Productivity Workshop

A workshop was held at the Southwest Fisheries Science Center in Santa Cruz, California, June 11-12, 2012, which brought together leading experts in the field of productivity, and National Marine Fisheries Service Science Center economists. The purpose of the meeting was to generate discussion around the concepts of productivity measurement, and to begin thinking about how to measure productivity in our nation’s fisheries.  Productivity is a key metric for understanding profitability change, and has been identified as a Tier II indicator for national reporting purposes.

Productivity measurement in fisheries presents challenges that are different from traditional industries.  Fundamentally, vessels are harvesting a natural resource stock where the Government sets the total harvest level allowed in any given time period. Whether the harvest is controlled directly through a total allowable catch, or through indirect measures such as limits on fishing time, total output is constrained. In many instances, regulations are intended to make vessels less productive. For example, more productive areas (biologically) may be closed, forcing vessels to fish less productive fishing grounds. This means vessels will need to use more inputs to catch the same amount of fish as they would in the more productive areas. Stock conditions and environmental factors can also influence productivity. External drivers, such as changing ocean temperatures, can impact overall stock conditions. Failing to recognize external conditions when setting catch limits may lead to over harvest in one year, and subsequent harvest reductions in the following years.  Finally, different technologies (typically gear types) can be used to harvest the same resource, and this needs to be factored into productivity assessments. 

The Santa Cruz workshop was designed to introduce NMFS economists to productivity concepts, and at the same time gather ideas from the productivity experts that were invited to attend the workshop. Some questions that were posed to the group included: Is there an alternative to the Malmquist index to measure productivity for fishing fleets? Do we measure productivity at an aggregate or individual vessel level? How do we account for stock conditions in our estimates? Do we consider undesirable outputs in our measures? Do binding catch limits matter, and if so how? How do we estimate productivity if cost data are lacking?
There are a wide variety of topics covered at the workshop. By not focusing solely on fisheries, it is hoped that the ideas presented here will help inform and develop the next generation of productivity models in fisheries.  The presenters, and the topic of each presentation is listed  below.

Workshop Presentations

John Walden opened up the workshop with a discussion about why measuring productivity was important to the National Marine Fisheries Service, and discussed potential challenges for measuring productivity of fishing fleets.
Eric Thunberg discussed the national plan for reporting performance of catch share fisheries, including productivity. Regional science centers will switch to explicit productivity metrics to replace proxy metrics of revenue per unit time.
Knox Lovell presented a framework that links financial performance, price, productivity and capacity constraints using the DuPont triangle. Productivity is measured using both a price and technology based index, and presents a way forward in development of rigorous financial performance indicators.
Kristiaan Kerstens explored the difference in productivity measures using balanced and unbalanced panel data. In fisheries, entry and exit of vessels in each year leads to unbalanced panel data.  Determining how to best handle unbalanced panel data is an important question for fishery researchers.
Sun Ling Wangpresented the methods used by the U.S. Department of Agriculture Economic Research Service (ERS) to estimate productivity growth for the farm sector, based on the Törnqvist index. The ERS has been publishing estimates of total factor productivity since the 1960s, and their work can help inform NMFS on methods to carry out productivity estimates for our catch share fisheries.
Subhash Ray discussed a method for decomposing the cost competiveness of a firm, relative to a rival, and showed how efficiency changes, relative price changes and technical change affect cost competitiveness. With the move to catch share fisheries management, where total output is fixed, the role that these factors play in overall profitability of vessels will become more important.
John Ruggiero presented a DEA model where exogenous fixed factors were included, and then applied the model to vessels in the California groundfish trawl fishery. The application modeled crowding externalities, which can result from various regulations such as area closures and effort limitations.
Niels Vestergaardexamined the impact of the convexity assumption on fishing capacity estimates. This is a topic which has not generated a lot of attention, but is very important in fisheries. For example, decommissioning schemes based on unrealistic capacity estimates may result in retiring too many vessels, at a higher cost than is necessary.
Chris O’Donnellused Bayesian methods to compute and decompose a Färe-Primont index of total factor productivity change in the Australian Northern Prawn Fishery. A Bayesian approach offers some advantages for the study of fishing vessels, because inferences can be made about productivity with little data.  It also solves the endogeneity problem in econometric estimation of multiple-input, multiple-output distance functions. 
Ole Olesen estimated a nonparametric homothetic S-Shaped production relation for U.S. West Coast groundfish vessels. He presented an approach which hasn’t been attempted before in the fisheries literature, but which holds promise for future work. For example, scale characteristics of various fishing fleets can be estimated using this approach.
Carl Pasurka discussed undesirable outputs in productivity estimates, and how the literature has evolved during the past 30 years. This is a topic which is very important, as discards from fishing vessels have been identified as a major contributor to fishing mortality worldwide.
Dale Squires showed why productivity change is an important topic for fishery managers. Technical change is perhaps the most important contributor to overfished stocks, and showed how the traditional focus on MSY may lead to economically sub-optimal results.
John Walden presented a model of productivity change calculated at the fleet level using a Fisher index. The index was constructed using public and private data as an alternative to the Malmquist index which was proposed for measuring productivity in our catch share fisheries. 

Regional fisheries presentations

Ron Felthoven presented information on Alaskan fisheries, and talked about the data limitations and challenges faced in construction productivity estimates.
Juan Agar talked about fisheries in the southeast region, including the Caribbean region, and the data collection efforts to gather better cost earnings data.
Erin Steiner presented catch share fisheries in the Pacific Northwest, and the data which are available to measure productivity.
Minlin Pan presented a case study about technical change and fishing capacity for Hawaii longline vessels.