Fisheries Economics & Policy: Maximum Economic Yield
Summary
TLDRThe 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
🐟 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.
📉 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.
⚖️ 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.
💰 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.
Mindmap
Keywords
💡Fish Population
💡Fishing Effort
💡Overfishing
💡Carrying Capacity
💡Maximum Sustainable Yield (MSY)
💡Economic Rent
💡Equilibrium Catch
💡Fishing Quota
💡Marginal Cost and Marginal Revenue
💡Open Access Fisheries
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
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