Economics of Fishery Resources PDF

96.4 34.2 % 59.6 % 6.2 %  Developing A Fishery Model Model assumptions: Fish grew through time → apply dynamic model or incorporate the element of time Let X(t) represent the stock of fish at time t. Example, biomass of fish in a particular area is 3,000 metric tons in Year...

96.4 34.2 % 59.6 % 6.2 %  Developing A Fishery Model Model assumptions: Fish grew through time → apply dynamic model or incorporate the element of time Let X(t) represent the stock of fish at time t. Example, biomass of fish in a particular area is 3,000 metric tons in Year 2 This fish stock will change in a short time interval dt. Represent this growth as dX(t)/dt, or simply dX/dt. For example, 10 metric tons increase in biomass from January to February dX/dt = F(X) → instantaneous growth of fish without harvesting F(X) → indicates the relationship of biomass X and increase in biomass over a small time interval F(X) → can be represented by a graph, growth on the y-axis and biomass on the x-axis  Fishery Harvest Function Model assumptions: Fish industry is perfectly competitive → 4 assumptions of a perfectly competitive market Let H(t) be the level of fish harvest at time period t H(t) depends on two factors of production: E(t) and X(t), where E is effort and X is fish stock or biomass. Mathematically, H(t) = G[E(t), X(t)]. Drop the t for simplification, H = G(E, X). E is a variable input called fishing effort. It can be represented as a combination of factors of production in fishing including capital (e.g. ships, fishing gears), labor, materials (e.g. fishing nets), and energy (e.g. fuel and oil to power boats)  Fishery Harvest Function Model assumptions: Review: Short-run production function describes the relationship of output as a of function of a variable input and a fixed input For the harvest function H = G(E, X), there are two possibilities of a short-run production function – E is fixed and X varies – E varies and X is fixed Effort E Harvesting under Private Property Model assumptions: The fishing grounds is divided among many firms. Each firm has an exclusive right to fish at a particular region. The implication of this is that the market is competitive, such that each firm takes the price of both output and factors as constant. We introduce the following curves in the model: – Total revenue (TR) – Total cost (TC) – Average revenue (AR) – Marginal revenue (MR) – Marginal cost (MC)  Harvesting under Open Access Model assumptions: Open access implies that no one firm can exclude another firm from harvesting in a particular area. Entry of new firms will continue to rise as long as TR is greater than TC, or rent/profit is positive.