Implications of Dual Permit Regulation on the Market Values of Limited Entry Permits in the Bristol Bay Salmon Drift Gillnet Fishery

Abstract

In 2003, a regulation allowing two drift salmon permits to actively fish on one fishing vessel was adopted by the Alaska Board of Fisheries. This thesis aims to determine whether the new dual permit regulation impacted the market values for buyers and sellers of limited entry salmon permits beyond inherent noise in the permit price data by estimating a difference-in-differences (DiD) model. I compare monthly average permit prices between the treatment fishery, Bristol Bay, and two control fisheries, Prince William Sound and Area M. I also account for exogenous drivers of fishermen’s perceptions of discounted future profits by controlling for exvessel prices, sockeye salmon run forecasts, and harvests in the DiD regression. Initial results indicate a 51.3% decrease in Bristol Bay permit prices occurred after the regulation was enacted. This result is statistically significant. The model proved to be extremely sensitive to sockeye salmon run forecasts in particular, however; and running the regression without this variable and others create drastically different outcomes that are not statistically significant. The analysis can be improved by future work refining control variables to more accurately reflect the information fishermen have about future profitability in the fishery.