Identifying supply elasticities of the world's fisheries: Implications for fisheries policy

Résumé

Despite recent improvements in the status of wild-capture fisheries in large part attributable to management, a growing share (33%) of stocks remains overexploited. Demand-side interventions have been touted as a blanket solution that would, through price signals, set the fishing pressure right. That reasoning hinges in part on the supply elasticity of fisheries. Using plausibly exogenous variation in fish prices and extensive data on the world's fisheries, we thus first estimate this elasticity, and find it is very low - about a tenth of that observed in comparable sectors. Demand-side policies also assume that the resulting fishing effort will be sufficient to ensure the recovery of depleted fisheries. We quantitatively verify whether that is the case, by combining a bioeconomic model of fisheries with a model of seafood supply and demand calibrated with our estimates. We find that no matter how drastic the intervention, demand-side policies never achieve more than marginal improvements to fisheries status compared to a counterfactual no-intervention scenario, and at enormous costs; on the other hand, supply-side policies (e.g. quotas), even imperfectly designed or implemented, result in substantial recovery. We conclude that in general, the conditions for demand-side policies to succeed are not met, but might be for some specific fisheries or should factors affecting supply elasticity such as subsidies change. (with Olivier Deschênes, Chris Costello, Gavin McDonald, Mike Melnychuk)