| Summary: | A major issue in resource economics is the capture of economic rent. In fisheries,
in contrast to nonrenewable resources, there has been a general failure by regulators
to prevent rent dissipation or capture rent where it exists. New ways of managing
fisheries such as the assignment of property rights in the form of individual harvesting
rights have been introduced in Canada and other countries and have proved successful
in improving economic efficiency. Despite such success, there remains no detailed
study of the implications of rent capture from such fisheries. The thesis addresses
this important problem in both a theoretical and empirical framework.
The theoretical model assumes a fishery regulated by an individual transferable
quota scheme where there are two representative fishers that differ only with respect
to their harvesting functions and fixed costs. The short-run quota equilibrium in the
fishery is compared to a first-best solution where a resource owner can determine the
number of fishers of each type, their individual harvests, and the biomass. Assuming
risk averse behaviour by fishers, it is shown that with uncertainty the expected rent
in the fishery will be equal to or less than the equilibrium with no uncertainty. Such
a result is not the case in an open access fishery. An implication of the work is that
reducing the uncertainty faced by all fishers for a given total allowable catch will not
decrease the expected rent from the fishery and in general will increase it. Decreasing
the risk costs of certain fishers and not others may, however, increase or decrease the
expected rents.
Using the theoretical model, different methods of rent capture including a quota
rental charge, profit charge, net cash flow charge, ad valorem royalty, auction of
the harvesting rights, lump sum fee, and a. quota transfer charge are compared and
evaluated. The criteria for assessing the different methods of rent capture include
their effect upon the profits of different fishers, efficiency, costs of rent collection, and
risk sharing and flexibility. It is shown that with no uncertainty a quota transfer
charge and lump sum fee are both capable of distorting the Pareto efficient quota
equilibrium while still capturing less than the estimated resource rent. Assuming
variability in the output price, it is shown that a profit charge, net cash flow charge,
and an ad valorem royalty cannot decrease and will in general increase the expected
rent at any charge rate whenever the quota price is positive. Comparisons between
the rent capture schemes also reveals differences in the burden of the rental paid by
different fishers.
The empirical study examines the effects of rent capture in a rights based fishery
using data from the British Columbia sablefish fishery. The first part of the study
estimates the rent in the fishery using a 1988 costs and earnings survey of individual
fishers. Estimates of the rent in 1990 are obtained from simulations using a normalised
quadratic and a translog restricted profit function. Using the simulations, the different
methods of rent capture are examined with respect to the burden they impose on
fishers and implications for the fishery.
The thesis provides several contributions to the literature. It provides an original
framework for examining different methods of rent capture in a rights based fishery
with heterogeneous fishers with and without uncertainty. Using this model, the thesis
distinguishes between short and long-run phenomena and presents the important
differences between the several methods of rent capture. Using data from the British
Columbia sablefish fishery, the thesis also provides the first empirical study of the
effects of rent capture in a rights based fishery.
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