Modeling Fisheries Agreements with Side Payments: The Case of Western Atlantic Bluefin Tuna

Abstract

Though the management of internationally shared fisheries with side payments is often considered politically difficult, quota transferring is now a policy alternative in specific fisheries treaties. Nevertheless, a theoretical framework capturing the details of the side-payments solution is, to a large extend, missing. My thesis tries to fill this gap in the literature, by proposing a static and a dynamic model in the context of a stochastic sequentially harvested stock. The conditions characterizing the solution of the dynamic model are the analogue of the Martingale Property from finance literature. The Western Atlantic Bluefin Tuna fishery is used as an example to calibrate the theory. The objective is to estimate the amount of compensation Canada should provide to the US, such that the latter restricts fishing activities. The compensation scheme could supplement/reform the existing management strategies.