Do monitoring and enforcement costs rise under tradable permit programs? The answer depends both on the level of required enforcement activity (greater levels of enforcement effort obviously cost more) and on the degree to which existing enforcement resources are used more or less efficiently. Higher enforcement costs are not, by themselves, particularly troubling because they can be financed from the enhanced profitability promoted by the tradable permit system.42
In addition to the obvious potential for quota busting that all tradable permit approaches face, fisheries also can face problems with poaching (harvests by ineligible fishermen), unreported highgrading (discarding low-valued fish to make room in the quota for higher valued fish), and bycatch discards (nontargeted species caught and discarded) (National Research Council, 1999:175-180).
Whether these problems are intensified or diminished by the implementation of a tradable permit program depends (in part) on the economic incentives confronting participants. The incentives for highgrading, for example, depend on the magnitude of price differentials for various types and sizes of targeted species. As the price premium for fish of a particular size and type increases, the incentive to use quota for especially valuable fish increases along with the incentive to discard less valuable fish (Anderson, 1994).
Incentives for bycatch can vary considerably as well (Boyce, 1996; Larson et al., 1998). The more leisurely pace of fishing afforded by individual fishing quotas (IFQs) allows fishermen to avoid geographic areas or times when bycatch is more likely.43 At the same time, the more leisurely pace reduces the opportunity cost of hold space and, consequently, also may provide fishermen with new opportunities to retain a greater proportion of the bycatch as joint products. For example, the halibut fishery encounters significant bycatches of rockfish. Although most rockfish and thornyheads command high exvessel prices, most of this bycatch was discarded during the derby fishery because halibut were even more valuable. A greater portion of this bycatch is now being retained.
On the other hand, implementing an IFQ regime may favor some technologies over others. If the favored technologies typically involve more bycatch, bycatch rates can rise in the absence of enforcement.
Ultimately, therefore, whether highgrading, bycatch, and bycatch discard increase or decrease under an IFQ regime depends on local circumstances, on whether highgrading and bycatch discards are legal (or even required), and on the enforcement response.
Every monitoring system must identify both the information that is needed to monitor the operation of the tradable permit program and the management component that will gather, interpret, and act on this information. Data also should be