The Effect of IFQs on the Total Factor Productivity of the US Gulf of Mexico Red Snapper Fishery

PresentationThe introduction of individual fishing quotas (IFQs) in the Gulf of Mexico red snapper fishery significantly impacted the way the commercial fleet operated. As result of the added flexibility afforded by the IFQ program, vessels began taking fewer but longer trips. They also began diversifying the composition of their catch. The purpose of this paper is to assess the impact of the IFQ program on the total factor productivity (TFP) of the Gulf of Mexico red snapper fleet. We also decompose the productivity changes into factors for technological progress and technical and scale efficiency. To do so, we expand on traditional frameworks by introducing the use stochastic distance frontiers, which can deal with the randomness and multi-species nature of the fishing industry. In addition, we control for stock abundance and regulatory and environmental conditions. An unbalanced panel data including more than 900 distinct vessels during the six years preceding and following the implementation of IFQ program are used in the analysis. Our preliminary results suggest that the IFQ program improved the TFP of the fishery. We also found that technical efficiency and technological progress increased while scale efficiency decreased