Individual Vessel Quotas Research Articles

The effect of quota portfolio composition on optimal harvest strategy and profitability in a multi-species fishery

Abstract The benefits of individual vessel quota (IVQ) management in terms of improved harvest strategy and profitability are well recognized, but there is less focus on how different components of a quota portfolio can influence decisions underlying the effort allocation and profit-maximizing behaviour of fishers. Variations in the components of the quota portfolio may create economic incentives that alter the optimal harvest strategy and profitability. Thus, we study the potential impact of different components of quota portfolio on the intra-annual harvest strategy and profitability in two segments of the Norwegian bottom trawl fleet. By developing a vessel-based spatio-temporal bioeconomic framework, we demonstrate and compare adopted harvest strategies and accrued profits for small and large trawl vessels under three scenarios regarding restrictive quotas in codfish fishery. Our analysis confirms that alternations in the components of the quota portfolio influence the spatio-temporal dynamics of the fishing effort for small and large trawl vessels in different ways, probably due to the differences in vessel-specific characteristics. We also demonstrate that the differences in profit between small and large vessels in part depend on the overall size of the quota portfolio. The economies of scale in the trawl industry are being eroded as the shares of higher-priced species in the quota portfolio decreases. The benefits of economies of scale cannot be reaped as trawlers respond to the reduction in profit by redirecting effort from offshore areas of the Arctic to nearshore waters or staying ashore. Likewise, having small quotas of high-priced species reduces the effectiveness of the IVQ system in meeting management objectives, and could in some cases undermine sustainability outcomes. Our results also demonstrate that both the intensity with which fishers react to the fluctuations in market price levels and fishers’ perceptions of location attractiveness are influenced by the components of the quota portfolio.

A Multi-Region and Multi-Period Harvest Schedule of the Trawl Fleet

Under the individual vessel quota regulations, the expected economic return of a multi species fishery is influenced by an array of a multi-component choice such as targeted species, landings per haul, harvesting time and its location. The components of effort allocation decisions are further complicated by changes in the market conditions and the constant movements of fish between spawning and feeding habitats. Migratory behavior influences the dispersal of species, relative availability of fish and its composition, and the bycatch likelihood across different locations over the course of a fishing year. The objective of this article is to investigate the optimal allocation of fishing effort in the Norwegian bottom-trawl fleet within economically important species; cod, saithe, and haddock across three heavily trawled areas—including southern and northern parts of the west coast of Norway, and the high sea areas of the Arctic—to achieve maximum expected economic return, with respect to the individual vessel quota constraints and bycatch considerations. The results from a mixed integer non-linear optimization problem evidence that the spawning migration of Northeast Arctic cod along the northwest coast, effort allocation behavior of coastal fleet, together with institutional regulations necessitate the substitution of fishing effort across different fishing locations within the fishing season to maximize expected return. The results of our study further reveal that the Arctic region to target cod is the biggest contributor to annual fishing revenue. By contrast, conducting saithe fishery in the southwest of the Norwegian coast has the lowest economic contribution. The results from Monte Carlo simulation demonstrate that the proposed model is effective and applicable for effort allocation decision analysis.

The role of path–dependent institutions during the collapse and rebuilding of a fishery

This article presents a historical analysis of the Norwegian spring spawning herring fishery. Theoretically, the study is rooted in new institutional economics (NIE). The study shows that the fishery collapsed during the 1960s because of overfishing. The underlying key drivers were unregulated open access management, technological progress, and excess capacity building. The analysis further discloses that the initial responses to the resource crisis exacerbated the underlying issues; subsidies introduced to support a fishing fleet that was not adapted to the catch base. Also, fishing for juvenile herring was allowed to protect the income of the fishers. The study argues further that the breakdown of the herring fishery represented a historical event that marked a paradigm shift from open access to closed entry fisheries management. The building of formal institutions supported the turnaround in the management path. In the aftermath of the crisis, the fishery was closed, total allowable catch regulations (TACs) were introduced, and individual vessel quotas followed a few years later. During the 1990s, the stock recovered, and herring reemerged as a key revenue driver for the pelagic fleet. Finally, some economic effects for the pelagic vessels brought about by the changed management path are outlined in the paper.

Sustainability and wealth creation, but no consensus: Recent decades in Iceland’s ITQ-managed fisheries

This paper describes the main developments, issues, and disputes surrounding Iceland’s fisheries and the individual transferable quota (ITQ) system governing them. The path to the ITQ system in Iceland started in 1979 in some pelagic fisheries. A substantial step was made in demersal fisheries when moving toward an individual vessel quota (IVQ) system in 1984. The biggest milestone in management was reached in 1990 when a comprehensive ITQ system was introduced that covered most Icelandic fisheries. Overfishing was a problem in the early days of the ITQ system. The path to sustainable fisheries was long and gradual, and now, most fish stocks are sustainably managed. There is clear evidence that the current fishing rights holders in Icelandic fisheries have demonstrated environmental stewardship because they have not opposed reductions in the total allowable catch (TAC) of important species. The economic performance of the industry has improved, and both the fishing and processing parts of Iceland’s fisheries are now very profitable, and the fishing component is paying significant resource rent taxes. The industry has changed considerably, fishing rights have been consolidated, primary fish markets have been liberalized, and vertically integrated firms dominate the Icelandic fishing industry. Fishing rights (permanent quota shares) are very valuable, so entering the industry for new participants is difficult. The Icelandic ITQ system is now and has always been very controversial and under heavy political debate and scrutiny.

Individual quotas and revenue risk of fishing portfolio in the trawl fishery

The Norwegian bottom-trawl fleet is managed through individual vessel quotas and is generally engaged in codfish fisheries, where several species contribute to the revenue of the fishery. The revenue from the fishing exhibits substantial intra-annual variation and carries a significant degree of risk due to the presence of intrinsic volatilities in the marine environment, such as seasonal fluctuations in stock size and constant changes in market conditions over the course of a year. In the face of volatile revenue, fishers may allocate fishing effort and use a quota portfolio to minimize revenue risk. However, decisions underlying effort allocation, such as when to fish what and how much to harvest to match the catch size and remaining quota, are challenging. In this regard, a decision-making framework based on a bio-economic model is used to explore the revenue risk minimization behavior of the Norwegian codfish trawl fleet targeting three different species (cod, saithe, and haddock), given the constraints set by the quotas. The study comprises trawl catches and fishing effort as well as the prices for the frozen products of codfish to investigate the adopted harvest strategy under two different scenarios. The results indicate that a risk-minimizing strategy leads to inefficient allocation of fishing quotas and fishing effort and that potential economic losses from minimizing revenue risk outweigh the benefits. Moreover, our findings prove that enhancing revenue is more important than minimizing revenue risk for the trawlers. We argue that the spatial and temporal freedom of the trawl vessels, together with a vertically integrated trawl industry, may explain the prioritization of revenue enhancement over revenue risk minimization. The seasonal spawning aggregation of NEA cod and how this affects market prices shape the trawlers’ harvest strategy of increasing fishing revenue.

Institutional nuts and bolts for a mesopelagic fishery in Norway

While most commercial fish stocks in the north Atlantic are regulated with TAC's (total allowable catch), access regulations and IVQ's (individual vessel quotas), harvesting mesopelagic fish resources, such as pearlsides (Maurolicus muelleri) and glacier lanthern fish (Benthosema glaciale), represents a clear exception. Neither TAC's nor rules for bycatch are implemented. As mesopelagic fish resources are classified as one of the largest fish resources globally and abundant in the north-Atlantic, the species represent a significant potential for the development a new fishery and source for the biomarine industry. However, with reference to the historical development of other fisheries, lack of TAC-regimes represents a major driver for capacity expansion. As a new mesopelagic fishery may be conducted either as a new- and additional season for today's deep-sea pelagic fleet or by specialized vessels for a year-round mesopelagic fishery, the alternatives represents different capacity adaptations and institutional implications for the management regime. This article outlines the mesopelagic potential, which management principles may be implemented to a mesopelagic fishery and the interplay to other TAC-regulated pelagic fisheries.

Examination of the Peruvian Anchovy Individual Vessel Quota (IVQ) system

The implementation of rights-based management programs is increasing worldwide yet there are few ex post evaluations, especially in developing country contexts. This paper examines changes following the implementation of a catch share system in the Peruvian anchovy fishery, which is the world's largest commercial fishery by volume. After implementation of the Individual Vessel Quota (IVQ) management system, there was a shift toward higher value product and a 105% increase in per-unit revenue with the IVQ program. Additionally, landings are more spread out over the fishing season with an increase in the number of fishing days and fleet consolidation occurs over time with a shift toward larger vessels in the steel fleet. Finally, using cost estimates from a large fishing firm on the cost of steel vessel operation, variable harvesting profit is estimated to have increased from 34% to 41% of the ex-vessel revenue pre-IVQ to 63–65% post.

Optimal Management Under Institutional Constraints: Determining a Total Allowable Catch for Different Fleet Segments in the Northeast Arctic Cod Fishery

Many real world fisheries have an individual vessel quota system with restrictions on transferability of quota or entrance of new vessels into the fishery. While the standard economic reasoning is that these institutional constraints lead to welfare losses, the size of those losses and optimal second-best policies are usually unknown. We develop a dynamic bioeconomic model, in which a scientific body provides an optimal TAC given restrictions on (i) transferability between vessel segments and (ii) entrance of new vessels. Further, we also quantify welfare losses arising from not maximizing economic welfare, but physical yield—which is actually the case in many fisheries. We apply the model to the Northeast Arctic cod fishery, and estimate not only the cost and harvesting functions of the various vessel types, but also the parameters of the biological model as well as those of the demand function. This allows us to determine optimal second-best policies and quantify corresponding welfare effects for our case study fishery.

Sociocultural institutions in Norwegian fisheries management

Many policymakers attribute the success of fisheries management regimes to the design and implementation of particular regulatory tools. While sound design and effective implementation are crucial elements of any successful regulatory action, fisheries policymakers and regulators should also account for the heterogeneous sociocultural institutions of partner communities. The success of fisheries policies relies on compliance and, ideally, cooperation (accepting policies, i.e. not protesting or otherwise strongly agitating against the system) from fisheries stakeholders. Even a policy that is sound in design and flawless in execution is at risk of failure if target stakeholders obstruct or otherwise undermine the system. This paper investigates how institutions, at various levels of scale and formality, play a role in determining the degree of compliance and/or cooperation that a fisheries management regime enjoys. In particular, it will examine the issue of Individual Vessel Quotas (IVQs) in Norway, and the response of fishing communities to the trade liberalization of IVQs.

A Profitability Analysis of Catch Quotas for the Pacific Hake Fishery in the Gulf of California

AbstractFishing for Pacific Hake Merluccius productus in the Gulf of California is carried out by shrimp trawlers. When the shrimp fishing season ends, these boats shift to catching Pacific Hake and other finfish. The Pacific Hake fishery is relatively new and has the potential to grow as an industry. Therefore, there is interest in defining management plans to create a sustainable fishery. One option is an individual vessel quota system. This paper estimates the per‐vessel quota in the Pacific Hake fishery that achieves a break‐even operation and estimates the number of vessels that could enter the fishery to avoid overexploitation and overcapacity. Potential per‐vessel quotas were estimated based on the cash flow of a representative trawler and the estimate of total Pacific Hake biomass. The results indicate that individual catch quotas for Pacific Hake should be 90.4 or 100 metric tons to achieve a 30% or 45% increase, respectively, in net cash. Additionally, with total allowable catch values equivalent to 25% of the available biomass, the corresponding fleet size would be 74, 82, or 103 vessels based on different scenarios. Because the Pacific Hake fishery is under development, these approximations can be used during the planning stage to meet resource conservation and right‐of‐use standards.Received November 12, 2015; accepted August 16, 2016Published online December 20, 2016

Unravelling the dynamics of a multi-gear fleet – Inputs for fisheries assessment and management under the Common Fisheries Policy

Effective species management requires good knowledge on vessel dynamics, either at a stock basis or through the establishment of multiannual management plans as advisable under the new European Common Fisheries Policy (CFP). Achieving such knowledge on Portuguese multi-gear fisheries is challenging given the large number of species caught and the different management measures applied to potential target species. The latter ranges from no input or output controls to output controls based on individual vessel quotas (IVQ). To provide accurate regional knowledge to the CFP, the dynamics of vessels involved in the trammel net fishery targeting anglerfish (Lophius spp.) was characterised based on onboard sampling data and logbook reports. The selected vessels were very dynamic, and were found to target other species such as hake (Merluccius merluccius), John Dory (Zeus faber) and octopus (Octopus vulgaris). Anglerfish landing trends can be explained by changes in abundance, quota availability and shifts/changes in fishing effort. Overall, the dynamics of these vessels varied with area of exploitation, IVQ value and anglerfish total allowable catch (TAC). These results show the influence of different management systems in the dynamics of vessels and the advantage of an IVQ management system, where fishers can spatially and temporally allocate effort. Results also highlight a fishing effort shift towards unregulated species in face of IVQ or TAC restrictions.

Design and implementation of electronic monitoring in the British Columbia groundfish hook and line fishery: a retrospective view of the ingredients of success

Catches inthegroundfishhookand linefishery inBritishColumbiaonCanada’swest coasthavebeenmonitoredsince2006withan interrelated suiteof technical components. These include, but are not limited to, full (100%) independent dockside monitoring, full video capture of fishing events and vessel monitoring at sea, 10% partial review of the video imagery from each trip, and full coverage of fisher logbooks. The monitoring also relies on complete retention of the over 30 species of rockfish (Sebastes spp.). Each component, in spite of its weaknesses as a stand-alone monitoring tool, makes an essential contribution without which the overall programmewould fail. The programme has surpassed expectations in providing accurate, defensible, and timely estimates of total catch for all quota and many non-quota species. This document summarizes contextual and process ingredients, which contributed to implementation, the key being a “carrot and stick” approach wherein industry support was facilitated by the “carrot” of coincident full introduction of individual vessel quotas (ITQs). The “stick” was that Government support was conditional on improving catch monitoringwiththeproviso that ITQswouldnotbe consideredand thefisherywouldbecloseduntil themonitoringwas improved.Also importantwasthe fact that previous failures to solvemanagement and catchmonitoring in this fishery with overly simple solutions had created an understanding by all participants that an effective and lasting solution would be complex and require a major commitment of time and funds.

Increasing Pressure on Unregulated Species Due to Changes in Individual Vessel Quotas: An Empirical Application to Trawler Fishing in the Baltic Sea

ABSTRACT Individual vessel quotas (IVQs) established on an important target species are a common tool to regulate fisheries. This article investigates fishermen's behavior in a situation in which a primary output quota is decreasing due to policy restrictions. The findings suggest that vessels respond to such situations by increasing pressure on unregulated species, using their spare capacity. This article models fishermen's behavior using a restricted profit function, treating the harvest of regulated species as fixed, while unregulated species are variable outputs. An empirical application is provided for the Polish trawler fleet with permits to harvest IVQ-regulated Atlantic Cod in the Baltic Sea. The results indicate a strong substitute relationship between the cod quota and pelagic species. Derived elasticities of intensity, providing a measure of the impact of a fixedfactor on variable factors, offer strong evidence of increasing pressure on pelagic species caused by decreasing quotas. JEL Code: Q22.

How does species association affect mixed stock fisheries management? A comparative analysis of the effect of marine protected areas, discard bans, and individual fishing quotas

We developed a spatially explicit bioeconomic model of a mixed-stock fishery with an unproductive and a productive stock to examine how the spatial overlap between species affects the outcome of a fishery under alternative management methods. We considered a competitive total allowable catch (TAC) system, with and without a ban on discards, and an individual vessel quota (IVQ) fishery managed either to maximum sustainable yield (MSY) or maximum economic yield (MEY). We also evaluated the utility of marine protected areas (MPAs) designed to protect the unproductive species for each management scenario. Banning discarding (whether under a TAC or IVQ) created the biggest increase in profit regardless of species overlap as it moves the target species biomass toward Bmey. MPAs reduced the profit in most cases and were not always successful at conserving the unproductive stock above a target size. The IVQ system managed to MEY produced the most profit among all scenarios while preserving the populations above some target values in most cases, but an IVQ system managed to MSY produced lower profits than a competitive TAC with a discard ban at some levels of species overlap.

Development in fleet fishing capacity in rights based fisheries

Individual Transferable Quota (ITQ) fisheries management systems are supposed to remedy the over-capacity problem associated with traditional command-and-control management systems. This paper provides some insight with respect to the impact of ITQs on vessel numbers in six different countries. The results indicate that the number of vessels was reduced by at least 30% within a few years of the implementation of individual vessel quotas. Thereafter a slow reduction in vessel numbers continued, indicating that it may take time period before over-capacity is fully removed. Moreover, the total effect on vessel numbers is surprisingly similar across countries and fisheries despite different degrees of transferability in the different cases analysed.

Individual Vessel Quotas in Peru: Stopping the Race for Anchovies

Abstract In January 2009 a new management regime of individual vessel quotas (IVQs) was put in force in the world's largest fishery, the Peruvian anchovy fishery. Until 2009, the fishery was managed by a regulated open-access system with clear symptoms of the race for fish. We argue that the new regime has stopped the race for fish, reduced the number of vessels participating in the fishery, and prolonged the fishing season. Furthermore, the IVQs appear to have improved profitability in the fishery and increased value-added production in the Peruvian anchovy value chains. This provides support that developing countries with presumed weaker institutions can reap benefits of such management systems. However, there appears to have been setbacks in 2010, as the number of participating vessels has once again increased. This indicates that the institutions that regulate and monitor the fishery must be further strengthened. JEL Classification Code: Q22, Q27

Population structure, distribution and harvesting of southern geoduck, <i>Panopea abbreviata</i>, in San Matías Gulf (Patagonia, Argentina)

Southern geoduck is the most long-lived bivalve species exploited in the South Atlantic and is harvested by divers in San Matias Gulf. Except preliminary data on growth and a gametogenic cycle study, there is no basic information that can be used to manage this resource in terms of population structure, harvesting, mortality and inter-population comparisons of growth. Our aim was to analyze the spatial distribution from survey data, population structure, growth and mortality of several beds along a latitudinal gradient based on age determination from thin sections of valves. We also described the spatial allocation of the fleet’s fishing effort, and its sources of variability from data collected on board. Three geoduck beds were located and sampled along the coast: El Sotano, Punta Colorada and Puerto Lobos. Geoduck ages ranged between 2 and 86 years old. Growth patterns showed significant differences in the asymptotic size between El Sotano (109.4 mm) and Puerto Lobos (98.06 mm). The maximum age decreased from north to south. Natural mortality was estimated for each bed according to a catch curve ( M = 0.105 – 0.177 yr -1 ), with a method based on mean age ( M = 0.212 – 0.233 yr -1 ) and a method based on maximum longevity recorded ( M = 0.062 – 0.13 yr -1 ). Population features were integrated into the harvest analysis to generate a preliminary management proposal that includes subdivision of the coastal zone, limited entry, harvest rate and individual vessel quotas.

A Study on the Norwegian Individual Vessel Quota System

A Study on the Norwegian Individual Vessel Quota System

Developments on fisheries management in Peru: The new individual vessel quota system for the anchoveta fishery

Rights-based management (RBM) has been proposed during the last two decades as a means to counteract the race for fish in the Peruvian pelagic fishery. Recently, the government has decided to implement RBM in the pelagic fisheries in the form of a system that allocates individual quotas for vessels licensed to harvest Peruvian anchoveta. The aim of this paper is to analyse the introduced individual vessel quota (IVQ) system and to identify factors that may have the potential to either aid or undermine the achievement of the objective of reducing the race for fish. The non-transferability characteristic of the vessel quota may aid protecting the social fabric from concentration of rights. A substantial fleet reduction, however, may not be achieved. Measures to permanently eliminate redundant capacity and thus the threat of the race for fish may be required. Such measures should comprise either decommissioning schemes or instruments to regulate transferability.

The IVQ regime in Norway: A stable alternative to an ITQ regime?

Abstract Since the introduction of quotas and licences as important management tools, Norway has insisted on an individual vessel quota regime (IVQ). The main argument has been to avoid market-based transactions of quotas and vessels and secure stability in regard to a diverse fleet structure and decentralized ownership of scarce cod resources. Thus, an individual transferable quota system (ITQ) with a high degree of transactions and the potential for a heavy concentration of quota ownership and fewer vessels has never been an alternative. However, since the late 80s, the trawler fleet has been trapped within a web of unprofitable overcapacity. Within the frame of a closed management regime and a path-dependent IVQ system, the quota regime has been forced towards a market-orientated system for transactions. In this article, we analyze the Norwegian IVQ system and discuss whether the aggregate effects of the IVQ regime are congruent with the models’ profound ideals.