The Role of Economic Models in Evaluating Commercial Fishery Resources

Abstract

Estimates of the value or changes in value of fish resources are necessary to address various issues related to the utilization, development, and management of these resources. Examples of issues for which such estimates are required are federal fishery research and development project planning, consideration of commercial/recreation or fish/petroleum conflicts, analysis of alternative management strategies for domestic fleets, and domestic/ foreign resource allocation decisions. The Fisheries Conservation and Management Act (FCMA) of 19761 set out the decision process for management of fish resources in the U.S. economic zone. The FCMA forms the legal basis for the establishment of quasigovernment Regional Fisheries Management Councils. Although the councils are required to develop management plans for all fish stocks within their jurisdiction, final authority for approving and implementing the plan rests with the Secretary of Commerce. This division of responsibility and authority along with the National Standards included in the FCMA almost assure that there will be conflicts and confusion with regard to consideration of national versus regional benefits. The Water Resources Council Principles and Standards (Water Resources Council) for evaluating waterand land-related resources will merely exacerbate these conflicts and confusion. In the absence of measures of utility, economists have used indirect approaches to estimate resource values. Two commonly used approaches are measures of consumer's willingness-to-pay and measures of market values of economic activity. The typical methods of measuring willingness-to-pay are through producer and consumer surpluses derived from estimated supply and market or compensated demand curves; and surveys where consumers are asked directly what they are willing to pay to gain or prevent an action. Typical measures of market values have been the value of output, value added, and employment. The willingness-to-pay approach has received a great deal of attention in the economic literature. Conceptual and empirical applications and problems have been extensively addressed and we do not intend to review these discussions here. Rather, because the market-value approach has received little attention as related to fishery questions, and because the market-value approach may be uniquely suited to address certain important issues, we concentrate on the market-value approach in this paper. We discuss inputoutput models and dynamic econometric models but do not address the associated data and estimating problems. We assume that goods and bads in the economy can be dentified and an appropriate measure of net benefits can be derived from value-added data.2 In fisheries questions we assume excess labor and capital and nonproductive transactions costs resulting from the lack of resource property rights can be identified (McConnell and Norton).