Individual transferable quotas and the “tragedy of the commons”

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The allocation of individual transferable quotas (ITQs) as shares of a total allowable catch (TAC) is now widely practised in fisheries management, but is not without controversy. It is often suggested that the possession of ITQs should provide an incentive for fishers to exercise stewardship of the resource. Quota holders acting in their economic self-interest should collectively exercise stewardship, setting TACs and supporting enforcement measures to maximize the present value of future profit streams. But it is in the economic self-interest of an individual fisher possessing ITQ to take additional unreported catch, through discarding, high-grading, or quota-busting. Thus, ITQs in themselves will not prevent a “tragedy of the commons”, unless there is sufficient compliance monitoring and enforcement to deter hidden catches. ITQs, with adequate enforcement, have been demonstrated to effectively address the race to fish and result in improved sustainability and profitability. There are questions of equity concerning the flow of benefits from the allocations of quotas and associated profit streams and who pays for the management costs required to sustain them. There are also issues around the ability of ITQ-based management to address other social and environmental objectives.