Decision making under uncertainty in fisheries management: capital adjustment, fishermen behavior and stochasticity in fish stocks

The world’s marine fisheries are characterized by declining global catch, an increasing number of overexploited stocks and high natural variability in fish stocks. Policy makers are becoming more aware that effective management systems have to be implemented to rebuild overexploited fish stocks. The success of a management system is specified in terms of biological, economic, social and political objectives of policy makers and the fishing industry. However, the combination of these objectives makes the implementation of policies one of the main challenges in fisheries management. To prevent overfishing, different measures have been applied that limit catch and/or fleet capacity. Yet, the same management systems and economic behavior of fishermen may lead to an increase in investments in the fleet capacity, causing overcapacity. Decisions of policy makers and fishermen are made under uncertainty, such as uncertainty about fish stock dynamics and/or fish prices, and this can affect optimal management, investment decisions, healthy and productive fish stocks and resource rents. The objective of this thesis is to study the impact of different fisheries management systems on resource rents from the fishery, investment in the fleet capacity and fish stock under uncertainty about fish stock growth and the ex-vessel price of fish. Bi-level stochastic dynamic programming is used to model the interaction between the quota decision of a policy maker and fishermen behavior. The fisheries management systems of multiannual quota and a quota adjustment restriction are introduced and analyzed in terms of resource rents, overcapacity and fish stock. Real Options theory is used to determine for a fisheries management system of limited entry at what ex-vessel prices it is optimal for fishermen to make investment and disinvestment decisions.