Biological and Economic STrategies for sustainable Ecosystem-services and ManagemenT (BESTEMT)

In 2023, work has continued in several areas. During the period, there are a total of 17 lectures and/or academic reports, and three new scientific articles have been published in international journals. An international workshop was also held in Bergen on 21 and 22 June. At the moment, work is being done on a game-theoretic model in which so-called Mean Field Games (MFG) are used. MFG is a type of game-theoretic model where there are many small actors who individually have little influence on the system, but together they can exert a large influence. This is particularly relevant for fisheries with many vessels/shipping companies. We use the model to look at how a tax can best be designed to counteract the tragedy of the commons. MFG fits well in situations of uncertainty and non-linearity. Aming other things, we compare progressive (non-linear) taxes with a fixed tax rate (linear tax). Such comparison would be difficult, if not impossible, to perform without using MFG. MFG, with many players, also contrasts with classic dynamic games where there are usually a maximum of two players. Under work package 3, which focuses on the characterization of the Norwegian purse seiner fleet, the focus here has been on vessels with purse seine licenses. The data provide a detailed financial picture of vessels that report catch quantity and value, operating expenses and the vessel's technical parameters (tonnage, length, engine power, etc.). Vessels in the profitability survey can be linked to information on vessel ownership, fishing rights and quota size. Work in progress: - Build a revenue function over the species harvested by the purse seine fleet. - Characterize the production structure of the fishery, estimate own price elasticities and calculate substitution possibilities. - Expand the revenue model by adding a simple cost function that will provide full performance characterization of the fishery. - Expand the income model to test for the causal significance of the introduction of structural quotas as an increase in profitability. - "Difference in Differences" estimator based on the introduction of structural quotas that control for stock and changes in technology. - Expand the income model to be able to measure technical and allocative efficiency. - What is the causal significance of the introduction of structural quotas with regard to improvement in efficiency?

The project aims at applying an ecosystem model to evaluate the environmental and distributional effects of various management instruments such as total and individual quotas and vessel specific taxes among other tools. Emission quotas and emission fees will be among the instruments we analyze. Thereby we address existing research gaps by integrating environmental and ecosystem information into our assessment of the tools. This includes fleet heterogeneity, multi-species management, trophic interactions, ecological indicators, and fisher behavior together with markets interactions. The model we plan to use, RESRENT2, is based on the existing RESRENT developed for the Ministry of Fisheries in 2005. The original purpose of this model was to find optimal size and structure of the Norwegian fishing fleet together with the optimal allocation of fish quotas over different vessel groups. In this project, we plan to include a number of new features, and thereby design RESRENT 2. The most comprehensive new features are population dynamics for the species included in the model and financial instruments in addition to harvest quotas. In addition to direct taxation of the resource rent, there are tax instruments that may achieve double dividend. For example, implementing emission taxes for the fishing sector will have positive environmental effects in addition to collecting at least part of the rent. Another interesting aspect of financial instruments such as taxes, is to apply them as tools for structuring the fleet. Such taxes may reduce overcapacity, improve the fleet composition and at the same time contribute to rent capture. As far as we know, this way of using financial instruments has received little or no attention in the literature, and a thorough analysis of this will be an important novel contribution to the literature. The project is divided in five work packages.