International (fisheries) agreements and game theory
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Transcript of International (fisheries) agreements and game theory
International (fisheries) agreements and game theory
• Why is international fisheries management important?
• What are the major international agreements governing the exploitation of marine fisheries?
• An example of failure• How can game theory help in explaining
and predicting the behaviour of countries?
International agreements: characteristics
• Countries negotiate on exploitation of common environmental & natural resources
• Negotiations slow, countries or groups of countries may later find it optimal to deviate from the agreements
• Disagreements on the size of environmental and natural resources
• Lead even to military conflicts
List of International Environmental Agreements
• London Convention on the Protection of Wild Fauna in Africa (1900; never ratified)
• International Convention for the Regulation of Whaling (1946)
• Convention for the Prevention of Pollution of the Sea by Oil (1954)
• Antarctic Treaty (1959)• Treaty Banning Nuclear Weapon Tests in the
Atmosphere, in Outer Space and Under Water (1963) • Treaty on Principles Governing the Activities of States in
the Exploration and Use of Outer Space (1967)
List of IEAs Continuing
• Convention on International Trade in Endangered Species (CITES) (1973)
• International Tropical Timber Agreement (1983; renegotiated in 1994)
• Vienna Convention for the Protection of the Ozone Layer (1985)
• Framework Convention on Climate Change (1992) • Convention on Biological Diversity (1992)• International Conference on Population and Development
(1994)• International Convention to Combat Desertification (1994)
Overexploitation of fish stocks
• historical records from 1600’s• resources are scarce, negative externalities• harvesting technologies have developed in
the 1960’s• important food source and industry for
many countries• Consequences: international conflicts,
decreased economic value of fisheries
Law of the sea convention 1982
• Established the Exclusive Economic Zones (EEZ) for the coastal states (200 nautical miles from the coastline)
• 90 % of the marine fish stocks are found inside the EEZs
• Fisheries disputes remained• 1992 UN Conference on Environment and
Development, Rio 1992
C1
C2
STRSH
Transboundary Fish Stocks
SH = Shared fish stocksSTR = Straddling (and highly migratory) fish stocksEEZ = Exclusive Economic Zone
EEZ 1
EEZ 2
UN Conference on Straddling and Highly Migratory Fish Stocks 1993-95
• Attempt to establish property rights for the remaining 10 % of marine fisheries
• Suggests cooperation through regional fisheries organisations
• What are the optimal structures of these organisations?
Example: the Norwegian spring-spawning herring
• One of the most valuable fish stocks in the world
• Stock was depleted in 1970’s due to intensive harvesting
• Migratory pattern changed • Fishing moratorium was declared for
almost 20 years
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 20000
2
4
6
8
10
12
14x 10
9 Norwegian spring-spawning herringSp
awni
ng st
ock
biom
ass
(kg)
Time
Collapse!
Fisheries economics and game theory
• Rational countries maximise their net present value from harvesting for given strategies of other countries
• Equilibrium where unilateral deviation not optimal
• Cooperation vs. non-cooperation
Nash solutions to the fishery games
• Non-cooperative, Clark 1980: Every fishing nation harvests at maximum effort until it is no longer profitable. At this equilibrium the stock is below the optimum of the most efficient country - “tragedy of the commons”
• Cooperative, Kaitala & Pohjola 1988: The surplus benefits from cooperation are equally divided between the fishing nations. Thus the countries in a three-player game receive their threat point payoff + a third from the benefits generated by cooperation
Coalitional games
• If countries can form coalitions with each other the solution of the game may be changed
• The bargaining strength is then also defined by the coalitions
• Stability of coalitions• Coalitional free-riding vs. individual free-
riding
Bioeconomic modelling: from open access to full
cooperation
Agenda
• Bioeconomic = biological models + economic models
• National vs International fisheries management
• International: non-cooperation vs. cooperation
Bioeconomic modelling• National level: Fishermen exploit a common fish stock,
say herring. • Biological model predicts the development of the stock
without any economic activities natural equilibrium• For economic analysis production function is needed,
how the resource is harvested h = Ex• Further, we need prices to build objective functions for
the agents interested in harvesting the stock economic equilibrium
• International level: Countries exploit a common fish stock
International cooperation: how to share benefits
• Assume an agreement is reached for the two countries. • Then the question remains how they should allocate
cooperative benefits• A further question arises whether they find the agreement
satisfactory on this path.
• In practice countries negotiate on TACs (Total Allowable Catch)
• After receiving the national TAC they still need to implement national management (open access, TAC, ITQ (Individual Transferable Quotas), ITE (Individual Transferable Effort)
Game theory and fisheries
• Countries exploit common fish stocks
• Strategic incentives to subsidise the national fleet and create overcapacity biological and economic inefficiency
• Game theory helps to explain the reasons and find ways to reach sustainable agreements
Schäfer-Gordon model
Gordon (Journal of Political Economy 1954), Schäfer (1957), Scott (JPE 1955)
Biology
• Logistic growth F(x)
• Biomass x
Logistic function
• R: intrinsic growth rate• x: fish stock• K: carrying capacity of the ecosystem
)1()(KxRxxF
Production
• Harvest function:
• E: Fishing effort• q: Catchability
qExh
Sustainability
• F(x) = h
• Steady state
Steady state fish stock
qExKxRx )1(
qEKx
R )1(
)1(RqEKx
Steady state harvest
• Insert steady state stock into production function :
)1(RqEKx
qExh
)1(RqEqEKh
Economics
Assumptions:• Fish price per kg constant• Unit cost of effort c constant (constant
marginal cost). Note marginal revenue not constant.
Optimum • Maximise economic yield by choosing E.
max
FOC:
(7)
cERqEpqEKcEph )1(
0)21( c
RqEpqK
E
)1(222
* 2 pqKc
qR
KpqcR
qRE
Comparative statics
• dE/dR > 0
• dE/dK > 0
• dE/dc < 0
• dE/dp > 0
• dE/dq ?
Open access
• Unregulated fishing. E.g. no international fisheries agreement.
• Fishers (countries) enter into the fishery until profits (rent) is equal to zero.
Open access effort
0 cEph
0)1( cERqEpqEK
0)1( cRqEpqK
)1(2 pqKc
qR
KpqRc
qREOA