Sharing the Fish Toward a National Policy on Individual Fishing Quotas (1999) / Chapter Skim
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5 Considerations for a National Policy on Individual Fishing Quotas
5 Considerations for a National Policy on Individual Fishing Quotas
Pages 139-191
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From page 139... ...
From this analysis, a national policy on IFQs may be derived. FIRST PRINCIPLES OF FISHERIES MANAGEMENT AS A POLICY FRAMEWORK A brief look at IFQ programs that have been implemented around the world reveals that these programs were designed for a spectrum of purposes because nations do not all share the same policy goals for their fishery resources.
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From page 140... ...
[51 ICED; and 5. The cautious approach to market mechanisms evidenced by the moratorium on development and implementation of new IFQ programs (Sec.
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From page 141... ...
. The "threshold criteria" would then evolve more into conditions governing the rational development of IFQ programs (e.g., adequate data, clear objectives, full participation)
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From page 142... ...
The recipients of initial allocations of quota shares reap a windfall profit when they sell their shares, which is not available to subsequent holders of the quota shares who must purchase them. The committee knows of no cases in which initial recipients of IFQs have been charged for their quotas.
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From page 143... ...
3. Actual amount of quota received by each fisherman IFQ programs may reduce the TAC initially, and in an attempt to include a broad class of stakeholders, quota is typically distributed to more individuals than are currently active participants in the fishery and recipients are allowed to use their best catch years as a basis for the initial allocation.
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From page 144... ...
A common competitive mechanism for making an initial allocation of a good is the auction. Auctions match buyers and sellers of a good and can be structured in a wide variety of ways.
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From page 145... ...
Under their chief, the people pooled their harvests, and the chief divided the pool into equal shares per person. A common random mechanism that may be used for the initial allocation of quota is the lottery.
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From page 146... ...
Lotteries could be combined with other allocation rules. For example, considerable concern was expressed that the initial allocation rules for Alaskan halibut and sablefish IFQs were so liberal in recognizing past participation that ensuing quota shares were often too small to fish profitably.
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From page 147... ...
How could other modes of allocation apply to an IFQ program? The rule of equal opportunity would suggest giving the initial allocation of a TAC in equal shares to eligible
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From page 148... ...
These criteria not only address the importance of fishing as a tradition and a profession, but also recognize the magnitude of investments already made in the fishery. For the other principles to be addressed, IFQ programs and the initial allocation of quota must take into account additional criteria.
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From page 149... ...
. Thus far, federal IFQ programs have been relatively limited both in the allocation mechanisms and in the criteria used to allocate quota initially.
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From page 150... ...
program does not have to preserve the same distribution of quota shares achieved by the initial allocation if such a distribution later becomes inconsistent with the long-run objectives of the fishery. Modifications can be made over time in such a way as to reward exemplary behavior and punish destructive behavior.
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From page 151... ...
The failure to include fishing vessel skippers and crew members in the initial allocation of quota shares in the Alaskan sablefish and halibut IFQ programs is perhaps their single most controversial element (see Alliance Against IFQs v. Browned.
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From page 152... ...
The issue of allocating quota to processors arose in Alaska in the context of long-standing conflict between inshore and offshore processors and in response to the provisions of the Alaskan IFQ programs that make it impossible for processors to hold quota and change their relative bargaining power in negotiating exvessel prices of the landed fish. Some other programs (e.g., for surf clams/ocean quahogs)
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From page 153... ...
The arguments for allocating harvesting or processing quota to processors derive from a desire to compensate those who will have to leave the industry because of excess processing capacity. By allocating harvesting quotas to vessel owners and crew members and allowing quotas to be bought and sold, some vessel owners and crew members can be bought out of the industry by those who are willing to pay a high enough price for their quota shares.
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From page 154... ...
Fish harvesters would then be required to sell their fish to those who hold a similar amount of processing quotas. Processors that choose to leave the industry could then sell their processing quotas to other processors, much as some vessel owners and crew members would sell their harvesting quotas to other vessel owners and crew members; in both cases, excess capacity is reduced.
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From page 155... ...
fisheries under IFQ programs (Sec.
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From page 156... ...
IFQ programs and concerns voiced to the committee have dealt more with the concentration of quota share ownership rather than whether the holders are foreign or domestic. The issue of concentration, as well as foreign ownership, appears explicitly in the Magnuson-Stevens Act (16 U.S.C.
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From page 157... ...
designed the sablefish and halibut IFQ programs to prevent foreign control of the fisheries via ownership of quota shares (Pautzke and Oliver, 1997~. The program's design limits initial issuance and subsequent receipt of quota shares to individuals who are either U.S.
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From page 158... ...
If Congress desires to limit foreign ownership of IFQs in all U.S. fisheries, it could model amendments to the Magnuson-Stevens Act after the provisions of the Alaskan halibut and sablefish IFQ programs.
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From page 159... ...
This restriction may not be desirable, however, for fisheries in which a large capital investment is necessary and where that investment can be attracted only with the limited liability of a corporate entity. Recreational Sector Recreational fisheries have received very little attention in IFQ programs.
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From page 160... ...
also recommends that recreational fishermen be allocated a share of TACs, with establishment of organizations to hold and manage the quota. These studies suggest that IFQ programs for only the commercial sector may benefit and strengthen commercial claims on fishery resources, leaving the recreational sector with no grounds to protect its rights.
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From page 161... ...
Mechanisms for capturing benefits for the nation include auctions, annual fees, transfer fees, and taxes. Some people are opposed to IFQ programs because they view them as awarding a large financial windfall to quota share recipients, and these windfalls could encourage unproductive behavior (e.g., expenditure of funds to influence the outcome of the implementation process)
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From page 162... ...
2. The cost recovery principle Under this principle, the government is entitled to reclaim the costs of creating and administering fishery management programs because the beneficiaries of government programs should bear the associated costs.
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From page 163... ...
Examples of attributable costs to the fishing industry in an IFQ program are the costs of allocating IFQs, costs of registering transfer of quota between IFQ holders, the costs of monitoring catch against quota, and costs of dockside monitoring. Avoidable costs for the commercial fishing industry are additional costs that exist because of the presence of a commercial fishing industry and are not transaction costs that can be charged to a specific activity.
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From page 164... ...
program. The compensation principle motivates the wide initial allocation of quota.
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From page 165... ...
The government can reclaim rent through the use of fees or taxes levied on several different types of tax bases: landed harvest, quota shares, annual entitlements to harvest, income or profit, or capital gains (Box 5.4~. The fees can be lump sum (dollars per fisherman or vessel)
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From page 166... ...
There are at least two other major arguments for using lump sum fees. First, except for entry and exit decisions, lump sum fees do not penalize operational decisions and therefore do not create some of the distortions associated with other taxes.
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From page 167... ...
The payments would depend on the value of the catch. Transferability and Accumulation Most IFQ programs used worldwide allow transferability (e.g., Box 5.5~.
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From page 168... ...
For example, although crew members did not receive initial allocations of IFQs in the Alaskan IFQ fisheries, they now own 11.2% of the halibut quota share and 4.6% of the sablefish quota share. This would not have been possible without transferability.
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From page 169... ...
In designing the sablefish and halibut IFQ programs, the NPFMC considered a prohibition on transferability to avoid consolidation of ownership, divestiture of coastal Alaskan residents from the fishery, and creation of windfall profits from transfers (Pautzke and Oliver, 1997~. Ultimately, the council decided to allow transfers, albeit restricted, to permit new entry into the fisheries and maintain significant Alaskan ownership.
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From page 170... ...
The same applies, they believe, for the Canadian program they studied; here more constraints were placed on transfers as well as on accumulation and ownership by nonfishermen, but the constraints were generally ineffective against strong economic incentives to consolidate holdings. In contrast, the Alaskan IFQ programs, which include some area restrictions, have maintained (to date)
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From page 171... ...
In some extreme cases, resistance to conservation measures in the fishery may reduce or invalidate potential economic and ecological benefits of an IFQ program, resulting in fishermen's strikes and increased highgrading and bycatch. Not only can transferability increase conflicts among quota holders, it also can alter relations of power between vessel owner and crew, with the latter increasingly losing power to quota-owning vessel owners.
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From page 172... ...
Rather than selling their quotas, quota shareholders may choose to lease them and gain unearned income on their quota wealth. This may tear at the social fabric in fishing communities, where absentee ownership is often seen as unfair.
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From page 173... ...
There are several ways of avoiding the problems of the tenant fisherman; the applicability of various approaches will depend, again, on the design of the IFQ program in question, the fishery, and the cultural context. The proportion of quota that is leasable during any single year can be limited; this ceiling can be kept low, if desired, and subject to restrictions on the frequency of leasing permissible for individual quota shareholders.
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From page 174... ...
It is not possible to provide a general rule regarding an optimal percentage concentration; this will undoubtedly vary by fishery and the goals of fishery managers in the region. It seems necessary, however, that concentration limits of some degree be included in all new IFQ programs, because National Standard 4 of the Magnuson-Stevens Act prohibits the holding of excessive share (not defined by the act)
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From page 175... ...
Insufficient monitoring and enforcement could also result in failure to keep a fishery within its TAC (Box 5.7~. Do monitoring and enforcement costs rise under IFQ programs?
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From page 176... ...
Not only has the recovery of monitoring and enforcement costs become standard practice in some IFQ fisheries (New Zealand, for example) , but funding at least some monitoring and enforcement activity out of rents generated by the fishery has already been included as a provision in the most recent amendments to the Magnuson-Stevens Act.
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From page 177... ...
It was estimated that bycatch mortality should decrease because fishermen can own quota shares for both species, so that regulatory discards are reduced. Whether these problems are intensified or diminished by the implementation of an IFQ program depends (in part)
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From page 178... ...
In general, the smooth implementation of IFQ programs requires two different kinds of data. First, periodic data on the condition of the fish stock are needed to evaluate the effectiveness of the program over time.
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From page 179... ...
Proper control procedures include both onshore and at-sea components. An onshore system of checks would normally include a requirement that sales only be made to registered buyers and that both buyers and quota shareholders cosign the landings entries.
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From page 180... ...
Honest fishermen should be willing to contribute some of their increased rent to ensure the continued existence of an effective IFQ management regime. Duration of Individual Fishing Quota Programs Some arguments have been made for limiting duration of IFQ programs, and in fact, the House of Representatives version of the Sustainable Fisheries Act of 1996 contained a "sunset" provision for existing IFQ programs.
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From page 181... ...
Culture. Community, and Individual Fishing Quotas Many fisheries are based in coastal communities that receive significant economic inputs from the fishing industry.
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From page 182... ...
Processors may also lend fishermen money to buy quota shares or even buy quota shares on behalf of fishermen who promise to deliver their catch to the sponsoring processor, although some U.S. IFQ programs prohibit nonfishermen from purchasing quota shares.
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From page 183... ...
The tendency for IFQs programs is to create a new community of interest, the holders of IFQs, whose interests and goals can diverge sharply from the rest of the community (McCay et al., 1998~. Consequently, attempts to link IFQs with larger community values and interests must take great care to design IFQ programs that will in fact reinforce desired community structures and formalize common property regimes.
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From page 184... ...
However, these two approaches to addressing the inefficient harvesting of fish ignore the hundreds of examples of fishing communities that organized themselves and have effectively managed their access to and use of fish stocks on which they were heavily dependent (e.g., NRC, 1986; McCay and Acheson, 1987; Berkes, 1989; Martin, 1989; Bromley, 1992~. These community-based governing arrangements are not historic anomalies.
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From page 185... ...
It is reasonable to conclude that IFQ programs are more likely to be successful if representatives of the relevant fishing communities have been active participants in devising the program and/or if such communities are themselves recipients of IFQ shares and are left to devise their own procedures for allocating these shares and monitoring their use. Community-based governance is not necessarily incompatible with central government or market-based designs for managing fisheries.
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From page 186... ...
The extent to which the impact of IFQ programs on processor-dependent communities can be mitigated is a matter to be determined for each fishery and each community and merits serious discussion when IFQ programs are contemplated. Less isolated fishing communities, such as those found in New Bedford and Gloucester, Massachusetts, pose somewhat different problems.
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From page 188... ...
In some areas, sportfishermen and environmentalists have considerable influence; in some, processors are well organized and influential; and in some, vessel owners are organized.
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From page 189... ...
By ensuring the active participation of resource users in designing and implementing fishery management systems, users' norms, values, and expectations are more likely to be taken into account. Since management regimes are simply collections of rules, and rules guide and shape people's
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From page 190... ...
To some extent, however, the participatory nature of the council process can moderate unequal voting representation on a specific council. The Secretary of Commerce is limited by the Magnuson-Stevens Act and by political realities in the degree to which he or she can correct for unbalanced representation and decisions in the design of IFQ programs.
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From page 191... ...
~41~. Both the design and the implementation of IFQ programs can be delegated to other units.
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