Efficient Policies to Maintain Total Allowable Catches in ITQ Fisheries with At-Sea Processing

Abstract

Total allowable catches (TACs) are used to limit annual fish harvest throughout the world. They are used separately or as the basis for more refined techniques such as individual transferable quotas (ITQs). With ITQs, the TAC is divided into smaller units which are held by, and can be bought, sold, or traded among, industry participants. The purpose of this paper is to discuss the economic aspects of determining a conversion factor program that will maintain the TAC in an ITQ program. Since TACs are denominated in terms of total biomass but fish are often landed after at-sea processing, provision must be made to convert the landed weight to a green weight (i.e., to the weight of the catch before any processing takes place). Processing at-sea can sometimes be more efficient than shoreside processing, especially when the fish deteriorate rapidly or where harvest occurs far from processing and market centers. In addition, pollution costs may be lower when waste products are returned to the ocean as opposed to using shoreside disposal. While the theoretical advantages of ITQs are generally accepted (Anderson 1986; Pearse 1979; Rettig and Ginter 1978; Neher, Arnason, and Mollett 1989), there are varying opinions on their practical application (Copes 1986). Although the conversion factor issue is rarely mentioned as a drawback, it is a serious problem in the New Zealand ITQ program. Industry argues that the conversion rate from landed weight to green weight is too high and they are cheated out of legal catch. Government biologists argue that they are too low and hence the actual green-weight catch is higher than the total allowable catch (New Zealand Fishing Industry Board 1988). Similarly, in the ITQ program for the U.S. surf clam and ocean quahog fishery, shucking at-sea has been temporarily banned because of the lack of a procedure to relate shucked product to green-weight harvest. (Mid-Atlantic Fishery Management Council 1989). If ITQs are to be successful, conversion factor problems will have to be addressed. The basic problem with at-sea processing is to achieve a practical and costeffective way of ensuring that the fleet remains within the TAC. There is no problem if all firms have the same recovery rate (i.e., the percentage of green-weight catch which is actually landed) since the inverse of the recovery rate can be used as a conversion factor to convert landed weight to green weight. But often firms will have different recovery rates due to differences in processing abilities or because they produce different types of landed-weight products. Setting standard conversion factors in these instances is inexpensive and easy to enforce, but it can lead to inefficiencies in at-sea processing and to overcatching the TAC. At-sea monitoring to measure greenweight harvest or actual recovery rates eliminates these problems, but it may require great effort and expense. The basic issues are introduced in the first section where it is assumed that firms have fixed recovery rates. The second section will show how inefficiencies are introduced when firms with variable recovery rates are faced with fixed conversion fac-