FULLENBAUM and BELL; AMERICAN LOBSTER FISHERY 



knidiiigs equal to ex-ves.sel price by placitig a 

 license fee on traps: The idea hei'e is to obtain 

 the greatest "net economic benefit" and has 

 been suggested by such economists as Crutch- 

 field and Pontecorvo (1969).''^ If a regulatory 

 authority were to try this for 1974, it would have 

 a drastic impact on the fishery as the number of 

 full-time equivalent vessels and traps would be 

 reduced by approximately 47%. To accomplish 

 this objective an estimated 1974 license fee 

 of $22.43 (in 1972 dollars) per trap would be 

 needed. This would yield the regulatory author- 

 ity appro.ximately $13.3 million in revenue. 

 From an economic point of view, it is argued 

 that this management strategy will result in the 

 most efficient operation of the fishery if fisher- 

 men and vessels can easily move to other fish- 

 eries or industries. However, this strategy may 

 be particularly unwise in rural areas such as 

 Maine where labor mobility is low. A drastic 

 cutback in the number of fishermen may create 

 social problems where the cost would greatly 

 exceed any benefits derived from this manage- 

 ment strategy. Therefore this management 

 strategy is difficult, if not impossible, to justify 

 on economic grounds for many rural areas where 

 the fishing industry is located and also has the 

 same disadvantages of a general license fee 

 plan on traps as discussed above. 



4. Issue "stock certificates" to each vessel 

 ou'iier based upon average catcJt over last 5 ijr 

 while freezing the existi)ig level of fishing effort: 

 Under this scheme, the historic rights of each 

 fishing firm would be recognized. In a similar 

 manner to a private land grant procedure, the 

 regulatory authority would simply grant each 

 fisherman a "private" share of an existing 

 resource or catch. The stock certificate would 

 be evidence of private ownership. Individual 

 fishermen would be free to catch up to their 

 allotted share through the use of pots or other 

 biologically permissible technology or, if they 

 desired, trade their stock certificates to others 

 for cash. Suppose the regulatory authority were 

 to freeze the level of fishing effort at the 1969 

 level and distribute the estimated catch via a 

 stock certificate to the existing fishermen. It 

 should be pointed out that the regulatory author- 



s'* When price is constant, maximization of net economic 

 benefit becomes identical to the goal of maximization of 

 rent to the fishery. This, however, is not the case when 

 the normally downward sloping demand curve is specified. 



ity fixes effort when it selects a given catch. The 

 selected catch could be either MSY or any other 

 level of catch deemed by the regulatory author- 

 ity not injurious to the viability of the .stock. The 

 expansion in demand for lobsters by 1974 would 

 generate excess profits for those individual fish- 

 ermen who were initially endowed with the 

 property right. By 1974, it is estimated that a 

 full-time lobsterman would be earning $10,278 

 (in 1972 dollars) a year of which $1,878 would 

 be excess profits (i.e., above opportunity cost). 

 If iirofits become excessive a license fee would 

 be levied on the fishermen holding stock certif- 

 icates to insure against increased abnormal 

 returns and provide the regulatory authority 

 with funding to conduct scientific investigations 

 and enforcement. It should be noted that this 

 plan is identical to the license fee scheme which 

 freezes effort at its 1969 level. However, in the 

 latter case, excess profits are taken by the 

 regulatory authority while for this strategy, 

 fishermen are allowed to hold onto the profits 

 generated in the fishery. Since many fisheries 

 are located in rural areas where earnings are 

 traditionally low, this strategy might be justified 

 on the basis that it will raise income levels and 

 thereby help improve living standards to com- 

 parable levels to those received in urban areas. 

 This management strategy would, of course, be 

 popular with those already in the fishery. How- 

 ever, new entrants would have to buy .stock 

 certificates from those initially in the fishery. 

 This would bring up certain questions of equity 

 and legal precedent which are beyond the scope 

 of this article. 



5. No manage Die nt strategy: When consider- 

 ing the economic consequences of alternative 

 management strategies (1-4), it is aJways wise 

 to assess the results of doing nothing. This gives 

 policymakers a better ])erspective in evaluating 

 the benefits from taking action. The consequence 

 of doing nothing would be overcapitalization 

 by 1974 with an expansion in the number of full- 

 time equivalent fishermen and traps fished. 

 Approximately 96,000 excess traps (i.e., above 

 that necessary to take MSY) would be in the 

 fishery, and the catch would fall to 28.1 million 

 pounds. 



The fishery would grow increasingly over- 

 capitalized, and the resource would be greatly 

 overexploited as demand increased for lobsters 

 during the 1970"s. On economic grounds, these 



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