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Multi-Jurisdiction Quota Enforcement for Transboundary Renewable Resources

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  • Many renewable resources, such as fish stocks, water or environmental quality, are shared between different countries. The management of such resources then relies on international agreements. We develop a model of a shared renewable resource for which there is an international agreement that determines each country's share of total extractions. The government of each country is responsible for the enforcement of their national quota. Governments seek to maximize the value of their country's share of the resource, but also care about sustainability (compliance with total quota). Lowering the level of national enforcement gives firms stronger incentives to violate their quotas. Consequently, even with a sharing agreement in place and national quotas set according to the agreement, the countries can cheat on the agreement by reducing enforcement efforts and thereby inducing its firms to violate their quotas. We analyze the effects of this in a differential game framework. There are two games. First, a Stackelberg game between the government and the extraction firms in each country, which determines national extraction. Second, an enforcement game at the international level between different governments, which determines total extraction. Our results suggest that if the total quota is too low, countries will have an incentive to cheat on the agreement by reducing enforcement efforts. Overly restrictive total quotas may in fact be counterproductive. In this case, the equilibrium resource stock increases as the total quota is increased. Imposing a less restrictive quota removes the incentive to cheat. We obtain a bound on the total quota that must be met for cheating to be eliminated.
  • Keywords: Modeling and Economic Theory, Fisheries Economics, Fisheries Modeling
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  • Beard, Rodney and Linda Nøstbakken. 2010. Multi-Jurisdiction Quota Enforcement for Transboundary Renewable Resources. In: Proceedings of the Fifteenth Biennial Conference of the International Institute of Fisheries Economics & Trade, July 13-16, 2010, Montpellier, France: Economics of Fish Resources and Aquatic Ecosystems: Balancing Uses, Balancing Costs. Compiled by Ann L. Shriver. International Institute of Fisheries Economics & Trade, Corvallis, Oregon, USA, 2010.
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  • US National Oceanic and Atmospheric Administration (NOAA) Fisheries Division, Agence Française de Développement, Ministère de l’Enseignement Supérieur et de la Recherche, Ministère de L’Alimentation de L’Agriculture et de la Pêche, Ministère de l’Énergie, du Développement Durable et de la Mer, La Région Languedoc Rouslilon, Département Hérault, Montpellier Agglomèration, The Department of Fisheries and Oceans, Canada, and AquaFish Collaborative Research Support Program (CRSP).
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