Catch Share Dilemma

Jacob Pearlman

U72300442

Dr. Martinez

ECO2023

April 29, 2020

corporations hundreds of thousands of people make their means off of the oceans. Over the last

few decades, problems have begun to arise with overfishing. To keep competition within the

United States, the government enacted laws to protect our fishermen. The law states only

American fishermen can fish within 250 miles of the shore, therefore eliminating the worry of

foreign ships coming and taking local fish. the National Oceanic and Atmospheric

Administration, more commonly known as NOAA then decided to insert legislation that would

change the New England fishing industry forever. NOAA introduced a catch sharing program.

This program gave the fisherman a quota of how much of each type of fish they could catch.

While the intentions were good it did not quite have the effect that many fishermen had hoped.

To discuss a possible solution I must discuss the problem.

Fish are what we call a scarce resource. Scarcity means there is a limited supply of a

certain commodity. Fish have a buy price and a selling price and every decision made from sea to

diner table affects the market. The fishing market is volatile and the population of fish is far from

stable meaning demand is constantly changing. The US fish market pre-regulation was a

booming market full of family-owned boats and massive shipping corporations. With little

knowledge regarding the amount of fish in the ocean, fishermen have been fishing to their fullest

potential. If the rate the US was fishing at continued, scientists believed there was a chance the

fish market could plummet if they didn’t reduce catch rates. At this point, they had a free-market

economy.

The market was in a good place due to the competitive nature of New England’s

fisherman. Before regulation came there were approximately 1500 fishing boats on the water,
after the fleet dropped to a mere 350 boats leaving most family-owned fishing companies out to

dry. At this point, the supply of fish in the United States was high meaning the prices were on the

lower side in the free-market economy. Because of how easy it was for companies to get fish the

marginal cost was little to nothing.

There was no limit on catching fish originally meaning that as long as people in the US

don’t stop buying fish, fishing companies would continue to make a profit. As fishing companies

would go out and catch fish in such large quantities the price would go down. This was the time

of the “race to fish '' where you only could make money if you were catching fish, which

encouraged competition on the waters and in the market. The one problem they ran into was

dealing with the scarcity of fish. When the government decided to step in to save the ocean's

population they decided to protect the fish and not the fisherman.

After scientists felt it was necessary, NOAA enacted a share-catch policy in New England

which flipped the fishing industry on its head. A once vibrant competitive market turned into a

chess game of capitalism. Legislation enacted a quota to the entire ocean that was to be split

amongst all the fishermen and as they say, sometimes there are too many cooks in the kitchen.

The big fishing companies with large amounts of capital thrived knowing they could purchase

more quotes if necessary, but left small fishers in a dilemma. Many fishermen had to go out

fishing knowing they couldn't afford to bring back all they caught massively lowering their

marginal benefit from nearly infinite to minimal gain. The effects were detrimental to local

fishermen but better for fish, but this effect was only in America. With less supply, the fish

market was expected to go up in the US, but surprisingly it didn't. Why may you ask? When US

fishermen began charging more for fish due to their quotas and slimming margins, stores across
the country began receiving fish from overseas to help keep their profits as high as possible. This

was bad for a few reasons. First, importing, while possibly more cost-effective, is money leaving

the US economy. Additionally, The drop in price also came with a drop in quality. This made

many Americans with cheaper food which made them happy, but many had no idea what they

were actually eating. Unfortunately for consumers the fish being received from foreign countries

also came with question marks. There is no way to tell the preservatives and chemicals used by

these overseas corporations and there is no telling how many times the fish has been frozen.

Policies such as catch sharing are used across the globe to solve a much larger issue,

which is the tragedy of the commons. Before regulations, fishermen went out with the goal of

coming back with as many fish as possible to help support their families and their business’. This

led to the massive depletion of fish in the sea due to the fact they are a rival and nonexcludable

goods. Once a fish is caught no one else can catch that specific fish because it is a rival good, and

a nonexcludable good meaning anyone can get access to it. Without policy, there was essentially

a never-ending depletion of the supply of fish, which is why NOAA felt something needed to be

put in place. The ocean is often thought of as a never-ending supply of fish because it is hard to

get an accurate count, but we know if we do not protect our sea life there will be a day where we

run out of fish to protect. One example where catch sharing is used in Iceland. Iceland started

with a similar problem and has found share catching to solve the overfishing issue, but it did not

come without damages. Much like the US, major corporations purchased the bulk of the quota

leaving family-owned ships to be pushed out of the waters. As you could imagine American

fishers were left furious because they felt they weren’t being considered.While the American
fishing industry struggled the American fish began to repopulate. After all, with the fish

population continuing to rebound when will the fishing industry have another major change.

Market failure in the fishing industry can be found because there was originally too little

regulation on catching fish leading to overfishing. With little regulation, boats would haul in as

much fish as they could not regarding the possible negative externalities. This forced the

government to introduce the share catching policies putting many small fishermen out of a job.

As quotas became lower the opportunity cost of fishing also became lower. Fishermen began to

consider if it was worth continuing to fish because there was a chance they would have to throw

back whatever they caught due to their lack of remaining quota. This can all be seen by the

supply and demand graph. When catch sharing came around the supply of the fish being caught

and sold from New England went down significantly. With limited amounts of fish being caught

daily, the price of fish began to rise. This then moved the supply over to the left, where it was

found to be socially optimal. At this level, fish were able to repopulate and most fishermen were

forced to leave the market, allowing the remaining fisherman to charge a fair price. Due to the

loss in supply the catch share policy resulted in an additional deadweight loss as displayed on the

graph where the fish market isn't at its economical best in effort to reach socially optimal levels.

While this is far from a good economic solution for fishermen this is what had to be done to help

repopulate our oceans for everyone to enjoy for years to come. Sellers of American fish were

still making just a fraction of their profits compared with before NOAA’s catch share policy.

While catch sharing was controversial for everyone involved it ultimately achieved its goal.

The goal of the share catching program was to help revitalize the ocean and repopulate

the concerningly low fish population. Over the years fishermen have worked with officials to
help clear the air regarding the actual amount of fish in the water but it is still not completely

known. Fishermen claim the catch share policy has accomplished its goal, but the government

continues to claim the amount of fish left is lower than many fishermen believe, costing

thousands of Americans their jobs. While catch sharing worked for its goal was it the right move

for everyone? Probably not. Ecologists accomplished their goal but what they will never be able

to fix are the lives torn apart by the policy. Because catch share technically accomplished its goal

it's clear it was a good idea but was it too extreme? As time continues to pass regulators must

raise the quota for the good of the fishing economy of New England. To prevent foreign fishing

from ruining the market officials must allow more boats, captures, and workers to do their jobs.

With more people allowed to catch fisherman are more likely to work harder to catch more fish

knowing they will be allowed to keep rather than wasting their time on the water just to have to

toss the fish back. Allowing the fishing market to rebound would be huge for the economy and

fish sales across the United States. Being able to keep commerce within the borders is key to

continuing to build a strong economy and will bring jobs back to New England, American fish

back to the dinner table, and money flowing through the US economy.

As the finishing industry continues to eliminate smaller boats and family-owned fishing

companies, the fishing market can quickly turn sour. With fewer boaters in the business, the

market is being left in the hands of the few and powerful. These big companies only have one

thing in mind, and that's profit. If the direction of the fishing industry doesn't change, it will

quickly turn to a monopoly with little to no say for the consumers or competition. With the

current course of catch-sharing, the fishing industry is going in a direction that will destroy the

market forever. With more fishermen having to hang up their boots, the major fishing companies
get more powerful by the day. With less competition, the industry could quickly turn into a

monopoly. With only a few companies bringing all the fish, companies' prices of fish will go up

leaving the American people to choose whether or not they would pay a higher price to eat fish

from America rather than cheaper foreign caught fish. One worry many have when it comes to

monopolies is stopping corporations from setting prices that their competition agrees on, also

known as price-fixing, to set a base price on a service or good in the United States because no

one else is providing that certain product. Luckily the Sherman Antitrust Act of 1890 was a law

enacted by the Federal Trade Commission banning price-fixing and other anti-competitive

activity. Without regulation the fishing industry could quickly turn into a natural monopoly,

giving too much market power to the few or one fishing company with all the money and quota.

One company having too much market power is a massive problem for any industry. No one

company should ever have the power to demand a certain price too high above marginal cost,

because it will take the smaller businesses out of the market and possibly make the product

unaffordable for the less fortunate in our population.

While catch sharing has been a failed program in the eyes of many, the original goal of

NOAA was accomplished. NOAA hoped to slow the mass removal of fish from the ocean and

that's exactly what they did. While their goal was accomplished it by no means came without

consequences. Catch sharing had a severely negative effect on the fisherman and companies

producing fish for people to buy. The quota given to smaller boats was too small to continue their

business of that alone leaving many smaller boats to sell their quotas to bigger companies. This

led to near monopolies eliminating any chance for smaller businesses to survive. Now that leaves

us with the question: what is a better solution?

fishermen lose their livelihood and jobs many have worked for their whole life for. While there is

no one solution to please both sides, a compromise is necessary to help get family-owned fishing

boats back out on the waters. The first step is raising quotas. The NOAA argues fish populations

have gone up but not enough. Fishermen argue the population has grown much more than

NOAA are saying, meaning more boats can be fishing at a lower rate than before and maintain a

safe level for both the fish and the fisherman. NOAA and the fisherman should work together to

help get a more accurate figure of the fish left in the ocean to ease restrictions and raise quotas.

Once these quotas have been raised there must also be regulation on the buying and selling of

quotas. To protect fishermen and prevent monopolies government agencies should promote small

business fishermen instead of pushing many to sell their quotas. One possible fix is to put a

maximum on the number of quotas available for purchase. Each ship should be allowed to buy or

sell quota as they see fit, but each boat should have a minimum and maximum quota to keep the

fishing industry from turning into a monopoly. This allows for smaller boats to survive while

allowing for larger companies to buy more quotas based on what they can catch. This eliminates

the worry many smaller fishing boats have regarding catching too much fish and having to

catch-and-return wasting time and resources. Additional solutions could be to limit the amount of

fish being brought in from foreign countries by placing a tariff. Foreign fish are often frozen

multiple times leaving question marks on the quality of the fish. A tariff would raise the price,

therefore, discouraging people from buying foreign fish and encourage more people to eat their

fresh local catch, keeping money flowing in the US economy. The NOAA can continue to work
with fishermen to find a quota that allows fishermen to stay in business and maintain profit

margins while protecting the ocean at the same time.

“Industry Market Research, Reports, and Statistics.” n.d. IBISWorld. Accessed April 30, 2020.

http://www.ibisworld.com/united-states/market-research-reports/fishing-industry/.

Noaa. “Catch Shares.” n.d NOAA. Accessed April 30, 2020.

http://www.fisheries.noaa.gov/insight/catch-shares.

Netflix Official Site, January 5, 2018.

http://www.netflix.com/watch/80149704?trackId=13752289&tctx=0,5,96fe20a7-5753-47

e4-a7f4-8566386ff95f-121516288,,.
Graph