The design of fishing-right systems — the NSW experience

Abstract

In 1994, the Australian state of New South Wales (NSW) passed legislation to introduce a fishery share system. In some ways it is similar to the ‘ITQ’, or individual transferable quota, fishery management systems found in New Zealand, Iceland, Australia, Canada and other countries. The focus of the system, however, is on fisheries rather than species. In most of these fisheries, a combination of input and output controls are used. Special design features include allotment of shares in the ‘fishery’ rather than in quotas, and a structure that forces adaptive resource management. The system is designed to maximise the probability that fishery use will remain both sustainable and consistent with social objectives as they change through time. The system’s conceptual framework is of relevance to other fisheries and, also, many other industries that use natural resources. Consistent with periodically revised management plans, rights to harvest specific amounts of fish or to use certain classes of boats and gear are issued in proportion to the number of shares held in each fishery, “fishery” being flexibly defined by region and habitat, with or without further specification by gear-type, species group or single species. The management plan might, for example, specify a relationship between number of shares and size of boat or net. Any quotas are allocated in proportion to the number of shares held. Subject to compliance with periodically reviewed share conditions, rights are perpetual and give each fisher a direct financial interest in the future of the fishery. Shares are mortgageable and fully transferable. Driven by the management plan, structural adjustment is delegated to the market and individual fishers. A dual property-right structure is used to minimise transfer costs encourage self-enforcement and compliance.