Dept. of Economics

UNIVERSITY of ALASKA

ANCHORAGE

Voluntary Approaches to Transitioning fromCompetitive Fisheries to Rights-Based

Management:An Experimental Analysis

or

Bringing the Field into the Lab

Gunnar KnappJim Murphy

Dept. of Economics

UNIVERSITY of ALASKA

ANCHORAGEEvolution of fisheries management institutionsInstitution Characteristics Problem

Open-Access(Common Pool)

No regulation Over-fishing(“Tragedy of the Commons”)

Dept. of Economics

UNIVERSITY of ALASKA

ANCHORAGEEvolution of fisheries management institutionsInstitution Characteristics Problem

Open-Access(Common Pool)

No regulation Over-fishing(“Tragedy of the Commons”)

RegulatedOpen-Access

Limit on total catch Race for fish;Excess inputs

Dept. of Economics

UNIVERSITY of ALASKA

ANCHORAGEEvolution of fisheries management institutionsInstitution Characteristics Problem

Open-Access(Common Pool)

No regulation Over-fishing(“Tragedy of the Commons”)

RegulatedOpen-Access

Limit on total catch Race for fish;Excess inputs

Limited entryInput restrictions

Race for fish;“Capital stuffing” of unrestricted inputs

Problems with Limited Entry Management in Alaska’s Bristol Bay Salmon Fishery . . . Race for Fish

Fishermen get in each other’s way competing for the best place to catch fish (“Derby fishing)

(Photograph by Bart Eaton)

Although boats are restricted to 32’ in length, over time fishermen have built wider and taller boats in an effort to catch a larger share of the available fish.

Boat costs have increased without any corresponding increase in catches.

Old 32’ boat (1970s)New 32’ boat (1990s)

(Photograph by Norm Van Vactor)

Problems with Limited Entry Management in Alaska’s Bristol Bay Salmon Fishery . . .“Capital Stuffing”

Evolution of fisheries management institutionsInstitution Characteristics Problem

Open-Access(Common Pool)

No regulation Over-fishing(“Tragedy of the Commons”)

RegulatedOpen-Access

Limit on total catch Race for fish;Excess inputs

Limited entryInput restrictions

Race for fish;“Capital stuffing” of unrestricted inputs

Rights-Based Limits on individual catches(Individual quotas)

Allocation issues(who gets the quotas?)Transition issues

Our Research Focus:Voluntary Transition to Rights-Based Management APPROACH:

• Divide the total quota between a derby fishery and a rights-based fishery

• Give fishermen a choice between fisheries• Base quotas on the number of fishermen choosing each fishery

LOGIC:• Opportunity to demonstrate benefits• “Win-win” • Reduced opposition

QUESTION:• Does voluntary transition lead to easier and quicker adoption?

Experimental Methodology

Basic math of the derby fishery problem:

p price of harvest

qi individual harvest

xi input choice

ci (xi) cost function

max i i ipq c xStandard profit max:

Maximizing profits in a derby

i ii

j j

xq Q

x

p price of harvest

qi individual harvest

xi input choice

ci (xi) cost function

max i i ipq c xStandard profit max:

i skill

Q aggregate quota

where:

Share of total harvest

Potential experimental approach:Nonlinear social dilemma payoff table

1 2 3 4 5 6 7 8 9 101 9.56 12.46 13.69 14.25 14.48 14.52 14.44 14.28 14.06 13.81 0.142 6.23 9.13 10.69 11.58 12.10 12.38 12.49 12.50 12.43 12.29 0.293 4.56 7.13 8.69 9.68 10.31 10.71 10.94 11.05 11.06 11.01 0.434 3.56 5.79 7.26 8.25 8.92 9.38 9.66 9.83 9.91 9.91 0.575 2.90 4.84 6.19 7.14 7.81 8.28 8.60 8.81 8.92 8.96 0.716 2.42 4.13 5.35 6.25 6.90 7.38 7.71 7.93 8.06 8.13 0.867 2.06 3.57 4.69 5.52 6.15 6.61 6.94 7.17 7.31 7.39 1.00

64 -0.13 -0.27 -0.42 -0.57 -0.74 -0.91 -1.09 -1.28 -1.47 -1.67 9.1465 -0.13 -0.28 -0.43 -0.59 -0.76 -0.93 -1.12 -1.31 -1.51 -1.71 9.2966 -0.14 -0.29 -0.44 -0.61 -0.78 -0.96 -1.14 -1.34 -1.54 -1.74 9.4367 -0.14 -0.30 -0.46 -0.62 -0.80 -0.98 -1.17 -1.37 -1.57 -1.78 9.5768 -0.15 -0.30 -0.47 -0.64 -0.82 -1.00 -1.20 -1.39 -1.60 -1.81 9.7169 -0.15 -0.31 -0.48 -0.65 -0.84 -1.03 -1.22 -1.42 -1.63 -1.84 9.8670 -0.16 -0.32 -0.49 -0.67 -0.85 -1.05 -1.24 -1.45 -1.66 -1.88 10.00

My Input Choice

To

tal

Inp

ut

Ch

oic

e o

f O

ther

Gro

up

Mem

ber

s

Averag

e Inp

ut C

ho

ice of O

ther G

rou

p M

emb

ers

Concerns about payoff tables

We don’t live in a world of payoff tables• A lot of numbers, hard to read• Too abstract??

Frames how a person should think about the game• May affect extent of cooperative behavior

How to address heterogeneity of fishing skill?

Harvesting experiment

8 subjects per group 20 cups of beans in large bowl Revenue is $1/cup.

Subjects need to purchase “gear” to harvest the beans.• Select a measuring cup• Larger gear costs more.

Experiment supplies

20 cups of pinto beans

Measuring scoops

Subjects harvest beans by scooping them into a pitcher on the floor

Gear (measuring cups)

Scoop Size(cups)

Cost(scoops)

Cost(cups)

1/8 0.551/4 1.091/3 1.461/2 2.192/3 2.923/4 3.281 4.38

TotalPer Person 2.5 cups

Cost of your harvesting scoop is:

4.375

Amount of beans in the bowl20.0 cups

RoundTreatment

1Treatment

2Treatment

3Practice Skill Skill Skill

1Skill Skill Skill2

34

Derby

Derby Derby5678

Choice between Derby &

Individual Quota

Choice between Derby &

Individual Quota

91011121314

Skill1516

Experiment Summary:

3 treatments4 sessions per

treatment16 rounds per session

Derby video

An unanticipated but interesting result:Significant rent dissipation occurs as beans are spilled

05

10P

erce

nt o

f ob

serv

atio

ns

10 20 30 40 50Percent of Beans Spilled

Mean = 27%

$5.40 per period spilled

(= $0.68/person)

There is wide heterogeneity in “fishing” skill, highly correlated across rounds

05

1015

2025

Per

cent

of

sub

ject

s

.05 .1 .15 .2Share of Total Catch in the Skill Treatment

We can predict catch shares accurately as a function of “skill” and cup choices (we can estimate catch functions)

0.1

.2.3

Sha

re o

f Ca

tch

0 .1 .2 .3 .4Share of Power

Share of Catch vs. Share of Power

010

2030

Per

cent

0 1/8 1/4 1/3 1/2 2/3 3/4 1Cup Size

Distribution of Cup Choices

Rent dissipation occurs through capital stuffing:Subjects choose scoops larger than 1/8 cup

“Nash” Prediction (with homogeneous subjects):

1/2 cup if no spills

1/3 cup if 25% spilled

05

1015

20P

erce

nt

-3 -2 -1 0 1 2EarningsUSD

Derby Earnings – Rents are almost fully dissipated

Mean = $0.15

17% were < 0

Derby Summary

Predicted(with no spills,

subject homogeneity) Mean Observed

Harvest / person 2.50 1.81 (73%)Spills are an

externality

Cup size 1/2 cup(cost=2.19)

1/3 cup(mean cost=1.66)

Earnings 0.31(16% efficiency)

0.15(8% efficiency)

IFQ video

Voluntary transition: hypotheses

Given the option to choose between a competitive fishery and a quota fishery, some but not all subjects will choose the quota fishery

Over time, the number of subjects choosing the quota fishery will increase

Average gear use (harvest cost) will be lower in both the quota and the competitive fishery than in a competitive-only fishery

Average profits will be higher in both the quota and the competitive fishery than in a competitive-only fishery

RESULTS:Some but not all subjects chose the quota fishery.Over time, the number of subjects choosing the quota fishery

increased. Average Number of Subjects Choosing Quota Fishery

(Average for four experiments, IHQ80 Treatment*)

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

8 9 10 11 12 13 14 15 16

period

num

ber

of s

ubje

cts

*Beans were allocated between bowls so that the

volume of beans per subject was always 25% higher in the competitive fishery than in the

quota fishery.

RESULTS: Average gear use (harvest cost) are lower in the quota fishery and (in later periods) in the competitive fishery

Average Cup Size by Period(Average for four experiments, IHQ80 treatment experiments)

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

0.45

0.50

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

period

Ave

rage

cup

siz

e

Competive,mandatory 1/4 cupscoop

Competitive,optional scoop size

Competitive bowl

Quota bowl

RESULTS: Average profits are higher in both the quota and the competitive fishery than in a competitive-only fishery

Average Earnings by Period(Average for four experiments, IHQ80 treatment experiments)

0.00

0.50

1.00

1.50

2.00

2.50

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

period

Ave

rag

e ea

rnin

gs (

cups

)

Competive,mandatory 1/4cup scoop

Competitive,optional scoopsize

Quota bowl

Average, bothbowls

Competitivebowl