CapacityEstimationADynamicApproach-DepreciationOnCapacity.docVIP

XIIth EAFE ANNUAL CONFERENCE ESBJERG 2000 Esbjerg, Denmark 13-15th April 2000 Capacity estimation: a dynamic approach DEpreciation on CAPacity First draft by Evelina Sabatella Istituto Ricerche Economiche Pesca e Acquacoltura IREPA Onlus Via S. Leonardo, trav. Migliaro 84131- Salerno Italy Tel: + 39 - 089 - 338 978 Fax: + 39 - 089 - 330 835 e.mail: e.sabatella@irepa.org Capacity estimation: a dynamic approach By: Evelina Sabatella IREPA, Istituto Ricerche Economiche Pesca e Acquacoltura Abstract Capacity is a component of the fishing effort usually measured by GRT. This measurement does not allow for technological innovation, modernisation and capital depreciation. This paper was developed within the Concerted Action for the promotion of common methods for economic assessment of EU fisheries (FAIR PL97-3541) and illustrates a method for a dynamic estimation of capacity taking into account fixed investments in the fishery industry. Amongst the various procedures used to estimate invested capital and depreciation, the perpetual inventory method was viewed as the most suitable method to compare capacity of different countries and different fishing gears. The perpetual inventory method was applied to estimate the current productive capital stock and to quantify investment over time. Comparative estimation of physical depreciation (loss of efficiency of obsolete capital) and economic depreciation (loss of capital value due to ageing) can be made using this method. A methodological scheme is illustrated and the issue of data availability is analysed. Keywords: invested capital, depreciation, perpetual inventory method, normal distribution, efficiency function. Introduction In the fishery sector capital is often estimated assuming that the invested capital and the vessel value are equal. The principal aim of this study is to estimate the economic value of the invested capital, viewed as capital stock, or better as the real value of investments over a period