* Re: update on selling the oceans
Topics: Resources
09 Apr 1995
From: "DG Ervan Darnell"
ThomasG1@aol.com wrote:
>
>Ervan said:
>
>->Even if the original allotment were suboptimal
>in terms of actual migration patterns, the market would fix the problem by
>one fish bank owner buying out his neighbor until a true "farm" had been
>achieved. [...]
>If I had a nice fishing spot in a small area surrounded by my neighbor who
>owned the rest of the fish bank, I'd put up a "Not for Sale" sign and fish
>the hell out of it.
>
>Why would I sell and then spend my money to buy a half interest in a whole
>bank somewhere else, when I can keep my small spot and get the benefits of
>half the fish in the entire bank?
>
> [ instead the majority owner and small spot owner will both overfish ]
You have proposed impossible numbers to make this argument work. Let's say
the bank stably produces $10M per year and each partial owner gets 50% of
the catch. Or, it could be overfished to garner $20M the first year and
declining amounts in subsequent years. Your scenario is that each partial
owner would rather split the declining amount than the $10M indefinitely.
Let's say the schedule is (almost anything will do here):
Year Greedy harvest Careful harvest
---------------------------------------
1 $20M $10M
2 $15M $10M
3 $10M $10M
4 $ 5M $10M
5 $ 0 $10M
6 ---- $10M
Assume the above numbers are NPV adjusted values. Now, the total six year
value is more than $60M for careful harvesting but only $50M for greedy
harvesting. Each greedy company splits that $50M and gets $25M. An outside
party could offer each $27M. Each greedy fishing company would now be
better off by $2M for selling. The buyer would be $60-2*27=$6M better off
for having bought both. Everybody wins. The transaction will proceed.
Species preservation and economic utility both happen.
The other scenario is that both initial owners will cooperate, which is just
as good of an outcome (of course the injustice department would sue for
collusion under the anti-trust statutes and force them to overfish, but
that's a different problem).
>The person trying to buy the whole farm would have to pay the cost of half a
>bank of fish just to buy that small spot from me. That would be a huge loss
>to try to recover;
He would never make that sort of limited offer since it is clearly a loser.
>-> The government promises to protect their property as it does
>any other in exchange for their taxes.<-
>
>I was referring to the fuzziness of international law. I assume you would
>have to make the bank a sovereign area, like a ship under a particular flag.
Yes.
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