Fishery Income Diversification and Risk for West Coast Fishermen and Fishing Communities Dan Holland – Northwest Fisheries Science Center Steve Kasperski – Alaska Fisheries Science Center
Dec 24, 2015
Fishery Income Diversification and Risk for West Coast Fishermen and Fishing Communities
Dan Holland – Northwest Fisheries Science CenterSteve Kasperski – Alaska Fisheries Science Center
2
Introduction• Catches and prices from many fisheries exhibit high inter-
annual variability leading to variability in the income derived by fishery participants.
• This financial risk may be mitigated in some cases if individuals participate in several different fisheries, particularly if revenues vary asynchronously
• We found that diversification of fishery revenue does decrease year-to-year variability of income for individuals and for ports.
• We found that diversification for individual fishermen, on average, has mostly declined the last few decades.
• Trends for ports are more variable but many ports have also seen decreases in diversification over time.
3
Methodology• Annual catch and revenue by vessel, species and port from 1981-2012 for
over 28,000 vessels with average revenues over $5,000• The port level analysis includes 166 ports with average fishing revenues
over $100,000 ( 79 West Coast and 87 Alaska). • Construct annual indices of diversification of gross revenue from fisheries
for individuals (in vessel categories) and for ports • Herfindahl Index
– where is the proportion of fishery revenues for the individual or port associated with the species or species group i and region j
• Evaluate trends in revenue diversification and how they have been impacted by regulatory changes
• Evaluate the relationship between variability of individuals’ or ports’ annual revenue and diversification
ijp
42
1 1
,jS
iji j
H p
4
Species Groupings For Diversification Indices
* Indices also separate out Bering Sea, Gulf of Alaska and Alaskan state waters
West Coast Alaska Pacific Whiting Pacific Cod Dover Sole, Thornyheads, Sablefish Flatfish Rockfish and Flatfish Rockfish Skate, Dogfish, Sharks Atka Mackerel Pacific Halibut Pollock California Halibut, Croaker Other Groundfish Pink Shrimp Sablefish Other Prawns and Shrimp Pacific Halibut Crab Herring Salmon Chinook Salmon Tuna Sockeye Salmon Herring Coho Salmon Coastal Pelagics Pink Salmon Echinoderms Chum Salmon Other Shellfish Other Salmon Squid Red King Crab Other Species Other King Crab
Opilio Crab
Other Snow Crab (Bairdi)
Other Crab
Scallops
Other Shellfish
Other Species
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Diversification Trends For Vessels Fishing on the West Coast
HHI declines from 10,000 toward zero when revenues are spread amongst more fisheries
HHI is erratic, but diversification has been mostly declining (HHI increasing) last two decades
Vessel that have been fishing longer tend to be more diversified
Higher earning and large vessels tend to be more diversified than smaller and lower revenue vessels
OR fleet more diversified than WA fleet which if more diversified than CA fleet
6,000
6,500
7,000
7,500
8,000
8,500
Aver
age
Her
finda
hl-H
irsch
man
Inde
x
West Coast and AK Vessels with >$5K Average Revenue
>$5K 2012 FLEET 1981-2012 FLEET
6,000
6,500
7,000
7,500
8,000
8,500
Vessels with 2012 West Coast Revenue >$5K
2012 WA >$5K 2012 OR >$5K 2012 CA >$5K
5000
5500
6000
6500
7000
7500
8000
8500
9000
9500
Year
Vessels with 2012 West Coast Revenue >$5K
<41 Feet 41-80 Feet 81-125 Feet
5500
6000
6500
7000
7500
8000
8500
9000
9500
Aver
age
Her
finda
hl-H
irsch
man
Inde
x
Year
Vessels with 2012 West Coast Revenue >$5K
$5K-$25K $25K-$100K >$100K
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Variation Diversification for Vessel Groupings
There is wide variation in the degree of diversification across vessels within each class.
The CA fleet is dominated by vessels with low diversification
Most higher revenue vessels are diversified while the distribution of smaller and low revenue vessels is concentrated at low diversification levels.
0%
5%
10%
15%
20%
25%
30%
35%
40%
Herfindahl-Hirschman Index Range
<=40 ft 41-80 ft 81-125 ft
0%
5%
10%
15%
20%
25%
30%
35%
40%$5-25K $25-100K >$100K
0%
5%
10%
15%
20%
25%
30%
35%
40%
Vessels with 2012 West Coast Revenue >$5K
2012 WA >$5K 2012 OR >$5K 2012 CA >$5K
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Income Risk and Diversification?
- 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.1
Vessels with 2012 West Coast Revenue >$5K
2012 WA REV >$5K 2012 OR REV >$5K 2012 CA REV >$5K
90-10 SplitHHI=8200
50-25-25 Split HHI=3750
50-50 Split HHI=5000
- 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.1
$5-25K $25-100K >$100K
90-10 SplitHHI=8200
50-25-25 Split HHI=3750
50-50 Split HHI=5000
- 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.1
Herfindahl-Hirschman Index
<=40 ft 41-80 ft 81-125 ft
90-10 SplitHHI=8200
50-25-25 Split HHI=3750
50-50 Split HHI=5000
• Quadratic Regressions (OLS) of CV of total annual revenue for individual vessels against their average Herfindahl (HI) diversification score.
• Separate regressions for different revenue and vessel length categories and the West Coast Groundfish fleet
• P-values on slope coefficients are all are nearly all significant at 1% level*
• More details on fit??
21 2* *iCV HI HI
*HI^2 coefficient for West Coast 80-125 feet p=.05
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-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Her
finda
hl-H
irsc
hman
Inde
x
Selected Washington Ports
SEATTLE ILWACO BELLINGHAM WESTPORT
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Her
finda
hl-H
irsc
hman
Inde
x
Oregon Ports
ASTORIA NEWPORT CHARLESTON BROOKINGS
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Her
finda
hl-H
irsc
hman
Inde
x
Selected Northern California Ports
CRESCENT CITY EUREKA FORT BRAGG SAN FRANCISCO -
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Her
finda
hl-H
irsc
hman
Inde
x
Selected Southern California Ports
MOSS LANDING SANTA BARBARA VENTURA SAN PEDRO
Diversification of Fishing Income For Fishing Ports
• Trends vary by port and can be highly variable for a given port
• Dungeness crab is responsible for higher and highly variable HHI in southern OR and northern CA
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Fitted relationships between the coefficient of variation (CV) of gross revenues for US West Coast and Alaskan fishing ports
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
1.1
1.2
1000
0
9750
9500
9250
9000
8750
8500
8250
8000
7750
7500
7250
7000
6750
6500
6250
6000
5750
5500
5250
5000
4750
4500
4250
4000
3750
3500
3250
3000
2750
2500
2250
2000
CV o
f Ann
ual
Land
ed V
alue
Herfindahl-Hirschman Index
WC >$100K Rev AK >$100K Rev
90-10 Split HHI=8200
50-50 Split HHI=5000
50-25-25 Split HHI=3750
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Conclusions• Greater diversification does appear to reduce annual
variability of income• Greater diversification could provide additional benefits:
– Greater acceptance of trade-offs required by ecosystem-based fishery management
– Increased community resilience • The impact of fishery management plans and regulatory
actions and programs on diversification should be considered along with other performance objectives
• It is unclear whether catch shares will increase or decrease diversification. We are beginning a national study to look at this question.
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If Diversification Lowers Income RiskWhy isn’t Everyone Diversified?
• Additional costs for license, quota, gear, moving between fisheries, etc.
• Lower efficiency from lack of specialization???• Regulatory Pressures:
– Management systems have favored full time players and forced out or marginalized part-timers
– Longer seasons means less time available to fish in other fisheries