Discount Rates in Small ‐ Scale Fisheries Discount Rates in Small Scale Fisheries L OUISE T EH I N H ONOUR OF D R . C OLIN C LARK C ONFERENCE UBC M AY 15 2012 UBC, M AY 15, 2012
C O R A L R E E F S
Reef Fisheries • Small ‐ scale, multi ‐ species & multi ‐ gear; • Extensive overexploitation; • Extensive overexploitation; • Over 55% of coral reefs worldwide threatened by overfishing and threatened by overfishing and destructive fishing (Burke et al. 2011).
Chris Johnson, Odyssey Threatened coral reef species Reef Guardian Reef Guardian
Discount rates and fisheries sustainability fisheries sustainability How willing are fishers to sacrifice their current fishery benefits in order to enjoy t fi h b fit i d t j higher benefits in the future? g
Discount rates and fisheries • Private discount rate measures one’s willingness to f forgo immediate benefits in order to enjoy future, i di b fi i d j f bigger benefits; • Discounting affects long term sustainability of Di ti ff t l t t i bilit f fisheries resources (Clark 1973, Sumaila 2004); • Few empirical studies: • Few empirical studies: – High discount rates increased intensity of violating fisheries regulations (Akpalu 2008); g ( p ); – Low discount rates associated with less intense fishing pressure (Fehr & Liebbrandt 2008).
Research Questions Research Questions 1 What are the private discount rates of small ‐ 1. What are the private discount rates of small scale fishers? 2 Under what socio economic conditions do 2. Under what socio ‐ economic conditions do fishers have low discount rates? 3 A 3. Are discount rates reflective of fishery di fl i f fi h exploitation status?
Study site 1
Study site 2 Fiji Australia li A
Fishing Villages
Discount rates of fishers in open access and traditionally managed reef fisheries d di i ll d f fi h i Open access (Sabah): Open access (Sabah): • No assurance of future benefits from the fishery; • Forced to entirely discount the future i e use a • Forced to entirely discount the future, i.e., use a discount rate of infinity (Clark, 1990). Customary marine tenure (Fiji): Customary marine tenure (Fiji): • Traditional management of fishing grounds; • Stewardship of marine resources • Stewardship of marine resources – lower discount lower discount rate. Teh et al. (submitted)
Eliciting discount rates • Semi ‐ structured interviews: – 75 interviews in Sabah (April/May 2009) – 45 interviews in Fiji (May/June 2008) • Binary choice series using hypothetical payments: – Choose between an immediate, smaller payment or delayed, larger payment
Estimating Discount Rates Now 1 month Discount rate ($) ( ) ($) ( ) (annual%) (annual%) Discount Function: Discount Function: 100 105 29 100 110 86 r = discount rate di t t 100 115 141 y = present value x = future value 100 120 193 t = time delay 100 125 243 100 130 291 100 135 337 100 140 381 100 145 424
Discount rates of fishers in Sabah for 1 month delay Mean = 265% 33 M 265% 33 Median = 29% cy requenc Fr Annual discount rate (%)
Discount rates of fishers in Fiji for 1 month delay Mean = 208% 27 Mean = 208% 27 Median = 121% cy requenc Fr Annual discount rate (%)
Proportion of fishers choosing each choice option by site i b i Sabah Sabah Fiji Fiji (%) (%) 30 30 20 20 ‘Impatient’ Impatient 51 27 ‘Patient’ 19 53 Other 0.39* 0.44 Patience proxy (= r i /r ( r i /r max ) ) *p <0.05
Percentage of respondents at each village who chose the patient option who chose the ‘patient’ option Village Site % Sibogo Balak Sibogo Balak Banggi Banggi 14 14 Mabul Semporna 20 Dogoton Dogoton Banggi Banggi 38 38 Hampalan Laut Semporna 40 Damaran Banggi gg 67 Omadal Semporna 67 Batu Sireh Banggi 70 Sibogo Air Banggi 71 Manawali Banggi 83 Maligu Banggi 100
Defining a low discount rate Now 1 month Low discount rate = ($) ($) ($) ($) Choosing smallest 100 105 future payment offered offered 100 100 110 110 100 115 All other choices = 100 100 120 120 non low discount non-low discount rate 100 125 100 100 130 130 100 135 100 100 140 140 100 145
Logistic regression model Identify which socio ‐ economic factors predict the probability that a fisher chooses a low discount rate a fisher chooses a low discount rate Y X Z W Y = Probability of choosing a low discount rate X, Z and W = matrices of demographic, socio-economic and location variables location variables 3 models: (i) pooled (n=118) (ii) Sabah only (n=73) (iii) Fiji only (n=45)
Prevalence of low discount rates among small ‐ scale fishers ll l fi h ents respond % of r
Logistic regression output Significant predictors of low discount rates among fishers Variable Variable Pooled Pooled Sabah Sabah Fiji Fiji Protection + + Site + Boat ownership + ‐ Relative catch Relative catch ‐ ‐ + + + Increases likelihood of a fisher choosing a low discount rate ‐ Decreases likelihood of a fisher choosing a low discount rate Teh et al. (2011) Sustainability
Coral reefs worldwide Coral reefs
Economics of overexploition Theory: Even under restricted access, the sole y , owner of a fishery has an incentive to deplete the resource if their discount rate satisfies the condition > 2 r > 2 r where r = intrinsic population growth rate of the fish stock (Clark 1973). h fi h k (Cl k 1973)
Data 1. Economic Di Discount rates t t Managers = official discount rate ( ) • Fishers = private discount rate ( p ) Fishers = private discount rate ( ) • • 2 2. Biological Biological Intrinsic growth rates • Species level (r ) Species level (r s ) • Fishery level (r f )
Species r s % of catch 0.5 5 0.6 20 1 0 1.0 10 10 0.4 15 Fishery level r f 0.5 5 0.875 yr -1 0.2 15 1.8 22 2.2 2.2 5 5 0.3 3
Comparing discount rates to exploitation status l Status* Official discount rate ( ) rate ( ) < r f Underexploited > r f Overexploited > 2 r > 2 r f Depleted Depleted r f : Fishery level intrinsic growth rate * Source: Newton et al. 2007 Current Biology
Inferring private discount rates Inferring private discount rates Status Private discount rate ( p ) ( p ) 0.29* < p < r f Underexploited r f < p < 2r f Overexploited O l i d 2 p = r f Fully exploited y p p f * Minimum discount rate from Fiji and Sabah case studies
Mean= 0.88 ±0.02 Sabah Fiji Fiji Fishery level r f Fishery case f ) e per yr (r f rowth rate trinsic gr In
Fishery level r f Rabbitfish r f ) Mauritius Mauritius e per yr (r Philippines rowth rat Parrotfish ntrinsic g Surgeonfish Snapper In Grouper Turks & Bahamas Caicos Caicos Fishery case Teh et al. (submitted)
Official discount rates Fishery cases Fishery cases 1.8 1.6 1.4 1.2 0 8 0.8 0.6 0.4 0.2 2 1 0 ate scount ra nnual dis Official an O
Official discount rate vs. fishery r f 2 y r f 1 8 1.8 / Fishery 1.6 1.4 ount rate/ 1.2 Fishery r f 1 Official Official ial disco discount 0.8 rate 0.6 Offic 0.4 0.2 0 Fishery cases
Inferred private discount rates Caribbean 102% Southeast Southeast Asia 145% Fiji 104% Indian Ocean 142% Sabah 110% Sabah 110% O Oceania 89% i 89% Overall mean = 107%
Official vs. private discount rates 3 2.5 2 5 nt rate 2 Private Private discoun discount rate 1.5 Official discount discount Annual rate 1 0.5 0 Fishery cases
Concluding Remarks Need to start paying attention to fishers’ discount rates – A k Acknowledge fishers’ short time perspective l d fi h ’ h t ti ti – Better understanding about why fishers discount the way they do y
ACKNOWLEDGEMENTS Rashid Sumaila Colin Clark Mike Meitner Dirk Zeller Rashid Sumaila, Colin Clark, Mike Meitner, Dirk Zeller In the field: Lydia Teh, Prof. Dr. Ridzwan Abdul Rahman, UMS Seaweed Project staff (Banggi) ,WWF team (Kudat & Semporna), Nanise Kuridrani, Vily Tuiwakaya and Fiji Fisheries Department Funding: SSHRC, Kingfisher Foundation, Cosmos International Graduate Travel Award (UBC) ( ) All the fishers who made this research possible… Maksukul, Terima kasih, Vinaka
Estimating intrinsic population growth rate h • Based on Euler ‐ Lotka method (McAllister et al Based on Euler Lotka method (McAllister et al. 2001) • Solve for r iteratively using a numerical minimisation function i i i i f i • Assume Beverton ‐ Holt recruitment function, expressed as a function of the steepness parameter h
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