Profit Efficiency of the South Australian rock lobster fishery: A Nerlovian and directional distance function approach

Abstract

Efficiency analyses are used in fisheries to understand the contributions of inputs, outputs and management to productivity. Previous efficiency analyses have mainly focused on productivity, cost and revenue, with relatively few investigating profit efficiency that enables analysis of the mix of inputs and outputs. Negative profits and small sample sizes in fisheries have been some of the obstacles diverting attention from this direction. We consider a new approach in the context of fisheries to overcome these challenges and examine profit efficiency in the South Australian rock lobster fishery. Specifically, we apply Nerlovian and directional distance function methods to decompose profit efficiency of the rock lobster fishery into technical and allocative efficiencies. We use local and meta-frontier efficiency techniques to compare the northern and southern zone rock lobster fisheries. In contrast to observations based on profit levels, the profit efficiency analysis shows no significant difference between northern and southern zones. In addition, we examine the effect of implementation of a quota system in the north to match the south and find that biological conditions hindered efficiency gains being fully realized after the implementation of the quota system.