FISHERY BULLETIN: VOL. 75, NO.3 



Base Period for Determining 

 Total Exvessel Revenue 



In the salmon fisheries total revenue fluctuates 

 widely from year to year depending upon the size 

 of the salmon runs and the price paid fishermen. In 

 the analysis, the 5-yr period from 1969 to 1973 was 

 used as the base period for determining the total 

 revenue produced by the state's salmon fisheries. 

 This period was used because it appears to be the 

 most recent, reasonably representative period for 

 which good data exist. The total catch value was 

 adjusted for each year by the wholesale price index 

 using 1973 as a base year. 



It was assumed in estimating the total revenue 

 produced by each fishery that regulatory decisions 

 would seek to maintain an historical allocation 

 among gear types. If a reduction in the size of the 

 southeast drift gill net fleet were to occur, for 

 example, it is assumed that no attempt would be 

 made to reduce the percentage of the total catch 

 available to this fishery. It was also assumed that 

 gear reductions in one fishery would not be made 

 without considering the effect on catches by other 

 fisheries utilizing the same stock. For example, a 

 large reduction in the Cook Inlet drift gill net 

 fishery could lead to increased catches in the set 

 gill net fishery if it is not reduced in some reason- 

 able proportion. 



Fixed and Variable Costs 



Fishing costs include such standard items as 

 fuel, food, repairs, moorage, administrative costs, 

 and so forth. Average costs in each fishery were 

 collected by means of a survey in spring 1974 

 (Owers 1974). For vessels fishing in several 

 fisheries, costs were prorated among each fishery 

 based upon the length of time fished and percent of 

 total earnings received. Other items were specif- 

 ically allocated, such as gear repairs. 



Because there is presently so much excess 

 capacity in the harvesting segment of the Alaska 

 salmon fishery, it was assumed that the total cost 

 of harvesting the resource was a linear function of 

 the number of boats in the fishery. This logic is 

 used in Equations (2), (3), and (4). While this 

 might appear to be inconsistent with economic 

 theory because fish production would be increased 

 for each operating unit without increasing any 

 factor of production, in reality it is likely that costs 

 would decrease even faster than the number of 

 operating units leaving the fishery. This is be- 



cause overcrowding in the salmon fisheries in- 

 volves frequent delays in setting nets and tangled 

 gear, and forces operators to travel long distances 

 to make all openings. Should substantial reduc- 

 tions take place in a fishery, consideration of in- 

 creasing costs per boat would be necessary. 



Depreciation has been standardized for all ves- 

 sels to a 30-yr straight line writeoff with no sal- 

 vage value. Depreciation for set net sites is 

 standardized with a 10-yr writeoff since most 

 equipment includes small skiffs and outboard 

 motors with a shorter useful life span. 



Labor Costs 



Labor costs in the fisheries are determined by a 

 share system and fluctuate directly in proportion 

 to gross earnings. Crew shares are ordinarily 

 computed before bonus payments are made to the 

 boat operator. In the analysis, it was assumed that 

 the entire bonus was kept by the entry permit 

 holder, which is the logic used in Equation (2). 

 Labor costs, as used here, do not include a return to 

 the entry permit holder's own labor. 



Capital Costs 



The opportunity cost of capital is assumed to be 

 10% and is the constant value used in Equation 

 (3). The estimated market value of each operating 

 unit was used in determining capital investment 

 in the fishing business. Average market values of 

 vessels, equipment, and fishing gear were derived 

 for each fishery by survey. It was found in surveys 

 conducted by the British Columbia License Con- 

 trol Program that the true market value of vessels 

 averaged about 84% of the estimated value 

 supplied by fishermen (Campbell 6 ). In this 

 analysis it was assumed that the market value of 

 investment was 85% of the value estimated by 

 fishermen in the survey. This is the constant value 

 used in Equation (3) to deflate the estimated value 

 of investment. 



In addition to vessels and gear, the capital in- 

 vestment in the freely transferable entry permit 

 was included in estimating total capital costs. 

 Theoretically the permit value might be calcu- 

 lated by discounting future cash flows or some 



6 Campbell, B. A. 1973. A review of the development of the 

 buy-back program and its impact on the salmon fishery. Fish. 

 Serv., Vancouver, B.C., 54 p. 



486 



