Use of a Simple Age-Structured Bioeconomic Model to Estimate Optimal Long-Run Surpluses

Abstract

When the New Zealand government introduced individual transferable quotas for major commercial fish stocks, the initial allocation for some stocks exceeded their total allowable catches and made it necessary to buy back immediately some of the quota. Quota was offered back by tender. A simple age-structured bioeconomic model was used to estimate long-run optimal surpluses. From these, the maximum prices that should be paid by government for quota were derived. The use of an age-structured model proved convenient for this purpose as the necessary parameter estimates tend to arise naturally from literature sources and the population dynamics are transparent. If stocks were managed optimally, the long-run value of quota would be equivalent to the net present value of the surplus at the dynamic maximum economic yield. Long-run surpluses proved to be dependent on the relative changes in catch rates and costs of fishing which resulted from changes in stock biomass. Optimal surpluses of up to 45% of the greenweight revenues were obtained for heavily exploited, long-lived stocks. Only small long-run surpluses were obtained for short-lived or very lightly exploited stocks.