SUSTAINABLE EXPLOITATION OF RENEWABLE RES OURCES - THE FAROE-ISLAND COD FISHERY

The Faroe Islands cod fishery is analyzed for the period 1985-1992. It is shown that an approximately optimal and implementable fishery poli cy based on sustainability could have increased the gross national inc ome in the fishery by about 20%. This loss is due to an inoptimal orga nization of the fishery during that period combined with a very low co d stock at the end of 1992, which means reduced future catch possibili ties. Beyond that the fishing capacity could have been reduced by abou t 1/3. The policy of sustainability is applied to the current situatio n in the fishery, and it is shown that the current quota is well above the quota suggested by the alternative policy. Finally it is demonstr ated how the policy could be implemented in the current regulation by individual transferable quotas (ITQs), which the Faroes introduced in 1994.