Individual Transferable Quotas

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Individual Transferable Quotas (ITQs) are one of many fishery rationalization instruments. They are defined under the Magnuson-Stevens Fishery Conservation and Management Act as limited access permits to harvest quantities of fish. Biologists decide the optimal amount of fish (Total Allowable Catch) to be harvested in a certain fishery, taking into account carrying capacity, regeneration rates and future values. Under ITQs, members of a fishery are granted rights to a percentage of the TAC which can be harvested each year. These quotas can be fished, bought, sold, or leased allowing for the least cost vessels to be used. ITQs were first implemented in New Zealand. Along with New Zealand, they can be found in Australia, Iceland, Canada and the United States. Only three ITQ programs have been implemented in the United States due concerns about distributional impacts leading to a moratorium supported by Ted Stevens on further implementation.

History of ITQs

H. Scott Gordon was the first economist to notice that under open access situations, fisheries become over-fished and rents become dissipated in the race for fish. Managers increasingly concerned with the tragedy of the commons started setting TACs, and calibrating a fishing season in which it was possible to catch only the TAC. Using technology, fishers were able to beat the system and consistently exceed the harvest plans. Seasons were getting shorter and shorter as harvesters built up capital. Harvesting was becoming more and more expensive and often dangerous. ITQs were proposed to eliminate the need for this race to fish by promising each harvester a portion of the catch and allowing them to catch it at a minimum cost.

Distributional Issues

ITQs capture the economic rents of a fishery and end up becoming quite valuable. Creating ITQs is a boon to overall wealth, but where that wealth goes has become a source of contention. Some are worried that large corporations will end up owning all the ITQs. Other industries, such as fish processing, have also tried to claim that they should receive a portion of the ITQ. One of the innovations to bypass these issues has been the formation of fishing cooperatives such as the offshort pollock cooperatives in the Pacific Northwest.

References Gordon, H.S. 1954 "The Economic Theory of a Common Property Resource: The Fishery." Journal of Political Economy 62(2):124-42