Introduction

IFQs as currently practiced were introduced from the early 1990s through mid-2010s ranging from (including but not limited to) the Alaska Halibut and Sablefish fisheries to the Gulf Coast Snapper, Grouper fisheries to the Maine Lobster and Cape Cod Scallop fisheries. While many elements are shared across fisheries:
• Manage entry
• Improve Quality of Catch
• Support Higher Ex-Vessel Prices
• Introduce a Transferable, and Valuable, Access Permit
• Managed through Regional Fishery Councils
However, it is important to note differences that can affect how IFQ are valued, accumulated, bought and sold. For example:
• How much IFQ a single owner may hold
• Who qualifies as an IFQ holder
• Market drivers of underlying fishery (for example seasonality, fresh vs frozen)
• Competition between commercial and recreational fishing
This project assumes a high-level of homogeneity across IFQ fisheries, but the model allows harvesters to choose fishery, expected ex vessel prices, IFQ prices, and risk profiles of future harvest conditions.

Project Objectives

This video provides an overview of the data collection and stakeholder interview process.

This section lays out a seminal challenge in this work. We need to evaluate traditional approaches to long term investment relative to cultural practices, near term information and long-term expectations.
Traditional: Key Premises of Pricing and Business Management:
1. Asset prices should reflect the present value of future streams of cash flows.
2. Business owners (fishermen) should aspire to maximize their profits.
VS
The Experiential and Behavioral Implications of Uncertainty and Cultural Norms
1. Fishermen have long-standing cultural bias against loans.
2. Fishing is inherently uncertain given market prices, resource availability, and even weather.
3. Policy making and shifts in policy priorities increasing uncertainty of access.
4. Environmental conditions are worsening at an increasing pace leading to greater uncertainty of long-term fishery performance.
5. Trends and new information appear to be negatively impacting fishermen’s expectations regarding the future performance of fisheries.
And therefore, there may be (rational) reticence to purchase, rather than lease IFQ – especially using loans.

The Single Fishery Model introduces users to our Excel-Based model. The user gets choice variables including:
1. Fishery
2. Ex-Vessel Price
3. IFQ vs Lease Price
4. Outlook on TAC as a function of above average, average, below average or zero over an expected engagement time period.
The outcome of this model allows users to see what conditions make Buying or Leasing IFQ preferable from a “Net Present Value” (cash flows from fishing are greater than the IFQ investments to fish) perspective. The model allows users to choose price and harvest scenarios to understand the sensitivity of their outcomes to starting prices, and TAC conditions.

In a Multi-Fishery model, we extend the framework to allow users to simultaneously invest in up to 4 fisheries in an IFQ lease or buy framework. This means that fishermen can spread risk exposure of a single fishery across multiple fisheries or investment modalities (lease vs buy). For example, the model shows that one can allocate some IFQ investment to the buy decision and some to the lease decision – and while the upside of either case may be foregone, the downside implication is lessened, leading to more consistent outcomes. This approach also shows the outcomes of holding IFQ in multiple fisheries, as market and environmental conditions may be unique across fisheries.

This component summarizes our findings and model. The outcome is that as uncertainty – or the perception of uncertainty --increases within the fishing industry, fishermen may increasingly choose leasing over purchasing IFQ. The implication of this insight is that there may be alternative industry or policy structure for allocating the risk of fishing from an investment perspective.

In this video, we will explore financial statements. We will look at a firm's Balance Sheet, Income Statement, and Statement of Cash Flows. In addition, we will emphasize the difference between accounting profit and cash flow. Upon completion of this video, you will be able to:
• Demonstrate ability to navigate a Balance Sheet, Income Statement, and Statement of Cash Flows.
• Explain how financial statements work together – for example, how “flows” on the income statement affect “balances” on the balance sheets.
• Differentiate between accounting profit and cash profit.

In this video, we will build economic intuition around the concept of the "Time Value of Money." We will be able to explain why a future dollar is worth less than a dollar today. We will also be able to explain why a safe dollar is worth more than a risky dollar. Using the "Time Value of Money," we will introduce and explore the topic of Net Present Value (NPV) analysis. Upon completion of this video, you will be able to:
• Relate the time value of money to discounting and compounding.
• Explain net present value (NPV).
• Use NPV when making decisions.

This video provides an overview of the data collection and stakeholder interview process.

In this video, we will develop an understanding of opportunity costs and how they relate to the cost of capital. We will also derive an understanding of interest rates and the Internal Rate of Return (IRR) metric. Additionally, an important responsibility of managers is determining which projects to undertake and which to avoid. Capital budgeting is the process of evaluating investment opportunities and choosing which ones to pursue. Capital budgeting decisions rely on decision criteria like Net Present Value (NPV) decision rules, Internal Rate of Return (IRR) decision rules, and other ad hoc rules (e.g., the Pay-back Rule). Upon completion of this video, you will be able to:
• Relate the concept of an “opportunity cost” to “the opportunity cost of capital.”
• Explain how interest rates measure the opportunity cost of capital and how changes in interest rates influence NPV.
• Explain internal rate of return (IRR).
• Compare the relative strengths and weaknesses of IRR and NPV.
• Summarize the strengths and weaknesses of other rules (e.g., “IRR” and the “Pay-back Rule”) and settings in which they may be relevant or complement NPV analysis.
• Understand the strengths and weaknesses of bootstrap financing.

In this video, we will develop an understanding of the relationship between risk & return. We will also highlight the value of diversification and how it can mitigate overall risk. Upon completion of this video, you will be able to:
• Explain the risk-return tradeoff.
• Discuss and interpret covariance, correlation, and standard deviation.
• Consider the value of diversification in the context of a portfolio.
• Identify risk factors in the fishing industry.