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Common Property Resources and Factor Allocation

Published online by Cambridge University Press:  07 November 2014

J. A. Crutchfield
J. A. Crutchfield*
Affiliation:
University of Washington
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Extract

Two recent articles by Professors H. Scott Gordon and Anthony Scott present an interesting analysis of the conditions for economic maximization in a renewable resource industry the primary raw material for which is drawn from the public domain. While their criticism of the concepts which now govern fishery conservation programmes will be generally accepted among the handful of economists dealing with the fishing industry, some aspects of the problem call for additional consideration. In this paper I should like to elaborate and modify the general outlines of the analysis, largely in terms of a specific and important case: the Pacific halibut fishery.

As Gordon and Scott point out, the core of the “over-fishing” problem inheres in the fact that the basic resource is incapable of ownership in any meaningful sense. When the demand for a given species exceeds the level at which supplies can be drawn from local waters at relatively constant costs, further exploitation of the fishery gives rise to higher costs at both intensive and extensive margins. The catch per unit of fishing effort will decline in the closer, more populous grounds as stocks are reduced, and greater costs must be incurred in pushing fishing activities to more distant grounds. If the grounds could be and were privately owned, the incremental income resulting from, say, secular growth in demand would, of course, accrue as rent in a purely Ricardian sense. Since they are not, and since there are no substantive barriers to the entry of new vessels, the increasing aggregate returns will simply be dissipated in excess capacity and higher monetary and real costs. If the reduction in stocks, viewed with grave alarm by biologist and legislator alike, now gives rise to restrictions on the catch designed to hold fish populations at some predetermined level or to rebuild them, the increases in price, aggregate returns, and excess capacity will continue. There is obviously no assurance that the final effect on economic output over time relative to total factor inputs is the same, better, or worse than in the absence of such restrictions.

Type
Research Article
Information
Canadian Journal of Economics and Political Science/Revue canadienne de economiques et science politique , Volume 22 , Issue 3 , August 1956 , pp. 292 - 300
Copyright
Copyright © Canadian Political Science Association 1956

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References

1 Gordon, H. Scott, “The Economic Theory of a Common-Property Resource: The Fishery,” Journal of Political Economy, LXII, 04, 1954, 124–42CrossRefGoogle Scholar; and Scott, Anthony, “The Fishery: The Objectives of Sole Ownership,” Journal of Political Economy, LXIII, 04, 1955, 116–24.CrossRefGoogle Scholar

2 For a more general discussion of conservation measures affecting this and other Pacific Coast fisheries see Crutchfield, James A., “Conservation and Allocation in the Pacific Coast Fisheries,” Proceedings of the Western Economics Association, 1955, 69–72.Google Scholar

3 The only exceptions of importance are the shellfish “farming” operations in inshore waters, such as the oyster fisheries of the Pacific Northwest and Middle Atlantic areas.

4 For a complete and recently revised series showing halibut landings, by area of origin, from 1888 to 1950, see Report of the International Fisheries Commission, no. 17 (Seattle, Wash., 1952), 10–11.Google Scholar

5 In the Pacific halibut fishery, virtually all fish are taken on anchored ground lines or “skates” to which baited hooks are attached at intervals. The “unit of fishing effort” is therefore readily defined as a given fishing period for a standard skate of long-line gear.

6 The International Pacific Halibut Commission exercises its powers subject, of course, to the approval of the Governor General in Council of Canada and the President of the United States.

7 The Commission announces opening dates in advance of each season (usually in April or May). Closing dates for each regulatory area are announced when it appears that the quota will be filled by vessels then at sea. Weighted average prices of dressed halibut landed at Seattle ranged from $.075 per pound in 1934 to $.227 in 1952. Even in the post-war years annual prices fluctuated between $.207 and $.267.

8 It may be contrasted, for example, with the Bristol Bay salmon programme, under which fishing was restricted to sailing craft only until very recently.

9 Flexibility in the use of fishing craft may well be desirable in so far as normal fishing conditions and relative price changes make some mobility among different fisheries essential. However, diversification in the Pacific Coast fisheries appears to have gone beyond these requirements.

10 Crutchfield, James A., “Conservation and Allocation in the Pacific Coast Fisheries,” 70–1.Google Scholar Data are from annual yearbooks of the Pacific Fisherman.

11 U.S. Dept. of the Interior, Fish and Wildlife Service, Fishery Statistics of the United States, 1950 (Washington, D.C.: U.S. Government Printing Office, 1953).Google Scholar Total landings in 1950 were 2 per cent below those in 1934 largely because of sharply reduced stocks of pilchards, salmon, and mackerel. Only a continued increase in landings of tuna, most of which are caught in waters off Central America, has prevented a more marked decline.

12 As a result either of new construction or the utilization of idle capacity in other fisheries which would otherwise be reduced in the long-run.

13 A longer period of time would, of course, be distinctly desirable from the standpoint of the buyer-shipper. Since deliveries must be spread over the full year, aggregate storage charges and deterioration in quality would be reduced by more equal distribution of landings.

14 Cf.: White, Donald J., The New England Fishing Industry (Cambridge, Mass., 1954)Google Scholar; Federal Trade Commission, Report on Distribution Methods and Costs, Part VIII, Cost of Production and Distribution of Fish in New England (Washington, D.C.: U.S. Government Printing Office, 1945), 46–64 Google Scholar; California C.I.O. Council, Research Division, The Fisheries of California (mimeo.) (San Francisco, Calif., 1947)Google Scholar; Jamieson, Stuart and Gladstone, Percy, “Unionism in the Fishing Industry of British Columbia,” this Journal, XVI, no. 1, 02, 1950, 1–11 Google Scholar; and Crutchfield, James A., “The Economics of the Pacific Coast Fresh Market Fishing Industry” (unpublished doctoral dissertation, University of California, Dept. of Economics, 1954), chaps, V, VI, and VIII.Google Scholar

15 The four largest dealers in Seattle purchased 72.4 per cent of total landings between 1951 and 1953. In other ports the percentage ranged from 86.8 to 100.

16 See particularly United States v. Seattle Fish Exchange, Inc., et al., Civil 612, District Court of the United States for Western District of Washington, Northern Division, 1941. Both this and an earlier case involving the same companies were settled by pleas of nolo contendere and acceptance of consent decrees.

17 Only members of the exchange could bid for fish, and admission to the exchange required a two-thirds' vote of the membership. No new buyers were admitted to the Seattle exchange until it was reorganized on an open basis under the terms of the 1942 consent decree.