Diversification, Efficiency and Productivity in Catch Share Fisheries

Abstract This study investigates the relationship between diversification, technical efficiency (TE), and productivity in the US Gulf of Mexico commercial red snapper fishery. We estimated a vessel-level input-oriented stochastic distance frontier simultaneously with a technical inefficiency effects model using a 20-year unbalanced panel (1997–2016). The panel documented the fishing activities of 1,255 fishing vessels, 10 years before and after the adoption of the red snapper catch share program in 2007. Our study points to the desirability of diversification in catch share fisheries. It shows that red snapper fishers who diversified their fishing portfolio tended to be more productive and technically efficient. The study found evidence that diversification resulted in cost savings from catching multiple species (diversification economies), and that the productivity of the fleet increased (diversification efficiencies). The analysis also showed that the TE of the fleet increased in the catch share period. The average TE rose from 0.78 in the command and control period to 0.85 in the catch share period. Higher TE scores were associated with higher levels of diversification. Our results suggest that policies that encourage diversification such as reducing quota ownership caps, adjusting quota carryover provisions, and providing governmental assistance to increase participation in other fisheries deserve further attention.