The Economics of Ecolabelling - SEAFOOD Ecolabelling: Principles and Practice - page 52

help avoid the embarrassment and business risk of purchasing illegally caught fish
(Roheim & Sutinen 2006). With respect to the latter, by voluntarily incorporating
business practices that mitigate sale of illegal fish, the seafood industry may be
avoiding more onerous regulations. Portney (2005) originally noted that practicing
CSR may make it possible for firms to avoid more onerous regulations, or influence
the regulations in ways that raise the cost for competitors, and result in more
favourable treatment by local communities.
There are many possible reasons why these corporations are engaging in bringing
sustainable seafood to the marketplace, other than because 'it is the right thing to
do'. There are costs involved to the producers of ecolabelled seafood, such as logo
licensing and chain-of-custody certification, although these are generally not that
large. Clearly, these companies have revealed that they expect a market benefit,
either in the present or in the future, that exceeds those costs.

2.4 The economics of certification of fisheries

In considering the economics of seafood ecolabelling, this chapter proceeds through
the market levels from the consumer - at the 'top' of the market chain - through
to the catch sector at the 'bottom' of the market chain. This section discusses the
economic implications of ecolabelling programmes on fisheries and the fishing
industry, or in other words, the supply sector.
To begin with, fisheries management systems play a large role in whether or
not a fishery may become certified as sustainable. Fisheries economists have long
provided insight into management programmes to achieve optimal management,
based on the recognition that providing appropriate economic incentives to the
fishermen can lead to better management of the fishery. Open-access and some
limited-access management programmes are generally recognised as leading to
overcapacity in fisheries further leading to overfishing (Gordon 1954, Anderson
1977). Rights-based systems have been proposed as a means to reduce capacity
and control fishing effort (National Research Council 1999).
Using a theoretical bioeconomic model, Gudmundsson and Wessells (2000) anal-
yse the impact of ecolabelling on sustainable fisheries production under open-access
and limited-access fisheries, and those managed under property rights systems. The
analysis shows that if price rises due to the ecolabel, fishing effort will increase.
Therefore, if certification of a fishery results in price increase, only those fisheries
which have management regimes that can control overcapitalisation and prevent
excessive fishing effort will preserve sustainable fisheries production. In addition,
a dynamic model of a fishery under property rights management shows that if the
premium is a function of stock size, then the fishery whose stock size is below the
equilibrium level will recover more quickly with an ecolabel as the label serves
the function of a market-based incentive. Combined, the results indicate that only
those fisheries that are managed well enough to control fishing effort in the face