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Fisheries Economics & Policy: Subsidies and Taxes

in this video we’re going to look at subsidies and taxes in the fishing industry and how they affect the fisherman’s incentives from the government’s perspective fisheries agriculture forestry mining oil extraction these primary sectors sectors that make use of natural resources are a way to generate wealth in a country the government’s mindset is put in a little money to help the fishermen buy boats pay for gas or an income in the offseasons help them with tax breaks and with lower interest loans and afterwards the country is going to get more than that amount coming back in income from fishing the fisherman will catch fish sell those fish some to other countries earn money to buy other things and the economy turns and over time that subsidy will pay off but what it’s doing is helping people inside the industry remain even when the catch is bad and helping people outside enter because there is that extra incentive from the government that makes fishing more viable so let’s say the government issues easy employment insurance for the fishermen registered fishermen are guaranteed to get some money from the government in the fishing off season before the subsidy they were fishing at this point but the subsidy is in effect increasing the fisherman’s income it’s still open access so they will put in effort until the industry’s total revenue equals its total costs so as a result of the subsidy the amount of effort the fishing industry is putting in is increasing what’s happening is that each fisherman has extra money to cover additional units of effort now it seems like total revenue has gone up but this is just from the subsidy this revenue curve is a mix of revenue from fishing and from subsidies if we look at the old revenue curve that’s just revenue from the fishing the extra effort has actually decreased the revenue from the fishing the subsidy has had the opposite effect the government expected it’s actually decreasing overall wealth because less fish is being caught and passing money from the government to the fishing industry doesn’t increase economic value this is just a transfer of money one without any real justification on a theoretical level like this we can model the increase in effort due to the subsidy this distance here would represent the amount of the subsidy but in the real world it’s very difficult to actually measure how much extra fishing effort is going on for each dollar of government subsidies but we can see that failing fisheries are often accompanied by government’s cities for example before the collapse of the cod population in the Grand Banks off the coast of Canada one of the most productive Fisheries in the world the subsidies were to such an extent that they made up over half of the fishermen’s total income and it can be even worse than that in other Fisheries this is putting the wrong incentives on the fishermen with an over fish stock the cause is typically to many fishermen chasing the fish so unfortunately reducing the number of fishermen is almost definitely going to have to happen but people like to have jobs it’s one of the most important things an individual can have and the government likes to make decisions that create jobs they often see that as their duty the job is how an individual gains food shelter other comforts a sense of purpose and social status if you don’t have a job it’s like the worst thing ever this is why when politicians campaign for an election they always go on and on about jobs and it’s why governments want to give money to fishermen but a job doesn’t exists for the individual to have stuff for to survive a job represents the labor that is required to get something done something that somebody wants done and a job shouldn’t exist for any other reason if the government created the Department of bird chasers employing thousands of workers who chased Birds all day they don’t tag them or weigh them or anything like that just chase them a hundred thousand dollars a year you wouldn’t care that some jobs are being created this just isn’t a good use of public money this is what subsidizing the fishing industry is fishing is often seasonal with fishing being closed or simply unavailable for big chunks of the year so it seems helpful to offer some aid in the off months so that they can keep fishing when the season opens but as we’ve seen this passing money to the fishing industry increases fishing effort and decreases overall revenue from the actual fishing making the problem worse and specifically with fishing if there are too many people fishing then the stock may collapse and people are going to lose their jobs anyway doing what you can to prevent overfishing is a better way to create jobs than by artificially inflating their income or deflating their costs there’s often a distinction made between the bad subsidies that cause the fisherman to put in more effort like employment insurance or tax breaks and good subsidies like government-funded monitoring and research or programs that helped reduce over capacity like ship decommissioning or boat buyback schemes the idea behind some of these good subsidies great but some of these alone do nothing about buyback scheme is meant to help a fisherman pay off the boat so they can leave the industry but at the core it can be just another subsidy that passes money from the government to the fishing industry if the fishermen don’t have any obligation to stay away then the ones that leave are just freeing up space for other fishermen to come in or maybe the fishermen even understand all of this and just use the program as a sure way to sell old boats then they have fresh cash to go and buy a new boat then it basically has the same effect as a fuel subsidy or employment insurance remember as you do reduce the effort suddenly individuals will see that there is money to be made by putting in more effort into fishing if the fishermen are going to have to lose their jobs then a boat buyback scheme or employment insurance can help in the transition but the more important task is making sure fishing is limited to a certain group of people otherwise these aren’t just wasting money they’re exacerbating the problem if a subsidy increases the amount of effort could the government use a tax to have the opposite effect and lower the amount of effort let’s say they add a tax to fuel which is going to increase the cost of each unit of effort it’s still open access so they still fish until total revenue equals total costs this point here but this is better the effort is reduced so the population is more healthy and more rent is generated but the problem is all that new rent that was generated went to the government this is the fisherman’s costs and this is their revenue that hasn’t changed but the effort was pushed back because of the tax cost this that here is the money that went to the government from the tax so because of the added costs the fishermen aren’t really any better off despite the fish population being higher and fishing being cheaper and a large portion of this lost effort was fishermen who lost their jobs fishermen who couldn’t pay the tax probably the smaller scale in shore or artisanal fishermen who work less efficiently than the large scale commercial ships the large scale ships can catch each pound of fish for relatively cheaper so they have extra money to pay off a tax so the problem is in the end the tax just looks like the government is trying to take the workers money and that they don’t care if they put people out of a job by doing it and I think this is why taxes aren’t really used for this purpose but taxes can be used and probably should be used to collect money to cover a government-funded regulation monitoring and enforcement just as a way of passing these costs on to the fishermen to keep them from having that same effect as a subsidy even though it is a good subsidy in the next few videos we’re going to look briefly at a few management strategies that can help move a fishery towards sustainable and economic fishing

  • This is GREAT info. Definitely passing this on. We're bottle-nosing our options and it seems we will have no choice but to let go lots of fisherman, or we loose our seafood. Both are undesirable but, we all know which choice is priority….

  • Wake Up degenerates… You are the Fish the criminal for profit corporate government entities or crown corporations and crown agents are the Fishermen …

    Ship = Vessel – Vehicle = Chattel Property or Citizens …. Forced Enslavement Human Trafficing for corporate government profits is the true environment of today's economy… Educate yourselves by reviewing the legal definitions for each act understand you are the fish the government agencies facilities and institutions are the fisherman profiting from the pain and suffering of HUMAN BEINGS! !!! taxation is no different than extortion when you understand the true economic corporate environment deceiving the world "globally" the land is flat river do not flow up hill people now let's smarten up before it's too late shall we?

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