Three essays on the economics of Hawaii's longline fishery: Modeling fishers' behavior

Abstract

The economic behavior of Hawaii's longline fishers was analyzed using a cross-sectional and time-series dataset from 1991 to 1998. Three empirical essays were written analyzing (1) the technological and economic interrelationships in the longline fishery, (2) trip choice behavior, and (3) vessel entry, stay, and exit decisions of the longline fishers. Studies on the analysis of technical-economic interrelationships among species suggest that Hawaii's longline fishery is characterized by a joint production process. Substantial economic and technical interactions existed, as many of the cross-price elasticities were significant, indicating either complementary or substitution relations in production among species. There was insufficient evidence for rejecting the null hypothesis of input-output separability. Output supplies were independent of their own prices. Output elasticities to effort and stock levels were positive and significant. Fishers' trip (or fishery) choice behavior was examined by applying the utility theoretic mixed model. Fishers exhibited utility maximizing behavior by choosing the trip type that yields best return, but they appeared to be risk-averse by choosing trip alternatives with less varying return, ceteris paribus. They exhibited "inertia" in switching to an alternative trip. Stock abundance indices of major species significantly influenced the type of trip chosen. Older and smaller vessels were more likely to choose the tuna trip rather than the swordfish or the mixed trip. Finally, the vessel entry-stay-exit decision was analyzed by applying the multinomial logit (unordered) model. The probability of a vessel to stay (or exit) in the fishery increased (or decreased) for an increase in the annual earning potential of a fisher. The fleet congestion level had a significant impact on the vessel entry-stay-exit decision. Vessels were reluctant to enter to and willing to exit from the fishery for an increase in fleet size. Entry-stay-exit decision was also based on a perceived abundance in major species stock levels. A vessel was more likely to stay in the fishery when the vessel owner was a Hawaii resident or a vessel captain. Vessel age had little impact on the entry-stay-exit decision. Simulation of probabilities for both forms of choices was carried out under different fleet structure and stock conditions.