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 catch via a stock certificate to the existing 

 fishermen.'" It should be pointed out that the regula- 

 tory authority 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 authority not 

 injurious to the viability of the stock. The expansion in 

 demand for lobsters by 1974 would generate excess 

 profits for those individual fishermen who were ini- 

 tially endowed with the property right. By 1974, it is 

 estimated that a full-time lobsterman would be earning 

 $11,966 a year of which $3,566 will be excess profits 

 (i.e., above opportunity cost). To insure against in- 

 creasingly excessive returns, fishermen holding stock 

 certificates might be charged a fee to provide the reg- 

 ulatory authority with funding to conduct scientific in- 

 vestigations and enforcement. 



It should be noted that this plan is identical to the 

 license scheme which freezes effort at the 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 gener- 

 ated 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 stan- 

 dards to levels comparable to those prevailing in urban 

 areas. This management strategy would, of course, be 

 popular with those already in the fishery. However, 

 new entrants would have to buy stock certificates from 

 those initially in the fishery. This would pose certain 

 questions of equity and legal precedent which are 

 beyond the scope of this paper. 



e. No management strategy. When considering the 

 economic consequences of alternative management 

 strategies (« through d), it is always wise to assess the 

 results of doing nothing. This gives policy-makers a 

 better perspective in evaluating the benefits from tak- 

 ing 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. Over 48,000 excess traps would be in the 

 fishery, and the catch would fall to 21.7 million pounds 



'"A reviewer of this paper has suggested that since the MSY 

 could be harvested with approximately 600,000 pots, why not issue 

 transferable licenses to existing fishermen to fish half the number of 

 pots he is currently fishing (1,200.000 pots were fished as of 1972). 

 This would avoid taxing existing fishermen out of the fishery. This 

 approach is similar to the stock certificate plan which would freeze 

 the catch (and resulting effort) at 1969 levels — close to MSY — and 

 establish transferable property rights; however, it would pose one of 

 the problems associated with the tax schemes. That is, with the 

 reduced number of traps per fisherman, there may be an increase in 

 the degree of utilization which was discussed earlier. Controlling 

 absolute catch itself (say at MSY) automatically controls fishing 

 effort if proper enforcement and surveillance are maintained. 



as computed by the model. However, we can see that 

 this estimate is very conservative since there were al- 

 ready 1,247,000 traps in the fishery by 1972, an in- 

 crease of 398,000 traps. The fishery has been and will 

 grow increasingly overcapitalized and the resource 

 greatly overexploited as demand increases for lobsters 

 during the 1970's. On economic grounds, these results 

 are hardly acceptable because more fishermen and 

 vessels will be catching less. 



/. Other suggested management strategies. 

 Reeves (1969) proposed a hike in license fees to 

 "eliminate" marginal or part-time fishermen. He sug- 

 gested that the present $10 yearly fee in Maine be 

 raised $10 a year over the next 9 yr to a limit of $100. In 

 1969, a little less than one-half of the lobster 

 fishermen were part-time. As defined by Reeves, a 

 part-time lobster fisherman is one who gains less than 

 one-half of his annual income from lobstering. 



The first step in most suggested limited entry 

 schemes is usually to restrict the fishery to full-time 

 utilization of capital and labor. Two problems occur 

 with this policy. First, the part-time fishermen may 

 represent the most efficient way of taking the catch. If 

 so, the full-time fishermen may be eliminated by in- 

 creased license fees. Second, license fees do not di- 

 rectly control fishing effort since fishermen may fish 

 more traps. However, Reeves went on to argue 

 strongly for limiting the number of traps each fisher- 

 man is allowed to set. It is not quite clear whether 

 anyone knows the optimum number of traps per ves- 

 sel. 



Rutherford, Wilder, and Frick (1967) in their study 

 of the Canadian inshore lobster fishery endorsed the 

 system suggested by Sinclair. They stated: 



An alternative management system is that sug- 

 gested by Sinclair (1960) for the salmon fisheries of 

 the Pacific coast. This would use the licensing of 

 fishermen to limit entry into the fishery. In the first 

 stage, lasting about 5 years, licenses would be reis- 

 sued at a fee but no new entries would be licensed 

 and it would be hoped that during the period there 

 would take place a reduction in the labor and capital 

 input, to take the maximum sustainable catch of 

 salmon at a considerably lower cost. After the end 

 of the first stage, licenses would be issued by the 

 government under competitive bidding and only in 

 sufficient numbers to approximate the most effi- 

 cient scale of effort; the more competent fishermen 

 would be able to offer the highest bids and it would 

 be expected that the auction would recapture for 

 the public purse a large portion of the rent from the 

 fisheries that would otherwise accrue to the fishing 

 enterprises under the more efficient production 

 conditions in the fishery. 



An arbitrary reduction in the number of fisher- 

 men by restriction of licenses to a specified number 

 would entail injustice and inequity as well as grave 

 administrative problems in determining who should 

 be allowed to continue fishing. The auctioning of 

 licenses to exploit a public property resource is jus- 

 tifiable in a private enterprise system of production. 



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