CNH: Diversification, Portfolio Effects, and the Sustainability of Fishing Communities

Award Period: 

Thursday, September 1, 2011 to Wednesday, August 31, 2016

Award Amount: 

$125 705

Agency Name: 

University of Washington

Award Number: 


PI First Name: 


PI last name: 


Area/s of Research: 


This proposal concerns the bioeconomics of fishery management under uncertainty, a topic that Professor Costello has focused on for his past 11 years at UCSB.  Costello’s primary role will be to develop and implement analytical and statistical models to address the research proposal’s key themes.  Specifically, Costello will play a leading role in developing and implementing models of salmon fishery management strategies that explicitly cope with environmental variability, tradeoffs between ecosystem sustainability and economic performance of salmon fisheries management, and how capital investment in salmon fisheries is influenced by environmental stochasticity.  What follows is a brief description of Costello’s role in each of these themes:

Theme 1: Salmon Management with Environmental Variability.  The key research question here concerns how management decisions can influence the ecological and economic consequences of a variable environment.  Alaska’s salmon fisheries are notoriously variable, largely due to highly stochastic interannual and decadal-scale fluctuations in the environment that affect reproduction, recruitment and growth.   Ignoring this variability in the determination of management strategies can have severe consequences to both fishermens’ livelihoods and to fish stocks themselves.  Costello’s role will be to develop and implement dynamic stochastic optimization models that predict and inform optimal management of this bioeconomic system.  These models will be parameterized with data from other aspects of the project and will be implemented in Matlab.

Theme 2: Tradeoffs between sustainability and economic performance.  Any given management strategy will deliver both an ecosystem outcome and an economic performance.  This theme concerns the tradeoff between those two.  It is sometimes argued that these two always go hand-in-hand: higher economic performance is always coupled to positive ecological outcomes.  While it is widely acknowledged that a collapsed fishery cannot produce optimal economic outcomes, it is not so obvious that a fishery managed for optimal economic performance results in strong ecological condition.  Costello will develop stochastic models of decision-making under uncertainty to address this theme.  He will also develop a tradeoff analysis which provides a graphical depiction of the tradeoff between ecological and economic objectives for different strategies for managing salmon fisheries in Alaska.  These are analytical and computation approaches, and Costello will develop both theoretical insights and practical solutions for this particular study region.

Theme 3: Capital Investment in Stochastic Fisheries.  Salmon fisheries are notoriously capital intensive.  Processing salmon requires large plants that depreciate rapidly.  These plants are expensive to build and maintain, and must be sufficiently large to handle the large volumes of fish that are landed in short periods of time.  This theme addresses the question of how much harvest capacity is efficient, and how much harvest capacity would we expect from the private sector.  Risk and variability in harvest size over time both influence these questions.  Costello’s role will be to model capacity investment in Alaska’s salmon fisheries and to predict the capacity investments we would expect from the private sector under different management approaches.  The results of these models will inform management of Alaska’s salmon fisheries.

This work is both analytical and computer-based.  Costello will work by himself to accomplish these tasks.  Pending other funding sources, there may be funds to hire a PhD student or post-doc to work with Costello on these items.  Costello will also be a central player in the larger research team.  He will travel to Alaska annually, and will collaborate with other personnel to achieve the broader goals of this ambitious research project.