March, 1999
Rodney M. Fujita, Ph.D - Marine Ecologist
Individual Transferable Quotas for fish catch privileges (ITQ) can enhance conservation and make fisheries more sustainable and profitable. However, to achieve these goals, ITQ programs must incorporate specific features. Many of these, such as sustainable TACs and stronger management institutions, are identical to measures needed to make any fishery management regime sustainable; they are systemic. Others, such as allocation of quota share to reward conservation-oriented behavior, are peculiar to ITQ programs. These are the features that would give ITQs added value for conservation relative to other management tools, all other things being equal.
Sustainable Total Allowable Catch Limits. Total Allowable Catch (TAC) limits are the primary conservation and sustainable tool for ITQs. ITQ programs must be based upon sound TACs to increase profits and to sustain fisheries. To be sound, TACs must either be based on a thorough and accurate understanding of fish population abundance, reproductive capacity, recruitment probability, the fishing mortality rate that gives rise to the Maximum Sustainable Yield (Fmsy), the impacts of fishing on the ecological factors that sustain the target fish populations (e.g., habitat, prey species, productivity), and an equally thorough and accurate understanding of all of these factors relative to bycatch species; or, the TAC must be hedged against uncertainty in any or all of these factors.
Furthermore, fishery managers must be able to exert relatively precise control over fishing mortality rate (F) if Fmsy is to be achieved and not exceeded. Again, if control over F is uncertain, managers must hedge against that uncertainty if the fishery is to be profitable and sustainable.
Since very few TACs are, or can ever be, based on such sound science, and since control over fishing mortality is usually quite imprecise (due to changing market conditions, weather, and innumerable other unpredictable variables), the only way that a TAC can serve as a conservation tool is if buffers against the uncertainty inherent in both the TAC and F are created and maintained. Such buffers include conservative estimates of the parameters that are used to estimate TAC, Fmsy, and F. No-take marine reserves offer a more robust kind of buffer against uncertainty, since they protect actual biomass and habitat, rather than modeled or estimated biomass.
Institutional safeguards against overfishing. As is the case for any other fishery management tools, the conservation potential of ITQs is only as strong as the institutional safeguards against overfishing and other adverse impacts. ITQs reduce the probability of overfishing, given sustainable TACs, because they (unlike other management tools) create a direct economic incentive for stewardship. The empirical evidence strongly suggests that this is the case, since ITQs usually increase compliance levels with TACs and other conservation-based measures (e.g., bycatch rates and ghost fishing have also decreased under ITQ management). However, ITQs can also create an incentive for unsustainable behavior (though there are few documented cases of this), such as raising TACs to unsustainably high levels in order to increase the short term value of ITQs.
Factors that lead fishery management institutions down the slippery slope of easing conservation measures in order to avoid short term economic pain, at the expense of sustainability, are many and varied. Prime among them are conflicts of interest, aversion to conflict, and a sense that their primary duty is to keep as many fishermen solvent in the short term as possible (rather than to allow attrition to reduce the size of the fleet in accordance with declining stocks). These factors must be addressed if ITQs, like any other tool, are to become a force for conservation and sustainable fishing.
Conflicts of interest can be reduced by reducing the dominance of fishing industry representatives on regional management councils and by strengthening recusal provisions. The current guidelines are completely inadequate. Creating a shift in values is considerably more difficult. One way to do this would be to adopt guidelines for appointing council members that stack the deck in favor of candidates with a longer term orientation.
Decentralizing and disaggregating fishery management could also help. It may be that the task of managing fisheries that are as large and diverse as those managed by regional councils is inherently too difficult. Area quotas and co-management could be used to increase accountability and reduce conflicts by reducing the number and diversity of fishers involved. Ideally, community sanctions, peer pressure, trust, and a shared value system make co-management systems work for sustainability. Many of these factors for success are lacking in regional fishery management councils.
More radical reforms aimed at creating institutional structures that reward sustainable behavior include corporate models and futures markets for catch privileges. To create positive incentives for long term stewardship of fishery resources, Townsend (1995) has proposed a new kind of institution in which the allocation of costs and benefits are clearly defined. Votes would be proportional to the number of shares held by a participant. Participants would be able to sell the future stream of benefits associated with the fishing quota by selling shares. Various hybrid institutions are possible; for example, ITQs could be issued by the institution, with quota shares being distributed in proportion to share ownership.
If fishery management institutions provided participants with votes in proportion to the shares they held and with well-defined harvest privileges, conservation-minded fishermen could buy shares from participants who do not favor, for example, a reduction in total allowable catch to allow for stock rebuilding. In this way, some fishermen would assume all of the economic risk of conservation in exchange for an anticipated future benefit that would accrue only to them, and other participants are compensated financially for lost fishing opportunities.
Townsend (1995) argues further that free transferability of shares is essential, so that far-sighted investors will have an economic incentive to buy a controlling interest in the management institution. He provides an example of an environmental organization that could purchase harvest privileges at a low price when the resource is depleted (reflecting inefficiencies owing to overcapitalization and other factors). The environmental organization could reduce total harvest in this way, and then lease harvest rights back to fishermen once stock recovery is accomplished.
This type of institution has a number of advantages in theory; however, some practical considerations suggest some potential problems. For example, majority shareholders could face other kinds of incentives for unsustainable harvests, such as a heavy debt load. Also, since harvest shares can become very costly in an open market, "far-sighted" investors must also be wealthy investors, a description that fits few environmental groups. If, however, shares are not granted in perpetuity but rather for a specific term only (for example, a three year contract from 2000 to 2003), shareholders could choose between bidding for the right to harvest today versus bidding for the right to harvest in the future. We would expect commercial fishing interests to bid up the price of shares of the current harvest, because of current debt burdens and other short term economic pressures. This tendency to discount the future would reduce pressure on share prices of future harvests (Leuthold et al., 1989), allowing far-sighted fishermen and investors an opportunity to invest in a larger share of future harvests. Such a far-sighted investment strategy could prove potentially lucrative in highly variable fisheries, such as the Pacific sardine, whose biomass appears to fluctuate naturally on a 30-60 year cycle (Baumgartner et al., 1992). A fishery organized by futures contracts could potentially spread fishing effort out over time. Fishermen and other investors would also have a vested interest in improving their understanding of the ecological factors influencing abundance and distribution, such as natural cycles.
Bycatch reduction. ITQs can and have reduced bycatch by slowing down or eliminating the race for fish and allowing skippers time to avoid high-bycatch areas. However, bycatch remains a problem in other ITQ fisheries.
Highgrading. ITQs can actually exacerbate highgrading under certain conditions (if the price differential between different grades of fish exceeds the costs associated with highgrading, in terms of crew time, extra time at sea, etc.), although there is little evidence that this actually occurs.
Local depletion. ITQs could potentially lead to the depletion of local populations, because ITQ holders would have more time to target aggregations than they would under a derby system.