Study: Government subsidies promote overfishing

September 22, 2010 | By PACIFIC LEGAL FOUNDATION

Author: Daniel Himebaugh

Subsidy money In his classic book, Economics in One Lesson, economist Henry Hazlitt explains that protecting chosen industries with government subsidies ultimately results in less wealth creation and a lower standard of living for everyone.  This is because subsidies are wealth transfers that divert capital and labor from industries that would use it efficiently, and direct it to industries that will employ it less efficiently.  Now, a new study indicates that government subsidization of the fishing industry has an additional adverse consequence: It incentivizes the over-utilization and eventual exhaustion of fisheries.

The study, conducted by the University of British Columbia's Fisheries Centre, and recently published by the Journal of Bioeconomics, concludes that government subsidies are responsible for depleting fish stocks around the globe.  As one of the study's authors explains:

"First, taxpayer money is directly contributing to the decline of worldwide fisheries, and second, fishermen and undernourished people are hurting from a steadily declining resource.  From a socioeconomic standpoint, subsidies that promote overfishing are doing far more harm than good."


The same point was made last year in a paper published in the North American Journal of Fisheries Management, which revealed that the U.S. government subsidized the American fishing industry to the tune of $6.4 billion from 1996 to 2004.  According to the paper, the subsidies continued while mounting data suggested that up to 25% of the nation's monitored fish stocks were being overfished.

The UBC's new study should cause us to doubt whether any government actually knows how to "manage" the fishing industry in a way that preserves fisheries for future use.  We've said it before, and it's worth repeating: Government is not adept at creating efficient markets because government doesn't have the same incentives for efficiency as private industry competing in a free market.  This includes the incentive to preserve fishery resources, which are the lifeblood of fishing enterprises, but which government has apparently overlooked in its efforts to "protect" the fishing industry.

The Columbia Basin Bulletin has more here.