Potential rent and overcapacity in the Swedish Baltic Sea trawl fishery for cod (Gadus morhua)

Eggert, H. and Tveterås, R. 2007. Potential rent and overcapacity in the Swedish Baltic Sea trawl fishery for cod (Gadus morhua). – ICES Journal of Marine Science, 64: 439–445. Many European Union (EU) fisheries have problems with depleted stocks and fleet overcapacity following the regulation of open-access regimes. Some EU countries have introduced individual vessel quotas (IVQs), which can stop “the race to catch” and provide fishers with incentives to minimize costs for a given catch. We model an IVQ fishery using a cost function approach and apply the methodology to the Swedish cod fishery in the Baltic Sea. Estimating a translog cost function for a data set of Swedish trawlers in 2001, we assess the potential gains from structural adjustment of the fleet. Results suggest a desired fleet reduction of 50–60% and a potential resource rent amounting to 25–30% of the landing value.