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Considering Economic Efficiency in Ecosystem-Based Management: The Case of Horseshoe Crabs in Delaware Bay


The welfare gains from incorporating ecosystem considerations into fisheries management are unclear and can vary widely between systems. Additionally, welfare gains depend on how ecosystem considerations are adopted. This paper uses an empirically parameterized bioeconomic model to explore the welfare implications of two definitions of ecosystem-based fisheries management (EBFM). We first define EBFM as a fishery management plan that maximizes the net present value of ecosystem services. We then explore an alternative definition that adds ecosystem considerations to a fishery managed with regulated open access. Our biological model reflects horseshoe crabs in Delaware Bay, which are harvested in a commercial fishery and are ecologically linked to migrating shorebirds populations, e.g. the endangered red knot. We find that introducing ecosystem considerations to a regulated open access fishery generates welfare gains on par with gains from addressing the commons problem even when fishery rents are completely dissipated. Additionally, solving the commons problem within an EBFM approach can provide substantial welfare gains above those from solving the commons problem in a single-species management framework.

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  1. 3 C.F.R. 227 (2010), reprinted in 33 U.S.C. §857–19 (2015).

  2. As a point of clarification Smith (2007b) considered a “quasi-optimized” system rather than a fully optimized system where fishing effort was fixed at a constant level over time to maximize the net present value of the system rather than allowed to vary over time.

  3. 79 Fed. Reg. 73,705 (11 Dec 2014).

  4. For example, in 2008 the Public Broadcasting System (PBS) released a documentary “Crash: a Tale of Two Species” detailing the importance of horseshoe crabs for the survival of the red knot.

  5. There were limited existing restrictions in New Jersey, Delaware, and Maryland (see ASMFC 1998b for more detail).

  6. The red knot threshold was originally 45,000 birds and was then adjusted to 81,900 birds in 2013 to reflect the change in the method of monitoring the red knot population. See ASMFC (2013b) for the detail on the adjustment.

  7. In the ASMFC’s model the fishery manager weighs harvest of female and male horseshoe crabs differently and takes into account the operational sex ratio.

  8. Empirical evidence supports assuming well-defined populations. First, tagging and genetic evidence shows limited exchange between the Delaware Bay horseshoe crab population and the Chesapeake Bay horseshoe crab population or the Raritan Bay horseshoe crab population (Swan 2005; Pierce et al. 2000). Second, the red knot population that winters along the Argentinian coast from Tierra del Fuego to Río Negro comprises the majority of red knots that stopover at Delaware Bay (Niles et al. 2008) although there are at least two other smaller populations identified feeding on horseshoe crab eggs in Delaware Bay (Atkinson et al. 2005).

  9. We ignore the sex composition and assume 1:1 sex ratios for both populations.

  10. Because red knots are believed to breed in their second year (Harrington and Morrison 1980), their recruitment delay is relatively short compared to that of horseshoe crabs. Therefore, to simplify the model we assume instantaneous recruitment for red knots.

  11. See also USFWS (2014, pp. 28–33) for a review of the literature on this matter.

  12. This is motivated by McGowan et al. (2011b), who modeled the probability of red knots transitioning from light-weight (departure weight, i.e. weight upon departing Delaware Bay, \(< 180 \mathrm{g}\)) to heavy-weight (departure weight \(\ge 180 \mathrm{g}\)) during the stopover as a logistic function of the abundance of spawning female horseshoe crabs.

  13. Smith (2007a) found a slightly sigmoidal relationship between the number of eggs disturbed by subsequent spawning and density of spawning female horseshoe crabs through simulation. Sweka et al. (2007) modeled the number of horseshoe crab eggs available to shorebirds as a convex function of the number of spawning females. Both studies modeled after horseshoe crabs in the Delaware Bay area.

  14. Several studies have revealed that increased egg density has diminishing returns on red knots’ egg-intake rate. See Niles et al. (2008, pp. 36–39).

  15. Our calculation with landings data shows that the inflation-adjusted ex-vessel price of horseshoe crabs was relatively low and stable from the late 1970s through the early 1990s. Although the price has risen considerably since the late 1990s, it exhibited much less variation than landings did in some years when landings fluctuated dramatically. See the online supplementary material.

  16. We note that optimal management may conflict with limits to incidental take defined by the Endangered Species Act. As ours is a conceptual analysis conducted for the purposes of exploring the welfare gains from various frameworks for ecosystem-based management, we do not incorporate any constraints imposed by the Endangered Species Act.

  17. While the total economic value of horseshoe crabs should also include any non-use values for both horseshoe crabs and red knots, these values have not been estimated in the literature.

  18. This valuation function is motivated by Kellner et al. (2011), who modeled the non-fishing value proportional to the square root of fish density.

  19. Additionally, we check that applying our valuation function to the lowest population count data on red knot does not yield an infinite marginal value of red knots. In fact, the highest marginal value calculated with observed data was $118.5 (2009 dollars).

  20. We implicitly assume that the manager assigns equal weights to the rents from horseshoe crabs and the economic value from red knots. We conduct a sensitivity analysis on our red knot value function later by varying w, which is equivalent to varying the relative weight.

  21. 16 U.S.C. §1851(a)(1) (2015); see also 50 C.F.R. §600.310 (2015).

  22. To determine \(F_\text {MSY }\) in our model, we first solve Eq. 1 for sustainable harvest, which gives \(h = g_c C \exp (- C / K_c^*) - \eta _c C\). Maximizing the preceding equation with respect to C gives the MSY harvest rate, \(h_\text {MSY }\), and the stock level that delivers it, \(C_\text {MSY }\). Then the upper bound on fishery mortality is \(F_\text {MSY } = h_\text {MSY } / C_\text {MSY }\).

  23. State-level fisheries are managed with gear-specific permit restrictions and quotas.

  24. Rents earned depended on the elasticity of substitution between restricted and unrestricted inputs.

  25. MATLAB code is available from the authors upon request.

  26. The non-negativity constraint on effort level \(E_t\) binds when \(\lambda _t > p\), at which point effort level is no longer determined by Eq. 16 but constrained to zero. On the other hand, the non-negativity constraints on \(C_t\) and \(R_t\) turn out to be non-binding in our numerical solutions. Proper treatment of these non-negativity constraints is included in the “Appendix”.

  27. Full set of necessary optimality conditions is included in the “Appendix”.

  28. The technique of historical decomposition in vector autoregression models was pioneered by Sims (1980) and subsequently developed by Burbidge and Harrison (1985).

  29. To our best knowledge, the turnpike property for finite-horizon delayed optimal control problems with discount criterion has not yet been formally established in the literature, although we speculate that it is true. We observe that, within the management horizon, the effort level, the harvest rate, and the horseshoe crab and the red knot populations approach certain stationary levels. The levels that are sustained for the majority of the optimization horizon should be very close to the respective turnpikes.

  30. Such extremely low population sizes are no surprise and are direct consequences of matching the predictions of our model with real-world trends in populations. For instance, the Delaware 30-foot trawl survey found the lowest horseshoe crab abundance index in 2004, which was only 1.1% of the index in 1990. Refer to Fig. 2a.

  31. By “stabilize” or “sustain,” we mean that subsequent changes in the population or harvest level are by less than 1% (except towards the terminal periods).

  32. Strictly speaking, effort level has a very small lead in time. We do not imply causality here, however.

  33. Our function is calibrated to fit through two data points based on the literature and our assumptions; see the online supplementary material for more detail.

  34. This statement holds when the stock size is larger than \(R_\text {m } + 1\), which is always true in our case.

  35. We mean the harvest rate maximizing the instantaneous profit. Due to the delay in recruitment of horseshoe crabs and discounting, the sustained harvest rate under ECON-EBFM does not maximize the instantaneous profit.

  36. We ignore the \(R < R_\text {m }\) branch of the red knot value function Eq. 7 since the infinite derivative at \(R = R_\text {m }\) would keep the optimal trajectory of \(R_t\) away from \(R_\text {m }\). It immediately renders the nonnegativity constraint on \(R_t\) and the subsequent introduction of the multiplier \(\zeta ^\text {p }_{r,t}\) redundant. Yet we keep \(\zeta ^\text {p }_{r,t}\) in the Hamiltonian for the sake of completeness. Alternatively, we could have set up the optimal control problem with the constraint \(R_t \ge R_\text {m }\), \(t \in [0, T]\), or \(R_t \ge R_\text {m } + \epsilon \), \(t \in [0, T]\), where \(\epsilon \) is a sufficiently small positive number. Additionally, it can be easily verified that the rank condition (Göllmann et al. 2009, Eq. 10) for the nonnegativity constraints Eq. 11 is satisfied.


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We thank Lee Anderson for his support. We also thank Amanda Dey at the New Jersey Department of Environmental Protection, James Lyons at the USGS Patuxent Wildlife Research Center, Stewart Michels at the Delaware Department of Natural Resources and Environmental Control (DNREC), and Kevin Kalasz formerly at DNREC for help with the data. This research was supported by NOAA Sea Grant #NA14OAR4170087 to S.L.J.

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Correspondence to Yue Tan.

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This research was supported by NOAA Sea Grant #NA14OAR4170087 to S.L.J. The majority of work was completed when Yue Tan attended the Ph.D. program at the Department of Economics at the University of Delaware.

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In this appendix we derive the first-order necessary optimality conditions for the fishery manager’s delayed optimal control problem under ECON-EBFM defined in Eqs. 812. We assume all conditions required by Theorem 4.2 in Göllmann et al. (2009) are satisfied so that the theorem applies.Footnote 36 We first work with the present-value Hamiltonian and then turn to the current-value Hamiltonian.

Construct the present-value Hamiltonian as

$$\begin{aligned}&\mathcal {H}^\text {p }(t, C_t, C_{t-\tau }, R_t, E_t, \lambda ^\text {p }_t, \xi ^\text {p }_t, \zeta ^\text {p }_{e,t}, \zeta ^\text {p }_{c,t}, \zeta ^\text {p }_{r,t}) \\&\quad = {} e ^ {- \rho t} \left[ p q C_t E_t - \delta E_t^2 + w (R_t - R_\text {m }) ^ \alpha \right] \\&\qquad {} + \lambda ^\text {p }_t \left[ g_c C_{t-\tau } \exp (- C_{t-\tau } / K_c^*) - \eta _c C_t - q C_t E_t \right] \\&\qquad {} + \xi ^\text {p }_t g_r R_t \left\{ 1 - R_t / K_r / a \cdot [1 + \exp (b_0 + b_1 C_t)] \right\} \\&\qquad {} + \zeta ^\text {p }_{e,t} E_t + \zeta ^\text {p }_{c,t} C_t + \zeta ^\text {p }_{r,t} R_t, \end{aligned}$$

where a superscript p indicates association with the present-value Hamiltonian, \(\lambda ^\text {p }_t\) and \(\xi ^\text {p }_t\) are the two costate variables associated respectively with Eqs. 9 and 10, and \(\zeta ^\text {p }_{e,t}\), \(\zeta ^\text {p }_{c,t}\), and \(\zeta ^\text {p }_{r,t}\) are multipliers associated with the nonnegativity constraints Eq. 11.

The first-order necessary optimality conditions are then given by

$$\begin{aligned} 0 = \frac{\partial \mathcal {H}^\text {p }}{\partial E_t} = e ^ {- \rho t} (p q C_t - 2 \delta E_t) - \lambda ^\text {p }_t q C_t + \zeta ^\text {p }_{e,t}, \quad 0 \le t \le T, \end{aligned}$$
$$\begin{aligned} \begin{aligned} - \dot{\lambda }^\text {p }_t&= \frac{\partial \mathcal {H}^\text {p }}{\partial C_t} + \left. \frac{\partial \mathcal {H}^\text {p }}{\partial C_{t-\tau }} \right| _{t+\tau } = e ^ {- \rho t} p q E_t - \lambda ^\text {p }_t (\eta _c + q E_t) \\&\quad - \xi ^\text {p }_t g_r R_t ^ 2 / K_r / a \cdot b_1 \exp (b_0 + b_1 C_t) + \zeta ^\text {p }_{c,t} \\&\quad + \lambda ^\text {p }_{t+\tau } g_c (1 - C_t / K_c^*) \exp (- C_t / K_c^*), \quad 0 \le t < T - \tau , \end{aligned} \end{aligned}$$
$$\begin{aligned} \begin{aligned} - \dot{\lambda }^\text {p }_t = \frac{\partial \mathcal {H}^\text {p }}{\partial C_t}&= e ^ {- \rho t} p q E_t - \lambda ^\text {p }_t (\eta _c + q E_t) - \xi ^\text {p }_t g_r R_t ^ 2 / K_r / a \cdot b_1 \exp (b_0 + b_1 C_t) \\&\quad + \zeta ^\text {p }_{c,t}, \quad T - \tau \le t \le T, \end{aligned} \end{aligned}$$


$$\begin{aligned} \begin{aligned} - \dot{\xi }^\text {p }_t = \frac{\partial \mathcal {H}^\text {p }}{\partial R_t}&= e ^ {- \rho t} w \alpha (R_t - R_\text {m }) ^ {\alpha - 1} \\&\quad + \xi ^\text {p }_t g_r \left\{ 1 - 2 R_t / K_r / a \cdot [1 + \exp (b_0 + b_1 C_t)] \right\} \\&\quad + \zeta ^\text {p }_{r,t}, \quad 0 \le t \le T. \end{aligned} \end{aligned}$$

Also, the optimal solution should maximize the Hamiltonian among all admissible control and state trajectories that satisfy the nonnegativity constraints Eq. 11. The transversality condition is simply

$$\begin{aligned} \lambda ^\text {p }_T = 0. \end{aligned}$$

Nonnegativity of multipliers and the complementarity condition guarantee

$$\begin{aligned} \zeta ^\text {p }_{e,t}, \zeta ^\text {p }_{c,t}, \zeta ^\text {p }_{r,t} \ge 0 \quad \text {and} \quad \zeta ^\text {p }_{e,t} E_t = \zeta ^\text {p }_{c,t} C_t = \zeta ^\text {p }_{r,t} R_t = 0. \end{aligned}$$

We now turn to the current-value Hamiltonian, defined simply as \(\mathcal {H} = e ^ {\rho t} \mathcal {H}^\text {p }\). The current-value costate variables and current-value multipliers are defined accordingly as

$$\begin{aligned} \lambda _t = e ^ {\rho t} \lambda ^\text {p }_t, \quad \xi _t = e ^ {\rho t} \xi ^\text {p }_t, \end{aligned}$$


$$\begin{aligned} \zeta _{e,t} = e ^ {\rho t} \zeta ^\text {p }_{e,t}, \quad \zeta _{c,t} = e ^ {\rho t} \zeta ^\text {p }_{c,t}, \quad \zeta _{r,t} = e ^ {\rho t} \zeta ^\text {p }_{r,t}. \end{aligned}$$

Differentiation with respect to time in Eq. 29 yields

$$\begin{aligned} \dot{\lambda }_t = \rho \lambda _t + e ^ {\rho t} \dot{\lambda }^\text {p }_t \quad \text {and} \quad \dot{\xi }_t = \rho \xi _t + e ^ {\rho t} \dot{\xi }^\text {p }_t. \end{aligned}$$

Substitute Eqs. 2931 into Eqs. 2328 and then we obtain the conditions in current-value terms. Eqs. 2326 become

$$\begin{aligned}\begin{gathered} E_t = [q C_t (p - \lambda _t) + \zeta _{e,t}] / (2 \delta ), \quad 0 \le t \le T, \\ \begin{aligned} - \dot{\lambda }_t + \rho \lambda _t&= p q E_t - \lambda _t (\eta _c + q E_t) - \xi _t g_r R_t^2 / K_r / a \cdot b_1 \exp (b_0 + b_1 C_t) + \zeta _{c,t} \\*&\quad + e ^ {- \rho \tau } \lambda _{t+\tau } g_c (1 - C_t / K_c^*) \exp (- C_t / K_c^*), \quad 0 \le t < T - \tau , \end{aligned} \\ \begin{aligned} - \dot{\lambda }_t + \rho \lambda _t&= p q E_t - \lambda _t (\eta _c + q E_t) - \xi _t g_r R_t^2 / K_r / a \cdot b_1 \exp (b_0 + b_1 C_t) \\*&\quad + \zeta _{c,t}, \quad T - \tau \le t \le T, \quad \text {and} \end{aligned} \\ \begin{aligned} - \dot{\xi }_t + \rho \xi _t&= w \alpha (R_t - R_\text {m }) ^ {\alpha - 1} \\*&\quad + \xi _t g_r \left\{ 1 - 2 R_t / K_r / a \cdot [1 + \exp (b_0 + b_1 C_t)] \right\} + \zeta _{r,t}, \quad 0 \le t \le T. \end{aligned} \end{gathered}\end{aligned}$$

Equation 27 becomes \(\lambda _T = 0\). Equation 28 becomes

$$\begin{aligned} \zeta _{e,t}, \zeta _{c,t}, \zeta _{r,t} \ge 0 \quad \text {and} \quad \zeta _{e,t} E_t = \zeta _{c,t} C_t = \zeta _{r,t} R_t = 0. \end{aligned}$$

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Tan, Y., Jardine, S.L. Considering Economic Efficiency in Ecosystem-Based Management: The Case of Horseshoe Crabs in Delaware Bay. Environ Resource Econ 72, 511–538 (2019).

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  • Bioeconomics
  • Delayed optimal control
  • Ecosystem-based fisheries management
  • Horseshoe crab (Limulus polyphemus)
  • Non-fishing values
  • Open access
  • Red knot (Calidris canutus rufa)

JEL Classification

  • Q22
  • Q57