The problem arises of converting estimates of stocks of capital or effort into flows of services from these stocks. One solution to this problem is to implicitly assume that service flows are proportional to the stock, so that one is a perfect surrogate for the other. In this case, maximum potential utilization of the stock is implicitly assumed to remain constant over time. However, while convenient, this assumption may not always hold, since utilization may vary. Still another solution to this problem - a variant of the first solution - is to assume that the fleet always operates at “full capacity”, i.e. using the maximum possible flow of services available. In this case, there is again no variation in capital or effort utilization.
An alternative approach is to multiply the estimated stock of capital or effort by an estimate of services, i.e. fishing time or activity. For example, the number of vessels in the fleet could be multiplied by an estimate of the maximum potential number of days the fleet could be expected to fish taking into account weather, fish availability, holidays, repair and maintenance, and other limiting factors. While this solves the problem of introducing variations in stock estimates, it actually just converts the problem to that of measuring maximum potential services or fishing time (activity).
Yet another solution multiplies the stock of capital or effort by an estimate of capital or effort utilization - defined in this case as the ratio of the flow (fishing time, activity) to the stock. This approach, however, also just converts the problem to that of measuring services (fishing time or activity). If the flow of has measurement problems, then the ratio of services to stock also faces problems.
Recognition of the difficulties in defining and measuring services (fishing time, activity) can lead to dispensing with the notion of services altogether and to analyze production from the standpoint of the stock of effort or capital alone. But this raises the problem that applying a stock, capital, to another stock, the fish stock, cannot generate a flow of output (catch). The fishery production process is inherently one of an input flow applied to a resource stock to yield an output flow, catch. To provide a concrete example, the fleet, represented by vessel numbers, tied up to the dock is a stock. Without these vessels leaving the dock for some time period and using a flow of variable inputs applied to the stock of capital, and this in turn applied to the resource stock, an output flow does not follow.
When capacity is equated with the flow of capital services or accounting for fishing time, the issue again arises of how to estimate the flow of services. Available fishing effort in this approach is generally conceived of as fishing power (essentially one or measures of physical capital stock) multiplied by observed fishing time (activity). In this case, available fishing effort is a flow variable. When there are regulatory limits to fishing time, this value can be used. The Northwest Region of the United States National Marine Fisheries Service used the maximum number of days fishing allowed by regulations. When there are no regulatory limits to fishing time, the actual fishing time is frequently adopted. In some instances, an allowance is also made for repair, bad weather, etc.
The rationale for use of actual or observed flow of services (time or activity) is as follows. In a deterministic fishery model, after the basic decision variable, the rate of exploitation, has been decided, optimum fishing effort follows. This gives a stationary pattern of fishing and no reason to vary fishing effort, and thus no difference between available fishing effort (effort capacity) and actual effort (Hannesson, 1993b). Alternatively stated by the Southwest Region of the U.S. National Marine Fisheries Service (1993; page 3), “...the actual performance of vessels in the fleet will to some degree reflect the harvesting capacity of the vessels in the fleet. Or, in other words, the ability of each vessel to achieve its maximum harvesting capacity was not limited by the availability of fish.”
The measurement and even definition of fishing time or activity, conceived of as a flow of services from the stock of capital or input bundle may face the same conceptual problems as the measurement of capital services. An alternative approach is to dispense, altogether, the notion of available fishing effort/capacity as a flow and to analyze available fishing effort/capacity from the standpoint solely of a stock. This is essentially the approach taken when fishing power is equated with one or more measures of physical capital stock (e.g. vessel length or a weighted average of vessel length and engine power giving VCUs) in which production is the result of a flow of fishing time or variable inputs applied to the capital stock and in turn to the resource stock. This approach also corresponds to the neoclassical approach to capacity and capacity utilization in which production is interpreted as a relationship between the flow of output (catch) and a flow of variable inputs applied to a quasi-fixed stock of capital (cf. Morrison, 1985; Nelson, 1989; Hulten, 1986; Berndt and Fuss, 1986). This latter approach is inherently short-run, since the stock of capital is quasi-fixed, and thus consistent with the notion of capacity as short-run concept.
Because the stock of capital (fishing power measured as vessel attributes and hence physical capital stock) is taken as fixed in the short-run, short-run fluctuations in demand can only be accommodated by changes in the amount of variable inputs (or fishing time/activity interpreted as a proxy variable for these variable inputs) applied to the resource stock to yield a resource flow (catch). From an economic perspective, the capacity of the capital stock is defined with respect to the optimal level of output (usually cost-minimizing) for the given amount of capital, and the optimal level of capacity occurs when actual output is at the cost-minimizing level. When the fishery is regulated by TACs, the optimal level of capacity corresponds to cost-minimizing level of the capital stock corresponding to the TACs.
