Three essays on the management of common pool resources, with application to fisheries

The management of common pool renewable resources has been the focus of economic research for decades, yet over-exploitation of many resources, particularly fisheries, continues to occur. This research adds to the literature supporting the effective management of fisheries in two ways. First, in recognition of the failure of many fishery management institutions to effectively halt or reverse the decline in fisheries around the world, a closer look is given to the natural processes governing biological and economic dynamics of fisheries. Chapter 1 addresses this issue by showing that ignoring or simplifying the multiple ways in which environmental disturbances impact renewable resources can undermine management goals, through both systematic error in achieving harvest targets, and the potentially improper application of various harvest control mechanisms such as individually tradable output quotas or taxes. Specifically, we allow for a single environmental disturbance to drive variation in both the economic and biological sides of a bioeconomic system. A number of specific fisheries are considered, and a stochastic dynamic programming model is developed to investigate how correlation between disturbances to marginal harvest costs and biological growth changes the optimal management of a renewable resource and the relative performance of harvest quotas, effort quotas, and taxes in a competitive equilibrium. Chapter 2 focuses on a specific environmental disturbance -- changes in salinity due to freshwater inputs to the coast -- and how that disturbance impacts revenues in the Georgia, USA blue crab fishery. It is well documented that the health of estuarine ecosystems depends on upstream hydrology; however, there is limited information available to policymakers about the economic impacts of restricting freshwater flow to the coast. The biological literature suggests that blue crabs are impacted in numerous, negative ways by heightened salinity, and a rich data set allows us to estimate a four-equation structural model to determine the importance of salinity to various biological life stages. A policy experiment provides an estimate of the benefits of a modest minimum flow standard for three rivers entering the Georgia coast, which are found to be considerable. This analysis provides the first estimate of the value of freshwater to a coastal fishery, and also highlights the importance of considering the detailed biophysical impacts associated with an environmental disturbance. The second contribution of this work is to the growing body of research on the informal management of common pool resources. In contrast with formal regulations, which depend on external institutions for the creation and enforcement of rules governing the use of resources, informal management systems rely on social and cultural norms to increase efficiency and reduce exploitation of common pool resources. These informal rule systems are particularly prevalent in exploited coastal fisheries, where monitoring and enforcement of formal rules is costly and resource users maintain a level of interaction that allows rules to develop and sanctions to be effective. Chapter 3 investigates a particular informal "rule reform," referred to as "first in time, first in right", and characterized by fishermen claiming fishing areas by actively fishing. The theoretical model is framed in the context of the Georgia blue crab fishery, and we show that resource and efficiency outcomes are not always improved under informal rules as compared to a purely competitive structure. This is an important insight with broad implications for fisheries in both developed and developing countries, and is novel in a literature that has universally assumed informal rules lead to improved efficiency and resource outcomes.