The social cost of fishery subsidy reforms |
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| Institution: | 1. ITAM, Centro de Investigación Económica, Av. Camino Santa Teresa 930, Col. Héroes de Padierna. Del. Magdalena Contreras, C.P. 10700 Mexico, D.F., Mexico;2. Universidad de Vigo, Escuela de Comercio, Calle Torrecedeira 105, 36208 Vigo, Spain;3. AZTI, Txatxarramendi ugartea z/g, 48395 Sukarrieta, Bizkaia, Spain;4. El Colegio de México, Camino al Ajusco No. 20. Col. Pedregal de Sta. Teresa, C.P. 10740 Mexico, D.F., Mexico;5. Universidad de Vigo, Department of Mathematics, Campus Lagoas-Marcosende, 36310 Vigo, Spain;1. Nereus Program & OceanCanada, The University of British Columbia, 2202 Main Mall, Fisheries Centre, Vancouver, Canada V6K1J5;2. Fisheries Economics Research Unit, The University of British Columbia, 2202 Main Mall, Fisheries Centre, Vancouver, Canada V6K1J5;3. Gulf of California Program, WWF Mexico, World Wildlife Fund, Inc., Álvaro Obregón 1665, La Paz, BCS 23000, Mexico;4. Enviromental Economics Research Center, Universidad Autónoma de Baja California Sur, Carretera al Sur km 5.5, La Paz, BCS 23080, Mexico;1. U.S. NOAA Fisheries, Southwest Fisheries Science Center, 8901 La Jolla Shores Drive, La Jolla, CA 92037, USA;2. U.S. NOAA Fisheries, Pacific Island Regional Office, 1601 Kapiolani Boulevard, Suite 1110, Honolulu, HI 96814, USA |
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| Abstract: | This paper analyzes the impact of reducing fisheries subsidies in a general equilibrium model for a fishery with heterogeneous vessels. It considers the impact of the stock effect, which determines the participation of vessels in a likely increased stock abundance. In equilibrium, the productivity of the fleet is endogenous as it depends on the stock of fish along the equilibrium path. The model concludes that any impact of a subsidy drop will depend on the stock effect. If that effect is large, fishing firms will benefit from the stock recovery and the elimination of the subsidy will increase future returns on investment. The model is particularised to industrial shrimp fisheries in Mexico. It is shown that the complete elimination of a subsidy increases biomass, capitalisation, marginal productivity, and consumption and reduces inequality when the effect of the induced increase in the stock is considered. However, if that effect is not considered, capital and consumption decrease, and inequality and hence, the social costs of a subsidy drop, increase. |
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| Keywords: | Subsidies General equilibrium model Fisheries Social costs |
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