Research

In Review and Working Papers

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Option Pricing in a Cap-and-Trade Market: Evidence from New Zealand Fisheries. 

(with Cameron Birchall and James N. Sanchirico) [Working Paper]

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We present empirical evidence of option pricing in a created market to address stock externalities in a common-pool resource. Using unique data on New Zealand’s quota fisheries, we show that tradable quota can carry an option premium of over 10 percent (i.e., the quota price is relatively higher at the start of the fishing year). By exploiting differences in species that are exported fresh and frozen, we show that an option premium arises only if a fisher can earn higher profits by aligning harvesting with high market prices. Since quota represents a forward-looking option to produce throughout the year, the quota price accounts for the potential value of using quota later in the year, when it may be more profitable.

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Internalizing Spatial-Dynamic Externalities: Endemic Disease in Chilean Aquaculture

(with Rolando Ibarra, James N. Sanchirico and Matthew N. Reimer) [Working Paper]

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Spatial-dynamic externalities are pervasive in environmental and resource systems, yet the appropriate spatial scale of policies remains poorly understood and difficult to evaluate. We study this problem in Chile's salmon aquaculture industry, where policymakers implemented a spatial management program to limit the transmission of infectious diseases. Using industry-wide panel data on veterinary outcomes and antimicrobial use, we test whether this spatially-explicit policy effectively contains pathogens by measuring spillovers across management boundaries. Exploiting policy-induced exogenous variation in pathogen prevalence, we find little evidence of disease spillover between management units and no response in antimicrobial use to pathogen pressure in neighboring units. These results suggest that Chile's spatial management policy protects against the spread of transmissible disease from one unit to another, offering rare empirical evidence on the spatial scale of management internalizing spatial-dynamic externalities.

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Measuring the Effect of Antimicrobial Use under Endogenous Selection

(with James N. Sanchirico and Matthew N. Reimer)

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Disease management is a critical economic and ecological challenge for the aquaculture industry. Pathogens not only undermine productivity but reliance on chemical treatments can lead to antimicrobial resistance, threatening the efficacy of therapeutants that are important for both human and animal health. This has prompted interest in developing public policy aimed at evaluating the costs and benefits of antimicrobial use. However, effective policy design requires integrating disease dynamics with the behavioral responses of the people choosing to administer treatment. In this study, we show that behavioral mechanisms can also bias econometric estimates of model parameters that are consequential for policy and suggest an alternative, bias-free estimator. We illustrate this empirically using Chile’s salmon aquaculture industry as a case study 

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​​​Does conservation finance have a role in global fishery reform? Lessons from a bioeconomic model

(with Suresh A. Sethi and Miguel I. Goméz)

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Current contributions from public and philanthropic sources, while significant, are insufficient to finance global fisheries reform. Private capital markets are a largely untapped resource that many argue can help support and sustain sustainable fisheries management. This paper explores this topic by analyzing the challenges and opportunities facing conservation finance, a growing industry seeking to balance financial returns with improvements to local environmental, economic, and social conditions. Using open access fisheries as context, we present the first application of a bioeconomic model to inform conservation finance for fisheries. We identify three strategies described by the conservation finance industry and evaluate their capacity to generate financial returns and to promote positive triple bottom-line impacts. Our model results identify key areas where the stated goals of conservation finance and the broader sustainable development community conflict with the likely outcomes of commonly funded interventions. 

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