Sea Change: How Markets & Property Rights Could Transform the Fishing Industry

Abstract

Global fish catches in the seas and oceans have stagnated since the mid-1990s. Because there are generally no established property rights in wild fish, fisheries are vulnerable to the ‘tragedy of the commons’. Trawler owners race to catch as many fish as possible before they are caught by competitors. While the short-term benefits of overfishing accrue to the individual trawler owners, the long-term costs in terms of reduced yields are shared. Governments have greatly exacerbated the problem of overfishing by subsidising the industry and undermining the economic feedback mechanisms that help to protect stocks. The European Union’s Common Fisheries Policy (CFP) has been particularly prone to this, with disastrous results. The British fishing industry, for example, has been in almost continuous decline in recent decades as stocks have fallen. Landings into UK ports of the more valuable demersal fish such as cod have plummeted by around 80% since 1970. The UK shares fishing grounds with other member states and has been allocated a relatively small share of EU quotas. Under the CFP, a high proportion of fish caught have been thrown back dead into the sea. Brexit will enable the UK to withdraw from the CFP and adopt a more efficient approach within its large Exclusive Economic Zone, which stretches up to 200 nautical miles from the coast. This has the potential both to increase catches and eliminate subsidies from taxpayers. Policy options include facilitating community-based management in some coastal fisheries and introducing Individual Transferable Quotas (ITQs) for other areas. Many local communities around the world have evolved successful approaches to managing coastal fisheries without the need for government intervention. They set their own rules on who has access to the resource, how it can be fished and what sanctions will be imposed if violations occur. Such management models have typically been highly effective at conserving stocks and maintaining yields in the long term, in marked contrast to the failure so often observed under state regulation. Property-rights-based systems, such as Individual Transferable Quotas, alter incentives in ways that are favourable to conservation and stewardship, because overfishing reduces the value of the quotas owned by fishermen. Where they have been introduced, ITQs have improved efficiency by reducing excessive fishing effort and over-capitalisation. Although the success or failure of any policy approach will be affected by the characteristics of the fishery to which it is applied, there are general lessons. An economically rational strategy for UK waters post-Brexit, and other fisheries currently subject to mismanagement, will necessarily involve phasing out government subsidies in all their forms and better aligning incentives with the long-term preservation of stocks.