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The implications for fisheries management systems of interactions between farmed and wild caught species

Objective

The project focuses on the demand for fish, and its implications for fishery management. Factors being determinants in the price formation process and the market structure (e.g., own-price and expenditure elasticities) are analysed. Focus will be on multi-species demand interdependencies between farmed and wild caught species. In addition to the key markets of France, Spain and the UK, the aggregated EU market will be analysed. Several North-Sea species are analysed. The supply side of both the farming industry and the marine wild fisheries will be explicitly modelled, and also accounted for in the demand analyses. Furthermore, price simulations and marine policy modelling analysis will be undertaken.
STATE OF PROGRESS

As can be seen from Table 1 in 1997 we have started the work with part 1, 2 and 3. Most of the data collection is finished, and the market structure of the key-markets is mapped. The results will be available by the end of February 1998 in the form of three key-market reports (Part 1).
Furthermore, the supply side analyses have resulted in two scientific reports, one where we estimate an aggregated Norwegian supply curve (Steen, Asche and Salvanes, 1997), and one productivity study of the Norwegian salmon industry by Tveteras and Heshmati (1997). The dataset for the Scottish salmon farming industry has been collected, and will be analysed in 1998. Work has begun on the development of a bioeconomic model of the North Sea fishery that will be used to determine the management implications of the interactions between the farmed and wild caught species.
We started also the work on part 3 in 1997. On the second DEMINT workshop in June, market delineation was one of the main topics that was discussed. So far the work been concentrated on methodology, which recently has resulted in a scientific paper on cointegration and product aggregation methodology written by Asche, Bremnes and Wessells (1997).

The paper "Market delineation and demand structure" was submitted and published in American Journal of Agricultural Economics, 1997, 79: 139-50. Cointegration tests for market delineation and estimation of a dynamic system of demand equations are undertaken for three high-quality products in the EU; Fresh and frozen salmon and crustaceans. The ideas and methodology in this paper form the basic framework for the DEMINT project, only that in the DEMINT project we undertake analyses of a much broader product group.

Finally, the CEMARE team's work has resulted in an article where they implement a so-called goal-programming approach to fishery management on resource allocation in the North Sea fisheries (Mardle, Pascoe, Tamiz and Jones, 1997).

PUBLICATIONS

Asche, F, K.G. Salvanes and F. Steen, (1997), "Market delineation and demand structure", American Journal of Agricultural Economics, 1997, 79: 139-50

Asche, F, H. Bremnes and C. R. Wessells (1997) "Product Aggregation, Market Integration and Relationships Between Prices: An Application to World Salmon Markets", (Working paper FAIR project CT96-1814), submitted to American Journal of Agricultural Economics.

Mardle, S., S. Pascoe, M. Tamiz and D. Jones (1997) "Resource Allocation in the North Sea Fishery: A Goal Programming Approach", CEMARE, University of Portsmouth, (Working paper FAIR project CT96-1814), submitted to Annals of Operations Research.

Steen, F., F. Asche and K.G. Salvanes (1997) "The supply of salmon in EU: A Norwegian aggregated supply curve", Foundation for Research in Economics and Business Administration, SNF working paper 53/97 (FAIR project CT96-1814)

Tveteras, R. and A. Heshmati, (1997) "Patterns of prices and productivity growth in the Norwegian salmon farming industry 1985-93", Foundation for Research in Economics and Business Administration, SNF report No. 92/1997 (FAIR project CT96-1814)
Asche, F, K.G. Salvanes and F. Steen, (1997), "Market delineation and demand structure",
American Journal of Agricultural Economics, 1997, 79: 139-50
Asche, F, H. Bremnes and C. R. Wessells (1997) "Product Aggregation, Market Integration and Relationships Between Prices: An Application to World Salmon Markets", (Working paper FAIR project CT96-1814), submitted to American Journal of Agricultural Economics.
Mardle, S., S. Pascoe, M. Tamiz and D. Jones (1997) "Resource Allocation in the North Sea Fishery: A Goal Programming Approach", CEMARE, University of Portsmouth, (Working paper FAIR project CT96-1814), submitted to Annals of Operations Research.
Steen, F., F. Asche and K.G. Salvanes (1997) "The supply of salmon in EU: A Norwegian aggregated supply curve", Foundation for Research in Economics and Business Administration, SNF working paper 53/97 (FAIR project CT96-1814)
Tveteras, R. and A. Heshmati, (1997) "Patterns of prices and productivity growth in the Norwegian salmon farming industry 1985-93", Foundation for Research in Economics and Business Administration, SNF report No. 92/1997 (FAIR project CT96-1814)

Workshops arranged

DEMINT workshop W1, Portsmouth, January 1997

DEMINT workshop W2, Bergen, June 1997

Presentations

Presentations have been given on several occasions; The market research fishery program's symposium, Norwegian Research Council, Tromso, the Annual Aquanor Symposium, Trondheim and lately also the Annual Norwegian salmon production meeting, Trondheim
DESCRIPTION OF WORK

The project is roughly divided into six main parts, that will be dealt with in chronological order. These are described in Table 1.

Table 1 Main parts of the DEMINT project

Demand- or supply side Part Description Tasks involved Status by 31.12.97
Demandside Part 1 Data collection and descriptive analyses Tasks 1.1-3, 5 Nearly completed
Supplyside Part 2 Supply side analyses Tasks 2.1-3 Started
Demandside Part 3 Market Delineation analyses Tasks 3.1-3, 5 Started
Demandside Part 4 Dynamic Demand modelling Tasks 4.1-3, 5 Not started
Demand- and
Supply combined Part 5 Price and quantity simulations/predictions Task 6 Not started
"........." Part 6 Marine policy implications analysis Task 7 Not started

In the first part we analyse the three key-markets, their industrial structure, their market characteristics etc. A review of the relevant literature that is available on these markets is undertaken. Necessary time series data (e.g., quantity and price) for the individual key species from each market are collected from local domestic statistics as well as from secondary sources (e.g., FAO, OECD and EUROSTAT statistics). The information collected at this stage is being used to produce three key-market reports one for each country, and the first part of the aggregated EU-market report. The species to be analysed are shown in Table 2:

In part 2, we concentrate on the supply side. We estimate aggregated supply models for the Norwegian and the Scottish farmed salmon industries (Sub-tasks 2.1 and 2.2). Furthermore we undertake productivity studies where we try to uncover which factors that have been important in determining the apparently large technological progress within these industries. Finally, we develop a bioeconomic model of the North Sea fishery that will be used to determine the management implications of the interactions between the farmed and wild caught species later in the project.

In Part 3 the objective is to analyse the demand interdependencies between wild caught and cultured species. The result from these analyses will be used to determine which species to consider in the dynamic demand systems (Task 4). More specifically, these analyses will use multivariate co integration techniques to test for price interdependencies between price series for wild caught and cultured species. This also involves the modelling of particular market characteristics such as seasonal variation in prices, structural shifts, etc.

Table 2 Species analysed

Spain France The UK The EU
Salmon Salmon Salmon Salmon
Cod Cod Cod Cod
Halibut (Halibut) Halibut Halibut
Whiting Whiting Whiting Whiting
Monkfish Monkfish Monkfish Monkfish
Hake Hake Hake
Tuna Tuna
Blue Mussels Blue Mussels
Squid Squid
Cuttlefish Cuttlefish
Octopus Octopus

Spain France The UK The EU

Prawns Prawns
Trout Trout Trout
Saithe
(Coal fish, Pollack) Saithe Saithe
Crustaceans
(Prawns/Shrimps and Nephrops) Crustaceans
(Prawns/Shrimps and Nephrops)
Plaice Plaice Plaice
Sole Sole
Lobster (prices) Lobster Lobster
Haddock Haddock
Sardines Sardines
Sea bass Sea bass

The objective in Part 4, is to estimate dynamic demand models to analyse the demand interdependencies between wild caught and cultured species. These analyses will use dynamic versions of almost ideal demand systems (AIDS) and single equation dynamic demand models, which estimate own-price, cross-price, and expenditure elasticities. The supply side will be incorporated either in the form of instrumental techniques or explicitly modelled using supply equations from Part 2.

In Part 5 we will use the estimated supply equations for the main cultured and wild caught species in the EU together with the dynamic demand models to simulate potential short and long run developments of production, prices and off-take in the fish markets. Specific scenarios will be explored relating to the impact on interdependent wild and aquaculture species markets of sustained growth in aquaculture production, changes in TACs with respect to selected marine fish species, and variation in imported supplies of wild salmon and other fish.

Finally, we will develop and assess alternative management strategies for both aquaculture and the traditional harvest sector taking into consideration the interactions at the demand level (Part 6).

Funding Scheme

CSC - Cost-sharing contracts

Coordinator

Foundation for Research in Economics and Business Administration
Address
Helleveien 30
5035 Bergen-sandviken
Norway

Participants (4)

OIKOS ENVIRONMENT RESOURCES
France
Address
Rue De Saint Brieuc 91
35000 Rennes
Scottish Agricultural College
United Kingdom
Address
581 King Street
AB9 1UD Aberdeen
UNIVERSITY OF PORTSMOUTH HIGHER EDUCATION CORPORATION
United Kingdom
Address
Locksway Road
Southsea
Universite de Nantes
France
Address
110,Chemin De La Censive Du Tertre
44322 Nantes