August 8, 2017

Photo: IEA

Overfishing is often cited as an example of market failure. This metaphor can illustrate a ‘tragedy of the commons’ with poor incentives, where the benefits of overfishing are concentrated among a few parties while the costs are shared evenly by all. The Institute of Economic Affairs (IEA), an Atlas Network partner based in the United Kingdom, took a closer look at the reality of overfishing in order to analyze the role of markets in solving economic and social problems.

In his latest article on the topic, Richard Wellings – deputy research director of the IEA – argues for a free-market approach to the serious problem of overfishing.

“A market solution would deliver major benefits for consumers, with higher yields leading to lower prices and improved quality,” said Wellings. “At the same time, the inefficiencies, subsidies and special-interest influence associated with state-imposed fisheries policies would be avoided.”

Wellings’ interest in environmental economics stems from a first-hand experience of the problem. “I grew up in Kingston upon Hull, a fishing port in Yorkshire, and saw how the decline of the fishing industry devastated the local economy,” he said. “It was clear that bad government decisions were to blame.”

The article is a continuation of Wellings’ recent and extensive policy research on the subject. In his publication, “Sea Change: How markets & property rights could transform the fishing industry,” he discusses counter-productive subsidies in the fishing industry and explains how property rights-based systems would alter the incentives that drive the market. Wellings also received media attention for this research, which called for “institutional frameworks so that the owners of fishing rights become enthusiastic conservationists.”

Wellings suggests the implementation of a framework to encourage cooperation and trade in the fishing market. The delicate balance of the trade is often disrupted by state protection and damaging subsidies. He attributes some of the overfishing problem to the state and blames overly bureaucratic competition rules for artificially controlling the market. This research draws heavily from public choice theory, which argues that special interests conflict with what is best for market growth.

“I hope that Sea Change will alert policymakers to the dangers of state intervention in the fishing industry,” said Wellings. “Sea Change provides them with intellectual ammunition.”