recent amendments to the U.S. Magnuson-Stevens Act. The sulfur allowance program mandates continuous emissions monitoring financed by the emitting sources.


An IFQ is the right under a limited access system to harvest a specific quantity of fish. ITQs are a form of IFQs in which the rights are transferable.


It is frequently suggested that new programs should be of the “cap-and-trade” type because they reduce transaction costs. Although I agree that they reduce transaction costs, it is less clear to me that cap-and-trade programs can always achieve the political will to be implemented without gaining familiarity through the more heavily controlled credit programs. My own reading of the U.S. case suggests that we would not currently have cap-and-trade programs if we had not proceeded first to implement credit programs. These served as a training ground for the various stakeholders before moving to the more flexible programs.


One exception is the ITQ program used in Chilean fisheries. Here the permits are allocated by auction (Bernal and Aliaga, 1999).


New users have to buy into the system, while existing users retain their traditional entitlement.


In an interesting analysis of the cost and emissions savings from implementing an emissions trading system for light-duty vehicles in California, Kling (1994) finds that although the cost savings from implementing an emission trading program (holding emissions constant) would be modest (on the order of 1 percent to 10 percent), the emissions savings possibilities (holding costs constant) would be much larger (ranging from 7 percent to 65 percent).


In derby fishing the harvest is landed in a relatively short period of time, creating the need for more peak capacity.


In many fisheries, for example, the relevant markets are global, with many different sources of supply. In air pollution the number of participants is typically quite high.


An Organization For Economic Co-operation and Development review concludes, “There was very little evidence to support the hypothesis that small scale fishers would be eliminated” (National Research Council, 1999:84).


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Anderson, L.G. 1991 A note on market power in ITQ fisheries. Journal of Environmental Economics and Management 21(2):291-296.

1994 An economic analysis of highgrading in ITQ fisheries regulation programs. Marine Resource Economics 9:189-207.

1995 Privatizing open access fisheries: Individual transferable quotas. Pp. 453-474 in The Handbook of Environmental Economics, D.W. Bromley, ed. Oxford, Eng.: Blackwell.

Annala, J.H. 1996 New Zealand’s ITQ system: Have the first eight years been a success or a failure? Reviews in Fish Biology and Fisheries 6:43-62.

Baumol, W.J., and W.E. Oates 1971 The use of standards and prices for protection of the environment. Swedish Journal of Economics 73:42-54.

1988 The Theory of Environmental Policy. Cambridge, Eng.: Cambridge University Press.

Bernal, P., and B. Aliaga 1999 ITQ’s in Chilean fisheries. In The Definition and Allocation of Use Rights in European Fisheries: Proceedings of the Second Workshop held in Brest, France, 5-7 May 1999, A. Hatcher and K. Robinson, eds. Portsmouth, Eng.: Centre for the Economics and Management of Aquatic Resources.

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