Deepwater Horizon Oceanic Fish Restoration Project: An application of market mechanisms for conservation

Abstract

Deepwater Horizon in 2010 marked the largest oil spill in United States history. Following the spill, a council of federal and state trustees was established to assess the impact of the released oil on natural resources in the Gulf of Mexico. The Programmatic Damage Assessment and Restoration Plan developed by the trustees specifically called for restoration approaches that would directly reduce known sources of mortality by providing fishing communities with tools and incentives to limit impacts on fishery resources. The first project selected to restore a portion of the injuries sustained by pelagic fishes, the Deepwater Horizon Oceanic Fish Restoration Project, was developed by the National Oceanic and Atmospheric Administration to reduce bycatch in the Gulf of Mexico Highly Migratory Species fishery. Participating vessel owners are compensated to voluntarily refrain from using pelagic longline gear for the first six months of the year, and are encouraged to adopt alternative fishing gear that results in low bycatch mortality. This paper describes the various mechanisms considered, posted-price offer, pay-as-bid auction, and uniform-price auction, leading to the design of the compensation for both the repose and alternative gear components of the Deepwater Horizon Oceanic Fish Restoration Project, and draws lessons from the first two years of the project's implementation.