The Role of Economics In Addressing Impacts of Climate Change 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

Preparing for Climate Change Impacts on the Northwest Atlantic Marine Ecosystem

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) Fishery Management Measures (e.g. mesh size, closed areas, effort limits, trip limits, quotas) Fishery Policy Making Institution • Legislative mandates and court imposed requirements • Incentives of policy makers • Stakeholder input • Information to predict outcomes

Information and incentives of fishermen

The Fishery System Biological, Human and Technological Components

Markets for inputs and outputs

Outcomes Biological, Economic, Social and Administrative

Direct and Indirect coupling of fisheries through economic, regulatory, environmental and ecological linkages

Groundfish

Environment

Human

Environment Markets, technology, regulations, etc.

Environment

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

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

Preparing for Climate Change Impacts on the Northwest Atlantic Marine Ecosystem

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 70,000,000 MA ME

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 Year

1990

1995

2000

2005

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 Year

1995

2000

2005

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