Efficiency of Public Water Area Development in the Presence of Compensation Rules for Loss of Fishers: Economic and Law Analysis

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The purpose of this research is to examine the efficiency of public water area development using both economic and law analyses. In particular, we examine (i) whether the existence of fishing rights and compensation rules for loss of fishers leads to efficient development, (ii) whether the rules of compensation influence the decision making of development, and (iii) what types of fishing rights are desirable in terms of social welfare.The main results of economic analysis are as follows. First, we obtain that explicit division of rights to the profits from fishing/fish stocks is needed for efficient development and harvesting. Second, who determines development and/or what kind of compensation rule is used influence the number of developed fishing districts and the amount of harvesting. For example, when the government determines the development area, the compensation according to the past fishing records leads to excess development and excess harvesting in terms of social welfare. On … More the other hand, the compensation according to the discounted present value of the fish stock leads to insufficient development.Moreover, the result of law analysis is as follows. Under the present Fisheries Act, it can be considered that each member of a fishery cooperative has her/his ownership interest in the profits of harvesting/fish stock. Demands for partition of the fishery (or the fish stock) and disposal of the partition are restricted for the benefit of cooperative resource management. When the present Fisheries Act was enacted in 1949, the fisheries rights under the former Fisheries Act were lapsed with compensation, and “new” fishing rights were given to fishers. Thus, the notion that a fishing right is given not to each fisher but to each community/cooperative, which was what fishing rights should be, is not valid under the present Fisheries Act.The result of the law analysis proves that the results from our economic analysis are effective to solve the problem on efficient development and harvesting. Less