This presentation is done by Export Agriculture students of Uva Wellassa University of Sri Lanka as a requirement for the subject which is “Agricultura Resource Management”.

1. Fishery Economics
Export Agriculture
Uva Wellassa university of Sri Lanka1

2. Fishery economics
Definition:
The production, distribution, and
consumption of fish and seafood and all
financial aspects of the fishing and seafood
industry (including aquatic life in fresh
water)
2

3. Introduction
• Fishery can be thought as a stock or stocks of
fish and the enterprises that have the
potential to exploit them
• The fish stock measured in terms of biomass,
is the natural capital of the system
3

4. • Factors which determine fish biomass;
– Ability to reproduce and provide new recruits
– Growth rate of individuals
– Natural mortality rate
– Rate of fishing mortality
4

5. • Fish stock can be increased with time if;
>
Recruitment of
new individuals
&
growth of existing
individual
Natural
mortality
&
fishing
mortality
5

6. Special Characteristics of Fisheries Resources
• Mobility
• Renewable
• Highly varied and poorly understood biology
• Dependence on ecosystem
• Tradition of open access
6

7. Renewable resource?
• A renewable resource is a natural resource
which can replenish with the passage of time,
either through biological reproduction or
other naturally recurring processes
7

8. Reasons to depletion of fish stock
• Overfishing due to;
Technology development
Boats with deep freezer facility
• Satellite technology
• By-catch
• water pollution
8

9. Relationship between fish stock & growth rate
when there is no harvesting
Growth Rate
Stock Size(kg)
XMSY
G*(x)
9

10. • When there is a small fish stock, the growth of
population is low
• As there are more fish in the water,
reproduction rates go up, causing the
population to grow
• Eventually however, due to crowding effects
and competition for food, the growth rates
decline
10

11. • At the far right point, the carrying capacity of
the fishery is reached and the stock is in
equilibrium
11

12. • Starting at a low level (the green dot) fish
reproduce in the first period
12
Growth Rate
Stock Size(kg)

13. • This leads to growth so that in the second
period the stock has increased
13
Growth Rate
Stock Size(kg)

14. • Again, reproduction and growth occur
14
Growth Rate
Stock Size(kg)

15. • This process continues until the carrying
capacity of the fishery is reached
Natural equilibrium
for the fishery
15
Growth Rate

16. Sustainable yield
• Production of a biological resource (fish)
under management procedures which ensure
replacement of the part harvested by re-
growth or reproduction before another
harvest occurs
16

17. What is MSY?
• The highest possible annual catch for a given
fish stock that can be sustained over time, by
keeping the stock at the level producing
maximum growth
17

18. Population dynamics
• A fishery population is affected by three
dynamic rate functions:
– Birth rate
– Growth rate
– Mortality
18

19. Schaefer logistic Growth model
• x(t) = Size of fish stock at time t
• Growth of fish stock with time
)(
)(
td
tdx
)(
)(
xG
dt
tdx

19

20. r= Intrinsic rate of growth
(Rate at which the stock would typically grow
with no external effect)
K= Carrying capacity
(Largest stock size that can be achieved given
food supplies, habitat, etc.)
)1()(
K
xrxxG ttt 
20

21. • shows that growth is proportional to
stock size
• Adds the complexity that growth
decreases with stock density,
• when stock size= carrying capacity, growth will
fall zero
rx
)1(
k
x

k
x
21

22. • Maximum growth rate can be found by 1st
derivative
• Set it equals to zero & solving for X,
02 
K
rxr
2
KxMSY 
22

23. • A critical issue in fisheries management is
what will happen to stock size over time
• Most purposes, size of an unexploited fish
stock will change through time according to
following relationship;
)()1( ttt xGxx 
23

24. • With no harvest, stock size next year is the
sum of stock size this year & growth generated
by stock during the period of observation
• In terms of Schaefer model,
stock reach equilibrium when Xt = K
Because, G(Xt)=G(K)=0
So, X(t+1)=Xt
24

25. Fish stock & growth rate when there is a
harvesting
• When fishers begin to harvest, part or all of
the growth that occurs in any period is taken
out (harvested)
• so that growth in the stock doesn’t take place
or is reduced
25

26. Effect of harvesting to fish stock
Size of
stock
H1
H2
H3
Rate of growth
X’ X”XMSY
26

27. Schaefer logistic growth with harvest
• Periodic change in stock size with harvest can
be represented as,
• In this case,
Stock will reach an equilibrium where,
G(Xt) = Harvest
)()1( )( tttt HarvestxGxx 
27

28. A more formal analysis of commercial
harvest
• Annual yield can be viewed as a function of
stock & amount of fishing effort applied to it
(think effort as a today’s standard boat)
Let Yt represent short run yield,
ttt EqxY 
28

29. • E- Fishing effort
• q- catchability coefficient
(embodiment of technology that is used to
harvest fish)
29

30. • Fisheries production does not obey in
economic law of diminishing marginal
productivity
• Each additional unit of effort or stock size adds
the same amount to catch
30

31. Relationship between effort, harvest &
fish stock
Yield
Effort
E0
H’
H
H=G(E,X)
H’=G(E,X’)
31

32. • The same amount of effort will produce more
harvest when the stock size is higher & vice
versa
32

33. • For long run analysis- can use concept of
sustainable yield
• Sustainable yield curve shows the relationship
between level of fishing effort & level of
sustainable yield
• A sustainable yield is one that can be
maintained indefinitely because,
catch=growth
33

34. • To achieve sustainable harvest,
growth must equals to short run yield
qEx
K
xrx  )1(
Growth Short run
yield
34

35. Effect of increased effort to stock &
harvest
Growth Rate
Stock Size
E3
E2
E1
X’ X”MSY
E3 > E2 > E1
35

36. Fishing EffortPopulation
Relationship between population, effort and catch
0
Catch per unit of effort is proportional to population
Growth/Catch
YE1
e1
C1

37. Fishing EffortPopulation
Relationship between population, effort and catch
0
Catch per unit of effort is proportional to population
Growth/Catch
C1
YE1
e1
YE2
e2
C2

38. Fishing EffortPopulation
Relationship between population, effort and catch
0
Catch per unit of effort is proportional to population
Growth/Catch
YE2
C2
C1
YE1
e1 e2
YE3
e3
C3

39. Population equilibrium curve (PEC)
• Solving for X obtains,
qEx
K
xrx  )1(
E
r
qKKx )(
qE
K
rxr 
PEC
39

40. Stock size
Effort
K
)(
r
qK
40

41. Sustainable yield function
• Substituting population equilibrium
equation(PEC) into Short run yield equation,
produces an equation for sustainable yield
function as a function of E(effort)
E
r
qKKx )( PEC
ttt EqxY 
Short run yield
equation
41

42. x
 

Er
qK
KqEY
qExY
)(
2
2
)( E
r
KQqKEY 
2
bEaEY 
42
r
Kqb
qKa
2



43. • Stock size is obviously an important element
in determining sustainable harvest
• But it is subsumed in equation, because
equilibrium stock size is a function of effort
43

44. Sustainable Yield Curve
Catch/Harvest
Effort
Low level of effort
When E
Sustainable yield
B’coz growth increases with
decreases in stock size
Further increase of E
Decrease yield
B’coz further decrease of stock size
cause growth to fall
44

45. Relationship between effort & revenue
Revenue
effort
yield
Revenue (Harvest× Price)
Revenue=(Harvest × $ 1)
45

46. Deriving Revenue & Cost functions
• To keep things simple,
assume:-
Price of fish (P)
Cost per unit effort (CE )
Constant
46

47. • Total sustainable revenue as a function of
effort,
Price
Sustainable
yield
r
Kqb
qKa
2


)( 2
bEaEPTSRE 
47

48. • Total cost as a function of effort;
• Average sustainable revenue
E
TSRE

ECTC EE 
bPEaPASRE 
48

49. • Average cost E
TCE

EE CAC 
EE MCAC 
49

50. • To show the relationship between Effort &
Stock size, it is also useful to look at
sustainable revenue & cost in terms of stock
size
• TSR as a function of stock size;
)1(.
K
xrxPTSRX 
Price Growth of fish
stock
50

51. • Now, we have identified the basic theories
needed to study the bio-economic equilibrium
• Bio economic equilibrium can be studied as 2
types;
1. Open access equilibrium
2. Private property equilibrium
51

52. Open access
Private property
52

53. 1. Open access equilibrium
53

54. 54

55. open access equilibrium
• When all of the excess profits or economic
rent that attracts new entrants to a
developing fishery have been dissipated in the
costs associated with the additional fishing
effort
• The fishery is no longer attractive to new
entrants
55

56. • Usually occurs when fishing effort is higher
than that which will obtain the greatest yield
from a fishery
56

57. TR/TC
E’ E0
TC”
TC
TR0
AB
H0
Effort
MC/MR
E’ E0MR
MC=AC
AR
Effort
X0 X’Xmsy
H0
Growth rate
Biomass
H0=G(E0,X)
H’=G(E’,X)
A
CB
57

58. 2. Private property equilibrium
58

59. 59

60. TR & TC
Rent
TR
TC
E* E0
H*
H0
Effort
E0E*
Rent
Unit Effort
Effort
MR
MC
AR
A
B
60

61. C
Growth rate
H*
F(x)
X*X0
H0
H*=G(E*,X)
H0=G(E0,X)
Biomass
61

62. Maximum economic yield
• The value of the largest positive difference
between total revenues and total costs of
fishing (including the cost of labor and capital)
with all inputs valued at their opportunity
costs
62

63. 63
TR & TC
MEY
TR
TC
E* E0
H*
H0

64. Management of fishery resources
• Most important fisheries in the world at the
state of open access
• So, fisheries have to be manage carefully
• Have to change the equilibrium from open
access to private property equilibrium
64

65. • This can be done by 2 ways;
– Control the harvest of fish at optimum effort
– Reduce the fishing effort
65

66. • Above 2 status can be achieved by;
– Tax
– Quota
Tax
Tax on harvest of
fish
Tax on fishing
effort
66

67. Tax on harvest of fish
Effort
TR & TC
Tax
Y*
Y’
E* E
TR
TC
TR’
67

68. Tax on fishing effort
TR & TC
Effort
TR
TC’
TC”
TC
E* E
68

69. Theories of Agricultural Resource Management
(Past papers)
2009 :-
01.
a). Define the following terms;
1. Renewable resources
2. Non - renewable resources
3. Open access resources
4. Common pool resources
69

70. b). 1. Briefly explain the variable in fishery
2. "Increase in fishing effort always increase the
profit in fishery" Comment on this.
70

71. 2010 :-
01. a). With the use of suitable illustrations
describe the following in relation to
fishery.
1. Sustainable yield.
2. Maximum sustainable yield.
3. Maximum economic yield.
4. Open access equilibrium level.
71

72. b). The effort catch relationship (production function) of a
fishery is given by,
Y = 90E - 2E2
Where Y is the sustainable yield measured in
kilograms of fish and E is fishing effort measured in
number of fishing trips. Each fishing trip costs Rs.
900.00. Fish sell at Rs. 40.00 per kilogram.
Determine the following
1. Maximum sustainable yield, corresponding level
of fishing effort and private profit.
2. Maximum Economic Yield, corresponding level of
fishing effort.
3. Find the open access equilibrium level of effort.
72

73. 2013 :-
04.
a). Define the term "Fishery"
b). Briefly explain the variables in fishery.
c). "Increase in fishing effort always increase the
profit in fishery" Comment on this
73

74. d). The effort catch relationship ( production function ) of a
fishery is given by,
Y = 1200E - 2E2
Where Y is the sustainable yield measured in kilogram of
fish and E is fishing effort measured in number of fishing
trips. Each fishing trip cost Rs. 900.00. Fish sell at Rs. 40.00.
per kilogram.
Derive the following
1. Maximum effort which yields no yield
2. Maximum sustainable Yield, corresponding level of fishing
effort and private profit.
3. Maximum Economic Yield, corresponding level of fishing
effort.
4. Find the open access equilibrium level of effort.
74

75. Thank You!
H.K.I.J Thilakarathne (UWU/EAG/11/0022)
Premasinghe (UWU/EAG/11/0023) 75