Excess capacity results because fishermen do not have an incentive to conserve fish in-the-sea causing them to over-invest in the capital used to harvest fish as well as other production or factor inputs.1 Excess capacity like overcapitalization and overfishing is a symptom of our regulated, open access fishery management system. Because capacity has been an ill-defined term in the fisheries literature, it has been poorly understood by fisheries managers. Excess capacity exists in a fishery when the yield from the fishery exceeds the point where net benefits to society are at a maximum; i.e., once maximum economic yield (MEY) is exceeded. Since MEY often occurs before maximum sustainable yield (MSY) is achieved in a developing fishery, excess capacity already exists in a fishery with a fully utilized fish stock. Even where barriers to entry exist in a fishery, such as exclusive economic zones (EEZs), permit moratoriums, or transferable licenses, fishermen who participate in the fishery retain a market incentive to race for the fish since no property rights exist for the in situ marine resource; i.e., the fish-in-the-sea. While the adverse effects of excessive capacity levels have become too obvious and severe to ignore,2 they can be corrected. With economically rational fisheries management, fishermen behave as if a private property right exists for the in situ marine resource. This creates a market incentive for fishermen to conserve the fish stock by divesting capital and other factor inputs needed to harvest fish until the yield from the fishery corresponds to MEY, the fish stock is conserved, and excess capacity in the fishery is eliminated. Achieving this objective is a matter of great debate. Without an unbiased and objective capacity measurement metric, the success or failure of regulations designed to reduce capacity cannot be accurately assessed.
Ward, John. Capacity, Excess Capacity, and Fisheries Management. In: Microbehavior and Macroresults: Proceedings of the Tenth Biennial Conference of the International Institute of Fisheries Economics and Trade, July 10-14, 2000, Corvallis, Oregon, USA. Compiled by Richard S. Johnston and Ann L. Shriver. International Institute of Fisheries Economics and Trade (IIFET), Corvallis, 2001.