IIFET 2008 Vietnam Proceedings REGIONAL FISHERY MANAGEMENT ORGANIZATION WITH A SELF-FINANCED ENFORCEMENT MECHANISM IN SHARED FISHERIES

In order to provide a rationale and mechanism for implementing responsible fisheries in practice, this paper examines the effect of establishing Regional Fishery Management Organisation (RFMO) with effective enforcement on cooperative possibilities in shared fisheries. The result shows that an increase in cooperation level is a social welfare improvement, and this is an important rationale in the establishment of RFMOs for managing shared fisheries. If an RFMO is established and participants commit full compliance (costless enforcement), the outlook for cooperation in shared fisheries is optimistic. However, the attractive incentive for asymmetric information sharing about compliance among the RFMO members may lead to non-cooperation. Therefore, the game framework is extended by introducing a self-financed enforcement mechanism to ensure compliance by the RFMO members (costly enforcement). The result demonstrates that a mechanism that RFMO members finance and empower an independent enforcement body with monitoring and sanctioning capabilities may be a solution for the protection of cooperation. In addition, at some participant’s enforcement cost level, when it increases, an RFMO requires a greater participation level to enter into force. Consequently, if an RFMO forms, it not only results in the higher level of steady-state fish stock, but also may improve participant’s rent