This article talks about the overfishing that is done in the ocean. “Small prey or forage fish” is being “overexploited”. This is due to the high demand of fish that people are consuming and the cheap costs to the firm. Another reason for the high demand of fishing is that some of the small species “are turned into oil”.
Fish is a common resource. They are located in international waters and since we can’t exclude someone from fishing, it is not excludable. The good is rival because when someone catches on fish, it prevents another person from catching the same fish. Overfishing means that society is catching too many fish. This creates a negative externality of production because resources are being over-allocated in the fish market. The overproduction of fish is having a negative effect on a third party, which is in this case the food chain of the ocean and future generations. Therefore society would be better off with less of it. It is shown in the graph below
The market will produce at P1Q1, where the marginal private cost, which is the production cost to the company, is lower that the marginal social costs, the cost of production to society. We see that the firms are pushing the cost of the externality off onto society. Ideally, we should produce at P*Q*, where we would be in Pareto optimal. This means that we cannot make someone better off without making someone else worse off. Because we are not, we have a potential welfare loss. This represents the misallocation of resources because the marginal social benefits are lower than the marginal social cost.
However, it is going to be really hard to find a way to decrease the demand of fishing because of the tragedy of the commons which means that we cannot forbid any country to fish on international waters. Therefore “Oceana and Ocean Conservancy” are asking for catch limits that would protect existing fisheries.” These limits would decrease the supply. However, firms will have a higher marginal cost because they have a lower quantity. This would shift the marginal private cost and bring it closer to the marginal social cost, decreasing the dead weight loss if not eliminating it.
We can see that the dead weight loss has greatly decreased, and depending on the catch limit it could be completely decreased. However, this can cause problems. First of all, “Overfishing of prey species are going unregulated”. Implementing a catch limit has might not fix this. Since it is already done unregulated, firms will not feel affected and will keep fishing. To fix this problem, the government will have to make sure to check this, creating a huge cost to the government. Second of all, if firms do need pay attention to the catch limit, their total revenue is going to decrease, and smaller firms might be forced out of business, especially if they specialize in some type of fish. Lastly, implementing the catch limit will be hard to control as well because this fishing is done on international waters. This means that the ocean waters don’t belong to any of the countries, and it will be hard for all the countries to agree where to put borders, and say who should check what area since many countries rely on fishing as a primary source of income. Another reason this might not work is that countries whose major income comes from fishing will not accept these catch limits. They will just keep fishing, while other firms will decrease their quantity, giving them an unfair advantage compared to other firms.
For the government to solve this international problem they will need to work together with other governments. However, trust will play a big role since some countries might promise something but not implement it, like the USA and the Kyoto Protocol. Therefore the solution of implementing a catch limit suggested by “Oceana and Ocean Conservancy” might be ineffective, and therefore the best solution would be to work together and implementing different solutions such as a catch limit and making sure that every country checks the catch of the fishermen when they arrive back at the port.
Article Source:
Kay, Jane. “Overfishing imperils ocean life, study says.” San Fransisco Chronicle. 03 March 2009. 30 Apr 2009 <http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/03/03/BAGQ167VF6.DTL>.
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