The Role of Economics

In Addressing Impacts of Climate Change

on the Northwest Atlantic Marine Ecosystem

Preparing for Climate Change Impacts

on the Northwest Atlantic Marine Ecosystem
A symposium hosted by: Center for Law & Innovation of the University
of Maine School of Law, and Gulf of Maine Research Institute April 26-27
 The Panel

Dr. Dan Holland (Chair)

Resource Economist
Gulf of Maine Research Institute

Dr. Jon Sutinen

Professor, Dept. of Environmental & Natural Resource Economics,
University of Rhode Island

Dr. Robert Johnson

Associate Professor and Associate Sea Grant Director
University of Connecticut
A Definition of Economics

The scientific study of the choices made by

individuals and societies in regard to the
alternative uses of scarce resources which
are employed to satisfy wants.
Three Basic Roles for Economics

• Evaluate the costs and benefits and economic impacts of specific

potential outcomes (e.g. decline or extinction of a fish stock)
• Understand how economic incentives influence human behavior,
and how that behavior influences outcomes (economic and
ecological). Assist in designing policies that create “appropriate”
economic incentives.
• Evaluate how the set of institutions (including markets) that
comprise the overall human governance system for the marine
ecosystem affect outcomes. Assist in designing governance
systems that lead to “appropriate” behavior by individuals as well
as actors in the governance system.
 Understanding and modeling humans as part of the
marine ecosystem
Environmental influences
(e.g., weather, oceanography, etc)
Information and incentives
of fishermen
Markets for inputs and outputs
Fishery Management Measures
(e.g. mesh size, closed areas,
effort limits, trip limits, quotas)
Fishery Policy Making Institution
• Legislative mandates and court
The Fishery System imposed requirements
Biological, Human and • Incentives of policy makers
Technological Components • Stakeholder input
• Information to predict outcomes
Outcomes
Biological, Economic, Social and
Administrative
 Direct and Indirect coupling of fisheries through
economic, regulatory, environmental and ecological linkages

Groundfish Environment

Human

Environment Environment

Markets, technology,
regulations, etc.

Lobster Herring
Dr. Robert Johnson
Associate Professor and Associate Sea Grant Director
University of Connecticut
 Climate Change
and the Allocation of Fishery Resources

Daniel S. Holland
Gulf of Maine Research Institute

Preparing for Climate Change Impacts

on the Northwest Atlantic Marine Ecosystem
A symposium hosted by: Center for Law & Innovation of the University of
Maine School of Law, and Gulf of Maine Research Institute April 26-27
Climate Change, Fisheries and Diversification

• There is a high degree of uncertainty about how specific fisheries

will be affected by climate change
• It is highly likely that some existing fisheries will decline while
others will increase
• Most fishermen now have limited ability to respond to these
changes by shifting from declining fisheries into healthier ones
• If changes in fisheries productivity are slow, this may be a limited
problem, but even gradual climate changes may result in relatively
quick and dramatic shifts in productivity for some species
From Limiting Access to Limiting Options

• Limited access has been implemented

in most fisheries in New England over
the last few decades
• Excess fishing capacity has required
first limiting and then reducing the
number of active fishermen and how
much they can fish
• The general rule has been to grant
ongoing access to the most active
fishermen and to virtually eliminate
access for everyone else
• The end result is that fishermen have
become more specialized and less
diversified
The A-B-C’s of Groundfish Fishery Access

• In 1994 Amendment 5 implemented a limited access

scheme for the Northeast Multispecies Fishery and
allocated fishing days to individuals.
• Effort allocations were further curtailed with Amendment
7 in 1997 and
• Additional cuts were still necessary in 2002 as
Amendment 13 was being crafted and substantial latent
effort still existed in the fishery.
• The decision was made to create “A”, “B” and “C” days
with only active vessels being granted “A” and “B” days.
“C” days can not be used for the foreseeable future. “B”
days could only be used for special access programs.
• A current management proposal could require fishermen
to choose a specific area within the Gulf of Maine
 Lobster Management Zones:
Fishing in Little Boxes

•Lobster permit
holders in Maine
must choose one
of seven zones
and must fish the
majority of their
traps in that zone
•Transfer is
possible, but
subject to long
waiting lists (years)
Other New England Fisheries

• Scallops Amendment 4 limits access in 1994

– Limited access permits with individual days at sea allocations
– General category scallop (up to 400 pounds of meats per day) remained open
to a much larger (but still limited) group but will soon curtail access under
amendment 11

• Red Crab implemented limited access in 2002

• Herring Amendment 1 limits access 2006
• In all of these fisheries there was a clear need to limit effort and
catch, but the end result is that many fishermen have lost
opportunities for diversification
What goes up may come down
Lobster Landings in Maine, Massachusetts and Rhode Island

80,000,000

RI MA ME

70,000,000

60,000,000

50,000,000
Pounds

40,000,000

30,000,000

20,000,000

10,000,000

0
1965 1970 1975 1980 1985 1990 1995 2000 2005
Year
Happy Scallop Permit Owners, Others not so happy

Massachussets Scallop, Cod and Lobster Revenues

$250,000,000
Scallop ($)
Cod, Haddock, Yellowtail ($)
Lobster ($)

$200,000,000

$150,000,000
Dollars

$100,000,000

$50,000,000

$0
1980 1985 1990 1995 2000 2005
Year
A Portfolio Approach to Fishing Access Rights

• Individual
transferable quotas
might provide
opportunities to
diversify fishery
access rights
• Fishing cooperatives
with access rights to
multiple fisheries
might do so as well
• Both represent a
major cultural change
that many are
strongly resisting
Sharing the fish – the international context

• The Gulf of Maine is home to a number of

commercially fished stocks that straddle US
and Canadian waters (e.g. herring and
several groundfish stocks)
• Some highly migratory stocks fished in the
Gulf of Maine range even more widely (e.g.
Northern Bluefin tuna)
• Optimal management and perhaps even
sustainability of these stocks depends on
bilateral or multilateral cooperation
• Economists, using a game theoretic
approach, have demonstrated that climate
change could create country-level incentives
that could destabilize cooperative
agreements and undermine sustainability
Implications of climate change for management of
transboundary fish stocks

• A strong case can be made for the involvement of the 1977 shift in the
PDO in destabilization of bi-national management of North American
Pacific salmon fisheries (McKelvey et al. 2006).
• Changing conditions for the North Sea herring stock are therefore likely to
put agreements on cooperation under strain, especially because such
secular changes in resource growth may be difficult to distinguish from
year-on-year variability (Hannesson 2006).
• The 1995 United Nations Fish Stocks Agreement facilitates the creation of
regional fishery management organizations (RFMOs) to govern harvests
of straddling and highly migratory fish stocks. The stability and success of
these organizations will depend, in part, on how effectively they can
maintain member nations’ incentives to cooperate despite the
uncertainties and shifting opportunities that may result from climate-driven
changes in the productivity, migratory behavior, or catchability of the fish
stocks governed by the RFMO. Such climatic impacts may intensify
incentives for opportunism, and create other management challenges for
the RFMOs now governing tropical tuna fisheries in the Pacific and Indian
Oceans (Miller et al. 2007)
 Sharing for now

•The US and Canada

have only recently
developed agreements
on how to share
transboundary stocks
of cod, haddock and
yellowtail flounder on
Georges Bank.
•Herring is jointly
assessed but no
formal sharing
agreement is in place
Conclusions

• Fishery management systems in New England tightly constrain

fishermen’s choices and leave them highly vulnerable to shifts in
productivity of fisheries
• Designing access rights that allow for greater diversification may insulate
fishermen from risks associated with climate change impacts on fisheries
• This may also be important for generating support for tradeoffs between
fisheries that may be desirable in the context of ecosystem based
management
• Managing the marine ecosystem in the Northwest Atlantic depends on
international cooperation, and climate change may undermine existing
cooperative agreements
• Game theoretic analyses can point out why cooperation might break down
and may help in design of international treaties that will be robust to
potential climate change impacts