Natural resource industries, 'tragedy of the commons' and the case of Chilean salmon farming

Michiko Iizuka & Jorge Katz

#2010-061

Chilean salmon farming has been considered as an outstanding example of success after growing at two digit rates for more than twenty years. With further insight, we now know that such rapid process of expansion came at the expense of sanitary and environmental deterioration. The outbreak of ISA- a viral disease that kills salmon - in 2008 has made this utterly clear. The overexploitation of the ´common´ - pristine waters - upon which the industry operates, and the lack of an adequate regulatory mechanism monitoring environmental impact contributed to a gradual - but not always adequately perceived - long term decay of industry performance. The paper shows that industries based on the exploitation of a CPR - common pool resource - require a quite different analytical approach than the one conventional neoclassical theory offers us for the understanding of firm and industry behavior. Our study shows that industries of this sort require location specific know how and R&D efforts plus public/private cooperation in order to maintain long term sustainable growth.

Keywords: common pool resources, 'tragedy of commons', natural resource based industry, Chile

JEL code: Q22, Q57, L22

  


UNU-MERIT