Catching cod with a translog : analyzing the multi-species structure of the maximum-quota regulated coastal bottom-feeder fleet with a neoclassical partial equilibrium model

Abstract

Fish is economically exciting. It is maybe as close to a free lunch as one can get: a gift by nature replenishing itself. But times when the oceans were a horn of plenty are over for good. A combination of fishing technology advances and behaviour has brought many of the world’s stocks to their limits and beyond. Similarly to other resources like fresh water or the climate, mankind must control its activity to prevent irreversible damages. Such management needs information: on the behaviour of fish and fishermen.

Focussing on Norway's most valuable fish stock, this study investigates the economic-technological structure the two largest fleet segments of Norway’s coastal cod fishery. The coastal fleet is a peculiar industry: some of the numerous vessels are more than seventy years of age while others are brand-new. They (fish)are fishing with traditional methods but modern gear. Their range of operation is small and particular species are only fished seasonally. Coastal vessels thus 'appear' to not fit into the modern fish industry which demands a steady flow of fish to optimally utilise the processing facilities (Stendal and Aarset, 2001, p.4). Seemingly a relic from other times, it is claimed by some to be a waste of resources: firstly because it consists of too many vessels and secondly because large ocean going vessels supposedly can do the job cheaper. It is thus wondered whether their existence bases on regulations protecting them. But fishing along the coast of Norway also preserves a traditional lifestyle and gives the chance to choose it. And is bigger better anyway? Answering such questions requires knowledge. Interestingly, there is little academic attention paid to the coastal NEAC fishery in Norway in the literature. This is puzzling since it catches around seventy per cent of the total catch in Norway each year.

It is first asked whether neoclassical modelling is appropriate in the given context. Next, a partial-equilibrium neoclassical model is developed. Since the vessels do not only fish cod but a multitude of species, a multi-output framework is appropriate. Thirdly, the empirical model, a system of linear regression equations is estimated by iterative seemingly unrelated regression estimation.

The empirical results paint a picture of a flexible fishery. Fishermen strongly react on price changes by shifting targets. Vessels are apparently also able to circumvent the capital restrictions by substituting away from it. Cod cannot be viewed as a fishery of its own: fishermen would not harvest it the way they do were it not for haddock. This implies that bio-economic modelling of cod only is inappropriate. Neither could a composite ‘fishing effort’ be supported. Finally, since saithe is nonjoint, the inclusion in the collective quota seems unjustified.

The current study could be seen as groundwork in establishing the ‘economic side’ of a bio-economic model of the NEAC fishery. It can also be regarded as a basis for fisheries management in other ways, be it for the result that saithe can economically be seen as independent or for the ‘flexibility’ uncovered in the coastal fishery.