Benefits and risks of diversification for individual fishers

Individuals relying on natural resource extraction for their livelihood face high income variability driven by a mix of environmental, biological, management, and economic factors. Key to managing these industries is identifying how regulatory actions and individual behavior affect income variability, financial risk, and, by extension, the economic stability and the sustainable use of natural resources. In commercial fisheries, communities and vessels fishing a greater diversity of species have less revenue variability than those fishing fewer species. However, it is unclear whether these benefits extend to the actions of individual fishers and how year-to-year changes in diversification affect revenue and revenue variability. Here, we evaluate two axes by which fishers in Alaska can diversify fishing activities. We show that, despite increasing specialization over the last 30 years, fishing a set of permits with higher species diversity reduces individual revenue variability, and fishing an additional permit is associated with higher revenue and lower variability. However, increasing species diversity within the constraints of existing permits has a fishery-dependent effect on revenue and is usually (87% probability) associated with increased revenue uncertainty the following year. Our results demonstrate that the most effective option for individuals to decrease revenue variability is to participate in additional or more diverse fisheries. However, this option is expensive, often limited by regulations such as catch share programs, and consequently unavailable to many individuals. With increasing climatic variability, it will be particularly important that individuals relying on natural resources for their livelihood have effective strategies to reduce financial risk.