Christopher Costello | Searcharxiv

arXiv2026

The behavioral effects of index insurance in fisheries

Fisheries are vulnerable to environmental shocks that impact stock health and fisher income. Index insurance is a promising financial tool to protect fishers from environmental risk. However, insurance may change fisher's behavior. It is imperative to understand the direction fishers change their behavior before implementing new policies as fisheries are vulnerable to overfishing. We provide the first theoretical application of index insurance on fisher's behavior change to predict if index insurance will incentivize higher or lower harvests in unregulated settings. We find that using traditional fishery models with production variability only originating through stock abundance leads fishers to increase harvest with index insurance. However, fishers are adaptable and experience multiple sources of risk. Using a more flexible specification of production shows that index insurance could raise or lower harvest depending on the risk mitigation strategies available for fishers and the design of the insurance contract. We demonstrate the magnitude of potential change by simulating from parameters estimated for three Norwegian fisheries. Fisheries with index insurance contracts protecting extraction risks may increase harvest by 10% or decrease by 2% depending on the risk effects of inputs. Insurance contracts protecting stock risk will lead to 6-20% increases in harvest. Before widespread adoption, careful consideration must be given to how index insurance will incentivize or disincentivize overfishing.

econ.GN↗

arXiv2014

Range contraction enables harvesting to extinction

Economic incentives to harvest a species usually diminish as its abundance declines, because harvest costs increase. This prevents harvesting to extinction. A known exception can occur if consumer demand causes a declining species' harvest price to rise faster than costs. This threat may affect rare and valuable species, such as large land mammals, sturgeons, and bluefin tunas. We analyze a similar but underappreciated threat, which arises when the geographic area (range) occupied by a species contracts as its abundance declines. Range contractions maintain the local densities of declining populations, which facilitates harvesting to extinction by preventing abundance declines from causing harvest costs to rise. Factors causing such range contractions include schooling, herding, or flocking behaviors--which, ironically, can be predator-avoidance adaptations; patchy environments; habitat loss; and climate change. We use a simple model to identify combinations of range contractions and price increases capable of causing extinction from profitable overharvesting, and we compare these to an empirical review. We find that some aquatic species that school or forage in patchy environments experience sufficiently severe range contractions as they decline to allow profitable harvesting to extinction even with little or no price increase; and some high-value declining aquatic species experience severe price increases. For terrestrial species, the data needed to evaluate our theory are scarce, but available evidence suggests that extinction-enabling range contractions may be common among declining mammals and birds. Thus, factors causing range contraction as abundance declines may pose unexpectedly large extinction risks to harvested species.

q-bio.PE↗