Entry deterrence or conservation in a fishery model
as a policy contest:
The effect of climate change on the probability of conservation
Urs Steiner Brandt
14 July 2017
Abstract
The paper considers a policy outcome as a result of a policy contest between two
opposing interest groups: the incumbent fishermen and the group of
conservationalists. The objective of the fishermen is to reduce future profitability
in order to reduce entry by inflating current catches, while the conservationalists
with the aim of reducing current fishing effort in order to protect the fish resource.
The probability of the policy resulting in overfishing is dependent on the relative
benefits the two groups receive if their preferred policy wins the contest. This
model enables us moreover to predict how climate change induced changes in the
underlying bionomic model affects the probability of overfishing.
1. Introduction
In this paper, the choice of fisheries management scheme is considered as determined by a contest
between two opposing stakeholder groups, the incumbent fishermen on the one hand and the
conservationalists on the other hand. It is assumed that the objective of the fishermen is to reduce
future profitability in order to reduce entry by inflating current catches, while the conservationalists
aim of reducing the current fishing effort in order to protect the fish resource.
The Political contest models have been applied to analyse a contest between competing interest
groups (Epstein, 1994), coordination efforts by interest groups sharing the same objective of
influencing the provision of a specific public good (Dijkstra, 1998), and the interaction between an
interest group and a two-tier government, where the interest group tries to influence the rejection or
acceptance of the politicians of the proposals made by agenda-setting bureaucrats (Epstein and
1
Nitzan, 2002). Political contest models are useful in situations where it is possible to influence a
political decision that has two (or more general a finite and discrete set of) possible outcomes and
specification of the model in the current paper resembles Epstein and Nitzan (2002), where two
interest groups compete over the provision of a public good, beneficial two one group and costly to
the other group.
In the proposed political contest model, only two possible outcomes can result, either a situation
where the overfishing continues, or a total temporary closure of the fishery. And the probability of a
specific outcome to be chosen depends on the relative gains the two groups receive from winning
the contest. Although only two policy options are considered, there are several reasons why this
could be acceptable. It could be interpreted as expected (ex ante) probabilities of a given outcome to
prevail (such that the actual policy is a weighted average of the two outcomes). However, a policy
can also be judged with respect to it final outcome. In this case, let the outcome be either a policy
that (over time) results in overcapitalization, or imply that current overcapitalization remains, or a
policy that over time results in conservation. In this way the outcomes are mutually exclusive and
collective exhaustible.
The third report of the Intergovernmental Panel on Climate Change (IPCC, 2001) estimates an
increase in the global mean temperature of 1.4 - 5.8 degrees from 1990 to 2100, with possible
significant regional differences. E.g., the temperatures are expected to increase more at northern
latitudes. This will also affect the future profitability of fisheries, since climate change is expected
to influence (alter) the recruitment, size and quality of the fish resource, and if focus is on a well
specified geographic area, on changes in emigration or immigration of species, changes in
transportation in larvae.1 We will specifically focus on how climate change influences the relative
to the two competing interest groups through its effect on biological background variables, and
consequently, how the probability of conservation is linked to climate change induced alteration in
the model.
1
This example shows how sensitive fish stock can be with respect to climate change. The salinity of the water at South
West Greenland is determined by the mixing of high salinity currents from Iceland (the Irminger current), and the low
salinity East Greenlandic current passing southwards). Cod compared to shrimps prefer the high salinity waters.
Moreover, in periods with a strong Irminger current, there is a transport of cod larvae’s to South West Greenland. The
relative mixing therefore has significant influence on availability of cod and shrimps in South West Greenland. There
has been a regime shift in the NAO in the 1960s, implying more mild south western winds over North Sea, implying a
weakening of the Irminger current, reducing the transport of cod larvae, and changing the relative availability of cod
and shrimps in South West Greenland. See e.g. Buck et all (2004).
2
This paper also deals with the question why overfishing (overcapitalization) exists in situations
where fishermen have power (discretion) to influence regulation. In traditional analysis fisheries
economics, the overfishing occurs due to incentives as in a ‘tragedy of the commons’ situations,
where non-coordinated actions of the economic agents imply inefficient high catch levels. However,
even if the fishermen are assumed to have full discretion over the regulation, there can be several
reasons why a high level of capitalization is pursued.
Consider a situation where the industry currently is characterized by too many boats and a nonsustainable high total catch level.2 Even though the fishermen have some discretion over the
regulation, it will be difficult to increase the profitability. Karpoff (1989) addresses the question of
the effort by incumbent fishermen to reduce the number of active fishermen to increase rent and
finds that only if the expected gain from reducing the number of boats is higher than the expected
cost of risking being the one excluded, then it is possible endogenously to reduce the fleet size.
However, even if the fishermen themselves have the incentive to reduce the fleet size, there might
be strategic incentives on the national level to have a large fleet size. Ruseski (1998) reports several
situations where fish stocks have been severely depleted due to competition between national fleets.
This can be done, either by increasing fleet size directly (licensing policy), or by effort
subsidisation. Both policies imply a too large a fleet size and too low rent.
In the current paper, we assume that the fishermen are organized in an effective lobby group with
the objective to maximize the total intertemporal profit for the group as a whole. However, the
strategic element that enters is that high industry profitability will spur entry, and hence, reduce the
market share of the incumbent fishermen. Therefore, the incumbent fishermen have to consider an
optimal entry deterrence strategy.
The behaviour of the incumbent fishermen is to maximize intertemporal profits subject to
possibility of future entry. Several papers argue that while the fishermen might be able to capture
the regulator, they will not be able to control entry directly (e.g. Burch and Costello, 2001).
Therefore, this group will look for other means of controlling entry. One obvious way is to propose
2
This could be a result when regulation has been designed by using TAC. In such a situation, the result might very well
end up where too many boats are present, and each boat operates on the negative sloped part of its average costs curve.
Moreover, as noted by Ludwig et al (1993), fluctuations in the fish stocks might imply a highly subsidized industry.
3
regulation that acts as a barrier to entry. This feature has been seen repeatedly in environmental
issues (see Brandt and Svendsen, 2003). Johnson and Libecap (1982) report several instances where
local fish unions have tried to hinder entry.
The issue of entry deterrence in a renewable resource management problem has been addressed in
Mason and Polasky (1994). They assume the existence of sole-exploiter of the resource, worried
about potential entry of a new exploiter. The incumbent fisherman promotes an active entry
deterrence strategy by increasing present catch levels to reduce future entry since entry is contingent
on future industry profits. By treating the incumbent fishermen as one agent, we can apply the
insight of Mason and Polasky also in our setting.
In the industrial organisation literature, limit pricing and entry deterrence will reduce welfare for
two reasons. First, output will be below the fully competitive output level.3 Second, strategies of
entry deterrence like strategic investments in lobbyism, advertising and overcapacity imply
squandering of resources. However, the limit pricing behaviour also implies welfare gain compared
to a situation without entry, since either the result is a reduction in output price in the first period, or
a “less competitive” situation will prevail in later periods. The welfare effect in renewable resource
exploitation is, however, different due to the fact that the welfare maximizing level of output (catch
and steady state stock size) is not the fully competitive situation (which is equal to an open access
situation). If entry deterrence reduces total catch below open access level, then the effect on the
total welfare is ambiguous. On the one hand, smaller catches imply higher resource rent. On the
other hand the restricted competition means less dynamic efficiency in the industry.4
The second group that has the power to influence the decision of how to manage the fish resource is
an environmental group with the aim of conservation of the resource. More specific, their agenda is
to increase the stock size of the resource to an “acceptable” level. This could be motivated by
safeguarding the stock in case of unforeseen (stochastic) temporary shocks that could force the
stock below its minimum level with long lasting adverse consequences.5 The objective of the
3
Either entry will be deterred, and consequently, in the post entry deterrence periods the monopoly maintains its
monopoly behaviour, or in the case where the monopoly recognizes that it cannot deter entry, it will simply maintain its
monopoly behaviour in the first period.
4
In this way, entry barriers might be welfare enhancing, with the qualifier that when the competition leading to cost
effective is absence, optimality will probably not be achieved.
5
Objectives of the conservationalists: I.e., ICES defines the following critical levels of stock size: limit reference points
–In order for stocks and fisheries exploiting them to be within safe biological limits, there should be a high probability
4
conservationalists is to secure the stock of the fish, by temporary closing the fishery. As the
consequence of this is a more profitable fishery in the future, if this policy is adapted, it undermines
the incumbent fishermen’s ability to deter entry.
When the conservationists win the contest, the adapted policy is one of conserving the resource.
The result of the contest depends on the relative gain the two interest groups receive from winning
the contest. Since climate change is likely to affect the two interest group’s gain from wining the
contest differently, it is possible to derive how the probability of conservation changes in different
climate change regimes.
The paper is organized as follows: The next section analysis the entry deterrence behavior of the
incumbent fishermen, while section 3 states the political contest model. Part two of the paper
analysis how the probability of conservation in the presence of climate change. In section 4 the
effect of expected climate changes on the availability of fish in the future. Section 5 analysis a
situation where future profits are reduced and the implication of this on the reduced profits on the
size of the entry deterrence and on the conservationalists’ utility. The implication of this on the on
the probability of conservation is analysed in section 6. Section 7concludes the paper.
2. The entry deterrence behaviour of the incumbent fishermen
In this section a two-period fisheries management model is set up. We assume that second period
catch levels are exogenously determined, but where in the first period the management outcome (in
terms of which first period catch level) is determined as a political contest between the incumbent
fishermen and the conservationalists. In the second period entry is possible, and the level of entry is
determined on basis of expected second-period industry profit.
that: 1 - the spawning stock biomass (SSB =B) is above the threshold where recruitment is impaired; 2 - the fishing
mortality (F) is below that which will drive the spawning stock to the biomass threshold, a condition that must be
avoided. (ICES, 1998. Study Group on the Biology and Assessment of Deep-Sea Fisheries Resources. ICES Council
Meeting 1998 / ACFM: 12). If these levels are not meet, a total ban of fisheries is advised. E.g.: To prevent cod stocks
in the North Sea, Irish Sea and west of Scotland from going the same way (as the Canadian cod stocks collapsed in the
early 1990s), ICES has been calling for a complete ban on cod fishing in these areas and for the development of
recovery plans to rebuild the stocks. (See ICES, 2005).
5
Let qi1 be the first period catch level decided upon of the incumbent fishermen, while q2 is the predetermined second-period catch. Pt , t  1, 2 , are the exogenously (and constant) pries of the fish in
period 1 and 1, respectively. The incumbent can influence second period profits via first period
output through the connection between qi1 and S 2 , given by S2  g (S1 , q1 ) , with g S' 1  0 and
gq' i1  0 . Finally define the cost function as c(qt , St ) , measuring the cost of providing qt units fish
given the present stock is St . Given that second period catch is exogenously determined, we can
easily determine second period industry profit as  2IND  P2  q2  c(q2 , S2 ) . Define the highest
possible second period profit as 2INDMax  2IND |qi1 0 , i.e. second period profits are maximized if no
fish is caught in period 1 since second-period catch levels are fixed, but costs are monotonically
decreasing in stock-size.
In Mason and Polasky (1994), the incumbent fishermen have a cost advantage over the entrant such
that it is possible to derive condition for a subgame perfect catch level that blocks entry. Brandt
(2004) specifies an entry function that measures the level of entry (as there is a fixed second-period
catch level, the entry function measures the percentage of this catch that goes to the incumbent.
Entry is assumed to be positively related to expected second-period industry profit.6 In this paper
we follow the approach of Brandt (2004). Here, the incumbent faces a trade off when increasing
first period catch. First, this yields lower first period profits, and faces higher costs because of a
lower second-period stock, and hence, less industry profit in the second period, on the other hand,
less industry profit implies less entry, and consequently, the incumbent receives a higher share of
the industry profit.
Define the function L  L( 2IND ) as the fraction of the industry profit in the second period that the
incumbent receives with L IND  0 implying that the higher the second period industry profit, the
2
more entry will occur and hence, a smaller fraction of the total profit will the incumbent receive.
Differentiating with respect to first period catch levels yields:
Lqi1  LIND  (cS )  g '  0 .
2
6
Note that if the entry function is specified such that when industry profits are sufficiently low, no entry will occur
implies that the model of Mason and Polasky (1994) is also encompassed in this more general approach.
6
When increasing first period catch, second period stock will be smaller ( g '  0 ) and the costs of
fishing increases implying a lowering of second period profit ( cS  0 ), which implies that the
fraction of the industry profit for the incumbent firms increases. In the two-period situation, letting
 be the discount rate, the intertemporal profit to the incumbent is given by:
 i  1i (qi1 , S1 )  L( 2IND )   2IND (q2 , S2 )  P1  qi1  c(qi1 , S1 )    L( 2IND )  ( P2  q2  c(q2 , S 2 ))
(1)
In lemma 1 below we state the result that in case of entry, the incumbent fishermen will always
increase their first-period catch levels in the presence of entry.
Lemma 1:
 i entry
|q q*noentry    L IND   2IND  [  ( 2IND ) S2  g ']  ( L  1)  0
2
i1
i1
qi1
Proof, see appendix
We first find the optimal catch level in case of no entry, denoted qi*1 no  entry . Next, we evaluate the
first order condition under entry at this catch level, denoted
 i entry
| *noentry . It turns out that this
q1i qi1 qi1
expression is positive, implying that the incumbent fishermen will always increase their first-period
catch levels in the presence of entry compared to a situation without entry.
Figure 1: The presence of entry increases first-period catch levels
1
L
 2Ind (q1, q2 )
 1 (q1 )
L( 2Ind )
L   2Ind
q1*
q1Entry
Figure 1 illustrates the mechanisms at work. Without entry, the optimal catch level is q1* . An
increase in catch level will still increase first-period profits, but the reduction in second-period
profits exactly outweighs this. In case of entry, the reduction in second-period profit to the
7
incumbent of increasing first-period catch levels will be smaller; hence, it is now optimal to
increase first-period catch-levels.
Although the entry function is treated as general as possible, some structure on this function will be
helpful for the analysis in this paper. The following assumption is put on this function:
Assumption A1: Assume that entry is such that
 i2
 0 , saying that when industry profit
 2Ind
 i2
increases, then profits to the incumbent also increases. (Obviously, 0 
 1 ).7
Ind
 2
Let qiF1  {arg
 i entry
 0} be the optimal entry deterring catch level for the incumbent fishermen.
q1i
The conservationalists’ utility is derived from the stock size at the end of a period, utc ( St  qt ) . The
implication is that lower catches in the first period increases utility for the conservationalists in both
periods. The intertemporal utility for the conservationalists reads: u c  u1c ( S1  qi1 )    u2c ( S2  q2 ) .
Inserting the growth function: u c  u1c ( S1  qi1 )    u2c ( S 2  q2 )  u1c ( S1  qi1 )    u2c ( g ( S1 , qi1 )  q2 ) .
It is easy to see that the optimal choice of the conservationalists is qi1  0 .8
In conclusion, the two contesters’ preferred strategies are qiF1 for the fishermen and qiC1  0 for the
conservationalists. This can be interpreted as an ex ante probability (to be defined below) of either a
situation with overcapitalization or a situation with conservation.
3. The political contest model
Consider the following timing of events: currently, the fishery is characterized by overcapitalization
(see definition in Munro, 1997). The fishermen are organized in an interest group that has overcome
the “internal” free riding problem (see Olson, 1965). Its objective is to maximize the profits to its
members, and it has been successful to pursue its entry deterrence strategy (as defined in Mason and
7
Note that it will not be optimal to move to a situation where the first-period profit function is negatively sloped, as
long as A1 prevails.
8
E.g. ICES determine lowest safe levels.
8
Polasky, 1994). However, there appears an environmental group with the aim of conserving the
resource. More specific, its agenda is to increase the stock size of the resource to an “acceptable”
level.9 If this policy is applied, it will be costly to the fishermen for two reasons: there will be a
temporary downturn in profits, since the TAC necessarily has to be lowered temporarily, and when
profits are increasing as a result of a higher stock, the pressure from outsiders to enter the industry
increases. Assume that there are only two policy options, and no possibilities of compromises
between them. The two policy options are the incumbent fishermen’s preferred action and the
conservationalists’ optimal conservation policy. The table presents the utilities for each group in the
two policy situations:
Table 1: The benefits in the two possible outcomes of the contest
Group
Entry deterrence policy Conservation policy
 i ( qiF1 )
i (0)
Fishermen
Conservationalists
u C ( qiF1 )
u C (0)
) > i (0) and u C (0) > u C ( qiF1 ) . With
From the discussion in section 2 it follows that  i (qiEntry
1
probability p F the fishermen’s preferred policy is approved, while with p C (= 1- p F ) the preferred
policy of the conservation group is approved. In this type of political contest models, it is generally
assumed that the contenders can affect the probabilities by their contribution level. Assumed is also
the existence of a contest success function (CSF) that specifies the probability of approval of the
proposed policy corresponding to the rent-seeking effort of the interest groups (Epstein and Nitzan,
2002, page 138). Let x F and x C be the contribution of the fishermen group and the
conservationalists, respectively. A commonly used CSF is the constant returns to scale nondiscriminating rule: p F  x F /( x F  xC ) and pC  xC /( x F  xC ) . Let    i (qiF1 )   i (0) and
u C  u C (0)  u C (qiF1 ) be the groups’ benefit from winning the contest.
In this model, the Nash equilibrium is given by (see again Epstein and Nitzan, 2002):
xF* 

U
( )2  U
(U )2  
*
,
, pF* 
and pC* 
.
x

C
2
2
  U
  U
(  U )
(  U )
9
This could be motivated by safeguarding the stock in case of unforeseen (stochastic) temporary shocks that could
force the stock below its minimum level with long lasting adverse consequences. The way this could be accomplished is
by a temporary reduction in the TAC below the present catch level until the new stock is achieved and then again to
increase the TAC, as shown in Munro, 1997.
9
From the equilibrium strategies it is straight forward to determine how changes in the relative gains
to the contenders of winning the contest influence the probabilities of winning the contest:
Lemma 2:
pC*
pC*
U


 0 and

0.
2

(  U )
(U ) (  U )2
The probability of conservation is increasing in the relative gain to the conservationalists and
decreasing in the relative gain to the fishermen. (When both  and U increase with the same
percentage, then the probability of conservation remains unchanged).
Focus will now be on the effect of climate change on the success of conservation or the failure to
eliminate (strategic) overcapitalization.
4. The probability of conservation in the presence of climate change
The third report of the IPCC (2001) estimates an increase in the global mean temperature of 1.4-5.8
degrees at the end of the century, with possible significant regional differences. E.g., the
temperatures are expected to increase more at higher latitudes.
There are several mechanisms through which climate related changes will affect future fish
resources. E.g., the cod in the North Atlantic is suspected to move to the north, yielding more
harvesting possibilities in the North Atlantic while less for e.g. North Sea.10
More generally, the natural size of the fish stock (net of fishing effort) is among others depending
on average water temperature, salinity, average wind and the presence of other species. The change
in these variables can have an effect on recruitment, size and quality of the fish resource, and if
focus is on a well specified geographic area, on changes in emigration or immigration of species,
changes in transportation in larvae.11
10
See e.g. Dickson and Brander (1993) and Blindheim et all (2000)
This example shows how sensitive fish stock can be with respect to climate change. The salinity of the water at South
West Greenland is determined by the mixing of high salinity currents from Iceland (the Irminger current), and the low
11
10
5. The implication of lower profits on the probability of conservation
Given the discussion in the previous section, the expected climate changes have the potential of
affecting the fisheries in several ways. In order to give any predictions about likely future impacts
of climate on fisheries, the specific local or regional conditions have to be known specified. In order
to develop some general results, we assume a situation where future profits are expected to be
reduced for the same level of catches in the present period. Note that it does not matter what type of
effect will cause this downward turn in future industry profits. In this respect this section is rather
general.
5.1 The implication of lower future profits on the size of the entry deterrence
Formally, assume that  2IND CC  (q1† , q2 ) <  2IND (q1† , q2 ) for all q1†  implying that for any equal
action in the first period, second period profits will be lower under the climate change regime.
Given this, what is needed is to derive how a reduction in second period profit affects the overall
profit for the incumbent. Let  iCC  express the change in profits to the incumbent due to a climate
change, where the ‘-‘ implies that conditions are less favorable in the future.
From the outset it seems rather obvious that  iCC   0 , since second period profits due to climate
change is reduced. However, there are two secondary and countervailing effects that work the other
way. First, the profit for the incumbent in the first period is increased since a less aggressive entry
deterrence strategy is now optimal to use. And second, since second period profits are lower, this

has en direct entry deterring effect. Let qiCC
be the optimal first period catch level for the
1
incumbent fishermen in case of a climate change induced reduction in the second-period industry
profit. The following result can be established:
Lemma 3:

qiCC
 qi*1
1
This is due to the fact that when profit is less in the second period, entry deterrence is not as
profitable. Entry deterrence is achieved by increasing first-period catch levels. The implication is
salinity East Greenlandic current passing southwards). Cod compared to shrimps prefer the high salinity waters.
Moreover, in periods with a strong Irminger current, there is a transport of cod larvae’s to South West Greenland. The
relative mixing therefore has significant influence on availability of cod and shrimps in South West Greenland. There
has been a regime shift in the NAO in the 1960s, implying more mild south-western winds over North Sea, implying a
weakening of the Irminger current, reducing the transport of cod larvae, and changing the relative availability of cod
and shrimps in South West Greenland. See e.g. Buck et all (2004).
11
that first-period profits for the incumbents will decrease compared to no climate change, due to
assumption A1.
What matters here is how much the situation with climate change affects the gain from winning the
contest. Formally, the effects look as follows:



1iCC   1iCC  (qiCC
)  1i (qi*1 )  (1i (qiCC
)  1i (0))  (1i ( qi*1 )  1i (0))  1i ( qiCC
)  1i ( qi*1 )  0 .
1
1
1
The reason is that when first-period catch levels are decreased, the profit in the first period will also
be smaller.12 Hence, in the first period, the gain from winning the contest will be smaller, due to the
fact that the gain from winning is smaller, while loosing the contest implies the same profit in the
two situations.
In order to being able to determine the effect of climate change on the gain in the second period
from winning the contest second-period, the following assumption is needed:
A2:  2IND CC  (qi'1 , q2' )   2IND (qi'1 , q2' )  Constant for qi'1and q2' .
A2 implies that the absolute reduction in profits due to climate change is the same for all choices of
first period catch-levels.
For the second period, the effect of climate change on the gain from winning the contest for the
incumbent is:



 iCC
  iCC
(qiCC
)   i2 (qi*1 ) 
2
2
1


L( 2IND CC  (qiCC
))   2IND CC  (qiCC
)  L( 2INDCC  (0))   2INDCC  (0)
1
1
[ i2 (qi*1 )  L( 2IND (qi*1 ))   2IND (qi*1 )  L( 2IND (0))   2IND (0)].
There are two effects at work here. First, for the same action in the first period, second-period
profits are smaller, and given A2, this is equal for any first-period action. However, this effect is

 qi*1 and therefore, second-period
weakened in case that the incumbents win the contest, as qiCC
1
profits will increase.
Lemma 4:

1iCC   1iCC  (qiCC
)  1i (qi*1 )  0
1



 iCC
  iCC
(qiCC
)   i2 (qi*1 )  0 given A2
2
2
1
12
This follows from the fact that the incumbent operates on the positive sloped part of his profit function.
12
Nothing conclusive can be said from lemma 4. However, the implication of assumption A1 this is
that in the climate change case, second-period profit for the incumbent is smaller than in the

 qi*1 has an increasing effect on second-period profits, but
standard case. This follows because qiCC
1
the total effect will be a smaller second period industry profit.
Lemma 5:
 iCC (qi*1 )  0, given A1
In what follows we only look at situations where reduced second-period profit implies that the
fishermen gain less from winning the contest.
5.2 The implication of lower future profits on the conservationalists’ utility
How does climate change affect the utility of the conservationalists? First of all, the preferred catch
level of the conservationalists for the first period remains unchanged at a zero catch level. As
discussed in section 2 and 3, the agenda of the conservationalists is first and foremost to secure that
the stock not falls short of the minimum sustainable level. The effect of the climate change on the
conservationalists’ utility appears through the changed action of the fishermen in the first period,
and the derived effect of this in the second period.
In order to calculate the effect on the probability of conservation, we have to calculate the change in
the utility gain from winning the contest with and without climate change. Note, however, that since
they already prefer a temporary closure of the fish-activity, they cannot do more to increase the size
to an acceptable level, which implies that loosing the contest yields the same absolute utility in the
two situations.
Let U CC be the change in the gain for the conservationalists from winning the contest when
*
comparing a situation with climate change with one without climate change. For qiCC
1  qi1 , it
CC
CC
CC
*
follows that U CC  U1 (qi*1 , qiCC
1 )    U 2 ( S 2 (0), S 2 ( qi1 ))    U 2 ( S 2 (0), S 2 ( qi1 )).
The gain to the conservationalists from winning the contest in the first period is reduced in under
the climate change regime, since the fishermen catch less in the first period, i.e., U1CC  0 . In the
second period, there might be two countervailing effects on the utility of the conservationalists due
to the climate change. On the one hand, since the catch level is lower in the first period, the stock is,
13
all things else equal, larger, but on the other hand, if the reduction in second period profit is caused
by a reduction of the second period stock, the climate change will reduce the second period stock
*
CC
CC
CC
size for the same of first-period catch. We have that: U1 (qiCC
1 , qi1 )  0 , U 2 ( S 2 ( qi1 ), S 2 (0))  0
and U 2 ( S2 (qi*1 ), S2 (0))  0.
Hence, the total effect on the second period utility is ambiguous, as U 2CC  0 . Figure 2a shows a
situation where the utility from winning the contest is reduced under climate change, while Figure
2b shows a situation where the opposite is the result.
Figure 2a: Conservationalists lose from climate change
S2
S2
Growth
2. period gain no CC
Growth
2. period gain no CC
Growth-CC
S 2 (qi*1 , q2 )
Growth-CC
S 2 (qi*1 , q2 )
S 2 (qiCC
1 , q2 )
S 2 (qiCC
1 , q2 )
2. period gain CC
Figure 2b: Conservationalists might win from climate change
qiCC
1
qi*1
2. period gain CC
qiCC
1
qi*1
The most likely total effect of climate change on the utility of the conservationalists is negative,
since we have to expect that the two negative effects dominate the one positive effect. The increase
in the stock in the first period implies an increase in the stock in the second period. However, only
if an increase of one unit of the first-period stock increases the second-period stock by more than
one unit, the utility gain from winning the contest can be higher under climate change. 13
6. The effect of climate change on the probability of conservation
The analysis in the previous section reveals that  CC  0 and the most likely situation for the
conservationalists is U CC  0 . This means that both interest groups have smaller gains from
winning the contest, and hence, the probability of conservation is ambiguous.
Let us now analyze a situation where the climate change is expected to reduce the future stock of
the resource. Common sense suggest that if future stock sizes is likely to be depressed due to
13
Formally, we have that U CC  0 if g q' i1  1 .
14
climate change, the pressure from the conservationalists to conserve the resource will increase, and
the effect being that the probability of conservation is increased. However, when letting the policy
outcome be determined be a contest between two opposing interested lobby groups, the outcome of
an expected climate change regime is more complex, as the analysis will demonstrate.
The effect on the probability of conservation as a result of climate change can be derived as:
pC*
U CC    U   CC
.

(CC )
(  U )2
Table 2 presents different ways climate change might change the interest groups’ gains from
winning the contest and its implication on the probability of conservation.
Table 2: Different ways climate change might change the groups’ benefit
pC*
U CC    U   CC
 CC U CC

 0 if

2
 (CC )
(  U )

U
Case 1
 CC  0 , U CC  0
Case 2
 CC  0 , U CC  0
pC*
U CC    U   CC

0
 (CC )
(  U ) 2
Case 3
 CC  0 , U CC  0
pC*
U CC  

0
 (CC ) (  U ) 2
Case 4
 CC  0 , U CC  0
pC*
U   CC

0
 (CC ) (  U ) 2
Below the four cases will be discussed. The must likely case is where climate change affects the
benefit from winning the contest of both interest groups (and the case that has been analyzed so far).
If climate change is expected to negatively affect the abundance of the fish stock in the future, then
both groups will gain less from winning the contest, and the result of climate change on the
probability of conservation can be both positive and negative depending on the finer details in the
model. More precisely,
pC*
 CC U CC
. That is, if the percentage increase in the gain
 0 if

(CC )

U
for the fishermen from winning the contest given climate change is smaller that the percentage
increase in gain for the conservationalists from wining the contest under climate change, then
conservation will be increased under climate change, but if the opposite is the case, then
conservation is reduced in a climate change regime.
Case 3 is a situation where only the utility of the conservationists is affected by the climate change.
The arguments entering the utility function of the conservationalists has so far only been related to
15
the size of the current and future stock. However, the conservationalists could also be guided by
some application of the precautionary principle or precautionary approach. 14 Once the climate
change is expected to increase the variance of estimates of future fish stocks, invoking of the
precautionary principle will imply that the limit reference points to be increased. If on the other
hand, the future profitability remains unchanged, the situation resembles case 1. Since the gain to
the conservationalists from winning the contest is increased, while the gain to the fishermen is
unchanged, the result is that the probability of conservation is increased.
The opposite situation is where the future profitability of the fishery is reduced, without affecting
the utility of the conservationalists. E.g., a situation where the commercial value of the fish resource
is expected to be lowered by climate change, without making the species less scarce. In this case,
since the gain for the fishermen from winning the contest is reduced, the probability of conservation
is again increased.
7. Conclusion
More and more evidence suggest that climate change is a real problem and that we are at the
beginning of a non-stoppable trend of increasing temperatures and other climatic changes. In this
light, fisheries management schemes need to be adjusted in order to cope with future climate change
induced changes in variables affecting fisheries. In this paper, it has been demonstrated how climate
change is likely to alter the relative strength of different interest groups with opposing interests in
the fish resources, where the relative strength is measured be the gain from winning the political
contest over the proposed regulation. The results give a hint to what difficulties future designers of
fisheries regulation will face.
By treating the determination of the fisheries management as a contest between interest groups with
opposing objectives, it is possible to endogenously determine the probability of conservation as
determined by the interest groups’ relative gain of winning the contest. Climate change is expected
In the Gilchrest-Farr “fishing recovery act” (HR 4046), the precautionary approach is defined as “exercising
additional caution in favour of conservation in any case in which information is absent, uncertain, unreliable, or
inadequate as to the effects of any existing or proposed action on fish, essential fish habitat, other marine species, and
the marine ecosystem in which fisheries occurs” and “selecting and implementing any action that will be significantly
more likely than not to satisfy the conservation objectives”.
14
16
to affect the fisheries in several ways, depending on what type of fishery is the issue, both with
respect to type of fish and the geographical location of the fish resource. As a consequence, climate
change will have the possibility of influencing the relative gain from winning the contest in
different ways. This paper provides a characterization of how the probability of conservation is
related to climate change related changes in the biological “background” variables.
8. References
Blindheim, J., V. Borokov, B. Hansen, S-Aa. Malmberg, B. Turell and S. Østerhus,(2000) ‘Upper
layer cooling and freshening in the Northwegian Sea in relation to atmospheric forcing’, Deep-Sea
Research, 47, 655-680
Brandt, U.S. and G.T. Svendsen (2003), ‘The political economy of environmental regulation:
Auction and grandfathering in the EU, Working Paper
Berck, P and C. Costello (2001), ‘Overharvesting the Traditional Fishery with a Captured
Regulator’, Working Paper.
Buch, E., S.A. Petersen and M.H. Ribergaard (2004), ’Ecosystem variability in West Greenland
waters’, Northwest Atlantic Fishery Science, 34, 13-28.
Dickson, R.R. and K.M. Brander (1993), ‘Effects of a changing windfield on cod stocks of the
Norht Atlantic’, Fisheries Oceanography, 2, 124-153.
Dijkstra, B.R. (1998),’Cooperation by way of support in a Rent Seeking Contest for a Public Good’,
European Journal of Political Economy’, 14, 703-725.
Epstein, G.S. and S. Nitzan (2002), ’Stakes and Welfare in Rent-Seeking Contests’,
Public Choice, 112, 137-142.
Epstein, G.S. and S. Nitzan (2002), ’Endogenous Public Policy, Politicization and Welfare’,
Journal of Public Economic Theory, 4, 661-667.
ICES (2005), ICES, http://www.ices.dk/marineworld/recoveryplans.asp
ICES (1998), Study Group on the Biology and Assessment of Deep-Sea Fisheries Resources. ICES
Council Meeting 1998 / ACFM: 12
IPCC (2001): Intergovernmental Panel on Climate Change: IPCC Third Assessment Report:
Synthesis Report, Cambridge University Press.
Karpoff, J. M. (1989), ’Characteristics of Limited Entry Fisheries and the Option Component of
Entry Licenses’, Land Economics, 65, 386-393.
17
Ludwig, D., R. Hilborn and C. Walters (1993), ’Uncertainty, Exploitation and Conservation:
Lessons from History’, Science 260, 17-36.
Mason, C. F. and S. Polasky (1994), ‘Entry Deterrence in the Commons’, International Economic
Review, 35, 507-525.
Munro, G.R. (1998), ’The Economics of Overcapitalization and Fishery Resource Management, a
Review’, Discussion Paper No.: 98-21, Department of Economics, the University of British
Columbia.
Nitzan, S. (1994), ‘Modeling Rent Seeking Contests’, European Journal of Political Economy’, 10,
41-60.
Olson, M. (1965), The Logic of Collective Action, Cambridge University Press, Cambridge.
18
Appendix
Proof of lemma 1:
 i entry  1i (qi1 , S1 )  L( 2IND )   2IND (q2 , S2 )  P1  qi1  c(qi1 , S1 )    L( 2IND )  ( P2  q2  c(q2 , S 2 )) .
 2IND
 2IND
 2IND
 i entry
 P1  cqi1    L IND 
  2IND    L 
 P1  cqi1   
 [ L IND   2IND  L] .
2
2
qi1
q1
q1
q1
 2IND
 i no entry
.
 P1  cqi1   
qi1
q1
Define q1*i no entry  arg{
 i  no entry
 0} .
q1i
* no  entry
1
Implying that P1  cqi1 (q
Now evaluate
 2IND
.
, S1 )   
q1
 i entry
at q1*i  no entry :
i
q1
 2IND
 2IND
 i entry
|







 [ L IND   2IND  L] .
*

no

entry
i
q1  q1
2
q1i
q1
q1
 2IND
 i entry
|qi q*noentry   
 [ L IND   2IND  ( L  1)]  0 .
i
2
1
1
q1
q1
19