Informal insurance and sustainable management of common-pool marine resources in Ha'apai, Tonga

We report on a field study of two coastal fisheries, in the island group of Ha'apai in the Kingdom of Tonga. On one island, Lofanga, the fishery is still sustainably used; on a neighboring island, 'Uiha, it is overused. None of the rules and regulations discussed in the literature is implemented in the island of Lofanga, Tonga. The two islands feature a similar parametric situation including natural regeneration, thus fulfilling the ceteris paribus condition. However, they differ with respect to a solidarity network in the two island communities. Whereas fishermen from 'Uiha have partially withdrawn from the traditional Tongan informal insurance system, fishermen from Lofanga still remain embedded in a solidarity network, which insures them against random income shocks and offers a pension scheme. While rules or norms governing fishing activity do not exist in either 'Uiha or in Lofanga, Lofangan fishermen have to abide by stronger rules and administer their premia payments into the insurance system. The subsequent analysis shows that the presence of the Lofangan informal insurance system sets incentives for Lofangan fishermen which induce a sustainable use of their coastal fishery while the 'Uihan fishery is stressed by overexploitation. The conclusion from the analysis is that onshore informal insurance rules can be a substitute for rules governing offshore fishing activities in securing sustainability of nonexclusive resource use. Informal insurance functions in the case of the Lofangan fishery as a cultural complement that transforms an otherwise nonsustainable resource-use regime into a sustainable common-pool fishery.