Subsidies, buybacks, and sustainable fisheries

Most fisheries subsidies, which on a worldwide scale are immense, are probably detrimental to resource conservation. However, payments used to buy out excess fishing capacity are often represented as useful subsidies, on the grounds that overcapacity encourages overfishing and causes economic waste. Some commentators, on the other hand, assert that most buyback subsidies are ineffective because additional capacity tends to seep back into the fishery over time. In this paper we take the latter argument further, and demonstrate that buyback subsidies, if they come to be anticipated by fishermen, will generally have a negative effect on economic performance and resource conservation. Consequently, buyback subsidies are perhaps over-rated as a management tool.