Quota-Induced Discarding in Heterogeneous Fisheries

Individual quota (IQ) programs are a promising and increasingly common means of regulating fisheries. This paper examines how profit maximizing fishers respond to different types of IQ programs in fisheries where many types of fish are harvested simultaneously. This analysis shows that the most common types of individual quota programs can induce discarding, and that individual quota programs that regulate the value of harvests never induce discarding. Since discarded fish have a high mortality rate, “value-based” individual quota programs are superior to their more conventional counterparts in that they waste fewer fish. The disadvantages of value-based quotas are also examined. Results are driven by the fact that the harvest technology examined here does not satisfy a “free-disposal” assumption. Since this free-disposal assumption is ubiquitous in production theory, and not obviously true, the framework developed herein may be useful for analyzing a broad class of problems involving joint production.