Measuring Quality of Property Rights: Development of User Rights Quality in the Icelandic Fisheries

Abstract

Strong user rights in fisheries are fundamental drivers of efficiency and profitability in the utilization of those resources. These user rights refer to the rights of fishers to harvest from fish stocks. The rights can be weak, or they can be strong, in terms of security, duration, exclusivity, and transferability. For this a definition of and a measure of the strength of user rights is needed, which we present in the property rights quality index, so-called Q-measure. By strong user rights in fisheries, we mean fishing rights that score highly on the quality of property rights, or Q-measure. Weak user rights are fishing rights that score low on the quality of property rights. We then explain how this approach can be applied to analyze and score the quality of actual user rights in fisheries. This we do first by relating the characteristics of property rights to harvesting rights or vessel quota systems in fisheries and we then look at the case of Iceland which implemented an individual transferable quota system in its fisheries in the latter half of the 20th century. We recount the story of the implementation and score the different property rights attributes. We then relate this to the change in performance of the fisheries by comparing the quality score to the economic value of the fishing quotas, and indirectly to the profitability of the fisheries. It turns out that there is a high correlation between the quality score and the value of the quotas.