Transition to Property Rights in Common-Pool
Resources: Evidence from Alaska Fisheries
Rebecca Toseland
University of California, Santa Barbara
November 2, 2013
Heartland Environmental and Resource Economics Workshop
R. Toseland (UCSB)
Transition to Property Rights in CPRs
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Research Question
What are the determinants of the transition from command and
control (CAC) regulation to rights-based management (RBM) in a
common-pool resource?
I
I
Conceptual framework
F
Regulator’s decision to adopt RBM regime in a common-pool resource
currently under CAC regulation.
F
Cost-benefit framework; testable hypotheses of RBM adoption.
Empirical application: Alaska fisheries
F
Duration analysis of RBM program (catch shares) adoption in a group
of federally managed Alaska fisheries.
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Transition to Property Rights in CPRs
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Preview of Empirical Results
1
RBM programs are more likely to be adopted if expected benefits of
mitigating the cost and value dimensions of rent dissipation are
high.
2
Limited empirical evidence that the resource dimension of rent
dissipation is an important factor in RBM program adoption.
3
Transaction costs are barriers to RBM adoption.
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Motivation
Theory of common-pool resources (CPRs) is well known.
I
Open access leads to over exploitation and complete rent dissipation
(Gordon, JPE 1954).
I
Establishing property rights can solve the common-pool problem, but
may be costly to implement (Cheung, JLE 1970).
Substantial body of research on empirical performance of property
rights institutions in CPRs.
I
Fisheries: Catch share programs improve biological and economic
performance. Grafton et al. (JLE 2000), Newell et al. (JEEM 2005),
Deacon et al. (JLE 2013), Costello et al. (Science 2008).
Many CPRs managed with command and control regulation (CAC).
Need for additional research on determinants of transition from CAC
regulation to (property) rights-based management (RBM).
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Rise of Catch Share Programs in Fisheries Worldwide
FIGURE A |
Species
Programs
Catch Shares Over Time
1,000
No. of Species
800
600
400
No. of Programs
200
0
1975
1980
1985
1990
1995
2000
2005
2010
Source: Environmental Defense Fund
contrast, traditional fisheries management holds fishermen
See Table A for the six basic catch share types. Other
accountable to regulations that are not directly tied to the
common names for catch shares include: Individual Fishing
Dedicated
Access Privilege Programs, Limited 5 / 18
catch andR.doToseland
not necessarily
(UCSB)limit the catch. Transition to PropertyQuotas,
Rights in
CPRs
Evolution of CPR Management Institutions
Open Access Command and control regulation Rights-­‐based management Open access: Unrestricted entry; no regulation possible.
CAC regulation: Uniform rules to constrain user behavior.
RBM: Exclusive use rights held by individuals or groups.
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Transition to Property Rights in CPRs
Cost-benefit framework for emergence of property rights.
I
Demsetz (AER 1967): “[P]roperty rights develop to internalize externalities
when the gains of internalization become larger than the cost of internalization.”
I
Libecap (“Contracting for Property Rights” 1989): “Whether or not the
more complete defining of property rights is socially beneficial depends on the
magnitude of common pool losses, the nature of contracting costs to resolve them,
and the costs of defining and enforcing property rights.”
Management policy choice in fisheries: role of transaction costs.
I
Resource users may oppose regulatory change due to potential
redistribution of rents even if policies are welfare enhancing in the
aggregate: Johnson and Libecap (AER 1982), Karpoff (JPE 1987),
Boyce (JEEM 2004), Grainger and Costello (Working Paper 2012).
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Cost-Benefit Framework for RBM Adoption
Main argument: transition from CAC regulation to RBM when the net
benefits of RBM exceed the net benefits of the status quo CAC approach.
Benefits: mitigating rent dissipation along up to three dimensions:
1
Resource dimension: user incentive to over extract resource relative
to social optimum.
2
Cost dimension: excess effort and overcapitalization resulting from
competitive process of rent capture by users.
3
Value dimension: failure to realize full potential market value of
resource when sold as lower-value product.
Transaction Costs: costs of establishing and maintaining a new
management policy.
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Transition from CAC to RBM: Four Hypotheses
Hypothesis 1.
Rights-based management program adoption is more likely when the aggregate expected
benefits from mitigating the resource dimension of rent dissipation are high.
Hypothesis 2.
Rights-based management program adoption is more likely when the aggregate expected
benefits from mitigating the cost dimension of rent dissipation are high.
Hypothesis 3.
Rights-based management program adoption is more likely when the aggregate expected
benefits from mitigating the value dimension of rent dissipation are high.
Hypothesis 4.
Rights-based management program adoption is less likely when the transaction costs of
program adoption are high.
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Transition to Property Rights in CPRs
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Transition from CAC to RBM: Four Hypotheses
Hypothesis 1.
Rights-based management program adoption is more likely when the aggregate expected
benefits from mitigating the resource dimension of rent dissipation are high.
Hypothesis 2.
Rights-based management program adoption is more likely when the aggregate expected
benefits from mitigating the cost dimension of rent dissipation are high.
Hypothesis 3.
Rights-based management program adoption is more likely when the aggregate expected
benefits from mitigating the value dimension of rent dissipation are high.
Hypothesis 4.
Rights-based management program adoption is less likely when the transaction costs of
program adoption are high.
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Transition from CAC to RBM: Four Hypotheses
Hypothesis 1.
Rights-based management program adoption is more likely when the aggregate expected
benefits from mitigating the resource dimension of rent dissipation are high.
Hypothesis 2.
Rights-based management program adoption is more likely when the aggregate expected
benefits from mitigating the cost dimension of rent dissipation are high.
Hypothesis 3.
Rights-based management program adoption is more likely when the aggregate expected
benefits from mitigating the value dimension of rent dissipation are high.
Hypothesis 4.
Rights-based management program adoption is less likely when the transaction costs of
program adoption are high.
R. Toseland (UCSB)
Transition to Property Rights in CPRs
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Transition from CAC to RBM: Four Hypotheses
Hypothesis 1.
Rights-based management program adoption is more likely when the aggregate expected
benefits from mitigating the resource dimension of rent dissipation are high.
Hypothesis 2.
Rights-based management program adoption is more likely when the aggregate expected
benefits from mitigating the cost dimension of rent dissipation are high.
Hypothesis 3.
Rights-based management program adoption is more likely when the aggregate expected
benefits from mitigating the value dimension of rent dissipation are high.
Hypothesis 4.
Rights-based management program adoption is less likely when the transaction costs of
program adoption are high.
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Bering Sea and Aleutian Islands (BSAI)
FisheriesPlan
Federal
Management Areas
FisheryAlaska
Management
Areas
AFS Conference 2011
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September 7, 2011
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Transition to Property Rights in CPRs
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North Pacific Fishery Management Council’s
“Mission Statement”
“In managing the fisheries under its jurisdiction, the North Pacific
Fishery Management Council is committed to: (1) assuring the
long-term health and productivity of fish stocks and other living marine
resources of the North Pacific and Bering Sea ecosystem; and (2) reducing
bycatch, minimizing waste, and improving utilization of fish resources in
order to provide the maximum benefit to present generations of
fishermen, associated fishing industry sectors, communities,
consumers, and the nation as a whole.”
(North Pacific Fishery Management Council, 1995)
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Federally Managed Alaska Fisheries Timeline
Limited entry established; Beginning of study period North Pacific Fishery Management Council established under MSA Central GOA Rockfish Cooperatives BSAI Crab Fishery Management Plan 1978 Bering Sea Pollock Cooperatives 1982 1976 2005 2008 1989 1996 BSAI Groundfish Fishery Management Plan GOA Groundfish Fishery Management Plan R. Toseland (UCSB)
End of study period 1999 2007 2010 BSAI Crab Rationalization BSAI Groundfish Amendment 80 Coops Transition to Property Rights in CPRs
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Data & Empirical Approach
Duration analysis: Cox proportional hazards model.
Panel data covering 65 groundfish and crab fisheries observed from
1996-2010; catch shares implemented in 15 fisheries.
Data Sources
I
Stock Assessment and Fishery Evaluation Reports (SAFEs)
I
NFMS Alaska Region Groundfish Catch Reports
I
Groundfish ex-vessel production revenue data
I
ADF&G Crab Annual Management Reports
I
ADF&G crab fish tickets and eLandings
I
NPFMC Fishing Fleet Profiles and Groundfish Species Profiles
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Variables and Expected Hazard Ratio
Category
Variable
Overfishing
Resource dimension
Discard rate
of rent dissipation
Bycatch closure
Cost/value dimension Season length
of rent dissipation
Utilization
Gini coefficient
Transaction costs
Sectors
Average price
Total catch
Controls
AREA
FMP
R. Toseland (UCSB)
Description
(Aggregate catch/OFL)×100%
% of total catch not retained
Bycatch closure indicator
Number of days fishery is open
(Aggregate catch/TAC)×100%
Vessel-level revenue equality (%)
Number of fishing sectors
Avg. ex-vessel price (2010$/lb)
Total catch (thousand mt)
Management area controls
Fishery Management Plan controls
Transition to Property Rights in CPRs
Expected
HR
>1
>1
>1
<1
>1
<1
<1
>1
>1
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Descriptive Statistics
All Fisheries
Catch Share
Fisheries
Non-Catch
Share Fisheries
Overfishing
35.56
(21.60)
50.53**
(17.43)
31.07**
(20.82)
Discard rate
21.73
(18.54)
16.16
(11.58)
23.40
(19.96)
Bycatch closure
0.3436
(0.4393)
0.2313
(0.3872)
0.3773
(0.4519)
Season length
164.2
(114.1)
59.24***
(60.48)
195.7***
(107.6)
Utilization
65.68
(35.04)
91.06***
(14.38)
58.06***
(35.89)
Gini coefficient
74.72
(16.27)
66.90**
(21.37)
77.08**
(13.83)
Sectors
2.335
(1.526)
1.400***
(0.5071)
2.616***
(1.619)
Average price
0.5320
(1.023)
0.7284
(1.705)
0.4730
(0.7218)
Aggregate catch
24.48
(131.93)
88.62*
(267.8)
7.832*
(26.46)
65
15
50
Variable
Fisheries
Standard deviations in parentheses. Stars indicate statistically significant differences
in means between fisheries that do and do not adopt catch share programs.
* Significant at 10% level; ** significant at 5% level; *** significant at 1% level.
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0.00
0.25
Survival fraction
0.50
0.75
1.00
Kaplan-Meier survival estimate
0
5
10
15
Analysis time
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Cox Proportional Hazards Model Results
Independence Model
Overfishing
Discard rate
Bycatch closure
Season length
Utilization
Gini coefficient
Sectors
Average price
Aggregate catch
Area Controls
FMP Controls
Observations
Fisheries
Catch Share Programs
Log-likelihood
Pseudo R-squared
(1)
1.034
(1.63)
0.895**
(-2.32)
2.085
(1.14)
0.963***
(-3.00)
0.951*
(-1.93)
0.934***
(-3.46)
0.288***
(-3.31)
1.314*
(1.66)
1.008***
(4.68)
Yes
877
65
15
-24.11
0.601
(2)
1.057
(1.63)
0.931***
(-3.35)
2.834
(1.55)
0.965***
(-5.02)
0.931*
(-1.67)
0.942***
(-3.65)
0.260***
(-3.29)
0.740
(-0.90)
1.015***
(3.49)
Yes
Yes
877
65
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-23.28
0.615
Shared Frailty Model
(3)†
1.034
(1.05)
0.895*
(-1.66)
2.085
(0.43)
0.963***
(-2.87)
0.951
(-1.16)
0.934**
(-2.52)
0.288**
(-2.37)
1.314
(0.63)
1.008
(1.40)
Yes
877
65
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-24.11
(4)#
1.057
(1.40)
0.931
(-1.25)
2.834
(0.55)
0.965***
(-3.44)
0.931
(-1.36)
0.942**
(-2.21)
0.260**
(-2.48)
0.740
(-0.48)
1.015∗
(1.86)
Yes
Yes
877
65
15
-23.28
Hazard ratios reported; t statistics in parentheses. * Significant at 10% level;
** significant at 5% level; *** significant at 1% level. Efron approximation for
tied failures. The frailty variance is given by θ. † The likelihood-ratio test of
H0 : θ = 0 has p-value = 0.500. # The likelihood-ratio test of H0 : θ = 0
has p-value = 0.500.
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Discussion
Empirical analysis generally verifies conceptual framework hypotheses
I
RBM programs are more likely to be adopted if expected benefits of
mitigating the cost and value dimensions of rent dissipation are high.
I
RBM programs are less likely to be adopted if the transaction costs of
program adoption are high.
I
Limited empirical evidence that the resource dimension of rent
dissipation is an important factor RBM program adoption.
Plans for strengthening the empirical analysis
I
Qualitative evidence on transaction costs arising from community and
processor lobbying.
I
Predictive model of catch share program adoption?
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