tion that does not deviate significantly from 

 the economic optimum.'^ 



Of greater significance is the political appeal 

 of the idea of achieving the maximum sus- 

 tainable physical yield. The economist cate- 

 gorically rejects the idea that it is "good" to 

 maximize the output of any commodity just 

 because it is physically possible. To the poli- 

 tician negotiating fisheries agreements both 

 nationally and internationally it is important 

 to be able to state that the agreement makes 

 possible the utilization of all the fish avail- 

 able for all time, none will be "wasted." The 

 simplistic political argument runs as follows: 

 the production of food, particularly protein 

 food, is good. The maximum sustainable 

 physical yield is the most food that can be 

 obtained. Any other definition of optimum 

 output such as the net economic yield would 

 either represent less food (a waste) or if it 

 was greater than the maximum physical yield 

 it would be a threat to the stock. 



The danger in this political exposition of 

 the problem is, of course, that it conceals the 

 underlying complexities of the biological pro- 

 cess as well as the interaction between those 

 processes and economic variables.'** 



THE NET ECONOMIC YIELD AND LONG 

 RUN PARTIAL EQUILIBRIUM MODELS 



Economic and Biological Models 



As a first approximation we may assert 

 that the utility of economic models in fisheries 

 management is symmetrical with the biolog- 

 ical counterparts upon which they rest.'** The 



'^ There is for the noneconomist a possible con- 

 fusion here. Both the output that will maximize the 

 net economic yield fi-om the resource and the output 

 that will maximize the physical yield in the long i-un 

 are points derived from the same biological yield 

 function. However, the maximization of the net eco- 

 nomic yield requires, given the common property status 

 of fish stocks, an economic control mechanism as well. 



18 "Wg have ignored any discussion of what has 

 been referred to as social problems. A good illustration 

 of the interaction of all the forces can be found in the 

 Norwegian coastal fisheries. For reasons that are 

 political, social, and national, the Norwegian govern- 

 ment has seen fit to subsidize coastal fisheries. These 

 subsidies have been indirect: education for dependents, 

 health care, transportation, etc., and direct: price 

 supports for raw fish, vessel consti-uction subsidies, 

 etc. A key objective of this policy is to maintain the 

 population living along the coast of western Norway, 



argument developed about the inadequacy 

 of partial models and the difficulty of utilizing 

 long run equilibrium systems for manage- 

 ment decisions are applicable to both biology 

 and economics. 



By ignoring underlying definitional prob- 

 lems as well as those which result in short 

 ran fiuctuations in output, the biological con- 

 cept of the maximum physical yield can 

 present a facade of stability. No such facade 

 exists with the net economic yield. The ap- 

 propriate level of output is defined by the 

 interrelationship between market price and 

 costs. Since the price of most fish products 

 is determined in markets that are describable 

 as workably competitive, it is clear that when 

 the physical yield function is transformed 

 into a revenue function the appropriate level 

 of output will shift in response to price 

 changes.-" 



The voluminous literature on the economics 

 of uncertainty is suggestive of the magnitude 

 of the administrative and political problems 

 it creates for the regulatory mechanism, and 

 also the lengths administrators will go to 

 minimize it. But how much uncertainty actu- 

 ally would be created by the imposition of 

 regulatory practices aimed at maximizing 

 the net economic yield? The major sources 

 of disequilibrium in most fisheries appear to 

 be attributable to two forces, short run vari- 

 ations in the supply of fish and shifts in the 

 demand function. In this context it is impor- 

 tant to distinguish between stability in the 

 demand function and stability of price. Within 

 the economic models price changes are caused 

 by short run variations in supply which cause 



the traditional farmer fisherman. Other considerations 

 are military, economic (balance of payment), and 

 political in that it is important to participate in the 

 exploitation of stocks as a claim against any future 

 regulation that might involve national quotas, etc. 



"* There are of course important differences. For an 

 exposition of certain properties of variable propor- 

 tions diminishing returns unique to the fisheries, see 

 F. W. Bell, and E.'W. Carlson (1970). 



20 See Crutchfield and Pontecorvo, (1969, pp. 28- 

 88). The usual assumption is that cost functions are 

 linear and stable. This follows from the size of labor 

 markets, the general availability of the type of capital 

 instruments required in most fisheries, and especially 

 from the small scale of most fisheries encompassed by 

 the partial equilibrium systems analyzed. 



17 



