Individual Transferable Quota Fishery Research Articles

The Transitional Gains Trap in Grandfathered Individual Transferable Quota Fisheries

Trade in freely granted individual rights has been speculated to gradually reduce the political feasibility of reallocation, as the initial recipients who enjoy windfall profits are replaced by rights holders who purchased their rights and would unfairly become loss-making if the rights were subsequently reallocated. This hypothesis, sometimes referred to as a Transitional Gains Trap, may be relevant when evaluating alternative methods of allocating rights. This paper presents a potential indicator for investigating the Transitional Gains Trap in grandfathered individual transferable quota fisheries, based on the cumulative amount invested in quota after allowing for offsetting windfall profits, relative to the total value of all quota. The indicator ranges between 0% and 100%, with higher values indicating more net investment and a greater threat of a Transitional Gains Trap. Illustrative calculations for Iceland's ITQ system, introduced in 1991, yield a value of 29% by 2016, suggesting that the Transitional Gains Trap is not a major constraint, although the results vary by species and are sensitive to assumptions. Finally, the indicator is shown to decrease over time under certain conditions, implying that the potential relevance of the Transitional Gains Trap is context-specific.

The Transitional Gains Trap in Grandfathered Individual Transferable Quota Fisheries

The Transitional Gains Trap in Grandfathered Individual Transferable Quota Fisheries

The Transitional Gains Trap in grandfathered Individual Transferable Quota fisheries

The Transitional Gains Trap in grandfathered Individual Transferable Quota fisheries

Does quota ownership affect perceptions of fishery performance?

Individual transferable quotas (ITQs) have been introduced in a large number of fisheries worldwide, mainly to achieve resource sustainability and improve the economic performance of the fisheries. Fisheries have evolved since quota introduction and have developed different ownership structures, with some fisheries being predominantly owner-operator, while other fisheries have attracted investors and non-fishing quota ownership. These different ownership structures may affect the perceptions of the effectiveness of ITQs, although the influence of ownership structures to the perception of management performance based on different management objectives is rarely studied. In this paper, we draw on a case study of the Tasmanian abalone fishery in Australia to illustrate the influence of different quota ownership structures on perceptions about the social, economic and resource sustainability outcomes of ITQ fisheries. We find that fishers with low levels of quota ownership (i.e. lease dependent) have low levels of satisfaction, and believe the fishery is not performing well against the multiple management objectives.

Individual Transferable Quotas (ITQ), Rebuilding Fisheries and Short-Termism: How Biased Reasoning Impacts Management

Recent research on global fisheries has reconfirmed a 2006 study that suggested global fisheries would collapse by 2048 if fisheries were not better managed and trends reversed. While many researchers have endorsed rights-based fishery management as a key ingredient for successful management and rebuilding fisheries, in practice the results are mixed and success varies by geographic region. Rights-based approaches such as individual transferable quota (ITQ) provide a necessary help to the important task of rebuilding fisheries, but we assert that they are sometimes less effective due to the human component of the system. Specifically, we examine the issue of setting an appropriate total allowable catch (TAC) in Individual Transferable Quota (ITQ) systems. ITQ are designed on the premise that economic ownership is sufficient incentive to entice fishers to be stewards of the resource. However, an excessive short-term orientation and an affective risk response by fishers can overwhelm feelings of ownership. In such cases, fishers and fishing communities can exert sufficient pressure on TAC setting and reduce the effectiveness of ITQ fisheries toward rebuilding fish stocks. Based on our analysis that draws on cognitive psychology, short-termism, and affective risk, we suggest heightened and wider democratic involvement by stakeholders in co-managed ITQ fisheries along with potential pilot tests of government-assisted financial transfers to help in transitioning ITQ fisheries to sustainable states.

The hidden role of processors in an individual transferable quota fishery

The hidden role of processors in an individual transferable quota fishery

The role of government and industry in resolving assignment problems in fisheries with individual transferable quotas

Fisheries managers often face the challenge of addressing multiple, conflicting objectives. Historically, the focus has been on biological objectives but there has been an increasing appreciation of the importance of economic and social objectives. A desire to address economic objectives has partly driven the increasing use of individual transferable quotas (ITQs). However, ITQs are insufficient to achieve the economic objectives as a suite of other decisions and regulations affect outcomes. Assignment problems are common in ITQ fisheries and can reduce economic yield. They occur through misallocation of fishing effort, particularly when there is spatial and temporal heterogeneity in the stock, leading to inefficient timing of supply and overexploitation and congestion in parts of the fishing grounds. Clubs in the form of fishing cooperatives have the capacity to resolve these problems through coordinating the fishing effort of their members. The likelihood of a single fishing cooperative forming and uniting to resolve assignment problems however, may be diminished under ITQ management due to the increasing heterogeneity in business structures, incentives and motivations among fishers generated by market-based mechanisms. This heterogeneity can also have ramifications for fishers trying to reach an agreed industry position that can be presented to government when negotiating on management changes that deal with assignment problems. In this situation, the absence of an agreed industry position should not act as an impediment to government in prioritising, articulating and taking the lead in implementing measures that reduce assignment problems and concurrently meet their overarching economic objectives.

Thirty years after privatization: A survey of Icelandic small-boat fishermen

Iceland's nationwide privatized Individual Transferable Quota (ITQ) system is over thirty years old but remains a topic of public and political debate, particularly because of the continued effects on small-scale fisheries. A national survey of small-boat fishermen was distributed to: (1) identify major defining characteristics of participants in ITQ and non-ITQ fisheries, (2) document and examine differences in satisfaction with fisheries management, and (3) evaluate the existing options for newcomers to participate in small-boat fisheries. Survey results indicate that Icelandic small-boat fishermen are engaged in multiple management systems within a wide range of boat sizes. Those who held quota were more satisfied with the current ITQ system compared to those who did not hold quota; however, nearly all fishermen were still critical of fisheries management in Iceland and the two major non-ITQ options of lumpfish and coastal fishing were not perceived to offer significant opportunity for entry-level fishermen. Dissatisfaction stemmed from the lack of decision-making power, a distrust of scientific advice, and the perception that the ITQ system did not serve the purpose of protecting fisheries resources, but was rather oriented only toward economic goals. The dynamic nature of Icelandic small-boat fishing livelihoods and the pervasive negative attitudes thirty years after ITQ implementation demonstrate the need for culturally appropriate and equitable fisheries management schemes where success is measured in social as well as economic and biological terms.

Changes in the lease and permanent sale quota markets of a rock lobster fishery in response to stock abundance

AbstractEffective individual transferable quotas (ITQ) systems rebuild stocks and allow transfer of quotas to more efficient operators. This process requires functional markets for both quota sales and temporary quota leases. These markets are expected to respond to changes in economic rent from the fishery, which is influenced by stock abundance and the international rock lobster price. This research used multistate Markov modelling and Granger causality test to examine changes in the permanent and temporary quota trade in the Tasmanian rock lobster fishery quota market, during periods of both increasing and decreasing stock abundance. The permanent quota trade market was more active during the period of stock growth, while the quota lease market was active in both periods of stock growth and decline. In contrast to theoretical trends in ITQ fisheries, trades in both markets were not linked to the technical efficiency (i.e. catching capability) of operators, but were more driven by the quota owners' financial capacity (i.e. number of owned quotas). Prolonged and unexpected stock decline affected the quota market so that it deviated from the theoretical pattern of ITQ fisheries. Operators previously active in the market reduced their activity, while smaller operators and firms that previously had not traded became more active, so the fleet expanded with smaller operators entering.

Does ‘race to fish’ behaviour emerge in an individual transferable quota fishery when the total allowable catch becomes non‐binding?

AbstractSuccessful individual transferable quota (ITQ) management requires a binding (constraining) total allowable catch (TAC). A non‐binding TAC may result in a shift back towards open access conditions, where fishers increasingly compete (‘race’) to catch their share of the total harvest. This process was examined by comparing fishing fleet behaviour and profitability in the Tasmanian southern rock lobster (Jasus edwardsii) fishery (TSRLF), Australia. Between 2008 and 2010, the TSRLF had a non‐binding TAC and effectively reverted to a regulated, limited‐entry fishery. Fishers' uncertainty about future profitability and their ability to take their allocated catch weakened the security characteristic of the ITQ allocation. The low quota lease price contributed to an increase in fleet capacity, while the more limited reduction in quota asset value proved an investment barrier, hindering the autonomous adjustment of quota towards the most efficient fishers. In the TSRLF, catch rates vary more than beach price and are therefore more important for determining daily revenue (i.e., price x catch rate) than market price. Consequently, fishers concentrated effort during times of higher catch rates rather than high market demand. This increased rent dissipation as fishers engaged in competitive race to fish to be the first to exploit the stock and obtain higher catch rates. The history of this fishery emphasizes the need for a constraining TAC in all ITQ fisheries, not only for stock management, but also to manage the security of the ITQ allocation and prevent unanticipated and undesirable changes in fisher behaviour and fishery profitability.

Correction: System Dynamics Modeling of Individual Transferable Quota Fisheries and Suggestions for Rebuilding Stocks, Sustainability 2011, 3, 184-215

The author wishes to make the following correction to this paper. Due to mislabeling, replace: [...]

Are input controls required in individual transferable quota fisheries to address ecosystem based fisheries management objectives?

This study examined the use of Individual Transferable Quotas (ITQs) to effectively manage fishing impacts on all ecosystem components, as required under Ecosystem Based Fisheries Management (EBFM) principles. A consequence of changing from input controls to output-based (catch) management is that the control of the regulating authority tends to be reduced, which may affect the outcomes for ecosystem management. This study reviewed the use of input controls across six fishing methods in 18 ITQ fisheries, which have been independently accredited as ecologically sustainable by the Marine Stewardship Council (12 fisheries) or under Australian environmental legislation for Wildlife Trade Operation (six fisheries). Input controls were retained across a range of ITQ fisheries, with non-selective fisheries such as trawl, gillnet and line employing more input controls than selective fisheries such as purse-seine, pot/trap and dredge. Further case-studies confirmed the widespread and recent use of input controls (spatial and temporal closures) with the aim of managing ecosystem impacts of fishing. The retention of input controls, particularly closures affects the security (quality of title) characteristic of the fishing use right and the theoretical ability of fishers to manage their right for their future benefit. The security characteristic is weakened by closures through loss of access, which undermines industry trust and incentive for long-term decision making. By reducing the security of ITQs, individual fisher incentives and behaviour may separate from societal objectives for sustainability, which was one of the foremost reasons for introducing ITQ management.

System Dynamics Modeling of Individual Transferable Quota Fisheries and Suggestions for Rebuilding Stocks

This paper develops a system dynamics model of Individual Transferable Quota (ITQ) systems in order to differentiate ITQ from total allowable catch (TAC) effects and to identify areas where policy changes and management improvement may be most effective. ITQ systems provide incentives for long-term stewardship but when fisheries are managed “at the edge,” the incentives are inadequate for stock rebuilding. The free-market design of ITQ systems means that fishermen may be in conflict with the long-run, public sustainability goals of fishery management. An adaptive control scheme with a contingent public/private transfer payment is proposed to improve long-term results for both the local community and the general public.

The elephant in the room: The hidden costs of leasing individual transferable fishing quotas

Despite the increasingly positive reviews of individual transferable quotas (ITQs), few studies have considered how quota leasing activities can reduce the economic benefits to society and to fishermen operating under the ITQ fisheries system. This analysis reveals negative economic impacts of ITQs previously overlooked by examining the extent of quota leasing and the relationship between the catch value, the cost of fishing, and the quota lease price in the BC halibut fishery, long considered a poster child for ITQs. Findings challenge assumptions of economic theory used to promote the benefits of ITQs.

How do individual transferable quotas affect marine ecosystems?

AbstractPublished papers were reviewed to assess ecosystem impacts of individual transferable quotas (ITQs) and other dedicated access systems. Under ITQs, quota shares increase with higher abundance levels, thus fishers may request lower total allowable catches (TACs) and pay for monitoring and research that improves fishery sustainability. Mortality on target species generally declines because catches are closer to TACs and because ghost fishing through lost and abandoned gear decreases. High‐grading and discarding often decline, but may increase if landings (and not catches) count against ITQs and when there is little at‐sea enforcement. Overall, ITQs positively impact target species, although collapses can occur if TACs are set too high or if catches are routinely allowed to exceed TACs. Fishing pressure may increase on non‐ITQ species because of spillover from ITQ fisheries, and in cases where fishers anticipate that future ITQ allocations will be based on catch history and therefore increase their current catches. Ecosystem and habitat impacts of ITQs were only sparsely covered in the literature and were difficult to assess: ITQs often lead to changes in total fishing effort (both positive and negative), spatial shifts in effort, and fishing gear modifications. Stock assessments may be complicated by changes in the relationship between catch per unit effort, and abundance, but ITQ participants will often assist in improving data collection and stock assessments. Overall, ITQs have largely positive effects on target species, but mixed or unknown effects on non‐target fisheries and the overall ecosystem. Favourable outcomes were linked to sustainable TACs and effective enforcement.

Impact of property rights on labor contracts in commercial fisheries

Property rights are increasingly utilized for environmental and resource management: in fisheries these market-based approaches take the form of individual transferable quotas. This paper studies labor contracts in fisheries governed by individual transferable quotas (ITQs). Previous literature on labor contracts in fisheries models the dominance of a share system of remuneration between boat owner and crew in fisheries. We extend the standard model of the labor contract to the case of ITQ fisheries to explain the share contract between crew and boat owner and the share contract between boat owner and quota owner when boat owner, quota owner, and crew are risk averse in a stochastic environment. We test this model through analysis of the Mid-Atlantic surf clam fishery and present empirical evidence of changes in contracting practices, harvest rates and shares of crew remuneration.

The Efficiency Gains from Fully Delineating Rights in an ITQ Fishery

Individual transferable quota (ITQ) regulation relies on a decentralized market mechanism and a single price to allocate access to a stock of fish. The result- ing allocation will not be fully efficient if the stock being allocated is heterogeneous or if there are potential gains from centralized coordination of harvesting effort. If stocks are heterogeneous in their density, location, or unit value during the season, harvesters governed by an ITQ policy will not be indifferent to when or where they exercise their quotas. Stocks that are relatively dense and/or close to port will be preferred to those less dense or more remote. Because an ITQ policy assigns the same opportunity cost for each unit harvested, individual harvesters have an incen- tive to compete for higher-valued units, and such competition may dissipate part of the fishery's potential rent. A similar phenomenon arises when stock densities vary in an unknown way over space or time, so harvesters must engage in costly search. Individual harvesters governed by an ITQ policy still face a collective action prob- lem which limits the incentive to share information on stock locations. This can lead to redundant search effort. We demonstrate that both sources of inefficiency can be eliminated either by defining ITQ rights more precisely or by an agreement among harvesters to coordinate their effort. We develop models that illustrate these effects and identify the factors that determine their likely size. Anecdotal evidence on prac- tices adopted by fishery cooperatives is presented to illustrate the practical relevance of the issues we raise.

A New Zealand ITQ Fishery With an In-Season Stock Externality

This paper explores the economic performance of a fishery that operates under an individual transferable quota (ITQs) management system and that is subject to an in-season stock externality. While Boyce (1992) and others have established theoretically that ITQ management is not fully efficient under all conditions, this is the first study that empirically estimates the efficiency losses due to an in-season stock externality in an actual fishery. We study the New Zealand southern scallop fishery, which has been under ITQ management since 1992. Our analysis provides evidence of a race-to-fish in the fishery, and estimates that individual firm profits were approximately $2,300 and $2,000 (20% and 10%) less in 1996 and 1997, respectively, than they would have been under optimal management. We recommend modifications in the ITQ policy to improve the economic performance of the fishery.

Implications of Taxing Quota Value in an Individual Transferable Quota Fishery: Comment

Implications of Taxing Quota Value in an Individual Transferable Quota Fishery: Comment

Implications of Taxing Quota Value in an Individual Transferable Quota Fishery: Reply

Implications of Taxing Quota Value in an Individual Transferable Quota Fishery: Reply