Capital costs and profitability

The paper estimates a line-of-business (LB) cost-of-capital and derives explicitly its link — in long-run competitive equilibrium — to profitability measured as LB operating income to LB assets. The ways that observed profitability differs from what would obtain in competitive equilibrium are explored.     

Price integration in the Australian rock lobster industry: implications for management and climate change adaptation

Rock lobster fisheries are Australia's most valuable wild fisheries in terms of both value of production and value of exports. Different states harvest and export different lobster species, with most of the landings being sent to the Hong Kong market. A perception in the Australian lobster industry is that the different species are independent on the export market, such that a change in landings of one species has no impact on the price of the others. This study investigates the market integration of Australian exports to Hong Kong for the four species and different exporting states. Our results indicate all four species and producers/export states are perceived to be substitutes for one another, so that, in the long run, prices paid to operators in the industry will move together. The integrated nature of the Hong Kong export market for Australian lobster suggests that the potential impacts of alternative fisheries management and development strategies at state and species levels cannot be considered in isolation, at least from an economic perspective. In addition, impacts of external shocks affecting production in one state (e.g. climate change) can be expected to affect all Australian lobster fisheries.     

Recreational benefits from a marine protected area: A travel cost analysis of Lundy

Marine Protected Areas (MPAs) have been proposed in many countries as a means of conserving parts of the marine environment. In some cases, MPAs may also confer recreational benefits. In this paper, a travel cost model is used to estimate the non-market recreational benefits arising from the Lundy Island Marine Nature Reserve (MNR). The estimated mean consumer surplus for visiting Lundy was found to range from £359 to £574 per trip. The designation of No Take Zone (NTZ) has also contributed to higher consumer surplus values. This result provides a strong economic justification for the designation of MPAs for recreational as well as conservation purposes.     

Value versus Volume in the Catch of the Spanish South‐Atlantic Trawl Fishery

An understanding of the link between the level of inputs and resultant level of outputs is of considerable importance when trying to manage fisheries through input controls. To this end, studies of several fisheries have been undertaken to examine this relationship through the estimation of production functions and frontiers, using either catch weight or revenue as the dependent variable. The choice of the appropriate output variable to use in the analysis will depend on the objectives of the fishermen. Maximisation of catch weight is often proposed as an objective of fishermen rather than maximisation of profits. In this paper, the technical efficiency scores of vessels operating in the Spanish south‐Atlantic trawl fishery are estimated using the stochastic production frontier approach. The production frontiers are estimated with both the weight and the value of the catch as the dependent variable. The results of the analysis suggest that fishermen adopt a range of strategies but relatively few aim to maximise catch weight only. The differences in strategies may reflect heterogeneous attitudes towards risk, with more risk averse fishermen aiming to trade‐off some potential catch value for a more certain quantity of catch.     

Effectiveness of harvest strategies in achieving multiple management objectives in a multispecies fishery

Fisheries management is characterised by multiple objectives, some of which may be complementary, while others may require trade‐offs between outcomes. Balancing these objectives is made more complex in the case of multispecies and multigear fisheries. In this paper, we develop a bioeconomic model that captures the key elements of such a fishery to test a range of potential harvest strategies to provide insights into how economic target reference points could lead to both desirable and undesirable management outcomes (e.g. discards). The model is developed as a long‐run optimisation model to identify target reference points to achieve multispecies maximum economic yield, and a dynamic recursive optimisation model, which includes more realistic representation of fishers’ behaviour, such as discards and trading of under‐caught species quotas. The potential economic, social and ecological impacts are evaluated using data envelopment analysis (DEA). The results suggest that the use of proxy target reference points can result in short‐term economic benefits at the cost of slower stock recovery and higher discarding. Limiting the number of species subject to quota controls may also prove beneficial in multispecies fisheries, while ensuring quota markets are efficient is likely to produce benefits irrespective of the harvest strategy adopted.     

Productivity Impacts of Veil Nets on UK Crangon Vessels

As with many shrimp fisheries, the North Sea brown shrimp (Crangon crangon) fishery has been characterised by by‐catch and discarding of juvenile fish species that are of value to other fleet segments. To offset this externality, the mandatory use of veil nets or separator panels was introduced in 2003 for all vessels using an aggregate beam length of more than 8 m. Sea trials prior to this date suggested that retained catch might be reduced by between 8% and 35%, depending on the area and season. These studies, however, do not consider the behavioural response by fishers to reduce this impact. In this study, the actual impact of the restrictions on the productivity of UK Crangon vessels was estimated using a production frontier approach. The ex post analysis suggests that a productivity decline of around 14% has been experienced by UK vessels adopting this gear.     

Economic versus physical input measures in the analysis of technical efficiency in fisheries

The measurement of technical efficiency requires the estimation of an appropriate production frontier. This is based on a set of inputs that are assumed to influence the level of output. Deviations from this frontier production function are separated into random variation and inefficiency. However, mis-specification of the production function through the use of inappropriate input measures may result in a bias in the measures of inefficiency. In fisheries, production is generally assumed to be a function of stock size, fishing time and the level of physical inputs employed. Defining the appropriate levels of physical inputs, however, is not straightforward, and several alternative measures are available. While economic measures of capital are more intuitively appealing, physical measures are generally readily available and hence less costly to collect. In this study, technical efficiency is measured for three fleet segments operating in the North Sea using three different gear types. The effects of using different measures of capital in the production frontier on the efficiency estimates are examined.     

Estimation of cost functions in a data poor environment: the case of capacity estimation in fisheries

Fisheries economic analysis is often handicapped by the lack of adequate data to undertake robust econometric analyses. In this study, a translog cost function was required to estimate the potential direction of adjustment in a UK fleet segment if a new regulatory regime was introduced. However, the available data were not appropriate for such estimation. Data envelopment analysis (DEA) was used to modify the data subsequently used in the estimation of the long-run cost function. The resulting model appears robust and is consistent with economic theory and the supporting evidence produced using DEA.     

Factors Affecting Technical Efficiency of Rice Farmers in Village Reservoir Irrigation Systems of Sri Lanka

Given the importance of water for rice production, this study examines the factors affecting the technical efficiency (TE) of irrigated rice farmers in village irrigation systems (VIS) in Sri Lanka. Primary data were collected from 460 rice farmers in the Kurunagala District, Sri Lanka, to estimate a stochastic translog production frontier for rice production. The mean TE of rice farming in village irrigation was found to be 0.72, although 63% of rice farmers exceeded this average. The most influential factors of TE are membership of Farmer Organisations (FOs) and the participatory rate in collective actions organised by FOs. The results suggest that enhancement of co‐operative arrangements of farmers by strengthening the membership of FOs is considered important for increasing TE in rice farming in VIS.