can conservation easements work in a marine setting? an economic analysis under four regulatory...
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Can Conservation Easements Work in a Can Conservation Easements Work in a Marine Setting? An Economic Analysis Marine Setting? An Economic Analysis
under Four Regulatory Regimesunder Four Regulatory Regimes
Robert DeaconDominic Parker
December 3, 2007
Policies to Manage ‘Bycatch’ in Fisheries
How can regulators reduce ‘bycatch’ and other environmentally damaging actions? Bycatch: “the incidental take of a species that has some value to
some other group” (Boyce 1998). “incidental take” can be interpreted broadly to encompass any
incidental, negative impact on non-commercial stocks. Policies
Fishery-wide TAC for prohibited species taxing incidental catch state-imposed time and area closures state-imposed gear restrictions (e.g.
turtle excluder devise) ITQs for incidental catch
Private Efforts
Research Questions
Can NGOs use ‘marine easements’ to achieve a reduction in damaging actions without incurring excessive costs?
How does the effectiveness of marine easements depend on if/how access to comm. harvest is regulated?
‘Marine easements’ voluntary agreements between fishermen and NGOs fishermen retain the right to harvest as regulated by law restricted from certain methods of fishing, or in the time and
location of harvest
Conservation Easements
Agreements between private landowners and conservation NGOs, known as land trusts
Typically conserve ‘open-space’ scenery and wildlife habitat usually prohibit intense development sometimes also restricts certain farming and logging
practices Restrictions in easements “run with the land” Valued as the difference between encumbered and
unencumbered value of the land
Land Trust Acreage in the U.S.(in millions)
0
3
6
9
12
1984 1994 2003
Source: The Land Trust Alliance and The Nature Conservancy
Easements
Owned Outright
1.2
3.5
10.8
Terms in Western Conservation EasementsLand use % of CEs
Prohibiting% of CEs
Permitting% of CEs
Silent on
Billboards
Mineral exploration
79
71
0
26
21
2
Feed lots 64 0 36
Subdivison
Recreational ORVs
Com. timber harvest
Agricultural use
57
36
28
19
43
36
36
79
0
28
36
2
Source: Parker (2003)
Efficiency Advantages of Conservation Easements
In contrast to land-use regulations easements are incentive-based policies that can be
customized – not one-size fits all selects parcels for conservation with consideration of
private land use values In contrast to outright ownership
Land-based commodities (e.g., soil, timber, or minerals) are better managed by a specialized landowner
Depends on transaction costs
Can Marine Easements Work?
Key difference is the absence of property rights to marine habitats
there is not a owner with whom a NGO can negotiate
However, there may effectively be property rights to use the habitat in various ways
we consider four regulatory regimes (i) open access (ii) limited entry (iii) individual transferable quotas (ITQs) (iv) territorial use rights in fishing (TURFs).
Model: Setup
An NGO wishes to affect the long-run, steady-state level of a non-commercial fish stock (X)
Effect of a on X is negative, effect of b could be positive or negative
A commercial stock, Y, is available for harvest by many identical fishermen
Fisherman i’s profit is
The profit maximizing demands for a and b are:
);,( EbaXX TTTI
i iTI
i i bbaa 11and
),;,( EYbaHH iii
),;,,,,,( RYHpvuba iiii
),;,,,( RYHpvuaa ii ),;,,,( RYHpvubb ii
Model: Setup (cont’d)
NGO offers to buy easements to restrict choice of a so that ai ≤ a NGO can observe a but not b so it cannot enforce easements over b A grantor of an easement maximizes πi s.t. ai ≤ a
NGO wants to minimize the costs of achieving --- this is equivalent to
Four regimes for regulating harvest of Y
R=O (Open access), with equilibrium πO R=L (Limited entry), with equilibrium πL
R=Q (ITQs), with equilibrium πQ
R=T (TURFs), with equilibrium πT
X
I
iiii
aRYpvuba
i 1
),;,,,,(max
XEbaXI
ii
I
ii
);,(s.t.11
and s.t. fishermen choices of bi
Model: Open Access
Fishermen maximal profit πO = π* = 0; profit-maximizing choices are aO and bO
Imagine that the NGO tried to hit its target by buying easements that restrict the firm’s use of action a.
An easement granted by an existing firm will have no effect on the
conservation stock in equilibrium. Any reduction in action a would result in losses, causing the firm to exit. Restoring equilibrium requires entry of a new, identical harvester who
employs the same level of a that the exiting firm used before the easement
Model: Limited Entry Figure shows case where both a and b are detrimental to X, all identical fishermen
under easement, NGO achieves target requiring , anticipating a response of Equilibrium easement price is Easement accomplishes long-run increase in X if easement ‘runs with permit’
b
NGO’s stockconstraint
L
L
a
bL
b
=0
X
Laai bbi
Model: ITQs The implications aren’t qualitatively different from Limited Entry if the NGO can place
all identical fishermen under easement However, implications should be different if NGO can only put a subset of fishermen
under easements
b
Q
bQ
b
H=HQ
=0Q
a
X
Model: TURFs Assume habitats of Y and X coincide, stocks do not interact, and are fully contained
spatially by a TURF A firm managing the TURF can choose a and b and thus can determine X If the NGO can observe X, it can pay for performance easements making the fact that
b is unobservable superfluous. Rents are maximized by the easement, and NGO achieves goal at minimum cost
b
T
bT
b
=0T
a
X
Conclusions
In general, our preliminary analysis suggests greater delineation of commercial harvest rights will improve effectiveness of marine easements
Marine easements will achieve nothing under open access Under limited entry and ITQs, easements can improve conservation stock, but
inability to contract over ‘hidden actions’ limits the effectiveness (e.g., raises the costs to NGOs)
Performance easements under TURFs could generate 1st-best outcomes
Future work Constrain NGOs from buying easements from all fishermen in a limited entry and
ITQ fishery and examine implications Allow fishermen to be heterogeneous in costs of harvesting targets or in costs of
avoiding ‘bycatch’ Impose a TAC and season closure on bycatch of ‘conservation stock’