habitat support function can be determined in terms of changes in the long-run equilibrium conditions of the fishery or in the harvesting path to this equilibrium.
To illustrate a static model, the wetland habitat-fishery linkage analysis pioneered by Ellis and Fisher (1987) and Freeman (1991) is used below. Assume that in Equation (1) there is only one conventional input or that all inputs can be aggregated into one unit (e.g., fishing “effort,” denoted as E). The commercial fishery will seek to minimize the total costs of fishing C:
where w is the unit cost of effort.
The fishery will choose the total level of effort E that will minimize costs in Equation (2) subject to the harvesting relationship in Equation (1). This will lead to an optimal effort level E*, which is a function of the harvest h per unit cost w and the area of coastal wetlands that support the fishery S (i.e., E* = E[h,w,S ]). Substituting this relationship into Equation (2) yields the optimal cost function of the fishery:
The change in costs as harvest changes is the standard marginal cost, or supply, curve of the fishery. It has the normal upward-sloping properties for any marketed supply; that is, the fishery faces increasing marginal costs as it supplies more harvested output to the market. However, as shown in Figure 4-1, an increase in wetland area leads to a downward shift of the supply curve. As a result, the marginal cost of supplying a given level of harvest will fall. More wetland habitat increases the abundance of fish and therefore lowers the cost of catch. Also illustrated in Figure 4-1 is that a new market equilibrium and price P of fish will occur, where price equals the new marginal cost (i.e., P = ∂C/∂h). The welfare gains from an increase in the habitat-fishery ecological service that occurs as an increase in S can be measured by the increase in consumer and producer surplus in the market for fish.
Unfortunately, many fisheries are not managed optimally so that all fishermen can agree to maximize joint profits, or equivalently minimize joint profits. Most fisheries have the characteristics of open access. That is, any profits in the fishery will attract new entrants until all the profits disappear. Thus, in an open-access fishery, the market equilibrium for catch occurs where the total revenue of the fishery just equals cost (i.e., Ph = C). Combining the latter equilibrium