The most obvious problem in today's fisheries is that more fish are removed from the sea than is biological defendable. Overfishing, however, is not only a biological concern but also a serious economic problem. Depleted fish stocks and overcapacity in the catch sector erode the surplus, the resource rent, that a fishery is capable of generating. Overfishing implies that a range of other values associated with marine resources are also threatened, such as biodiversity, recreational fishing and tourism. The aim of this report is to shed light on the following questions a) Why do biological and economic problems tend to persist in common-pool fisheries? b) What are the effects of the EU's Common Fisheries Policy (CFP)? and c) What is needed to solve current fishery problems?

A precondition for successful market solutions to resource problems is well defined property rights. That this isn't the case in fisheries is obvious, since the sea is a common-pool resource. Some form of collective organisation therefore seems necessary. Despite the "State" being heavily involved in fisheries management, fishery problems persist due to fundamental weaknesses in the organisation: fishers do not have property rights in marine resources. For individual fishermen it is therefore rational to overinvest in vessels and to gear to maintain their share of the catch. This "race to the fish" drives up costs and erodes resource rents, the economic potential of the sea.

A fundamental weakness of the CFP is that it has independent stock conservation and fleet structure policy measures. It is however impossible to separate the biological and economic goals of fisheries—they are two sides of the same coin. CFP lacks an economic perspective on management and despite reform attempts the basic problem remains: the rules of the game stimulate fishermen to act myopically.

Experience from the EU and around the globe shows that a regulation based fishery has great difficulties in organising fishing productively. To be economically rational for fishermen to consider the long-term impacts of their decisions, they need to own the right to their share of the catch. A rights based system also makes it possible to extract resource rents, which is the basis of an economically sustainable fishery. Property rights cannot, however, solve all problems (e.g. the supply of public goods). Other measures, such as marine reserves and eco-labelling, might be motivated to support the broader values associated with marine resources.