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IJMS Editor’s Choice – the economic value of environmental data

A selected Editor’s Choice piece from the latest issue of the ICES Journal of Marine Science is now available. This month read about how insurance concepts allow evaluations of trade-offs between economic gains and risks for an anchovy stock.
Published: 3 February 2016

​​​​​​​​​​​​​Biological, economic, and political uncertainties can constrain effective management plans in fisheries. Recognizing this, managing stocks under uncertainty is now a top priority on the fisheries agenda. ​​

Uncertainty about the stock of European anchovy in the Gulf of Cádiz, Spain (ICES subdivision IXa) mainly arises from environmental factors that are not usually incorporated in traditional stock-recruitment relationship or population dynamics models. Comparison of mean outcomes in conventional modelling approaches does not fully respond to uncertainties when testing harvest strategies.

In their paper, Rincón et al describe an innovative way of measuring the economic value of accounting for specific sources of variability in stock dynamics. The study builds on an insurance concept previously published in the journal, applying it for the first time to compare risk-based management options for a real stock. According to this concept, a premium is calculated, i.e. how much would have to be paid into an insurance fund if it would have to cover the risk of bad years. Although the insurance concept is used as a calculation tool, no use of an insurance scheme is proposed in reality. 

Using the principle of insurance valuation, the study compares a harvest control rule for this stock, based on constant fishing mortality, with an environmentally-based harvest rule that adjusts fishing mortality in accordance with wind observations. The reason for this is that wind is considered to be the main driver for the annual variability in anchovy abundance. Modelled output using the environmental rule indicates there would be higher mean catch values but greater variation in revenue. Comparing the harvest control rules based only on the mean revenues would fail to reflect the risk associated, but notional insurance cost calculations allow evaluations of trade-offs between economic gains and premiums. 

The paper enables a test of many scenarios using an accompanying R web application. Here, parameter values can be adjusted to simulate a wider variety of potential ecological scenarios and risk preferences than are covered in the paper and visualize revenue and insurance outcomes in graphical and tabular form. 

The particular drivers of stock dynamics are specific to this fishery, but the idea of using observations that can predict in-season variability is generic. The notional insurance concept for including a monetary measure of risk in considering trade-offs between harvest strategies is transferable to other fisheries that are moving towards risk-based management.

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​Anchovy Möbius strip by José Arboleda​​​​

​​​​​Article title: ​The economic value of environmental data: a notional insurance scheme for the European anchovy​

Authors: Margarita María Rincón, John D. Mumford, Polina Levontin, Adrian W. Leach and Javier Ruiz​​​
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IJMS Editor’s Choice – the economic value of environmental data

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