Fishing quota markets

Fishing quota markets In 1986, New Zealand responded to the open-access problem by establishing the world's largest individual transferable quota (ITQ) system. Using a 15-year panel dataset from New Zealand that covers 33 species and more than 150 markets for fishing quotas, we assess trends in market activity, price dispersion, and the fundamentals determining quota prices. We find that market activity is sufficiently high in the economically important markets and that price dispersion has decreased. We also find evidence of economically rational behavior through the relationship between quota lease and sale prices and fishing output and input prices, ecological variability, and market interest rates. Controlling for these factors, our results show a greater increase in quota prices for fish stocks that faced significant reductions, consistent with increased profitability due to rationalization. Overall, this suggests that these markets are operating reasonably well, implying that ITQs can be effective instruments for efficient fisheries management. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Environmental Economics and Management Elsevier

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Publisher
Elsevier
Copyright
Copyright © 2004 Elsevier Inc.
ISSN
0095-0696
DOI
10.1016/j.jeem.2004.06.005
Publisher site
See Article on Publisher Site

Abstract

In 1986, New Zealand responded to the open-access problem by establishing the world's largest individual transferable quota (ITQ) system. Using a 15-year panel dataset from New Zealand that covers 33 species and more than 150 markets for fishing quotas, we assess trends in market activity, price dispersion, and the fundamentals determining quota prices. We find that market activity is sufficiently high in the economically important markets and that price dispersion has decreased. We also find evidence of economically rational behavior through the relationship between quota lease and sale prices and fishing output and input prices, ecological variability, and market interest rates. Controlling for these factors, our results show a greater increase in quota prices for fish stocks that faced significant reductions, consistent with increased profitability due to rationalization. Overall, this suggests that these markets are operating reasonably well, implying that ITQs can be effective instruments for efficient fisheries management.

Journal

Journal of Environmental Economics and ManagementElsevier

Published: May 1, 2005

References

  • R. Arnason
  • Minimum information management systems and ITQ fishery management
    Batstone, C.J.; Sharp, B.M.H.
  • Asset Pricing
    Cochrane, J.H.
  • Effects of individual quota systems on New Zealand and British Columbia Fisheries
    Dewees, C.M.
  • Market efficiency, long-term returns, and behavioral finance
    Fama, E.F.
  • An interim evaluation of sulfur dioxide emissions trading
    Schmalensee, R.; Joskow, P.L.; Ellerman, A.D.; Montero, J.P.; Bailey, E.M.
  • Economic benefits of management reform in the northern Gulf of Mexico reef fish fishery
    Weninger, Q.; Waters, J.

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