Generating Value in Habitat-dependent Fisheries: the Importance of Fishery Management Institutions

This paper considers the dynamic producer and consumer benefits from improving habitat that supports a commercial fishery under two different fishery management institutions. By coupling state equations that represent the effects of estuarine eutrophication on fish populations with a multispecies, two-patch spatial bioeconomic model that endogenizes output price through residual demand, the analysis computes welfare changes from a major reduction in nutrient pollution. This, in turn, reduces the incidence of hypoxia (low dissolved oxygen) and enhances prey availability. The North Carolina blue crab fishery serves as the empirical application, and water quality improvements pertain to the Neuse River Estuary and the contiguous Pamlico Sound. The analysis simulates dynamic rent and consumer surplus changes from a 30% decrease in nitrogen loading under both open access (the status quo) and a partially rationalized fishery (constant total effort). Producer benefits from the environmental quality change are higher for the rationalized fishery than for open access but are of the same order of magnitude for some parameter values. Consumer benefits are larger than producer benefits and are comparable across institutions. However, the total benefits from improving environmental quality are small relative to the benefits from rationalizing the fishery and leaving environmental quality the same. INTRODUCTION The Dead Zone in Gulf of Mexico and growing awareness of other eutrophic coastal waters have focused policy attention on the fishery impacts of nutrient pollution. Anthropogenic nitrogen loading in estuaries—largely attributable to agricultural runoff and atmospheric