Individual Transferable Quotas – Benefits for global fisheries

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By Andrew Frederick Johnson, Bangor University, andrewjohnson540 [at] hotmail.com

In my last post, I closed by saying that in order for unsuccessfully managed fisheries to move forward, we need to innovate instead of repeating our current mistakes. I also introduced the idea of “rights-based” fisheries management as one method that has proved beneficial for past and present fisheries. This blog discusses, Individual Transferrable Quotas (ITQs), a rights-based approach showing promise, and describes how they can benefit struggling fisheries.

Open access fisheries often suffer from the tragedy of the commons and the unfortunate race to fish scenario in which fishers compete to catch as much fish as possible, as quickly as possible - driven by the knowledge that if they don’t, their neighbour will. In open access scenarios, fishers therefore aim to maximize the harvest each year in the hope that future problems will fall to their successors. In some cases there may be additional support from governments through subsidies (this, however, is a discussion for a whole separate post).  In the long term, this leads to economic over-investment by fishers, lower yields, declining stocks (often with a subsequent lobby to further increase the total allowable catch (TAC) of the declining stock) and shorter fishing seasons. If left untreated, the prospects of economic and biological collapse of the fishery are very real as the above patterns spiral out of control with boom-bust market cycles.

On the other hand, individual transferable quotas (in the past referred to as catch shares) give fishers a long-term stake (property rights) in the fishery – normally a fraction of the TAC. ITQs confer stewardship incentives, ultimately changing behaviour by reducing competition among fishers. Each individual owns a known fraction of the total resource and if anyone wants to fish more than their quota they have to buy quota from other fishers. Rationality is therefore brought into the fishery and the race to fish removed: with ITQs in place, no real advantage is to be gained from out-competing your neighbour. ITQs therefore look great for struggling fisheries, both economically and biologically.

So, if ITQs can stop the race to fish and thus improve the fishery economically and biologically, why aren’t more ITQ systems in place?

Although ITQs create incentives for fishers to fish more slowly and safely, deliver a better product to the market and reduce the tendency for overcapitalization, certain fisheries may not be suited to such management regimes and ITQs do have disadvantages.

Firstly, bycatch may increase through high grading; a situation where fishermen throw everything but the best fish back because fishing time is increased and waiting for only the best catch is beneficial. More time spent fishing may also lead to increased levels of non-target species bycatch, as well as potentially wider spread habitat destruction (e.g., the effects of trawling).

Secondly, additional costs associated with the enforcement of ITQs (ensuring quotas are stuck to) over the extended fishing seasons are also a clear disadvantage which often comes from the taxpayers’ pocket.

Thirdly, small scale fishers also fear that if quotas are available to purchase freely, then larger, more industrial fishers will win them at auction and the smaller scale fishers will be outcompeted.

Finally, it is important to note that ITQ systems may not always translate to an increased stock biomass. This is especially so for highly migratory species (for which ITQ systems are more difficult to police) as well as stocks that are highly overfished at the beginning of the implementation. Such scenarios may call for other strategies to be used in combination with an ITQ-based system.

But can the above disadvantages be blamed for the non-use of ITQ systems?

No. Issues of by-catch and habitat destruction can be readily addressed by the methods below, many of which have shown success when implemented correctly:

  • Bycatch quotas, which once exceeded, close the fishery
  • Gear selectivity to reduce bycatch and habitat destruction
  • Temporal or area closures avoiding bycatch species and areas of conservation concern (often very case specific)
  • General effort reduction*
  • Incentive programs*

*note often these generally come hand in hand with ITQ use.

What about the additional economic costs associated with ITQ use? If the current management strategy is ineffective in the long term, money as well as biological stability will ultimately be lost. Considering that the general populace believes that the sea and its contents are a shared resource - i.e., owned by everyone - why not tax the quota owners rather than the non-fishing tax payers? If someone is making money using something which is owned by everyone, a tax seems fair. This is already true for farms and mines that use others’ land. If land owners have responsibilities which come with the privileges of ownership, why don’t fishermen?

Finally, the fears of out-competition of smaller fishers by large companies may be overcome by introducing certain rules. For example, stipulations ensuring that quotas can only be bought by those who have historically fished an area, or by dividing quotas proportionally by boat sizes in the fishery.

It appears there is no clearly justifiable reason why we should not integrate more ITQs systems into our future fishery management plans. Of course, any change in legislation will incur initial costs, and certain fisheries may overall be unsuitable for ITQ-based systems; but for those who can benefit, the cost of not making ITQ-based changes to failing management strategies will be far higher. Cure rather than prevention is the commonly frustrating story. Institutional level action needs to be taken now to thoroughly evaluate current management pathways (economically but, more importantly, biologically) and change tack if we are to avoid multiple fishery collapses and economic declines from what should be a sustainable and profitable industry.

Iceland, New Zealand, Australia and Tasmania embraced ITQ initiatives early in their development, and they're now starting to reap the rewards of these changes in management. The US and Europe has been a little slower to progress to ITQs in many of their fisheries; however, with consistent reports of ITQ benefits from foreign and local systems, the implementation of more ITQ-based systems in the US is taking hold. Currently, over 30 of its marine fisheries are working under ITQ management frameworks. In Europe, however, the idea of widespread ITQ use is still under critical review and time will tell what the CFP reform holds.

Andrew Johnson has a Ph.D. in marine fish ecology and MPA design from the University of Bangor, UK. He also works as a commercial diver and has a keen interest in photography and videography. Andrew is currently working on a project in Chile evaluating the TURF management system used there and will be presenting the interviews with fishers, managers and scientists in video diary documentaries over the next six months - available to preview at http://afjimage.wordpress.com/ from December 2012.

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