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Abstract
Individual transferable quotas (ITQs) are to be introduced into Australia’s Northern
Prawn fishery in the near future. Total allowable catches (TACs) are to be set with the
objective of maximising economic efficiency in the fishery. Under ITQs, vessel owners
have the ability to adjust their fishing activities to maximise profits and changes in fleet
structure resulting from management changes need to be considered when determining
TACs. A restricted profit function for the fishery was estimated to determine the optimal
vessel characteristics and output levels as a guide to how the fleet may adjust
under an ITQ system. Vessels were found to be currently close to their optimal size
given average historic prices and current stock conditions. However, higher tiger
prawn stocks are expected to result in the average size of vessels increasing, with rising
fuel prices also likely to result in capital being substituted for fishing days. Optimal
average vessel-level catches of the main species are lower than current average vessel
catches for a wide range of input and output prices. These changes in vessel characteristics
and behaviour need to be incorporated in the derivation of the optimal TACs if
economic efficiency objectives are to be achieved.