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CHAPTER 3 - MEASURING CAPACITY AND CAPACITY UTILIZATION IN FISHERIES (James Kirkley1 and Dale Squires2)


1. INTRODUCTION
2. CAPACITY AND CAPACITY UTILIZATION
3. REVIEW OF CAPACITY IN FISHERIES
4. PROBLEMS AND ISSUES OF IMPLEMENTATION
5. POTENTIAL AND RECOMMENDED MEASURES FOR CAPACITY
6. SUMMARY AND CONCLUSIONS
APPENDIX I - RELATIONSHIP BETWEEN CAPITAL STOCK AND CAPACITY OUTPUT
APPENDIX II - CAPACITY OUTPUT AND CAPACITY UTILIZATION
APPENDIX III - CAPITAL UTILIZATION
APPENDIX IV - FISHING POWER
APPENDIX V - DETAILED LITERATURE REVIEW
APPENDIX VI - CAPACITY REDUCTION PROGRAMMES
APPENDIX VII - PEAK-TO-PEAK METHOD
APPENDIX VIII - HOLD CAPACITY
APPENDIX IX - MEASUREMENT ISSUES
APPENDIX X - RESOURCE STOCK FLUCTUATIONS
APPENDIX XI - EMPIRICAL APPROACHES FOR ASSESSING CAPACITY AND CAPACITY UTILIZATION
APPENDIX XII - CONVERTING ESTIMATES OF CAPITAL STOCKS TO FLOWS
APPENDIX XIII - ISSUES IN CAPACITY UTILIZATION
APPENDIX XIV - STOCHASTIC PRODUCTION FRONTIERS
APPENDIX XV - DATA ENVELOPMENT ANALYSIS (DEA)
APPENDIX XVI - CAPACITY AND LABOUR UTILIZATION
REFERENCES
GLOSSARY


1 Virginia Institute of Marine Sciences, School of Marine Sciences, College of William and Mary, Gloucester Point, Virginia 23062 [jkirkley@vims.edu].

2 Southwest Fisheries Science Center, National Marine Fisheries Service, P.O. Box 271, La Jolla, California 92038 [dsquires@ucsd.edu].

Abstract: Capacity is the potential output level in the short run, when at least economic input is held fixed. Capacity can be further defined in a technological approach as the maximum potential output given full utilization of variable inputs, the state of technology, existing regulations, capital stock, and the resource stock. This concept of capacity indicates how much the vessel or fleet is producing to the technological maximum for which it was designed. Capacity can also be defined in an economics approach as the output level corresponding to the tangency of the short- and long-run average cost curves. Capacity utilization is the ratio of observed to capacity output. Capacity can be assessed with or without the resource stock, where its exclusion gives the maximum potential output unconstrained by the resource stock and its inclusion gives the maximum potential output possible given the resource stock. Excess capacity occurs when capacity output exceeds a desired or target level of output, such as a Total Allowable Catch. In the past, capacity has been widely but incorrectly defined and used as fishing power or the capital stock of a vessel or fishing fleet. However, the correct definition of capacity and the capital stock coincide only when there is a perfectly linear relationship between the two (technically, a single capital stock and constant returns to scale are required to give a fixed optimum capital-capacity ratio). Given the limited information available for most fisheries, capacity and capacity utilization can be measured and assessed by the “peak-to-peak” method, which requires the least data (landings and vessel numbers), or by data envelopment analysis or DEA.


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