| Abstract: |
This paper considers the dynamic producer and consumer benefits from improving
habitat that supports a commercial fishery under two different fishery
management institutions. By coupling state equations that represent the
effects of estuarine eutrophication on fish populations with a multispecies,
two-patch spatial bioeconomic model that endogenizes output price through
residual demand, the analysis computes welfare changes from a major reduction
in nutrient pollution. This, in turn, reduces the incidence of hypoxia (low
dissolved oxygen) and enhances prey availability. The North Carolina blue crab
fishery serves as the empirical application, and water quality improvements
pertain to the Neuse River Estuary and the contiguous Pamlico Sound. The
analysis simulates dynamic rent and consumer surplus changes from a 30%
decrease in nitrogen loading under both open access (the status quo) and a
partially rationalized fishery (constant total effort). Producer benefits from
the environmental quality change are higher for the rationalized fishery than
for open access but are of the same order of magnitude for some parameter
values. Consumer benefits are larger than producer benefits and are comparable
across institutions. However, the total benefits from improving environmental
quality are small relative to the benefits from rationalizing the fishery and
leaving environmental quality the same. |