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How To Scuttle Overfishing? Tax The Catch


Economic Viewpoint

HOW TO SCUTTLE OVERFISHING? TAX THE CATCH

As a summer resident of Cape Cod, the Massachusetts seashore, I realize that the importance of fishing for food, livelihood, and sport may be a bit out of proportion there. But the local debate on controls over the striped bass--called stripers, a delectable white fish and longtime staple of gastronomes on the Cape--is a concrete example of the general issue of obstacles to intelligent regulation.

In the 1970s, the stock of striped bass in ocean waters offshore from Maine to Maryland became seriously depleted because of a combination of droughts, pollution in breeding grounds, and overfishing. In response, Massachusetts and other states in the region established strict quotas for commercial and recreational fishing. Overfishing may not have been the main reason for the dwindling supply, but environmentalists made a persuasive case that restrictions on fishing could help restore the stock.

Massachusetts placed a ceiling on the aggregate catch of stripers by commercial fishers. Unfortunately, this is a very poor way to control fishing, because it encourages each fishing boat to catch as much as it can early in the season, before other boats bring in enough fish to reach the aggregate quota that applies to all of them.

"FISHLESS WEEKS." This is precisely what happened last year, when the Massachusetts commercial quota of 200,000 pounds was already reached by the end of July, well before the normal finish to the fishing season in September. The rush to catch stripers early sharply lowered the wholesale price while fishermen had a lot to sell. The price then increased steeply, after the quota was exhausted and not much striper was on the market. The perverse incentives provided by the quota added to the difficulties of making a living from fishing in this region.

The number of striped bass in the waters off the coast has grown rapidly in recent years--perhaps because the controls over fishing helped in the breeding of additional stock--so Massachusetts increased the commercial allowance to 750,000 pounds in 1995, nearly four times the 1994 level. Because even this larger quota was expected to be reached early, the state tried to spread out the catch over the season by prohibiting commercial fishing for stripers during "fishless weeks" for stripers. As a result, fresh striper has been both expensive and scarce during these weeks.

A much better way to regulate fishing than quotas and fishless weeks--and one that should appeal to consumers, fishermen, sportsmen, and taxpayers alike--is for the states to tax the amount of fish caught. The tax would vary by weight and size, so that catching excessively small and young fish could be penalized severely. The present rules require stripers below a minimum size to be thrown back.

ONE A DAY. The size of the tax would control the total catch, because fishing for stripers would decrease when the tax rate is higher. This approach eliminates the incentive under the present system to catch fish early in the season, since fishermen who are taxed on their catch have no reason to attempt to bring in stripers before competitors do. Instead, they would spread their fishing over the season and try to catch more fish when prices are higher.

Recreational fishermen may be responsible for more than half the total stripers caught, which is why they too are regulated. Massachusetts presently allows each person fishing to catch one striper per day. The same tax rate should apply to both commercial and recreational fishing, since the effect on the stock of stripers in the sea is no different when fish are caught by one group or the other.

A system of taxes on fish caught by commercial and for-hire recreational fishing boats is no harder to implement than monitoring the catch, as required by the present quota system. A tax has the further advantage of providing additional state revenues, which could be used to fund research on the causes of the large and disturbing fluctuations in the stock of striped bass and other fish and to find ways of improving the marine environment.

It is not easy to enact sensible controls even in a small-scale industry such as fishing for striped bass, where the case for regulation is rather strong. One must wonder about what happens in the larger political arena when the advantages of regulation are questionable, especially in large national industries with lots of media attention. This may be particularly pertinent to current disputes over general environmental regulations and deregulation with regard to health and safety issues. This is the main lesson about regulation from the big fish story on the Cape.BY GARY S. BECKER


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