Operational tools and adaptive management

3.3 Comparing the optimal tax/subsidy rate in the different cases
When a new stakeholder, e.g. an ENGO, enters the management of a fishery and gets a say in
the management (becomes a principal towards the fishers) this will affect the optimal
regulations of the present managers (authorities). How it will affect the present regulations
depends on the how the two stakeholder groups, now called principals, relate to each other
and how aligned their interests are.
Above, we have analysed three situations where two stakeholder groups, authorities and an
ENGO, tries to affect the fishers‟ behaviour w r t use of effort. They do this by the use of
incentive schemes, where effort is either taxed or subsidised, and the fishers are in addition
either given compensation (if heavily taxed) or must pay a fee (if subsidised). We derived the
optimal tax/subsidy rate to set for the two principals in the three situations.
In table 3.7 we have applied the same numeric values on the exogenous parameters as in the
scenario “high alignment across all groups” in table 3.2, and calculated the optimal
tax/subsidy rate for the two principals.
Table3.7 Optimal tax/subsidy rate in the different models
National authorities ENGO Net tax/subsidy rate
Single principal 0.9
Cooperating principals 1.3
Symmetric principals - 0.06 1.92 1.86
Asymmetric principals - 0.6 3.0 2.4
First, we can see the relatively strong influence the ENGO has on the common tax/subsidy
scheme when they cooperate with the authorities and forwards a common incentive scheme.
We have assumed that the two principals have equal influence on the tax/subsidy rate, i.e. that
their weights for each of the three interests counts the same in the common objective function.
More realistically would it probably be to let the authorities‟ interests count more heavily than
the interests of the ENGO. Then the optimal tax/subsidy rate would be lower.
When the two principals “compete” and forward separate incentive schemes to the fishers,
table 3.7 shows that this leads to a “polarisation” between the principals, where the ENGO
sets a high tax rate and the authorities moderates the effect of this by setting a negative tax
rate, i.e. a subsidy. The net tax rate is still considerably higher compared to the tax rate set by
the authorities alone.
Finally, when the ENGO holds only environmental interests towards the fisheries, they set a
very high tax rate, which the authorities partly moderate by offering a subsidy. However, the
net tax rate is still relatively high. This gives the highest tax rate out of the rates offered in the
four situations we have compared.
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