Quiz 12: Reproducible Private-Property Resources: Agriculture

Business

200 - Mile limit states that a country bordering sea has ownership - right over the area extending to some 200 - mile out to sea from its coast line. Thus, this rule gives exclusive jurisdiction to the country over a 200 - Mile out in the sea along its coast line. This help the country in formulating rules and regulation with regards to exploitation of resources within this limit especially fisheries. This 200 - Mile limit prohibits fishermen of foreign countries from fishing with in this limit. However, if fishermen of native country have unrestricted access to this limit then it may lead to 'tragedy of commons'. 'Tragedy of Commons' implies overexploitation of open access resource or common - property resource in absence of clear and defined property rights. With fishermen of native country having unlimited access to fishes with in this 200 - Mile limit, ocean fisheries within this 200 - Mile limit would act as open access resource. Once too - many fishermen of the native country have unlimited access to this open access resource, property rights to fish would no longer efficient. However, scarcity rent would be there. Scarcity rent refers to the producer surplus that does not get eliminated by competition even with free entry. In case of fishing, each boat would receive a profit equal to its share in scarcity rent. This scarcity rent or producer surplus will act as bait for new fishermen to enter and will lead to building up of cost and ultimately will even eliminate the scarcity rent altogether. In this way, open access will result in over - exploitation. Unless and until, government regulate this open - access and puts into some framework that led to efficient management of 200 - Mile ocean fisheries and control and restrict the over - exploitation of fisheries. This 200 - Mile limit will only act as an extension of a country's land boundaries with in sea as well but would not be sufficient form of government intervention to ensure that the "tragedy of commons" does not occur for fisheries within the 200 - Mile limit.

Sustainability Criterion states that future generations should not be left worse off than current generations. If any arrangement with regard to allocation of resources is enriching the current generation at the expense of future generation then as per sustainability criterion such allocation is unfair. In terms of environmental sustainability this criterion states that in case of natural resources such as fishery, it is not sufficient to maintain the value of aggregate only but certain physical flows of specific individual resources would also have to be maintained. For example, in case of fishery, sustainability criterion states that fish caught in present time period should be equal to the growth of fishery then only a constant fish catch could be maintained overtime. Growth rate of fishery implies sustained yield or maximum sustained yield. So, as per sustainability criterion, current harvest should be equal to the maximum sustainable yield then only environmental sustainability of the fisheries could be maintained. However, it is given that with discounting, it is possible for the efficient fish population to fall below the level required to produce the maximum sustained yield. This implies that current production levels are in excess of growth rate of fisheries. As this position is contrary to what sustainability criterion suggests therefore this violates the sustainability criterion.