The introduction of ITQs in fisheries has also had implications for crew, processors, and communities. Traditionally in many fisheries, crew have been coventurers in the fishing enterprise, sharing in both the risk and reward. In some cases the shift to ITQs has shifted the risk and ultimately shifted the compensation system from a share of profits system to a wage system. Though this has not necessarily lowered incomes, it has changed the culture of fishing (McCay et al., 1989; McCay and Creed, 1990).

Processors can be affected by the introduction of ITQs in a number of ways. First, the processing sector is typically as overcapitalized as the harvesting sector.48 Because the introduction of ITQs typically extends the fishing season and spreads out the processing needs of the industry, less processing capacity is needed. In addition, the more leisurely pace of harvesting reduces the bargaining power of processors versus fishers. In some areas such as Alaska, a considerable amount of this processing capital may lose value due to its immobility (Matulich et al., 1996; Matulich and Sever, 1999).

Communities can be, and in some cases have been, adversely affected when quota held by local fishers is transferred to fishers who operate out of other communities. Techniques developed to mitigate these effects, however, seem to have been at least moderately successful (National Research Council, 1999:206).

Generally market power has not been a significant issue in most permit markets despite some tendencies toward the concentration of quota. In part this is due to accumulation limits that have been placed on quota holders and the fact that these are typically not markets in which accumulation of quota yields significant monopoly-type powers.49 In fisheries some concern has been expressed (Palsson, 1998) that the introduction of ITQs will mean the demise of the smaller fishers as they are bought out by larger operations. The evidence does not seem support this concern.50


What can be gleaned from this necessarily brief survey of the theory and implementation experience with tradable permits?


We begin by identifying the lessons that emerge from our evaluation of the factors affecting the implementation feasibility of transferable permits as well as the environmental and economic effects of their implementation.

  • The air pollution programs, on balance, seem to be the most successful in achieving both economic and environmental objectives. In part this seems to be due to the presence of fewer (though certainly not zero) externalities in these programs. Fisheries must cope with potentially severe bycatch problems in

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