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The Icelandic debate on the case for a fishing fee: a non-technical introduction

  • Economics
  • Medicine


Research by J.D. Sachs and A.M. Warner, indicates that resource-rich countries are less successful in terms of economic growth than are resource-poor countries. The question of what measures Icelanders need to take to prevent their fishery wealth from limiting economic growth is posed. The main body of the essay discusses arguments for a fishing fee. The principal arguments for a fishing fee are listed. One type of argument concerns flexibility, with a view to possibly introducing other forms of management or altering the distribution of profit in the future. Another type of argument concerns equity and fairness, contending that having a fishing fee makes it easier to ensure that the entire nation enjoys the benefit of the resource. A third type of argument is connected to risk-management, maintaining that, if properly arranged, a fishing fee would make it possible to offer vessel operators an indirect insurance policy which otherwise would not be available to them. The fourth type of argument concerns counter-cyclical policy and the problem of co-habitation of the fishery industry and other export industries and refers to the possibility of wage earners and/or taxpayers being forced (or tempted) to apply general policy instruments to secure a portion of the fishery rent. The general measures available to obtain a piece of the fishery rent share a common failing: their use unavoidably increases costs for other sectors of industry and thus limits possibilities for growth in those sectors and links their performance to fisheries performance. Then there are arguments for neutrality, based on the idea that the so-called resource rent taxes should not affect the use of the factors of production. Finally, there are economic growth arguments, which can be linked to theories of rent-seeking and Dutch disease.

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