Over-fishing = migration problems (no, not of fish)

Here’s an interesting string of negative externalities:

1. Fish prices in Europe do not reflect the depletion of fishing stocks (in, say, the North Sea)
2. Fishing stocks are depleted (this is the tragedy of the commons)
3. European countries move their fishing enterprises farther afield, striking bargains with African coastal countries to (over-)fish their waters
4. Fishing stocks in African waters become depleted also
5. Illegal immigration from Africa to Europe increases

Eh? We came upon the first few of these points way back in an earlier post:

… 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.

I’ll just use Europe as an exemplar, here – it does the most over-fishing, and is attracting the immigration, so it works well enough.

So that’s the fish – how did they grow into chickens that are now coming home to roost in the form of illegal immigrants (this is a generic term – I’m prepared to argue that there are no such thing)?

A vast flotilla of industrial trawlers from the European Union, China, Russia and elsewhere, together with an abundance of local boats, have so thoroughly scoured northwest Africa’s ocean floor that major fish populations are collapsing.

That has crippled coastal economies and added to the surge of illegal migrants who brave the high seas in wooden pirogues hoping to reach Europe. While reasons for immigration are as varied as fish species, Europe’s lure has clearly intensified as northwest Africa’s fish population has dwindled.

Last year roughly 31,000 Africans tried to reach the Canary Islands, a prime transit point to Europe, in more than 900 boats. About 6,000 died or disappeared, according to one estimate cited by the United Nations.

The region’s governments bear much of the blame for their fisheries’ decline. Many have allowed a desire for money from foreign fleets to override concern about the long-term health of their fisheries. Illegal fishermen are notoriously common; efforts to control fishing, rare.

How do we fix this? Several options. Europe is blaming Africa:

European Union officials insist that their bloc, which has negotiated fishing deals with Africa since 1979, is a scapegoat for Africa’s management failures and the misdeeds of other foreign fleets. They argue that African officials oversell fishing rights, inflate potential catches and allow pirate vessels and local boats free rein in breeding grounds.

…

harbor, for instance, remains littered with 107 wrecked fishing trawlers eight years after the European Union promised to clear them to help develop the port.

In their defense, European officials say they moved to reform their fishing agreements in 2003 to address criticism that ship operators were overfishing and were undercutting local fishermen. Fabrizio Donatella, who heads the European Union unit that negotiates fishing deals, says the new agreements are models of responsible fishing and transparency.

“One cannot say we are not fishing the surplus or that we have not respected scientific recommendations,” he said. Ultimately, African governments must protect and manage their own resources, he said.

If Europe is so enlightened, then, it would behove it (speaking planetarily) to withdraw its fleets. “Europe” can hardly call for personal responsibility by African nations when the imbalance of economic might is so great – it just doesn’t work that way. If nothing else, it – and the rest of the world: be it the EU, WTO, WHO, UN hell, NATO would be fine – should just take over the task of survey and science with regards to African coastal waters and fishing stocks. It is, after all, in our interest to start conserving this resource at some point: I don’t know of fish anywhere else nearby, apart from this small planet.

African countries, in turn, can tell everyone to piss off – but many are in such a state of under-development that this just isn’t likely. Dysfunctionally-managed, often corrupt but, at best, just trying to fight their way out of a poverty trap when every tide flows against them, they’ll take the money, however unfairly distributed the returns on African fish are.

Within Europe, the negative externalities, as per the string at the top, have reached back into our economy – not into the market causing the harm, but back into the economy causing the harm, and this is a positive thing. By being made to bear some of the burden, Europe now faces a direct incentive to stop making such a bloody mess of things out of its own gluttony.

More likely? Merely nominal changes to development aid/behaviour in Africa, and harsh anti-immigration law enforcement/detention to deal with the human consequence. That’s just the way we do things.

Aquacultural economics!

From the Times-Picayune, via Grist.

… with the United States importing 80 percent of the seafood it consumes, the pressure is coming from high levels of government to find alternatives.

“We are already consuming a tremendous amount of farm-raised fish,” U.S. Commerce Secretary Carlos Gutierrez said at a conference on offshore aquaculture earlier this year. “We might as well do it ourselves under our terms, under our conditions, under our standards, and take the market.”

I can’t argue with the logic. I like fish. I’ve mentioned fisheries a few times, here. I don’t eat the stuff, of course, but that’s neither here nor there.

What’s the problem here, exactly? To my mind, it’s basic economics. If demand exceeds supply, then the price has to go up. I went through this with regard to French fishermen and gasoline prices. Why do we insist upon this idea that, somehow, prices have to stay “low”? Prices are determined, one way or the other, by Supply and Demand. Pressing for subsidies is a mistake; over-fishing one’s own waters, then those of every other poor country that one can find is criminal; throwing in with massive fish-farms is a mistake.

An interesting perspective:

One company that has ventured into the field is Kona Blue Water Farms in Hawaii. The company produces 20,000 pounds a week of a boutique Hawaiian fish called Kona Kampachi, found in some organic food stores and many restaurants on the West Coast. That is about half the amount of red snapper brought to shore each week in Louisiana.

Chief executive Neil Sims has received numerous federal grants for hatchery research on other species, but he said the company is likely years away from turning a profit. Given the cost of shipping from Hawaii, Sims said expanding to other parts of the country is critical for success.

“You grow your own grains. You don’t chase chickens around in the wild. You don’t chase cows, so why would you only focus on wild fish?” Sims said. “Other countries understand that logic, and these countries are welcoming that.”

Without legislation to expand his business to federal waters, he said he plans to move some operations into Mexico.

I don’t know where this guy has been, but we do rather concern ourselves with the health and environmental consequences of Concentrated Animal Feeding Operations. Setting up Oceanic CAFOs, when the oceans already have enough problems, is probably not wise.

Ultimately it won’t matter. Less-tasty, utilitarian animal proteins are, more likely than not, the way of the future. I’m often asked whether I’d eat petri-dish-grown animal meat. Probably. I can always eat anything biblically: boil away all the taste and blood, just leaving fuel. We cannot, however, pursue increasing wealth, increasing sophistication, increasingly cosmopolitan lifestyles and tastes (including palates) and assume nature will keep feeding us. Natural resources are, typically, fixed in supply.

European politicians wrestle with high gasoline prices

From the International Herald Tribune:

“It’s a very difficult situation for governments,” said Colette Lewiner, an energy expert at Capgemini, a consultancy. “What governments should be doing is lowering the tax on the oil products, but that would mean lowering their own expenses and breaking spending promises, so governments are trapped.”

A big worry is that fuel price rises are contributing to an inflationary price spiral. Another is that past increases have triggered paralyzing national strikes. But European governments rely heavily on fuel taxes to balance their budgets, drastically reducing the scope for cuts.

In France, for example, taxes on unleaded gasoline represent 62 percent of the cost of a liter of fuel at the pump, while taxes on diesel represent 53 percent, according to the Union Française des Industries Pétrolières. Those taxes are the largest source of state revenues after value-added tax, income tax and business tax, said the industry association.

There is a picture painted of a government needing excise revenues; I would suggest the flip-side: that bowing to the pressure from fuel-intensive industries would only promote an expansion in the demand-side pressures on oil – precisely the cause of our environmental (and many of our economic) problems.

For example:

French fishermen, who already benefit from hefty fuel subsidies, have mounted the strongest protests so far over fuel costs.

This month, the fishermen – some of whom use several hundred of liters of diesel each day to power their boats – blocked fuel depots in Atlantic coastal regions to draw attention to costs that have climbed to about 50 euro cents a liter up from about 30 euro cents a liter. Only below 30 euro cents a liter can fishing be profitable, they say.

Amid reports that some gas stations in Brittany were running dry, the fishermen went back to sea Thursday, after President Nicolas Sarkozy of France visited the Atlantic coast and personally offered concessions Tuesday.

What? The demand for fuel by fisherman is not the demand for fuel: it is the derived demand for fuel, and it is a function of our actual demand for fish. That is to say, we, the consumers of fish, demand fuel such as it is needed to get us that fish – in given quantities, according to price.

Implications? Oil doesn’t have to be manufactured – via subsidisation or differential tax exemption – to be 30 Euro cents per litre so that fishing can be profitable. Fishing has to decline in accordance with the decrease in the quantity of fish demanded. Some fishing operations (those with lower costs) will stay in business; others will not:

The effect of the firms that shut down because they cannot achieve profitability will reduce market supply, thereby increasing the price. This is the law of demand: as oil prices appreciate, fish prices appreciate; as fish prices appreciate, the quantity of fish demanded decreases.

Alternatively, everyone stays in business, and charges a price higher than P^*, so that they keep making a profit. Rather than a leftward shift, the supply curve, above, shifts upwards – with the same effect. As oil prices appreciate, the costs of production (of fish) escalate. As the costs of production increase, the supply curve shifts backwards – but demand does not change. Therefore less fish is bought because people with the lower willingness-to-pay stop buying fish. For some firms, as in the first graph, this price increase will get back to where some intersection of MR and MC can be found – for some it may not. They either pack up and leave, or continue running (I didn’t bother with Average Variable Costs) and try to turn things around – by, say, picketing the government for lower excise duties on their fuel.

Basic economics. Cruel economics, perhaps, but basic economics. In this world, resources are scarce. This is the first principle of economics: resources are scarce, and allocating those resources is the defining problem of economics. Fisherman don’t get to remain fishermen because they’ve always been fishermen. They get to remain fishermen if we are prepared to pay the prices required for them to remain fishermen.

I realise we’re talking about already taxed fuel, here: at issue is not, simply, our willingness-to-pay for fish. That, too, however, was/is a consequence of a society-wide (political economy theory permitting) allocative decision-making process. If our opportunity cost of that tax revenue (or the environmental externalities of the fuel use) remains higher than the cost of losing jobs in the fishing industry, then jobs in the fishing industry have to go.

The article is quite good (to say the least). Further examples are (of course) agriculture and taxi-drivers. Agriculture becomes interesting because, like fish – but much moreso – national food security can become an issue (in which case we, as society/consumers, would be willing to pay what is required for that security. So far it would appear that, with regards to fish at least, either we aren’t, or we aren’t understanding the problem in those terms).

“Brutal moves are never welcome”

Interesting term of art, such as it is (having been employed thus, previously):

The European Central Bank threw its weight Thursday behind attempts to rein in the euro, reflecting concern that the currency’s rapid ascent against the dollar was making life harder for European businesses.

The bank president, Jean-Claude Trichet, made his verbal intervention after announcing that interest rates were being held steady amid continued turbulence in financial markets.

…

…the effectiveness of Trichet’s verbal intervention remains to be seen. The euro strengthened slightly Thursday, hovering near the record high slightly above $1.47 that it had reached in frenzied trading Wednesday. Downbeat comments by Ben Bernanke, chairman of U.S. Federal Reserve, about the state of the U.S. economy also weighed on the dollar.

Analysts pointed out that the ECB’s effort in 2004 to talk down the euro eventually bore fruit, although the unwinding of speculative bets against the dollar also played a role.

The verbal-interventionist approach to Euro-bolstering (verbal interventions not restricted to central bankers and ForEx markets) has been studied, previously. In their study, published in the European Journal of Political Economy, Jansen and de Haan (2007) found little support for the idea.

Based on a direction, a smoothing and a volatility criterion, we find little evidence that ECB verbal interventions were effective. The most important determinant of effectiveness is whether or not the verbal intervention is captured in the news report headline. Verbal interventions that coincide with releases of macroeconomic data are followed by lower exchange rate volatility.

The trouble with verbal interventions is that the market absorbs them, and their effectiveness subsequently declines, over time.

Facing a liquidity problem, more than a generic macroeconomic problem (Bernanke must be jealous), the ECB has rather more tools at its disposal, i.e.

Although it is keeping an eye on rapidly rising oil and food prices, the ECB has apparently concluded that raising borrowing costs at a time when many major banks are still reeling from losses incurred through bets on mortgage-backed securities would be too dangerous. Still, Trichet is not hiding the bank’s preference to tighten when markets calm down, and he repeated a promise to act “in a firm and timely manner.”

The ECB also announced Thursday that it would conduct two new liquidity injections worth €115 billion, or $168 billion, into the euro money markets, an apparent indication that it still saw credit tighter than normal and that it was determined to nurse the markets back to normality.

They have an advantage in the inflation-squashing game, relative to the US: their appreciating currency helps to keep down the effects of appreciating food and energy prices. The US is having both go gang-busters at it. Even BusinessWeek’s attempt at making lemonade barely rates as optimism of almost any kind (actually it comes across as more of a need to write something, fulfilled – but they should have just run a paid advertisement or something).

It strikes me as a decent attempt at slowing the appreciation of the Euro, or at least keeping speculators thinking twice before pushing the price up further with their nonsense (possible throwing the dollar a line, in the process). It’s certainly in their interests – given that inflation is their job first, before employment – to let the current trend hold, until a better long-term picture of food and energy prices emerges.

North Sea Cod and farmland birds

Two articles on management – fisheries, land and wildlife – in the Guardian:

Cod levels in the North Sea are showing signs of recovery, but limits must be enforced to ensure it continues, experts warned today.

For the first time in six years, the annual report on fish stocks in the north east Atlantic by the International Council for the Exploration of the Sea (Ices) has not called for a complete ban on North Sea fishing.

…

To continue this recovery, Ices, which advises governments on fishing quotas and coordinates marine research in the North Atlantic, has recommended that catches be limited to less than 50% of the 2006 catches in the North Sea, Eastern channel and Skagerrak, an area off the coasts of Norway, Sweden and Denmark.

Cod fishing in Kattegat, the Irish Sea and the west of Scotland, should be reduced to zero as the stocks are at dangerously low levels, Ices warned.

The committee of scientists said overall removals – including fish landings, discards and unaccounted-for removals – of less than 22,000 tonnes would allow the fish stock to recover to the minimum target of 70,000 tonnes by 2009.

Being neither a catcher nor an eater of fish, I wouldn’t say I’m directly invested in this sort of thing. Being a human being, I’m at least indirectly dependent upon life in the sea to sustain life on land (not least through the oxygen it makes for me). As an econometrician, I find the pursuit of the metrics of fish wonderful:

Ices calculates whether a stock is considered to be within safe biological limits by looking at its spawning stock biomass, estimates of fishing mortality and catch estimates. Ices classifies cod as being “at risk of being harvested unsustainably and suffering reduced reproductive capacity”.

That sounds like so much fun.

On to birds!

A European-wide ruling to increase wheat supply could have a “devastating effect” on Britain’s already threatened farmland birds, the RSPB warned today.

The decision this summer by the EU to reduce “set-aside” land across Europe in a bid to increase next year’s wheat crop by 10m tonnes will have a direct impact on populations of specialist farmland birds like the yellowhammer, grey partridge and skylark, the RSPB said.

The claim comes as new government figures show that populations of specialist farmland birds – birds that breed or feed mainly on farmland – have declined to a record low.

…

The RSPB called on the government to make more funding available for “agri-environment” schemes. These allow farmers to farm in a “wildlife friendly way,” Mr Madge said. “Maintaining hedgerows, ditches, building beetle banks and skylark plots all help.”

Honestly, it’s less interesting than the fish, econometrically. Economically, moreso: declining-to-extinction cod stocks will prompt a response, even from the vector of extinction. Fishing businesses will lay off overfishing, if/as/when they realise that they’re truly putting all future fishing yields at risk.

Farmland birds, not so much. We don’t hunt them, we don’t eat them. Their value is (almost purely) in terms of species’ diversity. Which is not to be under-estimated, but bloody easy to under-value, because there’s hardly any market. Ornithologists won’t muster the resources to save set-aside lands from being farmed for highly profitable (in the short-term) food crops.

‘We’, meanwhile, will remain fairly non-responsive. We see ‘birds’, so we figure ‘birds’ can more or less take care of themselves. Even if we acknowledge that the birds we see are not the species dying out, we don’t much respond – there are still ‘birds’, right? Isn’t ‘birds’ all we need? Good luck selling the argument that every species depends upon a minimum level of diversity in every other species to a mother of 3 in the cereal aisle of her local supermarket.

Eco 1 students: this is the scarcity problem. We need the land; the birds need the land. The land can’t serve both our needs, and we need to decide whether the food that the land can yield serves our needs better/more than the ‘service’ provided by the contribution of farmland birds to species diversity.

It’s the new “if you can’t the sucker in the room …” joke. If you spot the external market for your survival in the room, you won’t.