Measuring management success: Experience with United States fisheries

ARTICLE IN PRESS Marine Policy 33 (2009) 164– 171

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Measuring management success: Experience with United States fisheries$ John M. Ward , Michael Kelly 1 Division of Partnerships and Communications, Office of Sustainable Fisheries, National Marine Fisheries Service, 1315 East West Highway, Silver Spring, MD 20910, USA

a r t i c l e in f o

a b s t r a c t

Article history: Received 1 April 2008 Received in revised form 22 April 2008 Accepted 14 May 2008

Many articles have been published in recent years criticizing the management of living marine resources based solely on biological stock conservation criteria. In the United States and in many parts of the rest of the world, multiple management objectives and goals in addition to stock conservation must be met by fishery managers responsible for the marine resources under their control. An alternative management metric, conservation efficiency, is recommended based instead on a multidisciplinary scientific framework that captures these different goals and the behavior of participants in the fishery. On the basis of the constraints facing managers, resources can be conserved and the quality of life of consumptive and nonconsumptive fishery participants improved. Published by Elsevier Ltd.

Keywords: Stock collapse Fisheries management failure Cost–benefit analysis Multi-disciplinary scientific management framework Ecosystems approach to fisheries management

1. Introduction According to many recently published scientific articles, global fisheries are collapsing [1–3]. Meyers and Worm [4] suggest that over 90% of large predatory fishes have been lost in the global oceans and that by the year 2048, commercially valuable species will be all but completely eliminated. Fisheries management, they contend, is only able to stabilize fish biomass at low levels. While contentious, this result is supported by Alter et al. [5] whose studies indicate that the present abundance level managers’ cite as representing a rebuilt sustainable stock is three to five times less than the true, historic abundance level and should be considered depleted. But, are our fisheries managers really failing to manage living marine resources that were once deemed inexhaustible? In a recent National Geographic (NG) magazine [6], the former Assistant Administrator of the NMFS, William Hogarth, admits to presiding over fisheries declines. He is quoted as being ‘‘saddened to oversee the demise’’ of the most valuable fish stock in the world, i.e., bluefin tuna.

$ The views and opinions expressed in this article are those of the authors alone and do not reflect or represent the policies, views, or opinions of the National Marine Fisheries Service in any way, shape, or form. The authors also wish to thank James Kirkley of the Virginia Institute of Marine Science, Juan Agar and Susan Molina of the Southeast Fisheries Science Center, and the unknown reviewer(s) who provided insightful comments on an earlier draft of this paper.  Corresponding author. Tel.: +1 301713 9507; fax: +1 301713 2384. E-mail addresses: [email protected] (J.M. Ward), [email protected] (M. Kelly). 1 Tel.: +1 301713 2379 ext. 204

0308-597X/$ - see front matter Published by Elsevier Ltd. doi:10.1016/j.marpol.2008.05.008

This issue of NG goes on to characterize commercial fishermen as cruel and wasteful, and claims that recreational anglers are equally to blame for the ‘‘decimation’’ of living marine resources. In actuality, commercial fishermen are probably no crueler than the farmers or ranchers who supply our dinner tables with vegetables and steak. And, as for wasteful, much of the waste from discarded bycatch in the US is the result of fishery management decisions that require fishermen only land some portion of the total fish caught. In fact, the command and control fisheries management2 framework indirectly promotes wasteful fisheries production in what are called ‘‘common property’’ or ‘‘open access fisheries’’. The NG article continues with a call for ecosystems management and states that marine reserves free from any form of human incursion are the answer to the overexploitation of fish stocks. This belief that a complete understanding of the interrelationships in an ecosystem would improve fisheries management so that the benefits would exceed the costs in time and resources is naı¨ve. The Chesapeake Bay, which appears to be a clearly defined ecosystem within a single national jurisdiction, is slowly being turned into a giant cesspool3 even though solutions to its environmental problems are clear; reduce urban sewage treatment plant phosphate and nitrogen run off and close the

2 Command and control fisheries management attempts to block incentives to overfish the resource by setting total allowable catch levels, trip limits, bag limits, days at sea, restrictions on the physical characteristics of fishing craft, etc. 3 While it may sound overused or cliche´’, the authors use the term ‘‘cesspool’’ in its most literal definition. Urban sewage has reduced this closed system to a septic repository.

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oyster fishery so these populations of filter feeders can increase and clean the bay’s waters. So, even if all the interactions between species in an ecosystem could be understood after years of research and billions of dollars, what additional useful information would it provide to those fishery managers who cannot now resolve the Chesapeake Bay’s problems? Additionally, how could we possibly justify allowing a small, but influential, group of biologists who desire an antediluvian pristine ocean to convert half of it into marine reserves when millions of people around the world are dependent on these resources for their very existence? Simple solutions that rely on biological considerations without regard to their socioeconomic consequences caused the present management crisis to begin with and new simplistic solutions will not correct these problems.4 Yet, buried across this global fishery crisis, there have always been examples of successes. The Icelandic cod fishery, the New Zealand and Australian fisheries, and the Alaskan pollock fishery are all examples of well-managed, sustainable fisheries. Recreational fisheries have similarly shown tremendous management success in the US, European Union, and Australia. These successes exist not because fisheries are part of an ecosystem management program or because massive marine reserves were created. Instead, their fishery management system was changed to provide strong and enforceable property rights for fish in the sea, i.e., in situ resource private property rights. Individual private property rights create an incentive for good stewardship and prevent derby fisheries because it is no longer necessary to catch the fish to own them [7]. If the American Indians’ property right for bison5 on the Great Plains had been respected in US federal court, they would not be living on reservations today. Similarly, a rational fishery management program that causes fishermen to behave as if a clearly defined, enforceable, property right exists for fish in the sea, guarantees that those fisheries will be sustainable. To suggest that our fishery managers have failed in their attempts to conserve fish stocks is parochial when these many other fisheries successes are considered. NOAA Fishery managers are forced to operate in a complex biological, economic, and political world. Even in this complex and confusing landscape, practical solutions to the global crisis not only exist and are within our grasp, but have been implemented successfully in many places. Readers may wonder if this is possible, given the large amount of press given to stories of fisheries failures. Is it possible that a bias against fisheries and fisheries management exists in the popular environmental press, and that confusion over the basic goals and objectives that guide leadership at the highest levels of governance exists as well? If solving management problems is the objective, then developing a meaningful metric that focuses on determining if fishery management is meeting its multiple program objectives is necessary to ensure that these successes can be repeated. Developing a meaningful metric depends on the legal foundation that supports the fishery management environment. In Section 2, the US fishery management institution is explored. This section begins with the confusion that has developed under the Magnuson–Stevens Fishery Conservation and Management Act (MSFCMA) National Standards concerning the relative roles and priorities given to different scientific disciplines. It ends with a case study, the TED

4 The often heard balloon parable for fishery management is appropriate here; when you squeeze it in one place, another problem just pops out in another. 5 The American buffalo or bison supported the Plains Indian culture for a millennium, but was driven to near extinction by the political expansion of the United States. A commercial industry for buffalo hides, the expansion of cattle ranches, and the desire of the US military to remove free roaming Indians to reservations lead to the collapse of the herds in the mid-west. Today, only a remnant herd remains of what once consisted of millions of animals.

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Example, which highlights the limited and secondary role to biological sciences that social sciences played in the management process. Further scrutiny of performance standards in the next section reveals an almost paranoid obsession with biologically based measures and the avoidance of accountability in strategic plans for a variety of reasons allegedly beyond the control of decision makers. Recognizing the inherent unfairness of criticizing the present management metrics without offering a target for revenge and retribution, conservation efficiency as a management metric is offered up in the next section. This metric results from combining the physical and social sciences into a single multidisciplinary management framework that accounts for all the management goals and objectives, even those that conflict, in measuring the success or failure of fishery managers. Finally, in the conclusion, the case is made for maximum conservation yield (MCY) as both a creditable measure of management performance and to provide useful information for the fisheries management decision-making process.

2. Management success or failure: What standards to use? An investigation of standards for management performance should being with the fishery management environment. Traditionally, the ‘‘managers’’ in fisheries management have been biologists who have had distinguished biological science careers capped off by appointment to senior fisheries management positions. The central legal foundation that directs these managers is the recently reauthorized MSFCMA. Within the MSFCMA are a set of National Standards which could be construed as a list of top priorities established by Congress for fisheries management. The interaction between the legal and biological disciplines, in the interpretation of these National Standards, has generated much confusion. According to the then General Counsel of the NOAA,6 the MSFCMA is an economic regulatory statue designed to promote the United States fishing industry at its most optimal level. The statue is only a ‘‘conservation’’ statue in that the conservation promotes the long-term health of the United States fishing industry. National Standard 1 [NS 1] states that ‘‘Conservation and management measures shall prevent overfishing while achieving, on a continuing basis, the optimum yield from the United States fishing industry’’ MSA 301(1). In recent years, the emphasis on the long-term health of the fishing industry has been overlooked and parties have referred to the ‘‘conservation’’ purposes of the act without reference to the reasons for that conservation. Thus, the argument [has arisen] that National Standard 1 now requires NMFS to conserve fish stocks solely to conserve such stocks without regard to the health of the fishing industry. This occurred because the DOJ [Department of Justice] precipitously conceded this point in oral arguments in the summer flounder case in 2000.7 6 In the following quote, MSA and MSFCMA both refer to the Magnuson Stevens Fisheries Conservation and Management Act. 7 ‘‘As an initial matter, we reject the District Court’s suggestion that there is a conflict between the Fishery Act’s expressed commitments to conservation and to mitigating adverse economic impacts. Compare 16 U.S.C. 1851(a) (1) (directing the agency to ‘prevent overfishing’ and ensure ‘the optimum yield from each fishery’); with 1851(a) (8) (directing the agency to ‘minimize adverse economic impacts’ on fishing communities’). The Government concedes, and we agree, that, under the Fishery Act, the Service must give priority to conservation measures. It is only when two different plans achieve similar conservation measures that the Service takes into consideration adverse economic consequences. This is confirmed by the statues plain language and the regulations issued pursuant to the statue. See Sec. 1851(a)1851 (8) (requiring fishery management plans, ‘consistent with the conservation requirements of this chapter,’ to take into account the effect of other

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‘‘This case, [NRDC vs. Daley 209F.3d747 (D.C. circa 2000)] has been cited for the proposition that the ‘‘conservation goals’’ of the MSA trump economic considerations. What DOJ failed to point out and what the D.C. Circuit failed to clarify is that the ‘‘conservation goals’’ of the MSA are determined by the long term economic health of the fishing industry, not necessarily with the long term health of the biological stock’’. ‘‘So every time we discuss the NRDC case or their implications of saying that NS1 ‘‘trumps’’ the other national standards, we need to put it in the context of what NS1 actually sets as the ‘‘conservation’’ goals of the act and indicate that economics still plays a vibrant role in determining whether a stock is subject to overfishing’’ or in setting ‘optimum yield.’8 The confusion of the DOJ attorneys is understandable since overfishing definitions are based on biological parameters represented by maximum sustainable yield (MSY) rather than the more fish stock conservative and industry oriented maximum economic yield (MEY).9 The precautionary principle, ecosystems management, and the ecosystem approach to fisheries management are, in the US, all based on biological definitions exclusively, and with few exceptions in the rest of the world. The confusion continues. In NS 5, there is the requirement that fisheries allocation cannot occur for solely economic reasons. Since economics is the study of the allocation of scarce resources among unlimited wants, this NS is a severe limitation on the ability of managers to increase economic efficiency by moving toward MEY in fisheries, i.e., increasing the value of fish stocks by enhancing the satisfaction of recreational anglers and the profits of commercial fishers. However, safety at sea in NS 10 is enhanced at MEY since the implicit in situ resource property right allows fishers to harvest when market and weather conditions are optimal.10 The Congressional desire to preserve fishing-dependent communities in NS 8 also tends to block the fishery’s movement toward MEY. In an attempt to preserve the status quo, an overinvestment in fishing communities cannot be reduced, which prevents the potential economic efficiency from being enhanced. Just as a market externality can lead to overcapacity in the fishing fleet [8], it also causes overinvestment in the shore-side infrastructure to support the oversized fishing fleet such as excessive investment in processor cold storage holding capacity [9]. Future allocative changes to improve economic efficiency by achieving the MEY target cannot be made unless some other presumably biological objective is being achieved that hopefully will not adversely impact the fishing community’s infrastructure. Optimum yield is another problematic term since it is also based on MSY instead of achieving MEY [10]. While defined to be optimum if the yield provides ‘‘the greatest overall benefit to the Nation,’’ it is based on MSY as ‘‘reduced by any relevant economic, social, or ecological factor.’’ The problem exists in a subtle but critical distinction in that at MEY benefits net of cost are maximized, while only benefits are maximized at MSY without (footnote continued) management plans on fishing communities), 50 CFR 600.345(b) (1) (‘Where two alternatives achieve similar conservation goals, the alternative that y minimizes the adverse impacts on [fishing] communities would be the preferred alternative’). 8 Personal Communication, Sam Rauch, then NOAA GC, in an email to John Ward April 28, 2006. 9 Only in the simple single species static model can it be assumed that MEY is more stock conservative than MSY. Discount rates, multispecies fisheries, switching behavior can create more complex solutions for determining the MEY equilibrium level relative to MSY. This simple model approach is used here to make a point that it is the maximization of net benefits that is relevant to goals in the MSFCMA, not the maximization of yield from a fishery. 10 For this result to hold, MEY must be understood to be a point of economic efficiency, not simply a total allowable catch level (TAC).

regards to their costs. Assuming that Congress knew what it was doing when it defined optimum to reflect ‘‘overall benefit,’’ then their objective was to establish MSY as the implicit management target within this list of 10 standards to be achieved. Moreover, the MSFCMA is not the only applicable law for fisheries managers. Executive Order 12866 (EO 12866) also applies and recent amendments to that executive order have placed greater emphasis on economic efficiency. An amendment to EO 12866 signed by President Bush on January 23, 2007 changes the phrase ‘‘state the nature of your problem the management regulation is designed to address’’ to ‘‘state the nature of the market failure y.’’ Market failure does not refer to a complete collapse of a market for buying and selling a good or service. Instead, it is a reference to the violation of one or more of the underlying assumptions of perfectly competitive markets which maximize economic efficiency by allocating goods and services perfectly. Many buyers and sellers, homogeneous products, perfect and complete information about products, and free mobility of resources are the underlying assumptions which if violated prevent the market from allocating resources efficiently. Since no actual market satisfies these assumptions completely, some degree of market failure always exists. The government’s role is to detect these market failures and develop regulations internalizing the marketplace externality. This causes consumers and producers to include these costs or benefits in their consumption and production decisions. Once the regulation is in place, the government extracts itself from the market and allows it to operate without day to day interference. Net benefits improve if the market moves closer to the perfectly competitive ideal. Unfortunately for command and control (CNC) fisheries management, EO 12866 applies to a clearly defined set of special cases. The annual effect of a change must be $100 million or more, or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local, or tribal governments or communities. Second, it would materially alter the budgetary impacts of entitlements, grants, user fees or loan programs or the rights or obligations of recipients thereof. Third, it raises novel legal or policy issues. The extent of these special cases imply that economic efficiency criteria and a new less invasive government role need to be applied to domestic fisheries management. No longer can NMFS simply rely on CNC regulations in federally managed fisheries; instead, dedicated access privilege programs that address the open access externality are required, e.g., see the reauthorized MSFCMA requirement to double the number of IFQ fisheries as evidence of this new management philosophy. That is, added to the internal conflicts among management objectives in the MSFCMA and the difference of opinion on how to achieve these objectives between the NOAA General Counsel, the DOJ attorneys, and the biologically trained fisheries managers in NMFS,11 the recent amendments to EO 12866 contradicts the optimum yield definition by implying a new, different approach to management that should move fisheries closer to the economically efficient MEY point. Whether or not consensus exists for this interpretation of EO 12866, and there are those within NMFS who certainly would disagree, the impact of the amended Regulatory Flexibility Act12 (RFA) on the need to impose economic standards cannot be ignored. The reauthorized RFA provided for judicial review of the adequacy of economic analyses that determined whether small

11 While most fishery managers in NMFS are biologically trained, others have training in economics, marine policy, and even history. 12 Small Business Regulatory Enforcement Fairness Act of 1996, P.L. 104–121

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business entities were impacted by a proposed regulation. The federal district court remanded a number of cases to NMFS after finding that the economic analyses were insufficient to support the finding of no significant impact to small business entities by the proposed management regulation. This changed NOAA General Counsel’s opinion that NMFS should concentrate its resources solely on biological science. Instead, NMFS should expand its capabilities into fisheries economics to provide legal justification for its RFA analyses. Four court challenges had their basis in economic arguments including decisions to remand Initial Regulatory Flexibility Act (IRFA) analyses: (1) Lobster Amendment 6, (2) the quota framework for summer flounder, (3) Groundfish Amendment 7 in the northeast region, and (4) the shark quota lawsuit. The ruling by Judge Merryday in the shark quota lawsuit [11] is particularly compelling because it captured the essence of NMFS economic science policy up to that point in time. In his decision, the judge wrote ‘‘This effort partakes of an artifice to feign good faith, statutory compliance.’’ Rather than ‘‘engage in a careful and meaningful study of the problem from the beginning y’’ NMFS chose an insular approach designed to block further investigation and public scrutiny.’’ In fact, in his initial decision remanding the IRFA back to NMFS, he characterized NMFS as ‘‘y virtually thoughtless, and crudely heartless y’’ He argued that ‘‘NMFS never prepared ‘‘a correct IRFA; an opinion supported by respected economists outside the NMFS. It is not just court cases that have highlighted NMFS’ inability to adequately meet its economic and other social science responsibilities. The Office of Management and Budget (OMB) and the Small Business Administration (SBA) also substituted their judgment for NMFS expertise in IRFA analyses. While not meeting the $100 million annual impact requirement,13 a supplemental analysis of the bycatch reduction devices in amendment 9 of the Gulf of Mexico shrimp fishery management plan was required by OMB under the controversial rule clause in EO 12866. OMB’s subsequent review of that analysis cleared the proposed bycatch regulations citing the law, but required that the economics be done correctly and provided their own analysis for NMFS to adopt. SBA after reviewing the shark RIR also contested NMFS’ economic analysis and prepared their own analysis in support of the commercial fishery. Finally, the fishery management councils resisted implementing the new precautionary principle as they learned through experience that harsh economic impacts are the result for both recreational anglers and commercial fishermen, e.g., a Gulf of Mexico Fishery Management Council request to redefine overfishing from 30% to 20% SPR for red snapper, which was disapproved by the Secretary of Commerce. The implication of these actions was that Congress, OMB, SBA, and the fishery management councils appear to agree with Judge Merryday that NMFS is not ‘‘make[ing a] reasonable, good-faith effort, [as required by the RFA statue] prior to issuance of a final rule, to inform the public about potential adverse effects of its proposals and about less harmful alternatives.’’ In short, while willing to defer to the agency on the quality of its biological science, the economic science was being held to a much higher standard than NMFS could meet. While this Achilles heel of fisheries management has since been addressed through increased economics personnel and research funds, and more importantly, the development of ‘‘Guidelines for Economic Analyses’’ [12], this series of events

13 Without an assessment of the input/output multiplier effects of the estimated change in net benefits, it was not possible to determine if the $100 million impact threshold was breached by the proposed rule.

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indicates the agency’s reliance on sciences that address legal requirements instead of good management practices. This management philosophy continues to muddy the waters and prevents a clear and concise management framework from being developed out of the apparently conflicting management objectives. These are not the only source of conflicting management objectives for fisheries managers. The Endangered Species Act and the Marine Mammal Protection Act also have goals and objectives for fishery managers to address. After establishing species as ‘‘priceless,’’ economics is often seen by managers to have no further role in subsequent decision-making. This policy is reinforced by traditional thinking that narrowly defines fisheries management as biological management. Yet, conflicts with commercial and recreational fishing activities constantly arise, e.g., turtle underwater release devices (TEDs), bycatch reduction devices (BRDs), lobster traps and marine whales, and, finally, marine dolphin bycatch in the tuna fishery. Managers’ misunderstanding of economics prevents its scientific application to understand behavior and assist managers in designing effective management programs. Narrowly defining fisheries management challenges as solely biological in nature, restricts managers to solutions that are biological in nature. This ignores the full complement of scientific understanding of human, market, and community interactions that creates the potential for infinite solutions.

3. The TED example An interesting CNC management case study is the adoption of regulations for endangered and threatened marine turtles in the Gulf of Mexico by NMFS. Once identified as an endangered or threaten species, the directed fishery for marine turtles was terminated [13].14 However, a supposedly significant level of bycatch continued to exist in the shrimp fishery [14,15].15 These findings resulted in a series of voluntary industry interactions to reduce turtle bycatch including reduced trawl time from 4 h to 90 min and the resuscitation of comatose turtles by shrimpers. After a court challenge by a conservation group was lost by NMFS [16], mandatory tow times and closed area regulations were considered. The lack of success with industry compliance lead to NMFS adopting conservation engineering in the form of a turtle excluder later renamed the trawl efficiency device (TED). This bycatch reduction device allowed turtles to be released underwater rather than capturing them in the net. A cost–benefit analysis [17] found that this management program to reduce turtle mortality would result in an estimated $35 million loss16 to the Gulf of Mexico shrimp fishing industry. Subsequent stranding studies and observer programs [18] deduced that overcapacity in the shrimp fishery [19] had resulted in multiple captures and releases of marine turtles resulting in increased mortalities even with the improved TED designs. Also, improper use of TEDs and violations of regulations requiring mandatory TED use17 prevented marine turtle stock conservation objectives from being achieved under the ESA. 14 This resulted in the loss of jobs, income, and sales in the industries dependent on turtle meat and by- products such as turtle shell. 15 Henwood found that 11,000 turtle mortalities continued to occur as a result of shrimp trawl bycatch and the NRC in a subsequent review increased that estimate to 44,000 turtle mortalities in the Gulf of Mexico alone. Both studies implied rather than measured the effect these mortalities had on turtle populations. 16 This is equivalent to $85 million in 2007. 17 /http://www.publicaffairs.noaa.gov/releases99/may99/noaaSero99r023.htmlS.

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A study of closed areas to reduce turtle mortality in near shore areas [20] using the General Bioeconomic Fisheries Simulation Model (GBFSM) [21] found that such a strategy would be costly and ineffective in achieving conservation goals. The Woods Hole Oceanographic Institute study [22] suggested that shrimp ITQs would be successful in reducing fishing effort and as a result turtle bycatch could possibly be reduced to acceptable levels. Unfortunately, the recommendations of both of these studies were not adopted despite the development of a shrimp ITQ plan [23] and a subsequent analysis by Ward and Keithly [24] that indicated a doubling of net benefits could result from rights-based management of the shrimp fishery. On the speculative hope that an improvement in nesting marine turtle populations would lessen the need for draconian regulations on the fishing fleet, an enterprising group of shrimpers in Brownsville, TX, took the initiative to assist Mexico in enforcing nesting protection regulations at Rancho Nuevo. For an almost negligible cost, a substantial improvement in nesting marine turtle populations (nearly 16,000 in 2007) was achieved (personal communication, Les Hogson, Brownsville, TX, 2007). NMFS Laboratories in the southwest region also participated in turtle head start programs and in relocating turtles to new nesting sites, but met with limited success, no doubt because of the higher valued use of most beach front property, the lack of knowledge about conditions needed for creating successful turtle habitat, invasion of red ants to the southern US and other predators [16], and interactions with fishing fleets [25]. One study [26] found that preservation of nesting beaches, such as Rancho Nuevo, was the most likely to succeed and the least costly management approach to conserve marine turtles. Nonetheless, this study and the success at Rancho Nuevo failed to result in a change in TED regulations. The real point of this digression is that while fisheries economics had become necessary to evaluate management alternatives, it was never used to formulate alternatives. Instead of developing a comprehensive multidisciplinary scientific framework for fisheries management, the conflicting objectives under the law have resulted in a series of disaggregated scientific studies that managers must evaluate as stand alone, independent analyses. Managers have been forced to rely on their own expertise instead of being able to evaluate proposed regulations within an integrated, multidisciplinary, scientific framework. While it may appear that relevant information necessary for the efficient operation of the fisheries has been disregarded in decisions designed to achieve management goals and objectives, what actually prevents its integration into the final rules and regulations is the lack of economic expertise at the decisionmaking management level.18

4. Performance standards In fact, NMFS has many Government Performance Results Act imposed performance standards stated in former and current strategic plans. However, with the recognition that NMFS’ ‘‘performance is influenced by many factors that are partially or wholly beyond our control’’ such as ‘‘Extreme weather and climatic events like hurricanes or El Nino events, climate change, oil and chemical spills and other environmental catastrophes, agriculture practices, national and global economic trends, land development, and fishing practices of other nations’’ outcome performance measures have become difficult to quantify.19 As a 18 This became evident when Andrew Kemmerer retired as Regional Director in the southeast region. 19 /www.SPO.noaa.gov/pdfs/nmfs_strategic_plan_2005-2010.pdfS

result, clearly defined performance standards such as those that would eliminate overcapacity have been eliminated from plans and replaced by program policy directives such as reducing the number of overfished fish stocks. In what almost appears as a response to this planned removal of even the biological stock abundance performance standards, Congress in the reauthorized MSFCMA is much clearer in defining its performance measures for NMFS, i.e., eliminating overfishing by 2010 and doubling the number of IFQ managed fisheries. Taken together, these requirements imply that NMFS’ management standards cannot simply be expressed in biological stock conservation terms.

5. Conservation efficiency as a management metric Conservation efficiency is based on the economically efficient MEY point on the sustainable yield curve, but adjusted for the relevant socio-cultural and ecological factors affecting fisheries. MEY is the preferable management objective20 because net benefits are maximized in part by maintaining a living marine resource stock at a size greater than that at MSY, e.g., a larger fish stock size results in a lower cost per fish harvested and increases profitability of the fishing firm for a constant cost per unit of fishing effort. Ecological factors that cannot be incorporated in the calculation of MCY by adjusting the sustainable yield curve for changes in habitat, for example, can be included by capturing the nonmarket value held for a species indirectly affected by the harvest of commercial fishers and recreational anglers in the directed fishery, e.g., the value of harp seals21 that feed on caplin in the northwest Atlantic. Socio-cultural factors can be incorporated into conservation efficiency by building in labor constraints or by deliberately modeling individual fishing communities as competing entities in the fishing industry constrained by the size of the fish stock.22 A second advantage of using the term conservation efficiency is that, while having no official definition in the literature, it can be defined to include economic impacts such as jobs, income, and sales as well as the net benefits derived from recreationally and commercially fishing on stocks that have direct or derived value for non-consumptive users of living marine resources. This allows the creation of a plethora of performance standards that while transcending neoclassical economics can be evaluated using standard techniques of cost–benefit analysis (CBA) with input–output models and that comply with the national standards in the MSFCMA. To use this concept as a management tool, begin with the approach that all fisheries management should focus on the commercial harvesting industry [27]. The management objective of the social welfare maximizing manager should be to conserve fish stock to the point where the commercial fisher’s profits are maximized. The intuition is that for a given level of fishing effort, the cost per fish harvested is lower for larger stocks of fish. 20

This assumes a positive but small social discount rate. Day, Susan Virginia (1988). ‘‘Estimating the Non-Consumptive Use Value of Whale Watching: An Application of the Travel Cost and Contingent Valuation Techniques.’’ Chapters 3, 4, 6, Appendix A, and the Bibliography of a Masters Thesis, Department of Natural Resource Economics, University of Rhode Island, Kingston, Rhode Island presents a comparison of nonmarket valuation methods for marine mammals. 22 The economic purists would argue, correctly, that these influences are already captured in the concept of economic efficiency. However, conservation efficiency is used because it evokes images of plump, fuzzy, white harp seal pups happily floating on icebergs off Greenland while, unfortunately, economic efficiency conjures up images of great hulking machines belching black smoke and toxins into the atmosphere as baseball bats swing through the air leaving blood soaked ice cakes behind. 21

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However, total revenue increases with yield as stocks are depleted until MSY is reached. At MEY, the increase in total revenue for the next pound of fish harvested is just equal to the increase in the total cost of harvesting that next pound, at which point profits are at their maximum, i.e., the marginal revenue equals marginal cost condition for profit maximization in neoclassical economics. As unlikely as it may seem, fisheries are rarely so simple that only different commercial fishermen with different technical efficiency levels in production need be compared using similar variables representing physical characteristics of the vessels and boats, price levels for fish products produced, and input cost per unit prices. Many fish stocks are also exploited by extensive recreational fisheries. Recreational anglers maximize utility, an arcane word for satisfaction, derived from catching fish in the marine environment. Recreational anglers though less efficient at catching fish can still overfish a fish stock because their total angling effort is much greater [28] than that of a commercial fishery. Recreational fisheries also face an income constraint since anglers must tradeoff time spent working to earn income for the time spent fishing [29]. The intuition is that the additional satisfaction gained from taking the last fishing trip must be just equal to the income lost by taking the trip instead of working; this is the marginal condition necessary to maximize utility. A second issue is the recreational angler trips taken by salaried employees who do not have to give up income to take a fishing trip because they have paid vacations each year. However, these recreational anglers tradeoff the utility derived from one recreational activity for another. The net benefit maximizing decision then becomes more complex since the manager must tradeoff or allocate fish stock between two users of the resource with different social welfare functions. Heterogeneous angler behavior can also be introduced by incorporating behavior characteristics and angler fishing models. The recently impugned [16] Marine Recreational Fisheries Statistics Survey (MRFSS) identified three modes of recreational fishing, e.g., shore-based, private boat, and for-hire. Within each of these modes of fishing are different behaviors not captured by the MRFSS, e.g., generalist, specialist, artisanal, subsistence, etc. In addition, there are those in society that value the non-consumption of living marine resources for a variety of reasons. For example, the biologists in the NG article who desire the establishment of marine reserves around the globe to prevent commercial and recreational fishing. Individuals who value the existence of marine mammals, such as whales, dolphins, and fur seals, also desire that the harvest of their prey species be minimized. Harp seals overexploited in Greenland and Canada that have since recovered to their virgin population levels still impact cod rebuilding efforts, which are one of their primary prey species along with caplin; a prey species of cod that is also commercially harvested. The individuals who value marine mammals directly or indirectly experience dissatisfaction as commercial and recreational harvests increase. While multi-objective management is nothing new in the fisheries management literature [30], applying it to actual fishery management practices is rare, if done at all. Yet this approach will allow the comparison of different management objectives across different user groups using traditional cost–benefit analysis techniques. Once net benefits are estimated for a given set of proposed management regulations, adjustments could be recommended that improve the financial viability of commercial fishing fleets and recreational fishery participants, fishing-dependent communities, conservation non-government organizations (NGOs), and fisheries biologists. Ward et al. [31] in the development of the shrimp business options report used this approach in a limited way to evaluate several proposals offered by industry,

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NGOs, and government experts in a series of public meetings. Results from the cost–benefit analysis were combined with the multipliers from input–output models to demonstrate both the change in profitability and regional impacts of each proposed management alternative. This approach is also recommended in the economic guidelines developed by NOAA Fisheries and adopted by the Small Business Administration [12]. These guidelines suggest that four modules be developed for an integrated qualitative or quantitative assessment of proposed fishery management regulations. The first module is a market assessment; essentially, the estimation of market supply and demand to determine how prices change with quantities produced or, in the case of a fishery, harvested. In most fishery cases, demand has been shown to be highly elastic, which indicates little change in price as quantities increase or decrease. However, some fisheries such as the Gulf of Mexico and southern Atlantic states shrimp and Pacific salmon have seen such tremendous increases in aquaculture production that prices have fallen precipitously. The lesson is that the market assessment must be as complete as possible and accurately reflect market trends so that estimated changes in prices are as accurate as possible. Similarly, recreational demand models need to be estimated that are equally accurate and reliable in providing changes in nonmarket values for fishing trips under various management alternatives. The second module is the fleet dynamics of the commercial fishery and the participation rate for the recreational angler. There are many approaches to estimating how recreational and commercial fishing fleets change overtime. The methodology presently in vogue is based on multinomial qualitative-dependent variable statistical techniques, e.g., random utility models [32] and myopic profit expectation models [33]. The third component is the individual value generated by the fishing activity. A cost or profit function for an individual commercial fisherman [34] and a travel cost [35] or household production function [36] for the recreational angler are examples of this type of individual value function. The final module consists of the population dynamics of the fish stock or stocks being exploited [37], where the marine resource is a limiting factor on the recreational and commercial net benefits or value being generated by the two industries. By incorporating the stock dynamics as a constraint with the other modules, an integrated management framework can be constructed.23 An example of this approach was used to model the behavior of the Gulf of Mexico shrimp fishery. Modules were developed independently but with the intent of assembling them into an integrated model for subsequent use. The modules were individually peer reviewed [33,38,39]. The shrimp population dynamics module had a long history providing fishery management advice to the Gulf of Mexico Fishery Management Council [40]. As an integrated model, the results were used in shrimp amendment nine and underwent reviews by the Social and Economics Panel, Science and Statistics Committee, and Advisory Panel of the Gulf of Mexico Fisheries Management Council, an independent review by MRAG, and a Federal District Court Case [41]. The model’s flexibility was demonstrated by its subsequent use in analyzing proposed trade adjustment assistance legislation and in a study of global resource rent dissipation being conducted by the World Bank and FAO. This last analysis indicated that a change from incentive blocking to incentive adjusting fishery management to

23 This approach can be extended to include other nonconsumptive values as well either directly through additional utility functions or indirectly through the stock constraint.

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achieve optimum yield at MEY could result in a doubling of net benefits to the industry and nation and a six cent per pound increase in resource rents for this 300 million pound per year fishery.

6. Conclusion The MSFCMA provides an explicit framework for the collection of information for use in the fishery management process. It authorizes the collection of scientific data for use in developing assessments of federally managed fisheries. More importantly, it provides authorization to collect information from participants in the fisheries. The fisheries management councils provide representation for industry and environmental groups to formally submit regulations to the Secretary of Commerce for implementation. The council management system encapsulates both scientific expertise and industry advisory panels that provide expert opinion on these proposed rules. Public hearings on proposed rules are also required and input provided must be responded to by NMFS prior to implementation of the rules. In what has devolved into an exercise in federal compliance of congressional mandates, fisheries management has lost sight of the real utility of community input and too often falls back into singularly directed biological management. This has resulted because the MSFCMA does not prescribe how this information should be applied in making fishery management decisions. A fishery management framework has not been developed that formally captures this type of information in the decision-making process.24 Within the council system, each committee, subcommittee, and panel holds an independent discussion and submits a separate report to the council representatives who can ignore the input if desired.25 Public hearings have devolved into sterile statements that posture different groups of participants against managers instead of interactive, deliberative sessions that result in the identification of different user’s goals and objectives for fisheries management. Management strategies designed to meet narrowly defined management metrics make it difficult to develop a comprehensive metric to gauge management success that is acceptable to all fishery participants as well as the public at large who share concerns about marine issues.26 Simple biologically based stock assessments, even if accurate, are not a good metric of success or failure because managers have so many objectives that have to be balanced in the management process. Stock size can be increased to improve economic efficiency, or the economic viability of the fishing industry, per the MSFCMA interpretation of conservation by NMFS General Counsel. Alternatively, stock size can be improved by increasing the harvest cost until some arbitrary, precautionary MSY is achieved which is detrimental to the fishing industry and the communities dependent on it. While both points are acceptable from a biological perspective, only the MEY stock size is consistent with economic and social objectives facing managers and the legal requirements under the law. 24 The National Environmental Policy Act (NEPA) does provide such a framework, but its adoption by federal fisheries managers has been slowed by a lack of understanding of its usefulness to the management decision-making process. NMFS is taking great strides to implement the NEPA management framework under Bill Hogarth’s leadership as AA for Fisheries. 25 The discounting of biological stock assessment estimates by the fishery management councils lead Congress to revise the MSFCMA to preclude such behavior in the future. 26 Facilitation techniques are being adopted and are making inroads on the use of information developed from cooperation with the fishing industry, but still remained focused on biological data collection.

Solutions to ecosystem or ecosystem approach to fishery management problems may not be practical. The hypoxia zone in the Gulf of Mexico is actually the result of urban development and agricultural practices in the Mississippi River watershed beyond the jurisdiction of, for example, the NMFS [42]. Increases in the federal discount rate will indirectly increase the harvest rate of fish species, but this effect will not be captured unless economic relationships and behaviors are incorporated into this new management paradigm. Devising effective fishery management plans will require intra- and inter-governmental committees that work with industry, recreational and conservational groups, environmental organizations, etc. to ensure that legal authority exists to implement proposed regulations. Developing consensus in this mega-management environment will be even more difficult than under the present species-specific framework given the increased number of management goals and objectives as well as the management agency agendas to implement their own policies and plans. Maintaining a narrow focus on stock abundance as the management metric will be even less meaningful since so many additional management objectives and goals will have to be considered and traded-off under this new approach. Criticizing a management metric is not helpful if no alternative metric is available that better reflects the actual management environment. Conservation efficiency and MCY combines economic efficiency or value with economic impacts and population dynamics to account for both allocative and regional effects. However, noneconomic social scientists (NESS) have argued that regional impacts are insufficient to fully account for socio-cultural changes due to fishery management regulations. One approach to integrate socio-culture effects into the bioeconomic model would require the NESS to identify user groups and investigate their individual goals and objectives. Once available, this information can be quantified and included in the integrated management framework [43]. Net benefits can be estimated for each consumptive and nonconsumptive user group to determine the appropriate allocation of living marine resources, then combined with the input/output multipliers to determine economic impacts, and linked back to the demographic characteristics of each individual of interest to fishery managers to determine who are the winners and losers and what if any mitigation measures should be taken. The unanswered question that remains is what goals and objectives of fishery management should be incorporated into this conservation efficiency based metric. For example, preservation of fishing-dependent communities is important according to NS 8 in the MSFCMA provided it does not interfere with the stock conservation objective in NS 1. Modifying the CBA to hold the number of fishing communities constant either through a labor constraint or by directly modeling fleet size [33] and mobility [44] as part of the fleet dynamics would allow the estimation of how a proposed regulation would affect net benefits, stock size, and impacts on jobs, income, and sales. That is, given the constraint on number of communities, the question of whether society is better or worse off with the adoption of the proposed regulation to conserve fish stocks could be answered by determining if the MCY point in the fishery is the most economically efficient point for the alternatives considered, i.e., a second best solution. This result provides the answer to the question of the success or failure of fisheries management within this multi-objective management framework. Without doubt, mankind is worse off if marine biological diversity or living marine resource abundance is reduced. The solution is not to eliminate the exploitive users of these resources by maligning them and regulating them out of existence. This is clearly not the intent of Congress when the MSFCMA was enacted.

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Instead, the costs that have been imposed by fisheries managers need to be offset by the rational management of these resources in the future. We can continue to measure success or failure using a simple index of stock abundance that ignores other equally important management goals or a more inclusive approach can be taken that incorporates these multiple objectives into a single metric. If the former, fisheries will remain not what some call a political issue, but, in actuality, a highly charged, emotional, public problem.

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