Abstract
Academic and policy debates regarding the relationship between trade and environment have drawn attention to a number of potential linkages. A salient observation that has emerged from these debates concerns the importance of domestic institutions as intervening variables that can amplify and/or mitigate observed linkages. Within the IDGEC community this phenomenon is referred to as vertical interplay. My proposed paper will seek to advance the trade-environment debate by focusing on the interplay between trade, property rights and fisheries management. I will argue that as fisheries sectors are exposed to trade liberalization and/or increased levels of trade the impact of property rights regimes on three key variables becomes critical: (1) externalities; (2) time horizons; and (3) the distribution of benefits derived from the exploitation of the resource.
Externalities are costs or benefits generated from an economic activity that do not accrue directly to the parties involved in the activity. Externalities can positive or negative and can be associated with the production or consumption of a commodity. Externalities lead to a disjuncture between private and social cost/benefit calculations and market equilibria that do not reflect socially optimum outcomes. Negative externalities typically result in the overproduction/over consumption of a commodity while positive externalities lead to underproduction/under consumption. When considering negative production externalities it is important to keep in mind the nature of scale and technology effects on the environment. In most cases the relationship between the scale of operation and environmental externalities is not linear. Ecosystems often contain critical thresholds where the costs and/or consequences of degradation increase modestly up to a point before escalating rapidly. This is especially true for fisheries.
International trade in goods and services equalizes relative commodity prices. Where a natural resource commodity is relatively abundant in a given economy trade liberalization should increase the value of that commodity. Ceteris paribus this should lead to an increase in production that reflects a new equilibrium between private costs and benefits at the higher commodity price. This should also widen the margin between private and social costs if uncorrected negative externalities are associated with production of the resource. Liberalization often has implications for the scale of operations and associated production technologies. With sufficient access to raw materials and export markets most fisheries sectors are characterized by increasing returns to scale. When these conditions apply the negative production externalities and associated margins between private and social costs can become extremely pronounced.
Time horizons are another important variable that mediates the impact of increased seafood trade on harvesting behavior. Shorter time horizons generate incentives to deplete fish stocks more rapidly because their future value is discounted. Conventional wisdom suggests that the introduction of property rights in a given fishery will lengthen time horizons and strengthen incentives for conservation. While I do not contest this logic I argue that time horizons and/or discount rates for specific fish stocks may vary considerably across different segments of the industry. In highly mobile, industrialized segments of the industry where time horizons appear to be shortest it is possible that the introduction of property rights may not lengthen time horizons enough to alter strategies regarding resource exploitation. Again, this is especially likely under conditions of trade liberalization and increasing returns to scale. Accordingly, sustainable harvesting behavior may be more a matter of using property rights to reinforce the longer time horizons of smaller, less mobile segments of the fishing industry than it is a matter of simply introducing property rights.
The equitable distribution of fisheries rents is a third variable of interest. It is often case that the benefits of seafood trade accrue to a small group of actors while the costs are borne by large group. The inequitable distribution of fisheries rents can have adverse impacts on poverty reduction, food security and local/regional stability. Equity in fisheries management is a growing concern of international fisheries organizations and my paper will build upon recent work conducted under the auspices of the FAO and World Bank. I will argue that equity objectives will usually be enhanced developing property rights in a manner that reinforces the rights of less mobile, smaller-scale segments of the fishing industry while remaining sensitive to ecosystem externalities. Stated differently, the insights advanced under the sections on externalities and time horizons yield recommendations that should enhance equity.
Empirical support for the arguments made in this paper will be drawn from a broad range of fisheries sectors in both developed and developing countries. The paper will synthesize insights from the two major research projects that I’ve been involved in under the auspices of IDGEC. The first is my dissertation research which is being converted into a book manuscript entitled The Politics of Property Rights in Fisheries and the second is research following on the Workshop on Fisheries Management, Trade, and Human Livelihoods held at Duke University in 2003. My book manuscript focuses its case analysis exclusively on OECD countries while the latter research draws from a number of fisheries sector analyses in developing countries.
This paper proposal should be suitable for a number of IDGEC Synthesis Workshop panel themes including those focusing on The Performance of Exclusive Economic Zones, Trade and Environment, Interplay, Policy Relevance or New Directions.
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