KIRKLEY AND SQUIRES: CAPITAL STOCK AND INVESTMENT IN A FISHERY 



tonnage vessels or those which are <5 gross 

 registered tons are excluded since data are 

 unavailable; thus, total capital stock and invest- 

 ment in New England fisheries are underesti- 

 mated. 



Despite these limitations, the results provide 

 information on investment and capital stock in 

 New England fisheries which has not been avail- 

 able. As is characteristic of open-access fisheries, 

 investment in New England fisheries appears to 

 have increased over time. This is quite evident 

 subsequent to the passage of the Magnuson Fish- 

 eries Conservation and Management Act of 1976. 

 While possibly true, the observation that invest- 

 ment increased when the act was passed should 

 not be construed to imply that the act was respon- 

 sible for increased investment. Positive expecta- 

 tions regarding fish stocks or economic conditions 

 could also be responsible for increases in capital 

 stock and investment. 



The largest increase in investment occurred in 



1979 which coincided with the greatest influx of 

 vessels. It also coincided with increased fish 

 stocks in 1978 and 1979 and high vessel profits of 

 the previous year. In 1979, 226 vessels entered 

 the New England fisheries; 92 vessels were newly 

 constructed. 



Disinvestment also occurred, but the reasons 

 are unknown. ^^ Disinvestment may be associated 

 with vessel sinkings, foreclosures on vessel mort- 

 gages, and exit from the region. Alternatively, if 

 vessel prices reflect the expected net discounted 

 present value of earnings from a fishery, the dis- 

 investment or even changes in investment may 

 be due to changes in economic expectations. Dis- 

 investment occurred between 1968 and 1970, 

 1974, 1976, and in 1981. 



Disinvestment between 1968 and 1970 may re- 

 flect expectations of declining future earnings. 

 Disinvestment in 1974 may reflect the effects of 

 high fuel prices. Disinvestment in 1976 and 1981 

 may be associated with fishermen's expectations 

 of declining fish stocks, the effects of manage- 

 ment, and high fuel prices. 



The reasons for investment are also unknown. 

 Increasing levels of investment between 1977 and 



1980 may be due to economic expectations associ- 

 ated with fisheries management, fish stocks, and 

 future earnings. 



The real capital stock increased approximately 

 6% per year between 1965 and 1981. The largest 



increase occurred in 1978 and 1979 when there 

 was a substantial increase in the number of new 

 steel-hulled vessels and entry of vessels from the 

 mid-Atlantic region. Capital stock declined in 

 1981 when some of the mid-Atlantic vessels left 

 New England and the stocks of fish, particularly 

 sea scallops, declined (Northeast Fisheries Cen- 

 ter 1985). 



The results also indicate why a vessel count 

 should not be used to indicate capital stock or 

 investment. The number of vessels increased be- 

 tween 1969 and 1970 and 1975 and 1976, but 

 investment decreased in 1970 and 1976 (Table 6). 

 Alternatively, the number of vessels increased in 

 each year relative to 1965, but the real capital 

 stock between 1969 and 1976 declined with re- 

 spect to 1965. 



Table 6. — Indices of capital stock based on constant dollar value 

 and vessel count. 



i2Hirshleifer (1970) provided additional information about 

 disinvestment. 



'Gear type assigned by plurality of days absent. 



The inadequacy of using vessel count is more 

 pronounced when comparing the indices based on 

 gear type. As shown in Table 6, the number of 

 trawl vessels in every year exceeded the number 

 of vessels in 1965 while capital stock was less 

 than that of 1965 for four years. The two scallop 

 dredge indices also indicate dissimilar changes 

 between vessel count and real capital stock. It 

 may, though, be possible than an index based on 

 vessel count and weighted by vessel size would 

 more closely compare to the real capital stock 

 index. The construction of these indices would re- 

 quire considerable additional analysis and deter- 

 mination of the weights necessary for aggrega- 

 tion. 



347 



