The Role of Tax in Managing Offshore Fishing Activities: An Application of Bioeconomic Model

Abstract

The paper’s purpose is to light up the role of tax in managing offshore fishing activities. It was conducted by considering two management regimes; (1) assumes that the number of fishing firms is finite and defined as a restricted access regime, and (2) the number of fishing firms is infinite, which is regarded as an open access regime, to enter into a coastal nation’s fisheries. Each management regime is linked to two policy goals; namely, the maximum sustainable biomass yield and maximum sustainable economic yield goal. The Verhulst Schaefer model and Wachsman model were employed to estimate the biological parameters and economic analysis. The results of empirical analysis indicated that a coastal nation could control the effort and stock through adjusting the fishing fee that can be determined as a tax policy. More especially, if a coastal nation didn’t charge any fee level on fishing firms, even though the number of firms was restricted, the stock still was under acceptable level, which leads to the depletion and potential collapse risk of fisheries. Additionally, a coastal nation could adopt one of four fee levels such as r_MSBY (0.3378)_, r_MSEY (0.5071), r’_MSBY (0.3623), and r’_MSEY (0.5165) depending on each management regime and policy goal selected. However, it would be better if the coastal nation selects the open access regime, and then charges on fishing firms at level of r’_MSBY or r’_MSEY.

Keywords: Tax, Fishing Management regime, Policy goal

Classification: JEL, Q 22