Strategic Modelling and Business Dynamics. Morecroft John D.

the light grey colour on the extreme left. Release the mouse button and move the cursor back onto the time chart where it will now appear as a paint brush. Select and the background of the chart will turn grey. Return to the colour palette and select the light grey colour second from the left. Now move the paintbrush cursor so that it lies exactly on top of the phrase ‘Fish stock’ at the top left of the time chart. Select and the phrase will turn from blue to grey and will, as intended, be virtually indistinguishable from the background grey. Repeat the same painting procedure for the phrase ‘New fish per year’. Your time chart is now ready.

      Press the ‘Run’ button twice to recreate 10 years of natural fishery growth. At first glance the simulated chart will appear quite blank and uninteresting. That's how it should be! Now move the slider for ‘Purchase of new ships this year’ to a value of 2 by selecting, holding and dragging the slider icon until the number 2 appears in the centre box. This setting means that each simulated year two new ships will be purchased and used by Bonavista fishermen. Press the ‘Run’ button three times in succession to simulate fleet expansion for years 10–25, a period of historical growth for the imagined Bonavista fishery. Ships at sea (line 4) increase linearly from zero to 30 as you would expect from an investment policy that adds two new ships a year over 15 years. The catch (line 3) increases proportionally in a similar linear pattern. Press the ‘Run’ button once more to simulate continued fleet expansion for years 25–30. Ships at sea continue the same relentless linear expansion, but notice a dramatic change in the trajectory of the catch (line 3). In year 26, after 16 years of steady growth, the catch levels out and peaks at 786 fish per year even though new ships are being added to the fleet. (To check the numerical values move the cursor onto the time chart, then select, hold and drag.) In year 27 the catch declines for the very first time in the fishery's simulated history. At the start of year 29, the catch is down to 690 fish per year, a decline of 12 per cent from the peak. Imagine the situation in Bonavista. The town's main business is in a downturn. A community, which has become used to growth and success, begins to worry and to ask why. Perhaps the past two years have been unlucky – poor weather or adverse breeding conditions. However, year 29 sees continued decline. The catch falls below 450 fish per year while the fleet grows to 40 ships. A downturn has become a slump.

      At this point you can imagine pressure building in the community to do something about the problem. But what? The fishery is in decline. Perhaps the answer is to halt the purchase of new ships and to require some ships to remain in harbour. Such measures may seem logical if you believe that overfishing is to blame. But others will argue the decline is due to a run of exceptionally bad luck and that, sooner or later, the catch will return to normal. And remember nobody knows for certain the size of the remaining fish stock or the regeneration rate. That's all happening underwater. So, as in all practical strategy development, there is scope for argument and conflict about the true state of affairs and how best to react. Moreover, it is politically and economically painful for any community or business to cause itself to shrink deliberately. There are bound to be more losers than winners.

      Nevertheless, imagine Bonavista agrees a conservation policy involving a total ban on the purchase of new ships for the next five years and an effective reduction in the fleet size to be achieved by moving five ships per year into the harbour. A little mental arithmetic reveals that in its first year of operation this policy idles 12.5 % of the active fleet (5 ships out of 40), then 14.3 % in the second year (5 ships out of 35), then 16.7 % in the third year (5 ships out of 30). After five years, a total of 25 ships have been idled, which is fully 62.5 % of the original fleet – a huge reduction in a short time. Adjust the sliders to represent the implementation of this stringent conservation policy. First set the slider for the ‘Purchase of new ships this year’ to zero, either by dragging the slider icon to the extreme left or by selecting the slider's ‘Reset’ button (denoted by ‘U’) in the bottom left of the slide bar. Then, set the slider for ‘Ships moved to harbour this year’ by dragging the slider icon to the right until the number 5 appears in the centre box. Press the ‘Run’ button to see the results of the policy. You will notice that ships at sea (line 4) decline steeply as enforced idling takes place. By year 35 of the simulation, the active fleet size is 15 ships at sea, back to where it had been in the early growth heyday of the fishery almost 20 years ago in year 17. Despite the cuts and huge economic sacrifices, however, the catch has declined to less than 10 fish per year, scarcely more than 1 per cent of the peak catch in year 26. In a single decade our imagined Bonavista fishery has gone from productive prosperity to extreme hardship. Each day the community awakes to see the majority of the fishing fleet idle in its once busy harbour, and the remaining active ships returning with a dismally tiny catch. You can imagine that by now many will have lost heart and lost faith in the conservation policy.

      To finish the simulation reset to zero the slider for ‘Ships moved to harbour this year’ and then press ‘Run’. In these final years it is no longer possible to enforce further reductions in the active fleet. The number of ships at sea remains constant and the catch falls practically to zero. It's a depressing story, but entirely consistent with the facts of real fisheries. Harvested fisheries are prone to catastrophic decline that nobody involved – fishermen, community leader or consumer – would wish on themselves. Yet this situation in particular, and others like it, arise from nothing more than a desire to purchase ships, catch fish and grow a prosperous community. Why? Fisheries provide but one example of puzzling dynamics that are the focus of this book. As we will see, modelling and simulation can shed useful light on why such puzzling dynamics occur and how to bring about improvement.

A Start on Analysing Dynamics and Performance Through Time

Much of the problem with managing fisheries lies in properly coordinating the number of ships at sea in relation to the number of fish. A sustainable fishery, one that provides a reliable and abundant harvest year after year, regenerates fish at about the same rate as they are being caught. Successful replenishment requires an appropriate balance of ships and fish. Balancing is easier said than done when in practice it is impossible to observe and count the number of fish in the sea, when fishing technology is advancing and when there is a natural human propensity to prefer growth and the prosperity it brings. Imagine we could reliably count the fish stock and observe the regeneration of fish through time. What new light would this new data shed on the rise and fall of Bonavista and the policy options to avoid catastrophic decline in the fish population? In our simulator we can choose to observe and report variables that, in real life, would be unobservable. Use the colour palette and paintbrush to reinstate the original coloured trajectories for the Fish stock (blue) and New fish per year (red). You will find the appropriate colours on the top row of the palette. (If you accidentally set the background colour of the chart to blue or red, which can happen if you don't align the paintbrush with the variable name, don't panic. Simply return to the colour palette, select light grey, and repaint the background. Then try again to re-colour the trajectories.) The resulting chart will look like Figure 1.10, with all the trajectories clearly visible, except that yours will be in colour.

      Consider the behaviour over time of the fish stock (line 1). For the first 10 years of the simulation the number of fish grows swiftly because effectively there is a natural fishery (no ships) that is underpopulated relative to its carrying capacity. In years 10–15 commercial fishing begins and each year more ships are sent to sea (line 4). Nevertheless, the fish population continues to increase. These are the early growth years of the Bonavista community. During this entire period the catch is rising (line 3), but is always below the rate of regeneration (new fish per year, line 2). The fishery is sustainable with growing population. In years 15–20 the catch continues to rise steadily in line with fleet expansion, but the fish stock begins to decline gently as the catch exceeds the number of new fish per year (line 3 rises above line 2). This excess of catch over regeneration is not necessarily a problem for long-term sustainability because harvesting is actually stimulating the regeneration of fish, as shown by the steady increase in new fish per year. A harvested fishery, even a well-run one, will always have a fish population considerably lower than the maximum fishery size.

Figure 1.10 Simulation of harvested fishery showing all trajectories

      Herein lies a fundamental dilemma for fisheries management.