Better late than never, optimum yield redux

A blog of Bridge Environment, updated most Thursdays

I am currently in Florida attending the North American Association of Fisheries Economists’ Biennial Forum. Yes, there are enough fisheries economists in North America that we can talk, three at a time and with 15-20 minutes each, for three days straight!

Ray Hilborn of the University of Washington gave our plenary address yesterday morning. He made two interrelated points. First, he argued that our fisheries are influenced by environmental fluctuations in unpredictable ways, and thus need what he called robust policies. Second, he argued that we currently “lose” a lot of potential food, jobs, and income by underfishing many fish stocks.

I challenged him on these points, pointing out that his measure of “loss” was diversion from a policy (maximum sustainable yield) that was rarely in fact sustainable. I argued that robust policies come with a cost and perhaps the foregone yield was serving that purpose. Regular readers of this blog will recognize these points from previous entries. He acknowledged the possibility that we were gaining robustness, and responded by advocating for a systematic review of what we are actually getting from our fisheries, so that foregone food, jobs, and income would be acknowledged and designed to meet other objectives. On this point, we both agreed.

Following his talk, there was a panel discussion on economics and catch-limit setting rules under US fisheries law. The panel discussed the current systems for setting quotas and generally complained that they all look pretty similar when in fact they could and should be meeting the specific economic, social, and ecological needs of each fishery.

Their argument warmed my heart at the same time that it left me keenly frustrated. I started working on national-level fisheries in 1998, and my mantra was this: fisheries are fundamentally uncertain, we need robust policies to address the associated risks, robustness comes at a cost which might be some foregone food, jobs, and income, and we should use the existing legal mandate to customize the catch rules for each fishery to account for specific economic, social, and ecological needs. I made this pitch to most of the fishery management councils across the country, to the government fisheries agency, and to numerous fishing and conservation groups. Despite much effort on my part, I didn’t have much success making national level change, nor even in incorporating this approach into my own work as a fisheries stock assessment biologist. There was simply too much inertia and pushback. Therefore, it was heartening to hear a group of well-respected scientists discussing these same issue 15 years later, albeit frustrating that it took so long.

If we are going to have better success this time around, we need to confront a situation that hasn’t changed much in 15 years. First, let’s be clear about where the problem lies. Is it the law or its application? The law is quite good, and has been since 1996. It sets optimum yield as a primary goal for catch setting policies. Optimum yield is defined to incorporate the need for food production, recreational opportunities, and ecosystem protection. Specifically it is supposed to based on maximum sustainable yield, as reduced by relevant economic, social, and ecological factors.

One could take argument with restricting optimum yield to lie below maximum sustainable yield (and Dr. Hilborn did) based on the argument that it may be ok to drive one stock to relatively low levels in order to take advantage of more opportunities from a co-occurring fish stock. However, managers in certain regions of the country had a history of selecting quotas higher than what their scientific advisers recommended. The 1996 revision of the US fisheries law was designed to stop this abuse. Moreover, the idea of driving some stocks to low levels presents two practical problems. First, it potentially sets up incentives to drive these stocks to levels so low that their ecological role is reduced or eliminated, and could cause a stock collapse. Dr. Hilborn argued that stocks usually eventually rebound, even after their abundance drops to low levels. However, he also pointed out that reduced fishing pressure was often necessary for this rebound to occur, and that certain stocks, for example New England cod, have not rebounded. Second, the idea that we can reduce certain species to very low levels in order to exploit others rests on a view that the ocean is primarily a fish-producing device. There is precedence for such policies on land, where natural ecosystems are heavily modified in order to farm it for food production. I personally like the fact that the ocean is still a wild environment, albeit a stressed one. I’d like to keep it that way and know I am not alone.

Dr. Hilborn also brought up concerns that the current law requires overfished stocks to be rebuilt within 10 years if doing so is biologically feasible. The origin of this policy is like the one restricting optimum yield: certain fisheries managers abused rebuilding plans by avoiding current sacrifices and putting off recovery nearly indefinitely. There is a legitimate problem with current rebuilding systems, though. They are used for two incompatible purposes: tracking the overall performance of fish stocks and flagging fisheries that need immediate attention. Rebuilding plans are required of fisheries that are overfished, defined as a level that jeopardizes the capacity of the fishery to produce maximum sustainable yields on a continuing basis. In practice, most stocks use an overfished threshold equal to about half of the level that would produce maximum sustainable yields. Conservation groups like having a hard definition like this as a way of tracking national-level fisheries management performance. However, for this purpose, multiple categories would be more appropriate, for example above optimum yield levels, below maximum sustainable yield levels, and in between these two.

The second purpose, identifying urgent management needs, is complicated by the existence of evolving catch limit systems, many of which now automatically scale back fishing to some degree if there are signs of depletion. Regarding this purpose, one simple change would be extremely useful: defining overfished in terms of optimum yield instead of maximum sustainable yield. Doing so would make it clearer that an overfished designation represents a failure to achieve the objectives of a fishery. This change in perspective makes a dramatic operational difference. As long as the catch rules are designed, enacted, and enforced in a way that is thoughtful about the degree of robustness necessary to account for environmental fluctuations and produce the preferred mix of performance, the policy would not be considered a failure just because a stock happened to drop to low levels. On the other hand, if stocks dropped in ways that brought the catch rules into question, either because of performance or new information, a stock would be deemed overfished and its entire management system would be revisited. This process would be far more comprehensive than a rebuilding plan but not much extra work.

With the exception of that one small suggestion for change, the current law is sound. The real problems are with its implementation. It is true that virtually all stocks have the same definition for optimum yield. It makes no sense that the mix of objectives would be the same for industrial-scale offshore fisheries in arctic waters and small wooden boat nearshore fisheries in the tropics because they are influenced by such different economic, social, and ecological factors. I made this argument repeatedly in my work 10-15 years ago, without much success. Hopefully the time is right to make it again now.

The challenges we face are not much different from 10-15 years ago. The process of designing effective catch-limit rules is a long-term planning exercise, which will not be seen as a priority for managers who are usually focused on crises. An even greater challenge is the need to educate decision-makers about the trade-offs they face when designing control rules. To do this right, we have to have effective communication among experts in biological and social science in ways that are knowledgeable of and responsive to policy wants and needs. This is a big part of what we are trying to do at Bridge Environment. We are not alone this time, though. With broader interest and increased resources to tackle these issues, we can achieve meaningful improvements in long-term US fishery management strategies. Let’s hope the interest and resources are there.

Best,

Josh

For more information, read our other blog posts and visit us at Bridge Environment.

Uncertainty, debt, and fiscal stimulus

A blog of Bridge Environment, updated most Thursdays

This New Yorker joke could be made of virtually
any economist or environmental scientist

The current controversy surrounding government fiscal stimulus looks a lot like an environmental policy debate. Like environmental issues, there is tremendous uncertainty about future performance. Also like environmental issues, there is conflict over competing objectives. Today I will use this analogy to shed some light on the stimulus controversy and suggest a way forward.

Here is the issue. The US economy went into a tailspin starting in late 2007. Though it bottomed out by mid-2009, recovery has been slow and uneven. The US’s recession prompted a worldwide economic downturn, which triggered debt crises in several European countries, most notably Greece. Initially, the US government took on debt to help stimulate the economy, first with tax rebates in 2008 (enacted under the second President Bush) and then with a mix of tax credits and short-time horizon spending programs, including many infrastructure projects (enacted under President Obama). These sorts of responses follow the advice of Keynesian macroeconomic theory. Under this theory, the government can smooth out economic fluctuations by spending when the economy is slow and saving when it picks back up. If you listen to many prominent economists, Paul Krugman chief among them, it is a no-brainer that the government should use this approach to combat recession.

The challenge with this approach is the associated debt. The US was already running up major budget deficits prior to 2007. The tax cuts and new spending only accelerated borrowing, particularly because the recessed economy was generating fewer dollars to be taxed. Debt sounds bad, but it’s important to understand exactly why. High debt risks the potential for default. The US is generally seen as a safe lender with a low chance of default. As a result, the government is able to borrow cheaply, at very low interest rates. If there were ever to be a crisis of confidence, though, the government would have to offer higher interest rates in order to service its debt, and these higher interest rates would exacerbate the debt. This vicious cycle is what caused debt crises in European countries. Once investors believe there is a problem, their hesitation to invest can cause one whether their initial belief was correct or not. Conservatives make this argument, supported by some economists, chief among them Carmen Reinhart and Kenneth Rogoff. They published an influential paper in 2010 that claimed there is a dramatic falling off of economic growth when countries hit a public debt level of 90% of gross domestic product (GDP), essentially a tipping point. Ninety percent of GDP means being in the hole enough that it would take nearly a year to pay it back if the entire economy were devoted to debt repayment, and is about the amount of debt the US had when President Obama took office. Recently, other investigators found some errors and subjective judgments in Drs. Reinhart and Rogoff’s work. When corrected and revisited, the results still show a dropping off of economic growth with higher debt, but not as dramatic a drop-off at 90% of GDP. Whereas the liberal economists focus almost entirely on the benefits of stimulus spending, the conservative ones focus almost exclusively on the risks associated with high debt.

On balance, most economists, myself included, think that more fiscal stimulus in the US would have been and is still worth the risk. Analysts like Dr. Krugman make a solid case that fiscal stimulus does work to flatten out the negative effects of recession, and given the confidence the world has shown in US debt, we could take on more. But, we have done a lousy job of selling this argument. A better sales job would acknowledge we are taking a risk by racking up more debt, make a strong case for the need to plan for debt reduction in the long run, and then highlight the benefits we would achieve by stimulus spending now. For the most part, we have only made the last of these three points well.

In the next blog entry or two, I will explore the concept of debt reduction and then talk more broadly about fiscal policy as a balancing act among competing objectives, including risk reduction.

Best,

Josh

For more information, read our other blog posts and visit us at Bridge Environment.

Greenhouse gases carbonate the ocean, but I’m not feeling bubbly

A blog of Bridge Environment, updated most Thursdays

The gases we are producing by burning fossil fuels and cutting/burning natural reservoirs of carbon, such as forests, are making the ocean carbonated. San Pellegrino and Perrier need not worry, though. This ocean cocktail is bitter to swallow. This chemical process creates what I believe is the most imminent danger from global warming, ocean acidification. Most other climate change dangers relate to increased temperatures. While these are very real threats, we don’t have a good understanding of exactly how temperatures will change with increased greenhouse gas concentrations, and there’s at least the possibility that the outcome will be mild. When it comes to the threat from ocean acidification, temperature is secondary. The concentration of greenhouse gases, specifically carbon dioxide, is the direct threat. These concentrations are unanimously recognized to have increased and predicted to continue to grow. In the next couple of paragraphs, I will go through the relevant chemistry. If that’s not of interest, feel free to skip past the chemical equations for a summary and discussion of implications.

Carbon dioxide (CO₂) and water (H₂O) have an interesting equilibrium:

CO₂ + H₂O  H⁺ + HCO₃^-

In this way, when more carbon dioxide is added to water, more bicarbonate (HCO₃^-) is produced along with free hydrogen ions. In solution, this combination is familiar to us as carbonated water. When you pop open a can or bottle of soda, the carbon dioxide built up in the headspace dissipates and more emerges from the liquid as bubbles, the fizz in soda pop. While carbon dioxide is still in solution, it continues to support free hydrogen ions, the acidity that gives soda its invigorating quality. Through this reaction, our production of carbon dioxide makes the ocean more like soda pop.

At first glance, this chemical relationship appears to be a good thing for marine organisms that produce calcium carbonate shells because there’s a second equilibrium:

H⁺ + HCO₃^-  2H⁺ + CO₃^2-

and the fundamental chemical reaction for shell (CaCO₃) production is:

Ca²⁺ + CO₃^2-  CaCO₃

For the non-chemistry-inclined, these relationships suggest that more carbon dioxide would lead to more carbonate ions (CO₃^2-) for shell production (CaCO₃), in combination with calcium. The problem lies with the fact that the equilibrium for shell production is sensitive to the concentration of free hydrogen ions in the solution, also known as acidity and measured as pH. As pH changes, the relative concentrations of carbon dioxide, bicarbonate ions, and carbonate ions change as well. Here’s a useful figure showing that relationship, from Wikipedia. The blue band indicates the increased acidity (lower pH) already observed in the ocean, and the arrow shows the direction of change with increasing build up of cabon dioxide. These changes in pH are associated with decreased concentrations of carbonate ions. As a result, marine organisms that produce calcium carbonate shells are facing an increasingly hostile environment due to increasing carbon dioxide concentrations.

This is no small change. Calcium carbonate shells are incredibly important in marine ecosystems and, in fact, the history of life. Life existed for literally billions of years in forms that were soft and mostly single-celled. That all changed about 500 million years ago, when many major groups of life forms first appeared during an event called the Cambrian explosion. One of the most distinguishing characteristics of the new life forms was their use of calcium carbonate shells. In modern-day ecosystems, shells are essential for the survival of many marine organisms, from some plankton (the little things, both plant and animal, that float in the water column and form the base of most marine food webs) on up. Corals are of particular concern because their calcium carbonate shells not only protect them, they also create the foundation of an entire and quite spectacular ecosystem. By making shell production more difficult, we are adding strain to these already stressed ecosystems.

The news is not all bad. Though some forms of plankton are at risk as a result of the difficulties in shell production, the plant varieties (phytoplankton) may actually thrive due to increased concentrations of carbon dioxide, which they use to capture the sun’s energy. Also, shell production in corals may be more complex, at least for some species, than the version presented here. There is some hope that at least a few species may be able to rely on bicarbonate-based pathways for producing shells. These findings prove once again that nature is resilient. They should not give us false hope, though. We are looking at dramatic changes to ocean ecosystems as a result of ocean acidification, even if certain life forms may find ways to adapt or even thrive.

In the past, my advice about climate change has been to refocus the debate on the uncertainties surrounding predictions of warming trends, and on identifying alternative policy options, their immediate costs, and the degree to which they would reduce the risk of bad outcomes from warming. I stick with that advice, but we should keep in mind that marine ecosystems face pretty certain dramatic changes, including the likely loss of coral reefs, if we do not start the process of reducing carbon emissions very soon.

Best,

Josh

For more information, read our other blog posts and visit us at Bridge Environment.