Fisheries Economics & Policy: Maximum Economic Yield

Summary

The video explains the dynamics of fish population and how overfishing impacts sustainable catches. It uses the example of the Grand Banks Cod collapse to show how increased fishing effort doesn't always mean higher catches and is a sign of declining fish stocks. The video models fish population growth, carrying capacity, and introduces the concept of maximum sustainable yield (MSY). It then discusses economic aspects like maximizing profits (economic rent) while maintaining sustainability. The video ends by addressing how open-access fisheries lead to overfishing and suggests a need for better management strategies to optimize economic and ecological outcomes.

Takeaways

• 🎣 Increasing fishing effort without a corresponding increase in catches is a clear sign of declining fish populations.
• 🐟 The Grand Banks Cod was overfished due to ignoring scientific warnings, resulting in a 20-year fishing ban to help the population recover.
• 📉 Fishing quotas need to account for the natural growth rate of fish populations to avoid overfishing and depletion.
• 🔄 Fish population growth is slow at low and high population levels, with the fastest growth occurring at mid-level populations.
• ⚖️ Sustainable fishing happens when the amount of fish taken equals the population's growth rate, maintaining a balance.
• 🛑 Overfishing occurs when the catch exceeds the fish population's growth, leading to a decline in fish numbers over time.
• 📊 The goal is to set fishing quotas that maximize economic rent (profit) while ensuring sustainability.
• 💰 Maximum economic yield occurs when fishing effort is optimized to generate the most profit without depleting the population.
• ⛔ Open access fisheries, where multiple fishermen compete, often lead to overfishing as each fisherman tries to maximize personal gain.
• 🤝 Cooperation and regulation are needed in fisheries to ensure sustainable fishing practices and prevent stock collapse.

Q & A

What are the indicators of a declining fish population despite stable catches?

If the number of boats, the size of the boats, and the technology used for fishing are all increasing, but the total catch remains the same, this suggests that the fish population is likely declining. Increased effort without a rise in catch is a clear sign of an unhealthy fish stock.

What happened to the Grand Banks cod population off the eastern coast of Canada?

The Grand Banks cod population declined due to overfishing. Despite scientists warning about the decreasing fish stock, policymakers focused on stable catch levels and ignored the warning signs. Eventually, the population collapsed, and a fishing ban has been in place for over 20 years.

What is 'carrying capacity' in the context of fish populations?

Carrying capacity refers to the maximum number of fish that an environment can support. Once the population reaches this level, the growth rate slows because food, space, and other resources become limited, balancing the birth and death rates.

How does population growth rate change as fish populations increase?

At low populations, growth is slow because there are fewer fish reproducing. As the population grows, the growth rate increases, but once the population nears the carrying capacity, the growth rate slows again due to limited resources.

What is the 'maximum sustainable yield' (MSY), and why is it important in fisheries management?

MSY is the largest amount of fish that can be sustainably harvested without depleting the population. Fishing beyond this point leads to a decline in the fish population. MSY is important because it helps determine how much fish can be caught while ensuring the long-term survival of the stock.

Why is aiming for the 'maximum economic yield' (MEY) better than aiming for the MSY?

While MSY focuses on maximizing the number of fish caught, MEY aims to maximize economic profit by balancing revenue and costs. MEY allows for higher rent (profit) with less fishing effort, preserving the population and making the fishery more resilient.

How does fishing effort impact both population and revenue in the long term?

As fishing effort increases, the fish population decreases, which in turn reduces the overall revenue generated from the fishery. More effort may initially result in higher catches, but over time, diminishing fish populations reduce productivity and profitability.

What happens under an 'open access' scenario in a fishery with multiple boats?

In an open access fishery, multiple fishermen compete for the same resource, leading to overfishing. Each individual fisherman focuses on maximizing their own profit without considering the overall population health, causing more boats to enter the fishery until the total revenue equals the total costs, eliminating rent and overexploiting the resource.

How do marginal costs and marginal benefits affect a fisherman's decision-making?

Fishermen continue to fish until the marginal cost of fishing (e.g., fuel, labor) equals the marginal revenue (the profit from an additional catch). When costs exceed revenue, it is no longer profitable to continue fishing.

What is the danger of continuing to fish past the maximum sustainable yield (MSY)?

Fishing beyond the MSY reduces the fish population below sustainable levels, leading to a decline in catches over time. If unchecked, this can result in population collapse, as seen with the Grand Banks cod, forcing drastic measures like long-term fishing bans.

Outlines

00:00

🐟 Declining Fish Populations: Warning Signs and Historical Example

The paragraph discusses the steady decline in fish catches despite increased fishing efforts through technological advancements. This is a clear sign of declining fish populations, as illustrated by the Grand Banks Cod collapse off the coast of Canada. Policymakers ignored scientific warnings, leading to overfishing and the eventual collapse of the cod population. The ban on cod fishing, which has lasted over 20 years, highlights the dangers of increasing fishing effort without a corresponding increase in catches.

05:00

📉 Modeling Fish Population Growth and Sustainable Fishing

This paragraph introduces a basic model of fish population growth over time, explaining how reproduction rates vary depending on population levels. When populations are low or high, growth is slow, while moderate populations foster faster growth. The paragraph highlights the concept of 'carrying capacity' and explains how sustainable fishing can be modeled by determining what portion of the population's growth can be harvested without causing long-term decline.

10:02

⚖️ Sustainable Yield and Fishery Equilibrium

Here, the focus shifts to determining how much fish can be caught sustainably, using population growth data. It explains how overfishing beyond the population's growth rate leads to decline, while staying below it allows the population to recover. The 'maximum sustainable yield' is introduced as the point at which the most fish can be harvested without lowering the population. However, the paragraph also stresses the importance of caution and aiming for a slightly lower catch for added safety.

15:04

💰 Maximizing Economic Rent in Fisheries

This section emphasizes that the goal of fisheries is not only to catch the maximum number of fish but also to maximize economic rent (or profit). By adjusting the graph to focus on revenue from fish catches, it becomes clear that as fish populations decline, more fishing effort is required, and costs rise. The relationship between fishing effort and population is explained, with the aim of maintaining high revenue while minimizing effort to sustain fish populations and economic profitability.

📊 Balancing Fishing Effort for Maximum Economic Yield

The concept of 'maximum economic yield' (MEY) is explored, which aims to maximize profit by balancing fishing effort with sustainable fish populations. MEY occurs when the difference between revenue and costs is greatest. This is shown to be a better long-term strategy than catching the maximum sustainable yield, as it leaves the fish population healthier and more resilient. It’s also highlighted that real-world fishermen don’t necessarily stop fishing at MEY, leading to potential overexploitation.

⛴ Open Access Fisheries and Overexploitation

The problem of 'open access' fisheries, where multiple fishermen compete for the same fish stock, is described. While an individual fisherman may stop fishing at the maximum economic yield, multiple fishermen, driven by competition, may continue fishing past this point. This leads to decreased overall rent (profit) and more effort for the same or fewer fish. The paragraph warns that open access can lead to the collapse of fish populations as competition drives more effort, even when it’s no longer profitable.

📉 The Race to the Bottom in Fisheries

Continuing the discussion on open access fisheries, this paragraph explains how competition drives fishermen to continue fishing even when it's no longer profitable. The introduction of additional boats reduces overall rent, and overfishing becomes inevitable until total revenue equals total cost, leaving no rent. The system is inefficient, as the same amount of fish could be caught with less effort and more profit under a more coordinated approach.

📈 Moving Towards Maximum Economic Yield and Sustainable Practices

The final paragraph outlines the need for collective action and better management strategies to encourage fishing at the maximum economic yield, which preserves fish populations and maximizes profit. It introduces the next part of the series, which will address challenges in the fishing industry and explore methods to structure fisheries for long-term sustainability, higher rent, and healthier fish populations.

Keywords

💡Fish Population

The term 'fish population' refers to the number of fish within a specific area or ecosystem. In the video, it is central to discussions about overfishing, sustainable fishing practices, and the decline of species like the Grand Bank's Cod. Understanding the population dynamics helps in determining sustainable fishing quotas to prevent depletion.

💡Fishing Effort

Fishing effort represents the amount of resources (boats, technology, time) invested in fishing. The video highlights how increasing fishing effort without a corresponding rise in catches indicates declining fish populations. It also explores the relationship between effort and fish stock, showing that excessive effort can lead to stock collapse.

💡Overfishing

Overfishing occurs when fish are caught at a faster rate than they can reproduce, leading to population decline. The video uses the example of the Grand Bank's Cod, where overfishing and failure to act led to a significant collapse of the fish stock, prompting a fishing ban for over 20 years.

💡Carrying Capacity

Carrying capacity refers to the maximum population size of a species that an environment can support without degradation. The video illustrates how fish populations grow until they reach their ecosystem's carrying capacity, after which growth slows due to limitations like food and habitat. Managing catches requires understanding this concept to avoid overexploitation.

💡Maximum Sustainable Yield (MSY)

MSY is the largest amount of fish that can be harvested from a population without causing long-term depletion. The video explains how exceeding this yield leads to declining populations, while taking less allows the population to grow and reach equilibrium. It’s a key concept for setting fishing quotas sustainably.

💡Economic Rent

Economic rent in the context of the video refers to the profit made from fishing, defined as the difference between revenue and costs. The goal is to maximize this rent sustainably. The video highlights that fishing should aim to maximize economic rent over time, rather than just catching the maximum number of fish.

💡Equilibrium Catch

The equilibrium catch is the amount of fish that can be harvested without changing the fish population over time. The video describes how catching at the equilibrium point allows for sustainable fishing practices, where the population remains stable and avoids overfishing or collapse.

💡Fishing Quota

A fishing quota is a regulatory limit on how much fish can be caught to prevent overfishing. The video emphasizes the need for setting quotas based on ecological data to ensure the long-term sustainability of fish populations and maintain balance within the ecosystem.

💡Marginal Cost and Marginal Revenue

Marginal cost is the cost of catching one more unit of fish, while marginal revenue is the income generated from catching that additional fish. The video explains how fishermen make decisions based on these margins, and how overfishing occurs when marginal costs start exceeding marginal revenues.

💡Open Access Fisheries

Open access fisheries are fishing grounds that are not regulated by quotas or limits, allowing unrestricted access to fishermen. The video explains that this lack of regulation leads to excessive fishing effort, which can drive fish populations down to unsustainable levels, leading to a collapse in both fish stocks and economic rent.

Highlights

Catches are steadily falling, likely due to overfishing, and even though the effort and technology in fishing increase, catches remain the same, indicating a declining fish population.

The Grand Banks Cod in Canada was overfished, leading to a ban on fishing for over 20 years due to a critically low population.

Increased fishing effort without increased catches is a clear sign of an unhealthy fish population.

The fish population growth rate is low when the population is either very high or very low, but grows fastest at an intermediate population level.

When fishing catches exceed the natural growth rate of a fish population, the population will decline.

Taking an amount of fish below the sustainable growth line allows the population to grow, ensuring future catches.

The maximum sustainable yield is the highest amount of fish that can be caught without reducing the population, but aiming for economic rent can provide a more sustainable, long-term approach.

Economic rent maximizes profit for fishers by balancing revenue and cost, which often results in catching fewer fish than the maximum sustainable yield.

Fishing at the maximum economic yield results in a healthier fish population and more resilience to external stress.

Under Open Access, fishers increase their effort until total costs equal total revenue, which leads to overfishing and reduced profits.

Fishing efforts can continue even when total revenue decreases because individual fishers focus on their own share rather than total fishery health.

Open Access fisheries lead to overexploitation because fishers compete for the largest share of the catch, reducing overall economic rent.

At maximum economic yield, total rent is highest, and fish populations are healthier and more resilient.

Groups of fishers require incentives to cooperate in order to avoid overfishing and maximize rent at a sustainable level.

The series will explore further challenges facing modern fisheries and potential solutions to structure them for sustainable and profitable fishing.

Transcripts

okay let's say we have a stock of fish a

population of fish and we see that the

catches are steadily falling every year

and it's probably from fishing too much

or maybe the catch isn't falling it's

staying about the same from year to year

but we notice that the number of boats

on the stock is increasing and the size

of the boats is increasing and the

technology they're using is becoming

more advanced the amount of effort that

seems to be going into fishing is

increasing but the catches are not if

there's more effort being being put into

fishing but there's not more fish being

caught it's a pretty clear sign that the

population is probably declining this

exact thing happened to the Grand bank's

Cod off the eastern coast of Canada the

scientists who monitored the fish

population calculated the fish stock was

on the decline but the policymakers saw

that there were still high catches from

the fisherman and thought scientists

with their math and their hipster

glasses but the stock was indeed

overfished and the catches weren't

changing because of the increased

technology because nothing was done the

population continued to decline and

eventually the catches did too as of now

there's been a ban on fishing Cod for

over 20 years because the population has

been so low increasing effort without

increasing catches is a sign of an

unhealthy population anyways it may be

clear that fishing needs to decrease on

a particular stock but to what degree in

this video we're going to look at what

we should be aiming for in a fishing

quota first let's try to model how fish

populations behave let's say this line

represents fish population this axis is

population and this axis is time or

something let's say there's not a lot of

fish in the beginning so we're down here

they're going to reproduce but at first

their population isn't going to rise

that fast because there's not a lot of

fish reproducing as their population

increases more and more fish reach

sexual maturity and the population Rises

faster but then growth slows down as

food and habitat space become scarce and

then eventually the death rate equals

the birth rate this is the highest

population this particular environment

can fit the carrying capacity in reality

ecosystems are Dynamic and this level is

always always changing for example if

some food sources are depleted or the

fish find other food sources or if they

move around and this is no small effect

and when setting quotas we can't ignore

that but for our model here we're just

going to treat it as constant so what

this is showing is that down here when

the population is low the growth rate is

low and also when the population is high

the growth rate is low somewhere in the

middle is where the fast growth is

happening okay let's take this same

information but model the population

growth rate as it changes with the

population assuming the population is

the only thing that affects the growth

rate so when the population is zero the

growth rate is zero because there's no

fish to reproduce at low populations the

growth rate is low but as the population

Rises then reproduction Rises at some

point food and habitat are starting to

limit growth reproduction rates are

still high but they're starting to

decline the growth rate slows and slows

until the carrying capacity is reached

okay so this is basically showing the

same thing as this other graph when the

population is in the middle the growth

is fast when the population is low or

when it's it's high the growth is slower

but what this graph can show us is what

amounts of fish we can take and how it

affects the population if the fish

population was here then the fish is

growing by this amount so we know we can

take that amount and by next time the

population wouldn't have changed if the

population was still here but we took

below that line then next period the

population would be greater if we keep

taking that amount the population will

grow and grow and grow until it reaches

here now we're at the growth line for

this fish if we take this much again the

population isn't going to change if the

population were here but we took this

much fish then we're taking more than

that period's amount of growth and next

time the fish population will be lower

if we still take that much the next

period then it will be lower and lower

and lower what I'm calling the period

will depend entirely on the Ecology of

the fish and requires a bit more insight

for Simplicity we're just sort of

assuming that it's the growth in between

fishing seasons and it only depends on

the population of the fish if you take a

catch below the line the population Will

Rise by next period if you take above

the line the population will fall by

Next Period catches along the line won't

change the population so if you take an

amount of fish in these areas here the

catch is sustainable the population will

change but only until it reaches the

line in this way the line is an

equilibrium for the catches but if the

amount of fish is taken in this area

then the population will decline keep

taking in those areas and the population

might collapse so it's always safer to

be fishing when the population is high

if the population is low we'll want to

try to take an amount from below the

line so the population is safely given

Room to Grow okay so based on this how

much should we be taking well of the

catches along the line this point here

allows us to take the maximum amount of

fish each period this is the maximum

sustainable yield taking any higher will

result in a declining population so we

could try to take a little bit less when

the population is good just for safety I

think this was actually an old basis for

setting fishing quotas but it's pretty

shallow I mean maybe it would be fine if

our goal was to take take as much fish

out of the water as fast as we can but

that's not our goal our goal or rather

the fisherman's goal and Fisher women

who will hereby be referred to

collectively as fishermen fishermen will

want to make as much money as they can

for as long as they can so our goal is

to maximize the economic rent from

fishing and to do it sustainably for as

long as possible if you're new to the

term economic rent don't worry about it

just think of it as profit for now the

difference between the costs and the

revenue there are some important

differences between rent and profit

which is why we're bringing it up but

for here if you just think of it as

profit you'll do just fine but I'm going

to call it rent anyway so let's change

this graph to reflect that we're trying

to maximize the amount of money made

instead of looking at what amount of

fish is taken from period to period

sustainably let's change this to what

amount of money can be made sustainably

from period to period the line changes

from what catches are sustainable to

what earnings are sustainable we're

going to keep the line the same shape

you can look at it like it's just

whatever fish was caught was then sold

and the price of fish isn't ever

changing okay now this is a revenue

curve the total revenue curve from the

amount of fish caught for the bottom

axis we have population but we're

assuming the population is only changing

because of what we're doing that is how

much effort we're putting into fishing

so let's track that instead and change

this access to fishing effort this is

how the population will be experienced

by the fishing industry on a cost and

revenue basis if the population is low

then they have to put more effort into

finding and catching fish because

there's L Fish to find there's less fish

in every net effort is a term that

refers to a few things it could refer to

how long people are fishing or how many

people are fishing or how advanced the

fishing gear is it's about how much

equipment is on the fish stock so more

boats fishing more time spent fishing

more Advanced Equipment more efficient

techniques are all increasing the amount

of effort while money and fish catch

were directly related effort and

population are actually inversely

related as the population decreases more

fishing effort is required to find out

where they are and there's less fish in

every net or we could look at it like

the more effort put into fishing the

lower the population will be but we want

low effort over here and have the effort

increasing so we're going to switch the

axis so that high fish population is

here and low population is over here as

fishing effort increases so look at it

like this we've come to a new stock the

population is high because we haven't

touched it yet and the more effort

that's put into fishing the lower the

overall population gets okay so now this

graph is what are the sustainable

earnings when certain amounts of fishing

effort are put in let's say we come to a

new stock at the beginning when the

population is at carrying capacity the

equilibrium catch is zero right the

population is as high as it can be

there's no net growth so there's no

amount of fish that we can take without

affecting the population if we put in

some effort the equilibrium catch

increases we freed up some room for the

fish to grow and the growth rate

increases so the equilibrium catch

increases but it's still low the high

population is limiting the growth rate

of the fish as we put in more effort we

keep freeing up room for the fish and

the growth rate increases until it

reaches this point the maximum

sustainable yield coming up to this

point the population was still limiting

growth a little bit but after this point

it's the fact that the population is

lower and there's less fish reproducing

that's limiting growth and this trend

continues until there's no more fish

reproducing keep in mind we changed this

axis from population to effort with the

old graph when we caught a certain

amount of fish the population changed

and we could sort of track how the

population changed when certain amounts

of fish were taken season to season but

we can't do that with this graph there's

no population anymore for example let's

say we come to a new stock and we put in

a ton of effort there's tons of boats

fishing on it is the total revenue going

to be this measly amount of money well

no that first season they're going to

catch a lot and the industry will have a

high total revenue the relationship

between effort and revenue for one

season would look more like this the

more effort you put in the more fish you

catch until there's no more fish to

catch here you can put in more effort

but you're not going to make any more

money but with this graph when we refer

to this amount of effort being put in we

mean after many seasons and an

equilibrium has been reached remember

that previous chart if we try to catch

this amount the population will change

until the catch equals the growth rate

along the line This level showing the

amount of fish that's taken is kind of

like the effort kind of when we look at

this graph we're assuming an equilibrium

like that has already been reached this

is after many seasons okay okay to

determine the economic rent we need to

know what the costs are let's pretend

there's only one person fishing on this

stock and fishing effort will measure

just as the amount of time they're

spending fishing the first week of

fishing costs this much the second week

costs this much the third well each week

costs the same the total cost line is

going to be a straight line we're just

assuming additional units of effort

extra weeks of fishing always costs the

same amount okay to maximize economic

rent we want the spot where the

difference between the revenue and the

costs is greatest there is an equation

to derive it personally I'm just going

to eyeball it it is here we can fish

more and make more total revenue but the

cost will increase by more from that

point so the total economic rent will

actually go down that's no good compare

that to if we were back here and we

wanted to put in more effort the total

revenue increases by more than the total

cost so we should be putting in more

effort we can be making additional rent

this spot is the maximum economic yield

it's the amount of effort where the rent

is maximized at the maximum economic

yield the catch will be sustainable the

rent is high as it can be everyone's

happy and note that the maximum economic

yield is at a lower fish catch than the

maximum sustainable yield even though

we're catching less fish more rent is

being generated and also the population

is larger so it will be more resilient

to other stresses but the problem is

fishermen don't study a graph pick this

point and say I'm going to fish with

this amount of effort they live day by

day year by year trying to maximize

their personal rent so we need to look

at this graph in a a different way let's

look at it in steps to see how the

fishermen are thinking we need to

examine the marginal costs and marginal

benefits let's say in between each of

these lines is one week again we're

still assuming this is one fisherman if

the Fisher fishes for one week they'll

make this much revenue and pay this much

cost if the Fisher fishes for 2 weeks

they're making this much revenue and

paying this much in costs but the extra

Revenue the marginal revenue from an

extra week's catch is this amount the

extra costs from an additional week is

this amount the third week of fishing

will give them this much additional

total revenue and they'll have to pay

this much additional total costs as I

fill these in note here P the maximum

sustainable yield the total revenue is

actually going down they would be

spending so many weeks on the stock that

the population is getting to a point

where additional effort is damaging the

fish's productivity okay how many weeks

is the Fisher going to fish they'll fish

until the marginal revenue is no longer

greater than the marginal costs when the

extra week of fishing costs more than

the money from the fish again eyeballing

it it looks about here where the

marginal revenue equals the marginal

costs they could spend another week

fishing but they wouldn't catch enough

fish to cover the cost of gas and labor

and whatever it's just not worth it so

they'll stop interesting one person

fishing alone will stop fishing at the

maximum economic yield which is great

and all but a stock of fish is almost

never fished by one person okay so what

happens when the stock of fish is under

an Open Access scenario fished by

multiple people they're going to be

fishing with slightly different

incentives so let's change this up we'll

use the same chart but this time let's

measure fishing effort as the number of

boats on the water this will be just for

Simplicity this will be the same effect

whether we're talking about increasing

technology or increasing amount of time

they're each spending fishing any other

effort measure the important thing is

there are multiple people using the

resource now one fisherman will stop at

the maximum economic yield if he kept

fishing he could make more money but not

enough to cover those new costs it's the

same thing with multiple boats and if

the industry were acting as a single

unit they wouldn't add any additional

boats the additional catch doesn't cover

the additional costs but the new boat

doesn't see it that way they're not

getting this amount of Revenue which

wouldn't cover the costs right they're

there with everyone else they share a

total of the revenue of the industry the

total number of fish caught and the

revenue only increased by a little bit

but they're not making decisions based

on that they only see their share okay

so an individual or a group acting as an

individual will think does this extra

effort make the whole Pi bigger no then

screw it but working within a group

that's not working together people will

think does this extra effort make my

slice bigger the individual has the

opportunity to gain more by in essence

trying to get a bigger portion of the

pie so if we assume the fishermen always

share an equal portion of the catch then

they're each coming away with just the

total revenue divided by the total

number of boats okay so it's this line

here in between each of these lines is

no longer one week but the amount of

effort that one boat puts in each boat

makes the amount in revenue and spends

this amount in costs okay so this was

where an individual would stop fishing

more effort means less rent but here the

extra person coming in can earn some

additional rent by basically taking a

little bit of everyone else's but

remember back there at the maximum

economic yield was where rent was

maximized we're only going down in rent

by going forwards but people will keep

entering the fishery because they don't

see it that way even past this point

when the total revenue is actually

decreasing the new fishermen still see

rent to earn people will keep keep

entering the fishery until that is no

longer the case that is here when the

total revenue equals the total costs now

when new boat won't enter the fishery

they would buy a boat hire a crew and

never find enough fish to cover those

costs this is the amount of effort that

a group under Open Access will put in at

this point the total revenue equals the

total costs and there's no rent being

made there's less rent being made and in

this case less fish being caught and

significantly more effort being put in

than back at the maximum economic yield

also they could have caught the same

amount over here for way less effort and

way more rent and now we're potentially

in a danger zone for collapse this is

all less than ideal we want to be

fishing back here at the maximum

economic yield while one fisherman will

stop there anyway a group needs extra

incentive to cooperate and that's our

next goal in the rest of this series

we're going to look at a few more

challenges facing fishing industries

today and then what are some things we

can do to try to structure a fishery so

that people fish at the maximum economic

yield where population is relatively

healthy and the rent is

[Music]

high