Tuesday, January 27, 2009

Reward system to solve free rider problem

Here is an interesting article from ENN that describes a competition for the development of by-catch reducing fishing gear.

I think this is a great idea. Here's why...

Inventing fishing gear that is more environmentally safe sounds like a great idea, but when you think about it, there's little incentive for an individual to undertake such efforts. Once invented, the "smart gear" will generate positive externalities (benefits that accrue to society at large) through the reduction of incedental catch that cannot be captured by the inventor. Hence, the inventor incurs a great deal of R&D expenses, but shares the gains with society. With open-access or common property fisheries, fishers have no incentive to invent or adopt new technology unless their profits increase or they are forced to do via a technology standard mandate.

By creating a monetary prize, we are in effect subsidizing a positve externality generating good (R&D to reduce by-catch).

Question: is this competition enough, or do we need an additional policy to go along with it?

Sunday, January 18, 2009

Ecosystem markets

Here is an interesting article from ENN about markets for ecosystem services (biodiversity, water, carbon, etc).

I loved the quote near the end by the Director of USDA's Office of Ecosystem Markets and Services, who was at first skeptical about whether or not market mechanisms would work to enhance conservation. Regarding the standard (CAC) approach she says: "The regulatory framework that is so critical was driving people to do just the bare minimum"...

In other words, CAC mechanisms result in inefficiency as once you are in compliance, there is no incentive to do more.

Here is the press release from USDA.

Monday, January 5, 2009

How to know when a fish species is doomed

If it has these 2 qualities:

1. The fish is slow growing

2. The fish tastes really good to people

1 + 2 = 3. The fish will command a high price.

Read about a recent transaction here.

Read about the demise of the bluefin tuna here.