The Impact of Access Restrictions on Fishery Income Diversification of US West Coast Fishermen

ABSTRACT

Access to most fisheries on the US West Coast was essentially open prior to the mid-1970s when state licenses were first limited for salmon fisheries. Subsequently, licenses to most fisheries on the West Coast have been limited, and the numbers of licenses in many fisheries have been reduced with buy-back programs. More recently, catch share programs, which dedicate exclusive shares of catch to individuals or cooperatives, have been introduced in several sectors of the federally managed Pacific groundfish fishery. As access to fisheries has become more restricted, revenue diversification of West Coast fishing vessels has generally declined. This is a source of concern since diversification has been shown to reduce year-to-year variation in revenue and hence financial risk. However, catch share programs may create more security and stability in vessels' landings, which may offset effects of less diversification. Nevertheless, there may be a tradeoff between the efficiency gains enabled by restricting access and risk-reduction benefits associated with greater diversification.

KEYWORDS:

• catch shares
• cooperatives
• diversification
• IFQ
• limited entry

Notes

1. Because an individual or firm might own more than one vessel and be diversified although each vessel is not, it would be preferable to have the owning entity rather than the vessel as the unit of analysis. However, comprehensive ownership information is not available making it impossible to take this approach with our large sample.

2. Kasperski and Holland (2013) use the Herfindahl-Hirschman Index to measure diversification. The effective Shannon index yields very similar results in terms of trends, but the effective Shannon index is somewhat more intuitive as it rises with increased diversification and has an intuitive meaning when revenues are evenly spread across fisheries. A variation on the Herfindahl-Hirschman index using one over the sum of squared proportions would also be a good alternative for measuring diversification as it increases with diversification like ESI and exhibits similar but slightly different properties.

3. The 2 years need not be consecutive.

4. These are not balanced panels—not all vessels included in calculating ESI in a given year appear in all years.

5. The average value of the ESI index can vary substantially year to year, even when averaged across large numbers of vessels, due to large fluctuations in landings and value of major fisheries, which then alter the concentration of earnings for large numbers of individuals. For example, on the West Coast, total landed value in the Dungeness crab fishery fluctuates dramatically year to year, which can affect the diversification scores for large numbers of vessels. Kasperski and Holland (2013) found a large increase in concentration (drop in diversification) for West Coast and Alaska vessels in the year of the Exxon Valdez oil spill.

6. As a reviewer noted, fishers in the derby fishery for sablefish with seasons falling to as short as 10 days might have been essentially forced to be diversified to cover fixed costs for participating in a 10-day derby.