Section 1
1. Ocean ranching is releasing fish into the ocean to grow relatively unprotected and unassisted to be subsequently harvested.
2. Ocean ranching may be divided into pure ocean ranching where the harvesting is by the releasing agency usually close to the point of release and stock enhancement ocean ranching where the harvesting is by other agents.
3. For several decades, greatly intensifying in the 1970s, extensive ocean ranching has been conducted by Japan, USA and Iceland.
4. In Japan the bulk of this ocean ranching has been of the stock enhancement variety involving several species. In the USA and Iceland, there has been large scale efforts at pure ocean ranching of salmon.
5. Pure ocean ranching of salmon has generally been found highly unprofitable in Iceland and the USA. For this reason, virtually all the pure ocean ranching companies in Iceland and USA have ceased operation.
6. Stock enhancement ocean ranching of salmon, however, still continues in both Iceland and the USA. In Iceland it is for recapture by recreational fishermen in privately owned rivers. This seems to be privately profitable based on very high fishing licence fees in the rivers. In the USA, salmon stock enhancement is primarily for harvesting by commercial fishermen at sea. A good part of these operations are government run and it is unclear whether they are economically profitable. Some Alaskan cooperative ocean ranching of salmon appears to be privately profitable.
7. Most of the stock enhancement ocean ranching in Japan is funded by the government. It is unclear whether it is economically profitable.
8. The outlook for pure ocean ranching in Iceland and the USA is nothing less than bleak. Moreover, based on the experiences in the USA and Iceland the outlook for pure ocean ranching worldwide is not encouraging.
9. Private stock enhancement ocean ranching for river fishing in Iceland is likely to continue. Stock enhancement ocean ranching is also likely to continue in Japan and the USA as long as the respective governments are willing to fund it.
Section 2
10. By releasing additional fish into the ocean ecology, ocean ranching has an external effect on all other users of the ecosystem. This external effect is fundamental in the sense that it is an inevitable consequence of ocean ranching. In addition to this fundamental external effect a variety of other externalities may be generated by ocean ranching depending on the empirical situation.
11. It is important to realize that due to the nature of the ecosystem, a comparatively small ocean ranching operation can have a large impact on the availability of other valuable ocean resources.
12. It follows that the true economics of ocean ranching cannot be judged solely in terms of the ocean ranching operation itself. The external effects have to be taken into account as well. This generally is a complicated and demanding exercise.
13. It also follows that, unless corrective actions are undertaken, private ocean ranching operations are almost certain to be socially suboptimal.
14. The only known remedies to this are either (i) corrective taxes/subsidies or (ii) an appropriately defined and enforced system of property rights.
Section 3
15. Due to the externalities associated with ocean ranching, a private evaluation of the appropriateness of an ocean ranching project can usually not be relied on as a guidance as to whether the project should be undertaken.
16. The appropriate methodology for assessing the net benefits of a proposed ocean ranging operation is essentially just a variant of the standard cost-benefit analysis.
17. The assessment of the net benefits of ocean ranching is significantly complicated, compared to more standard cost-benefit studies, by the existence of the fundamental ecological externality and other externalities associated with ocean ranching.
18. An accurate assessment of the net benefits of a proposed ocean ranching operation will be particularly difficult to obtain in underdeveloped economies.
