Question

The economics of fisheries - what are the issues involved? A graphical illustration of the economics of fisheries and the response of economic agents; how does the equilibrium look like? What is the problem with the equilibrium?

Answer 1

Fishes are fundamentally biological systems and hence the general theory of population change for an organism in the natural environment is shown in the figure below.The graph shows two paths of population change.

Above the min critical population necessary for survival Xmin population grow from A to a natural equilibrium. B is the inflection point, where the annual growth declines and population eventually approaches its upper limit Xmax. If the population fall below the critical Xmax level due to temporary increase in food, it will decline rapidly as seen from C to Xmax. If it falls below Xmin it will decline to extinction point D.

In the population growth pattern seen above Stock size appears in the x axis and annual growth on the y axis. The arrow indicates the direction of population change. When growth rates are positive the population is expanding towards Xmax while when it is below Xmin it is declining towards zero.

We can see that X min is an unstable equilibrium as a slight increase set the species on the road to recovery while a slight decrease heads it towards extinction. Whereas Xmax is a stable equilibrium as a smaller population will grow and a larger population will shrink.

MSY: Maximum sustainable yield: Max quantity of a natural resource that can be harvested without depleting the stock population of the resource.

Above MSY is at the top of the curve. The potential sustainable harvest equals the total annual growth.

Economic Optimum EE, Marginal Revenue = Revenue Cost

Open Access Equilibrium Eo Total Revenue = Total Cost or Average Revenue = Marginal Cost