FULLENBAUM and BELL: AMERICAN LOBSTER FISHERY 



positions shown in Table 1 to result over a 

 period of years from the 1969 initial e(iuilibrium. 

 We may incorporate all of the four changes 

 given separately in (a) - (d) to ascertain their 

 net impact. The strength of the simulation 

 model is that we can study the separate and 

 combined influences on the fishery of important 

 variables. Because we have both positive and 

 negative influences on fishing effort, it is likely 

 to be such that complete extinction of a particu- 

 lar species would be somewhat difficult.-'" 



ECONOMIC IMPACT OF SELECTED 

 MANAGEMENT ALTERNATIVES 



Up to this point, we have been concerned 

 largely with building a bioeconomic model that 

 considers all important variables. The model is 

 based upon the fact that open access to the 

 American lobster fishery is permitted. However, 

 all States restrict gear to pots and traps. Each 

 State (Maine, Massachusetts, New Hampshire, 

 and Rhode Island) has a minimum length re- 

 quirement; permitted minimum lengths vary 

 from S'/h to S-'/ie inches. We are taking the 

 array of existing regulations as given. We shall 

 consider the economic impact of five alternative 

 policies that could be adopted to manage or to 

 limit entry to the entire American lobster fish- 

 ery. These management strategies assume that 

 some central authority such as a regional com- 

 mission could impose these regulations. •'! The 

 specific objectives of these management strate- 

 gies will be discussed below. All strategies 

 have two objectives in common which are (1) 

 to protect the resource from overex])loitation and 

 (2) to allow maximum freedom for operators to 

 function in a free enterprise fashion. Further, 

 the following strategies are meant to be illustra- 

 tive and do not exhaust all possible alternatives. 

 Also, two other management strategies sug- 

 gested by Reeves (1969) and Sinclair (1960) will 



30 This is subject to two qualifications. First, since we 

 are plotting only equilibrium relationships, extinction is 

 a possible dynamic outcome (as was mentioned previously). 

 Second, we have implicitly assumed that in the case of 

 American lobster, the rate of technological advance is 

 minimal. This is a fairly realistic assumption for the in- 

 shore trap fishery. However, in general. / = r(i), with 

 ^'>0. 



31 With the steady-state assumption, the management 

 policies would in fact maximize the present value of the 

 stream of net benefits over time. 



be reviewed. As other management strategies 

 are suggested both inside and outside govern- 

 ment, the model formulated above may be used 

 to predict their impact. 



Some Possible Alternative Management 

 Strategies for Inshore American Lobsters 



1. Freeze on existing (1969) fishing effort by 

 placing a lice)ise fee on traps: Under this 

 scheme, the regulatory authority would calcu- 

 late a license fee on traps which would keep 

 the level of fishing effort constant despite an 

 increase in the demand for lob.sters.-'- A license 

 fee could not be levied on the individual vessel 

 because this would not control the number of 

 traps fished per vessel. The increased cost of 

 operations due to the license fee would make it 

 uneconomical for vessels to enter the fishery 

 even though ex-vessel prices have increased. 

 In essence, the license fee would siphon off 

 increased revenue (or profits) from an increase 

 in ex-vessel prices assuming the latter increases 

 faster than cost of operations. For purposes of 

 illustration, let us assume that we desire to 

 manage the inshore American lobster fishery 

 commencing in 1974. Given the estimated trend 

 in important variables in the fishery (i.e., n, 

 I, Qq, Y, N, CPI) to the year 1974, it would be 

 necessary to place an estimated annual license 



32 The model can derive the "correct tax" (or license 

 fee) in a number of ways. Suppose, the regulatory author- 

 ity wishes to freeze effort at some specified level K^. We 

 can derive the equilibrium yield consistent with K'\ 

 call it (A^.v)", from the yield-effort relationship. The total 

 tax and the tax per vessel are then respectively given by: 



7'^. -(a-/i(/..Y)0)(A-.v)0-AOf 



K 



In similar fashion, if the regulatory authority wishes to 

 freeze effort at a level consistent with maximum sustain- 

 able yield, we can obtain the tax that will insure this 

 level of exploitation. 



The only other taxing scheme that requires further ex- 

 planation is a tax that will insure marginal cost pricing. 

 Long-run industry marginal cost can be defined as: 



ff/ J^\ where 



dK.\ 



is the first derivative of (16). Total 



industry cost can then be redefined as, 



ydKx/bK/ 



This expression can be substituted into the total revenue 

 function and solution for K, Kx can be found by iteration. 

 The tax consistent with these solutions can then be derived 

 by using the formulas given above, i.e., Tx, TxIK. 



21 



