Abstract
Traditional single-species fisheries management does not explicitly account for multispecies interactions and has not always performed well for avoiding overfishing or rebuilding many fisheries. Considering these interactions has become increasingly important for effectively managing mixed-species fisheries. Ecosystem-based fishery management (EBFM) is a more holistic approach to fisheries management which has gained traction over the last several decades. EBFM considers the biological, physical, and social-economic components which may influence fisheries. Implementing EBFM requires new tactics that can be informed by interdisciplinary research. One way risk associated with achieving a target reward has been analyzed in the finance field is through portfolio optimization whereby the financial risk of a portfolio is minimized for given levels of return based on portfolio covariance. A set of fishery stocks’ landing values can be analyzed similarly to a set of financial assets in an investment portfolio. In this study, a candidate fisheries portfolio was analyzed for New England demersal species caught in the same fisheries. The sensitivity of this portfolio to data decisions such as species composition and time series length was investigated by developing efficient frontiers for alternative sets of fishery stocks and time periods. Efficient frontiers were developed using portfolio optimization techniques from the finance field and adding harvest constraints to account for limits on harvesting in fisheries. Sensitivity analyses showed that risk estimates were sensitive to both species’ exclusion and time series selection. Examination of the changes in the frontiers to different periods of the time series showed that a portfolio approach could improve efficiency for fisheries utilizing either input or output control systems. Efficient frontier analyses based upon historic landings data indicated that the same target revenue could have been achieved with less or similar risk had a portfolio approach to management been taken for these species. Portfolio effects as applied to fisheries management can provide additional catch stability through increased diversification of multispecies fisheries and can reduce the risk of forgone revenue, all of which make it an important tool to consider for implementing EBFM.