INCOME ESTIMATES AND REASONABLE RETURNS IN 

 ALASKA'S SALMON FISHERIES 1 



James E. Owers 2 



ABSTRACT 



Earnings in some fisheries may fall to a level that is unacceptable from the viewpoint of public policy. 

 Using the Alaska salmon fisheries as an example, this paper examines a method for establishing the 

 number of operating units that will provide a reasonable economic return in a fishery. Estimates are 

 provided of the rates of return that can be expected with various numbers of operating units. Three 

 criteria are then developed to determine a reasonable rate of return. These criteria include: 1) a 

 comparison with wages in a similar industry in an equal time period, 2) a comparison with total annual 

 incomes from all sources with total incomes of workers in other occupations, and 3) an estimate 

 provided by fishermen themselves. These three different measures indicate an optimum number of 

 operating units within a fairly narrow range. In some fisheries it appears that substantial reductions in 

 the number of fishing units will not be sufficient to raise incomes to an "acceptable" level. This raises 

 questions about the allocation of valuable fishery resources among various user groups. 



During the last two decades economists have de- 

 veloped a general theory of a common property 

 fishery under conditions of open access. The sa- 

 lient implications of that theory are that: 1) there 

 is a danger that the resource will be fished beyond 

 maximum sustained yield, 2) the resource will not 

 be harvested with maximum economic efficiency, 

 and 3) there will be a misallocation of productive 

 factors between the fishing sector and other sec- 

 tors of the economy (Crutchfield and Pontecorvo 

 1969). Empirical research has shown that there 

 may be a fourth consequence of open access that is 

 not adequately dealt with in the theoretical litera- 

 ture. This is the fact that earnings of fishermen 

 under conditions of open access may fall below a 

 level that is acceptable from the viewpoint of pub- 

 lic policy (Sinclair 1960; Owers 1974; Huq 3 ; 

 Smith 4 ). The public interest arises from the fact 

 that poor earnings have been responsible for creat- 

 ing sanitation, health, safety, and other hazards; 

 that programs providing government assistance 

 for fishermen are becoming increasingly expen- 

 sive; and that in many cases commercial users can 



'The opinions and conclusions set forth in this paper are not 

 those of the Commercial Fisheries Entry Commission nor the 

 State of Alaska. 



2 Cornell Law School, Myron Taylor Hall, Ithaca, NY 14853. 



3 Huq, A. M. 1971. A study of the economic impact of changes in 

 the harvesting labor force in the Maine lobster fishery. U.S. Dep. 

 Commer., NOAA, Natl. Mar. Fish. Serv., contract 14-17-007- 

 1121, Wash., D.C., 34 p. 



"Smith, F. S. 1974. 1972 commercial fishermen survey. Dep. 

 Agric. Econ., Oreg. State Univ., Corvallis, 7 p. 



no longer afford to pay their share of management 

 costs. The cause of the problem appears to be the 

 very low opportunity costs of fishermen who have 

 only an avocational interest in fishing or else have 

 little mobility and limited access to alternative 

 employment. 



Data collected by interview and from landing 

 records indicate that 44% of the purse seiners, 15% 

 of the drift gill netters, and 60% of the set gill 

 netters in Alaska showed a net loss in 1973 (Smith 

 et al. 5 ). In the same year, the average net return to 

 the more than 6,400 gear operators who partici- 

 pated in those salmon fisheries which now have 

 limited entry was about $1,600 per gear operator. 



Recognition of the recurring problems created 

 by low earnings in many of the state's fisheries led 

 Alaska to pass the first comprehensive limited 

 entry law in the United States in 1973. The law 

 directs an independent commission to stabilize or 

 reduce the number of legal units of gear that can 

 be fished in those fisheries where economic or 

 biological conditions require it. Specifically the 

 law states the following must be considered in 

 establishing an economically sound number of 

 entry permits: "The number of entry permits 

 sufficient to maintain an economically healthy 

 fishery that will result in a reasonable average 



5 Smith, F. S., D. Liao, J. Martin, and P. Adelman. 1975. 

 Profitability analysis for Alaska fishing businesses. Dep. Agric. 

 Econ. Oreg. State Univ., Corvallis, 13 p. 



Manuscript accepted May 1976. 



FISHERY BULLETIN: VOL. 75, NO. 3, 1977. 



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