MEY and MSY in a General Equilibrium Environmental and Resource Economics

Most studies have focused on the effects of targeting Maximum Economic Yield (MEY) in fisheries using a partial equilibrium (PE) approach, which fails to assess the economy-wide effects and welfare impacts on society by overlooking the interactions between the fishing and non-fishing sectors. To address this limitation, this study develops a bioeconomic computable general equilibrium (CGE) model for a local fishery in Korea, embedded within a dynamic optimization framework, to calculate the economic and welfare effects of targeting MEY and Maximum Sustainable Yield (MSY). The CGE model considers varying degrees of the economy’s openness regarding factor mobility and commodity trade while determining the input and output prices endogenously. Next, this study conducts various simulations to assess the model’s sensitivity to different assumptions and bioeconomic parameters. This study reveals, among others, that in the steady state, the MEY is significantly lower in the GE model than in the PE model in most simulations, and that aiming for MEY often leads to a decrease in overall welfare in many simulations, while targeting the MSY typically enhances it. The study highlights the importance of employing a GE approach for accurately assessing the economy-wide effects of achieving the fishery management targets.