Portfolio theory is not applicable to fisheries management

There has been considerable recent interest in applying portfolio theory to manage multispecies fisheries, analogous to the management of financial portfolios. It is demonstrated here that this analogy breaks down for several reasons. First, fisheries portfolio theory focuses on mitigating the uncertainty in short-term landings and revenue, which, unlike financial stocks, can usually be predicted to good precision. Meanwhile, it neglects the much more important risks of overfishing and stock depletion. Additionally, while portfolio theory reduces the volatility of the combined portfolio, it may call for highly varying landings of individual fisheries, which can cause considerable hardship. Finally, the control parameters (portfolio weightings) and random variables fundamental to portfolio theory have not been properly defined in the fisheries context, nor do such appropriate definitions seem to exist. Fisheries portfolio theory fails because it focuses on the wrong risk and it calculates this risk incorrectly. Additionally, it is based on an incorrect assumption that the actions of managers do not affect future fishery productivity.