Econ 171 Models & Concepts

Front 1

Shaefer Model

Back 1

Posits relationship between growth of fish population and size of fish population

Front 2

Static Efficient Sustainable Yield for a Fishery

Back 2

Inclusion of costs to the Shaefer model to determine maximum net benefits; different from dynamic efficient sustainable yield which incorporates discounting
Three assumptions:
1. price of fish is constant and does not vary with amount sold
2. MC per unit of fishing effort is constant
3. amount of fish caught per unit of effort expended is proportional to the size of fish population (or, the smaller the population, the fewer fish caught per unit of effort)
Efficient yield at Ee

Front 3

Dynamic Efficient Sustainable Yield for a Fishery

Back 3

Effect of a positive discount rate for the management of a fishery: the higher the discount rate, the higher the cost to the resource owner of maintaining any given resource stock.
When introduced, efficient level of effort is increased from static efficient sustained yield with a corresponding decrease in equilibrium population level.
Efficient yield at Ec

Front 4

External costs created by unrestricted open-access resources

Back 4

1. Contemporaneous: external costs borne by current generation from overcommitment of resources, leading to lower current rates of return
2. Intergenerational: external costs borne by future generations from reduction of stock, leading to lower future profits

Front 5

Market Allocation in a Fishery (graph)

Back 5

Front 6

Characteristics of an efficient quota system (for fisheries; ITQs)

Back 6

1. Entitles the holder to catch a specified share of the total authorized catch of a specific type of fish
2. Catch authorized by quotas held by all fisherman should be equal to the efficient catch for the fishery
3. Quotas should be freely transferable among fisherman, and markets should send appropriate price signals about the value of fishery

Front 7

Catch Shares

Back 7

Percentage-share allocation of allowable catch, where total allowable catch is determined annually by the government in accordance to changes in stock

Front 8

High-grading

Back 8

When smaller stocks and wasted harvests result from quotas that specify catch in terms of weight and the value of catch is greatly affected by size of fish; fisherman have the incentive to throw back smaller, less valuable fish
Solution: Allow fisherman to cover temporary overages with allowances subsequently purchased or leased from others, as long as the market value of "extra" fish exceeds the cost of these leasing quotas

Front 9

200 Mile Limit

Back 9

Declaration by countries that their ownership rights extend some 200 miles out to sea, so that countries have exclusive jurisdiction and can implement effective management policies

Front 10

Market for Food

Back 10

High price responsiveness to food (relatively inelastic demand curves)
Strong form represented by supply curve Sa
Weak form represented by supply curve Sb

Front 11

Strong Form

Back 11

One form of the Global Scarcity Hypothesis that suggests that per capita food production is declining-- production does not keep pace with increases in demand brought by population growth
Evidence suggests that per-capita food production in both developed and developing countries has actually increased, ruling out the strong form

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Weak Form

Back 12

One form of the Global Scarcity Hypothesis that suggests that the supply curve is sufficiently sloped that food prices are increasing more rapidly than other prices in general, causing food insecurity from high prices
Recent evidence supports the weak form of the Global Scarcity Hypothesis

Front 13

Debt-Nature Swaps

Back 13

An international arrangement involving the purchase of a developing country debt by a governmental environmental organization who offers to cancel the debt in return for an environmentally related action

Front 14

Infinite-Horizon Harvesting Model

Back 14

Considers forest harvest as an infinite sequence of harvesting and replanting, and therefore must consider interdependencies between cycles such as the opportunity cost of delay
As such, the optimal time to harvest would be shorter than in the single-harvest case, all other things equal

Front 15

Basic Forest Harvest Model (Single-Harvest)

Back 15

The size of net benefits from wood depends on whether the land will be perpetually committed to forestry or left to natural processes after harvest. Factors include planting and harvesting costs, discount rate, growth function, and price. Age of optimal harvest (max net benefits) varies directly with discount rate.

Front 16

Concession Agreements

Back 16

Contractual agreements between governments and loggers that define terms under which public forests can be harvested. Loggers have a substantial advantage in harvesting existing forests over planting new forests.
Typically, governments fails to fully capture rent, and there is disincentive for loggers to exercise sustainable logging practices due to the limited term agreement.