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The Community Development Quota Program in Alaska (1999)

Chapter: 4 Evaluation of the Performance of Community Development Quota Program

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Suggested Citation:"4 Evaluation of the Performance of Community Development Quota Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
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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-

Suggested Citation:"4 Evaluation of the Performance of Community Development Quota Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
×

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

    Suggested Citation:"4 Evaluation of the Performance of Community Development Quota Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
    ×

    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

    Suggested Citation:"4 Evaluation of the Performance of Community Development Quota Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
    ×

    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.

    Suggested Citation:"4 Evaluation of the Performance of Community Development Quota Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
    ×

    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
    Suggested Citation:"4 Evaluation of the Performance of Community Development Quota Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
    ×
    • 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

    Suggested Citation:"4 Evaluation of the Performance of Community Development Quota Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
    ×

    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.

    Suggested Citation:"4 Evaluation of the Performance of Community Development Quota Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
    ×

    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

    Suggested Citation:"4 Evaluation of the Performance of Community Development Quota Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
    ×

    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

    Suggested Citation:"4 Evaluation of the Performance of Community Development Quota Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
    ×

    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-

    Suggested Citation:"4 Evaluation of the Performance of Community Development Quota Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
    ×

    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

    Suggested Citation:"4 Evaluation of the Performance of Community Development Quota Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
    ×

    consists of two distinct dimensions. The first dimension concerns the opportunity (and the need) for western Alaskans to create new governance structures and processes around the management and harvest of this newly available access to fishery resources. The mere fact of this opportunity to organize and mobilize residents of western Alaskan villages around the fishery resources of the region represents one important element in the process of development. These new structures and processes have, in addition to their concern for fishery development, begun to play an additional role in the communities. For instance, village residents with questions about social security checks, other employment opportunities, or college programs come to the CDQ offices for advice. The second dimension concerns the more traditional "outcome" oriented impacts. Significant revenues have been generated to support fishery-related investments in the villages. Employment opportunities have expanded for young people able to take advantage of relatively well-paying jobs on factory trawlers and in processing plants. Finally, general education and training programs have brought benefits to other members of the villages in western Alaska.

    Recommendations

    • The Community Development Plans should be careful to balance the mix of local fishing opportunities with wage-earning opportunities through fishing partners. This is important because local fishery development can benefit less mobile village residents, while wage-earning opportunities in the industrial fleet are especially important for younger, more mobile adults. A focus on local fisheries opportunities for permanent village residents, where they exist, will help tie the CDQ program to the village economies.
    • To improve the effectiveness of developing a well trained workforce, the CDQ groups need a strategic plan for education and training programs. This would include internships and technical training for direct employment with the industrial fishing partners of the CDQ groups, formal university education in fields pertinent to the development goals of native residents, and training of administrators and board members of CDQ organizations. The ultimate objectives would be to develop both the business acumen and labor productivity of village residents.

    Governance and Decision-making

    The overall structure of the CDQ program established by the North Pacific Fishery Management Council was reaffirmed and codified in federal legislation during the reauthorization of the Magnuson-Stevens Fishery Conservation and Management Act of 1996. Decisions regarding management of various aspects of the Bering Sea fishery and the CDQ portion of that fishery are made at a many levels, including federal, state, and local. The six CDQ groups operate in a sys-

    Suggested Citation:"4 Evaluation of the Performance of Community Development Quota Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
    ×

    tem of governance which reviews their decisions in several different ways. Generally, regulatory power over fisheries resides at the federal level, with the National Marine Fisheries Service providing enforcement of fishing regulations. Business management decisions are reviewed at the state level. The North Pacific Fishery Management Council makes broad policy decisions about the structure of the fishery. The CDQ groups make decisions about how to harvest their quota and select partners to assist them in their harvest. Halibut is regulated by the International Pacific Halibut Commission with input from the North Pacific Fishery Management Council.

    The structure of the CDQ portion of the system was influenced by Alaska's experience with village and regional corporations created by the ANCSA (see Box 4.1). In its structure, ANCSA created both for-profit and nonprofit corporations, and some of these corporations experienced severe business difficulties. The system of oversight designed for the CDQ program was motivated, in part, by a desire to avoid the problems that developed with the ANCSA corporations.

    The following text provides an overview of national, state, and local decision-making structures.

    Federal Oversight

    Federal oversight of the CDQ program involves several elements. The North Pacific Fishery Management Council allocates a portion of each species to the CDQ program as a whole, while the State of Alaska allocates the overall Community Development Quota to the specific CDQ groups representing the eligible communities. The National Marine Fisheries Service has codified the general structure of the CDQ program in 50 CFR 679.30-34. These regulations specify the eligibility criteria for communities to participate in the CDQ program, and the specific content of the Community Development Plans. An additional qualifying criterion is that at least 75 percent of the board of directors of the applicant organization be resident fishermen of the community or group of communities that are applying.

    The Community Development Plans need to contain information on three topics:

    • (1)  

      Community development information, such as employment, vocational and educational programs, existing fishery-related infrastructure, sources of new capital, and a schedule for transition to self-sufficiency in fisheries rather than dependence on the CDQ program.

    • (2)  

      Business information, such as the method of harvest, description of business relationships (including how proceeds are divided among the parties), a general budget, a list of capital, a pro forma cash flow and break-even analysis, and a projected balance sheet and income statement.

    Suggested Citation:"4 Evaluation of the Performance of Community Development Quota Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
    ×

    Box 4.1 The Alaska Native Claims Settlement Act

    The Alaska Native Claims Settlement Act (ANCSA) was signed into law on December 18, 1971 (43 U.S.C. 1601 et seq.). The Act was the result of an extensive and protracted effort by Alaska Natives to receive compensation for land held prior to the arrival of Euroamericans in 1741 and subsequently lost. The Act was influenced by various events in the disposition of land in Alaska including the sale of Alaska by Russia to the United States in 1867 (The Treaty of Cession), the Organic Act of 1884 that established protection for Alaska Native land rights, and the Statehood Act in 1959.

    Alaska Native concerns about land status increased following statehood as the state began selecting lands in the vicinity of native villages. In 1966, a statewide native organization was created, the Alaska Federation of Natives, to pursue Alaska Native claims issues. Through its efforts, then-Secretary of the Interior Seaton imposed a freeze on further state land selections until native land claims were settled. Pressure for a settlement increased dramatically when land rights were needed to build a pipeline to transport oil discovered at Prudhoe Bay in 1968. The combination of native efforts, the land freeze, and desires for oil development eventually led to the passage of ANCSA (Arnold, 1976).

    ANCSA provided $962,500,000 and 44,000,000 acres of land to Alaska Natives as settlement of their aboriginal claims to land in the state. The land and funds were not transferred directly to Alaska Native governmental entities, however. Instead, ANCSA created 12 regional for-profit corporations and over 200 village for-profit corporations. These corporations received title to the conveyed land and settlement moneys. Alaska Natives became owners of the corporations as shareholders based on where they resided when ANCSA was passed. Each Alaska Native received 100 shares in the corporations for which he or she qualified. The regional corporations hold title to subsurface rights to their lands as well as those of the village corporations within their region.

    At first, the opportunities provided by these corporations appeared promising and Alaska Natives were optimistic that substantial economic benefits would follow development activities. But problems emerged as the implementation of ANCSA proceeded. In many cases, the corporate structures created by ANCSA did not provide the hoped-for gains. Lack of familiarity with for-profit organizations, limited managerial expertise, and confusion led to circumstances that allowed advisors and consultants to profit without providing real opportunities to the native corporations. Neither oversight nor advisory functions were provided legislatively by federal or state agencies to assist with these problems. In many cases, particularly in western Alaska, the lands selected by the village corporations were chosen primarily based on subsistence needs and

    Suggested Citation:"4 Evaluation of the Performance of Community Development Quota Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
    ×

    offered few or no prospects for development or job creation; as a result, many of the corporations simply ceased to function. The lands they selected were primarily based on subsistence needs. To some extent, the cash dividends received simply flowed from the shareholders in the communities to industries and services outside the region for imported goods and services. The fortunes of the regional corporations were directed in large part by the development potential of the lands they were allowed to select. Because land in western Alaska had little development potential, corporations in what is now the CDQ region had a difficult time. Bering Straits Regional Corporation was in bankruptcy in the late 1970s. Calista, the regional corporation of the Yukon-Kuskokwim region, was assisted through Congressional legislation in 1988, paying the corporation a substantial bonus over the appraised value for lands turned over to federal refuges in the region. The problem of corporate insolvency and potential loss of lands has been a major issue as Alaska Natives have sought greater economic and political self-determination during the last decade (Langdon, 1987). Corporate solvency was addressed by Congress in the mid-1980s by creation of a program that allowed some Alaska Native corporations to partially refinance.

    Some ANCSA corporations have been more successful than others at defining goals, creating business and employment opportunities, and identifying funds for infrastructure development. They are also called on to meet social goals—education programs and scholarship funds—and to be political advocates for village residents. Although the experience with ANCSA has been mixed, overall it is clear that some important components of the more successful programs include the development potential of conveyed lands; well-trained, responsive managers; clearly defined goals; effective community communications and participation; and oversight by village and regional administrators acting in the best interests of their constituents.

    SOURCES: Alaska Natives Commission, 1994; Arnold, R. 1976; Langdon, 1987; Case, 1984; Berger, 1985.

    (3)  

    Statement of the managing organization's qualifications, including a description of the management structure, resumes of key personnel, and a list of "management qualifications" to provide evidence that the organization can prevent quota overages. Additional information such as letters of support from the communities, demonstration of management and technical expertise, including the balance sheet and income statement for the past twelve months, should be provided as well.

    Suggested Citation:"4 Evaluation of the Performance of Community Development Quota Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
    ×

    The NMFS regulations set out five "factors" that appear to be criteria NMFS requires the State of Alaska to apply when judging the completeness and adequacy of the Community Development Plan:

    1. The number of community members to be employed and the nature of the work,
    2. The number and percentage of low income people in the communities, connected to the opportunities to be provided to them,
    3. The number of communities,
    4. The relative benefits for the communities and the plans for developing a self-sustaining fisheries economy, and
    5. The success or failure in administration of a previous Community Development Plan.
  • After the applications and allocations of quota are approved, the regulations require annual reports to be submitted to NMFS. These reports must include an annual progress report, and an annual budget report, reconciling projected and actual income and expenditures.

    Substantial amendments to a Community Development Plan must be approved by the State of Alaska and the NMFS. A procedure has been put in place to expedite this stage of review. After the State reviews the amendment, the amendment is approved if NMFS does not disapprove within a 30-day time period. Once both the State and NMFS have approved, the amendment is accepted. Major capital expenditures are defined as substantial amendments. Since the Community Development Plans are completed each three years, changes to capital expenditures are likely and the review of such amendments is an important part of oversight by the State and the NMFS.

    State Of Alaska Oversight

    Based upon its evaluation of the Community Development Plans submitted by the six CDQ groups, the State of Alaska allocates a percentage of each species' CDQ to the communities. Evaluation of the Community Development Plans is coordinated by the Department of Community and Regional Affairs, with participation by staff of the Department of Commerce and Economic Development and the Department of Fish and Game in a CDQ evaluation group. The CDQ team reviews the Community Development Plan applications and, after a public hearing to resolve questions, provides summary comparative information to a committee made up of the commissioners of each of the three departments just listed. The three commissioners together make a recommendation to the Governor, who makes the final decision.

    In allocating the quotas, the State faces a complicated multicriterion deci-

  • Suggested Citation:"4 Evaluation of the Performance of Community Development Quota Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
    ×

    sion-making problem. The need for the fair application of a set of criteria to the applications was raised at our hearings and in our site visits. Multi-criteria decision-making is difficult. As Arrow and Raynaud (1986) have shown for the general case, such decision-making is troubled by two tendencies: either one criterion appears to take over as the single criterion, or decisions appear to be inconsistent. These dangers exist whether or not the analyst applies a ''scoring system," which implies a single unit of measure for all of the criteria. Use of a scoring system tends to increase the probability of being inconsistent. Thus, it should be no surprise that the people most affected by the application of the many criteria that the State uses find the outcome somewhat difficult to fathom. The problem of allocating resources based on many criteria is intrinsically a difficult problem. In recent years, multi-attribute decision analysis has improved, but it remains complex.

    The application form for the multispecies CDQ allocation in 1997 lists 16 criteria for use by the State (see Box 4.2).

    The 16 criteria used create a difficult ranking problem. A reorganization and

    BOX 4.2 Criteria Used by the State of Alaska to Evaluate the 1997 CDQ Allocation

    1. The application's objectives.
    2. Realistic measurable milestones for determining progress.
    3. Previous ability to manage a Community Development Plan.
    4. Methods for developing a self-sustaining local fisheries economy.
    5. Level of career track employment and training opportunities.
    6. Capital or equity generated for local fisheries investment.
    7. Profit-sharing arrangements.
    8. Diversity in harvesting/processing partners and modes of operation.
    9. Coordinated activities with other CDQ groups(s).
    10. Investments with experienced industry partners.
    11. Ability of a CDQ group to maintain control over allocations
    12. Involvement and diversity in all facets of harvesting and processing operations.
    13. Depth of seafood related infrastructure development.
    14. Stimulation of Alaska's economy in both CDQ and non-CDQ communities.
    15. Conservative and sound management principles in the fishing plan which provide for full retention and utilization of quota.
    16. The development of innovative products and processing techniques aimed at conservation and maximum utilization.
    Suggested Citation:"4 Evaluation of the Performance of Community Development Quota Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
    ×

    simplification of the criteria was provided in the State's recommendation to the North Pacific Fishery Management Council through a letter from the commissioner of the Community and Regional Affairs to the North Pacific Fishery Management Council dated September 23, 1997 (see Box 4.3).

    The order of the criteria proposed in the letter is different from that provided in the application booklet. For instance, the first and second criteria in the state's letter, population and income, are not mentioned in the application. The first criterion in the application booklet, the application's objectives, are not listed in the letter. The criteria given in the letter are also different from the ones listed at 50 CFR 679.(d)(5)(iv). For instance, the goal of developing a self-sustaining fisheries economy listed in the CFR is present only by implication in criteria 3, 6, and 7.

    Given the difficulty of allocating quota based upon these many criteria, discussion of the overall purpose of state oversight is important. Is the overriding goal of state oversight to provide an equitable division of the quota allocated to the communities? Or is it to provide a check upon possible mismanagement (e.g., poor investments, misallocation of royalty payments) by the community development management organizations? It appears that the system is working as a mix of these two goals. The actual allocation of quota seems to be driven by two criteria: population and income levels. The CDQ regions with the most people or the most poverty or both tend to get a larger quota. But the allocation proce-

    BOX 4.3 Simplified Criteria to Evaluate CDQ Allocation Proposed by the State of Alaska

    1. The number and population of eligible communities represented in each group.
    2. The level of income, unemployment and other indicators of social and economic well being that demonstrate the need for the allocation.
    3. The merits of the proposed investment, employment, education and training programs.
    4. The qualifications of the management organization to effectively manage the quota.
    5. The contractual relationships between the applicant and the harvesting and processing partners.
    6. The degree of success as measured by performance of the management organization.
    7. The ability of the Board of Directors to effectively maximize the benefits of the program to the region.
    Suggested Citation:"4 Evaluation of the Performance of Community Development Quota Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
    ×

    dure can be used to serve the purpose of minimizing potential mismanagement by application of criteria 3 to 7 of the summary criteria listed in the State's letter to the North Pacific Council.

    In a desire to prevent mismanagement by CDQ groups, the State of Alaska is trying to use its oversight powers to induce better performance. When this Committee visited Alaska, it held an information-gathering workshop and spoke with many of the leaders of the groups; the efficacy of the State's oversight was a major source of discussion. In the first reallocation of the pollock CDQ, St. Paul had its allocation reduced and the Yukon Delta had its allocation increased; part of the reason for the changes appear to have been response to management performance. At issue in 1997 was the review of the Coastal Villages Fishing Cooperative (CVFC) and its financial problems (described in Chapter 3). But there was a concern expressed that long-range planning is difficult when the whole amount of quota is at risk during reevaluation.

    In its September 23, 1997 letter to the Secretary of Commerce, the State of Alaska also recommended that the CDQ group's multispecies allocation:

    be held in abeyance until the following conditions are met: 1) submission of plan amendment dissolving the Imarpiqamiut Partnership between CVFC and Golden Age Fisheries; 2) steps be taken to strengthen its management structure and (3) an agreement to perform an open RFP process for the lease of the pollock allocation in 1999 and beyond.

    The State was willing to exercise its leverage in allocation of quota in order to make one of the CDQ groups improve its performance. It began by using the multispecies allocation to induce changes. But if that was not enough, the letter continued, "The state also intends to recommend termination of the 1998 pollock quota to Coastal Village Fishing Cooperative unless the IP partnership is dissolved."

    By the first and second criteria recommended in the September 23 letter, the large and poor region represented by the Coastal Villages Fishing Cooperative would merit a large allocation, rather than take away its allocation entirely. However, the State decided to threaten action in order to obtain compliance from the CDQ managers in the Coastal Villages region. On October 31, 1997, the executive director of the Coastal Villages Fishing Cooperative indicated that his board of directors had decided to dissolve the partnership. The Coastal Villages region has since begun proceedings to dissolve the Imarpiqamiut partnership, formed a new organization to oversee the management of the CDQ (the Coastal Villages Region Fund) instituted a management review project, and changed harvesting partners. In a January 28, 1998 letter from the deputy commissioner of the Department of Community and Rural Affairs to NMFS, the State indicated that based on these changes, it was rescinding its recommendation to withhold quota from CVFC. The State's letter was unprecedented, but because the threat seems to be pushing the group to make significant changes, there is no test yet of what will

    Suggested Citation:"4 Evaluation of the Performance of Community Development Quota Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
    ×

    happen in the future if the State needs to enforce a similar threat in some other situation.

    One issue in this type of oversight is the threshold level which induces a reallocation of quota from one CDQ group to another. In evaluating the return on investment, it is not clear how broadly "returns" are identified or counted. For instance, education is valued for its relevance but the increase in wages that an educated community member receives over that of others is equally important. The return to the community from having a more skilled worker may be more economically valuable than the increase in that worker's wages, particularly in a poor community. Enhanced skills and education can have a broader influence on community capabilities and long-term economic prospects although these effects may not be fully reflected in individual incomes, especially if the skills provided by education are diverse and act in concert with each other. Investments in infrastructure pose a similar problem, in that the increased productivity of the community may not show up on the books of the CDQ organization. In order to adequately assess the impact of improved education and infrastructure, a much more detailed study would need to be undertaken.

    The criteria of both the NMFS and the State of Alaska appear to stress observable impacts which occur in the financial and narrative reports that the CDQ groups submit quarterly and annually. To what extent can the communities define words such as "the merits of the proposed investment, employment and training programs," or "effectively maximize the benefits of the program to the region"? If these terms are defined in terms of market-oriented economic evaluation, the State may overlook the contributions to the modern subsistence economy. The first criterion listed in the Community Development Plan application for multispecies allocation was "the applicant's objectives." This criterion, however, is not present in the letter to the North Pacific Fishery Management Council, and it is not present in the federal regulations. This would suggest that the State means to evaluate the applicant's objectives according to other criteria, rather than to allow the applicant to explain the objectives of its plan and to have the plan evaluated based upon those objectives. The application materials, however, can be interpreted to mean that an applicant can have some influence on the definition of success for its own community development program. If success is defined only in traditional market terms, some of the communities' definitions of success may not be fully recognized in the oversight process.

    CDQ Groups

    The CDQ groups are organized as corporations under Alaskan law; five of the six groups were organized as nonprofit corporations initially, and now the sixth is also a nonprofit corporation. In all cases, the members of the corporation are the communities served by the CDQ organization, not individuals from the communities. Thus, boards of directors are selected in municipal elections or

    Suggested Citation:"4 Evaluation of the Performance of Community Development Quota Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
    ×

    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—

    Suggested Citation:"4 Evaluation of the Performance of Community Development Quota Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
    ×

    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.

    Suggested Citation:"4 Evaluation of the Performance of Community Development Quota Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
    ×

    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

    Suggested Citation:"4 Evaluation of the Performance of Community Development Quota Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
    ×

    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.
    Suggested Citation:"4 Evaluation of the Performance of Community Development Quota Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
    ×

    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

    Suggested Citation:"4 Evaluation of the Performance of Community Development Quota Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
    ×

    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

    Suggested Citation:"4 Evaluation of the Performance of Community Development Quota Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
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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

    Suggested Citation:"4 Evaluation of the Performance of Community Development Quota Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
    ×

    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

    Suggested Citation:"4 Evaluation of the Performance of Community Development Quota Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
    ×

    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

    Suggested Citation:"4 Evaluation of the Performance of Community Development Quota Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
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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

    Suggested Citation:"4 Evaluation of the Performance of Community Development Quota Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
    ×

    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.
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    This book reviews the performance and effectiveness of the Community Development Quotas (CDQ) programs that were formed as a result of the Sustainable Fisheries Act of 1996. The CDQ program is a method of allocating access to fisheries to eligible communities with the intent of promoting local social and economic conditions through participation in fishing-related activities. The book looks at those Alaskan fisheries that have experience with CDQs, such as halibut, pollock, sablefish, and crab, and comments on the extent to which the programs have met their objectives—helping communities develop ongoing commercial fishing and processing activities, creating employment opportunities, and providing capital for investment in fishing, processing, and support projects such as infrastructure. It also considers how CDQ-type programs might apply in the Western Pacific.

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