Abstract
The Norwegian bottom-trawl fleet is managed through individual vessel quotas and is generally engaged in codfish fisheries, where several species contribute to the revenue of the fishery. The revenue from the fishing exhibits substantial intra-annual variation and carries a significant degree of risk due to the presence of intrinsic volatilities in the marine environment, such as seasonal fluctuations in stock size and constant changes in market conditions over the course of a year. In the face of volatile revenue, fishers may allocate fishing effort and use a quota portfolio to minimize revenue risk. However, decisions underlying effort allocation, such as when to fish what and how much to harvest to match the catch size and remaining quota, are challenging. In this regard, a decision-making framework based on a bio-economic model is used to explore the revenue risk minimization behavior of the Norwegian codfish trawl fleet targeting three different species (cod, saithe, and haddock), given the constraints set by the quotas. The study comprises trawl catches and fishing effort as well as the prices for the frozen products of codfish to investigate the adopted harvest strategy under two different scenarios. The results indicate that a risk-minimizing strategy leads to inefficient allocation of fishing quotas and fishing effort and that potential economic losses from minimizing revenue risk outweigh the benefits. Moreover, our findings prove that enhancing revenue is more important than minimizing revenue risk for the trawlers. We argue that the spatial and temporal freedom of the trawl vessels, together with a vertically integrated trawl industry, may explain the prioritization of revenue enhancement over revenue risk minimization. The seasonal spawning aggregation of NEA cod and how this affects market prices shape the trawlers’ harvest strategy of increasing fishing revenue.
Highlights
The Norwegian codfish bottom-trawl vessels hold fishing quotas for North-east Arctic (NEA) cod (Gadus morhua) as the main species, together with large quantities of other economically important fish species, such as saithe (Pollachius virens) and haddock (Melanogrammus aeglefinus) (Birkenbach et al, 2020; Salvanes and Squires, 1995)
revenue per unit of effort (RPUE) of cod exhibited a lower volatility at the beginning of the fishing year, probably due to the opposite effect of high values of CPUE and low prices
We developed an intra-annual revenue riskminimizing strategy for the Norwegian bottom-trawl targeting cod, saithe, and haddock, with the aim to investigate whether this goal governs the effort allocation decisions
Summary
The Norwegian codfish bottom-trawl vessels hold fishing quotas for North-east Arctic (NEA) cod (Gadus morhua) as the main species, together with large quantities of other economically important fish species, such as saithe (Pollachius virens) and haddock (Melanogrammus aeglefinus) (Birkenbach et al, 2020; Salvanes and Squires, 1995). The trawl vessels are reasonably homogenous in terms of length (size) and engine power, conducting year-round operations over a vast geograph ical area from south in the North Sea to the sub-Arctic areas of the Barents Sea (Flaaten and Heen, 2004; Standal and Hersoug, 2014). This sector comprises companies that are vertically integrated, where adja cent stages of production process are managed under a single ownership (Dreyer et al, 2006; Hermansen and Dreyer, 2010; Isaksen, 2007). Given its significance and the fact that the trawler fleet supplies a year-round codfish fishery, identifying the revenue risk-minimizing harvest strategy of the trawl fishery could secure the supply chain from disruptions and reinforce the Norwegian fishery
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