Using Portfolio Theory to Manage Marine Fisheries

Portfolio selection is a flexible tool that can be used to support natural resource decision-making. The natural resource portfolio literature includes applications in fisheries, forestry, range management, spatial planning, animal disease and invasive species surveillance, and conservation of tree species at risk from climate change. We contribute to this growing literature by proposing a set of essential questions to guide the development and implementation of empirical portfolios for natural resource management that deal with 1) the nature and objectives of the portfolio manager, 2) the definition of an asset to be included in the portfolio, 3) the way in which returns are measured and expected to be distributed, and 4) the definition of constraints in the programming problem. The approach is illustrated using landings data to set catch limits or quotas in fisheries at the ecosystem level employing a sustainability constraint which ensures that prescribed catch levels are within the bounds of historically observed catches.