Wednesday, July 11, 2007

Unfortunately, Fish Swim

Keywords: fisheries; sustainable development; tragedy of the commons.

I've been sharing a ride across Canada with Adele and Peter Buckley, often debating with Adele about sustainable development. She's involved with a research project that uses a mathematical model to project the future stocks of essential raw materials, such as timber, oil, fish, and the like. The problem is that models don't predict very well, mostly because they are simple extrapolations from present use patterns into the future, without taking account of the significant impact of technological changes. It is true that we'd run out of raw materials if we continued using them on the current basis as population increases. But we don't. For example, 25 years ago, everyone would have predicted an enoromous increase in the number of telephones, which would mean an increase in the need for wires, etc. But along came cell phones and wireless computers, so the future seems to be one with even less need for wires than at present. The mathematical models cannot predict the technological future, so their projections are of limited value. All the efficiencies that we now are enjoying have come from technological changes, so that factor must be taken into account, though nobody except a fortune teller can do so.

However, there are certain non-technological innovations that can also make a huge difference. When we started talking about fisheries, I realized that I had to qualify my claims. I'd argued that the rising price of any commodity would, under a decent market system, provide incentives for users to conserve it and innovate alternative designs that use alternative types of material-- as, for example, fiber optics replaced copper when it became costly. These considerations have forced me to become increasingly favorable to capitalism, which favors private ownership and therefore creates individual incentives for producers to conserve and manage their own resources over time.

But there are indeed certain circumstances under which scarce commodities are actually depleted instead of conserved. In those cases, an institutional change can make a big difference. The most obvious example consists of any product that can be "mined" from a common stock of capital. Thus the most famouse case is the "tragedy of the commons" in which a common pasture is used by all the villagers. This is called, in game theory, a "mixed motive game" -- partly cooperative and partly competitive. That is, each villager will benefit by having as many cows as possible grazing on the common. But also, each villager will be harmed if the other villagers allow their own cows to graze as much as possible, for soon the grass will all be gone and all the cows will starve. The villager is torn between his own conflicting desires -- in which his collective interests clash with his individual interests.

The same goes for fisheries, which are now being depleted. As with cow pastures, the answer should be to divide the commons into individual plots and allow each farmer or fisher to manage his own grazing or fishing space. Some countries are actually doing that. New Zealand, for example, has a system of ITR -- individual, transferrable rights. These are assigned to individuals in perpetuity and may be bought and sold, just as land ownership is bought and sold.

But the trouble is, fish swim. That makes it difficult to create incentives for individual fishers to invest in maintaining their stock of fish, since the fish may simply swim away. Ultimately, we wanst a scheme that will give incentives to do even more than conserve fish -- but also use the space for "farming" fish in a susstainable way. There are systems of licensing that tax fishers for their hauls, but it seems that something better than that is required. So I hope someone can figure out how to make the oceans into discrete plots of private property rather than a huge global commons. This proposal will not appeal to many of my friends, who prefer socialistic answers to every problem, but I think there is no such answer to the problem of the world's declining fish stocks.



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