Production Risk in the Norwegian Fisheries

Although fishing is regarded as a risky production process, limited attention has been given to the impact of input factor use on production risk. Production risk is particularly important for fisher behavior and fisheries management when input factors are restricted, since input restrictions can influence production risk in addition to output levels. This paper investigates production risk by estimating production and risk functions for the main vessel groups in the Norwegian fishing fleet. The results indicate that production risk is present and that the effect of input use on production risk varies between vessel groups. Capital has a risk-reducing effect in the ocean fleet, but are risk-increasing in coastal fisheries. Fuel use is found to be a risk-increasing input for most of the vessel groups, while labor use is risk-reducing.