Costs of fisheries management: the cases of Iceland, Norway and Newfoundland

This paper reports on the results of an investigation of management costs in the fisheries of Iceland, Newfoundland and Norway and discusses them in a more general framework. Management costs are defined as costs necessary to overcome the problems associated with common property. The question of whether management costs should be paid by industry is discussed, as is the likely effect of user pay on the efficiency with which management is provided. Since management has public goods characteristics, it is likely that there is an unavoidable role for government in providing these services. The question of who pays for it is separate, and recovering costs from industry has both efficiency and optimal taxation aspects. A greater involvement in management by industry further raises the question of compatibility between the industry's interests and the public interest. Measured as percent of gross value of fish landings the management costs are by far highest in Newfoundland (15-25%), lowest in Iceland (about 3%), with Norway in the middle (about 10%). Management costs thus appear to be substantial and quite variable. This gives rise to three conclusions. First, when calculating optimal harvesting and investment paths one must take the management costs of implementing these paths explicitly into account. Second, what is the economic efficiency of management? Could the same level of benefits be produced at lower costs? Third, can fisheries management expenditures of the magnitude discussed be justified in the sense that the benefits exceed the costs?