Substitution Preferences for Fish in Senegal

Abstract

In a marine multi-species environment, consumers’ decisions may introduce interactions between species beyond biological ecosystem links. The theoretical literature shows that consumer preferences for variety can trigger a sequential (local) extinction of fish stocks. However, consumer preferences are not yet fully understood empirically, as it is uncertain how variety-loving consumers really are, in particular in specific settings such as in developing countries. In this article, we present an aggregation procedure to study consumer preferences in a highly diverse marine system. In a first step, we use co-integration analysis and aggregation theorems by Hicks and Lewbel to find groups of species that consumers find substitutable. In a second step, we use a direct quadratic almost ideal demand system (QUAIDS) to estimate price elasticities between these groups. We then quantify and compare welfare losses and spillovers from species-specific price shocks that may for example result from restoration efforts. Our case study from Senegal across 28 species reveals evidence that consumers do indeed have a preference for diversity of species on their plates.