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The government of Mexico has already undertaken a critical first step in planning for the economic compensation that will be necessary in order to implement a gillnet ban.

Economists at the National Institute of Ecology (INE) have undertaken a study to determine the value of the gillnet fisheries in the upper Gulf of California.

Information for the economic analysis presented here was largely gathered from trusted anonymous sources within the fishing industry and the government. Much of the gillnet fishing is conducted illegally (without permits) and is therefore not included in the official records.

The number of pangas fishing with gillnets was estimated as the sum of legally permitted and illegal boats. The number of legal boats is not known precisely because some permits cover an unspecified number of vessels. In 2007, the fisheries agency in Mexico (CONAPESCA) began a process of individualizing the multiboat permits so that each permit covered only one vessel. The numbers of legal vessels reported in table 15.1 are the estimated numbers of individual permits plus the estimated number of pangas covered by multiboat permits.

These estimates are most accurate for San Felipe and Santa Clara, where the individualization process is nearly complete. Estimates of legal vessels in Puerto Peñasco (table 15.1) are less precise because the individualization process has just begun there. Estimates of the number of illegal pangas (table 15.1) come from local Secretaría del Medio Ambiente, Recursos Naturales (SEMARNAT) officials and nongovernmental organizations that work with the fishermen and are only rough estimates.

With these caveats, we estimate the total number of pangas fishing with gillnets in the northern gulf is approximately 1,073.

The total catch of shrimp is known relatively precisely because virtually all landings are handled by a few firms (private or cooperatives) and the international distribution is handled largely by one company.

By far, the largest and most profitable catch is of the premium-sized blue shrimp (Penaeus stylirastris)

. The catch of blue shrimp by panga fishers is approximately 722 metric tons per year, with a beach landing price of approximately US$14/kg. The total gross income from shrimp for all panga fishers is approximately US$10.1 million per year (table 15.2).

The gillnet fishery for finfish is an important source of income for fishermen, especially in the months when the shrimp fishery is closed. Six major finfish species are caught (chano, curvina golfina, manta, sierra, shark, and guitarra), with an aggregated catch of 5,583 metric tons (table 15.3). The gross income from finfish is approximately US$5.7 million.

The net income from fisheries is estimated as the gross income minus the operational costs. We consider the fixed costs (gasoline, nets, ice, depreciation, etc.) and labor separately and estimate these as annual costs for each panga. The gross income per panga is estimated as the gross income for the fishery in each community divided by the total number of pangas (legal and illegal) fishing there.

For the shrimp fishery, we estimate the fixed costs to be US$4,600 per year per panga for all areas and estimate the labor costs as the wages that would be paid to two fishers (US$1.50/kg shrimp caught) if they were hired from the community (although, in fact, the fishers are often the permit holder and a family member). For the finfish fishery, we estimate fixed costs to be 72 percent of the gross income (higher than for the shrimp fishery) and the labor costs to be 12 percent of the beach-landing value of the catch (equal to the shrimp fishery). The annual profits per panga in the shrimp fishery range from US$2,200 to $3,200 in the three communities(table 15.2), and the annual profits per panga in the finfish fishery range from US$226 to $1,935 (table 15.3). Although all of these values are sensitive to uncertainties in estimates of the number of pangasand of the operational costs, they provide a good first approximation for estimating the opportunity cost of not fishing.

Our estimates of the value of a permit are based on the assumption that the labor market works smoothly in the region, and that a family that provided all its labor for the panga could easily findwork outside the fishery at the same implicit wage. If the fishers use family labor to work the pangas, then their opportunity cost would increase by an amount equal to any difference between the wage the fishers could obtain in other economic activity and their implicit fishers’ wage. While local labor markets are thin in Santa Clara and San Felipe, the regional and U.S. labor market provide more opportunities. In that case, the cost of job search and migration costs should be included.

We have little information on the set of skills the fishers’ families have and thus could not produce an estimate of this difference. Our estimates use the net profits as the lower bound for the fishers’ opportunity cost of handing back the permit, while the upper bound would include the labor costs.

The opportunity cost of not fishing for a year can be used directly to estimate the cost of a “rent-out” to temporarily reduce fishing effort and vaquita bycatch. Permit holders should be willing to accept a payment of this amount to forgo fishing for one year. The cost of a permanent “buyout” of a permit would be equal to the expected net profits in perpetuity
given the discounted value of future catches.

If catches were constant and the discount rate was 10 percent per annum, the value of a permit would be approximately 11 times the annual net profits. For shrimp permits, this would be US$29,700, $24,200, and $35,200 for San Felipe, Santa Clara,
and Puerto Peñasco, respectively (table 15.2).

The value of a finfish permit varies more widely from US$2,400 in Peñasco to $21,300 in Santa Clara. Although these preliminary estimates of economic value are useful for decision making at early stages of designing a buyout program, the estimates can be improved through the use of a contingent valuation study or through a revealed preference approach, observing results of the informal sales/rents of permits among fishers or observing the larger scale responses once the first stages of the buyout program begin.

Source, excerpt from:

Barlow, J., L. Rojas-Bracho, C. Muñoz-Piña, and S. Mesnick. 2010. Conservation of the vaquita (Phocoena sinus) in the northern Gulf of California, Mexico. Chapter 15 in: R. Q. Grafton, R. Hilborn, D. Squires, M. Tait, and M. Williams (eds.) Handbook of Marine Fisheries Conservation and Management. Oxford University Press, New York. 770pp.