalist. He should know his stuff, but he is making these statements without a single speck of irony, and apparently he has been doing this for years. Of course there is lots of nonsense spouted on the internet and you don't have to react to everything, but people like my smoking ecologist listen to David Suzuki. I don't mind criticism of economic theory, in fact I think a lot can be improved. The nice thing about interdisciplinary work is that you learn not just about the contents of other disciplines, but also their way of doing science. And this reflects back on your own discipline. But such cooperation is not helped if people start spreading this kind of prejudice and misunderstanding about one of the fields involved.

zondag 16 september 2012

Mapping marine economics (1): A planet walks into a doctor's office

Somewhere in the near future the wise men and women in Wageningen University's tenure track Advisory Committee will decide whether I'm doing a good enough job to keep it. One of the things they may possibly ask is what my research will focus on in the coming, say, 15 years. So I've been thinking a lot lately about questions like "what on Earth am I doing?" and "where the Hell am I going?"

If you go to the doctor with a problem, the doctor will generally do four things. First, he will assess the seriousness of your problem. Second, he will try to identify the cause of your problem. Third, he will decide on the objective to be pursued by any therapy he may prescribe. Fourth, he will prescribe a therapy, which may be a pill, an operation, or something else. Economics of coastal and marine ecosystems is not much different:
  1. Economists assess how well or how badly coastal and marine ecosystems are doing, and how important they are to us. Should we worry about, say, disappearing mangrove forests? Who should be worried? (Ecologists hate these questions, but somebody has to ask them.) To answer these questions, economists try to put a price on ecosystem services, develop environmental indicators, or correct GDP for environmental degradation.
  2. Economists also investigate the fundamental reasons why we deplete, pollute, or overexploit ecosystems. If we all know how important fishery resources are to us, why are some stocks so terribly overfished? So economists develop theories of open access resources, of enforcement problems, corruption, and other forms of market failure or government failure.
  3. A lot of economic research is done to set the right policy objectives. How do we trade off the profits of a large-scale distant-water fishery against the interests of small-scale local fishers in a developing country? How do we trade off our own welfare against that of future generations? So economists have developed many applied optimisation models, and concepts such as Maximum Economic Yield.
  4. Lastly, economists also investigate how we can attain our policy objectives. Should we introduce restrictions on days-at-sea or Individual Transferable Quota to keep catches at an efficient level? Should we freely distribute fish quota, or auction them off? If we pay land owners not to cut a mangrove forest, will it really save that forest or will they simply cut another forest?
In future posts I'll share my thoughts on each of these four issues.

woensdag 12 september 2012

WWF Coral Triangle's tuna tube

WWF Coral Triangle has just released a very informative Youtube movie on tuna:

It gives a good introduction into some of the issues we address in BESTTuna.

zondag 9 september 2012

Stuff I do: Pacific tuna

Chances are you've thrown one of these on your barbecue this summer:

 Tuna is massively important for many Pacific island nations. Kiribati, a country whose land mass is only 0.02% of its total area (the rest is sea), gets about 30% of its GDP from tuna fishing. Not that the I-Kiribati (people from Kiribati, that is) catch much of that themselves: most of it is caught by fishers from other countries, like Japan, Spain, and the United States, who pay Kiribati for the right to fish in its national waters.

Actually, to just call it "tuna" is misleading, because there are several species of it. If you have ever had a tuna sandwich you will probably have eaten skipjack tuna. It is the cheapest, least tasty, but also the most abundant tuna species: the IUCN is not particularly concerned about it, and the FAO assesses we can catch some more of it without depleting its stock (pdf). The species in the pack in the picture, yellowfin, is doing less well: the IUCN labels the species "near threatened", and the FAO argues against catch increases of this species. Other species are doing worse or much worse than that: bigeye tuna, for instance, is labelled "vulnerable" 1.

Save the apples, don't eat pears
So we should all eat skipjack instead instead of yellowfin and bigeye, right? If only life were that simple. Yellowfin and bigeye are often caught as so-called bycatch of skipjack tuna. Many fishers use Fish Aggregating Devices (FADs) that attract all kinds of fish, starting from small fry all the way up the food chain to several species of tuna. When this includes a school of tuna, fishers draw a purse seine net around the FAD and haul in their bounty. Fishing this way, you are likely to catch a lot of skipjack, yellowfin and bigeye at once, where the yellowfin and bigeye you catch is probably still young and difficult to separate from the adult skipjack. And hence yellowfin and bigeye often end up in a tuna sandwich at a young age where they could have had a glorious career as sushi or tuna steak.

Therefore, the FAO recommends not to increase skipjack catches: not because it is concerned about skipjack stocks, but because catching more skipjack will likely have a negative impact on stocks of yellowfin and bigeye. So perhaps to preserve yellowfin and bigeye stocks, the last thing one should do is buy skipjack tuna.

Governments have used all kinds of different policy instruments to manage fisheries, such as days-at-sea restrictions, or individual transferable quota, or a variety of gear regulations. Such instruments, however, are not everywhere as easy to implement, and governments are in a difficult situation themselves. It is often difficult to observe how much fishers have caught. Moreover, if Kiribati limits its tuna catch in order to preserve tuna stocks for the future, fishers gladly move on to the next Pacific Island Nation to fish there. Perhaps retailers, NGOs, and consumers should step in? We could reward fishers who fish more selectively with some certification scheme: guilt-ridden consumers may be willing to pay some extra for guilt-free tuna. But what if that simply increases demand for fish, and thereby fishing pressure?

Note the neat batik BESTTuna shirts - courtesy of our Bogor partners
Last week I was in Bogor, Indonesia, to discuss this problem with colleagues from Wageningen University and other institutes. We were at the kick-off of BESTTuna, a project of Wageningen University together with many other organisations, including Bogor Agricultural University, University of the South Pacific, University of the Philippines, University of California, Santa Barbara, WWF, and Anova Seafood. The objective of BESTTuna is to look deeper into the management problem with skipjack, yellowfin, and bigeye tuna, considering the different countries involved, the different fishing techniques, the companies involved, NGOs, fishers, and so on. Should Indonesia introduce individual tradable quota? Will MSC certification give fishers an incentive to fish sustainably or will it only enhance fishing pressure as green consumers can start eating tuna with a seemingly clear conscience? How can we make sure that Pacific Island Nations cooperate to manage their tuna stocks sustainably? It's a complex, but therefore also fascinating problem - and it's one of those problems you're reminded of every time you enter the supermarket.

One of the most depressing cases of tuna overfishing is the southern Pacific bluefin tuna. It is currently at no more than about 15% of its 1973 stock. Bluefin, however, is quite a different story than the species I describe in this post.

woensdag 5 september 2012

No tu-ning jokes please

I could think of no better way to start the academic year than by welcoming our first Chinese sessioneer:


Read more about the monthly traditional music sessions here.

vrijdag 31 augustus 2012

Carbon is carbon, but water is not water and land is not land

Besides the ecological footprint you might also have heard of the carbon footprint and the water footprint. Only carbon footprint makes sense; I criticized ecological footprint in an earlier post, but I did not mention another problem that also holds for water footprint.

Why do I think carbon footprint makes sense? It's about one environmental problem: climate change. It's about one type of pollutant, greenhouse gases such as carbon dioxide and methane, and it doesn't matter where you emit them. Whether you burn coal in Las Vegas, Shanghai, or Maasbree: the radiative forcing of the greenhouse gases you emit is similar.

How different that is with water. Growing fairly thirsty crops in Las Vegas is a much bigger problem than growing very thirsty crops in Maasbree, simply because there is much more water in the Dutch province of Limburg than in the American state of Nevada. In Nevada you would have to extract groundwater to irrigate your crops, and you would have to extract a lot of it because a big part of what you spray on your crops will evaporate before your crops can drink it. The groundwater aquifers you extract your water from will take a very long time to be replenished. In Limburg, on the other hand, you can use water from the Meuse (which is what Maasbree is named after), and even if you extract groundwater there is plenty of rain and river water to replenish it. Nevertheless, the water footprint will simply look at water use or the thirstiness of your crops, so growing very thirsty crops in areas where there is plenty of water is worse than growing somewhat less thirsty crops in areas where water is very scarce. Water depletion is a local problem: you can't compare Dutch water to Nevadan water. This problem does not hold for greenhouse gas because a Dutch ton of CO2 has the same effect as a Nevadan ton of CO2.

Ecological footprint has the same problem. Here the unit is not tons of carbon or liters of water, but hectares of land. With land it is important to consider the opportunity cost: if, say, you would use it to store carbon, what uses of the land would you have to forgo? In other words: if you would not use it to store carbon, what else would you have done with it? And then it turns out that it actually matters a lot whether we are talking about highly productive land in a well-drained and fertile Dutch polder or some remote wasteland with no biodiversity to speak of. Ecological footprint aggregates all land used by a person, a city, or a product, including the hypothetical hectares one would need to store carbon. Whether it is office space in the centre of Hong Kong, a highly diverse rainforest in Brazil, the fertile polder of Het Groene Hart or the barren desert of the Sahara: land is land, according to the ecological footprint. But it isn't, just like water is not water.

zondag 26 augustus 2012

How to cram the whole world in a small Dutch pub

One of the greatest things about Wageningen is that you meet people from over the world. It's a fairly small university, but it is very internationally oriented, so there is no escaping our international students and staff.

Some of them find themselves in a small pub on a Sunday afternoon listening to a couple of folks playing bagpipes, fiddles, hurdy-gurdies and other strange acoustic instruments. That would be me and my fellow musicians at the monthly traditional music session in Café De Zaaier:


(I'm the one holding the camera.)

We have been doing this every month for more than 10 years now, and I know we should count ourselves very lucky. It's the perfect setting for a traditional music session: the pub is a traditional 'bruin café' (literally "brown pub" - a type of Dutch pub named after its dark brown wooden interior) with a large collection of Dutch and Belgian genevers, many different beers (including Guinness and Kilkenny - Irish sessioneers seem to be quite keen on that) and the owner is a musician with a love for folk music. This being Wageningen, we have enjoyed the company of musicians and listeners from Mexico, the Czech Republic, Sweden, Eritrea, and, lately, the Basque country:


Everybody is welcome to come and listen or to play along. All traditions are welcome - this diversity is one of the fun things! The only thing to mind are three rules:
  • We play 'around the table' so that all musicians get a chance to start a tune or a song;
  • It is better to play something simple you feel confident with than to play something difficult that you have to start over and over again. In other words: if you play, you play;
  • Feel free to join somebody else's tune or song, but don't overdo it, especially if you don't know the song or tune.
Curious? We have a website where you can find all the details.

dinsdag 21 augustus 2012

Two draft course documents

What do you do when you need only one chapter of Perman et al., or Tietenberg, but you can't reasonably ask your students to buy the whole book? You either distribute illegal copies, or you write the text yourself. Of course I'm a decent guy so I just posted two draft texts on my WUR website:

A very basic introduction to Stochastic Dynamic Programming
This is a text that I prepared last year for my lecture on stochastic dynamic programming in a course on the economics of natural resources. Dynamic Programming is one of the more elegant ways of presenting the problem of natural resource depletion: how much should we harvest now, and how much should we save for later? The problem is that most introductory texts in natural resource economics say little about DP, whereas the specialized texts on DP are too difficult technical.

Market failure and natural resource depletion
I co-teach a course on marine resource management where I explain the basic principles of natural resource economics to MSc students with almost no economic background. I have not yet found a text that explains natural resource economics in an accessible manner to this audience. So far this document only features the basics of supply, demand, consumer surplus, and producer surplus, but I intend to extend it in the near future.

Feel free to download, use, comment, etc.

woensdag 15 augustus 2012

My two hands, I mean cents, on Monbiot's anti-valuation rant

I am happy to say that James Delingpole and George Monbiot make my toes cringe in equal measure (don't you think they even look alike?). Whether it's about the leftist conspiracy to strangle the economy with cap-and-trade or the neoliberal commodification of our athmosphere by cap-and-trade, I always find it difficult to reach the end of their writings with the same blood pressure as when I started reading them.

This time it's Monbiot who writes yet another econophobic rant against Payments for Ecosystem Services: pricing nature is wrong, PES is just a slippery slope towards privatisation of nature, without markets we wouldn't be in this situation in the first place, blah blah blah.

Tim Worstall writes a rebuttal of Monbiot's piece in The Telegraph (indeed, Delingpole's home newspaper) where he makes two major points:
  1. If we didn't try to estimate the value of nature in monetary terms, it would be priceless, which in today's world means worthless (and hence, defenceless);
  2. It's not the establishment of property rights, but their absence that is driving overexploitation of natural resources. Monbiot's rejection of private property rights takes us back to the days when nature was a free-for-all, with all the depletion and extinctions that come with it.
Worstall's second point is very valid, and I'm glad somebody is making it (although I doubt it convinces George "markets are evil and governments are saints" Monbiot). His first point, however, raises two question marks, making me feel somewhat like the proverbial two-handed economist.

On my left hand, I admit (albeit grudgingly) that Monbiot has a point: there are more reasons to preserve nature than just its contribution to the economy. It's the classical dichotomy between utilitarian and deontological ethics: Worstall uses utilitarian arguments (show how important nature is and people will more likely preserve it), whereas Monbiot argues that it is simply morally right to preserve nature, because it has a value in itself regardless of how highly humans value it.

On my right hand (call it my Delingpole hand if you like), arguments like Worstall's first point make me suspicious. Too much research in this matter is being done to "raise awareness", "wake up the politicians", or something like that. It makes for terrible, politically biased science that accepts any wild guess as long as it gives a big number. People still seem to believe the global ecosystem is worth $33 trillion, although any serious economist can tell you that this number as well as the method used to arrive at it (and, indeed, the sheer idea of calculating a total value of the entire ecosystem) is nonsensical: economist Michael Toman called it "a serious underestimate of infinity." Moreover, when you price nature you should be aware that it may turn out not to be that valuable: perhaps it is still sensible to cut that forest and build a hospital instead. This is of course the outcome that folks like Monbiot dread; on the other hand, the folks who use the "raise awareness" argument gloss over it, or worse.

The bottom line is that economic valuation of ecosystem services is best done in the context of a concrete, well-defined policy question. Pricing nature improves that decision-making by making values visible that would otherwise be ignored, in a way that makes them comparable to goods and services that do have a market price. Prices can never tell the entire story (this is where I agree with Monbiot), but it is a laudable goal to make the cost-benefit analysis as complete as possible (which is where I agree with Worstall). But whatever you do, "raising awareness" is just about the worst reason to do it.

woensdag 1 augustus 2012

Why economists argue with ecologists (4): Economics and thermodynamics

If you think environmental economists are a boring lot, look up this 1997 issue of Ecological Economics. It covers a debate between three economists on economic growth and the environment, but at times it reads like a transcript of a Jerry Springer show. On one side we have Herman Daly, one of the first ecological economists and co-founder of the journal Ecological Economics. On the other side we have Robert Solow and Joseph Stiglitz. Solow and Stiglitz are environmental economists, neoclassical economists, or mainstream economists, whatever you want to call them, although Stiglitz has lately turned into antiglobalists' favourite economist due to his criticism of globalization.

The trouble actually started twenty years earlier, when Solow and Stiglitz pointed out that when we run out of one resource, we can substitute it by another one: when we run out of oil, we switch to natural gas; when gas runs out, we switch to solar energy; and so on. Because we can always invent better and more efficient ways of meeting our needs, the economy should be able to keep on growing for the foreseeable future, or perhaps even indefinitely. Not everybody agreed, and an economist called Nicholas Georgescu-Roegen wrote a scathing rebuke where he argued that not all resources will be as easily substituted: if we run out of fish, how will we make our paella? If we run out of oxygen, what will we breathe? The idea of eternal economic growth, he argued, violated the laws of thermodynamics. To put it very crudely, these laws state that although you could convert matter into energy (which is what happens in a nuclear reactor), or energy into matter (as happens in particle accelerators), it is impossible to create energy or matter out of nothing. Georgescu-Roegen accused Solow and Stiglitz of "ignoring the difference between the real world and the Garden of Eden" and of "conjuring tricks." In the 1997 issue of Ecological Economics, Daly compares Solow to a medieval alchemist trying to turn lead into gold. You may not consider that particularly diplomatic, but Solow and Stiglitz pull no punches either. The opening sentence of Solow's article reads
Dr Daly's prose tends to dissolve at any moment into a dense cloud of righteousness. This makes it very hard to respond rationally to his performance.
Stiglitz's reaction seems somewhat friendlier, until we get to the last few sentences:
No one, to our knowledge, is proposing repealing the laws of thermodynamics! Doing so would make as little sense as the act of one state legislature that thought that students' intellectual resources could be economized by changing the value of π from the highly inconvenient 3.1416... to just 3.
In the end, we hope we have made our essential points, using somewhat fewer trees and other resources than Daly did in his 15-page note.
I will not go into all the arguments used in this debate now. There is a lot to be said about economic growth, too much in fact for one blog post. But that these people argue over the law of thermodynamics points towards another difference between ecologists and economists.

The laws of thermodynamics are central to many environmental sciences. Climate scientists include in their models the amount of heat the sun directs at the Earth, as well as the amount of heat that the Earth radiates or reflects into space: the difference is net warming, or net cooling. Biologists model animals as barrels of energy where energy goes in as food and goes out as movement and body heat: this helps biologists explain under what circumstances a species thrives and when it goes extinct. Whatever the system, if there is energy or matter coming out of it, the same amount must also be going in somewhere, or the system is either collecting or losing something. No wonder ecologists are critical of economic growth: if you produce more, it must be because you are losing something somewhere else. So how can these economists claim that we can produce ever more with ever less inputs?

Like Stiglitz says, no economist proposes to repeal the laws of thermodynamics: they govern how we can convert raw materials, energy, and labour into cars, computers, and so on. In other words, they would apply if we were talking about producing ever more stuff. But economics does not necessarily deal with stuff, but with the value of that stuff. And believe it or not: it is possible to create value out of nothing, and to make it disappear into nothing.

In fact it works a lot like information. A while ago I read a rather strange question in Intermediair, a Dutch career magazine: does a USB stick get heavier when you load it with data? The answer, of course, is no. To a computer, a USB stick is like an Etch-A-Sketch: it uses it to write things down by moving stuff around, not by adding stuff. A USB stick contains loads and loads of switches that can be either turned 'on' or 'off' (if I'm not mistaken, my 16GB USB stick has 134,217,728 of them). A computer 'reads' the information on a USB stick by observing which switches are 'on' and which ones are 'off'. Together, these switches can contain the latest Ufomammut CD, a movie of your PhD defense, or your illegal copy of Matlab. Put these files on your USB stick, and the USB stick has become a lot more valuable to you. How often do you read that some official has lost a USB stick with sensitive data? And this is all possible without changing the mass, nor the energy contained in the USB stick. (OK, to be honest, there may be some swapping of electrons between the stick and the computer, but that is negligible.) But leave it near a strong magnetic field and all your data are lost. And the USB stick has become worthless.

I sometimes get the impression that ecologists tend to treat value as they would treat the number π, or the density of some material, or the temperature of a body. Some studies measure it for a few samples and then aggregate them over the entire planet. And the folks who cite those studies seem to assume it remains unchanged over time. But value is a strange concept. Ever wonder why water is so much cheaper, yet so much more important to human life than gold? Value also varies between individuals and over time. You may not give a rat's ass for Trout Mask Replica, but there are folks out there willing to lose an eye for an original vinyl copy. Likewise, is there anyone who still listens to The Sweet? I mean, seriously?

Granted: so far economies have grown partly because we are getting more effective at extracting and using ever more inputs, and thereby producing ever more stuff. This is something we cannot keep doing indefinitely: resources are finite, the amount of solar energy our planet receives is finite. There is only so much stuff you can produce, period.

But economies also grow by producing more value with the same inputs, by tayloring products to people's wishes ever more precisely, or by enhancing the efficiency of production. How long we can keep that up is lot more difficult to say.

maandag 23 juli 2012

Economists need the softer social sciences

A follow-up to my remark on how few valuation studies include proper qualitative research: this remark was provoked by two travel cost studies presented at EAERE 2012. One looked at the effect that forest fires have on visit rates in Portuguese forests, whereas the other studied how people trade off entrance fees and mortality risk while visiting a nature reserve in Japan.

The Portuguese study reminded me of a paper by Erwin Bulte and others on what they called the 'outrage effect'. They found that people are willing to pay a lot more for conservation of Wadden Sea seals if you tell them the population suffers from pollution than if you tell them the seals suffer from a viral disease. I would expect something similar to happen with regard to forest fires. People might even appreciate a scorched patch of forest if you tell them it is part of a natural or at least indispensible process, but they would be apalled if the fires were caused by human carelessness. I would also expect it matters whether multiple hectares are gone, or whether there are only occasional blackened patches. The researchers did not ask their respondents what they thought was the cause of forest fires, but almost all forest fires in their region were man-made, and they assumed their respondents were aware of that fact.

The Japanese study reminded me of the Darwin Awards, or rather, the fact that most of its recipients are intoxicated, overconfident males. Suppose a respondent prefers a $20 dangerous hike over a $30 safe one, does that mean that he considers $10 too much to lower his risk of getting killed? Or does he (I'm afraid it's mostly a 'he') assume that bad stuff only happens to other people? In this case the researchers stated that it was widely known which hiking trails are dangerous, and that casualties have been all over the news. But that argument ignores how good some people are at downplaying risks - at their peril, indeed.

The bottom line for me is that too much economic research, especially the valuation stuff, seems to blindly jump into the issue, imposing wildly unrealistic assumptions on human behaviour, without doing proper explorative research first. Why not interview a few hikers first, to get an idea what considerations may be at play? Why not talk to a psychologist, or a sociologist, who has done research on how people view their own mortality risks?

I think economists should observe more, and take more heed of what other social scientists have found so far about human behaviour. Economics is a world apart from most other social sciences, notably sociology and anthropology. (Supposedly, an unnamed Hindu economist once claimed that bad economists reincarnate as sociologists.) But I think this is finally changing, as Economics Nobel prizes1 are being awarded to behavioural economists and political scientists, and economic experiments have become fashionable enough to be published in top journals like American Economic Review.

So how does this relate to my own work? Besides other activities, my work involves modelling of how people exploit natural resources, and estimating how valuable those resources are to them. I think the time is ripe to do such work together with anthropologists and sociologists. I am about to start a research project on international cooperation in management of Pacific tuna, together with Simon Bush from Wageningen University's Environmental Policy Group. But I'll keep my eyes open for opportunities to do more such interdisciplinary work.

1 Actually, I don't like calling the Economics Nobel an Economics Nobel. It's just that Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, as it is officially called, is a bit too long. But there is no such thing as a Nobel Prize for Economics. The only reason why there is an Economics prize that has "Nobel" in its name, and not, say, a similar biology prize, is that economists work at banks such as the Swedish central bank, and thereby have access to enough money to create the fund for such a prize. Unlike biology faculties.

maandag 16 juli 2012

Should one species be allowed to choke a fishery?

The North Sea bottom trawl fishery is a typical multispecies fishery. A single haul catches many different species, including plaice, sole, cod, turbot, red mullet, tub gurnard, and monk fish. These species tend to associate with other species instead of swimming together in schools, so it is almost impossible to catch one species without also catching a lot of others. Fisheries scientists like to call this a technical interaction between the species: they interact not through predation or competition, but through ending up in the same net.

If a bottom trawl fisher runs out of cod quota he can do three things: buy additional cod quota from other fishers, stop fishing, or keep on fishing but throw all cod that he catches back into the sea (which is what we call discarding of fish). So if this fisher is not allowed to discard his cod catch, and there is nobody who can sell him any cod quota, he is forced to stop fishing altogether. Cod is then called the 'choke species': the species that stops you from fishing when its quota runs out. If you were allowed to discard fish you would continue fishing as long as there is at least one species that can still be caught. As far as I know there is no term for this sort of species, but I kind of like the term slack species.

The EU is about to introduce a ban on discarding, and to set TAC (Total Allowable Catch) levels for a number of species whose catch has so far been unrestricted (for instance red mullet, brill, and sea bass). Unsurprisingly, fishers are adamantly opposed. To them 'more species under a TAC regime' means 'more potential choke species'. They prefer fisheries policy to regard a few major species only, and to accept the bycatch of all other species.

MSY is flawed in two ways...

I admit that my first reaction was something like "oh, so these guys just want the right to fish a species to extinction if it suits them". But on second thought they point towards two flaws in the principle of Maximum Sustainable Yield (MSY), which is currently the guiding principle in fisheries policy worldwide. MSY is the largest possible annual catch you can get sustainably. If a stock is never fished, it is at its maximum possible size, but you don't catch anything. If you fish a little every year, the stock will be a bit smaller, and you catch a little bit every year. Fish some more, and the stock will be somewhat smaller while your catches are larger. As you keep on intensifying your fishing, however, you reach a point where not only the stock declines but also your catch. The maximum catch you can have every year without depleting the stock is called MSY.

The first problem with MSY is that it is based solely on biological principles. Economists have long argued for Maximum Economic Yield to be the guiding principle: this is the annual catch that maximizes, in a sustainable manner, the total revenues minus the total costs from fishing. MEY means that you take into account not only biological growth, but also the costs of fishing and the price of the fish. In the simple text book models this actually means fishing a bit less than under MSY to take advantage of the fact that more abundant fish is easier, and hence cheaper, to catch.

Second, the principle of MSY does not only ignore costs and prices, but also technical interactions. If you took these into account, a policy that maximizes the sum of the MEY over all species would allow fishers to overfish some species, and to underfish others. Mind you: 'overfishing' does not necessarily mean depleting a fish stock. It simply means that fishing pressure is higher than the fishing pressure that would lead to MSY. So you can sustainably overfish a stock! It's just that in general you shouldn't do that, because it gives you less fish under higher costs than you would have under MSY. In a multispecies fishery, however, it may be more efficient to overfish some species because that would allow more catch of other species that are more valuable, more productive, or both.

Note that trading quota could relieve some of the pain, but not all. If cod quota are very low compared to other quota, cod will eventually become a choke species, trade or no trade.

...but what is the alternative?

Ideally TACs should be set taking technical interactions into account. Fisheries biologists are working on this problem, but I suspect that it remains a very complex issue. On the other hand, current TACs are certainly not realistic in multispecies fisheries, so any consideration of technical interactions would be welcome.

Then there is the issue of discarding: the EU can either allow fishers to discard unwanted catch, as has been the policy so far, or ban discards, as the EU is about to do. In theory, if discards are allowed, fishers can keep on fishing as long as there is a 'slack species'. It sounds horrible that fishers go on fishing, throwing over board everything they don't need, but be aware that not all discarded catch is dead or dying, although the survival rate can be very small. A discard ban will have the advantage that the researchers who do stock assessments have better catch data, because so far they had only very crude estimates of how much fish were discarded. This matters, because stock assessments lean heavily on landings data, which underestimates catch if part of the catch is discarded. On a longer term a discard ban may also give a strong incentive to develop more selective fishing technologies, although it is highly unlikely that bottom trawling will ever be 100% selective.

Additionally, perhaps the current system of catch quota could be complemented with the possibility to rent additional quota from the government for, say, the first few choke species. Under such a policy you would indeed catch a bit more of the choke species and a bit less of the slack species, because catching all species would become too expensive. The rental price would still give an incentive to fish more selectively, but the fishery would not be shut down completely as soon as the choke species quota run out. The problem, of course, is setting the right prices: they should reflect the value of the loss of future catches of the choke species, which depends not only on biological growth, but also on the price of the choke species, the costs of catching it, and the discount rate. A daunting task indeed.

vrijdag 6 juli 2012

AIR on stupidity and optimizing your wedding party

Here is a journal I'd love to publish in someday. It's from the same folks who issue the igNobel prices. Its latest issue is a delightful exposition of the science (including economics!) of stupidity, and how a marrying couple of scientists applied mixed-integer programming to design the optimal seating plan of their wedding party. In the acknowledgements it says:
MLB gratefully acknowledges JDLP for still agreeing to marry her after writing this.
Congratulations folks.

woensdag 4 juli 2012

Ecological Economics must be economizing on language editors

How else can you explain the publication of a paper with the title

Economical sustainability of pinestraw raking in slash pine stands in the southeastern United States

Economical? As in the meaning of "thrifty"? What on Earth is "thrifty sustainability"?

I can forgive my students, especially non-economists, making this mistake, and as a non-native English speaker I understand the confusion between "economy" and "economics", the Dutch translation of which is "economie" in both cases. But I wouldn't expect such a mistake in the title of a paper in an international peer-reviewed journal that has "economics" in the name.

I know I'm being a bit of a language nazi here, but the point is also that Ecological Economics has a strange position in the environmental economics literature. The quality of the publications varies wildly between highly influential and original ideas on one hand, and vague econophobic claptrap on the other. Nevertheless, its impact factor is high enough to make it an A-journal. Perhaps that is why I have so far submitted most of my papers to that journal.

dinsdag 3 juli 2012

More thoughts on Stapel, Smeesters, and scientific fraud in general

Whenever there is a new case of scientific fraud the question pops up: does publish or perish force scientists to lie about their results? What makes this question all the more relevant is the fact that many universities employ their academic staff (including me) under some form of tenure track. Here the publish or perish is translated into a principle of up or out: either you keep increasing your education evaluation scores, publication list, Hirsch Index, project acquisition, and so forth, or you're out of a job. Needless to say it gives quite an incentive to cook the books.

The first thing to realize here is that neither Stapel nor Smeesters are good examples of such a mechanism. Both had tenure, and Stapel has been making up data for the entire length of his career.

The second thing to realize, however, is that there are many forms of scientific misconduct, not all of which are outright fraud. Stapel is an extreme example of blatant fraud as he fabricated complete datasets. But there are more ways of behaving badly in science:
  • Skip observations that don't support your hypothesis. This is what Smeesters is being accused of.
  • Copy text or ideas without citing the source.
  • The mirror of that: support a claim with a reference to a source that does not provide such justification.
  • Leave out details of the research method that would have put your results in a different light.
  • Run lots and lots of regressions on any combination of variables. You are bound to find a statistically significant relation between one or more variables somewhere. Present it as something you intended to investigate in the first place. (Be aware that "statistically significant at 5%" means "the probability that this relation is due to random fluctuations is 5%", meaning that 1 in 20 of such "statistically significant" relations are really just a coincidence.)
  • Include the name of some big shot who hardly contributed to the paper but will make your paper look important. The big shot has yet another publication and you can bask in his glory.
  • When you do an anonymous peer review, tell the authors to cite some of your papers, especially the ones that improve your Hirsch Index if they are cited once more.
  • When you do an anonymous peer review, reject the paper if it presents results that you present in a paper that you just submitted to another journal. After all, you want to be the first to present the idea!
  • Or even worse than that: reject the paper (or a proposal) and submit the idea yourself. (Admittedly, given the huge time lag in publications you wouldn't have a high chance of success.)
Note how difficult it is to identify bad intentions behind some of these, and that the line between good scientific practice and scientific misconduct can be surprisingly thin:
  • You can have very good reasons to skip an observation (protest bids in contingent valuation surveys are one). This is Smeesters's defence.
  • You may have always thought that author X said Y in article Z, but actually you were confused with another article.
  • Nobody ever includes those details of the method in their papers, so why should you?
  • You're a PhD student and you don't want to let your professor down by not including him as an author - he is your supervisor, after all.
  • The paper you are reviewing would be incomplete without that reference, whether you wrote it or not.
It is easy to say that there are no such things as small sins and big sins: thou shalt not sin, period. But for most people it just doesn't work that way: they wouldn't mind crossing the speed limit by 10 km per h but object to crossing it by 100 km per h. And crossing the speed limit by 20 km per h may make you feel slightly worse about yourself, but when you are in a hurry it becomes easier to silence that guilty feeling.

So yes, I do believe the principles of publish or perish and up or out increase the incidence of scientific misconduct, but not in the way we read about it in the news. The cases you read about in the news are poor examples of such pressures. These are the sensational ones, the blatant fabrication of data by prestigious professors with big egos. The main damage is in the everyday nitty-gritty of science, and most of it may never be detected. Does that make it less bad? No, it may actually be worse because we don't see, let alone quantify, the damage.

So is tenure track bad? Well, to paraphrase Churchill, it is the worst system except for all the other ones. The alternative we had in The Netherlands, where you had to wait for the current professor to die or retire before you could become one, has stifled scientific progress and chased a lot of talent out of the country. I believe the solution lies not in abandoning tenure track, but rather in the way we publish our results - but I'll leave that for another post.

zaterdag 30 juni 2012

My highlights from EAERE 2012

My highlights from the 19th annual conference of the European Association of Environmental and Resource Economists:
  • I was surprised to see how crude estimates of travel costs still are in non-market valuations of recreational sites;
  • Also, how few of those studies have done a proper qualitative analysis before they do their quantitative study;
  • Linda Nøstbakken had a very nice paper on how a combination of diversified monitoring and self-reporting incentives can greatly enhance monitoring of fisheries legislation;
  • Martin Quaas proposed using a "shadow interest rate" as a way of expressing the quality of fisheries management;
  • Nick Hanley is a Les Paul man:

And rightly so; Fender people are evil.

vrijdag 29 juni 2012

I played the fiddle in a Prague biker bar

So this is Bajkazyl:
It started out as a bicycle repair workshop but since last year they have a bar and live music almost every evening. Prague has a small but growing scene with young people interested in traditional Breton and Czech dances, so we played some Breton, French, Dutch and Czech tunes and pissed off a lot of cyclists doing that. Prague has a wonderful liberal atmosphere: any Dutch bike repair workshop trying this would have its ass sued to hell within a week.