primary resource-related problem identified with IFQ management is the high rate of discarding. This includes both discarding of bycatch for which fishermen do not possess quota (see discussion below) and highgrading to ensure that only the highest-priced portion of the catch is landed and counted against quota. However, fishermen encouraged by high-profile enforcement have learned to modify fishing operations to reduce the amount of illegal discarding as time has progressed (Annala, 1996).

Bycatch and Ghost Fishing. Elimination of the race for fish may provide time for fishermen to search for lower-bycatch fishing grounds (e.g., halibut bycatch in the groundfish fishery in Pacific Canada) and to better care for bycatch species while on deck, thereby decreasing discard mortality. Nevertheless, as Squires et al. (1998) asserted, managing fisheries where several species are caught jointly is especially difficult—part of the mix is likely to be overfished and excessive discards of bycatch can occur.

In New Zealand, IFQs are used in multispecies fisheries and lessons learned there suggest that this form of management can work if sufficient flexibility exists for balancing catches after the fact by acquiring additional quota holdings for bycaught species by the end of some specified time period (Boyd and Dewees, 1992). However, matching the mix of quota held to catches remains a real problem, and excessive bycatch has proven to be a difficulty in certain New Zealand fisheries. In addition, in contrast to U.S. fisheries, in the New Zealand quota management system fishing can continue in multispecies fisheries when either the IFQ or the TAC of a particular species has been filled, if the quota of other associated species has not been caught (Annala, 1996). Thus, many of the overruns in New Zealand TACs have resulted from bycatch in multispecies fisheries (Boyd and Dewees, 1992; Annala, 1996). However, fishermen appear to be adjusting their operations as time passes such that fewer overruns have occurred in recent years (Annala, 1996). Gilroy et al. (1996) estimated that fishing mortality from lost and abandoned gear decreased by 77% in the first year of halibut IFQs. Bycatch discards of halibut in sablefish fisheries decreased by 83%.

Highgrading. In the absence of derby fishing, the incentive for highgrading may be increased as fishermen hunt for fish of the most marketable size and species, but more time for better treatment of discards while on deck may decrease discard mortality of fish caught with some gear types (but not trawls). Empirical evidence from the Alaskan halibut and sablefish fisheries following implementation of the IFQ program indicates that highgrading is not significant in these fisheries (Gilroy et al., 1996; see Appendix G). Indeed, the generalization that highgrading in unlikely to be profitable can be demonstrated (Box 3.4). There is theoretical evidence that the occurrence of highgrading will depend on the unique conditions in each fishery (Anderson, 1994).

Empirical evidence for highgrading in other IFQ-managed fisheries (including some state programs) is mixed. Data from Wisconsin lake trout and Ontario walleye fisheries indicate serious highgrading (Wisconsin lake trout IFQs are

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