WTO Fights to End Harmful fishing Subsidies

EconEye Admin

4 years ago

The World Trade Organization is seeking a global agreement to end harmful fisheries subsidies. Fish stocks and other marine species have been under enormous pressure for decades, with many species already gone or in danger of extinction.—laprensalatina.com

Answer the following questions to check your understanding of the story.

What is a fisheries subsidy, and why is it considered harmful?

A fisheries subsidy is a ______________, and it is considered harmful because it results in ______________.

a) quota placed on individual fishing vessels; fishing vessels ignoring their quota and overfishing

b) tax per catch placed on fisheries; less than the efficient quantity of fish caught

c) payment to fisheries per catch; overfishing

d) voucher provided to fishing vessels specifying their maximum allowable catch; overfishing

Wrong! - What is a subsidy? How does a subsidy influence the supply of fishing? Does it result in more or less than efficient quantity of fishing?

Correct! - A fisheries subsidy is a payment to fisheries that lowers the cost per catch to fishing vessels. Faced with lower costs, vessels increase the quantity of fish they catch above the efficient quantity, and the result is overfishing.

How can overfishing be avoided?

Overfishing can be avoided by _____________.

a) assigning property rights to the oceans

b) setting production quotas

c) requiring fishers to buy an ITQ

d) educating fishers about the harms of overfishing

Wrong! - What are the methods that can be used to achieve the efficient use of a common resource? Which of these methods has the least obstacles to efficiency?

Correct! - The price of an ITQ is set equal to marginal social benefit minus marginal cost. Fishers have no incentive to overfish because to do so would increase marginal cost above price and result in a loss on the marginal catch.

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