On January 30, 2014, ISET hosted Dr. Rognvaldur Hannesson from the Norwegian School of Economics. Dr. Hannesson gave a presentation on the somewhat unusual topic of Fisheries Economics.

Fish resources represent a form of natural capital and fishing is a potential source of wealth for many coastal, island, and inland countries. Unlike other natural resources, fish do not inhabit just one place or, in this case, a water reservoir, they flow from one to another depending on the season. Fish stock generally flows in a circle, returning back to its initial place after a period of time. However, no single country is able to control this process.

In order to ensure they have enough fish in their water reservoirs in those seasons when fish are present, countries sharing a common stock of fish should cooperate with each other.

Economists have implemented game theory to address the problem of the management of fish stock migration. Dr.Hannesson presented two methods used for that case: the Nash-Cournot equilibrium, when one player chooses his/her optimal strategy given the strategy of the other players; and the repeated game, where the game is played more than once and where any deviation from one player from cooperation in one game will lead to punishment from others in the subsequent game.

The second half of the presentation was devoted to the so-called mackerel dispute that recently developed between the European Union, Norway, Iceland, and the Faroe Islands. The flow of mackerel, a fish used all over the world, recently changed. Previously, the mackerel entered only EU and Norwegian water reservoirs; however, a few years ago the stock of mackerel started making a wider circle and also entered the waters of Iceland and the Faroe Islands.

The optimal strategy to resolve this dispute depends on many factors. By implementing game theory, one of the findings of Dr. Hannesson was that the EU will benefit from a strategy of cooperation, while the best strategy for Iceland is to deviate from cooperation and use its own strategy.

ISET would like to thank Dr. Rognvaldur Hannesson for presenting such an interesting and original topic to ISET.