April 8 2013 Chesapeake Values Commercial Fishing I A real example of consumer surplus measurement Chesapeake Oyster a What is the benefit of a restored Chesapeake Bay Oyster Fishery b How did I calculate i Fifty eight years worth of Chesapeake Bay oyster harvest quantity and price data ii Data on 1 Oyster Production in other parts of the US a Gulf of Mexico b Pacific Northwest Aquaculture 2 Imports iii Change in Taste around 1970 1 People eat less oysters than they use to a Change in taste over time 2 People can get sick eating raw oysters c The actual quantity and price data If imports were very high that might explain why prices were lower i ii Example of substitutes iii Oyster demand without the change in taste is higher 1 Higher demand at any given price more oysters are d The calculation consumer surplus purchased i The base of the triangle is 850 000 bushels ii The height of the triangle is about 3 iii Area Base x Height iv Annual consumer surplus from Chesapeake Bay Oyster Harvest is 1 3 million v Note Consumers spend 28 x 850 000 23 8 million vi Note Consumers Total Maximum Willingness to Pay 25 1 million e Supply and Producer Surplus i A restored oyster fishery can generate 15 16 million per year in net economic benefit from consumer surplus ii Producer Surplus Its complicated 1 2 Two related Problems a Biological Overfishing b Economic Overfishing iii Result is most of Chesapeake Bay fisheries have very low if any producer surplus This may be true even if we are successful with the TMDL II Fish are a Renewable Resource a Fish Stock the amount of fish by weight or number replaces itself i Smaller fish get bigger b Rate of Replacement depends on the stock size weight or numbers of fish c Why is it renewable Energy is being added to the system solar energy ii Reproduction at a given time algae fish d Nutrient enrichment and fisheries exploitation interactive effects on estuarine living resources and their management e What is the relationship between the amount of fish in the bay and the rate at which is replaces itself f Fishing in Equilibrium i Carrying Capacity on average the maximum amount of a species that can be supported on a continuing basis under current ecosystem conditions habitat food predators ii Sustainable Harvest harvest only the amount that the fish stock was growing that year will keep the fish stock at the same level year after year 1 Harvesting less than the annual growth allows the fish stock to get bigger in the next period 2 Harvesting more than the annual growth makes the fish stock smaller in the next period iii Harvest growth stocks gets smaller iv Maximum Sustainable Yield MSY 1 Note every point on graph has sustainable yield g Overfishing a rate or level of fishing mortality that jeopardizes the capacity of a fishery to produce the maximum sustainable yield on a continuing basis i Magnuson Stevens Fishery Conservation and Management Act Prohibits Overfishing 1 Federal Law doesn t apply to most federal concerns ii Unsustainable fishing harvesting fish at greater than the rate of replacement leads to continuing decrease in population size iii Other ways to fish sustainable 1 Recruitment overfishing not enough spawners to replace harvest and mortality 2 Growth overfishing harvesting fish at too small a size when they are growing faster iv Economics of Overfishing 1 The unregulated III The Strange Case of the Fishery Supply Curve a Regular Supply c i Curve ends up going backwards because of overfishing at the MSY point