The optimality of the Common Fisheries Policy: the Northern Stock of Hake

We evaluate the management of the Northern Stock of Hake during 1986-2001. A stochastic bioeconomic model is calibrated to match the main features of this fishing ground. We show how catches, biomass stock and profits would have been if the optimal Common Fisheries Policy (CFP) consistent with the target biomass implied by the Fischler's Recovery Plan had been implemented. The main findings are: i) an optimal CFP would have generated profits of more than 667 millions euros, ii) if side-payments are allowed (implemented by ITQ's, for example) these profits increase 26%. JEL Classification: Q22, Q28 We thank two anonymous referees whose comments and suggestions have substantially improved the paper, and to Javier Pereiro from Instituto Oceanográfico de Vigo for making available part of data available to us. Financial support from the Instituto de Estudios Económicos de Galicia, Pedro Barrie de la Maza, FEDER, Ministerio de Ciencia y Tecnología, SEC2002-4318-C02-01 (José María Da-Rocha), CICYT 1393-12254/2000 and SEC2003-02510/ECO (María José Gutiérrez), Fundación BBVA 1/BBVA 00044.321-15466/2002 (María José Gutiérrez) and from Universidad del País Vasco, 9/UPV00035.321-13511/2001 (María José Gutiérrez) is gratefully acknowledged.