Chapter 5 Financial instruments

Publisher Summary Financial instruments are used to improve the working environment and the safety conditions of exposed population groups and branches. The use of financial instruments in trade entails distortions and welfare losses, and is considered harmful as it leads to an increase in inefficient domestic production, at the expense of a decrease in the supply shares of efficient foreign production. These types of financial instruments are the main subjects of the negotiations in the World Trade Organization (WTO). If the fishing industry is protected in the same way by the use of financial instruments this leads to further overexploitation of the fish stocks (lower supply) of the domestic country, and less overexploitation (higher supply) in the exporting countries. This chapter focuses on financial instruments that have environmental effects for example, those that influence fish stocks. In order to examine the consequences of such instruments, it is necessary to obtain information of the functioning of bio-economic systems.