Quest for appropriate overcapacity in the fisheries industry

The effective management of natural resources is a critical issue that concerns many people with differing interests. This paper examines aspects of overcapacity and optimal capacity within fisheries by accounting for multiple objectives. Overcapacity arises when a fishing fleet is capable of producing more than what is demanded at the industry level, or allowed by a regulatory framework. The presence of multiple objectives within fisheries management is most often an unavoidable reality, where the objectives determine what level of overcapacity is considered optimal. A two-stage model is suggested that can produce information for management in terms of tradeoffs, policy frontiers, objective values and optimal fleet structure. In the first stage, an output-based Data Envelopment Analysis (DEA) model is applied. Efficiency is evaluated and production units transformed such that they use technologically efficient inputs and produce at their full potential. In the second stage, these transformed units are included in an aggregate industry model formulated as a multi-objective optimization program. The model provides information for managers in terms of tradeoffs, policy frontiers, objective values, and optimal fleet structure (by generating Pareto optimal solutions). The proposed model has then been applied to the Danish commercial fishing fleet.