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Production Risk in the Norwegian Fisheries

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Abstract

Although fishing is regarded as a risky production process, limited attention has been given to the impact of input factor use on production risk. Production risk is particularly important for fisher behavior and fisheries management when input factors are restricted, since input restrictions can influence production risk in addition to output levels. This paper investigates production risk by estimating production and risk functions for the main vessel groups in the Norwegian fishing fleet. The results indicate that production risk is present and that the effect of input use on production risk varies between vessel groups. Capital has a risk-reducing effect in the ocean fleet, but are risk-increasing in coastal fisheries. Fuel use is found to be a risk-increasing input for most of the vessel groups, while labor use is risk-reducing.

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Notes

  1. 1.

    The coastal fleet comprises vessels smaller than 28 m.

  2. 2.

    There are also other vessel groups of much less economic importance such as shrimp trawlers and reduction fisheries.

  3. 3.

    There were some adjustments in how the groups were defined in 1998 and 2003, mostly within what we define as the coastal groups.

  4. 4.

    The smallest coastal vessels in all fisheries do not have IFQs, but are regulated open access for all species.

  5. 5.

    Structural break tests indicate that none of these groups can be combined.

  6. 6.

    As it is mandatory to land all fish that is being brought onboard, this virtually ensure that most whitefish trips are multi-species.

  7. 7.

    The models were also estimated allowing for structural breaks on the slope parameters. However, the structural breaks captured by the time dummies seem to capture the structural shifts.

  8. 8.

    This is in line with most productivity studies of Norwegian fisheries which use three or four inputs.

  9. 9.

    The confidence intervals of the fuel elasticity coefficients for coastal vessels and trawlers do not overlap.

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Acknowledgements

Financial support from the Norwegian Research Council (RCN: 233813 and 294804) and the Brazilian National Council for Scientific and Technological Development (CNPq: 202649/2011-3) is acknowledged. Any opinions and shortcomings in this paper are the responsibility of the authors and not these institutions.

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Correspondence to Ruth B. M. Pincinato.

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Appendices

Appendix 1

See Table 5.

Table 5 Mean production functions for the Norwegian fishery groups

Appendix 2

See Table 6.

Table 6 Variance production functions for the Norwegian fishery groups

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Asche, F., Cojocaru, A.L., Pincinato, R.B.M. et al. Production Risk in the Norwegian Fisheries. Environ Resource Econ 75, 137–149 (2020). https://doi.org/10.1007/s10640-019-00391-2

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Keywords

  • Production risk
  • Norwegian fisheries
  • Input use
  • Groundfish
  • Pelagic fish