South-Western College Publishing - Economics  
In California, Tradeoff Between Fishing Livelihood and Fish Survival is Hot Topic
Topic Environment and the Economy
Key Words porpoise, fishing net, fishing ban, Mexico, California,
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Reference ID: A159211916

News Story The Vaquita, a porpoise that lives in the ocean waters between California and Mexico is facing extinction from fishermen's nets. Environmental groups want to help, but local fishermen don't want to see the end of their livelihood.

Biologists estimate that only about 400 Vaquita exist, and that number is very tenuous, since females only have one calf every two years. Environmentalists argue that the vaquita are dying because they are being trapped in nets designed to catch other fish and shrimp. This has happened before; in 1993, the Mexican government declared a portion of the waters off-limits to fishing with nets. Environmentalists are calling for a greater ban on fishing with nets, wider than the current 673 mile sanctuary for the Vaquita.

But rather than leaving the fishers out in the cold, activists suggest a buyout. A $50 million trust fund could be set up to provide payments to the fishers so that they may continue to live, and find employment elsewhere outside of fishing. At this point, tourism exists in this part of California and Mexico, but it is not a significant industry. This is an application of the famous Coase Theorem, which argued that such payments could help compensate for lost activity: in this case, environmental activists are compensating fishers for their lost income from fishing.

The porpoises live and eat at roughly the point where the Colorado River flows out into the ocean. Some fishers point to the damming of the Colorado River further north as the reason behind the death of the porpoises, as the reduced river water reduces the amount of food that comes through for the porpoises.

But that doesn't change the fact that the fishers will have to change their lifestyle to which they've become accustomed.

Discussion Questions:
1. What does it mean that this is an example of the "tragedy of the commons"?
2. Because of the death of porpoises in the capture of fish for sale, a distinction between private marginal cost and social marginal cost is made here. Draw a graph of the market for fishing, including the capture of porpoises as an external cost.
3. Does the extension of the no-fishing sanctuary solve the problem of the commons? Why or why not?
Multiple Choice/True False Questions:
1. True/False. The deaths of porpoises can be considered an external cost of fishing for shrimp.

2. Assuming that fishing in these waters is an example of a common property resource, then the amount of private fishing done is -------- relative to the socially optimal level of fishing.
  1. Too high
  2. Too low
  3. The same as
  4. More elastic
3. Because of the presence of an external cost, then ----- is greater than ------.
  1. Private marginal cost; social marginal cost
  2. Social marginal cost; private marginal cost
  3. Private marginal cost; private marginal benefit
  4. Social marginal cost; social marginal benefit
Source McKinley, James C, Jr. "Vaquita Porpoise, and a Way of Life, Face Extinction." The New York Times. 13 February 2007.
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