While the development of regulations to reduce excess capacity and to eliminate overcapacity in actual fisheries is a complex problem, a simple model can be used to distinguish between the concepts of excess capacity and overcapacity in a single species fishery.[17]
These concepts are described in the following sections.
Fishery managers faced with the knowledge that large levels of fish harvesting capacity exists in the fishery do not know if it is a short run phenomenon that the market will resolve through its normal processes, or if it is long run problem that needs action by management to correct. Traditionally, most industrial applications treat excess capacity as a short run phenomenon, but the question remains whether this holds true for fisheries.
For example, a firm’s scale of production is determined based on economic conditions in the marketplace; i.e., a level of output is chosen that minimizes the cost of production. As market conditions change (prices of inputs and outputs increase or decrease), the plant’s scale of production may not produce a level of output that minimizes its costs of production.
If the costs of production increase and the firm reduces its output level to maximize profits, then the potential output of the firm becomes greater than the actual output level and excess capacity exists, and this short run, excess capacity condition will exist until the firm can change its scale of production to minimize its production costs again.
In fisheries, this type of excess capacity can develop when a fishing vessel has a hold capacity that exceeds the regulated trip limit. If fisheries were managed like other industries, this excess capacity would similarly be a short run phenomenon and likely of little importance to fishery managers - simply because excess capacity in most industrial sectors is a short run problem of adjusting capital investment to the uncertainty caused by random variations in the marketplace.
In this situation and for a single species fishery, excess capacity can be represented in Figure 1 using the bioeconomic model suggested by Greboval and Munro (1999).
Assuming that the initial equilibrium for harvest level (h), effort level (e), and equilibrium stock size (x) occurs in Figure 1 where the open access supply function (Soa) equals demand (D), then the stock constant supply function for stock size (x) is S(x), which intersects the demand curve (D) at its intersection with Soa. A decline in market price would be represented by a shift in D to D’, causing the long run equilibrium harvest level to increase to h’. However, in the short run, harvest would decline to h” where D’ and S(x) are equal. Since the potential harvest (h) is greater than the actual harvest (h”), excess capacity exists for this level of effort (e) and stock size (x).
In the short run, fishing effort cannot decline because capital is immalleable. However, point (b), corresponding to effort level (e) and harvest level (h”), is below the sustainable yield curve, point (a). Since the harvest level is less than the growth level, stock size will begin to grow at point (b). This causes the stock constant supply curve to shift down and to the right representing a decline in the cost of harvesting fish. Eventually, the stock constant supply function will intersect both the demand curve (D’) and the open access supply function (Soa) corresponding to harvest level (h’), point (d) on the sustainable yield curve and stock size (x’).
Figure 1 Excess Capacity and Overcapacity in a Single Species Fishery
If the stock does not act as a constraint in the estimation of excess capacity, then excess capacity also can be represented as the difference between point (c) and point (d) in Figure 1. Over time - as the fishery responds to the change in market demand by reducing fishing effort which allows growth in the stock - excess capacity will disappear in the fishery.
Regardless of the excess capacity issues in this fishery, this open access fishery also experiences overcapacity, which is a long run and persistent form of capacity.
Quite simply, overcapacity, like overcapitalization and overfishing, is a symptom of a regulated open access or common property fishery management institution (Anderson, 1986, Hannesson, 1978 and 1993, and Clark, 1990). When fishermen do not have an incentive to conserve fish by leaving them in the sea, they will over-invest in the capital and labor used to harvest fish as well as other inputs[18] used to produce fish. Overcapacity results.
Even where barriers to entry exist in a fishery, such as exclusive economic zones (EEZs), permit moratoriums, or transferable licenses, the fishermen who participate in the fishery react to market conditions. Because of this, they tend to operate where management institutions and market conditions combine to make overcapacity both of indeterminate duration and of a considerably greater magnitude than would occur in most other industries, and it is the persistence and magnitude of this excessive level of harvest capacity in fisheries that create concerns for fishery managers around the world.
In Figure 1, overcapacity can be expressed in terms of a long run target level of production point (f). Initially, the equilibrium level of effort and harvest is found where demand (D) and open assess supply (Soa) intersect with S(x) - at point (a) on the sustainable yield curve. Point (a) can then be compared to the target stock size (x’’’) which corresponds to the target harvest level (h’). Basically, the difference between the target yield point (f) and the potential yield point (a) represents overcapacity in the fishery.
Initially, at point (a), no excess capacity exists in the fishery, but there is substantial overcapacity present as indicated by point (a) relative to point (f) in Figure 1. The decline in price caused by the shift in the demand curve from D to D’ creates excess capacity - as seen by point (b) relative to point (a). Overcapacity remains the same because it is measured as potential production, point (a), relative to the target level of production, point (f).
When the biomass constraint is relaxed, then the potential level of production is point (d), and excess capacity increases relative to points (b) or (c) while overcapacity declines - because overcapacity is a comparison between potential production at point (d) and the target level of production at point (f).
The same discussion of excess capacity and overcapacity can be expressed in terms of fishing power, effort, or in terms of fishing mortality.
A total catch level (TCL) is a set equal to the fishing mortality times the average biomass level in a fishery; e.g.,
TCL = F B
This equation can be restated as
C = F B
where:
C = catch
B = biomass
= average biomass
F = fishing mortality
Solving this relationship for fishing mortality results in
Thereby expressing fishing mortality, F, in terms of capacity utilization.
Let
C* be the actual catch,
CT be the target catch based on a set of biological parameters,
and where
B* is the actual average biomass
F* is the actual fishing mortality, and
is the target average biomass
Then,
is the actual fishing mortality, and the target fishing mortality, FT, is:
Then the ratio of actual to target fishing mortality, F*/FT = [C*/CT][BT/B*]. As a result, excess and over capacity can be related to fishing mortality.
In the case of excess capacity where BT=B*, then
F*/FT = C*/CT
and the ratio of the actual and target fishing mortalities equals the capacity utilization rate.
This result is particularly useful since fishery managers with training in biological stock assessment techniques may feel more comfortable dealing with excess capacity and overcapacity measures based on fishing mortality estimates.
Technically speaking, the generic topic of capacity, in itself, is not necessarily a problem for fisheries managers. Some level of capacity is necessary to harvest fish in a fishery, regardless of whether the management of the fishery is based on open access, regulated open access, common property, or rights-based regulations.
Thus, excess capacity is theoretically not a problem for fishery managers because, in the long term, marketplace incentives to increase profits cause the fisherman to adjust his use of inputs to eliminate it. However, excess capacity can be a problem for fishery managers if it exceeds an implicit or explicit target catch level either in an open access or in a regulated open access fishery that used command and control management regulations - and these types of management arrangements are prevalent around the world.
Overcapacity, however, is a problem for fishery managers. The marketplace does not provide the financial incentives necessary to induce fishermen to alter their production levels to eliminate it. Because clearly defined and enforceable property rights do not exist for fish-in-the-sea, fishermen continue to instead invest in capital and labor in order to harvest their perceived share of the resource - and a derby fishery results.
Not surprisingly, there are numerous problems, special cases, and exceptions in applying these simple capacity concepts:
In short, there are still considerable gaps and issues to be resolved in the various approaches for modeling excess capacity and overcapacity.
|
[17] For this simple model,
originally proposed by Greboval, and Munro (1999), an output approach is used to
differentiate between excess and overcapacity. [18] Factor inputs in the production process also include labor, fuel, ice, bait, electronic equipment, fishing gear, etc. |
