Marine Resource Economics, Volume 11, pp. 105–123 0738-1360/96 $3.00 + .

00
Printed in the U.S.A. All rights reserved. Copyright © 1996 Marine Resources Foundation

Bioeconomic Interactions Between the

Capture Fishery and Aquaculture
YIMIN YE
Shanghai Fisheries University
JOHN R. BEDDINGTON
Imperial College of Science, Technology and Medicine

Abstract This paper builds on the work of Anderson (1985a). Interactions be-
tween the capture fishery and aquaculture are modeled in two different cases:
(1) cultured fish has the same market value as wild fish, and (2) cultured fish
has only a substitute value for wild fish. In agreement with Anderson’s conclu-
sions, it is found that the entry of aquaculture lowers market price, increases
total supply, reduces fishing effort, and raises natural fish stocks. When culture
cost is reduced in some way, the fish price will decrease and fishing effort will de-
cline. This may represent another way to reduce pressure on capture fisheries, with
the advantage that the market equilibrium has a higher supply and lower price than
other effort control measures. The interactions in both cases are similar, but im-
pacts of aquaculture on price, supply, and effort in the second case are weaker
than the first. Dynamic simulations are carried out and show more clearly the
process of dynamic interactions between the capture fishery and aquaculture.

Key words Aquaculture, bioeconomic interaction, capture fishery, demand,

effort control, supply.

Introduction
In world fisheries, aquaculture production has increased significantly, and for some
species already dominates market supply. In 1993, 97.8% of Atlantic salmon pro-
duction came from fish farming (FAO 1995). Aquaculture production in China has
exceeded wild catch since 1993, constituting 52.9% of the total production in 1994
(Anon 1995). Chinese landings of shrimp from aquaculture were 210,000 metric
tons in 1992, six times the marine catch under normal circumstances (Qian 1994).
The world demand for aquatic products is increasing because of expanding human
populations and improved living standards in some developing countries. However, 60%
of the world’s major fish stocks are now overexploited, in the sense that stock sizes have
been driven to lower levels than would produce the largest annual biological surplus or
net economic value (Hilborn and Walters 1992). Production from the conventional cap-
ture fisheries is unlikely to increase much beyond the present levels. The analysis of
Chinese market demand and supply potential (Ye 1994) shows that aquaculture pro-
duction has to increase dramatically in the future to satisfy market demand.

John R. Beddington is professor of Applied Population Biology and Director of the Centre for Environ-
mental Technology at the Imperial College of Science, Technology and Medicine, 8 Prince’s Gardens,
London SW7 1NA, United Kingdom. Yimin Ye is a lecturer in fisheries at Shanghai Fisheries Univer-
sity, Shanghai 200090, China. The first author was supported by the Marine Education and Conservation
Trust (UK) and ORS award of the Committee of Vice-Chancellors and Principals of the Universities of
the United Kingdom. We are indebted to two anonymous referees for their valuable comments.

105
106 Ye and Beddington

In some ways, aquatic products are quite close substitutes for each other. A
change of supply from one species will have some effect on the other. Where a spe-
cies comes from both a capture fishery and aquaculture (like shrimp and salmon)
there will be a clear interaction between them. Increasing supply from aquaculture
will lure consumers from capture fisheries and relieve the capture fishery from the
high demand. The effective management of such a species must understand the dy-
namic interaction between the capture fishery and aquaculture.
Anderson (1985a) did some initial analysis of this aspect. He supposed that both
the market demand and supply from the aquaculture sector could be expressed as
linear functions of a single price variable and the cultured and wild fish were identi-
cal. It was found that the entry of a competitive aquaculturist could reduce the price
and increase the total supply.
This paper presents further study on the interactive dynamics between the cap-
ture fishery and aquaculture. The first section treats the cultured fish as same as
wild fish and in second section, the cultured fish is supposed to have only a substi-
tute market value. Finally, three illustrative simulations show clearly the dynamic
interactions between them. As opposed to salmon ranching (Anderson 1985b;
Anderson and Wilen 1986) where the wild stocks and the cultured stocks compete
for the same ocean resources, no production interaction is considered. Emphasis is
put on the effect of aquaculture of substitute fish on capture fisheries. This study is
restricted to a discussion of bioeconomic efficiency and dynamic interactions be-
tween aquaculture and natural fisheries. A full analysis of the social welfare implica-
tions of aquaculture is beyond the scope of this work.

Equivalent Market Value of Cultured and Wild Fish

Demand Function for Fish
The market demand for fish is related with many factors such as own price, substi-
tute price, personal income, taste, and tradition. The first three are the most impor-
tant and can be quantified. Here, a general constant-elasticity demand function is
used to study the interaction between the capture fishery and aquaculture

D = αp β I γ pyσ (1)

where D: demand quantity

I: average income per capita
P: fish price
p y : price of a substitute
α, β, γ, σ: constants.

If the Law of Demand holds, price elasticity is negative i.e. the lower the price,
the higher the quantity demanded. Properly, fish is a superior good (Bell 1968), so
the income elasticity should be positive. The cross-price elasticity is positive if two
goods are called substitutes since a rise in the price of one increases the purchases
of another. This study focuses on the relationship between demand and price. It will
not lose its generality if supposing that variables in equation (1) are constant except
price p. So, the demand function has the form

D = α 1p β1 (2)
α 1 = αI γ pyσ .
 Bioeconomic Interactions Between Capture Fishery and Aquaculture 107

This demand curve is depicted in figure 1. With the increase of price, the market
will demand less. A general assumption is made throughout this study that both pro-
ducers and buyers are price takers.

Supply from Capture Fishery

Clark (1990) presented a model for an open-access fishery. Briefly summarized, the
population dynamics are expressed by Schaefer model (Schaefer 1957)

dX/dt = rX(1 – X/K) – qEX (3)

where X: stock biomass

r: intrinsic growth rate
K: carrying capacity
E: fishing effort
q: catchability coefficient,

with the flow of economic rent being given by

R = (pqX – c)E (4)

where R: rent
p: price of fish
c: cost per unit of fishing effort.

The change in fishing effort is proportional to current economic rent (Smith 1969)

Figure 1. Demand (D) and Supply Curves for the Capture Fishery (Sf) and Aquaculture (Sc)
108 Ye and Beddington

dE/dt = η f R (5)

where ηf is a stiffness parameter for the capture fishery.

The conditions for bioeconomic equilibrium in the open-access fishery are

S f = qEX – rX(1 – X/K)

and

pqX – c = 0

The bioeconomic equilibrium supply can be expressed in terms of price p

rc  c 
Sf = 1 – . (6)
pq  pqK 

The equilibrium supply curve is shown in figure 1. It can be seen that the output Sf
is zero for p < c/qK, then increases to MSY at p = 2c/qK, and subsequently decreases
towards zero again as p → +∞. The supply curve is therefore backward bending for
p ≥ 2c/qK as a consequence of the biological overfishing that occurs when effort ex-
ceeds the level of EMSY that maximizes the sustainable yield. In essence, it demon-
strates the dangers of biological overfishing when price is increased or costs are re-
duced.
The policy implications are depressing, but obvious. Intervention, for example,
to improve product price or reduce average costs will have benefit only in the situa-
tion where biological overfishing is not occurring. Beyond that level, increasing in-
put will produce less at a higher input cost. The inexorable nature of the open-access
competition will also lead to rent dissipation and no improvement in the average
well-being of the participants in the fishery (Anderson 1977; Clark 1990).

Supply from Aquaculture

The aggregate production of aquaculture should be a function of cultured area and
labor force involved. Here, a modified Cobb-Douglas type of function (Frankel
1962; Beattie and Taylor 1985) is used because the Cobb-Douglas function in its
pure form has a number of disadvantages (e.g. see Abramovitz 1956),

S c = α′HL β″A γ″

where Sc is total output, α′, β″, γ″ are constants, L and A are quantities of laborers
and culture area. The symbol H is a parameter representing the level of development
of the economy in which the enterprise operates. This development modifier ac-
counts for the fact that enterprises in relatively developed or advanced economies
are able to produce more with given inputs of area and laborers than enterprises in
relatively undeveloped economies.
It is convenient to define the development modifier, H, as levels of culture area
per worker. A higher ratio of area to laborer means a more developed technology
and more product could be produced with given values of area and laborer. Let
 Bioeconomic Interactions Between Capture Fishery and Aquaculture 109

H = (A/L) σ″

where the exponent σ″ is a parameter and gives the expression a more general form
(Frankel 1962). The aggregate production function can now be written as

S c = α′(A/L) σ″L β″A γ″ = α′A γ″+σ″L β″–σ″

To simplify subsequent analysis, it is supposed that σ″ = β″, γ′ = γ″ + σ″, and

the production function can be written as

S c = α′A γ′ (7)

where γ′ < 1 (i.e. this gives decreasing returns to scale increasing area). This means
that marginal production of A will decrease as A becomes larger because of the limi-
tation of other resources like labor and equipment.
The rent from aquaculture is

R c = pS c – c cA

where R c : rent from aquaculture

p: price of fish
A: cultured area
c c: opportunity cost per unit of cultured area,

and the rate of change of cultured area is proportional to current rent

dA
= ηc Rc (8)
dt

where ηc is a stiffness parameter for aquaculture. In equilibrium dA/dt = 0, substitut-

ing equation (7) gives
γ′
S c = c cA/p = α′(α′p/c c ) 1– γ ′ (9)

The equilibrium supply function for aquaculture is a positive function of price. Any
intervention to improve product price or to reduce average costs will have benefit or
improvement in the average well being of the participants in aquaculture. It is op-
posing the backward bending supply curve for the capture fishery (figure 1).
Under the assumption that cultured and wild fish are identical, the supply is the
total of both fisheries (S = Sc + Sf). The entry of aquaculture will form a different
curve for total supply (figure 1). The market equilibrium means D = S and is
achieved at point e in figure 2. In the case that there is no aquaculture at all, the
whole burden of market demand will lie on the capture fishery. The market equilib-
rium is reached on point e′ when D = Sf (figure 2). Comparing these two equilibrium
points, it can be seen clearly that, if technology is available and costs make aquacul-
ture profitable, the presence of aquaculture will lead to a reduced price (p < p′), in-
creased total supply (Q > Q′), reduced fishing effort (E < E′) and therefore an in-
creased stock size.
110 Ye and Beddington

Effect of Reduction of Culture Cost on Price

The market equilibrium is D = Sc + S f. Substituting equations (2), (6), and (7) into
the equilibrium equation gives

α′ γ′ P γ′
1 1

cc = 1– γ ′ . (10)
 rc  c  γ′

α1 P β1 +1 – 1 – 
 q  pqK  

This equation represents the relation between the market price and production costs
of the capture fishery and aquaculture. Any changes of costs will lead to altered
share of supply between the capture fishery and aquaculture, and then changed mar-
ket price. Any price change caused by other exogenous sources will change the
share as well at equilibrium.
Here, it is assumed that the cost of natural fishing remains unchanged, but the
culture cost can be changed. Suppose parameters for the natural fish stock are
r = 0.5, K = 100 metric tons, q = 0.01/boat-day, and for aquaculture and market de-
mand α1 = 4,200, α′ = 5, β1 = –0.7, γ′ = 0.8, and c = $250/boat-day in equation (10). The
results are shown in figure 3. The reduction of culture cost will lead to increased
supply and reduced price and fishing effort. Any decrease in culture costs will make
aquaculture more profitable and then boost its investment. Finally, increased supply
from aquaculture depresses the price and makes fishing effort shrink. Catch from the

Quantity e′ is the market equilibrium when only the capture fishery exists, with quan-
tity Q′, price p′ and fishing effort E′. After the entry of aquaculture, the market equi-
librium is then at e, with quantity Q(> Q′), price p (< p′) and fishing effort E (< E′).

Figure 2. Comparison of Market Equilibriums

 Bioeconomic Interactions Between Capture Fishery and Aquaculture 111

capture fishery first goes up and then comes down after the peak. This is the ex-
pected path for an overfished stock when its fishing effort keeps decreasing.

Conditions for Investment in Aquaculture

Before aquaculture exists, the capture fishery is the only source of fish supply. If the
market demand is greater than supply and the production is unable to expand fur-
ther, price will play the main role in equalizing demand and supply. Obviously, this
will lead to higher prices and raise the attractiveness for aquaculture to enter the
market. Whether aquaculture can enter the market depends on its cost and the fish
price. If such a technology exists to culture some kind of fish and the activity can
make a larger profit than normal, aquaculture may enter whether the current market
demand is greater or less than supply. Of course, in the latter case market price will
come down, which aquaculturists have to take into account when they plan to enter.
Therefore, price and cost determine the fate of aquaculture. Only when the revenue
is larger than opportunity cost, aquaculture enters the market [equation (8)]. After
entering, the survival of aquaculture from the competition with the capture fishery
depends on whether it can make a profit.
How much investment for aquaculture is needed to supply the market with
enough fish after aquaculture enters? In a coexistent system of aquaculture and cap-
ture fisheries, the demand for aquaculture supply is

 c 
 1– 
q pqK 

Substituting Sc = ccA/p into the equation above, the culture area needed for aquacul-
ture to cover the rest of demand is

Figure 3. Changes of Fishing Effort, Price, and Supplies from the Capture
Fishery (Sf) and Aquaculture (Sc) When Aquaculture Cost Decreases
112 Ye and Beddington

rc  c 
αpβ +1 I γ pyσ – 1 – 
q  pqK 
A= .
cc

This equation gives information about the input needed into aquaculture to satisfy
the market in a coexistent system of capture fisheries and aquaculture.
From the equation above it can be seen that investment required in aquaculture
depends on fish price, personal income, aquaculture costs, and productivity of cap-
ture fisheries. Personal income has a positive effect on the requirement for aquacul-
ture. Increase in fish price or substitute price also increases the demand for aquacul-
ture investment because price elasticity β is negative and normally less than one.
The increased price will reduce the supply of the open-access capture fishery which
is already fully harvested or overfished. This sharpens the demand for aquaculture.
Any decreases in culture costs will increase investment in aquaculture. Therefore, it
may be concluded that any increase in market demand for fish will press for further
investment in aquaculture when the capture fishery is overfished.

Cultured Fish has Substitute Market Value

The cultured fish actually does not have completely the same quality as wild fish,
but is a close substitute. Even if they are the same species, people often prefer wild
fish to cultured fish (Herrmann 1993). Some closely related species can also be
treated as substitutes. As a substitute, they have different prices and demands, but
demand for them can switch between them depending on market prices. What effect
does aquaculture have on the capture fishery in such a case?

Market Demand
Demand functions of the same kind as equation (1) are adopted here. Given other
factors like personal income remain fixed, the demand functions could be as follows

D 1 = α1 p1β p2σ
1 1
(11)
β2 σ2
D2 = α 2 p p 2 1

where D 1: demand for wild fish

D 2: demand for cultured fish
p 1 : price of wild fish
p 2 : price of cultured fish
α 1 , β 1, σ 1, α 2, β 2 , σ 2: constants.

Price elasticities β1 and β2 should be negative, but the cross-elasticities σ1 and

σ2 should be positive in the case of substitution (Hirshleifer 1984). Demands for
wild and cultured fish are closely related to each other in equation (11). Any price
changes from either will lead to different demands for both fisheries and a changed
price for another. For example, if p1 goes up, D1 will come down and D2 will rise.
Increased D 2 will generate upward pressure on p 2 . These changes are realized
through market mechanisms.
 Bioeconomic Interactions Between Capture Fishery and Aquaculture 113

Supply
Equilibrium supply functions can be derived similarly by setting dE/dt = 0 and dA/dt
= 0 in equations (5) and (8) separately

rc  c 
S1 = 1 –  (12)
p1q  p1qK 
γ′

 p2  1– γ ′
S 2 = α ′ α ′ 
 cc 

where S1: supply from the capture fishery

S2: supply from aquaculture.

Interaction Between Capture Fishery and Aquaculture

When the market equilibrium is reached, supply from each fishery should equal demand

rc  c 
α1 p1β p2σ =
1 1
1 –  (13)
p1q  p1qK 
γ′

β2 σ2  p2  1– γ ′
α2 p p = α ′ α ′ 
 cc 
2 1

From equation (13), it can be seen that prices p1 and p2 are related to each other. Any
changes of one will alter the other. This shows the complexity of determining price
levels. The other factors influencing prices are the costs. Any changes of costs in the
capture fishery or aquaculture will lead to changes in supplies from both fisheries
and then prices p1 and p2.
Here, given that fishing cost is fixed, the effect of changes of culture cost on
prices is investigated. Equation (13) is not so simple that the effect of reduction of
culture costs can be directly derived. Fortunately, in this case the first equation can
be written as p2 = f(p1) and the second equation as p2 = f(p1, cc). Equalizing them
makes the solution of equations reduced to finding a root for a single equation.
Therefore, equilibrium prices under various levels of culture costs can be found. The
results shown in figure 4 are obtained under the following parameter values:
α1 = 50, β1 = –0.7, α1 = 0.45, α2 = 5, β2 = –0.5, α2 = 0.5, α′ = 5, γ′ = 0.8, r = 0.5,
K = 100 metric tons, q = 0.01/boat-day and c = $250/boat-day. The parameters for
the capture fishery are the same as in figure 3. In this case, the values of σ1 and σ2
determine the extent of the effects the cultured fish has on the price of wild fish.
It is noted that reducing the cost of culture has a negative effect on both prices.
The reduced culture cost will make aquaculture more profitable and attract more in-
vestment. The supply from aquaculture then increases, and both fish prices are de-
pressed. However, the effect on the price of cultured fish is larger than wild fish.
The influence of cost reduction in aquaculture on the price of wild fish is less than
in the case of the same prices (figure 4). For the case of same market values, a de-
crease of culture cost from $1,200/ha to $600/ha can make price go down from
$420/ton to $170/ton, but in the case of substitute values, the same reduction of cul-
114 Ye and Beddington

ture cost can only lower the price of wild fish from $345/ton to $285/ton. The re-
duced culture cost will increase production of both fisheries [equation (12)] because
even for aquaculture, the price/cost ratio, p2 /cc, is increased. Consumers are better
off with the increased supplies and reduced prices.
This conclusion implies that for some species, even if they could not be cul-
tured, farming of a substitute species can help to relieve pressure on the capture
fishery and prevent overfishing or allow recovery of an overfished stock by depress-
ing the price of wild fish.
Cost and price are two key factors in determining the states of exploitation of
wild fish and aquaculture. Changing either of them will lead to changed supplies.
The market allows the price to alter so that demand and supply are equal. Relatively,
demand is more complicated and determined by many factors such as personal in-
come, price, substitute price, taste, and tradition. It seems difficult to find some effi-
cient way to influence demand. However, if the price is given by the market, then
costs will determine the level of supplies. If some method could be used to change
the cost, its supply will be altered as well.
Many economists have argued that the introduction of taxes in proportion to
fishing effort/or catch can achieve many management goals more economically than
other approaches (McConnell and Norton 1978). For example, license fees and taxes
on fishing effort or catch require that fishermen have to pay some extra money be-
sides the normal fishing costs, and then make fishing less profitable for the fisher-
men. Some vessels or companies will quit from the fishery as a result of competition
with others. Therefore, the total effort is reduced.
These measures to control fishing effort have many problems in practice
(Beddington and Rettig 1983). The great disadvantage, from the point of view of
market demand and supply, is that they do not target the market demand. The de-
mand will be depressed by a high price because of the limitation of supply. Even if
fishing effort is controlled to the level corresponding to its MSY by means of license

Figure 4. Effect of Culture Cost Decrease on Fish Prices in the Case of Substitution
 Bioeconomic Interactions Between Capture Fishery and Aquaculture 115

or tax, the high market demand, which is dependent on factors outside fishery like
personal income, will raise the price. Consumers will suffer from buying less at a
high price. High price means high profit for fishermen. This will certainly increase
the difficulty of implementing regulatory measures.
The conclusion that aquaculture can have a positive effect on lowering the price
of wild fish by reducing its cost whether the cultured fish is the same as wild fish or
only a close substitute, represents another way to reduce fishing pressure. Its obvi-
ous advantage is that the equilibrium of market demand and supply will have a high
level in quantity and low value in price. This means a big social benefit for consum-
ers. Due to the difficulty in controlling fishing effort and high demand for fish, the
alternative is that the government could invest in aquaculture directly, promote tech-
nical innovation, develop new techniques or give subsidies/or loans to fish farmers.

Simulations
To examine the interaction dynamics between the capture fishery and aquaculture,
simulation models were developed based on the equations described above. It is as-
sumed that at the outset, the wild fish stock is slightly overfished in the sense of
maximum surplus production and the quantity demanded is still higher than that
supplied under the current price. To simplify comparison, three illustrative simula-
tions were carried out. First, there is no aquaculture, second, cultured fish has the
same market value as wild fish, and third, cultured fish has a substitute market value
for the wild fish.
In the first case, the dynamics of the system are determined by equations (2),
(3), and (5) with the parameters and initial values for state variables set arbitrarily
(table 1). Response of demand or production to price varies with specific commodi-
ties and features of production and society (Ye 1994). For simplicity, it was assumed

Table 1
Parameters and Initial Values of the State Variables Used in Simulations

Parameters/Initial Values Simulation 1 Simulation 2 Simulation 3

r 0.5 0.5 0.5

K 100 100 100
q (Boat-day –1) 0.01 0.01 0.01
α′ 5 5
α1 1,500 2,200 80
α2 45
β1 –0.75 –0.75 –0.75
β2 –0.6
δ1 0.3
δ2 0.2
γ′ 0.8 0.8
η f (10–3) 0.5 0.5 0.5
η c (10–3) 0.25 0.25
c($/Boat-day) 220 220 220
c c($/ha) 1,000 1,000
P1($/Ton) 600 600 600
P2($/Ton) 500
X0(Ton) 45 45 45
E0(Boat-day) 27 27 27
A0(ha) 1 1
116 Ye and Beddington

in all simulations that there is no time lag between price and demand, but producers
plan production according to the previous year’s market price. Excess supply is car-
ried forward as next year’s production.
The dynamic results are shown in figures 5a and 5b. As time goes on, fishing
effort is expanding and the fish stock is depleted further due to the high market de-
mand. As a result, fish price increases further in general. Both quantities demanded
and supplied are going down. This means that the supply will change along the
backward bending supply curve and the demand will follow the demand curve.
Some fluctuation occurs because the producer adjusts production on the basis of the
previous year’s price. An equilibrium in the system is finally reached with zero
profit from fishing and quantity demanded equal to quantity supplied (corresponding
to e′ in figure 2). Therefore, for open-access fisheries, high demand will deplete
stock further and result in a higher price and lower supply. The system equilibrium
is determined by fishing costs (c) and consumer’s response to price (β).
In the second case, the dynamics of the system are simulated by equations (2),
(3), (5), (7), and (8). At the outset, the demand for wild fish, same as the first case,
is greater than the capture fishery can provide, but the technique for culturing this
species of fish exists and allows aquaculture to survive in the economic competition
with the capture fishery. The only difference from the first case is that aquaculture
coexists with capture fisheries. The parameters and initial values of the state vari-
ables are arbitrarily set (table 1), keeping those used in the first simulation the same
for easy comparison.
Figures 6a, 6b, and 6c depict these simulation results. The high demand for wild
fish at the beginning makes aquaculture expand, so the supply from aquaculture in-
creases with time. The increased supply depresses the price in general, leading to a
decrease in fishing effort of the capture fishery. The fish stock recovers, and the
supply from the capture fishery declines. With the same situation of the capture fish-
ery, the addition of aquaculture supply to market lowers market price, increases total

Figure 5a. Dynamics of Fish Stock and Fishing Effort for a Single Capture Fishery
 Bioeconomic Interactions Between Capture Fishery and Aquaculture 117

Figure 5b. Dynamics of Demand, Supply, and Price for a Single Capture Fishery

Figure 6a. Dynamics of Fish Stock and Effort for the Capture Fishery Coexisting with
Aquaculture in the Case Where Wild and Cultured Fish have the Same Market Value
118 Ye and Beddington

Figure 6b. Dynamics of Demand (D) and Supplies from the Capture Fishery (Sf)
and Aquaculture (Sc) in the Case Where the Capture Fishery Coexists with
Aquaculture and Wild and Cultured Fish have the Same Market Value

Figure 6c. Dynamics of Culture Area and Fish Price in the Case
Where the Capture Fishery Coexists with Aquaculture, and
Wild and Cultured Fish have the Same Market Value
 Bioeconomic Interactions Between Capture Fishery and Aquaculture 119

supply, reduces fishing effort and raises natural fish stocks. However, the final equi-
librium depends on costs of fishing and aquaculture as well as the consumer’s re-
sponse to prices.
The third case simulates the dynamics of the market system where cultured fish
are not the same as wild fish, but have a substitute market value. The simulation
model was based on equations (11), (3), (5), (7), and (8). The parameters and initial
values for variables are also shown in table 1. Those parameters and initial values,
which previous simulations have, have been kept the same. The results are shown in
figures 7a, 7b, and 7c.
It can be seen that this case is more unstable because the cultured fish has only
a substitute market value. There is no direct interaction between the capture fishery
and aquaculture. An indirect interaction between them comes through the market.
The development of aquaculture improves the supply and keeps prices down. This
interaction drives more consumers to the cultured fish and the demand for wild fish
to a lower level (figure 7b). As a result, the aquaculture of a substitute relaxes the
demand for natural fish and natural stock would not decline further. At equilibrium,
the values of natural stock, fishing effort and wild fish price are between the first
and second cases. Therefore, addition of a cultured substitute fish to market has
some positive effect on preventing the natural stock from being further overfished,
but the extent of such influence is lower than the situation where the cultured fish
have the same market values as wild fish (figures 6a, 6b, and 6c).
These simulations give similar conclusions, but show more clearly the dynamics
of the interaction between the capture fishery and aquaculture. Particularly, in the
case of substitution, analytical results cannot reveal the detailed effect of aquacul-
ture on the system equilibrium and how the equilibrium is attained. The very general
conclusion could be found that for an overfished capture fishery, when the current
market demand is greater than its supply, price will increase and the wild stock will
be further depleted. If the technique and cost of farming this species of fish permits

Figure 7a. Dynamics of Fish Stock, Effort, and Area for the Capture Fishery Coexisting
with Aquaculture in the Case Where Cultured Fish is Only a Substitute for Wild Fish
120 Ye and Beddington

Figure 7b. Dynamics of Demands for Wild Fish (Df) and Cultured Fish (Dc),
and Supplies from the Capture Fishery (Sf) and Aquaculture (Sc)
in the Case Where the Capture Fishery Coexists with Aquaculture,
and Cultured Fish is only a Substitute for Wild Fish

Figure 7c. Price Dynamics of Wild Fish (P1) and Cultured Fish (P2)
in the Case Where the Capture Fishery Coexists with Aquaculture
and Cultured Fish is Only a Substitute for Wild Fish
 Bioeconomic Interactions Between Capture Fishery and Aquaculture 121

aquaculture to enter the market, aquaculture will attract consumers to cultured fish
and bring down the price, which reduces fishing effort and allows the stock to re-
cover. Even if the technique or cost of culturing the same species of fish makes
aquaculture unable to survive in competition with the capture fishery, the culture of
a close substitute can also have some similar positive effect on reducing the price of
wild fish and then, relieve the pressure on capture fisheries. However, the degree of
such an influence may be weak.
The simulations above show how the capture fishery, for which the demand is
greater than could be produced, became worse and worse; and how aquaculture
could affect such a capture fishery in the case where cultured fish is the same as
wild fish or a substitute. The response of one variable to another is supposed to hap-
pen immediately like demand to price or with a year delay like production to price.
The real-world may suggest different time lags.
A sensitivity analysis was carried out to investigate the effect caused by the
model assumptions. Different response times of demand to price or production to
price will affect the stability to equilibrium. In table 1, r, K, q, α′, α1, α2, β1, β2, σ1,
σ 2 and γ′ are parameters determining demand and production functions for the cap-
ture fishery and aquaculture, and X0, E0, A0, p1, and p 2 are initial state variables.
Changing values of them produced different absolute values of the results, but the
effect of aquaculture on capture fisheries remained the same. Lower values for c and
c c made production more profitable and produced different equilibrium levels of
fishing effort and culture area. Variables η f and ηc could change the response speed
of investment to market price and the degrees of fluctuation appeared in figures 5, 6,
and 7. However, the essence of the interaction between the capture fishery and
aquaculture remained the same.
The most interesting result is that different σ1 and σ2, which explain the close-
ness of substitution between cultured and wild fish, showed different degrees of the
effect that aquaculture has on the capture fishery. Lower values of the cross-elastici-
ties makes Simulation 3 similar to Simulation 1. Fluctuation will also be reduced to
a lower level. Aquaculture and the capture fishery respond to the market as they are
isolated from each other. However, large cross-elasticities together with high ηf and
η c may make simulations not stabilize. Generally, it appears from these examples
that dynamic behavior is more complex than steady-state analysis, particularly in the
case of substitution.

Conclusions
The models analyzed in this study represent an attempt to develop a method for ana-
lyzing the interaction between the capture fishery and aquaculture. This
bioeconomic approach involves (1) the determination of the market demand function
for fish and (2) the derivation of the production functions for aquaculture and cap-
ture fisheries. Two different situations were discussed. One supposes the cultured
and wild fish are identical and the other treats the cultured fish as a substitute for
wild fish.
Several conclusions were reached. In the case that the cultured fish has the same
market value as wild fish, the stable equilibrium after the entry of aquaculture will
have a lower market price, increased total supply, reduced fishing effort, and in-
creased wild fish stock levels. Aquaculture and the capture fishery have the same
market and they are directly related to each other. If the culture cost is reduced in
some way, high profitability will attract more investment in aquaculture and then in-
crease supply, generating downward pressure on fish price. Lower prices will force
fishing effort to shrink. The reduction of effort will relieve the pressure on capture
122 Ye and Beddington

fisheries and the stock abundance will increase. This represents another way to con-
trol fishing effort with the advantage that the market equilibrium has a higher supply
and lower price, compared with other management measures.
If the cultured fish has only a substitute market value for wild fish, they have
separate prices and demands, but their demands can switch to each other depending
on prices. Such a relation of substitution brings about indirect interactions between
the capture fishery and aquaculture through the market. The farming of a substitute
species will have similar effects on the capture fishery, but to a less extent than in
the case where cultured and wild fish have the same market value. In a substitu-
tional system, any changes in costs will alter supplies and prices of both species.
Any changes in the prices of either product from exogenous sources will change
their supplies and their share proportions in the market as well. If the cost of natural
fishing remains constant, the reduction of culture cost will increase the profitability
of aquaculture, boost investment and then lead to lower consumer prices for both
species. Finally, fishing effort decreases. The extent of these changes are lower than
in the case of the same market value. This result implies that even if some species
cannot be cultured, the culture of a close substitute can have similar positive effects
on relieving the pressure on the capture fishery. The obvious advantage is that the
market is supplied with more fish at lower prices. Although this decreases the fish-
ing rent, it is a great social benefit.
Traditional measures of fisheries management only consider overfishing as a
problem in fisheries production. They try to preserve wild stocks, but do not target
the balance of market demand and supply. Actually, demand is a major driving force
of overfishing before the problem of property rights solved. With the limited pro-
duction of natural species, high demand means high price and profit for fishing.
Over-development of an open-access fishery is straightforward. In such situations, a
great effort is required to get the fishing effort reduced by force. Inefficiency is an
inevitable result. The only active strategy to sort out the problem of overfishing is to
increase supply and then depress the market price. When the market is supplied with
more substitutes, the market demand and price for a specific species will decrease,
and then the economic environment for capture fishery management improves.

References
Anon. 1995. Yearbook of Fisheries Statistics of China. Chinese Ministry of Agriculture.
Abramovitz, M. 1956. Resource and Output Trends in the United States Since 1870. National
Bureau of Economic Resource Occas. Paper 52. New York.
Anderson, J.L. 1985a. Market Interactions Between Aquaculture and the Common Property
Commercial Fishery. Marine Resource Economics (2):1–24.
_ . 1985b. Private Aquaculture and Commercial Fisheries: Bioeconomics of Salmon Ranch-
ing. Journal of Environmental Economics and Management 12(4):353–70.
Anderson, J.L., and J.E. Wilen. 1986. Implications of Private Salmon Aquaculture on Prices,
Production, and Management of Salmon Resources. American Journal of Agricultural
Economics 68(4):866–79.
Anderson, L.G. 1977. The Economics of Fisheries Management. Baltimore: Johns Hopkins
University Press.
Beattie, B.R., and C.R. Taylor. 1985. The Economics of Production. New York: John Wiley
and Sons, Inc.
Beddington, J.R., and R.B. Rettig. 1983. Approaches to the Regulation of Fishing Effort.
FAO Fish. Tech. Pap. 243.
Bell, F.W. 1968. The Pope and the Price of Fish. American Economic Review 58(15):1346–50.
 Bioeconomic Interactions Between Capture Fishery and Aquaculture 123

Bird, P.J.W.N. 1986. Econometric Estimation of World Salmon Demand. Marine Resource
Economics 3(2):169–82.
Clark, C.W. 1990. Mathematical Bioeconomics, 2nd ed. New York: John Wiley and Sons, pp.
386.
FAO. 1995. Aquaculture Production Statistics. FAO Fisheries Circular No. 815, Revison 7,
pp. 186.
Frankel, M. 1962. The Production Function in Allocation and Growth: A Synthesis. American
Economic Review 52(5):995–1022.
Hilborn, R., and C.J. Walters. 1992. Quantitative Fisheries Stock Assessment. New York:
Chapman and Hall, pp. 570.
Kong, Q., and K. Hong, eds. The Great Yellow Croaker in Fisheries Bureau of the Ministry
of Agriculture of China: Investigation and Division of Fishery Resources of the East
China Sea. Teachers Univ. East China Press, pp. 318–38.
McConnell, K.E., and V.J. Norton. 1978. An Evaluation of Limited Entry and Alternative
Fishery Management Schemes. In R.B. Rettig and J.J.C. Ginter, eds., Limited Entry as a
Fishery Management Tool. Seattle: University of Washington Press, Washington Sea
Grant Publication, pp. 188–200.
Qian, Z. 1994. The Development of the Chinese Fisheries and Manpower in Aquaculture. Ag-
ricultural Press China’s, Beijing, pp. 212.
Schaefer, M.B. 1957. A Study of the Dynamics of the Fishery for Yellowfin Tuna in the East-
ern Tropical Pacific Ocean. Inter-Am. Trop. Tuna Comm. 2(6):245–55.
Smith, V.L. 1969. On Models of Commercial Fishing. Journal of Political Economy
77(2):181–98.
Ye, Y. 1994. Bioeconomic Analysis of the Harvesting of Fishery Resources. Ph.D. thesis. Im-
perial College, University of London, UK, pp. 296.