Measuring potential rents in the North Sea herring fishery

Abstract

This paper assesses the potential for rent generation in the North Sea herring fishery. The assessment distinguishes between rents and intra-marginal profits—the sum of which constitutes variable profits in the fishery. A bioeconomic model combining fish population dynamics and the economics of the fishery is constructed to allow the computation of these different components of profits. In order to assess the dynamics of both rents and intra-marginal profits, the model is computed under various assumptions with regard to price, costs, and discount rates. Potential total profits are measured at £88 to £89 million annually, of which rents make up about £87 million with intra-marginal profits measured in the order of only £2 million. The study further shows that, in this fishery, rent is dissipated mainly due to excess effort but also due to suboptimal stock size.