Production economic models of fisheries: vessel and industry analysis

Jesper Levring Andersen

Production economic models of fisheries: vessel and industry analysis

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Abstract

Formålet med denne ph.d. afhandling er at undersøge forskellige aspekter af fiskeres adfærd ved anvendelse af produktions økonomiske modeller på individ- og industriniveau. Afhandlingen består af tre dele. Den første del giver en oversigt over afhandlingen. Den anden del består af fire papirer, som analyserer efficiens på fartøjsniveau og faktorer som påvirker efficiens. Den tredje del består af to papirer, hvor der gennemføres analyse på industriniveau og fokuseres specielt på konsekvenserne af at indføre individuelle omsættelige kvoter. De opstillede modeller tillader ændringer i fiskernes adfærd via individuel læring og tilpasninger i sammensætningen af output. Alle papirerne inkluderet i Del II: Modellering og Evaluering af Fiskeres Adfærd betragter faktorer, der påvirker fiskeres adfærd. Kendskab til disse er vigtige for at give en korrekt beskrivelse af fiskernes adfærd. Inkludering af alle faktorer i specifikke analyser er dog umuligt, hvorfor det er vigtig at være opmærksom på de mest betydende af faktorer. Som fremstillet i litteraturgennemgangen i Papir 1 kan en lang række af faktorer påvirke fiskernes kortsigtede adfærd, det vil sige valg af redskab og fiskeområde. Adfærd kan opfattes som værende bestemt af fiskernes målsætninger underlagt en række forskellige restriktioner i form af fysiske ressourcer, tid, mental kapacitet og information, samt institutionelle forhold. Gennemgangen af den omfattende litteratur giver støtte til den neoklassiske antagelse om nyttemaksimering via profit maksimering. Derudover viser litteraturen betydningen af de fysiske ressourcer og tid, hvilket dog i noget omfang kan tilskrives den relativt nemmere adgang til sådanne oplysninger. I de efterfølgende tre papirer analyseres specifikke forhold af fiskeres adfærd. I Papir 2 estimeres teknisk efficiens og årsager til inefficiens ved anvendelse af den såkaldte Stokastisk Front-metode. Resultaterne viser, at niveauet af teknisk efficiens ikke påvirkes af, om fangstværdi eller vægt anvendes som outputmål. Det har heller ikke nogen afgørende betydning om input måles ved at inkludere ”fishing power” og tid på havet separat eller som et kombineret mål. Disse valg har dog betydning for de beregnede output elasticiteter. Derudover er det fundet, at inefficiensen påvirkes af fartøjsstørrelsen, fiskernes erhvervsstatus og deres erfaring. Papir 3 analyserer, hvorledes fiskebestanden kan inkluderes i efficiensanalyse. Den biologiske udvikling er vigtig i relation til fiskeriet, idet bestandene er en af de primære komponenter i produktionsprocessen. Det er derfor værdifuldt at evaluere, om forskellige metoder for inkludering af bestandene giver anledning til forskellige konklusioner. Tre mulige metoder undersøges. Den første metode er baseret på fangstdata, mens de to andre metoder er baseret på uafhængige bestandsestimater. Det vises, at estimationer på grundlag af den førstnævnte metode ikke er sammenlignelige med dem opnået ved anvendelse af de to sidste metoder. Denne konklusion er uafhængig af valget af tidshorisont og valg af input/output mål. Papir 4 analyserer fiskeres adfærd til at modvirke usikkerhed. Når efficiensanalyser udføres, sker dette på ex post data. I relation til fiskeriet er dette dog muligvis for hård en tilgang, idet fiskerne opererer i et miljø præget af usikkerhed som følge af variationer i fiskebestande, vejrforhold osv. Fiskerne søger derfor i deres ex ante beslutninger at forholde sig til usikkerheden. Hvis forholdene er bedre end forventet, kan dette resultere i at nogle inputs ikke anvendes. I ex post efficiensanalyse vil dette blive fortolket som inefficiens, selvom det - i en ex ante opfattelse - var rationelt at tage disse inputs med. Denne type af inefficiens kan betegnes som rationel inefficiens. Ved at videreudvikle metoden fra Bogetoft og Hougaard (2003) udføres en evaluering af 308 danske fiskefartøjer. Resultaterne indikerer, at disse fartøjer søger at forsikre dem selv mod usikkerhed ved at have størst fleksibilitet i besæt-ningsaflønningen efterfulgt af omkostninger til henholdsvis brændstof, salg og is/proviant. Hensyntagen til ændringer i fiskernes adfærd på industriniveau er undersøgt i Del III: Industrimodeller for Fiskeres Adfærd og Individuelle Omsættelige Kvoter. Mange bioøkono-miske modeller er blevet opstillet gennem tiderne til at evaluere sådanne adfærdsændringer, men ingen af disse tillader til forfatternes kendskab den adfærdsfleksibilitet, som modellerne i denne afhandling. Udgangspunktet i Papir 5 er det faktum, at ændringer i regulering ofte vil resultere i en ændret fiskeradfærd. Det er nødvendigt at tage hensyn til sådanne ændringer, når de forventede gevinster beregnes. Ved anvendelse af Data Envelopment Analyse metoden opstilles en ramme til beregning af disse gevinster. Gevinsterne er beregnet ved at sammenligne industriprofitten under det initiale reguleringssystem med den under et reguleringssystem baseret på Individuelle Omsættelige Kvoter (IOK’er). To typer af adfærdsfleksibilitet tillades i form af muligheden for at lære den bedste metode og muligheden for at ændre sammensætningen af inputs og outputs. Den opstillede ramme anvendes efterfølgende på et datasæt for dansk fiskeri. Ikke overraskende vises gevinsterne at stige med øget adfærdsfleksibilitet. Under de mest restriktive adfærdsantagelser vil alene en reallokering af IOK’erne resultere i en stigning i bruttooverskuddet på 50 %, mens denne stiger til 87 % i den mest fleksible situation. Det sidste Papir 6 udbygger rammen opstillet i Papir 5. Et kompleks af begrænsninger inkluderes, således at mere realistiske estimationer af de potentielle gevinster ved reallokering kan opnås, når rammen anvendes på specifikke fiskerier. Begrænsningerne relaterer sig til bestemmelsen af den bedste metode, muligheden for individuel læring og ændringer i fangstsammensætningen. Ved at anvende et datasæt, som dækker hele det danske kommercielle fiskeri, estimeres de potentielle gevinster, hvis dansk fiskeri havde været reguleret med IOK’er i 2002. I den mest fleksible (optimistiske) situation kan en stigning på 92 % i bruttooverskuddet forventes, men dette niveau reduceres betydeligt, når fartøjernes adfærdsfleksibilitet begrænses. Yderligere en række forhold inddrages i form af koncentration, specialisering, aktivitet på markedet og prisændringer. Slutteligt analyseres de forventelige konsekvenser af eksogene chok og ændringer i reguleringen i form øget maskestørrelser.

Originalsprog	Engelsk

Udgivelsessted	Copenhagen
Forlag	Den Kgl. Veterinær- og Landbohøjskole, Fødevareøkonimisk Institut
Antal sider	175
ISBN (Trykt)	87-989302-2-2
Status	Udgivet - 2005

Navn	Skrifter fra FOI: samfundsvidenskabelige serie
Nummer	16

Emneord

Det tidligere LIFE
Produktion økonomiske modeller fiskeri

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Unit_of_Economics_16Forlagets udgivne version, 939 KB

Citationsformater

@phdthesis{02d9b330a1bf11ddb6ae000ea68e967b,

title = "Production economic models of fisheries: vessel and industry analysis",

abstract = "The overall purpose of this PhD thesis is to investigate different aspects of fishermen{\textquoteright}s behaviour using production economic models at the individual and industry levels. Three parts make up this thesis. The first part provides an overview of the thesis. The second part consists of four papers analysing efficiency at the vessel level and factors influencing this. The third part consists of two papers and presents industry level analyses and focuses in particular on the likely impacts of implementing individual transferable quotas. The models are able to allow for changes in fishermen{\textquoteright}s behaviour via individual learning and adjustments in output mix. All the papers included in Part II: Modelling and Evaluating Fishermen{\textquoteright}s Behaviour consider factors influencing fishermen{\textquoteright}s behaviour. Knowledge about these factors is important to give a correct description of fishermen{\textquoteright}s behaviour. However, including all relevant factors in specific analyses is impossible, and it is therefore important to be aware of the most essential ones. As demonstrated in the literature review of Paper 1, a large number of factors may significantly influence fishermen{\textquoteright}s short run behaviour, i.e. choice of gear type or fishing location. Behaviour can be viewed as being determined by the fishermen{\textquoteright}s objectives subject to different restrictions, given by physical resources, time, mental capacity and information, and institutions. The review of the extensive literature gives reasonable support to the neoclassical assumption of utility maximisation through profit maximisation. Furthermore, the literature has demonstrated the importance of physical restrictions and time. The emphasis on these may of course be a consequence of the relatively easy access to such data. In the following three papers, specific aspects of fishermen{\textquoteright}s behaviour are analysed. In Paper 2, technical efficiency and reasons for inefficiency are estimated using the Stochastic Production Frontier Approach. The results suggest that the level of technical efficiency is not influenced by the choice of revenue or weight as the output measure. Also, it has no profound impact whether inputs are measured by including fishing power and fishing time separately or as a composite measure. However, the output elasticities are influenced by these choices. Furthermore, vessel size, employment status and experience is found to influence inefficiency. Paper 3 considers how to include fish stocks in efficiency analyses. The biological developments are important in relation to fisheries, because fish stocks are one of the primary components in the production process. It is worthwhile to evaluate whether different methods of including fish stocks give rise to different conclusions. Three methods are investigated as possible ways to include fish stocks. The first method is based on catch data, while the two other methods are based on independent stock measures. It is shown that estimations based on the former give different results from the ones based on the latter. This conclusion is independent of the choice of time horizon and choice of other input/output measures. Paper 4 considers fishermen{\textquoteright}s behaviour to counteract uncertainty. When performing efficiency evaluations, this is done on ex post data. However, in relation to fisheries such an approach may be too harsh, because the fishermen are operating in an uncertain environment with variations in fish stocks, weather, etc. Fishermen therefore seek in their ex ante decisions to cope with uncertainty. If the conditions are better than expected, this may result in some inputs not being used. In ex post efficiency evaluation, this is interpreted as inefficiency, although it was - in an ex ante perception - rational to bring the inputs along. This type of inefficiency can be denoted rational inefficiency. By further developing the method from Bogetoft and Hougaard (2003), an evaluation of 308 Danish fishing vessels is performed. The results indicate that these vessels seek to insure themselves against uncertainty by allowing for the highest flexibility in crew payments, followed by fuel costs, sales costs and costs for ice/provisions respectively. Accounting for changes in fishermen{\textquoteright}s behaviour at the industry level is investigated in Part III: Industry Models of Fishermen{\textquoteright}s Behaviour and Individual Transferable Quotas. Many bioeconomic models have been set-up through time to evaluate such changes, but none of these have to the author{\textquoteright}s knowledge allowed for the behavioural flexibilities, as included in the modelling framework presented here. The starting point for Paper 5 is the fact that management changes will most likely result in different behaviour by the fishermen. It is necessary to account for these changes, when evaluating the expected gains to be derived. Based on the Data Envelopment Analysis approach, a framework to calculate these gains is provided. The gains are calculated by comparing industry profits in the initial management system with industry profits in a management system based on Individual Transferable Quotas (ITQs). Two types of behavioural flexibility are allowed in the system. They concern the ability to learn best-practice (catch-up) and the ability to change the input and output composition (mix). The framework is then adapted to a dataset from the Danish fishery. Not surprisingly, the gains rise with increased behavioural flexibility. Under the most restrictive assumptions, reallocation of the ITQs will alone result in a 50% increase in gross profits, while this level increases to 87% in the most flexible situation. The final Paper 6 provides an extension of the framework developed in Paper 5. A complex of restrictions is included to obtain more realistic estimations of the potential reallocations gains, when applied to specific fisheries. The restrictions relate to the determination of best-practice, possible levels of individual learning and changes in output composition. By using a dataset covering the entire Danish commercial fishery, we obtain estimates of the plausible tradability gains if Danish fisheries had been regulated by ITQs in 2002. In the most flexible (optimistic) situation, a 92% increase in gross profits can be expected, but this level is significantly reduced if vessel behaviour is restricted. Furthermore, a series of policy implica-tions are considered in relation to an ITQ system, including concentration, specialisation, market activity and price changes. Finally, plausible consequences of exogenous chocks and changes in management practice in the form of mesh size increases are considered.",

keywords = "Former LIFE faculty, Produktion {\o}konomiske modeller fiskeri, Production Economic Models Fisheries",

author = "Andersen, {Jesper Levring}",

year = "2005",

language = "English",

isbn = "87-989302-2-2",

series = "Skrifter fra FOI: samfundsvidenskabelige serie",

publisher = "Den Kgl. Veterin{\ae}r- og Landboh{\o}jskole, F{\o}devare{\o}konimisk Institut",

number = "16",

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TY - BOOK

T1 - Production economic models of fisheries

T2 - vessel and industry analysis

AU - Andersen, Jesper Levring

PY - 2005

Y1 - 2005

N2 - The overall purpose of this PhD thesis is to investigate different aspects of fishermen’s behaviour using production economic models at the individual and industry levels. Three parts make up this thesis. The first part provides an overview of the thesis. The second part consists of four papers analysing efficiency at the vessel level and factors influencing this. The third part consists of two papers and presents industry level analyses and focuses in particular on the likely impacts of implementing individual transferable quotas. The models are able to allow for changes in fishermen’s behaviour via individual learning and adjustments in output mix. All the papers included in Part II: Modelling and Evaluating Fishermen’s Behaviour consider factors influencing fishermen’s behaviour. Knowledge about these factors is important to give a correct description of fishermen’s behaviour. However, including all relevant factors in specific analyses is impossible, and it is therefore important to be aware of the most essential ones. As demonstrated in the literature review of Paper 1, a large number of factors may significantly influence fishermen’s short run behaviour, i.e. choice of gear type or fishing location. Behaviour can be viewed as being determined by the fishermen’s objectives subject to different restrictions, given by physical resources, time, mental capacity and information, and institutions. The review of the extensive literature gives reasonable support to the neoclassical assumption of utility maximisation through profit maximisation. Furthermore, the literature has demonstrated the importance of physical restrictions and time. The emphasis on these may of course be a consequence of the relatively easy access to such data. In the following three papers, specific aspects of fishermen’s behaviour are analysed. In Paper 2, technical efficiency and reasons for inefficiency are estimated using the Stochastic Production Frontier Approach. The results suggest that the level of technical efficiency is not influenced by the choice of revenue or weight as the output measure. Also, it has no profound impact whether inputs are measured by including fishing power and fishing time separately or as a composite measure. However, the output elasticities are influenced by these choices. Furthermore, vessel size, employment status and experience is found to influence inefficiency. Paper 3 considers how to include fish stocks in efficiency analyses. The biological developments are important in relation to fisheries, because fish stocks are one of the primary components in the production process. It is worthwhile to evaluate whether different methods of including fish stocks give rise to different conclusions. Three methods are investigated as possible ways to include fish stocks. The first method is based on catch data, while the two other methods are based on independent stock measures. It is shown that estimations based on the former give different results from the ones based on the latter. This conclusion is independent of the choice of time horizon and choice of other input/output measures. Paper 4 considers fishermen’s behaviour to counteract uncertainty. When performing efficiency evaluations, this is done on ex post data. However, in relation to fisheries such an approach may be too harsh, because the fishermen are operating in an uncertain environment with variations in fish stocks, weather, etc. Fishermen therefore seek in their ex ante decisions to cope with uncertainty. If the conditions are better than expected, this may result in some inputs not being used. In ex post efficiency evaluation, this is interpreted as inefficiency, although it was - in an ex ante perception - rational to bring the inputs along. This type of inefficiency can be denoted rational inefficiency. By further developing the method from Bogetoft and Hougaard (2003), an evaluation of 308 Danish fishing vessels is performed. The results indicate that these vessels seek to insure themselves against uncertainty by allowing for the highest flexibility in crew payments, followed by fuel costs, sales costs and costs for ice/provisions respectively. Accounting for changes in fishermen’s behaviour at the industry level is investigated in Part III: Industry Models of Fishermen’s Behaviour and Individual Transferable Quotas. Many bioeconomic models have been set-up through time to evaluate such changes, but none of these have to the author’s knowledge allowed for the behavioural flexibilities, as included in the modelling framework presented here. The starting point for Paper 5 is the fact that management changes will most likely result in different behaviour by the fishermen. It is necessary to account for these changes, when evaluating the expected gains to be derived. Based on the Data Envelopment Analysis approach, a framework to calculate these gains is provided. The gains are calculated by comparing industry profits in the initial management system with industry profits in a management system based on Individual Transferable Quotas (ITQs). Two types of behavioural flexibility are allowed in the system. They concern the ability to learn best-practice (catch-up) and the ability to change the input and output composition (mix). The framework is then adapted to a dataset from the Danish fishery. Not surprisingly, the gains rise with increased behavioural flexibility. Under the most restrictive assumptions, reallocation of the ITQs will alone result in a 50% increase in gross profits, while this level increases to 87% in the most flexible situation. The final Paper 6 provides an extension of the framework developed in Paper 5. A complex of restrictions is included to obtain more realistic estimations of the potential reallocations gains, when applied to specific fisheries. The restrictions relate to the determination of best-practice, possible levels of individual learning and changes in output composition. By using a dataset covering the entire Danish commercial fishery, we obtain estimates of the plausible tradability gains if Danish fisheries had been regulated by ITQs in 2002. In the most flexible (optimistic) situation, a 92% increase in gross profits can be expected, but this level is significantly reduced if vessel behaviour is restricted. Furthermore, a series of policy implica-tions are considered in relation to an ITQ system, including concentration, specialisation, market activity and price changes. Finally, plausible consequences of exogenous chocks and changes in management practice in the form of mesh size increases are considered.

AB - The overall purpose of this PhD thesis is to investigate different aspects of fishermen’s behaviour using production economic models at the individual and industry levels. Three parts make up this thesis. The first part provides an overview of the thesis. The second part consists of four papers analysing efficiency at the vessel level and factors influencing this. The third part consists of two papers and presents industry level analyses and focuses in particular on the likely impacts of implementing individual transferable quotas. The models are able to allow for changes in fishermen’s behaviour via individual learning and adjustments in output mix. All the papers included in Part II: Modelling and Evaluating Fishermen’s Behaviour consider factors influencing fishermen’s behaviour. Knowledge about these factors is important to give a correct description of fishermen’s behaviour. However, including all relevant factors in specific analyses is impossible, and it is therefore important to be aware of the most essential ones. As demonstrated in the literature review of Paper 1, a large number of factors may significantly influence fishermen’s short run behaviour, i.e. choice of gear type or fishing location. Behaviour can be viewed as being determined by the fishermen’s objectives subject to different restrictions, given by physical resources, time, mental capacity and information, and institutions. The review of the extensive literature gives reasonable support to the neoclassical assumption of utility maximisation through profit maximisation. Furthermore, the literature has demonstrated the importance of physical restrictions and time. The emphasis on these may of course be a consequence of the relatively easy access to such data. In the following three papers, specific aspects of fishermen’s behaviour are analysed. In Paper 2, technical efficiency and reasons for inefficiency are estimated using the Stochastic Production Frontier Approach. The results suggest that the level of technical efficiency is not influenced by the choice of revenue or weight as the output measure. Also, it has no profound impact whether inputs are measured by including fishing power and fishing time separately or as a composite measure. However, the output elasticities are influenced by these choices. Furthermore, vessel size, employment status and experience is found to influence inefficiency. Paper 3 considers how to include fish stocks in efficiency analyses. The biological developments are important in relation to fisheries, because fish stocks are one of the primary components in the production process. It is worthwhile to evaluate whether different methods of including fish stocks give rise to different conclusions. Three methods are investigated as possible ways to include fish stocks. The first method is based on catch data, while the two other methods are based on independent stock measures. It is shown that estimations based on the former give different results from the ones based on the latter. This conclusion is independent of the choice of time horizon and choice of other input/output measures. Paper 4 considers fishermen’s behaviour to counteract uncertainty. When performing efficiency evaluations, this is done on ex post data. However, in relation to fisheries such an approach may be too harsh, because the fishermen are operating in an uncertain environment with variations in fish stocks, weather, etc. Fishermen therefore seek in their ex ante decisions to cope with uncertainty. If the conditions are better than expected, this may result in some inputs not being used. In ex post efficiency evaluation, this is interpreted as inefficiency, although it was - in an ex ante perception - rational to bring the inputs along. This type of inefficiency can be denoted rational inefficiency. By further developing the method from Bogetoft and Hougaard (2003), an evaluation of 308 Danish fishing vessels is performed. The results indicate that these vessels seek to insure themselves against uncertainty by allowing for the highest flexibility in crew payments, followed by fuel costs, sales costs and costs for ice/provisions respectively. Accounting for changes in fishermen’s behaviour at the industry level is investigated in Part III: Industry Models of Fishermen’s Behaviour and Individual Transferable Quotas. Many bioeconomic models have been set-up through time to evaluate such changes, but none of these have to the author’s knowledge allowed for the behavioural flexibilities, as included in the modelling framework presented here. The starting point for Paper 5 is the fact that management changes will most likely result in different behaviour by the fishermen. It is necessary to account for these changes, when evaluating the expected gains to be derived. Based on the Data Envelopment Analysis approach, a framework to calculate these gains is provided. The gains are calculated by comparing industry profits in the initial management system with industry profits in a management system based on Individual Transferable Quotas (ITQs). Two types of behavioural flexibility are allowed in the system. They concern the ability to learn best-practice (catch-up) and the ability to change the input and output composition (mix). The framework is then adapted to a dataset from the Danish fishery. Not surprisingly, the gains rise with increased behavioural flexibility. Under the most restrictive assumptions, reallocation of the ITQs will alone result in a 50% increase in gross profits, while this level increases to 87% in the most flexible situation. The final Paper 6 provides an extension of the framework developed in Paper 5. A complex of restrictions is included to obtain more realistic estimations of the potential reallocations gains, when applied to specific fisheries. The restrictions relate to the determination of best-practice, possible levels of individual learning and changes in output composition. By using a dataset covering the entire Danish commercial fishery, we obtain estimates of the plausible tradability gains if Danish fisheries had been regulated by ITQs in 2002. In the most flexible (optimistic) situation, a 92% increase in gross profits can be expected, but this level is significantly reduced if vessel behaviour is restricted. Furthermore, a series of policy implica-tions are considered in relation to an ITQ system, including concentration, specialisation, market activity and price changes. Finally, plausible consequences of exogenous chocks and changes in management practice in the form of mesh size increases are considered.

KW - Former LIFE faculty

KW - Produktion økonomiske modeller fiskeri

KW - Production Economic Models Fisheries

M3 - Ph.D. thesis

SN - 87-989302-2-2

T3 - Skrifter fra FOI: samfundsvidenskabelige serie

BT - Production economic models of fisheries

PB - Den Kgl. Veterinær- og Landbohøjskole, Fødevareøkonimisk Institut

CY - Copenhagen

ER -

Production economic models of fisheries: vessel and industry analysis

Abstract

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