The Role of Fisheries in Optimal Eutrophication Management

We analyze dynamically optimal eutrophication management using two controls, targeted fishing and reduction of external nutrient loads. Fishing removes nutrients from the water ecosystem, and the size of the fish stock also influences eutrophication through food web effects and other mechanisms. We show that fisheries have a role to play in cost-efficient water quality management in combination with external load reductions. Our numerical application considers phosphorus driven eutrophication, agricultural phosphorus abatement and fisheries targeted on cyprinids on a coastal bay in the Baltic Sea. The socially and privately optimal intensity of fishing efforts, phosphorus abatement and the resulting water quality are influenced by damages, revenues and costs. Furthermore, we show that the link between cyprinid fish stock and water quality, and the form of the fishing industry — sole owner or open access — have joint dynamics that lead to very different outcomes. A weak link between cyprinid stock and water quality is associated with socially optimal stock close to its maximum sustainable yield. This maximizes phosphorus removal. With a strong link, socially optimal stock and phosphorus removal are low. Coincidentally, open-access fishing sometimes yields socially desirable outcome automatically — a market failure in industry structure may counteract eutrophication.