Individual fishing quotas (IFQs) also known as "individual transferable quotas" are one kind of catch share, a means by which many governments regulate fishing. The regulator sets a species-specific total allowable catch (TAC), typically by weight and for a given time period. A dedicated portion of the TAC, called quota shares, is allocated to individuals. Quotas can typically be bought, sold and leased, a feature called transferability. As of 2008, 148 major fisheries (generally, a single species in a single fishing ground) around the world had adopted some variant of this approach,[1] along with approximately 100 smaller fisheries in individual countries. Approximately 10% of the marine harvest was managed by ITQs as of 2008.[2]:218 The first countries to adopt individual fishing quotas were the Netherlands, Iceland and Canada in the late 1970s, and the most recent is the United States Scallop General Category IFQ Program in 2010.[3] The first country to adopt individual transferable quotas as a national policy was New Zealand in 1986.[4][5]
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Historically, inshore and deep water fisheries were in common ownership, essentially a free-for-all, where no one had a property right to the fish (i.e., owned them) until after they had been caught. Each boat faced the zero-sum game imperative of catching as many fish as possible, knowing that any fish they did not catch would likely be taken by another boat.
Initial domestic responses to this classic example of the tragedy of the commons were command and control approaches, each of which had serious unintended consequences, while generally failing to achieve their primary goals of preserving fisheries.
Commercial fishing evolved from subsistence fishing with no restrictions that would limit or direct the catch. The implicit assumption was that the ocean's bounty was so vast that restrictions were unnecessary. In the twentieth century, fisheries such as Atlantic cod and California sardines collapsed, and nations began to limit access to their fishing grounds by boats from other countries, while in parallel, international organizations began to certify that specific species were "threatened", "endangered", etc.
One early management technique was to define a "season" during which fishing was allowed. The length of the season attempted to reflect the current abundance of the fishery, with bigger populations supporting longer seasons. This turned fishing into a race, driving the industry to bigger, faster boats with better fish finders, which in turned caused regulators to repetitively shorten seasons in a failing effort to limit catches, sometimes to only a few days per year. Landing all boats over an ever-shorter interval also led to glut/shortage market cycles with prices crashing when the boats came in. A secondary consequence was that boats had to go out when the fishery was "open" regardless of weather or other safety concerns.[6]
Restrictions such as limiting the number of boats (or licenses) through a limited access pimp led to a race to build the biggest possible boat. Limiting technology set off an unproductive cat and mouse game of inventing technology to accelerate the catch that was in turn quickly outlawed.[7]
A second technique was daily catch limits. This eliminated the arms race, but did not protect the fish, because the number of licenses was unlimited.
An underlying problem with all of these techniques was that because fishers had no long-term stake in the fishery, their incentives were to maximize the harvest each year hoping that any problems would fall to their successors.
The implementation of ITQs or IFQs works in tandem with the privatization of common assets. This regulatory measure seeks to economically rationalise access to a common-pool resource so that its future availability is not compromised by current practices of exploitation[8] .This type of management is based in the doctrine of natural resource economics. Notably the use of ITQs in environmental policy has been informed by the work of economists such as Jens Warming [9], H. Scott Gordon [10] and Anthony Scott [11]. It is theorised that the primary driver of over-fishing is the rule of capture externality. This is the idea that the fisher does not have a property right to the resource until point of capture incentivising competitive behavior and overcapitalisation in the industry. It is theorized that without a long-term right to fish stocks, there is no incentive to conserve fish stocks for the future.
The use of ITQs in resource management dates back to the 1960s and was first seen in ‘pollution quotas’, which are now widely used to manage carbon emissions from power utilities [12].For both air and marine resources ITQs use a ‘cap-and-trade’ approach by setting typically annual limits on resource exploitation (TAC in fisheries) and then allowing trade of quotas between industry users.
The use of IFQs has often been related to broader processes within neoliberalism that tend to utilise markets as a regulatory tool [13]. The rationale behind such neoliberal mechanisms situates itself in the belief that market mechanisms harness profit motive to more innovative and efficient environmental solutions than those devised and executed by states [14]. Using market-based instruments allows for greater flexibility than command and control measures, prescribing goals for industry without dictating measures for meeting those goals. Whilst such neoliberal regulation has often been posited as a move away from state governance [15], in the case of privatization the state is integral in the process of creating and maintaining property rights.
Whilst the use of IFQs has in many cases enabled a rebuild in fish stocks [1] there are often initial short-term costs to the industry. Implementing IFQs to an overexploited fishery involves reducing fishing capacity meaning the likelihood of employment in the industry will be compromised. Recovery of fish stocks may take years or decades (depending on species reproduction rate) in which time TAC may be dramatically reduced.
The use of neoliberal privatizing regimes has also often raised contradictions with the rights of indigenous communities. For example the exclusion of the Maori in the initial allocation of fishing quota in New Zealand's quota management system lead to a lengthy legal battle delaying development in national fisheries policy and resulting in a large settlement from the crown. There have also been similar legal battles regarding the allocation of fishing rights with the Mi'kmaq in Canada and the Saami in North Norway. Aboriginal fishing rights are said to pose a challenge to the authoritative claims of the state as the final arbitors in respect of access and participation in rights-based regimes [16].
The term catch share has been used more recently to describe the range of programs similar to ITQs. Catch shares expanded the concept of daily catch limits to yearlong limits, allowed different fishers to have different limits based on various factors, and also limited the total catch. Under catch share approaches, threatened fisheries became sustainable by keeping the totals low enough and enforcing the limits.[17]
Catch shares eliminate the "race to the fish" problem, because fishers are no longer restricted to short fishing seasons and can schedule their voyages as they choose. Boom/bust market cycles disappear, because fishing can continue throughout a typically many-month season. Safety problems are reduced because there's no need to fish in hazardous conditions just because the fishery happens to be open. The technology arms race switches from catch maximization to a healthier focus on productivity, Capital costs are potentially lower because ever-bigger boats are not required to handle even a sizeable quota.[17]
A crucial element of catch share systems is how to distribute/allocate the shares and what rights come with them. The initial allocation can be granted or auctioned. Shares can be held permanently ("owned") or for a fixed period such as one year ("rented"). They can be salable and/or leasable or not, with or without limits. Each variation has advantages and disadvantages, which may vary given the culture of a given fishing community.
ITQs are typically initially allocated as grants according to the recent catch history of the fishery. Those with bigger catches generally get bigger quotas. This is less disruptive to the fishing community which can continue to do what it has been doing, albeit at a scale compatible with the TAC, without the significant expense of buying their quotas. The primary drawback is that fishers receive a valuable right at no cost Grants are somewhat analogous to "homesteading", in which settlers who developed farms in the American wilderness eventually received title without payment to what had been public land. In some cases, less than 100% of the TAC becomes ITQs, with the remainder allocated to other management strategies.
The grant approach is inherently political, with attendant benefits and costs. For example, related industries such as fish processing and other non-participants may seek quota grants. The offshore pollock cooperative in the Pacific Northwest allocated initial quotas by mutual agreement and allows quota holders to sell their quotas only to the cooperative members.[18]
Quota auctions recompense the public for access to fisheries. They are somewhat analogous to the spectrum auctions that the U.S. held to allocate highly valuable radio spectrum. These auctions raised 10s of billions of dollars for the public. Note however that the television industry did not have to pay for the necessary spectrum to switch from analog to digital broadcasting, which is more like quota grants for incumbent fishers.
ITQs can be resold to those who want to increase their presence in the fishery. Alternatively, quotas can be non-tradeable, meaning that if a fisher leaves the industry, the quota reverts to the government to retire or to grant/auction to another party. Given that many fisheries now have too many boats and fishers, allowing those whose quota grants are too small the ability to sell them encourages them to leave the industry, helping eliminate the overcapacity.
Once distributed, quotas can be regranted/reauctioned periodically or held in perpetuity. Limiting the time period lowers the quota's value and its initial auction price/cost, but subsequent auctions create recurring revenues. "The difference is comparable to renting an apartment versus the house you own...If you own something, you take care of it—you protect your investment or else it loses value. But there's no incentive for stewardship when you don't own the rights to it", according to Chris Costello, lead author of a major study of ITQs.[19] At the same time, "privatizing" such a public resource reduces the remaining amount of public resources and can be thought of as "giving away our future". In the industry, rented quotas are often referred to as "dedicated access privileges" (DAP).
Another issue with tradability is that large enterprises may buy all the quotas, ending what may be a centuries-long tradition of small-scale operations. This may benefit the sellers (and the buyers and those who buy the fish) but can potentially cause large changes in the culture of fishing communities.
Some fisheries require quota holders to be participating fishermen to prevent absentee ownership and limit the quota that a captain can accumulate. In the Alaska halibut and black cod fisheries, only active fishers can buy quota, and new entrants may not sublease their quota. Requiring market entrants to purchase quota acts as a barrier to entry. Since IFQ's began in 1995, the commercial longline fleet has never exceeded these fisheries' TACs. Other benefits to these fisheries include improved safety and product quality, a more professional fleet, minimal gear loss or 'ghost fishing'.
ITQs may have the effect of changing the criteria that fishers apply to their catch. Highgrading involves catching more fish than the quota allows and dumping specimens that are less valuable because of size, age or other criteria. Many of the discarded fish are already dead or quickly die, increasing fishing's impact on stocks.[20]
Catch shares can be tailored to the ecological, economic, and social characteristics of a fishery. For example, by including limits on bycatch, catch shares encourage development of more selective, less damaging fishing gear.[19]
In 2008 a large scale study concluded that ITQs can help to prevent collapses and restore declining fisheries.[19][21] While nearly a third of open-access fisheries have collapsed, catch share fisheries are only half as likely to fail.[6]
This new study expanded a global database of more than 11,000 fisheries from the Sea Around Us Project that spans the years 1950-2003. A 2006 study by Boris Worm of Dalhousie University, Halifax, Nova Scotia and colleagues using the original dataset projected widespread global fishery collapse by 2048, assuming that traditional management techniques would continue to predominate. Worm commented, "This study gives us a solution to work with in fighting the global fishery crisis."[19] The study acknowledges complicating factors such as that the same readiness to change that triggers a change to ITQs may also lead to other beneficial changes, such as bycatch limits.
In 1995, the Alaskan halibut fishery converted to ITQs, after regulators cut the season from about four months down to two or three days. Until the change, the catch was frozen at sea, because the market could not absorb so much fresh product at once. Today, the season lasts nearly eight months and boats deliver fresh, undamaged fish at a steadier pace and sell it at a significantly higher and profitable price.[19]
Not all fisheries have thrived under ITQs, in some cases experiencing reduced or static biomass levels,[2] because of factors such as:
The Magnuson-Stevens Fishery Conservation and Management Act defines individual transferable quotas (ITQs) as permits to harvest specific quantities of fish of a particular species. Fisheries scientists decide the maximum annual harvest in a certain fishery, accounting for carrying capacity, regeneration rates and future values. This amount is called the total allowable catch (TAC). Under ITQs, participants in a fishery receive rights to a portion of the TAC without charge. Quotas can be fished, bought, sold, or leased. Twenty-eight U.S. fisheries have adopted ITQs as of 2008.[1] Concerns about distributional impacts led to a moratorium on moving other fisheries into the program that lasted from 1996 to 2004.[2]
Starting in January 2010, fishermen in California, Oregon and Washington will operate via tradeable catch shares. Fishers have been discarding bycatch that is not their target, typically killing the individuals. Catch shares allow trawlers to exchange bycatch with each other, benefiting both. Goals of the system include increased productivity, reduced waste, increased fish populations and higher revenues for fishers. More than a dozen other U.S. fisheries are trying out catch shares. Fishery managers say that in Alaska, where catch shares have been in place for several years, fishermen are now getting higher prices for their catch.[22]