This report represents a first step at considering the potential for the use of market-based
incentives to aid in the resolution of fishery bycatch problems. Market-based incentives have
several advantages over more traditional command-and-control approaches, including cost-effective
allocations of environmental controls; incentives for firms to seek technological
solutions; flexibility; returns to the public for the use of its resources; and lower administrative
costs in some cases.
Notwithstanding these advantages and with several notable exceptions, market-based
incentives are almost never employed in the management of fishery bycatch problems. There
may be several reasons why this is the case, including significant distributional effects, high
costs of monitoring and enforcement, difficulties in educating consumers about product
attributes, administrative and transactions costs, or merely oversight.
We consider this report to be an "advanced outline" of the issues surrounding the
consideration of market-based incentives. We begin first by developing in Section 2 a definition
of bycatch, including a "typology" of bycatch types. Next, we compile available public
information on bycatch in U.S. fisheries, as defined by target species, location, and gear type
(Section 3 and Appendix 1). We then review, in Section 4, two potentially relevant strands of
literature, the economic theory of multispecies fisheries and studies from other social sciences
of how small-scale fisheries deal with problems of bycatch.
In Section 5, we describe, in general, the kinds of market-based policy instruments that
may be of use in managing bycatch problems. Following this evaluation, we identify and
discuss, as case studies; three priority fisheries: th~ northeastern groundfish fishery; the Gulf of
Mexico shrimp fishery; and the eastern tropical Pacific yellowfin tuna fishery (Section 6).
Finally, in Section 7, we outline approaches to identifying appropriate policy instruments,
including a qualitative comparison of market-based approaches, an examination of the effect of
specific types of uncertainty on the choice between taxes and ITQs, and the development of a
"proposal" for a bycatch management "policy package." This section concludes with a proposal
for a set of priority market-based approaches to bycatch management in the three cases discussed
in Section 6.