Cost Allocation for Commercial Catcher Vessels Operating in Multiple Fisheries

1. Cost Allocation for Commercial Catcher Vessels
   Operating in Multiple Fisheries

1. Carl Lian

   Northwest Fisheries Science Center

   NOAA Fisheries Service

   May 14, 2013

 

1. Background --- Why Cost Allocation is Important

• •Performance measures for catch shares fisheries and the PFMC Groundfish Spex process require cost data at the fishery level 

• •Annual catcher vessel cost data collected by the NWFSC covers either all vessel operations on the West Coast or all vessel operations in any fishery (including Alaska) 

• •Since most commercial catcher vessels participating in the West Coast groundfish fishery participate in multiple fisheries, a methodology for allocating joint costs to individual fisheries is needed 

   

 

1. Components of Groundfish Fishery
   for Cost Allocation

1.         Cost estimates are needed for a number of components of the West Coast groundfish fishery:

• • •Shoreside whiting 

  • •At sea whiting 

  • •DTS trawl 

  • •Non-whiting non-DTS trawl 

  • •Primary sablefish 

  • •Other limited entry fixed gear groundfish 

  • •Open access groundfish          

1.                

                  

 

1. Today’s Discussion

• •Comparison of cost allocation methods applied to the shoreside whiting and limited entry fixed gear fisheries 

• •Total cost net revenue equals revenue minus monetary costs, with both variable and fixed costs included 

• •Net revenue is upward biased 

• •Total cost net revenue focuses on monetary costs associated with operating a catcher vessel, and does not consider opportunity costs such as  

• • • •Owner-captain who is not explicitly paid for captain services 

    • •Opportunity cost of owning vessel, permits, and quota 

 

1.  Data Sources

• •Comparison of cost allocation methods is based on 2010 data (most recent year for which cost data is available from all limited entry groundfish fisheries) 

• •PacFIN provides data on West Coast vessel landings 

• •The mandatory EDC program provides economic data for the shoreside whiting catcher vessels 

• •The voluntary cost earnings program provides data for catcher vessels operating in the limited entry groundfish fixed gear survey 

 

1. Ex Vessel Prices During 2010

 

1. Cost Allocation Methodology --- Properties

1. The cost allocation methodology is used to allocate joint costs to individual fisheries for catcher vessels which have already made decisions about output quantities and prices.  

   Desirable properties of a cost allocation methodology:

• •The same cost allocation methodology can be applied to all vessels --- every vessel is treated in the same manner 

• •The allocation method is easy to understand, as a methodology which can be understood is more likely to gain acceptance 

• •The allocation method should be “tidy”, so that the sum of costs in all fisheries is equal to total costs for the vessel  

   

1. .  

 

1. Five Methods of Allocating Costs
   to Individual Fisheries

• • Revenue by landed species 

  • Revenue by target species 

  • Pounds by landed species 

  • Pounds by target species 

  • Days At Sea  

 

1. Total Cost Net Revenue (Per Vessel, Group of 3)
   Shoreside Whiting

 

1. Total Cost Net Revenue (Per Vessel, Group of 3)
   Limited Entry Fixed Gear

 

1. For each cost category, regress reported cost on:

• •WC whiting revenue 

• •WC non-whiting groundfish revenue 

• •WC crab revenue 

• •WC shrimp revenue 

• •Other WC revenue 

• •Alaska revenue 

• •Vessel length 

   

1. Repeat with pounds and days at sea in place of revenue

1. Empirical Comparison of Cost Allocation Methods --- Shoreside Whiting

 

1. Goodness of Fit --- Limited Entry Fixed Gear

	Revenue by	Revenue by	Pounds by	Pounds by	Days
	Landed	Target	Landed	Target	At
	Species	Species	Species	Species	Sea
Crew	0.86	0.89	0.81	0.81	0.84
Captain	0.84	0.85	0.79	0.80	0.71
Fuel & Lub	0.90	0.90	0.86	0.86	0.74
Bait	0.58	0.57	0.61	0.63	0.48
Food	0.72	0.73	0.64	0.66	0.77
Ice	0.29	0.31	0.32	0.33	0.36

 

1. Empirical Comparison of Cost Allocation Methods --- Limited Entry Fixed Gear

1. For each cost category, regress reported cost on:

• •WC groundfish revenue 

• •WC crab revenue 

• •WC halibut revenue 

• •Other WC revenue 

• •Alaska revenue 

• •Vessel length 

   

1. Repeat with pounds and days at sea in place of revenue

 

1. Goodness of Fit --- Limited Entry Fixed Gear

	Revenue by	Revenue by	Pounds by	Pounds by	Days
	Landed	Target	Landed	Target	At
	Species	Species	Species	Species	Sea
Crew	0.81	0.80	0.80	0.78	0.63
Captain	0.83	0.84	0.81	0.83	0.51
Fuel & Lub	0.92	0.92	0.88	0.88	0.70
Bait	0.78	0.74	0.81	0.75	0.59
Food	0.75	0.73	0.73	0.70	0.67
Ice	0.24	0.21	0.31	0.28	0.20

 

File Type	application/vnd.ms-powerpoint
File Title	West Coast Limited Entry Trawl Fleet Number of Active Vessels
Author	carl lian
Last Modified By	Carl Lian
File Modified	2013-05-14
File Created	2005-10-21

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