This cycle of increasing investments and decreasing returns eventually causes profits to decrease to the point where it becomes unprofitable to continue fishing. But because neither of these approaches effectively removes the incentive to race for fishery resources and therefore to engage in capital stuffing, neither has been an effective control on fishing capacity. Subsidies Federal government subsidies, such as the Capital Construction Fund and other tax programs and exemptions, the Fisheries Obligation Guarantee Program, and other fisheries development, marketing, and promotion programs, have also encouraged fishing capacity to exceed sustainable levels. By aiding individual investments, subsidies increase participation in the fishing industry and, by distorting the market, they make it profitable to fish far past the point where an unaffected market would have signaled an economic failure. Health of Fishery Resources Excess fishing capacity affects the biological health of fishery resources through the incentives it provides both fishermen and fishery managers.
Fish are a renewable resource, but they have limitations.
Productivity levels depend on the ability of stocks to renew themselves through reproduction and growth. Removing too many fish or changing the reproductive capacity of the population can deplete stocks below a minimum viable population. Under normal conditions, these depletion effects would provide fishermen with an incentive to maintain stocks at larger levels. But when a fishery has more capacity than it can sustain and fishermen are forced to compete for their share of the total allowable catch, fishermen have no assurance that they'll profit from taking conservation measures to keep stocks around in the long run. Competition for fishery resources often results in increased bycatch and habitat degradation, and the socioeconomic hardship associated with overcapacity pressures fishery managers to set total allowable catch at risky levels.