A Bargain for Tuna: a Coasean Solutions to Bigeye Tuna Bycatch

Ovando Dan (UCSB)
Libecap Gary (UCSB)
Lennon Thomas (UCSB)
Kat Millage (UCSB)

Abstract: Many environmental/natural resource problems persist despite consensus that aggregate benefits exceed costs so that action should be taken. Nevertheless, responses are often delayed with final policies that do not correspond to ideal types. Distributional conflicts impede collective action. Bigeye tuna in the Western Central Pacific are an example. They are an economically and ecologically critical species that is overfished. Standard regulatory solutions have been unsuccessful. Overfishing of bigeye stems from accidental catch of juvenile bigeye in the skipjack tuna fishery. Our estimate of the benefits of reduced bigeye juvenile harvest are less than the costs imposed on the skipjack fleets from adjustments in fishing technologies. If the constraints, however, are directed only to hotspots where incidental harvests are largest, then benefits exceed costs. We identify fleets involved and construct a payment scheme to fleet owners so that conservation of bigeye does not make them worse off. Enforcement is feasible because fishing largely takes place within the economic zones of small island states. Who should pay? Long-line fleet owners who directly harvest bigeye tuna are an option, but there are high transaction costs. Consumers in Japan who value bigeye in the sashimi market are another option. The tuna distribution market in Japan is highly-concentrated and Japanese consumers have been willing to pay a premium for sustainably-caught fish. This concentration reduces the transaction costs of collecting a sustainability tax and distributing compensating payments to parties that must adjust behavior. This is a unique example of large-scale use of “beneficiary pays” rules. Coasean bargaining offers a breakthrough in achieving agreement on reducing the incidental harvest of bigeye tuna that thus far has eluded action. It provides a template for other problems where “polluter pays” rules via regulation or taxes have failed.

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