Wednesday, November 02, 2005

Privatizing the commons: the case of fisheries

The "tragedy of the commons" is directly responsible for the global fishery crisis. Few experts would agree that direct state regulation (command-and-control) is capable of ending this tragedy. The direct and more effective approach is to dec-commonize the commons, i.e. to assign property rights to fisheries. The question is at what level.

Tim Worstall argues that property rights should be assigned to individual fishers. In his sanguine view:
We actually know how to solve this problem. Seriously, we do, we know how to solve the biggest of the short term environmental problems on the planet (the only larger one is climate change which is much longer term).

This is however a bit too sweeping. Certainly in some contexts individual transferrable quotas (ITQs) would address the overfishing problem. However as shown by some research cited in a a World Bank study on saving fisheries, there are some situations where ITQs may not work. For example, in tropical fisheries in the developign world, the following preclude effective implementation of ITQ regimes:

First, the fishery is multispecies, considerably complicating the definition of total allowable catch;

Second, fishers are numerous (much more so than in the industrial fisheries in which ITQs were successfully implemented); monitoring and enforcement of individual quotas is difficult.

Third, social and market infrastructure is underdeveloped or absent. It is difficult to imagine how to set up a market for ITQs in say Batangas Bay or the Java sea.

In these cases, the second option is perhaps more appropriate: assigning property rights at the level of groups (or "community-based management"). How group rights are defined, and how groups are to operate, is however not a simple matter - Ostrom and others have studied numerous traditional and modern institutions for collective management of the commons. As with almost anything else, one can juxtapose success stories with cautionary tales. Identifying some general principles for a well-functioning collective management of the fisheries in the developing countries remains an open research problem, in which social scientists are just beginning to make headway.


Rizalist said...

I wonder if there is an application of the tragedy of the commons to the emerging situation around the EVAT Law. Now that the president has called upon Congress to raise the minimum wage, business will surely follow suit and everyone will be raising their "prices" (taxes, wages, prices). that can't be good for INFLATION.

Econblogger said...

I would rather liken it to a similar problem, that of the "free-rider" (the classic problem of public finance). People want public goods from the government (laws, national security, protection of property and person, etc.) but usual pay-for-use or pay-for-access systems don't work.

Almost by definition, citizens would oppose governments efforts to exact an involuntary tax. (Under some circumstances resistance may be justified. That's when government fails their end of the deal, i.e. provide the appropriate types, quantities, and quality of public goods.)

I'll address the wage-price spiral in some detail in a future post.