Cooperation in a Stochastic Transboundary Fishery: The Effects of Implementation Uncertainty Versus Recruitment Uncertainty

Abstract

This paper examines how non-binding cooperative agreements on fisheries management can be sustained when the management plans in participating countries are implemented imperfectly, and compares the effects of implementation uncertainty and of recruitment uncertainty on the potential for cooperation. The model developed assumes two countries that share a fish stock. Reproduction depends on how much fish each country leaves behind after harvesting and hence on random variation in each country’s achieved abandonment level. A self-enforcing agreement is proposed that accounts for the random variation. The agreement is illustrated with a numerical example. A self-enforcing cooperative solution can only be sustained when uncertainty is not pronounced and when the two countries control close to equal shares of the fishery. Even when a cooperative agreement can be achieved, frequent phases of reversion to non-cooperative harvest levels are needed to support the agreement. A comparison of the effects of recruitment and implementation uncertainty on implicit cooperation indicates that implementation uncertainty is more likely to hamper cooperation.