Discount factors and the performance of alternative fisheries governance systems

Abstract

Abstract We investigate the performance of different governance arrangements (command‐and‐control, self‐governance and co‐management) in terms of sustainability and conservation when the discount factor of the regulator is different from the discount factor of fishers. For exogenous discount factors, self‐governance management regimes do better than command‐and‐control in terms of the long‐term sustainability of the fish resources, if the fisher’s discount factor is higher than that of the regulator, and vice versa if the discount factor of the regulator is higher. Under the assumption of endogenous discount factors, the decision whether to promote a command‐and‐control management system or a self‐governance or co‐management structure will depend on: (i) the magnitude of the intertemporal preferences of both the fishers and the regulator; and (ii) the relative weight or political influence of the fishers on the regulators’ decision‐making process. Hence, this contribution highlights the possibility that command‐and‐control can be less sustainable than self‐governance and vice versa. It is therefore important to explicitly take account of intertemporal preferences in the decision‐making process if a governance system for a given fishery is to succeed. For many fisheries, it is difficult to know the ‘true’ discount factors of both fishers and governments, hence, the practical message from this paper is that to guide against over exploitation of fishery resources, it is prudent to put in place co‐management arrangements, since both discount factors, whatever they may be, will be weighted into the decision‐making process.