OverFishing - Market Failure

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OverFishing:

Over Fishing By: Reyana & Ali

Why is it a problem?:

Why is it a problem? Fish stocks around the world are diminishing 1/7 humans rely of fish as a major food source A large proportion of jobs depend on fish stocks, eg . When Canada lost its Cod in 1992 over 40,000 people became unemployed We are losing species as well as entire ecosystems. As a result the overall ecological unity of our oceans are under stress and at risk of collapse .  negative externality We are in risk of losing a valuable food source many depend upon for social, economical or dietary reasons.

Why it’s a market failure in production:

Why it’s a market failure in production Firms are exploiting the fish stocks Profit maximising firms are not taking the social cost of overfishing into account, only the private cost This means a negative externality occurs, where there is a spillover cost onto a third party not involved in production or consumption

Why it’s a market failure in consumption:

Why it’s a market failure in consumption Consumers are demanding too many fish This high demand is what is giving producers the incentive to fish to this extent Consumers aren't considering the long term consequences , if they had perfect information they would demand less

Policies that can be used to fix it:

Policies that can be used to fix it Safe catch limits A constantly reassessed, scientifically determined, limit on the total number of fish caught and landed by a fishery. Politics and short time economical incentives should have no role in this. Controls on bycatch The use of techniques or management rules to prevent the unintentional killing and disposal of fish, crustaceans and other oceanic life not part of the target catch or landed. Protection of pristine and important habitats The key parts in ecosystems need full protection from destructive fisheries; e.g. the spawning and nursing grounds of fish, delicate sea floor, unique unexplored habitats , and corals. Monitoring and Enforcement A monitoring system to make sure fishermen do not land more than they are allowed to, do not fish in closed areas and cheat as less as possible . Strong monetary enforcement is needed to make it uneconomic to cheat.

More policies that can be used to fix it:

More policies that can be used to fix it Hypothecation The purchase of fish can be taxed , and this tax can be used to subsidise less endangered animals to eat, eg . chicken Information Websites, social networking, pamphlets , to educate the public about overfishing Quotas Put a limit on just how much fish can be caught Increasing the amount of fish hatcheries Fish stocks can gradually increase , and wild fish can be left alone

The policies we pick:

The policies we pick Monitoring and Enforcement To make sure any quotas and restricted areas already in existence are enforced properly Hypothecation To reduce the market failure in consumption We picked these policies to correct the market failure in production and consumption

Is our policy efficient: Monitoring and enforcement :

Is our policy efficient: Monitoring and enforcement It will only be efficient if the monitoring system works , if not then it will be a large waste of resources

Is our policy efficient: Hypothecation:

Is our policy efficient: Hypothecation Yes, because there is clearly too much demand for fish , demand is exceeding supply, so a market failure occurs

Is our policy effective: Monitoring and enforcement :

Is our policy effective: Monitoring and enforcement It will ensure that the policies that are already in place will be carried out properly, therefore making it effective It wont take a lot of research as it is building upon the policies that already exist However if the existing policies are not effective then it wont work In reality we cant measure the optimum social level, so it can never be 100% effective Monitoring can be very costly Monitoring provides employment  economic growth

Is our policy effective: Hypothecation:

Is our policy effective: Hypothecation The optimum marginal social level is unknown, so we will not know how much to raise taxes It will slow down the amount of fish being extracted from the sea There is a time lag, so it wont be able to be implemented in the short run In order for this policy to be completely effective it must be implemented on a large scale It depends on the PED of fish

Is our policy equitable: Monitoring and enforcement :

Is our policy equitable: Monitoring and enforcement Yes, because it affects everyone equally, restricted areas will be off limits for all fishermen, and quotas will have to be followed correctly by all those catching a specific type of fish

Is our policy equitable: Hypothecation:

Is our policy equitable: Hypothecation Allergies + those with other dietary issues may not be able to eat the subsidized product, so they will see the tax as unfair Lower income earners can afford to buy the subsidized good at a lower price, so they will be subject to better nutrition and a wider variety There might be outrage/industrial action from those involved in the fish business eg . Fishermen, restaurants There will be more employment in the market of the subsidized good

Is our policy sustainable: Monitoring and enforcement :

Is our policy sustainable: Monitoring and enforcement Definitely, it protects fish stocks for future generations It creates a new job market

Is our policy sustainable: Hypothecation:

Is our policy sustainable: Hypothecation No because we cant guarantee that its going to work There might be strain on the subsidized market

The End:

The End

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