Fewer Fish for Higher Profits? Price Response and Economic Incentives in Global Tuna Fisheries Management

Abstract

This paper evaluates industry-wide economic incentives arising from changes in product prices in an industry exploiting a common renewable resource (tropical tunas) that is regulated via output limits. Changes in prices alter economic incentives by affecting revenues, profits, conservation, and nonmarket public benefits. Economic incentives in industries exploiting common resources have been examined from multiple angles. However, industry level variation in market prices arising from changes in public regulation has not been explored. We analyse the impact on economic incentives due to changes in output limits and market prices through estimation of ex-vessel price and scale flexibilities for imported skipjack and yellowfin in Thailand’s cannery market. The unitary scale flexibility, estimated from the General Synthetic Inverse Demand Systems, indicates no loss in revenue and even potential profit increases resulting from lower harvest levels that could arise from lower catch limits. However, for a revenue neutral or positive outcome to be achieved, the three inter-governmental tuna Regional Fisheries Management Organizations, which manage the majority of the yellowfin and skipjack tuna in the Pacific and Indian Oceans, would have to coordinate multilaterally to set the catch limits for both species.