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--> 4 Evaluation of the Performance of the Community Development Quota Program The evaluation and performance of the Community Development Quota (CDQ) program requires some standard criteria to measure progress. In general, this can be done by measuring changes in indicators such as unemployment, per capita income, educational opportunities, capital investments, infrastructure, and other quantifiable measures. More difficult is measuring the effects of the CDQ program on the attitudes of the individuals in the community. Factors such as the effects on the local culture, the ability of the program to contribute to self-determination, and the possibility of the program to enhance indigenous uses of modern technology are difficult to quantitatively evaluate. Chapter 2 has described some of the ways in which development is perceived in western Alaska. This chapter attempts to quantify those measures of development that are more easily defined (e.g., employment, income). Additionally, this chapter attempts to evaluate those facets of development that are not easily quantifiable, and attempts to provide means for incorporating them into the consideration of the CDQ program. Understanding if the CDQ program improves the perception of opportunity and provides new avenues and hope for members of the community requires investigation of the social conditions in the communities. To provide a complete evaluation of the effects of the CDQ program, both of these factors are considered in the chapter. In general, some of the quantifiable factors can be evaluated by comparing conditions before the CDQ program and changes since the program's implementation. However, in some cases the data are not available to adequately measure such changes. Data about the CDQ program that precisely detail the benefits received by the CDQ communities can be difficult to obtain. One of these diffi-
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--> culties is due to the newness of the program and the inability to draw clear conclusions from the limited data that are available. A second difficulty is a State of Alaska law (described on page 92) that certain financial and catch data can be maintained as confidential. These conditions make it difficult to provide a detailed analysis of the benefits received by the CDQ program. However, a review of the data that are available and the nature of the investments of the CDQ groups can be used to evaluate the economic performance of the CDQ program. The criteria that have been used both by the State of Alaska and National Marine Fisheries Service (NMFS) have tended to rely on quantifiable economic or performance based criteria (see Appendixes D and E). The State of Alaska and NMFS evaluate the CDQ program by measuring criteria such as: the number of community members to be employed and the nature of the work; the number and percentage of low income people in the communities; the number of communities; the relative benefits for the communities and the plans for developing a self-sustaining fisheries economy; and the success or failure in administration of a previous Community Development Plan. This Committee's Evaluation While this committee kept the State/NMFS criteria in mind during this review, our work was guided most by the charge given to us in the Magnuson-Stevens Act of 1996. Specifically, the committee focused on four broad criteria: (1) the extent to which such programs have met the objective of providing communities with the means to develop ongoing commercial fishing activities; (2) the manner and extent to which such programs have resulted in the communities and residents receiving employment opportunities in commercial fishing and processing; and obtaining the capital necessary to invest in commercial fishing, fish processing, and commercial fishing support projects (including infrastructure to support commercial fishing); (3) the social and economic conditions in the participating communities and the extent to which alternative private sector employment opportunities exist; and (4) the economic impacts on participants in the affected fisheries, taking into account the condition of the fishery resource, the market, and other relevant factors. In addition, as the committee became more familiar with the program, it considered additional factors such as the pattern of distribution of benefits, awareness of the CDQ program and its benefits within the community, access by the community to CDQ group directors and managers, and impact of the program on
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--> people—whether it increased opportunities, hopes, and self-defined improvements in people's lives. The following sections provide conclusions and recommendations related to: community development strategies, participation and benefits, governance and decision-making, environmental and economic sustainability, development of human resources, and program duration. The North Pacific Fishery Management Council (NPFMC) and NMFS establish the amount of quota allocated to the CDQ program for each of the fisheries based on a decision-making process that incorporates resource assessments, management goals, and political factors going far beyond the CDQ program alone. The amount was not intended to meet all the possible development goals of the communities, but rather to be a contribution, albeit one with significant impact. To date, the amount seems adequate, although over time as the development record builds this may need to be monitored. Community Development Strategies The strategies pursued by the six CDQ entities have varied considerably. A detailed description of the investments pursued by the CDQ groups is provided in Appendix F. The range of activities reflects different resource situations and economic circumstances among the groups, as well as different goals. The perception of a tenuous future for the CDQ program (in a political sense) has put the governing boards in a difficult position. The fear that the program may be terminated has induced some groups to seek investments that will yield economic returns as quickly as possible. In a few instances, this strategy has resulted in unwise investments. Ironically, where this strategy has resulted in investments that have turned out well the boards are vulnerable to criticism that they have pursued monetary gains while ignoring the simpler needs and aspirations of their members in the villages. Indeed, the committee found that some groups had pursued a strategy to maximize economic returns, while others paid close attention to the participation of members of their villages, often at a less-than-maximum financial return to the CDQ corporation. Another form of uncertainty has equally perverse influence on the behavior of CDQ boards. While some may be moderately confident that the CDQ program will persist over time, they fear that their particular allocation of a share of the total CDQ quota is highly uncertain. This uncertainty arises from a sense that the criteria used by the State of Alaska to allocate individual shares of the total quota are unclear. There is a concern that if a group is perceived by the State as receiving ''too much" income their share of the total allocation may be reduced and given to another group with greater needs. Conversely, if a group is not performing well it may lose its share of the total allocation in the future. The committee finds these various forms of uncertainty to have undesirable effects on the development strategies chosen by the various boards of directors. There is another aspect of the CDQ program that warrants comment. The
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--> This trawler has just delivered CDQ pollock to a shoreside plant in Akutan. Involvement in commercial fisheries requires significant economic investment. To some extent, the plans and implemented activities of the CDQ groups were influenced by uncertainties about the duration of the program and the stability of the shares allocated, which caused some groups to pursue strategies designed to maximize economic returns quickly while others focused on longer-term investments. (Photo by Craig Severance.) NPFMC, the NMFS, and the State of Alaska have determined that all investments made by the CDQ groups must be in "fishery related" activities. This restriction means that although the CDQ program has two objectives—community development and fishery development—"community development" is defined as "fishery development." The committee finds this strict requirement to be of dubious merit. There are, to be sure, advantages to a fisheries program that encourages continued investment in, and improvement of, fishery resources and fishing capacity. To the extent that there are viable fishery-related investments in the coastal villages that promise reasonable returns on investment, they should be pursued. However, we can foresee a time when this restriction on investment opportunities will force the CDQ boards to make investments that may not promote economic diversity and sustainability at the village level. It is also possible that the available sound fisheries investments in many villages will ultimately be exploited, in which case the restriction will force some CDQ boards to undertake less than ideal investments.
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--> A more compelling argument is that "community development" should be seen as broader than just fisheries development. While all CDQ villages are, by law, within 50 miles of the Bering Sea, some of the subsistence economic activity in these villages is land-based. In addition, there are many investment needs in these villages that would contribute materially to "community development." Among the alternatives are development of general infrastructure, health clinics, recreation centers, schools, improved roads, water and sewerage systems, and fire protection. Conclusion While the Community Development Plans prepared by each of the CDQ groups are similar in some important respects, the specific elements included vary considerably among groups. Each CDQ group pursues income from the large scale pollock fishery through royalties and employment, and each seeks to develop nearshore fisheries using smaller vessels. The diversity of infrastructural investments, training programs, and financial strategies adopted by the CDQ groups does, in our judgment, appropriately reflect varying circumstances and reasoned approaches to diverse problems. To some extent the development plans were shaped by uncertainty about the duration of the CDQ program and by the restriction that the CDQ plans must focus on fishery development. For example, the uncertainty may have encouraged at least one CDQ group to seek a quick financial gain by conveying their quota rights in perpetuity. We found this permanent conveyance to be inconsistent with the philosophy and intent of the CDQ program. Finally, the economic and cultural development of these communities may at times be advanced through non-fishery employment or investments. Hence, we found no strong reason to require the communities to use funds generated from their CDQs to invest only in fisheries. Recommendations We recommend that the State of Alaska prohibit permanent conveyance of community development quotas into the hands of commercial enterprises outside the communities. An important aspect of the community development sought in western Alaska is the continuing and direct involvement of local people in fisheries of the Bering Sea. Sale of the CDQs to outside interests will create an inappropriate separation of the people from the regional resources. We recommend that the restriction that CDQ revenues to be invested only in fishery-related activities should be removed, at least for some portion of the revenues. Many of the communities will find that fishery investments are still the ones they wish to undertake. However, since community development is broader than fishery development, funds should also be available for other activities that
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--> will enhance community infrastructure or land-based economic activity. This broadening of the allowed investments would also remove uncertainty about whether particular investments are indeed "fishery related" and thus allowable under current rules. Participation and Benefits The CDQ program has had a positive economic impact on western Alaskan communities. During the first four years of operation, the six CDQ groups collected over $92 million in gross revenues from fishing partners (Table 4. 1). This revenue is derived primarily from royalties received from offshore pollock fishing partners. Somewhat more than half of the total revenue has been accumulated for use in future fisheries development projects. The other half has been spent on project administration, training, fishing equipment, infrastructure development, and commercial subsidiaries of the CDQ organizations. A detailed description of the investments pursued by each of the CDQ groups is available in Appendix F. Current administrative expenses, in the 20 percent range, are high and should be expected to be trimmed as the groups mature. During 1992-1996, a total of $3.8 million was spent on a variety of training projects involving 3,443 people, and western Alaska residents were employed on a total of 2,503 fishing trips that range from a few days to several weeks in length (Table 4.1). The CDQ program has enhanced the employment of western Alaskans in the commercial fishing industry—before the program, employment on factory trawlers and in on-shore processing plants was not generally available to the people of the CDQ villages. The categories in which employment increased are: (a) the TABLE 4.1 Total Revenues, Expenses, and Income for Six CDQ Organizations 1992-1996 (million $) 1996 (million $) Total Revenues $92.71 $24.24 Project Expenses $25.86 $6.93 Administrative Expenses $17.22 $5.63 Tax $0.04 Net Income $50.68 $11.94 Training Expenses $3.80 $1.22 Wages Earned $19.99 $6.60 Fishing - Positions/Trips 2503 1101 # Training Opportunities 3443 1126 SOURCE: DCRA, 1997
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--> pollock fishery, which is separated into the winter fishery for roe-bearing pollock, called the 'A' season, and the autumn fishery which is called the 'B' season, (b) "other fishing" which includes fishing for species other than pollock or traditional salmon and herring fisheries, (c) "other positions" which includes on-shore fish processing and other jobs not with the CDQ organizations themselves, and (d) internships with the pollock fishing partners (Table 4.2). Over the four years, the average income earned per position was $6,567 in the pollock 'A' season, $5,042 per position in the pollock 'B' season, $3,303 per position in "other fishing," and $4,917 in "other positions'' (Table 4.2). The data do not indicate how frequently individuals participate in more than one of these categories. It is possible, for instance, that a resident active in both pollock seasons and in other fishing could earn cash income on the order of $14,900. The significance of this income supplement can be judged by comparison to annual cash incomes per household, which averaged $30,180 for all western Alaska native villages in 1990, but ranged from a low of $11,340 in Savoonga to $54,070 in King Salmon in 1990. As shown in Table 4.3, the distribution of employment among these categories varies widely among the CDQ organizations. For example, a relatively large proportion of new fishing employment in BBEDC's villages occurred in the offshore pollock fishery, while at the other extreme CBSFA placed almost all of their new positions in other local fishing. The other four organizations spread the employment among pollock, other fishing, and other positions with an particular emphasis on "other fishing." Employment in the "other fishing" sector of the fishing industry may change with the implementation of the multispecies CDQ program in 1998. Scarce information about the amount and types of fishing occurring under the "other fishing" category makes it impossible to characterize TABLE 4.2 Employment Attributed to CDQ Organizations in 1996. Employment Wages Income per Position Management/Administration 103 $1,843,000 $17,900 Fishing CDQ Pollock 'A' Season 161 $1,057,000 $6,570 CDQ Pollock 'B' Season 136 $686,000 $5,040 Other Fishing 691 $2,283,000 $3,300 Other Employment 106 $521,000 $4,920 Internships 32 $202,000 $6,330 Total 1229 $6,593,000 $5,360 SOURCE: DCRA, 1997.
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--> Table 4.3 Indicators of Economic Impact of CDQ program in Western Alaska Villages in 1996. "Positions" represent various employment levels, ranging from a few weeks of pollock fishing to full time staff positions. Year 1996 APICDA Positions Wages BBEDC Positions Wages CBSFA Positions Wages Management & Administration 15 $257,600 6 $241,800 17 $259,120 Pollock 'A' Season 4 $30,600 57 $217,200 7 $29,150 Pollock 'B' Season 10 $72,200 43 0 $0 $141,600 Other Fishing 55 $605,100 42 $128,100 146 $454,000 Other Positions 72 $308,700 0 $0 9 $39,670 Internships 0 0 22 $63,900 1 $13,620 TOTAL 156 $1,274,200 165 $978,100 180 $795,860 Table 4.3 (part 2) Year 1996 CVFC Positions Wages NSEDC Positions Wages YDFDA Positions Wages TOTAL Positions Wages Management & Administration 7 $248,870 22 $546,740 14 $142,240 103 $1,843,370 Pollock 'A' Season 52 $167,040 45 $216,100 32 $358,000 161 $1,057,300 Pollock 'B' Season 36 $108,710 61 $248,710 7 $114,570 136 $685,780 Other Fishing 179 $229,430 183 $336,980 86 $528,900 691 $2,282,510 Other Positions 1 $18,600 11 $11,610 13 $142,360 106 $521,240 Internships 3 $36.710 1 $20,000 5 $68,250 32 $202,470 TOTAL 278 $809,350 293 $1,380,140 157 $1,355,020 1229 $6,592,670 SOURCE: DCRA, 1997
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--> One of the goals of the CDQ program is to increase employment for people from rural areas of western Alaska where jobs are scarce, which then brings benefits to their communities. Before the program, employment of western Alaskans in the commercial fishing industry was limited, but opportunities on both factory trawlers and in on-shore processing plans are now showing increases. (Photo by Craig Severance.) this activity in more detail. This is due in part to State of Alaska laws regarding the confidentiality of financial data. Because data are not available to indicate who in the community is receiving employment, it is difficult to determine whether the disadvantaged members of the community are receiving employment in the CDQ program. It is possible that those members of the community who have experience with other organizations and corporations, such as Alaska Native Claims Settlement Act (ANCSA) corporations, could be deriving greater benefits from the CDQ program. More data would be needed to assess the distribution of employment benefits within the particular communities. According to testimony received by the committee and the information gathered during the site visits undertaken by committee members, several factors about the participation in the CDQ program are apparent. The main participants from the villages come from three groups: (1) the community and regional leaders
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--> who manage the development projects; (2) the mobile young adults who are able to work on fishing vessels or accept university fellowships or training programs outside the community; and (3) adults with families who participate in community-based projects such as fish processing plants and local, small-boat fisheries for halibut, sablefish or crab. The first group involves relatively few people, but is of strategic importance because it includes people becoming more capable of business management through familiarity with corporate structures and procedures. At present, the second two groups are larger and constitute the target populations for the community development program. Increased cash incomes in these two groups entail definite development benefits—an amelioration of major social problems and the achievement of a measure of self-determination, as well as the alleviation of poverty. The participation of young women and men in the wage and educational programs is especially salutary, given that this group has been at greatest risk of the suicide, alcoholism, and drug abuse problems that have plagued western Alaska native communities (NRC, 1996). The strict anti-drug conditions of trawler employment have had beneficial effects, according to local testimony, and are much appreciated by community elders. At the same time, many of the young people have made productive use of their wages, such as investing in snow machines, all-terrain vehicles, and other equipment needed for subsistence activities for themselves or their families. Moreover, it can be foreseen that the educational and training programs will be at least as beneficial locally as the fisheries employment—in ways not necessarily imagined by earlier notions of "community development." To appreciate this difference we need to explore the concept of "community" and its future in western Alaska. Overall, testimony to this committee indicated that the program has contributed to improved understanding of business administration, corporate structure and procedures, and technical skills of village residents. This practical training facilitates long-term enhancement of the cash earnings potential of western Alaska villages. Western Alaskans have become involved in a fishery (pollock) that previously seemed beyond their capabilities. Moreover, the CDQ groups in Yukon Delta, Norton Sound, and Bristol Bay have shown a capacity to link up with municipal agencies to co-sponsor important infrastructure projects that would otherwise have been left undone due to a lack of initiative and funds. The management of the corporate structures and boards responsible for strategic and operational decisions has improved from the earliest efforts at CDQ programs in 1992. While at least two CDQ groups experienced serious shortfalls in business planning and investment strategy, these appear to have been addressed through interaction between State oversight authorities and the CDQ group leadership. Continued enhancement of these management skills will follow further experience, formal training, and State oversight. Improvement of program management capabilities will accelerate the devel-
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--> opment of a cadre of western Alaskans who are capable of mediating between the rural subsistence culture and the urban westernized cultures. These people are a critical resource for the development of western Alaskan communities, which relies upon local subsistence resources, commercial fishing activities, and external wage-earning opportunities. The training, education, and employment opportunities received from the CDQ program may assist even those village residents that chose to move to larger communities on either a long-term or short-term basis, because often their transition is hampered by lack of skills and employment opportunities. Although training and education may encourage some residents to leave at some loss of human capital, even this can have benefits because those who leave tend to maintain contact, sometimes building skills further and then returning and in any case providing increased links to the rest of the state. Through testimony and direct observation, the committee found another important value of the CDQ program, which is less tangible but in some respects the most promising for development and the most appreciated by the people concerned. The general heading of these values would be something like "self-determination"—a condition of autonomy which both the larger American society and traditional native custom take to be a supreme virtue. Everything about the subsistence life style encourages and rewards self-reliance. The depth of the despair that ensues when such autonomy is frustrated—paradoxically, under modern conditions, by the lack of cash for traditional activities—is a measure of the importance of self-reliance for the native communities. Another indicator is the enthusiasm for the CDQ program voiced in several villages visited by the Committee. However, it must be noted that awareness of the CDQ program by residents of some of the participating villages was inconsistent, and in some places quite low (Hensel, 1997). These findings underscore the necessity of appropriate communication between the CDQ groups' administrators and member villagers. In various ways the CDQ program is giving western Alaskans a new measure of control over their lives. Training in such activities as welding and boat-building brings these services into the village and under local management. Similarly, the wage opportunities (e.g., on factory trawlers) not only connects the village to the larger economy, but provides a means to control that connection. Individuals choose when, and under what conditions, to participate in the commercial fisheries of the BSAI. To the local people, the CDQ program benefits bring valued independence and greater self-determination. Conclusion The CDQ program has had important impacts on western Alaska communities. The CDQ program—through its access to a small share of the fishery resource in the Bering Sea—represents a reallocation of economic opportunity to residents of western Alaska. This new economic opportunity
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--> selected by municipal governments, not at meetings of the shareholders of the corporation as would be the case with a corporation whose owners or members are individuals. The selection of such an organizational form has implications for accountability to the communities. Corporations with individual memberships may face problems in that the many individual members, because of the difficulty of communication and organization among themselves, are unable to exercise major control over the board of directors and the management of the organization. Representatives elected by communities or selected by community governments would be fewer in number and more able to communicate among themselves in selecting the policies of the corporation. But the members of the communities would have representation only through their elected representatives. The accountability question is thus moved, in part, back to the system of local elections within the villages. Village residents do not have to learn a new system of governance, that of the CDQ group. Rather, residents use their existing system of governance to select their representatives to the CDQ corporation. With one major exception, the Committee heard few complaints about this governing structure, and some major support for it. The fit with local governing approaches seems to have been fairly good. Some constituents from some areas indicated that they preferred an individual membership approach rather than a community membership approach but have not been able to change the current approach. In some of the communities the committee visited, there were isolated concerns about aspects of the governing structure, but the committee did not hear widespread criticism about the governance structure as a whole. One notable characteristic of Alaska's laws regarding corporations is that financial data and catch data can be defined as confidential. At 6 AAC 93.070, the regulations state: (c) Good cause to classify a record as confidential under this section includes a showing that (1) disclosure of the record to the public might competitively or financially disadvantage or harm the eligible community, qualified applicant, or managing organization with the confidentiality interest, or might reveal a trade secret or proprietary business interest; and (2) the need for confidentiality outweighs the public interest in disclosure. The result is that the management and board of directors of a CDQ group can, if they wish, keep such data away from the public. This is a characteristic of Alaskan law, not a necessary characteristic of the CDQ program itself. The committee observed some dissatisfaction with the communication of information from the management of the CDQ groups to their constituents. Although the Community Development Plan that is submitted to the State is a public document—with the exception of financial data, which is in an appendix—
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--> it may not be widely available and accessible to those in communities who wish to read it. The state's regulation, at 6 AAC 93.070, states that non-confidential information "submitted under this chapter by a Community Development Plan applicant and in the possession of the governor or governor's designees . . . are open to inspection by the public during regular office hours." A trip to Juneau would be required to inspect the records, and no authority to make copies is provided. Given the extensive amount of review that the State and the Federal Government exercise over the CDQ program, one would expect that management of the CDQ groups places considerable effort in compliance with that oversight. Information would be readily available to the State of Alaska, less so to community members. A major issue is the extent to which communication with the State potentially reduces the responsiveness of the management of the CDQ groups to the desires of their constituents in the communities they serve. One part of this issue is the location of the main office of the CDQ group. Only one of the six headquarters is located in the region it serves. The other headquarters are located in Anchorage (2), Juneau (2), and Seattle (1). Several of the groups have subsidiary offices in one or more of their communities. Why do so many have their main office outside of their communities? Two answers have been provided: to improve communication with the State, and to improve business communication, primarily with the industry partner. For instance, the process of requesting bids and selecting a business partner is easier to carry out from one of the major cities. The governance structure also orients management toward the regulators; quarterly and annual reports are due to them and the confidential financial data are available only to the regulators. There are no regulations providing for regular reporting to constituents in the communities. As a result, managers of CDQ groups might quite understandably tend to orient their work toward those who receive regular reports and have the power to change allocations rather than to the constituents in the communities. The balance of communication is thus shifted toward the State managers and away from the communities they serve. The idea of "community development" would seem to require that the people in the communities should have more influence over management than others do. For this reason, reporting to the communities should be more formal and required. The six CDQ groups are in competitive positions with each other regarding the state's allocation of quota. They are in a cooperative relationship with each other in participation in the North Pacific Fishery Management Council process, which affects the overall quota available and the regulation of fishing effort. The groups have attempted to form a coordinating body, the Western Alaska Fisheries Development Association, to serve as a communication forum and a way for them to synchronize their participation in the federal and state processes. This synchronization role has not been entirely successful due, in part, to the fact that the differing priorities and competition for allocations does not lend itself to coordinated efforts.
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--> The oversight of the CDQ groups by the State of Alaska provides a way for difficulties in the management of any one of the six groups to be addressed. This feature of the CDQ program distinguishes it from the preceding economic development effort under the Alaska Native Claims Settlement Act. The fact that the CDQ groups are not individual membership corporations also distinguishes this program from the ANCSA corporations. Since one of the motivations for establishment of the CDQ program was the poverty of the communities involved, the supervision and oversight from the State has a reason to counteract the effect of lack of business experience in the communities in the program. The leases of quota under the pollock portion of the program involves large sums of money. As might have been expected, there were some initial missteps in the sale of pollock quota, and the oversight system has worked as a way to address such problems. The results for the supervision of investments of the returns from the lease of quota are more difficult to address, given the short time period in which these investments have been in place and the general uncertainty which exists in fisheries. The different CDQ groups have undertaken different investment strategies, and the state has not insisted on a common investment strategy. The State seeks to assure itself that minimum precautions such as the completion of due diligence investigations are taken. Each CDQ group is expected as part of due diligence to investigate the facts presented to them by potential partners to assure themselves that the information they are receiving is accurate. The danger of micro-management by the State is a possibility raised by the managers of one of the CDQ groups; the committee did not receive additional testimony or information indicating that micro-management by the state was a concern and did not assess whether or not this is a serious problem. The committee found evidence of some social friction between native and non-native residents in villages having relatively large non-native populations. For instance, the committee received testimony relating to these frictions in Nome and Dillingham. Generally, each village has an internal governance structure that affects the opportunities of residents to participate in Community Development Plan discussions and decisions. For example, each village in the Coastal Villages Fishing Cooperative has chosen its "Traditional Council" (federally recognized tribal governments) to represent it. The choices made by villages will affect the degree to which native and non-native residents are included in the program. Given our charge and resources, this committee cannot offer a prescription for resolving these tensions. Conclusion The CDQ groups were given a unique governance structure that includes elements of both state and federal oversight, which is appropriate given the goals of the program. But the extensive and variable criteria used by the
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--> State and federal governments in allocating quota among the groups causes decision-making to be inconsistent and difficult to evaluate. That the lists of evaluation criteria are not entirely consistent with one another in either content or order of listing presents additional opportunity for confusion among the CDQ groups and the public in evaluating the logic and fairness of the decisions made by the governor and ratified by the Secretary of Commerce. Recommendations State and federal criteria for the allocation of quota based on performance and plans should be less complicated than they are and should also be consistent with one another. We recommend that changes be made to simplify the criteria, in consultation with the CDQ groups. The committee notes that the criteria currently are used for two purposes: to allocate quota equitably and to encourage good management. One way to clarify some of the confusion created by using the criteria in this way would be to separate these two purposes into two allocations of quota. A "foundation quota" would address issues of equity and a "performance quota" would address issues of performance. The foundation quota (likely more than half of the allocation) would be allocated on measures of population, income, employment, and proximity to the fishery being allocated. The performance quota (the remainder) would be allocated based on clearly defined performance measures such as accomplishments of the Community Development Plan goals, compliance with fishing regulations (e.g., regarding bycatch), quality of Community Development Plans, and so forth. One way to improve responsiveness of the CDQ groups' managers to the communities would be to improve communication. Although the idea of locating the headquarters of the CDQ groups near potential business partners and the State government may have made sense in the early years of the program, as it matures and the management proves its business capability, relocation of the headquarters to the communities may have significant benefits in terms of responsiveness to the desires of the community members. Communication would be further improved if the confidentiality rules and the rules for making information available to constituents were improved. NMFS and the state need to collaborate to resolve any potential conflicts between state laws regarding the confidentiality of financial data and the evaluation of the CDQ program objectives. Information on the number of people employed by the program and the earnings in each of the communities should be provided. Although some of the CDQ groups have created newsletters to communicate with their constituents, a requirement that newsletters, town meetings, or other forms of communication appropriate to reach community members in the region be provided might be a helpful step in improving communication in the communities.
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--> Development of Human Resources The CDQ groups have dedicated some $4.5 million to education and training over the last five years, making this an important component of the CDQ programs in western Alaska. A closer look, however, reveals a lack of long range planning for the human resource needs within some of the CDQ organizations. Indicators include the many comments heard during site visits and also the Pete (1995) and Hensel (1997) reports that indicate there are local people unfamiliar with the CDQ program and the potential benefits it has to offer. This calls for greater attention to community outreach. The CDQ groups have now had enough time to operate that a review of the effectiveness of the education and training components of their programs might be in order. There are cases where the training is offered at the forefront of programs to develop on-shore processors, design, and construction of boats. In addition, programs exist for maritime training for those local residents in need of this specialized certification. In most cases, however, capital expenditures are the most common achievement of the CDQ groups, with on-shore processors, harbors, docks, and necessary support facilities being constructed or purchased, but with no plan for their continued maintenance and operations. When observers ask, "what have the CDQ groups accomplished," such capital expenditures are clear answers. It is harder to document results associated with the 3,425 individuals funded for higher education scholarships or vocational/technical training. The federal regulations for CDQ pollock, halibut, and sablefish (Section 679.30 (b) (1) (vi) of 50 C. F. R. 679.30 - 34, updated 10-07-96) mandate that the Community Development Plans include information describing the "existing fishery related infrastructure and how the Community Development Plan would use or enhance existing harvesting or processing capabilities, support facilities, and human resources " [emphasis added]. From the data presented to the committee, it appears that only one CDQ group furnished detailed information on the development of local human resources. This information indicates approximately 30 percent of their population has received some form of skills upgrading or training for fisheries related positions. While the bottom line of this CDQ program does not appear as profitable as others, it should be noted that they have made a conscious effort to invest in the development of their human resources as part and parcel of their fisheries infrastructure. The strategy used by another CDQ group is to fund a scholarship trust with approximately $1.1 million from their financial portfolio. Through this scholarship program, financial aid is offered to full-time higher education students who are residents of their CDQ villages. This scholarship program was initially funded with 10 percent of pollock CDQ royalties to be earned through 1998. In looking at this strategy, there are some who view this approach as "hoarding" the funds rather than developing human resources. Others may view this approach as appropriately cautious in response to concerns about the duration of the program. Such funds could provide security if quota allocations change or the program is
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--> terminated. With the CDQ program emerging from the embryonic stage, it will be interesting to observe the progress of this approach. All the CDQ groups have some type of scholarship fund. Some are administered through the University of Alaska. However, it is difficult to determine how the statistics are compiled for State reports. For instance, reports indicate 619 students have received higher education funding since 1993 but do not explain whether the statistics consider a student every year of attendance or once on initial enrollment. Nor does it describe which career paths students are selecting, the number of students who have successfully completed college, the number of students working in their career field, or the number working in the fishing industry. The largest area of fishery sector employment appears to be on the fish processing line on a factory trawler, the so-called "slime line." Generally speaking, the "slime line" involves long hours in the processing facility preparing fish to be run through filleting machines. It is the tedious, dirty work assigned to low skill workers, and offers the greatest number of job opportunities; higher level opportunities so far have been limited. While construction jobs associated with capital construction projects hold potential for spin-off employment associated with the activity of the CDQ group, the data are not readily available. Conclusion Education, training, and other activities to develop human resources in the participating communities are an explicit part of the CDQ program mandate and a key element in ensuring the program's success because stable, healthy communities depend as much on people as on economic growth. Recommendations To be truly effective, over the long-term, the CDQ groups must have education and training elements. These elements should not be haphazard, but carefully planned and coordinated so they meet long-term community needs. Both vocational training and support for higher education will help members of the community acquire the skills and knowledge needed for more advanced technical and managerial positions. CDQ groups need to do a better job of disseminating information that describes the educational and training opportunities open to the use of program funds. They also need to improve their recordkeeping of education and training initiatives so the results can be monitored over time. A common framework for recording and reporting their efforts would be useful. Program Duration Questions have been raised about the desired duration of the CDQ program. The committee believes that the CDQ program must not be seen as a short-term
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--> solution to a long-term problem in western Alaska. Contemplation of termination of the program suggests a view of development as a terminal concept. There may be a perception in some quarters that there will come a time when the CDQ program can be declared to have achieved it goals, and be terminated. However, as discussed in Chapter 2, the purposes for which the program were created, such as long-term economic development, are not terminal concepts. A comparison between the CDQ program and other explicitly development-oriented features of American fisheries policy in general may be illuminating regarding the suggestion that development has easily identifiable endpoints. The creation of the exclusive economic zone (EEZ) itself was a development policy. Yet those who advocate ending the CDQ program do not advocate ending the EEZ or other allocations that have benefited them. The American fishing fleet would never be content to compete with Japanese and Russian fishing vessels off the coast of Oregon or elsewhere; to do so would threaten capital investment in vessels, shore-based and off-shore processing facilities, jobs, and related infrastructure that has blossomed over the past 15-20 years. Clearly the CDQ program is similar to other features of American fisheries policy, including allocations and the EEZ itself, in that they can be modified by Congress or the regional councils. However, singling out the CDQ program for termination because it is a ''development" program strikes the committee as an odd partitioning of fisheries policy and an ill-founded conceptualization of the development process. As with other aspects of fishery policy within the EEZ, the CDQ program is an on-going program that creates new economic opportunities. Economic development, whether it is along the Bering Sea or elsewhere, is not something that can be turned off and on. Economic development is a continual process of investing in human capital, natural capital, and technology for the betterment of families and individuals. Economic development is a continual process of change, with the essential trait being that new opportunities are pursued, new challenges are faced, and new goals are set. Economic development for communities is the structural transformation of a region and its people—more children are in school for longer periods, more jobs are available for residents of a particular place, more investments in infrastructure are undertaken, the health status of the local population improves, and per capita incomes gradually rise. However, it may be entirely appropriate to evaluate the changes that the CDQ program has created in the coastal communities and review the progress of this program in achieving improved economic opportunities and growth. In addition to assessing the CDQ program in the Bering Sea, the committee was asked to assess the feasibility of developing some kind of CDQ-like program for the western Pacific. Again, it is difficult to undertake that task if it carries with it a presumption that at some time in the near future the program will "not be needed." This does not mean that programs that are failing must be continued. It is, rather, to point out that programs that are succeeding cannot—by that very success—then be regarded as candidates for elimination. To follow that logic is
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--> to accept a perverse notion of public policy; programs that both fail and succeed could be eliminated. Of course, some programs are of a sort that their success warrants a "sunset clause." Development, however, is a long-term process. Conclusion The CDQ program must be a long-term program because it deals with a long-term issue: development of healthy, sustainable communities in coastal Alaska. Long-term development requires stability in the underlying policy base so decision-makers can make choices that balance current and future needs. Recommendations The original CDQ program was a three-year trial. It was subsequently extended and then made a more permanent part of the fishery management system with the passage of the Magnuson-Stevens Fishery Conservation Act reauthorization in 1996. As noted earlier, this program has been successful in bolstering community development in western Alaska. It has passed a crucial point in its evolution and we should expect the allocation of harvests to the CDQ groups to become a long-standing, if not permanent, feature of the federal fishery management system in the North Pacific. The committee recommends that the CDQ program should be reviewed on a periodic basis to determine if the preliminary trends observed by the committee continue in the future. Reviewing the CDQ program in another five years may provide important additional information on the effects of the program and provide valuable suggestions for modifications to its management. Economic Sustainability and Environmental Stewardship The CDQ program does not now address environmental stewardship, but if the goal of the program is long-term economic sustainability in the region, it will need to give more emphasis to environmental considerations, specifically the condition of the resource base (the fisheries). All ecosystems respond to natural and anthropogenic perturbations, and even the highly productive Bering Sea ecosystem is subject to such stresses. The 1996 NRC report, The Bering Sea Ecosystem, concludes ". . . it seems extremely unlikely that the production of the Bering Sea Ecosystem can sustain current rates of human exploitation of the ecosystems and the population of all marine mammals and bird species that what we believe existed before human exploitation—especially modern exploitation—began." This thought seems prescient because in 1997 many fish stocks were down (whether due to climatic variation or the impacts of harvest is not clear) and thousands of birds starved and nests were abandoned because of a natural shift in
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--> the ecosystem (Baduini et al., 1998). Experience with California sardines suggest that it is almost impossible to understand the very complex interactions between natural shifts and anthropogenic impacts (McCall, 1990). This is why it is so important for management to be sufficiently conservative to ensure rapid recovery from large scale natural changes in ocean climate. Such balance is an explicit management goal in the North Pacific fishery management plans, and the North Pacific Council has tended to adopt conservative management measures when the results of a stock assessment are uncertain. Expected variability of resource productivity and unexpected changes in the Bering Sea suggests that CDQ groups should be concerned about how they will deal with environmental surprises. Currently, the CDQ groups have a quota allocation that, while subject to some political uncertainty, seems to offer a long-term allocation of fishery resources. These groups may therefore be concerned that management practices sustain the resources for future generations. Since many of the communities are participants in subsistence economies, they generally recognize the importance of sustainable use of natural resources. Conservation of fishery resources depends on actions taken in the North Pacific Fishery Management Council, the National Marine Fisheries Service, the Alaska State Board of Fisheries, and other entities under international treaties. But at the community level, the CDQ groups face two related policy issues: how they will structure their investment policies to deal with ecological uncertainty, and to what extent will they become involved in management to address issues of ecological sustainability? The first issue, dealing with ecological uncertainty, is part of the general issue of pursuing economic sustainability. The idea of economic sustainability has a variety of interpretations in the literature. Some interpretations refer to the nature of the capital stock that is left for future generations. Within this general perspective, "weak" sustainability allows for the substitution of constructed capital for natural capital, while "strong" sustainability insists that the quality and quantity of natural capital must be retained at all cost. Other economists discuss sustainability in terms of the welfare to successive generations into the future. Here, sustainability is interpreted as a situation in which human welfare does not decline over time. Another main theme in the literature on economic sustainability is coping with uncertainty. The flows of products to economic systems from ecological systems are highly variable. A sustainable economy, in addition to maintaining stocks of natural, human, and physical capital, must be able to cope with uncertainty. It is also important to consider that markets for fishery products can be particularly difficult to predict, including changes in the demographic situation in the communities. For the CDQ groups, biological and economic uncertainties are augmented by political uncertainties. The CDQ groups do not have a choice about what their share of the natural capital will be, since their quotas in the several fisheries are already determined by the Council and the State. The CDQ groups do have options about their levels of constructed capital, human
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--> capital, and other types of investments. Diversification would seem to be a prudent investment strategy. Regarding the second issue, management involvement, increased attention to long-term sustainability is evident throughout the sector. For instance, significant changes in the 1996 re-authorization of the Magnuson-Stevens Fishery Conservation and Management Act have emphasized conservation. Three of these changes emphasize (1) ecosystem-based management, (2) protection of essential fish habitats, and (3) avoidance of bycatch. The CDQ groups can choose to become involved in all of these issues. Ecosystem-based management is fraught with semantic problems and lack of data. The most useful approach might be to admit that adequate data will never be available to fully understand marine ecosystems, and instead fisheries managers should focus on precautionary management strategies that avoid risk to the long-term sustainability of the system. To follow this approach, the CDQ groups should consider becoming interested in total allowable catch determinations, especially with regard to assuring that the exploitation does not reduce any stocks or any food web relationships below thresholds from which recovery does not take more than one fish generation. Because of the structure of the CDQ program, the CDQ groups are not directly involved in setting management goals related to resource conservation. They do have some form of representation on the council and within the council's industry advisory panel. The long-term assurance of exclusive rights to the resource that the CDQ program provides may create an incentive for the CDQ groups to conservatively manage the fishery. Although the CDQ groups have not developed explicit plans to develop conservation measures, further efforts to ensure the long-term sustainability of the resource could benefit the CDQ groups in the long-term. Those managing the CDQ groups should be concerned about the relationship between natural environmental change and change resulting from fishing. To understand that relationship, a long-term research program is needed, including monitoring protected reserves or sanctuaries in areas large enough to evaluate natural fluctuations independent of fishing-induced changes. If this activity is undertaken, possibly by the National Marine Fisheries Service, representative reserves may be established in areas close to communities that might otherwise be open to CDQ fishing. Protection of essential fish habitat is of obvious concern in regions where bottom trawling is utilized. There is evidence that trawling can have massive effects on many benthic habitats as well as taking a considerable bycatch of both commercial and non-commercial species. In recognition of this there are notrawl zones designed to protect the crab fisheries. It is relevant to note that the crab fisheries themselves can have environmental impacts from bycatch and especially from continued "ghost" fishing by lost traps which attract predators such as octopus, fish, and snails even if the panels do open so that the crabs can escape. The Magnuson-Stevens Act specifically addresses broad concerns about
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--> bycatch. Bycatch occurs not just from bottom trawling and trap fishing, but all fisheries have some bycatch which potentially impacts other populations in the ecosystem. CDQ groups will need to comply with the Magnuson-Stevens Act and the National Standards for Fishery Management objectives of reducing bycatch; such compliance should contribute to healthier fisheries which will benefit CDQ groups in the long term. Conclusion Economic sustainability implies programs and policies that offer the greatest assurance of economic options over the long-term to a population that chooses to remain in specific locations. That is, given alternative economic futures for a people (or for a community), economic sustainability would entail choosing that future with the lowest probability of inducing economic decline as measured by a range of indicators. Economic sustainability is but one part of the larger problem of ecological and socio-cultural sustainability. Clearly, communities that squander their local environmental resources (or that fail to maintain cultural and social processes and structures) will be incapable of economic sustainability. Large-scale commercial fishing activities can have negative impacts on ecosystems, either independently or through interaction with natural fluctuations. Because the CDQ program is designed specifically to increase participation in fisheries activities and at the same time improve the long-term economic conditions of the participating communities, special emphasis should be given to environmental stewardship. Recommendations Overall, concern for the long-term health of the Bering Sea ecosystem needs to feature more prominently in the CDQ program. Local level concerns about environmental sustainability and stewardship need to be able to be expressed in a meaningful way throughout the management structure, beginning with effective communication of local concerns to the CDQ group management and continuing on up through the Council process. The allocation process can foster enhanced emphasis on environmental sustainability by directly recognizing such emphasis when applications from the various CDQ groups are evaluated. Economic sustainability is dependent upon sound environmental stewardship. In order for the CDQ program to help build a sustainable economy in the region, it is imperative that the underlying resource base—the fisheries—be used in ways that are sustainable over the long-term. This will require explicit, indepth, continuing analysis of the condition or health of the fishery resource and management that can respond and adapt to changes in this condition.
Representative terms from entire chapter: