Simulating the effects of environmental and market variability on fishing industry structure

Abstract

An Agent-Based Model comprising a fish stock, a fishing fleet and a fish market is used to investigate the combined effects of environmental and market variability on the structure of a fishery. Over 15-year simulations, agents make daily fishing decisions and annual entry, exit, and investment decisions based on the fishery's past economic outcomes and their individual risk preferences and opportunity costs (e.g., an alternative source of income). Environmental variability is simulated through fishing success variability while market variability is simulated through changes in the elasticity of the demand curve (i.e., the responsiveness of market prices to changes in daily landings). Our findings indicate that changes in variability lead to changes in economic and biological conditions of the fishery by influencing the composition of risk preferences within the fleet. Counter to expectations, market stability did not dampen the negative impacts of environmental variability but rather stimulated over-investment and increased harvesting by a small number of risk-seeking fishers. Results from this research suggest that climate-driven increases in fisheries variability, coupled with increases in market integration that act to reduce local price signals, may lead to inefficient investments and reduced fishery resources.