Rent Dissipation in Chartered Recreational Fishing: Inside the Black Box

under new incentives. Importantly, we find that open access rent dissipation in the for-hire
recreational sector operates in a manner subtly different from that in the commercial sector. In
commercial fisheries, there is a direct link between harvest and revenue that motivates each
vessel owner to increase fishing capacity in the drive to increase his/her share of the aggregate
catch. In the recreational sector, vessel owners instead produce a multidimensional recreational
service rather than mere harvest, although harvest and landings are obviously important drivers
of the market for recreational trips. Vessel owners do not simply purchase more catch-producing
inputs as in the commercial sector; instead, they offer recreational trips with various
characteristics and prices, and anglers operate in the market to choose a recreational provider and
number of trips according to utility maximization. It is the subtle interaction of angler
preferences with open access competition among suppliers that leads to our predictions of rent
dissipation, distorted inputs and excessive harvest and landings.

Efficient rationalization requires that the full mortality from discards and landings be
incorporated within the institutional design. When the proportion of discard mortality lies
between zero and one, it is necessary to induce both anglers and vessel owners in the for-hire
sector to correctly account for their respective roles in influencing total fishing mortality. A
useful and potentially policy-relevant result is that if both forms of mortality are appropriately
priced, this induces efficient choices of all other fishing inputs, except the size of the fleet. A
corollary is that with discard mortality, an efficient ITQ program must ideally have transferable
permits for both discards and landings. However, if discard mortality lies at the extremes of the
spectrum then a single mortality instrument will suffice. For example, if discard mortality is
close to zero, an ITQ program on landings will be sufficient. Similarly, if the target is a high
quality food species and anglers are strongly motivated by “putting food on the table”, then

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