The Value of Fish
First-of-its-kind equation measures nature’s assets
Creating asset markets for natural resources – among them, commercial fish stocks – is the underlying premise of a first-of-its-kind interdisciplinary equation developed by a pair of researchers.
Josh Abbott at Arizona State University and Eli Fenichel at Yale University created the equation that – by determining an estimated monetary value for fish, forests, or other natural resources – they say can encourage sustainable practices and conservation by changing the way policymakers discuss the value of natural resources.
In their recently published study, the researchers used reef fish in the Gulf of Mexico as an example.
According to their findings, the value of preserving live reef fish in 2004 was more than $3 a pound. Even then, Abbott pointed out, the value was higher than the ex-vessel price of the fish. Commercial fishermen could sell them for about $2 per pound. Stocks at the time were about 25 percent of carrying capacity. The value of “keeping fish in the water” jumped to almost $9 in 2007 after policymakers implemented management reforms – essentially quotas and consolidation – that Abbott says “incentivized conservation.”
Fishermen, he noted, were assigned individual tradable quotas or shares of the fish stock, creating a market for the fish as a capital asset. The changes, he said, led to higher quality fish and lower cost of harvest.
The Gulf’s reef fish contributed more than $256 million to US national wealth in 2004, an amount that tripled three years later after management reforms were put in place.
“It is often said that nature is capital, but this has largely been a metaphor thus far,” said Abbott, associate professor in ASU’s School of Sustainability. “Former measurement methods have lacked necessary inputs from experts from various disciplines, resulting in vast gaps of information.”
What goes unmeasured often goes unvalued, he added. “So being able to treat fish in the water as a capital asset encouraged fishermen to preserve the natural resource, which enhanced sustainable fishing practices that ultimately led to higher returns. This approach to valuation is forward-looking and inherently interdisciplinary,” noted Fenichel, an assistant professor at the Yale School of Forestry and Environmental Studies. “It accounts for the role of ecological dynamics in shaping the future direction of natural capital stocks, and incorporates the role of human behavior in shaping this direction, as well as how real-world management policies mold this behavioral feedback.”The researchers liken the process to folks considering selling stock they own in a company. They use market wisdom and research to inform their decision. Their equation helps in making a similar buy, hold or sell decision in the natural world, in this case deciding whether to use the resource now or save it as natural capital for the future. Abbott said assigning monetary value to natural capital carries widespread implications for policymakers and various stakeholders, and advocates for the creation of robust asset markets for natural capital, a much-needed advance. Researchers found that the value of preserving live reef fish in the Gulf of Mexico was more than $3 a pound in 2004, a price that jumped to almost $9 in 2007 after policymakers implemented management reforms that incentivized conservation.Unlike earlier approaches, this method also weighs the “opportunity cost” of losing future units of natural capital that could help replenish the resource, providing economic benefits in the long run.
It is underpinned by the same economic principles also used to value physical or human capital.
By assigning a dollar value to natural capital, Abbott and Fenichel’s approach puts natural capital on an equal footing with other, more easily measured parts of society’s wealth. They say they want to apply the method to measure the value of all US natural assets, including fish stocks.
“We know from experience in the corporate world that changes in management practices can enhance the overall value of a company’s assets,” Abbott noted. “It is no different with natural capital – our management of it can either enhance or detract from its value.”
All of this factors into decisions on whether to take fish out of or leave them in the water for sustainability purposes.
“Sustainability can be defined as ensuring that the assets the next generation inherits are worth at least as much as they were when the previous generation received them,” Abbott said. “As humans, we are not going to have zero impact on the environment, but we want to make sure that the value of human, physical and natural capital that we pass on to future generations is worth no less than when we inherited them. We are pursuing this research to help provide better measurements of society’s wealth, so we can know whether we’re moving in a sustainable direction.”
What it all comes down to for both fishery managers and commercial fishermen is to determine what it’s worth to keep fish in the water versus what it’s worth to harvest them and in what quantities.
Ultimately, Abbott said, it’s about access to the resource.
What are legally considered assets of the public are real economic assets of the fishing industry. Commercial fishermen can use the monetary value equation to look ahead and more closely determine how different types of management would affect the value of the fish in and out of the water, and the impact on commercial fishing harvests and industry profitability.