HowTo: stop bloody overfishing

North Sea fishing has been in the news, lately. I say lately, this extends back a few years. Yesterday’s article contends

Europe’s seas are in a “serious state of decline” as a result of coastal development, overfishing and pollution from agriculture, warn scientists.

The Black Sea, too. Last year, a similar article (also in the BBC) warned us

There will be virtually nothing left to fish from the seas by the middle of the century if current trends continue, according to a major scientific study.

And the superb magazine Science has been at it longer than that (more generally here).

I originally got onto this issue through – who else? – George Monbiot, back in 2006. He was writing about the necessity of Omega 3 fatty acids:

The more it is tested, the more compelling the hypothesis becomes. Dyslexia, ADHD, dyspraxia and other neurological problems seem to be associated with a deficiency of omega-3 fatty acids, especially in the womb. The evidence of a link with depression, chronic fatigue syndrome and dementia is less clear, but still suggestive.

None of these conditions are caused exclusively by a lack of these chemicals, or can be entirely remedied by their application, but it’s becoming pretty obvious that some of our most persistent modern diseases are, at least in part, diseases of deficiency.

He had a bunch of references in there, which I deleted (one of the great things about Monbiot’s writing is his use of references – something I always wish I had the non-laziness to emulate. For now I just go with hyperlinks).

Unfortunately, as Monbiot pointed out, there aren’t enough fish to achieve this purpose. Why?

If you want to know why, read Charles Clover’s beautifully-written book The End of the Line. Clover travelled all over the world, showing how the grotesque mismanagement of fish stocks has spread like an infectious disease. Governments help their fishermen to wipe out local shoals, then pay them to build bigger and more powerful boats so they can go further afield. When they have cleaned up their own continental shelves, they are paid by taxpayers to destroy other people’s stocks.

The European Union, for example, has bought our pampered fishermen the right to steal protein from the malnourished people of Senegal and Angola. West African stocks are now going the same way as North Sea cod and Mediterranean tuna.

I first realised just how mad our fishing policies have become when playing a game of ultimate frisbee in my local park. Taking a long dive, I landed with my nose in the grass. It smelt of fish. To the astonishment of passers-by, I crawled across the lawns, sniffing them. The whole park had been fertilised with fishmeal. Fish are used to feed cattle, pigs, poultry and other fish – in the farms now proliferating all over the world. Those rearing salmon, cod and tuna, for example, produce about half as much fish as they consume. Until 1996, when public outrage brought the practice to halt, a power station in Denmark was running on fish oil.

Now I have discovered that the US Department of Energy is subsidising the conversion of fish oil into biodiesel, through its “regional biomass energy program”. It hopes that fish will be used to provide electricity and heating to homes in Alaska. It describes them as “a sustainable energy supply”.

He also written more recently about the effects of industrial fishing on larger species in the oceans. As have the BBC’s science people:

“Changing relationships within the food web, such as removing top predators through fishing, can tip the scales and lead to large-scale changes in ecosystem make-up, scientifically referred to as regime shifts.”

More broadly, this is problematic because marine life is kind of the basis for our entire food chain. The EPA discusses their use as a bioindicator. The indications, by the by, aren’t great.

This is also why we worry about the oxygen levels down there.

An economic solution

So, what to do? This relates a little to the cross-post with the missus.

The question is, why are we doing this? Because we like fish (genereally speaking – I like them enough to wish we didn’t eat them) and we either don’t know or don’t care about declining biodiversity. Both of the latter are true. We don’t know. Do you know what it is you’re eating at the local chippy? Or which ocean the thing actually came from?

I fancy the chances that you don’t. You don’t know whether you’re eating Cod that was accidentally scooped up by a trawler looking for Haddock (or that you have Cod because the standard fishes of the day have disappeared). You don’t know whether you’re eating fish from the territorial waters of a poor country in Africa, because your country’s waters are ‘dry’ (so to speak) and you got these fishing rights on the cheap. Too cheap for them, and too cheap for you. Why?

I say ‘too cheap’ for you (the consumer) because of the not-caring crack made above. You might care, you might not. But when you enter the supermarket, odds are you buy a fish based on the price. That’s the information given to you. None of this other stuff is provided. There’s no pseudo-Surgeon-General’s warning that Eating This Fish Might Cause Critical Loss of Biodiversity And Shorten Humanity. As consumers we typically aren’t this well informed, and we purchase according to a price that does not include the loss of biomass, the loss of biodiversity, the loss of future wellbeing and income in Angola, etc.

This is a breakdown in the market. We are pursuing technical efficiency, but at the probable cost of allocative efficiency. We won’t achieve allocative efficiency because we aren’t sufficiently informed. A breakdown in the market means inefficient equilibria, mis-allocated resources, and a need for Government to direct us to the efficient outcome. As in the textbook example below (substitute Fish for Electricity and Loss of Biodiversity for Acid Rain, and you’re set).

We function, say, on the lower Supply curve, the one that doesn’t include the social cost of our consumption. Our price P₁ is too low, and our consumption quantity Q₁ is therefore too high. That yellow triangle is called Deadweight Loss – it represents the mis-allocation of scarce resources.

How should we deal with this? Clearly someone is at fault. If consumers knew the costs of their consumption, would they stop? Maybe, maybe not. Don’t forget all the other weird shit for which fishmeal is being used.

Perhaps if we knew better we would demand our governments stop allowing such practices? Perhaps. This is called the tragedy of the Commons: free access to a finite resource with infinite demand results in over-exploitation and the depletion of the resource. Fishing isn’t exactly free, but it’s free enough.

Command and Control

Suppose, hypothetically, that we did convince our governments that this all had to be slowed way the hell down. There are arguments already for a total ban on deep-sea fishing (although it becomes more difficult to distinguish this, as deep-sea animals come ever upwards and inwards in search of depleted food sources). But this is a bit like banning the catching of certain species of fish. Trawling is by definition imprecise. A ban would have to be imposed, policed, enforced, etc., and the impact on prices in the market would completely arbitrary. As consumers we would lose out on efficiency grounds, which is what we’re after.

This is the command and control approach: government intervention by way of regulation. It isn’t typically the efficient approach. For a start, whose to say the government actually does work with a weighted value of all of our interests as their goal? They don’t usually.

Coasean markets

The Coase theorem springs forth once more! So named for the original contribution by Ronald Coase, this is more or less what we have at the moment. Selling rights to the Commons to private enterprise. This creates a market where there wasn’t one before. Instead of worrying about equilibrium in the market for fish, we allow equilibrium in the market for reducing the loss of fish.

In this manner the cost of losing fish, etc. is built into the price of the permission to fish. That cost is then built into the price we pay at the supermarket. The problem? That cost is clearly too low. And as we discussed with the case of Hyperbolic Discounting, since something is more valuable as it becomes more rare, the cost of losing species should be increasing as more of them are lost. In our case, for example, there is a real disconnect: we’re paying for the loss of marine diversity in Angola, not the North Sea. The market for fishing out Angolan waters is not, I would think, the result of efficient bargaining (the key ingredient to Coasean solutions).

Pigovian taxes

The other option is government intervention of the third kind – taxation. A tax on production. In the graph above this automatically raises the cost of production and moves the supply curve up/leftwards, towards the efficient equilibrium (taxing consumption would alternatively move the demand curve inwards, but the effect is the same. First year students? The incidence of a tax doesn’t change if the tax is moved from supply to demand. Very good).

These are Pigovian taxes, again. Named after Arthur Pigou, welfare economist extraordinaire. Pigovian taxes are just such as these: taxes whose purpose is altering consumer behaviour to ensure that resource allocation falls in line with our social welfare function (i.e. our desired allocation) in the presence of market failures.

Taxation is more likely than the other two. Regulation is inefficient, and doesn’t let the market work at all. Coasean solutions only work if the market they construct is itself open and efficient, which is rare. With taxation the government can intervene to alter our economic incentives and lead us, via the market, to the optimal equilibrium. Along the way it can also raise money which it can use to research solutions to the very problems it is trying to overcome (petrol/road taxes can be used to deal with pollution and maintain road, cigaretts excise taxes to research cancer, fishing taxes to research marine diversity and high-protein farming techniques, etc.).

Welfare, Pigovian taxes and the distribution of Cod Cakes

Finally the other sort of welfare consideration. Anybody spot the problem here? All of these measures involve one variation or another of rationing. Infinite demand for a finite resource = rationing the finite resource. Taxation is price rationing, and it means some people won’t be able to afford fish. Consumption taxes are regressive. A 10% tax on bread and milk, for example, represents a larger proportion of a poor person’s income than a rich person’s income.

Equally with the Overfishing Tax. It’s good, because it means the people contributing most to the problem contribute most to the solution. But it will also price poor people out of the market, and that can be considered distributionally unfair. The answer? You aren’t going to like this:

Too bad.

This is how it goes. Poor people are priced out of the market for Gold and Caviar, as well. When things are rare, things are valuable (diamonds not included). The alternative is non-price rationing. I.e., strict limits on the number of fish that can be brought into port. As mentioned, non-price rationing is, by and large, inefficient. Relative to price-based rationing, anyway.

There are of course multiple instances when the distributional equality supercedes the efficiency argument (for the Brits). I don’t see that fish is one of them. Allowing for the aforementioned Monbiot argument, the money raised from the excise on incoming laden fishing trawlers should be used to deal with the distribution of adequate Omega-3, or putting it in school lunches, or something. That, being health-related, is a significant exception to my hand-washing approach to the distribution of fish. I think the distribution of fatty acids is another matter (batter-fried Hake fillets don’t meet my criteria as a doses of fatty acids, I’m afraid). I don’t think the unequal distribution of fish is unfair, but I can agree that an unequal distribution of fatty acids is (sorry, Dave).

So, to my mind, the solution is economic (when wouldn’t it be?), and multi-faceted. But it needs to be built upon adjustment of prices such that consumers in Europe leave over-exploited seas and oceans alone for a good long while.