Landing Fees vs Harvest Quotas with Uncertain Fish Stocks

This paper analyzes the relative performance of two market-based fisheries management instruments in the presence of a stochastic stock-recruitment relation. Regulators are forced to choose either a fee per fish landed or a quota on the total fish harvest—at a time when they are uncertain what will be the stock of fish recruits that will actually materialize during the next fishing period. With such recurrent “ecological” or “environmental” uncertainty being the predominant random variable in fisheries, some striking regulatory conclusions emerge, which go strongly against conventional wisdom.