Question

A proposal is made to ban the use of a particular type of gear by vessels engaged in a certain saltwater fishery. indicate conceptually how costs would be measured in this case. how might the necessary data be obtained?

Answer 1

The popular method for project evaluation is cost benefit analysis. For environment projects, we consider the social cost for impact assessment. The social cost is summation of private cost and external cost. The cost for banning use of particular type of gear by vessel engaged in a certain saltwater fishery would be measured in following ways:

• We assume that this ban would have some impact in the prices of local market, but not have any influence on the market price of fisheries in the national market since it is implemented in certain areas for particular gear only.
• Due to above, the demand curve for the fisheries would be horizontal or flat as depicted by line D.
• The supply curve would be upward sloping as per law of supply. The supply curve also depicts marginal cost such that S1=MC1. So, before ban the total output would be q1 and total cost represented by area (c)  and (f).
• Now, the ban on particular gear will increase the cost of catching fish in the particular area. This is marked by shift in supply curve upwards depicted by S2=MC2.
• If we assume output to be fixed at q1, then increase in cost would be the area b+e+d. However, ban puts a burden on fishermen. Consequently, cost will increase and output will decline to q2.
• We can clearly see cost-benefit analysis from the diagram. Before the ban, the cost was shown by area c+f and benefit by area a+b+e. However, post ban on gear, the benefit has declined to area a only.

The necessary data can be obtained by cost surveys, face-to-face survey, etc. In the cost survey, we can ask the fishermen by supplying him questionnaire about various cost of raw material, labor cost, overhead cost in catching fish, technological cost etc. The same can be done by face-to-face interview. However, latter have limited outreach. The questionnaire survey is better method for data collection.