A practical guide to economic frontiers for evaluating benefits of multispecies fisheries management North American Journal of Fisheries Management

Management of most fisheries is currently based on single species, so multispecies interactions often constrain fishing, leading to suboptimal yields or overfishing. Ecosystem-based fisheries management (EBFM) uses a more holistic approach to resource access or allocation and takes advantage of multispecies interactions to spread risk and achieve target yields. Portfolio theory is a commonly applied financial tool that considers covariance between assets in an investment portfolio to reduce the risk of achieving economic return targets. This method can be adapted to EBFM for balancing risk with expected benefits for a portfolio of species’ revenue. Portfolio management considers species interdependencies (covariance in revenue time series), uncertainty, and sustainability constraints. We demonstrate how to apply economic frontier analysis using publicly available landings and revenue data from commercial fisheries and calculate the risk gap between historic portfolios and the EBFM frontier to assess past fishery performance. We identify data challenges and offer guidance on practical decisions for applying portfolio analysis to derive annual efficient frontiers (trade-offs between revenue risk and return) and demonstrate the sensitivity of frontiers to these data decisions and model parameters. In accordance with previous portfolio analyses, results show that the multispecies portfolio approach outperformed single-species management and there was forgone revenue for the associated risk taken in the single-species approach. These demonstrations as well as guidance on data and analysis are intended to facilitate broader evaluation and application of multispecies fishery management and portfolio theory to fisheries. Grant no. NA19OAR4320074