Profit and Resource Rent in Fisheries

• Main Authors: Flaaten, Ola, Heen, Knut, Matthíasson, Thórólfur
• Format: Conference Object
• Language: English; unknown
• Subjects: Seafood > Marketing; Aquaculture > Economic aspects; Seafood industry > Congresses; Fishery management > Congresses; Norway; Iceland
• Online Access: https://ir.library.oregonstate.edu/concern/conference_proceedings_or_journals/3197xp189

In fisheries, as well as in other natural resource based industries, there is a difference between the concepts of profit and rent. The former is a basic indicator for gauging the business performance of firms and industries, and the latter is for the evaluation of the economic welfare contribution of resources and industries. Economists are mainly concerned about resource rent and the managers of the industry with the objective of maximising rent - often conditional on ecological and social issues. Business economists are mainly concerned about the profitability of the firms. In the academic literature and in costs and earnings studies there are not always clear definitions of the profit and rent concepts and the use of them in actual analyses. We discuss differences and similarities of the profit and rent concepts, theoretically and based on data from the Icelandic and Norwegian fish harvesting industries. At the aggregate level for both countries, the resource rent (RR) is higher than the earnings before tax (EBT), both for each year and on average 2009-2013. Iceland has the most rationalised fishing industry and highest RR relative to the landed value of fish, adjusted for transfer pricing and above-normal payment of labour, though Norway has somewhat higher profitability as gauged by the common business economic indicator return on capital. We also discuss some important policy implications. Proceedings of the Eighteenth Biennial Conference of the International Institute of Fisheries Economics and Trade, held July 11-15, 2016 at Aberdeen Exhibition and Conference Center (AECC), Aberdeen, Scotland, UK.