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.

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