Maximizing the economic value of fisheries resources requires knowledge of the growth potential of the fish stock and the benefits and costs of harvesting fish. Despite its crucial role in the rent maximization problem, stock abundance effects on costs, the stock-cost elasticity, have not previously been estimated. Unobservability of the stock is the main problem; abundance estimates generated by assessment models are rarely spatially delineated and contain unmeasureable noise.
This paper consistently estimates the stock-cost elasticity in the Alaskan longline halibut fishery. We combine recent advances in estimating harvest technologies when abundance is unobserved (Weninger, Perruso and Bunzel, 2018) with industry-independent stock survey data collected by the International Pacific Halibut Commission (IPHC). A generalized linear model is fit to the IPHC data to construct a space-time-varying map of relative halibut stock abundance. We embed the index in an estimation of a structural model of halibut fishing costs. Consistent estimation of the stock-cost elasticity obtains under reasonable assumptions for fisheries data generating processes.
Two stock-cost elasticity estimates are derived. A first measures stock abundance effects under the assumption that the spatial distribution of longline fishing is stock invariant. A second approach exploits the predictive power of the generalized linear model and spatial fishing patterns in our data to simulate profit maximizing spatial longline fishing patterns when halibut abundance and its spatial distribution both change. We estimate additional cost savings that derive when fishermen reoptimize spatial-temporal fishing patterns in response to increased halibut abundance.
A preliminary elasticity estimate of -0.35, with 95% c.i., [-0.61, -0.11] obtains when spatial fishing patterns are assumed to remain constant. Our elasticity estimates is -X.XX (TBD) when fishermen re-optimize their spatial fishing patterns in response to an stock abundance increase.
Our results have profound implications for setting harvest policies in fisheries: stock-cost elasticities in the range estimated in our model favor maintaining abundance at levels well above the maximum sustainable yield benchmark. Doing so will substantially lower halibut fishing costs and increase fishery rent.