National Academies Press: OpenBook

The Use of Limited Access Privilege Programs in Mixed-Use Fisheries (2021)

Chapter: 5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries

« Previous: 4 Ecological Impacts of LAPPs in Mixed-Use Fisheries
Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×

5

Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries

This chapter reviews the theoretical and empirical effects of Limited Access Privilege Programs (LAPPs) and the evidence for these effects in LAPPs for commercial fisheries. The committee considers the evidence regarding economic and social effects in general and in the five fisheries under direct consideration in this report. Commercial fishery participants are those directly engaged in the harvest side of the fishery as quota owners, captains, and crew members, and in the post-harvest side as buyers, dealers, and processors. In some cases there are commercial fisheries involved that are not in the LAPP as well, as for example the large number of vessels permitted to take small incidental catches of golden tilefish, which is otherwise allocated through a LAPP. Chapter 7 considers effects in communities where such participants work and/or reside.

The theoretical and empirical work on the effects of LAPPs on commercial fisheries is not specific to mixed-use fisheries. The hypothesized mechanisms for the effects of LAPPs are no different when other sectors such as for-hire or individual recreational angler sectors co-exist, although it is possible that other sectors that are not controlled could amplify some problems that LAPPs are meant to address, such as the race to fish. Similarly, empirical studies of LAPPs in mixed-use fisheries—whether they be retrospective or prospective policy analyses, rigorous ex post quasi-experimental evaluations, or simple ex post before-after comparison evaluations—have not distinguished between mixed-use and single-use fisheries. Findings are expected to apply in both settings.

The major economic and social effects on the commercial sector are reflected in the goals of LAPPs and the National Standards of the Magnuson-Stevens Fishery Conservation and Management Act (the MSA), which are laid out in detail in Chapter 3. This chapter evaluates the LAPPs of the study in relation to the following expected or commonly observed economic and social impacts:

  • Reduced overcapitalization;
  • Less participation in “derby fishing”;
  • More economic efficiency in the fleet;
  • Price effects from improved market timing or product quality;
Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×
  • Profitability as reflected in quota prices;
  • Improved safety at sea;
  • Capacity spillovers into other fisheries;
  • Changes in labor relations and employment;
  • Economic, demographic, social, and cultural distributional effects;
  • New roles (e.g., broker); and
  • Barriers to entry for young and small-scale fishers.

DISCERNING IMPACTS

As discussed in Chapter 1, it can be difficult to establish causation when evaluating the social and economic impacts of LAPPs. LAPPs often coincide with stricter controls on overfishing, stock rebuilding programs, intensified monitoring, and other measures. For example, in the Mid-Atlantic golden tilefish fishery, certain successes of the fishery are better attributed to the 2001 Fishery Management Plan that established key measures for a healthy fishery (i.e., a constant quota rule and accountability measures), rather than to the later implementation of the LAPP. In general, the 2007 reauthorization of the MSA that specified LAPPs also put in strict requirements for annual catch limits (ACLs) and gave authority to Scientific and Statistical Committees to set acceptable biological catches (ABCs) based on evaluation of the stock assessment science and uncertainty. ACLs are not allowed to exceed ABCs. These changes occurred at the same time that some LAPPs in this report were being adopted. As explored in other chapters in this report, implementation of IFQs in the red snapper fishery was accompanied by a large reduction in commercial (and recreational) total catch limits. In addition, external events have occurred since LAPPs implementation in these fisheries, including the Deepwater Horizon oil spill in 2010 that resulted in closure of fishing grounds and depressed markets in the Gulf of Mexico, continued globalization of seafood markets, and increased competition from farmed seafood.

Social science research on the social and economic effects of LAPPs nationally and globally is diverse and multidisciplinary. Social science spans the disciplines of economics, anthropology, sociology, geography, public administration, political science, and more. Variation in how fisheries systems are conceived and what research and data are preferred across disciplines can make integrating the approaches of these diverse fields both challenging and necessary (e.g., Charnley et al., 2017; Ferraro et al., 2019; Moon and Blackman, 2014; Moon et al., 2021). Economists developed the LAPP idea as a conceptualization of fishery systems that situated the goal of profit and the problem of open access in the commons as paramount, with goals to reduce derby fishing, decrease overcapacity, and promote efficient use of the natural resource. From other perspectives, such as in anthropology and geography, fishery systems are conceived of as place- and culture-based livelihoods, where access to fisheries—whether fully open or limited by circumstance or institutions—is paramount; therefore, the limitation and commodification of fisheries access, similar to systems seen in the forest and offshore oil industries, is seen as a possible source of broader social, cultural, and/or economic transformations.

Within these disciplines and their various conceptualizations of fishery systems are both quantitative and qualitative assessments of the socioeconomic effects of LAPPs. Much of the quantitative evidence reviewed below pertains to the entire fishing fleet (a complete census), which is a strength of the evidence base. Some quantitative data also draw on surveys of samples of participants in the fisheries, whose responses can be quantified and reported through statistical analyses, whether they pertain to economic measures like income and costs or to measures of well-being and satisfaction or perceptions and attitudes. How representative these samples are affects the strength of the evidence

Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×

base. Qualitative data are collected through participant observation and in-depth interviews and are concerned with understanding fishery participants’ perspectives, motivations, and experiences. Some of the data sources in this review are qualitative, particularly a set of studies done on social impacts of the grouper-tilefish LAPP. This kind of ethnographic research, as well as efforts to interpret surveys beyond statistical analysis, may identify important channels through which policy may have changed the operation of the fishery and potentially the resulting socioeconomic outcomes, which involve social relationships and power differentials (such as among individual fishing quota [IFQ] holders and crew) and also cultural values (such as criteria for job satisfaction and fairness). For example, qualitative data suggest the red snapper LAPP changed labor relations between captains, crews, vessel owners, and newly created shareholders in ways that have largely been missed by quantitative metrics. However, the purposive sampling that often underlies qualitative data collection programs may create challenges for drawing inferences about the representativeness of the findings for the entire population of fishery participants. Moreover, ethnographic research is very intensive and costly, and may be at a scale that is too restricted to represent the entire scope and diversity of groups involved in a fishery.

A challenge in interpreting both quantitative and qualitative data when assessing the impacts of a LAPP lies in the benefits of having a clear “counterfactual”—the likely outcome in a scenario in which the LAPP had not been implemented. Measuring the “causal effect” or “impact” of a LAPP requires an explicit or implicit counterfactual scenario. In principle, quantitative data should make such causal analysis easier. However, only some quantitative studies implement rigorous quasi-experimental design and most rely heavily on before-after comparisons of the treated unit (the fishery) to infer causation. For example, evidence for slowing the race to fish is based on a rigorous quasi-experimental design, whereas evidence for consolidation uses only before-after comparisons. The assumption of a static future that often underlies such before-after comparisons may be unrealistic and potentially bias measures of impact. Qualitative studies of the impacts of LAPPs are frequently noncommittal about the relevant counterfactual (perhaps in part because the guidelines for the LAPP reviews only require that changes since the baseline be analyzed; Morrison, 2017b). They tend to have no explicit control group or prepolicy baseline—relying instead on the researchers’ interpretations of the unstated, counterfactual scenarios implicit in respondents’ accounts.

As noted earlier, this discussion of challenges in handling different kinds of data and discerning counterfactuals reflects the committee’s commitment to taking an interdisciplinary approach to its task. Successful interdisciplinarity often requires shared knowledge of and respect for divergent approaches and standards of evidence. It also benefits from cooperation in data analysis and interpretation where possible and transparency in reporting the results.

OVERCAPITALIZATION AND THE RACE TO FISH

A primary goal set out in Section 1853a(c) is that a LAPP shall contribute to reducing overcapacity if the fishery is overcapitalized (see Box 5.1). All but one of the individual programs of this study have goals and objectives that emphasize reducing overcapitalization. A key objective of LAPPs, particularly those where trading is allowed, is to create a system where fleet size—or other indicators of capital investment and fishing effort—can be adjusted to better fit the state of the resource through the decisions and market transactions of permit holders albeit often within the context of buy-backs or other administrative and government measures. In addition, LAPPs provide incentives and a mechanism for less efficient fishers to exit the fishery, by selling or leasing the shares they hold.

Reducing overcapitalization often becomes an issue that leads to consideration of LAPPs when the fishery has become a “derby” fishery, where participants race competitively for the fish. This is created by the use of fishery management regulations (or in some circumstances buyer demands)—

Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×

such as pure open access, regulated open access, or regulated restricted access environments—that establish limited seasons or quotas. Under pure open access, the threat of other entrants competing for the catch incentivizes incumbents to fish intensively immediately before others enter and the fish are depleted. Under regulated open access, the regulator sets a limit on total allowable catch, opens the season, and closes the season when the fleet collectively lands the allowable catch. This style of regulation encourages harvesting as a race where fishers harvest as much as possible before a season has ended or a total allowable catch is reached, closing the fishery. Even if the stock is held at a sustainable level, the regulatory regime must shorten the season further if more vessels enter, exacerbating the derby conditions in a vicious cycle (Homans and Wilen, 1997). Under regulated restricted access, racing can still occur despite limiting access to a finite number of permit holders. These systems can have latent capacity such that restrictions on entry are too lax to eliminate incentives to race. Alternatively, these systems can create new incentives to increase capital investment and race to catch a larger share of the total quota. The extent of racing generally will depend on how much latent capacity is in the fishery, stock availability, and the existence and efficacy of other input restrictions. Derby fishing was seen as a major source of overcapitalization for three of the five LAPPs in this study. A LAPP reduces the motivation to quickly harvest as much as possible by giving its holders the assurance of a specific share of the overall allowable catch and hence the freedom to decide when and at what rate and cost to fish.

The idea that individual quotas allocated to fishers would slow the race to fish has long been conventional wisdom in fisheries economics, but only recently have rigorous quasi-experimental tests provided causal evidence. Structural empirical studies of regulated open access and regulated restricted access identify the mechanism driving the race to fish under these institutional arrangements (Homans and Wilen, 1997; Huang and Smith, 2014). As such, they provide indirect evidence for what would happen under adoption of a LAPP. Before-after comparisons are also consistent with the story of slowing the race to fish (Brinson and Thunberg, 2016; Tveteras et al., 2011; Wilen, 2006). Hsueh (2017), using a rigorous quasi-experimental approach, finds that adoption of catch shares caused the race to fish to slow in the Pacific whiting (hake) fishery.

Compressed harvesting, or increased fishing effort in response to reduced season length, is an optimal strategy from an individual point of view when fishers need to compete for their harvest at sea. Allocating individual fishing quotas changes a fisher’s objective from maximizing catch to maximizing profits, which could take more time. However, the objective is not to slow down; rather,

Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×

the objective is to weigh all factors that affect profitability and welfare maximizing decisions for the quota owner, including into the future. In the case of Pacific whiting, an early bioeconomic analysis showed that fishing at a different time of year would allow for the harvest of fewer but larger fish under the same total allowable catch (TAC), and those fish could then be used to produce higher-valued products (fillets versus surimi) (Larkin and Sylvia, 1999). Additional travel costs could also be saved by allowing the fleet to specialize seasonally in different fisheries. In this case, the savings were not in the speed of harvest, but in the flexibility of timing of harvest (which could also have ecological benefits if the timing resulted in harvesting fewer larger fish; Larkin and Sylvia, 2004). Similar arguments hold for being able to supply fresh fish during peak demand (holidays), being able to work around family constraints (school schedules), and bad weather (to ensure safety).

Birkenbach et al. (2017) evaluated the causal effects of catch shares on the race to fish in 39 U.S. fisheries managed under LAPPs, including three of the LAPPs under review in this study spanning seven fisheries (i.e., golden tilefish, red snapper, and Gulf of Mexico grouper-tilefish). Using individual fishery matched controls and then analyzing the results using meta-analysis and in a pooled regression, they find that catch shares slow the race to fish, as indicated by lengthening seasons on the order of 0.8-0.9 months averaged across the 39 fisheries. Most of the largest effect sizes out of the 39 fisheries were Gulf of Mexico reef fish species in the red snapper or grouper-tilefish IFQ programs. Results for red snapper, red grouper, gag, other shallow-water grouper, deepwater grouper, and tilefish all showed a slowing of the race to fish, and all results were statistically significant in both model types except one model for red snapper. The more moderate effects for red snapper are consistent with the fact that management before the LAPP was implemented in 2007 included a number of season openings and closings rather than just one derby, which in monthly landings data gives the appearance of a relatively spread-out season despite the possibility of intense derby conditions within a month. Importantly, all six of these Gulf of Mexico species are mixed use, and in the analysis, they all use as controls other species within the mixed-use fishery that are not managed with LAPPs.

Fishing season lengthening sometimes did not occur among the 39 fisheries analyzed by Birkenbach et al. (2017). The extent of derby-style fishing varied substantially. There were heterogeneous regulatory environments pretreatment, catch share programs were configured differently, and biological and market conditions in each fishery did not always align with stretching out seasons. And, some fisheries experienced season contraction as a result of catch shares. In a modeling study of vessel behavior, Birkenbach et al. (2020) explain this anomalous result by showing that slowing the race in one fishery can trigger season contraction for other species within the same complex. They find supporting evidence using microdata from Norwegian groundfish fisheries.

Racing is a mechanism that can lead to negative social and economic outcomes such as unsafe conditions, increased costs, inability to deliver high-value products, and market gluts when landings are concentrated in short bursts. On the other hand, the relatively open access and competitive nature of derby fishing may have positive values to some participants and some types of fishing communities, where, for example, alternative work is scarce or the derby fishery is only part of a complex of fishery and/or other work opportunities. These associated socioeconomic outcomes are expected to change under forms of governance that remove or mediate incentives to race, highlighting some of the trade-offs entailed.

Race to Fish in Study Fisheries

The causal effects of LAPPs on the race to fish, including results for most of the fisheries in this study, is illustrated by Figure 5.1 which is reprinted from Birkenbach et al. (2017).

Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×
Image
FIGURE 5.1 The causal effect of LAPPs on the race to fish. Depicts point estimate (red dot) and 95% confidence interval (blue bars) for the treatment effect of the LAPP on the Gini coefficient of within-year landings. A reduction in the Gini means that landings became more spread out as a result of the LAPP.
SOURCE: Extended Data Figure 2 from Birkenbach et al., 2017.

Red Snapper (Gulf of Mexico)

Evidence for reduced race to fish: very strong and based on rigorous quasi-experimental design. Quasi-experimental evidence is consistent with before-after comparisons in the 5-year review. A survey of participants showed that this was one of the most positive impacts of the program (Boen and Keithly, 2012).

Grouper-Tilefish Complex (Gulf of Mexico)

Evidence for reduced race to fish: very strong and based on rigorous quasi-experimental design. Effect sizes are heterogenous across program species, but all show clear evidence of slowing the race to fish. The quasi-experimental evidence is consistent with perceptions of derby conditions, although the baseline derby conditions were not as severe as in red snapper (Gulf of Mexico Fishery Management Council, 2013).

Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×

Bluefin Tuna (highly migratory species)

Evidence for reduced race to fish: not applicable. Derby fishing is not identified as a problem in the commercial sectors of the bluefin tuna fishery; the LAPP pertains only to the longline sector, in which bluefin tuna are caught only as bycatch.

Wreckfish (South Atlantic)

Evidence for reduced race to fish: weak based on fleet consolidation and application of theoryof flexibility. The evidence is weak because the baseline for the 5-year review is well after the formation of the LAPP. There is no direct measure. The review states that there was a derby situation before the LAPP began, when the TAC was caught in 4 months. A decline in the derby fishery can be inferred from the dramatic decline in the number of vessels involved since the year immediately preceding the LAPP to the present, and that theoretically there is no reason to expect a derby with a very small fleet. The review also makes statements about fishers now fishing less in bad weather and that those who remain in the fishery are experienced and able to fish safely.

Golden Tilefish (Mid-Atlantic)

Evidence for reduced race to fish: strong and based on rigorous quasi-experimental design. Quasi-experimental evidence is consistent with patterns of landings changes, but the 5-year review suggests elimination of derby conditions was inconclusive. It is unclear why this is considered inconclusive, but that is the reason the evidence here is listed as “strong” and not “very strong.”

SAFETY AT SEA

Commercial fishing is among the most hazardous professions in the United States with a rate of 80.8 deaths per 100,000 full-time equivalent workers in 2014 compared to the national average of 3.3 (Bureau of Labor Statistics cited in Marvasti and Dakhlia, 2017). Section 1853a(c) of the MSA also requires that a LAPP promote safety at sea, fishery conservation and management, and social and economic benefits. Promoting fishing safety is in theory linked with the decline in derby fishing, which at times has resulted in taking risks in poor conditions in order to compete for fish before a quota is reached or a season has ended. It could also be related to improvements in profitability, whereby there may be less pressure to take risks in vessel operations because of financial pressures. The conceptual argument for improved safety at sea as a consequence of LAPPs flows directly from mediating the race to fish. Because LAPPs allow fishers to decide when to catch fish rather than forcing them into competitive and often short openings, they can avoid bad weather and other potential safety hazards. For example, a participant in a derby fishery faces the choice of taking a risk today to fish in bad weather or not catch anything at all, whereas a holder of some secure quota pounds means the fisher can choose to risk the bad weather to fish or wait until the weather clears to fish. The conceptual underpinning is so straightforward that it formed part of the narrative in the popular reality television show Deadliest Catch.

A social survey of Gulf of Mexico reef fish permit holders conducted in 2005 highlights safety concerns about derby conditions and the need for management changes in the fisheries. All permit holders were sent surveys, the response rate was 45.9%, and the adjusted response rate was 46.7% after adjusting for blank surveys from people no longer fishing in the Gulf and duplicate addresses (Zhang and Smith, 2011). When asked about the statement, “Seasonal closures force fishermen to fish in bad weather,” 80% of respondents agreed or strongly agreed (unpublished data from survey reported in Zhang and Smith, 2011).

Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×

There are four categories of empirical evidence about the effects of LAPPs on improved safety at sea: (1) indirect evidence based on econometric studies of fishing behavior; (2) before-after comparisons of accidents, injuries, and fatalities at sea; (3) quasi-experimental evaluation of exposure to weather risk; and (4) survey and ethnographic research with fishers about their perceptions of safety in their fisheries. Indirect evidence from studies of fishing behavior show that fishers are willing to trade off potential revenue gains against risks of fishing in bad weather or unsafe conditions. These results are consistent across fisheries with different gear types and operations, including California urchin divers avoiding bad weather and shark attack risk (Smith and Wilen, 2005); Florida lobster fishers avoiding high winds and hurricanes (Stafford, 2015); Gulf of Mexico reef fish fishers fishing less in bad weather (Marvasti, 2017; Smith et al., 2008); and Gulf of Mexico shrimpers fishing less in high waves (Smith et al., 2017).

Emery et al. (2014) specifically study an individual transferable quota (ITQ) fishery and examine risk-taking behavioral differences between fishers who own quota and fishers who lease quota. They find that those who lease quota have higher tolerance for weather risk, hoping to get higher prices for the catch to help make up for the cost of the lease. They do not compare risk taking with and without the ITQ and, as such, it may be that both quota owners and those who lease quota are safer relative to the counterfactual scenario of no ITQ. Moreover, the findings in Smith and Wilen (2005) provide a plausible explanation for why quota lessees would be less weather risk averse than quota owners. Specifically, Smith and Wilen (2005) find that risk tolerance is heterogeneous in the fleet, and physical risk avoidance is correlated with financial risk avoidance. If leasing quota is financially risky, it might select for individuals who have higher risk tolerance across both physical and financial domains. If, as is likely, quota owners are wealthier than quota lessees, a compatible explanation is that lower-wealth individuals have higher marginal utility of income and thus are willing to tolerate more physical risk.

Before-after comparisons can be as simple as comparing accidents at sea or fatalities before and after adoption of a new policy such as a LAPP. Fatality rates in Gulf of Mexico reef fish fisheries are shown in Figure 5.2.

But more sophisticated econometric studies can control for potentially confounding factors. Marvasti and Dakhlia (2017) study the effects of the Gulf of Mexico red snapper and grouper-tilefish LAPPs on occupational safety and show that individual fish quotas led to reductions in fishing fatalities. Consistent with the theoretical mechanism for improved safety at sea, they find evidence that fishers take fewer trips in adverse weather conditions under individual quotas. Recent research in Iceland found that derby-style open access coastal fisheries in the summertime are no less safe than fisheries managed by LAPPs, although the coastal fleet was operating at a loss, which may have allowed it to achieve this parity in safety (Gunnlaugsson et al., 2021).

Pfeiffer and Gratz (2016) use rigorous quasi-experimental identification to show that adopting catch shares caused less fishing in unsafe weather conditions. They analyze the U.S. West Coast fixed gear sablefish fishery that was treated with catch shares, compare it to a segment of the fishery that was managed with trip limits, and find a 79% reduction in fishing on high-wind days.

Survey and ethnographic studies have explored fishers’ perceptions of safety pre- and post-LAPPs in various fisheries. In some fisheries, improved safety is among the most agreed-upon positive impacts of LAPPs on the fishery, for example the North Pacific halibut fishery (e.g., Carothers, 2013, 2015; Hartley and Fina, 2001; Hughes and Woodley, 2007). However, there is some evidence to suggest that as larger shifts in fishery systems occur in the decades after LAPPs are implemented, such as shifts in crew members from more experienced to less experienced (as explored more below) and leasing arrangements discussed above, there may be a decrease in fishers’ perceived safety at sea (e.g., Pinkerton, 2014; Pinkerton and Edwards, 2009; Ringer et al., 2018). Interviews with crew members who worked on Bering Sea crab vessels soon after the implementation of LAPPs show that some crew members felt less safe at sea as the fleet consolidated because

Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×
Image
FIGURE 5.2 Fatality rates in Gulf of Mexico reef fish fisheries.
SOURCE: Red snapper 5-year review.

there were far fewer vessels in remote icy waters should help be needed (Lazrus et al., 2011). However, these reports should be balanced against the overall evidence of decreased fatalities and accidents at sea that have been reported in the fishery after rationalization, as well as reports of delayed maintenance on fishing vessels during the derby fishery (NPFMC, 2017). Nonetheless, safety at sea was improving prior to rationalization, so causal attribution based on the before-after comparison alone is difficult.

Safety at Sea in Study Fisheries

Red Snapper (Gulf of Mexico)

Evidence for actual changes in safety: strong evidence for improved safety at sea based on rigorous econometric analysis of risk exposure (Marvasti and Dakhlia, 2017) and simple before-aftercomparisons (Gulf of Mexico Fishery Management Council, 2013). The evidence is not based on a quasi-experimental design providing a strong counterfactual (as in Pfeiffer and Gratz, 2016). The effect size is large relative to the background occupational safety hazard. The simple before-after comparison reveals “annual fatalities per million vessel days in the Gulf decreased by 51%” (Gulf of Mexico Fishery Management Council, 2013). The evidence is consistent with much stronger causal evidence showing a slowing of the race to fish.

Evidence for perceived changes in safety: mixed but mostly favoring improvements in safetyat sea. From the 5-year review: “Results from a recently completed survey of RS-IFQ participants in the Gulf indicate that the industry as a whole is relatively indifferent in terms of the RS-IFQ program impact on safety at sea. However, detailed analyses of safety-related responses by share size ownership and across geographical areas indicate that medium to large shareholders as well as RS-IFQ participants in the northern and western Gulf perceived the RS-IFQ program to have improved safety at sea in the Gulf” (Boen and Keithly, 2012).

Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×

Grouper-Tilefish (Gulf of Mexico)

Evidence for actual changes in safety: strong evidence for improved safety at sea based onrigorous econometric of risk exposure (Marvasti and Dakhlia, 2017) and simple before-after comparisons (Gulf of Mexico Fishery Management Council, 2018a). However, the evidence is not based on a quasi-experimental design providing a strong counterfactual. The effect size is large relative to the background occupational safety hazard and even larger in grouper and tilefish than in red snapper. The evidence is consistent with much stronger causal evidence showing a slowing of the race to fish.

Evidence for perceived changes in safety: moderately strong evidence for improved safety atsea based on in-person survey of captain and crew, simple before-after comparison (ECS Federal Inc. et al., 2017).

Bluefin Tuna (highly migratory species)

Evidence for actual changes in safety: weak. There is discussion in the 5-year review of greater fishing flexibility resulting from the LAPP, but there is no formal effort to quantify this flexibility, unlike in other LAPPs that this report addresses. As such, improved safety at sea is consistent with this qualitative discussion and the theory of reduced derby fishing but lacks specific evidence in support.

Evidence for perceived changes in safety: none.

Wreckfish (South Atlantic)

Evidence for actual changes in safety: weak and based on indirect application of theory tostylized facts. There is no quantitative evidence directly pertaining to safety at sea, but the fleet has shrunk and the derby conditions that raise safety issues have been eliminated (SAFMC, 2019).

Evidence for perceived changes in safety: none. The review mentions a concern about expansion of the fishery raising potential safety issues due to inexperience, but this is a hypothetical concern that is only loosely tied to the LAPP.

Golden Tilefish (Mid-Atlantic)

Evidence for actual changes in safety: modest and based on before-after comparisons andindirect application of theory to stylized facts. The accident rate declined after the IFQ, but there is no assessment of the counterfactual (MAFMC, 2017). Improved safety at sea is also consistent with effort for a segment of the fleet shifting out of the winter season (MAFMC, 2017).

Evidence for perceived changes in safety: none.

PRICES AND PROFITABILITY

Profitability is primarily affected by revenues and costs. On the revenue side, the most straightforward metric is the price of fish. Implicitly, relying on price assumes that markets are competitive because in a competitive market, price is the marginal revenue. A number of studies indicate that LAPPs can increase prices by allowing fishers to time catches to market demand, avoid market gluts, improve product quality by not racing to fish, and fetch a premium by landing more fresh fish that otherwise would have to be frozen under derby conditions (Birkenbach et al., 2017; Grafton et al., 2000; Homans and Wilen, 1997, 2005). Evidence for price increases in LAPP fisheries mostly is

Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×

in the form of before-after comparisons without a control fishery, although there is ongoing research to measure price changes relative to a valid counterfactual.

Avoiding market gluts by allowing landings to be more evenly dispersed throughout the year can also provide more stability in ex-vessel prices. In all four of the LAPP IFQ programs examined in this study (exclusive of the bycatch-based individual bluefin quota [IBQ]), ex-vessel fish prices were considered to have become more stable as a result of implementing the IFQ program. While none of the reviews provided quantitative evidence to support the conclusions, several referred to external studies including those that obtained information from stakeholder surveys.

While the price of fish is extremely important to total revenues, a long-run measure of profitability would also include consideration of individuals’ time value of money (i.e., discount rate) and overall risk preference for participating in a given fishery.

Price Increases in Study Fisheries

Red Snapper (Gulf of Mexico)

Evidence for price increases: strong based on before-after comparison of inflation-adjustedprices. Red snapper experienced inflation-adjusted price increases after the LAPP (Gulf of Mexico Fishery Management Council, 2013), as shown in Figure 5.3.

Image
FIGURE 5.3 Inflation-adjusted red snapper prices before (1990-2006, Accumulated Landings System [ALS]) and after (2007-2011, Individual Fishing Quota [IFQ]) introduction of the LAPP.
SOURCE: Figure 16 in red snapper 5-year review (Gulf of Mexico Fishery Management Council, 2013).
Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×

Grouper-Tilefish (Gulf of Mexico)

Evidence for price increases: strong based on before-after comparison of inflation-adjustedprices. All species categories experienced inflation-adjusted price increases after formation of the LAPP (Gulf of Mexico Fishery Management Council, 2018a).

Bluefin Tuna (highly migratory species)

Evidence for price increases: unknown (the 5-year review does not report ex-vessel price inthe baseline pre-LAPP period). The market for bluefin tuna is mainly international, and therefore there is no theoretical reason why small changes in the numbers of bluefin tuna landed and sold would have an effect on price.

Wreckfish (South Atlantic)

Evidence for price increases: unknown (the 5-year review does not report ex-vessel price inthe baseline pre-LAPP period).

Golden Tilefish (Mid-Atlantic)

Evidence for price increases: strong based on before-after comparison of inflation-adjustedprices (MAFMC, 2017).

OTHER INDICATORS OF EFFICIENCY

Changes in costs are more difficult to assess because cost information is typically proprietary, and the relevant comparisons are marginal cost curves, which are not directly observable. Productivity analysis relating inputs to outputs is typically used to assess cost changes. Higher productivity implies lower costs and thus higher profitability. A much simpler, but less reliable, indicator of productivity is catch per unit effort.

Productivity analysis relating inputs to outputs was done for the golden tilefish LAPP review. Productivity increased relative to the baseline in golden tilefish after adjusting for biomass changes (assumed to be independent of the LAPP management), with the exception of 1 year. This can be interpreted as modest to strong evidence for a decrease in costs due to the LAPP. Changes in profitability and efficiency can be interpreted from changes in revenues too, as was done for the bluefin tuna LAPP review. Maintaining profitability was an objective of the bluefin tuna IBQ program, balanced with the objective of limiting landings and dead discards. In this case, revenues (mainly from target species) declined, but that was a trend that began prior to and independent of the IBQ program for the most part.

EVIDENCE OF PROFITABILITY FROM SHARE OR QUOTA PRICE INCREASE

Another indicator of overall profitability is the quota or share price. The quota price is an indicator of the discounted future stream of expected profits. As such, it is a measure of cost and revenue expectations from an operational perspective as well as anticipated stock health, regulation, and fleet structure. This makes quota price the most comprehensive measure of profitability. The drawback of relying on quota price to assess profitability changes in a LAPP fishery is that quota price does not exist in the baseline, pre-LAPP period. It can only be used to assess profitability changes after creation of a LAPP.

Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×

Evidence of Profitability from Share or Quota Price Increase in Study Fisheries

Red Snapper (Gulf of Mexico)

Evidence for profitability increases: strong based on the trend of inflation-adjusted share prices. Red snapper experienced very large inflation-adjusted share price increases in the first 5 years of the LAPP (Gulf of Mexico Fishery Management Council, 2013). This is also consistent with a large increase in share value relative to estimated pre-LAPP share values provided by Fenichel and Abbott (2014).

Grouper-Tilefish Complex (Gulf of Mexico)

Evidence for profitability increases: strong based on the trend of inflation-adjusted shareprices. Red grouper, gag grouper, and tilefish experienced very large inflation-adjusted share price increases in the first 5 years of the LAPP, suggesting large increases in profitability (Gulf of Mexico Fishery Management Council, 2018a). Deepwater grouper experienced more modest price increases in share price, suggesting more modest increases in profitability. Shallow-water grouper experienced modest share price increases in some years, but the most recent inflation-adjusted share price in the 5-year review is below the initial price in 2010. Substantial increases in profitability for most species in the complex are consistent with a large increase in share value relative to an implicit share value pre-LAPP as estimated by Fenichel and Abbott (2014).

Bluefin Tuna (highly migratory species)

Evidence for profitability increases: none. The configuration of the bluefin LAPP is different from others and share prices do not have the same meaning in terms of signaling profitability.

Wreckfish (South Atlantic)

Evidence for profitability increases: none. Share prices are not available consistently over time due to data confidentiality issues.

Golden Tilefish (Mid-Atlantic)

Evidence for profitability increases: modest. Quota prices are confidential and not reported in the 5-year review. However, there are two percentage changes reported, suggesting that quota prices increased substantially (144%) after 2010. However, quota prices subsequently decreased (–51%). The net effect is still positive, so it appears that profitability increased in the post-LAPP period.

EFFORT REDUCTION AND CONSOLIDATION

LAPPs are expected to reduce total fishing effort and can be associated with consolidation in an overcapitalized fleet. Consolidation refers to changes in industry structure where catch, boat ownership, and/or quota holdings become more concentrated among fewer vessels, individual owners, or fishing firms. LAPPs can change industry structure through consolidation of ownership of quota shares and/or fishing vessels through at least two mechanisms: (1) transferability of catch shares, which tends to favor the more efficient operations, and thus less efficient ones disappear from the fishery or are bought out and consolidated with the more efficient ones; and (2) possible economies of scale that attend larger business ventures. Therefore, an examination of economic effects of LAPPs includes a focus on consolidation.

Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×

As described above, many LAPPs are structured to provide incentives for the consolidation of the fleet, particularly if the exclusive privileges are transferable. The actual effects will vary depending primarily on the size, age structure, the diversity of vessel efficiency of the fleet, and its overall annual catching capacity relative to the annual TAC. Often LAPPs are chosen because of identified overcapacity problems. As such they can fundamentally change fleet composition and structure, which can have repercussions throughout the fishery. In countries like Iceland and New Zealand, consolidation of fishing quota ownership following ITQ implementation was rapid and substantial (Pálsson and Helgason, 1995; Stewart and Callagher, 2011; Stewart et al., 2006). In the United States, some fisheries experienced rapid consolidation after LAPPs implementation. For example, in the first year of IFQ management, the number of vessels in the Bering Sea red king crab fishery contracted by 63%, indicating significant overcapacity of the fleet prior to implementation. Consolidation is a common but not universal outcome of LAPPs. For example, Olson (2011) notes that some fleets in New Zealand expanded after LAPPs due to recently discovered offshore stocks and the lack of vessels capable of harvesting far from shore at those depths, which led to state support for offshore fishing capacity. This example illustrates the limitations of drawing inferences about policy impacts without a counterfactual. Fleet capacity might have expanded anyway without the LAPP, or it might have expanded more or less.

Consolidation induced by a LAPP also has implications for the stock of capital available to fish in other fisheries. Fishers can enter or intensify fishing in other fisheries for which they hold permits. There is evidence that the New England groundfish sector catch share program caused spillover of fishing effort into adjacent Mid-Atlantic fisheries that were not managed with IFQs (Cunningham et al., 2016). Vessels can also be sold domestically or internationally and enter new fisheries. The interconnections of fisheries and the mobility of fishing capital highlights the difficulty in understanding individual fisheries in isolation (Kroetz et al., 2019b) and reinforces the need to avoid subsidies of fishing capital even when they are intended for a tightly controlled IFQ fishery (Smith, 2019).

Evidence on Consolidation in Study Fisheries

Red Snapper (Gulf of Mexico)

Evidence for some consolidation: modest. While Boen and Keithly (2012) report consolidation concerns from an early survey of participants, especially among smaller shareholders, the committee found little evidence for concern about market power (see also Mitchell, 2016). Further the evidence is all based on before-after comparisons, so it lacks statistical control of the counterfactual (Gulf of Mexico Fishery Management Council, 2013). The number of vessels participating in the red snapper fishery declined after the LAPP went into effect, and the concentration of landings and quota increased as indicated by the Gini coefficient and the Herfindahl-Hirschman index (HHI). The highest landings HHI (191.6 in 2011, up from a low of 106.4 in 2002) is still well below the standard threshold for a market showing “moderate concentration” (HHI = 1,500). That is, these values of the HHI are on the low end of the range considered unconcentrated and near the threshold for highly competitive. In light of this, it is unclear whether this amount of consolidation is economically or socially consequential. Also, the landings HHI was trending upward prior to the LAPP and vessel numbers were trending down, weakening the evidence for a causal effect of the LAPP on consolidation, as shown in Figure 5.4. However, this figure also shows that some increase in HHI was beyond what would be expected based on the trend alone.

Concern about consolidation. The 5-year review mentions concern about the structural aspects of consolidation because of quota distribution and public comment. Quota distribution data have shown that 29 accounts hold 61% of the red snapper fishery quota, and public comment has indi-

Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×
Image
FIGURE 5.4 Concentration of Gulf of Mexico red snapper landings before and after the LAPP. Concentration is measured by the Herfindahl-Hirschman index (HHI). Actual values (blue) were trending upward prior to the LAPP. The trend (orange) is based on a linear regression of HHI on year using only data before the LAPP (2002-2006).
DATA SOURCE: Table 7, red snapper 5-year review (Gulf Mexico Fishery Management Council, 2013).

cated that further consolidation may restrict access and adversely affect some communities (Gulf of Mexico Fishery Management Council, 2013). LAPPs have implemented caps on share ownership to account for the potential negative impacts of share consolidation, such as in the red snapper program, and given these caps the HHI could be rescaled to account for the effective maximum value in any quantitative analysis. However, identifying the actual entities—whether individuals, partnerships, businesses—that hold accounts, and their linkages with other accounts, has proved difficult given the method of record-keeping employed. Thus, empirical data on consolidation of shares, as distinct from vessels, as an additional metric may not be as helpful as other measures or make it possible to discern certain types of social impacts. It may also be the case that consolidation in the landings or allocation markets, such as from the development of brokers, could affect social outcomes. The modest consolidation of quota in the red snapper fishery is illustrated by Figure 5.5.

Grouper-Tilefish (Gulf of Mexico)

Evidence for some consolidation: modest. The evidence is all based on before-after comparisons, so it lacks statistical control of the counterfactual (Mitchell, 2016). This omission is particularly important because the LAPP went into effect in the same year as the Deepwater Horizon oil spill, which may also have affected post-LAPP outcomes. The number of vessels participating in the grouper-tilefish fishery declined after the LAPP went into effect. Measures of concentration vary across species within the complex. HHIs are in the unconcentrated range for red grouper, gag grouper, deepwater grouper, and shallow-water grouper, while tilefish crosses the threshold of modest concentration in two of the post-LAPP years. If one defines the market narrowly enough, it is always possible to find evidence of concentration, so it is debatable whether splitting out the individual species in the grouper-tilefish IFQ is too narrow. In light of this, it is unclear whether consolidation in grouper-tilefish is economically or socially consequential. Also, the vessel numbers were trending down prior to LAPP implementation, weakening the evidence for a causal effect of the LAPP on consolidation. The 5-year review notes the relatively high Gini coefficients for the

Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×
Image
FIGURE 5.5 Number red snapper IFQ program quota shareholders over time by size.
SOURCE: Red snapper 5-year review (Gulf Mexico Fishery Management Council, 2013).

grouper-tilefish complex as well as red snapper, but notes that there was similarly high concentration prior to IFQs.

Concerns about consolidation. Ethnographic research in west Florida fishing communities (Overbey, 2016) showed that the initial distribution and subsequent consolidation made social distinctions between “big guys” and “little guys” more obvious than before; the latter were those who had to lease, work as crew for others, or leave the fishery. There is also a perception that a few of the “big guys” can exert undue control over the price of leasing allocation (Gulf of Mexico Fishery Management Council, 2018a). The cost of leasing allocation is central and critical to the typically small-scale, family-owned fishing enterprises of the region, affecting the entry of young people and the ability to attract and keep captains and crews.

This example also illustrates a divergence between perceived reality and the measurable economic conditions of the fishery. The HHIs for quota share holdings are all in the unconcentrated range in every period for red snapper, red and gag grouper, deepwater grouper, shallow-water grouper, and tilefish (Mitchell, 2016). Quota allocation holdings also fall in the unconcentrated range for red snapper, red and gag grouper, and shallow-water grouper in every period (Mitchell, 2016). Altogether, this evidence suggests that “big guys” are not controlling the price through market power. Only for tilefish and deepwater grouper do HHIs exceed the 1,500 threshold of moderate concentration and only in some parts of 2010, indicating little possibility for market power contributing to high quota prices. In the absence of evidence of market power, the more plausible explanation for high quota prices is that the fishery has become more profitable through reduced costs, increased

Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×

revenues associated with better market timing, more stable supply chains, improved product quality, and overall improved stock condition most likely driven by stock rebuilding rather than the LAPP.

Bluefin Tuna (highly migratory species)

Evidence of consolidation: weak. The number of vessels in the fishery declined after LAPP implementation, but the number of vessels was declining prior to implementation. There are no calculations available to assess industry concentration.

Wreckfish (South Atlantic)

Evidence of continued consolidation: modest. The pre-LAPP data are not reported in the 5-year review, and instead before-after comparisons are made in the period prior to 5-year review and during the 5 years. This makes concentration comparisons to other fisheries more difficult, as there is not even before-after data on the fishery itself. Overall, the wreckfish fishery has become highly concentrated according to the HHI. This is not surprising given the small number of total participants in the fishery. The 5-year review concluded that the high concentration is unlikely to have negative effects on product markets given the highly competitive nature of seafood markets. However, the highly concentrated HHI does suggest possible market power that would constrain new entry.

Golden Tilefish (Mid-Atlantic)

Evidence of continued consolidation: modest. The evidence is all based on before-after comparisons, so it lacks statistical control of the counterfactual. Prior to LAPPs, the golden tilefish fishery had just 14 active vessels and an HHI of 1,150 in the baseline period (unconcentrated). After LAPPs, the number of vessels declined to between 9 and 11, and HHI increased as high as 1,805 (in the range of moderate concentration). It is unclear whether this change is enough to create market power in the quota market that has consequences for entry into the fishery.

LABOR AND EMPLOYMENT

If the LAPP creates conditions for reduction in the numbers of boats and/or trips and other changes linked to greater efficiency, one can expect effects on the number and character of jobs at sea and on land, the nature of work, and conditions of employment. Asche et al. (2018) found no effects of LAPPs on labor in their cross-sectional correlative study of a large set of fisheries. However, the issues of employment changes and labor conditions frequently arise in debates and observations of LAPP fisheries and are expected to differ depending on the design and prior conditions of a fishery (Steiner et al., 2018).

Studies have shown that fewer vessels participating over longer seasons can result in both positive and negative outcomes for crew members. For example, changes in the unit value of catch may affect wages and employment. The intended reduction of the fleet that often accompanies IFQ programs reduces captain and crew jobs as well as fishing opportunities for vessel owners who do not qualify for the initial allocation, some of whom may become crew members on other boats (Overbey, 2016). For those who continue or begin when the LAPP is in place, there may be other changes. For example, if derby fishing ends, employment may be spread across a much longer fishing season, which could increase or decrease employment for affected crew members and change the nature of the work (e.g., Abbott et al., 2010). Research in Kodiak, Alaska, showed a decline in the value of skilled labor that led to a loss of power for crew members and an additional barrier to

Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×

upward mobility due to the costs associated with acquiring quota (Carothers, 2015). People also see unfairness in a system in which quota owners can lease or sell their share when they leave the fishery, but crew members are not similarly compensated and may have fewer alternatives (Terkla et al., 1988). The roots of the sense of inequity revealed in such studies lie in the practice of allocating IFQs almost exclusively to vessel owners, based on an assumption about the priority of capital ownership (e.g., “vessel owners and lease holders are the participants who supply the means to harvest fish, suffer the financial and liability risks to do so, and direct the fishing operations”; NOAA Fisheries, 1993) over the contributions of the skills and labor of hired captains, mates, and deckhands. One exception is the Bering Sea crab fishery where skippers of vessels received 3% of the allocated fishing quota.

The effects of LAPP-related consolidation on former hired captains and crew members are especially difficult to assess because there is usually no official record of their identities and histories of participation. As the 5-year review for red snapper states, “A survey of crew members and vessel owners who were omitted from the IFQ fishery would be helpful to gauge the level of stress and impact the decisions of management had on them and their families” (Gulf of Mexico Fishery Management Council, 2013). Such a survey does not exist. However, a general survey of crew members in the northeast and Mid-Atlantic regions (Henry and Olson, 2014) provides some insight into the situations and perspectives of crew in general. The survey indicated that crew members rarely participate in the management process, often feel as though their opinions are irrelevant, and exhibit a high level of distrust of management. Many indicated that they do not have access to health insurance and that earnings predictability is a concern. Nevertheless, survey participants “exhibit a high level of attachment to fishing as an occupation and satisfaction with the non-economic aspects of fishing as a career” (Henry and Olson, 2014).

A major social question is how the wealth that is created by more efficient fisheries is distributed in relation to expectations of participants in the fishery and the larger community. The owner-captain-crew relationship is central, and most commercial fisheries have a tradition of remunerating captains, mates, and deckhands via a “lay” system of sharing both costs and returns with the owner(s). The costs of quota shares are taken into account in a variety of ways within these systems, and may come to be seen as unfairly disadvantaging crew members (e.g., Pinkerton, 2014; Pinkerton and Edwards, 2009). Leasing costs and even cost recovery fees are often deducted from the lay, together with other costs of the voyage, before shares to the owner and crew are distributed. This can be perceived locally as a social problem because of expectations derived from the longstanding systems in fisheries of sharing risk and rewards in labor contracts. Thus, even though the actual pay may be the same or better, and working conditions including safety at sea may improve, some participants are dissatisfied, adopting historically inaccurate but evocative terms such as “sharecropper” to refer to what they perceive as the loss of a more equitable “sharing” in the remuneration system, which is colored by the social status differential that emerges between shareholders and others with LAPPs.

Despite a rich ethnographic literature, there are strikingly few quantitative analyses that attempt to measure the causal impact of LAPPs on labor. This is largely driven for most fisheries by the lack of crew registries and even the most basic data on vessel crew employment and pay. In the few cases where such data do exist, they are often not available either before or after the policy change, making any inferences about changes in the welfare of crew members difficult to substantiate with or without efforts to assess counterfactuals and confounding variables.

Abbott et al. (2010) provide an exception to the lack of data before and after the policy change by utilizing data collected from vessels in the years immediately preceding and following the implementation of IFQs in the Bering Sea and Aleutian Islands crab fisheries. Utilizing simple before-after comparisons, they show that, while employment measured in total employees declined dramatically due to consolidation under the IFQ, a metric of employment that considers the “intensity” of employment (its duration) for crew members on the same vessels before and

Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×

after IFQs did not decline. However, improvements in harvesting efficiency did reduce the amount of crew time required per a unit of landings. These findings highlight the importance of adopting a multidimensional notion of measures of employment, where IFQs may expand some margins at the cost of others.

The issue of changes in share contracts or a shift toward daily wages is often seen as a negative aspect of LAPPs by crew members (e.g., Carothers, 2015; Eythórsson, 1996; McCay and Brandt, 2001; Olson, 2011; Pinkerton, 2014, 2015; Ringer et al., 2018). However, the cost of leasing quota can be removed from the ex-vessel revenue prior to the crew being paid. An analysis of the British Columbia halibut fishery showed lower returns to crew members from the practice (Pinkerton and Edwards, 2009), but other studies, in that fishery (Casey et al., 1995), in the Mid-Atlantic surf clam fishery (Brandt and Ding, 2008), and the West Coast groundfish trawl fishery (Steiner et al., 2018), found that the added cost to crew members was more than compensated by increases in crew income.

In their quantitative crab fishery study, Abbott et al. (2010) found no evidence of changes in the share contracts used to define crew remuneration, while the overall seasonal pay of noncaptain crew undoubtedly increased for the majority of crew members relative to pre-IFQ years. When calculated as a daily “wage,” the majority of red king crab crew members saw their pay increase as well—driven in part by the reduction in labor hours per ton of harvest and a consolidation-induced increase in the number of fishing versus nonfishing days per vessel compensated by the lay system—while the evidence for snow crab was more mixed. On the whole, it could be argued that crew outcomes improved for those that were able to remain in the fishery, particularly in light of well-documented improvements in safety in the fishery.

Although revenues may be the same or higher, the share of landings devoted to crew pay may decline. In other words, the rents created by additional productivity are not divided proportionally with crew members, but are instead capitalized into the price of quota, a factor that might affect job satisfaction and perceptions of equity within the fishery (Steiner et al., 2018). Effects on job satisfaction may reflect perceptions of some participants in the fisheries that reduced shares are evidence of devaluing labor. More generally, the traditional “co-venturer” nature of crew employment in fisheries may be altered, coming closer to wage labor relationships (Pinkerton, 2014). Whether these changes in remuneration practices constitute a net gain or loss to crew members is unclear. Movement toward a wage may reduce the upside risk from a highly successful season (or from working on a particularly skilled vessel), but it also shelters captains and crew members from the downside risk associated with poor fishing or shocks to input prices (e.g., fuel). Furthermore, while some crew members employed before the LAPP transition may find this new arrangement undesirable and either persist in the fishery anyway or seek alternative employment, some new crew members may be specifically attracted to the new terms of employment in the LAPP. The overall effects of remuneration changes under LAPPs are therefore uncertain and depend strongly on the risk preferences of a changing population of crew members.

While useful, the Abbott et al. (2010) study suffers from some shortcomings including the lack of a comparison group to control for confounding trends and the inability to follow outcomes for those crew that exited the fishery. Finally, the study only focuses on the short-run effects of LAPPs potentially failing to reveal longer-run impacts to crew as quota consolidates, the rate of leasing among vessels increases, and as “sticky” remuneration practices, such as a crew’s share of net revenues or the list of costs that are deducted before calculating this share, change.

Evidence on Labor and Employment Shifts in Study Fisheries

No information is available on labor and employment shifts due to LAPPs for the wreckfish, golden tilefish, and Atlantic bluefin tuna programs. Confidentiality may be a factor for the wreckfish

Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×

and golden tilefish cases, given the very small number of vessels involved. The general problem is, as noted above, the lack of records on hired captains and crews. However, special efforts were made for the two Gulf of Mexico LAPPs.

Red Snapper and Grouper-Tilefish Evidence on Labor and Employment

Boen and Keithly (2012) report a reduction in crew size in the red snapper fishery since IFQ implementation, especially in the western Gulf region and among small and medium-sized vessels (Gulf of Mexico Fishery Management Council, 2013). The 5-year review asserted that while crew sizes decreased, the ability to hire and retain stable crews increased, suggesting that holding a quota share, and hence the capacity to know how much the vessel will actually fish, may help recruit and keep crews.

Efforts were made in a 2016 in-person survey of 153 captains and crew members to assay changes since the IFQ program for grouper and tilefish species in the Gulf of Mexico began in 2010 (ECS Federal Inc. et al., 2017). Strength of the findings was constrained by the lack of a baseline survey and quantitative data on incomes, and by underrepresentation of captains and crew who no longer fished as well as regional, ethnic, and age differences. Respondents were almost all white males from Florida who participated before IFQs and continued participating in grouper and tilefish fishing. As expected given consolidation, they generally reported less work available, with less choice and flexibility to move among vessels. Income measures were roughly unchanged. Crew members reported a slight reduction in the stability of their annual incomes, and both captains and crew members reported a slight reduction in their ability to earn large increases in income. While many fishers experienced increased revenue shares, there was, on average, a decrease. It was unclear whether this decrease was caused by IFQs directly, general labor market conditions (e.g., fewer jobs in the fishery driving down wages), or some other change. Approximately one-third of respondents said that they were worse off than before IFQs, but it was not evident what the causes were. The respondents reported a significant increase in safety, mixed perceptions of job satisfaction, and a general concern with lack of perceived fairness, focusing on the fact that holding quota did not require active participation in fishing.

Another source (QuanTech, Inc., 2015) is based on a mail, telephone, and Internet-based survey of people identified as shareholders; the total response rate was 35.6%. The “lay” or share system predominates, accounting for 88% of the enterprises that hired crews. A very small percent paid crew members a flat rate per day, trip, or season, and the difference before and after was small (from 7.6% to 10%; Table 17 of QuanTech, Inc., 2015), therefore not indicating a shift toward wage labor. Although there were differences in the share system of distribution of revenues to owner, captain, and crew, they reported virtually no change in the system pre-IFQ to post-IFQ (Table 19 of QuanTech, Inc., 2015), but by and large they deducted the expense of shares before paying captain and crew (Tables 15 and 18 of QuanTech, Inc., 2015). In contrast to crew and captain reports of greater difficulty finding employment in the fishery post-IFQ, in this study there was a marked increase in the percentage of respondents who felt that retaining skilled crew members and hiring skilled replacement crew members was “difficult” or “very difficult” post-IFQ (Table 12 of QuanTech, Inc., 2015).

Griffith et al. (2016) conducted qualitative research on labor relations in the grouper-tilefish ITQ program. Their studies included 176 interviews (25% of the approximately 700 shareholders). They note that “very likely due to the contentious nature of the program” those who no longer fished in these programs refused to be interviewed (Griffith, 2018). Concern about changed social relations within the fisheries came up in many discussions by interviewees of the situation where some who received small allocations are forced to lease some or all of the quota share they need, at what they see as high costs (one term used is “usury”), or to become crew members rather than owner-operators. Hired captains and crew members, including many with long histories of partici-

Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×

pation, viewed themselves as disadvantaged in the initial allocation, stating that the shares went to boat owners with reef fish permits rather than to fishers on vessels. As such, some of the labor outcomes associated with the IFQ stem from the particular design of the initial allocation, not necessarily the transition to IFQs.1

RISE OF NEW ROLES

A social consequence of LAPPs with economic implications is the emergence of new social roles and relationships (Wingard, 2000). The initial allocation sets up the conditions and structure for a realignment of social and economic positions within a fishery and within communities. In the existing IFQ systems, the initial allocation is set up to “grandfather in” those historical participants who meet qualification criteria, and those criteria tend to be designed to reflect the status quo at the time decisions are made by the Council or other bodies (Creed, 1991; McCay, 2001). One reason for this in overcapitalized fisheries is the desire to not attract new capital (i.e., vessels) into the fishery. The process that follows, involving sales, lease exchanges, and so on, often results in a continuation or intensification of existing differences in capital, wealth, and status, as shown in a large number of cases worldwide (Shotton, 2001). From the perspective of those with no or small shares, the situation is sometimes viewed as intensifying differences between “winners” and “losers,” as learned in an ethnographic study of west Florida grouper-tilefish participants, where many appreciate the benefits of the IFQ program but identify the intensified gap between the “haves” and the “have nots” as a problem (Griffith et al., 2016; Overbey, 2016). The Mid-Atlantic golden tilefish LAPP 5-year review also noted as a social impact the persistence of this sentiment, coming out of a long history of progressive consolidation of ownership and participation and exclusion of some with perceived claims to the fishery based on their roles in developing it.

With the initial allocation comes the rapid appearance of a new socioeconomic class of individuals and other entities that control access to the fisheries, the IFQ shareholders, and a corresponding group dependent on them for access. As seen in the Gulf of Mexico IFQ programs, shareholders have formed associations and been active in representing their interests in fisheries management venues and the courts, potentially changing the political economy of the fisheries.

Furthermore, shareholders and others have become brokers, buying and selling allocations, as might be expected given the transferability of the shares and annual allocations and their possible value of market clearinghouses. A LAPP is a constructed market and, as in other sectors of the economy that have financial assets like commodity futures or equities associated with them, it creates opportunities for employment in the trading of assets. The rise of a new broker class was mentioned in the 5-year review of the red snapper LAPP as a social impact (Gulf of Mexico Fishery Management Council, 2013). In surveys and interviews with participants in the IFQ fisheries, there is a frequently expressed idea that it is unfair for some people to profit from owning and/or trading quota shares or allocations without actually fishing. “The increase in the number of shareholders not landing any fish has led to perceptions that many are profiting from the program at the expense of hard-working fishermen” (Gulf of Mexico Fishery Management Council, 2013). This moral sentiment is colored by concern that outside investors might be profiting, which was made more possible in 2012 (for red snapper) and 2015 (for grouper and tilefish) allowing “public” ownership, removing the requirement that one had to have a limited access reef fish permit to hold and use a quota share. However, identifying such brokers is difficult in the Gulf LAPPs because it requires landings and allocation trading data; Ropicki et al. (2018) referred to participants that do not own

___________________

1As Griffith (2018) noted, in most of the U.S. LAPPs, history has become a commodity because measures of historical landings are used to determine initial allocations of IFQs, and those measures take on an identity and value of their own. The history created by a particular fishing crew becomes an attribute of the vessel and goes with it if the vessel is sold.

Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×

shares or fish commercially but buy and sell allocation as “allocation brokers,” acknowledging their roles in facilitating a market.

The Councils are authorized to address the issue of ownership of catch shares by people who are not active in the fishery. In Section 1853a(c)(5)(E) of the MSA (see Box 5.2), Congress reflected the social concern about outsider control over fisheries in a provision that authorizes LAPPs “to harvest fish to be held, acquired, used by, or issued under the system to persons who substantially participate in the fishery, including in a specific sector of such fishery, as specified by the Council.”

It should also be noted that new relationships among fishers, dealers, brokers, and others have formed in many other ways, as shown in a social network analysis done for the grouper-tilefish 5-year review, but the social and economic impacts of such new arrangements have not been studied extensively (red snapper is an exception; Ropicki and Larkin, 2014). The committee was unable to find information that allows assessment of what the actual impacts are on fishers and their access to allocation across all the cases of this study; however, Ropicki et al. (2018) identify six different

Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×

categories of LAPP participants and discuss proposed impacts to each by changes suggested in Amendment 36B (i.e., increase share ownership among harvesters, limit allocation/harvest consolidation, and increase harvest flexibility). This study also emphasizes that socioeconomic outcomes are affected by the size and composition of several interrelated markets (i.e., markets for shares, allocations, and fish landings).

DISTRIBUTIONAL INEQUITIES

Commercial participants in a fishery are not identical. In economic terms, participants can differ by size and type of ownership, target portfolios, vessel characteristics, and level of investment. As such, implementation of LAPPS also can have differential impacts on diverse operators and operations and these impacts can be amplified under LAPPS such as when they utilize additional management measures (such as vessel permit requirements) or allow for leasing (which creates markets for two types of assets: quota shares and annual allocations). In response to distributional concerns such as these, the Councils have been responsive and have instituted a suite of additional criteria for allocation within the commercial sector including allocating quota by area and vessel characteristics (size, targets, owner-operated, inclusion of other species, etc.). While such supplemental measures may solve or address critical management issues, perhaps unsurprisingly they can create dependencies and advantages that were not anticipated. One such example is in the Gulf of Mexico.

The 5-year review of the red snapper program identified two primarily distributional impacts within the commercial sector: relatively high regional discard rates due to regional differences in stock improvements (a disadvantage of allocating based on past catch in absence of a well-functioning transfer market) and an increase in quota owners that were not fishing (and, relatedly, an increase in lease-dependent fishers). Because the very purpose of the mandated reviews is to assess success and adjust the program, the Council sought to address these impacts through Amendment 36. In particular, Amendment 36B was drafted to include red snapper and grouper-tilefish participants and included several options that were designed to do one of three things: “increase ownership of shares by harvesters, limit consolidation in the harvest sector, or increase harvest flexibility” (Ropicki et al., 2018). To foster dialogue on potential outcomes in advance of adoption, Ropicki et al. (2018) used available data from the catch share, allocation, and landings markets to systematically compare likely impacts on six participant types in the red snapper fishery based on whether they were active fishers, owned shares, and bought or sold allocation. While Amendment 36B did not answer several key questions to perfectly match the proposed outcomes, the insights gained on the causal mechanisms for effects in such fisheries could prove valuable. With respect to changes that could increase ownership of share by harvesters—a common narrative to achieve more equity—all of the options considered would likely either flood and devalue the share market or shrink and increase the value of the allocation market. These outcomes undermine the intended benefits to harvesters who move from being allocation dependent to an investor fisher and to those who prefer the flexibility of using the allocation market (i.e., supplementers and remaining allocation-dependent fishers). More importantly, there is no guarantee that if more shares were available in the market, they would go to allocation-dependent fishers.

Social and Cultural Diversity

LAPPs can require significant trade-offs between increasing economic efficiency and maintaining a diverse fleet structure. Removal of less efficient vessels suggests a trade-off between increasing economic value and the social objective of maintaining diverse participation, as documented for Alaska’s halibut and sablefish fisheries (Kroetz et al., 2015). Fleet diversity is not just about

Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×

vessel size classes or areas fished or technology; it is also about the demographic, socioeconomic status, and cultural identities of participants. Studies of LAPPs worldwide show loss of access rights in LAPPs fisheries on the part of young, small-scale, low-income, Indigenous, minority, and rural fishers (e.g., Carothers and Chambers, 2012; Pinkerton, 2019; Stewart et al., 2006; Yandle and Dewees, 2008; Young et al., 2018). For various reasons, these populations can disproportionately be excluded from LAPPs at initial allocation or fare poorly under the trading that follows. They may have diverse motivations for fishing and less access to auxiliary institutions that support LAPPs fishery participation, like education, credit, and banking (Carothers, 2008, 2012; Davis, 1996; Langdon, 2018; Maurstad, 2000; McCormack, 2007, 2010). Furthermore, although these are often less economically efficient fishers, and thus the ones pinpointed for removal from the fishery based on economic goals, their livelihoods, identities, and cultures can be highly dependent on fishing, so the loss of access can be catastrophic. Moreover, smaller-scale, place-based fishers are likely more dependent on local stocks, with incentives to favor conservation (Bennett et al., 2018). A demographic trend—the aging or “graying” of the fleet—has been studied in limited entry and LAPP fisheries in several regions in the United States (e.g., Cramer et al., 2018; Donkersloot and Carothers, 2016; Johnson and Mazur, 2018; Ringer et al., 2018). Economic and social barriers to entry and upward mobility in LAPPs fisheries and incentives that lead to older quota owners keeping rather than divesting their fishing assets (e.g., Szymkowiak and Himes-Cornell, 2015) are contributing factors to this demographic trend.

In fisheries where onshore processing is part of the supply chain, trading of quota shares can benefit some coastal communities, where the owners of those shares decide to land their catches, and hurt others, where local fishing firms have sold out or were not granted adequate quota shares, and thus reduce the amount available to the processing firms. This was a major problem in Iceland in the early period of ITQs (Pálsson and Helgason, 1995). Quota share transfers have also led to a significant shift in fisheries participation and control between rural and urban regions in Alaska, with important cultural and political implications as rural Alaska is primarily made up of Indigenous communities including 229 federally recognized Tribes (Carothers et al., 2010; Donkersloot and Carothers, 2016; NPFMC, 2010). Chapter 7 examines community dimensions of the LAPPs in mixed-use fisheries.

As noted in Chapter 2, in defining LAPPs, Congress included provisions to recognize and protect small-scale, owner-operated fisheries and respect the needs of fishing communities. There were provisions to mitigate unfair initial allocations, high costs of entry after the initial allocation, excessive consolidation and concentration of ownership, and other known and anticipated socioeconomic consequences of creating tradable individual privileges. Consequently, the LAPPs of this study have had various features such as caps on ownership of shares or holding of allocations, tiered vessel size classes and other measures to reflect fleet diversity in initial allocation (the golden tilefish and red snapper IFQs), and owner-on-board provisions intended to prevent what is deemed as excessive consolidation and maintain fleet diversity. The original red snapper and golden tilefish IFQs now allow any U.S. citizen or permanent resident to own and trade shares or allocation (since 2012 and 2015, respectively) but the commercial reef fish permit is still required to harvest.

Such measures and others are devised because of recognition that market-based allocation can have effects on fleet diversity. However, the data for the fisheries in this study are not collected and analyzed currently in ways that allow for assessing the effects of the program on small-scale fisheries, owner-operator fishing enterprises, minority fishers, or any other socioeconomic or demographic group. The section above on consolidation discusses evidence for degrees of concentration of ownership or inequality in participation, using the standard measures, the Gini coefficient and the HHI. From this perspective, the LAPPs in this study vary in the extent to which the consolidation occurred, and it is unclear whether any consolidated enough to create market power in the quota

Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×

market (Mitchell, 2016). This can be relevant, through the price of shares, for entry into the fishery and thus social diversity.

Evidence for how participants assessed the distributional effects of the red snapper LAPP is from two surveys. An early survey of IFQ shareholders underscored disapproval of the IFQ design process, including how voting took place, which fed into general distrust in fisheries management (Miller, 2010). A second survey of the perceptions and attitudes of participants (Alsharif and Miller, 2012) also identified a high level of opposition to IFQs, mostly because of fear that small-scale fishers would be pushed out of the fishery. “When it comes to protecting the interests of the small scale fishers and fishing dependent communities, respondents (82–88 percent) overwhelmingly believed the IFQ fails” (Alsharif and Miller, 2012). Although the required environmental impact assessment stated that “investment in IFQ shares would not necessarily be prohibitive for small operators, part-time fishers, or fishers who participate in several fisheries throughout the year,” many respondents felt that the cost of buying shares was in fact prohibitive, and there was only a small net gain from leasing shares (Alsharif and Miller, 2012).

Evidence of Diversity in Study Fisheries

Red Snapper and Grouper-Tilefish Evidence

For the Gulf of Mexico LAPPs it is difficult to investigate distributional impacts because of the challenge of identifying the actual entities involved. Groups of individuals and businesses can have affiliated or shared ownership of quota shares and boats, some vertically integrated. However, these relationships are not fully recorded in the record-keeping system, resulting in the underestimation of consolidation (Mitchell, 2016). The overall conclusion for the grouper-tilefish review was simply that “as economic theory would suggest, the distributions of GT landings and revenues have become somewhat more unequal since the IFQ program was implemented” (Gulf of Mexico Fishery Management Council, 2018a). The analysis was done at the vessel level but does not indicate which vessels remained and had the higher landings and revenues, and which did not. Data in the red snapper and grouper-tilefish reviews are not reported in a way that would allow quantitative assessment of the distributional outcomes among different categories of participants.

Unfortunately, data were not available to the committee about social and cultural diversity dimensions of the fisheries of the study, beyond ethnographic appraisals of the grouper-tilefish IFQ in various communities of Florida, Louisiana, and Texas (Griffith et al., 2016), and the National Oceanic and Atmospheric Administration community studies discussed in Chapter 7. Surveys done for the grouper-tilefish IFQ review indicate the ages, racial and ethnic identity, location, and gender of respondents but emphasize lack of adequate representation of regional, age, and other differences in the sample (e.g., ECS Federal Inc. et al., 2017). This is despite knowledge of tremendous diversity in the Gulf of Mexico and the Southeast Atlantic region, both at sea and in the processing and marketing sectors on land, including ethnic Cajuns, Spanish speakers, members of the United Houma nation, African Americans, and Vietnamese and Hmong Americans (e.g., Durrenberger, 1995; Griffith, 1999; Hoskins-Brown, 2020; Kang, 2016; Levin et al., 2010; Margavio et al., 1993; Sullivan et al., 2018). The participation of these groups in the coastal, shrimp, and shellfish fisheries is well known; the committee was unable to find documentation of their presence or absence in the federal waters fisheries under review in this study.

Evidence of Distributional Impacts from Other Cases in This Study

No information was available to the committee for Atlantic bluefin tuna or wreckfish. For golden tilefish in the Mid-Atlantic, the only evidence for distributional impacts of the LAPP in

Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×

the 5-year review is a qualitative report from a Council visioning process of 2011-2012. It stated that those who did not own significant quota in the golden tilefish ITQ system, “especially early participants in the fishery, are frustrated and feel as though they were pushed out of the fishery,” and some felt that the qualification dates were set to benefit certain businesses over others, even though the Council can document its efforts to represent all stakeholders in the process (MAFMC, 2017). In that initial allocation process, of the 31 limited access permits in the prior management system, 18 did not qualify because of low landings during the qualification period. Of those, only 8 had actually been engaged in fishing for tilefish, and after the ITQ system was implemented, all 8 focused on other fisheries, and four landed some tilefish via leased allocation or incidental landings (MAFMC, 2017). No information was provided about vessel sizes, comparative economics of the alternative fisheries, or how many later obtained quota shares.

The golden tilefish LAPP in the Mid-Atlantic includes an allocation of 5% of the TAC to an open access incidental catch fishery. Vessels possessing an “open access commercial/incidental” permit are allowed a trip limit of 500 pounds of golden tilefish (whole weight). Although they take a small amount of the TAC, this class of more than 2,000 vessels, spread throughout the region, benefits from the ability to add incidentally caught tilefish to their portfolios, and a few of those vessels are able to lease quota shares as well.

Fisheries Conservation and Management

As noted in Chapter 4, a possible positive effect of IFQ programs is that holders of exclusive rights or privileges have increased interest in sustainable fisheries management because the IFQs, if transferrable, become assets that will deliver a stream of long-term economic benefits (Moloney and Pearse, 1979; Munro and Pitcher, 1996; Squires et al., 1998). However, the theory is based on the idea that those rights are truly exclusive and secure property rights, whereas the LAPPs are only partially privatized and contingent privileges.2 IFQ shareholders do not own fish, nor is their ownership of rights to catch a portion of a total allowable catch fully exclusive or secure, because the government retains the right to adjust allocations and even end the program (Bromley, 2009; Copes, 1986). Consequently, the effectiveness of LAPPs in promoting voluntary behaviors oriented toward conservation goals may be weaker than cases where ITQs or IFQs are more fully privatized with indefinite duration (Sumaila, 2010). This theory has been tested and refined through economic modeling, particularly in regard to the duration of the right and/or expectation that it will be renewed (Costello and Deacon, 2007; Costello and Kaffine, 2008; Deacon et al., 2011). However, it is important to recognize that, in practice, LAPPs are integrated with other dimensions of fisheries management that have major effects on conservation outcomes, making this theory difficult to apply to actual cases.

Barriers to Entry of Young and Small-Scale Fishers

Recruitment into the fishery by young people, small-scale fishers, rural fishers, minorities, and Indigenous peoples can address socioeconomic concerns. Fishing is a traditional livelihood for many people. It is also a trade that has long favored people who work their way into it, accumulating knowledge, experience, and capital over the years, perhaps with the help of family or neighbors, often with the hope of eventually owning one’s own business. One benefit of LAPPs in encouraging

___________________

2Depending on features of an IFQ share within a particular regulatory context, the share can have more or fewer property-like attributes. For example, programs may make shares fully transferable, nontransferable, or put limits on transferability. The question of exactly where LAPP permits fall on this spectrum is beyond the scope of the Statement of Task. The committee assumes throughout the report that LAPPs can have some property-like features, but do not entail the same kinds of rights as, say, real estate.

Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×

new entry is that they can be passed down to family members in the same way agricultural land can be bequeathed. This creates a mechanism for passing along wealth that one has accumulated from investment in the fishery over one’s career, and it allows for renewal of the labor force. It also presents a limitation in that fishers may overlap with their children in fishing the same amount of quota, which presents similar challenges in agricultural land.

When the privilege of fishing is capitalized into marketable quota shares, the price of becoming an owner-operator can be too high for many who are not able to obtain quota from family members. This is the same in any number of industries in which the fixed asset becomes more expensive as the industry becomes more profitable. What differs with LAPPs is that the initial owners are usually grandfathered into the program and can anticipate “windfall” rewards from ownership and sale of the shares, setting up potential situations of “winners” versus “losers” within communities. Crew members may perceive that they are newly disenfranchised, having little chance of becoming owners and often having reduced percentages of the take in the share systems used for reimbursement. And small coastal communities dependent on the fisheries for supplies to processing plants and other economic benefits can be vulnerable when the few quota holders decide to sell, but none of the younger people in the community can afford to buy, resulting in the loss of quota to that community (e.g., Coleman et al., 2018; Ringer et al., 2018). This issue is important in the design of the initial allocation and subsequent markets, calling for consideration of auctions and corresponding loan markets to facilitate new entrants without access to capital.

The issue of the high barriers to access for new entrants and small-scale fishers is one that Congress recognized when delimiting LAPPs. The Councils are encouraged to come up with measures to enable the participation of both new entrants to the fisheries and existing small-scale fishers. To date, none of the LAPPs in this study have developed such measures, although the issue is one that has arisen, especially in the Gulf of Mexico fisheries where it was discussed in the grouper-tilefish 5-year review and in draft Amendment 36B of the Reef Fish Resources management plan (August 2, 2019). The grouper-tilefish review “concluded that fostering access for new entrants would be consistent with the program objectives [including reducing overcapitalization], as new entrants are often participants in the fishery, e.g., crew and hired captains who do not own shares but could buy allocation. The review suggested consideration of loan programs, share redistributions, and quota banks to provide access to quota” (Amendment 36B) (Gulf of Mexico Fishery Management Council, 2019). The August 2, 2019, draft of Amendment 36B considers numerous alternatives, and Ropicki et al. (2018) discuss this as well.

This question is of course closely related to the issues of perceived excessive shares and ownership of shares by nonfishing entities, through the availability of shares or leased allocations and their prices. In the work of the Gulf of Mexico Council on Amendment 36B, reforming these is considered along with ways to ease the costs of leasing or purchasing access privileges for young people or others (the definition of which is itself a challenge to the Councils; see also Ropicki et al., 2018). To this end, in 2021 the Southeast Regional Office of the National Marine Fisheries Service made loans through the Fisheries Finance Program available for purchase or refinancing of existing debt for ITQs.

Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×

This page intentionally left blank.

Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×
Page 91
Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×
Page 92
Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×
Page 93
Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×
Page 94
Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×
Page 95
Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×
Page 96
Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×
Page 97
Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×
Page 98
Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×
Page 99
Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×
Page 100
Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×
Page 101
Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×
Page 102
Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×
Page 103
Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×
Page 104
Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×
Page 105
Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×
Page 106
Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×
Page 107
Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×
Page 108
Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×
Page 109
Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×
Page 110
Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×
Page 111
Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×
Page 112
Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×
Page 113
Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×
Page 114
Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×
Page 115
Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×
Page 116
Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×
Page 117
Suggested Citation:"5 Social and Economic Effects for Commercial Participants in Mixed-Use Fisheries." National Academies of Sciences, Engineering, and Medicine. 2021. The Use of Limited Access Privilege Programs in Mixed-Use Fisheries. Washington, DC: The National Academies Press. doi: 10.17226/26186.
×
Page 118
Next: 6 Social and Economic Effects of LAPPs for Recreational Fishery Stakeholders in Mixed-Use Fisheries »
The Use of Limited Access Privilege Programs in Mixed-Use Fisheries Get This Book
×
Buy Paperback | $50.00 Buy Ebook | $40.99
MyNAP members save 10% online.
Login or Register to save!
Download Free PDF

A central goal of U.S. fisheries management is to control the exploitation of fish populations so that fisheries remain biologically productive, economically valuable, and socially equitable. Although the Magnuson-Stevens Fishery Conservation and Management Act led to many improvements, a number of fish populations remained overfished and some fisheries were considered economically inefficient. In response, Congress amended the Act in 2006 to allow additional management approaches, including Limited Access Privilege Programs (LAPPs) in which individuals receive a permit to harvest a defined portion of the total allowable catch for a particular fish stock.

This report examines the impacts of LAPPs on mixed-use fisheries, defined as fisheries where recreational, charter, and commercial fishing sectors target the same species or stocks. The report offers recommendations for NOAA's National Marine Fisheries Service (NMFS) and the Regional Fishery Management Councils (the Councils) who oversee and manage federally regulated fisheries. For each of the five mixed-use fisheries included in the report, the committee examined available fisheries data and analyses and collected testimony from fishery participants, relevant Councils, and NMFS regional experts through a series of public meetings.

  1. ×

    Welcome to OpenBook!

    You're looking at OpenBook, NAP.edu's online reading room since 1999. Based on feedback from you, our users, we've made some improvements that make it easier than ever to read thousands of publications on our website.

    Do you want to take a quick tour of the OpenBook's features?

    No Thanks Take a Tour »
  2. ×

    Show this book's table of contents, where you can jump to any chapter by name.

    « Back Next »
  3. ×

    ...or use these buttons to go back to the previous chapter or skip to the next one.

    « Back Next »
  4. ×

    Jump up to the previous page or down to the next one. Also, you can type in a page number and press Enter to go directly to that page in the book.

    « Back Next »
  5. ×

    Switch between the Original Pages, where you can read the report as it appeared in print, and Text Pages for the web version, where you can highlight and search the text.

    « Back Next »
  6. ×

    To search the entire text of this book, type in your search term here and press Enter.

    « Back Next »
  7. ×

    Share a link to this book page on your preferred social network or via email.

    « Back Next »
  8. ×

    View our suggested citation for this chapter.

    « Back Next »
  9. ×

    Ready to take your reading offline? Click here to buy this book in print or download it as a free PDF, if available.

    « Back Next »
Stay Connected!