Extending Federal Crop Insurance Programs to Commercial Fisheries: The Case of Bristol Bay, Alaska, Sockeye Salmon

Abstract

This paper analyzes the feasibility of extending the U.S. Department of Agriculture's crop insurance program to the Bristol Bay, Alaska, capture fishery for sockeye salmon Oncorhynchus nerka. The impetus for this program has been a string of poor sockeye salmon fishing seasons followed by a series of disaster declarations in western Alaska. The mission of the Risk Management Agency, for whom this analysis was prepared, is to help stabilize the agricultural sector, not to provide disaster payments that offset permanent industry shifts by assuring producers some historical (but no longer attainable) production or revenue levels. Without a contemporaneous effort to restructure and rationalize the program of limited entry, the proposed crop insurance program for Bristol Bay cannot provide meaningful relief to a maladaptive industry that is beleaguered by excessive costs and increased competition.

Notes

¹ The Togiak fishing district may be an exception. That fishery is superexclusive, and the drift netters who participate in it are not allowed to fish in other Bristol Bay districts.

² A review raised another concern about individual guarantees, namely, that fishermen would fraudulently switch fish between boats to trigger an insurable event.

³ From 1977 to 1999, the annual coefficient of variation (SD/mean) of harvests ranged from 12% to 84% for the drift-net fleet and from 57% to 96% for the set-net sector.

⁵ The same simple averages of 4, 8, and 12 years were used to calculate the APH. We examined the possibility of introducing a cyclical component into the averages; however, from both our analysis and talking to fishery biologists, there did not appear to be an easily determined cyclical pattern that could be used for long-term financial planning.

⁶ Due to rounding error, calculations based on the equations in the text may not match the more precise spreadsheet calculations (reported).