Current rationalization options for West Coast groundfish trawl fisheries include significant allocations of harvester quota to processors, justified as compensation for “stranded capital.” This article discusses the origin of the concept of stranded capital, its use in other policy settings, preconditions, measurement, and remedies for addressing it. Our main finding is that rationalization of fisheries is unlikely to generate significant processing stranded capital. Most capital involved in fisheries processing is malleable and not likely to be devalued as a result of rationalization. If policy makers nevertheless judge it desirable to consider compensation, a legitimate process would tie compensation to anticipated or demonstrated capital losses. Current policies proposed on the U.S. West Coast to transfer harvester quota are arbitrary and unsupported by empirical estimates of the magnitude of the problem. They are likely to generate important spillover effects that could negate some of the intended benefits of rationalization.

JEL Classification Code: Q22

We demonstrate how to specify and estimate a time series model that can isolate the effects of changes in fishery policy and forecast the outcome of policy changes in the context of changing climate and economic factors. The approach is illustrated with data from the headboat fishery for red snapper in the Gulf of Mexico. The initial data analysis finds that effort and harvest are cointegrated series and that effort appears to respond somewhat to past changes in harvest. This suggested a structural vector error correction model specification. Model estimation results indicate that seasonal closures directly influence both harvest and effort, whereas bag and minimum size limits only affect harvest directly. Also, climate activity has a moderate influence on this fishery, mainly via changes in effort. Model forecasts are evaluated relative to a more naïve specification using out-of-sample data and the use of the model for policy analysis is demonstrated.

JEL Classification Codes: Q22, Q26, Q28, C32

Using data drawn from a web-based travel cost survey, we jointly model revealed and stated preference trip count data in an attempt to estimate the recreational use value from diving the intentionally sunk USS Oriskany. Respondents were asked to report their: (i) actual trips from the previous year, (ii) anticipated trips in the next year, and (iii) anticipated trips next year assuming a second diveable vessel (a Spruance class destroyer) is sunk in the same vicinity. Results from several different model specifications indicate average per-person, per-trip use values range from $480 to $750. The “bundling” of a second vessel in the area of the Oriskany to create a multiple-ship artificial reef area adds between $220 and $1,160 per diver per year in value.

JEL Classification Codes: Q26, Q50

This study analyzes individuals' choice and the implied economic values associated with spinner dolphin excursions in Hawaii based on a stated preference survey. A mixed error component choice model is used to analyze respondents' preferences. Respondents are found to be highly heterogeneous in their choices depending on both the observed and unobserved individual characteristics, while the derived marginal values are also moderately different across respondents. The results of this analysis have implications for dolphin excursion operators and for policy makers managing Hawaii's ocean resources.

JEL Classification Codes: Q26, D12

This article corrects an internal inconsistency in Li's (1998) model of the option value of fishery harvesting. In that model, the harvesting effort was related to the fish stock at harvest by the Gordon-Schaefer average sustainable yield model. However, when deriving the option value, the harvesting effort and fish stock at harvest were treated as unrelated to each other. I show that, when this inconsistency is rectified, the option value is smaller, and as a result the optimal harvest trigger is lower (or moves closer). Further, the optimal harvest trigger becomes less sensitive to the degree of uncertainty regarding the evolution of the fish biomass.

JEL Classification Codes: Q22, C61

Li's results (1998) are correct and robust. The Comment offers an interesting perspective from real-options theory, albeit misguided–from a resourceeconomics point of view. In particular, the lack of sensitivity in the optimal harvest trigger to biomass uncertainty is questionable. This reply begins with a general overview of resource-economic principles and the role of real options in them. A specific reply to each point raised in The Comment will then be addressed.

JEL Classification Codes: M30, M39