Title: When to Sign an Environmental Agreement: The Case of High Seas Fisheries

Authors: Veijo Kaitala and Marko Lindroos

Status: Proceedings from the Conference on the Management of Straddling Fish Stocks and Highly Migratory Fish Stocks (T. Bjørndal, G. Munro and R. Arnason eds.), and the U.N. Agreement, Centre for Fisheries Economics, Papers on Fisheries Economics No. 39/2000, Bergen.

We investigate in this paper the optimal timing of cooperative agreements dealing with the harvesting, utilisation or management of marine fish resources. We formulate the optimal timing problem as a two-player dynamic differential game model where both players, e.g. harvesting countries, consider the timing of the agreement as a strategic decision parameter. In other words, the initialisation of the environmental agreement will be subjected to negotiations. The objective function is linear in the control variable (fishing effort) and the harvesting costs depend on biomass. Population dynamics is described by logistic growth. The game begins by a period during which the players negotiate on the cooperative agreement. During this period the players optimise their fishing unilaterally, that is, they play a non-cooperative game taking into account that they will enter a cooperative fishery some time later. It is up to the players to decide when they wish to initiate cooperation. We show that there are several possibilities where cooperation is never an option for at least one of the countries. In other cases immediate cooperation may be optimal for both countries. The determinants of willingness to cooperate in the game include unit costs of harvesting, discount rate, maximum fishing efforts, initial stock size and division of profits.