Effects of income and population growth on fish price and welfare

Abstract

ABSTRACTAn excess supply-demand model is used to determine the effects of income and population growth on the international price of fish and on welfare in net-exporting and importing regions. Stochastic simulations of the model suggest that fish price increases by between 0.25 and 1.07% for each 1% increase in world income, and by between 0.30 and 1.20% for each 1% increase in world population. Combining these elasticity estimates with the actual growth in income and population for 1999–2013, results suggest that income and population growth together caused the world price of fish to rise by between 1.0 and 4.1% per year, for a best-bet estimate of 2.1% per year. According to a trend regression the actual rise in fish price over the same approximate period averaged 1.0% per year. This suggests supply growth due to aquaculture cut the increase in price due to demand shifts by about one half. Higher fish prices increase welfare in net-exporting countries at the expense of welfare in net-importing countries. However, our results suggest that net gains to producers and consumers in the two regions combined are positive.