Opportunity cost and fish

This story about the four-hour abalone fishing season in WA is reminiscent of a number of similar cases discussed in my soon-to-be-published book, Economics in Two Lessons (extract over the fold). However, it turns out to be something of a special case: a recreational fishery where economising on effort isn’t really relevant, and where the activity is culturally significant, mainly for people of Asian background. In these circumstances, a short season, with open access, makes good sense.


Extract from Economics in Two Lessons

Fisheries provide another example of the importance of opportunity costs, and what prices and markets can tell us about them.

The proverbial advice ‘there’s plenty more fish in the sea’ reflected what seemed, until modern times, to be an inexhaustible abundance. The vastness of the oceans, the proverbial difficulty of catching fish and the reproductive capacity of most fish species made it seem that, no matter how many fish might be caught in one season, there would be just as many to catch in the next.

The industrialization of fishing in the late 19th century changed all that. Steam powered vessels could travel further, and were independent of wind and currents. The development of factory ships allowed catches to be processed on board, so that voyages could be longer. These were followed in the 20th century by new trawling techniques, longline fishing, electronic navigation, radar and sonar systems. Catch rates soared and then, predictably, crashed.

With the slow reproduction rates typical of mammals, and the misfortune of being valuable sources of lighting oil, whales were among the first species to be hunted to the edge of extinction. The right whale (supposedly so-called because it was the ‘right’ whale to catch) was almost extinct by the 1930s, with the result that hunting right whales was banned worldwide in 1937. Even so, nearly 70 years later both the North Atlantic and North Pacific right whales are critically endangered, with populations still in the hundreds.

Fish species soon followed. The decline of the Atlantic northwest cod fishery was typical. Catches rose steadily over the first half of the 20th century, reaching a peak in the 1960s. Then came a sharp decline, as stocks crashed. This decline did not, at least initially, produce a decline in fishing effort. Rather, efforts were intensified in an attempt to maintain declining incomes.

By 1992, catches had fallen almost to zero, and it was estimated that only 1 per cent of the original stock remained. The Canadian government imposed a moratorium, originally intended to be temporary. As with the right whales however, the damage was too severe to be remedied by a temporary respite. More than twenty years later the moratorium is still in place. There are some limited signs of recovery in fish populations, but the resumption of commercial fishing is still a long way off. The same story has been repeated in fisheries all around the world with minor variations.

Thinking in terms of opportunity cost makes the reason clear. If a landowner fells a tree and sells the timber, the opportunity cost includes the return that might have been gained by letting the tree grow for another year. But catching a fish has no such opportunity cost for the fisher. Left in the sea, it might have grown and reproduced, increasing future catches. But for any individual fisher, thinking about whether to cast the net one more time, fish that are not caught now are gone forever.

Some other fisher might catch them in the future, but that is not part of the individual’s opportunity cost. The opportunity cost for an individual fisher includes the time and effort spent fishing, the cost of boats, fuel, nets and so forth, but not the impact on the fishing stock.

In these circumstances, once technology advances far enough to permit it, overfishing is virtually inevitable. A wide range of responses has been tried in an attempt to prevent overfishing: the number of boats in a fishery has been limited, the gear they can use has been restricted, and allowable fishing seasons have been shortened.

These measures have almost invariably proved ineffective. If the number of boats is limited, fishers buy bigger boats. If gear restrictions are imposed, new types of gear are developed to evade them.

If the open season is limited, effort is increased, and boats put to sea in good weather or bad, with the result that overfishing continues. The response is commonly to shorten the season still further. As Laurence White of New York University’s Stern School of Business observes:

these input limitations — especially the limits on the number of calendar days for fishing — have led to “fishing derbies” or “races for the fish”, in which fishermen try feverishly to maximize the amount of fish harvesting that they can accomplish within the limited time period available to them.
The contraction of the Alaska halibut season is a “poster child” for this process. From an open season of over 150 days in the early 1970s, the season length shrank to only 47 days by 1977 and then collapsed to an average of only 2-3 days per year between 1980 and 1994. Similarly, the collapse of the surf clam fishery in the Mid-Atlantic region caused a progressive shortening of allowable fishing time until, in 1990, a surf clam vessel was permitted to fish only 6 hours every other week.

Even this is not the most extreme case. The spawn of Alaska herring is highly valued for its use in sushi. During the harvesting season in 2017, fishers took three hours and 20 minutes to catch half the year’s quota. A second opening lasting only 15 minutes exhausted the rest. Some fishers who had trouble starting their boats missed the entire event.

4 thoughts on “Opportunity cost and fish

  1. The extract is good. It leaves out the proposed solution of large conservation zones where no fishing is allowed, ever. Fish can reproduce in these areas, and then migrate to areas where fishing is allowed. That is, if stocks of reproductive adults have not crashed to the point that they can’t find each other to mate, as with Atlantic cod.

    One benefit of offshore wind farms is that the developers, large and influential companies, are able to impose bans on seabed trawling to protect the seabed cables. I’m not sure whether longline and seine fishing is also blocked, but it must be heavily regulated to protect the valuable turbines. The steel foundations become artificial reefs.

  2. One of the major sticking points with getting the Brexit deal through the British Parliament is the issue of fishing rights.

  3. They might try this Greg.
    Cooperate and play the (simulation) game.

    This paper has 3 stock and flow diagrams. “Figure 8: STELLA model for cooperation among fishermen” includes (a bit late) carrying capacity.

    “As the simulation shows, fish stocks and profits stabilize at significantly higher levels in the cooperative case, leading to a continuous accumulation of capital.”

    The math behind some of this was above my expertise yet building the with experts and then ‘driving’ the models was always enjoyable. I was the clean up and dashboard person. I used to hold workshops for the actors of a given model. One of the system dynamists (very few) had a tremendous working memory. As domain experts were calling out details his brain had a 10-20 variables and a numerical answer and intuitively knew if it was within bound. I saw him catch out many in positions of power incl wing commanders much to the delight of those who actually worked the system in question. In 5 years I only met one or two others with his capacity to build sound models so rapidly.

  4. It’s a pity that, as a nation, we don’t think about opportunity costs more widely.

    What are the opportunity costs of pet ownership? For the individual they are quite costly, about $2,500 a year per dog. For the environment, they are very costly. Studies show an average sized dog has the same ecological footprint as a medium-sized SUV. This is mainly due to the environmental costs of producing meat for pet food. For native birds, the costs are over 1 million native birds killed every DAY by cats, including feral cats. For us, the costs are destruction of native species and environment. Pets are also a public health hazard spreading ordure, parasites and disease and disturbing general peace and amenity with endless barking (the usual case with most dogs as most dogs are ill-trained and ill-cared for).

    Re the birds:


    Australians spend $14.9 billion a year on alcohol. Every large pub built is a school not built. Australians lose $24 billion a year on g a m b l i n g. All the infrastructure for this is a total waste of resources.

    Then there is a our rate of car ownership. It’s far too high.

    Of course, progress against these social shibboleths will never be countenanced… until it has to be done for survival purposes.

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