Fisheries Management under Uncertainty Using a Convex Tax

This article considers the use of convex taxation as an instrument to regulate fisheries, comparing it with linear taxation with regards to economic yields and the risk of resource depletion. Convex taxation is shown to be central in studies with static models but has rarely been explored in the context of dynamic fisheries. Literature shows that a linear tax regime is superior to quantity regulation when the stock estimate is uncertain in terms of economic gains and its ability to prevent resource extinction. Furthermore, when cost uncertainty is involved, a strictly convex tax on landings can prove even more efficient. A numerical example with a single-species demersal fishery having both ecological and economic uncertainty demonstrates the gain in value of moving from a linear to a strictly convex tax.