Optimal Allocation of Anchovy Stocks as Baitfish for Tuna and Food for Local Communities in Developing Coastal Countries

Bait tuna boats in developing coastal countries compete for small pelagic stocks such as anchovy that are primarily targeted by artisanal fishers. The tuna vessels are typically foreign owned, their catches are exported, and the vessels pay taxes to the resource-rich countries; by contrast, the artisanal fishers exploit the small pelagic stocks to support their livelihoods. In addition, the technologies employed in catching the baitfish (i.e., intermediate input) may destroy the benthic floor of the management area of artisanal stocks. Although these resource-use tradeoffs are common, bio-economic models that seek optimal allocation of such small pelagic species, as well as accounting for environmental opportunity costs, are rare. In this paper, such a model has been developed to verify the extent to which non-cooperative solutions deviate from social optimal outcomes when the tuna vessels are locally or foreign owned. Moreover, I have derived an expression for optimal (ad valorem) tax enough to maximize rents from the two stocks. The optimum solutions are characterized using data on tuna and anchovy fishing in Ghana.