growth F(XA, S). Also, in Equation (6), all of the profits in the fishery are dissipated in the long run, that is, p(hA)hA = wEA. The latter expression can be rearranged to solve for the steady-state fish stock XA in terms of the equilibrium price pA, effort EA, and cost w (i.e., XA = X[PA, EA, w]). Substituting for XA in the equilibrium condition for Equation (5) yields the long-run inverse supply curve of the fishery:
For an open-access fishery, this equilibrium supply curve is backward-bending (Clark, 1976). However, since coastal wetland habitat is an argument in the growth function of the fishery, the effect of an increase in wetland area will be to shift the long-run supply curve of the fishery downward and thus raise harvest levels. This effect is shown in Figure 4-3, in the case of a loss of wetland area. Welfare losses can be measured by the fall in consumer surplus, which will be greater if the demand curve is more inelastic.