Three essays on the conservation of endangered species

Date of Completion

January 2009

Keywords

Agriculture, Wildlife Conservation|Economics, General

Degree

Ph.D.

Abstract

This dissertation contains three essays that contribute to the economics literature on designing and evaluating conservation policies for protecting endangered species. We focus on bycatch, an externality that arises when commercial fishing activities result in the capture of non-target marine species, often killing them in the process. ^ The first essay analyzes the effectiveness of environmental policies involving voluntary approaches as alternatives to regulation for protecting bycatch species. The chapter employs a game theoretical model to investigate whether a policy involving a voluntary approach, coupled with a permanent tax threat, can be designed and applied to reduce stochastic bycatch. We show that both when the policy is imposed on a single fisher and when it is applied to the industry as a whole, the background threat of a permanent tax can be sufficient to induce fishers to make an efficient avoidance choice voluntarily to avoid bycatch if the performance standard is optimally set. The optimal performance standard, which will trigger the tax penalty upon violation, depends on the discount factor and the degree of variability in the bycatch level. The net impact of both these factors on the optimal standard is ambiguous and depends on the nature of the underlying distribution of bycatch mortalities, given the efficient level of avoidance measures. ^ The second chapter focuses on the economic impact of a U.S. sea turtle bycatch reduction policy: the TED (Turtle Excluder Device) regulation, which aims to reduce sea turtle bycatch mortalities that result from commercial shrimp harvesting activities. The objective of this chapter is two-fold. First, we develop a theoretical model that identifies the three ways in which the regulation affects domestic supply: (i) directly through the use of TEDs (a negative effect), (ii) indirectly by affecting the fishers' choice of avoidance activities which reduce the likelihood of turtle interactions and hence, the need to use TEDs (an ambiguous effect), and (iii) through a positive effect on the equilibrium market price. The model shows that the net effect of a more stringent TED regulation on industry supply is ambiguous. However, it unambiguously reduces industry profit. Second, we use an instrumental variable approach to estimate the effect of this regulation on the aggregate domestic shrimp supply. The estimation results indicate that when we account for the effect of the TEDs on price, the total estimated harvest loss from TEDs is approximately equal to 12.1% ^ The third chapter develops a simple analytical framework to identify both country and industry specific factors that determine the magnitude of trade induced leakage of environmental damage that stems from unilaterally imposed bycatch reduction policies. The net change in global bycatch level is sensitive to a wide range of both supply and demand side factors, such as the relative difference in spatial and temporal distributions of both the target and bycatch species in the two countries, the difference in fishing technologies adopted by the two countries, the home country's elasticity of demand for the target species, the difference in output prices in home and foreign markets, the resource management regime and the two countries' respective trade policies for the target species. The global bycatch level is lower when firms compete over quantity than when they engage in price competition. For some target species, there is scope for using eco-labeling schemes to mitigate bycatch, but the effectiveness of the labeling scheme depends on the distribution of consumers' willingness to pay for a ‘low bycatch’ product label. ^

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