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The devil and the deep sea - economics, institutions and incentives: the theory and the New Zealand quota management experience in the deep sea

Catherine Wallace[307] and B. Weeber[308]


This paper will look at three key questions in fisheries management.

i. Does theory suggest a property rights regime can be relied on to protect fish stocks and the environment of the deep sea?

ii. Has the New Zealand property rights based Quota Management System (QMS) been a success in terms of its management of fish stocks and the environment in the deep sea?

iii. What lessons can be learned for the deep sea from the New Zealand experience?

To address these questions, this paper canvasses basic economic theory including harvesting theory predictions and draws on theory of property rights, institutions and incentives and commonly expressed expectations about property rights. The paper briefly outlines the salient elements of the evolution of New Zealand’s QMS. It examines the empirical record to determine what has happened in management of deep-sea fisheries in New Zealand. In the light of both the theory and the New Zealand experience, it then addresses how this informs choices for the deep sea.


2.1 Economic nature of fisheries

Diagnosis of the "tragedy of the commons" (Hardin 1968) as instead a "tragedy of open access" (Bromley 1991) has led to much attention to institutional forms and property rights approaches to fisheries management. But there is more to fisheries economics than the "tragedy of open access". Fisheries theory notes that relative rates of growth of fish themselves is a significant element in the determination of harvest rates, even for a single owner. The of costs and benefits of the fishers may well differ from that of society. There are strong incentives to externalise costs. The marine environment yields a range of valued services, goods and ecological functions over a time path that stretches to infinity.

Fisheries are non-rival for ecosystem functions and for viewing and existing so everyone shares the benefits when they are in the sea. Fish are rival when extracted. Some of this value may be translated into market values if the fish are sold on markets rather than being used for subsistence. We can assume that there is little subsistence deepwater fishing and that most of the harvesting of deep-water species is for sale.

Fishing impacts not only the target fish stocks but bycatch, incidental mortality and damage to the host environment. Some methods such as trawling do considerable damage. Some ecosystem functions and benefits from the impacted environment are lost to all, possibly irrevocably, when the environment is affected. These adverse effects of fishing are known as "external costs".

Fishing is a joint product of human effort, capital and entrepreneurship and the environment so for fishers their investment decisions may take into account fishing capital and fish stocks. Harvesting may affect the environment and its attributes, thus diminishing the natural capital (Purge 1995) and the capacity of the environment (Randall 1987).

2.2 Value of fish, market and non-market - Total Economic Value

Economists use the "Total Economic Value" concept to capture both market and non-market values (Pearce and Turner 1990). The value of fish and seafood that is sold on the market is only one small part of the value that people attach to fish. Non-market economic values include:

"Total Economic Value" does not include, but may reflect aspects of cultural values. In public policy, ethical concerns, such as the sense of the obligation to not cause extinctions and to retain ecosystems intact may set limits to extraction or after other uses or abuses of the environment. Efficiency then becomes an optimisation problem - often subject to constraints such as not causing ethically unacceptable harms.

2.3 Core economic harvesting theory - market values

Although environmental economic analyses are now well established, it is not necessary to rely on this theory to analyse what are the incentives that drive harvesting decisions. We could elaborate the theory and introduce many complex modelling elements, including the effect of harvesting and processing capital, but for the purposes of this paper we reduce the analysis to the core standard dynamic economic harvesting theory. This harvesting theory[309] suggests that the decision as to how much fish stock should be retained and how much effort should be deployed by a single owner only concerned about the financial flows of harvest depends on:

Economic theory suggests that for fish stocks with low productivity, the net rate of growth of the capital value of the fish stock in the sea may be less than the rate of return from harvesting the fish and investing the revenues in the best alternative (Conrad 1995). Under these conditions the dominant incentive will be to "mine" the fish stock and to invest funds in the next best alternative as the proceeds of the sale of the fish stock can then be expected to grow faster than the net capital value of the fish stock in the sea.

2.4 Property rights

Suggestions that the solution to over-fishing is the creation of property rights rely on the idea that those with ownership in an asset are more likely to conserve it than those without them (Clark 1976). But the basic theory above shows that even a sole owner of a stock is, under the conditions described, likely to want to harvest the whole stock that can be taken and invest the proceeds (Clark 1976, Conrad 1995). The optimism that a share in ownership will cause the stock to be maintained overlooks that basic theory.

2.5 Harvest quantity limits

In general the setting of catch quotas as done in New Zealand with the imposition of a total allowable catch (TAC) or total allowable commercial catch (TACC)[310] or both (Fisheries Act 1996), provides a limit to the amount of fish that may be caught (though more may be killed during harvest than are landed). This provides more certainty than "effort" controls, which use input controls such as gear, seasonal or other controls as a proxy for harvest controls.

The purpose of allocating sub-sets of the total quota, as community or individual quota, is to alleviate the "race to fish" and to diminish "capital stuffing". Capital stuffing is where vessels are filled with expensive gear designed to give them an advantage over competitors during some limited period or other controlled fishing conditions.

A major reason economic theorists (Clark 1976, 1985, Anderson 1979, Crutchfield 1961, Gordon 1954, Stokes 1979) advocate limited entry, quantity limits and shares of catch limits rather than relying on rationing access to fish via effort controls, is that quantity limits provide for more efficient fishing. There is less dissipation of potential rents than occurs when fishers have to comply with "imposed" inefficiencies such as seasonal closures and effort-reducing "input" measures (Christy 1996, Conrad 1995, Crutchfield 1973, Gordon 1954, Scott 1988, Turvey 1964). Catch quantity limits and property rights do not remove the incentives to "mine" a resource and to use the proceeds elsewhere for the reasons outlined in Section 2.2. They rather promote more efficient harvesting and a lowering of costs compared to restrictions using effort controls. Transferable property rights allow for efficiencies from economies of scale and reduction of total fishing capital and capacity.

2.6 Quota owner associations

In general the idea of quota owner associations relies on theories of government failure, co-management, compliance, clubs, and institutional theory (Wilson et al. 1994, Jentoft and McCay 1995, Jentoft, McCay and Wilson 1998, Hannesson 1988, Sandler and Tschirhart 1997). Quota owner associations are founded on the idea that compliance with rules including catch limits will be promoted if quota owners form mutually binding contracts and rules to diminish competitive fishing and cheating. There is more incentive for restraint if each fisher can be confident that all other fishers will be restrained. There are fewer enforcement costs if members of the group have the incentive to police each other. In the absence of incentives for mutual forbearance, the forbearance of one fisher will simply benefit others rather than leaving more fish in the sea for tomorrow, in which case incentives to forbearance are eroded. Such fisher ‘clubs’ are posited as a means for limiting competitive fishing (Jentoft and McCay 1995). Harvesting will be less competitive and more cooperative: but incentives to harvest a stock completely may remain.

2.7 Externalisation of costs

Since many deepwater benthic species are also slow growing and of no market value, there is little or no incentive to look after the host deepwater environment. Ordinary incentives to externalise the effects on the environment prevail. There will be no incentive to consider these in private decision making. As with any profit-driven enterprise, as long as the costs of environmental damage by fishing do not enter into the fishers’ private equations, or into preferences of consumers, and hence into market choices and prices, then there is no incentive to avoid environmental damage. Property rights regimes do not provide incentives to protect the environment unless there is a rapid impact of the environmental damage on harvests. In the case of the deep sea, with its long-lived and slow-growing invertebrates and fish, property rights do little to reduce damage to the host environment. There remain strong incentives to externalise costs.

2.8 Predictions from theory - a summary

The establishment of TACs, of individual transferable quota (ITQs) and quota owner associations does not remove the incentives to "mine" stocks. The outcome of transferable property rights and quota owner associations is that harvesting a stock will be done more co-operatively and more efficiently from a private fishers’ financial point of view than if there are input controls, but this does not take account of externalized environmental costs or the costs of lost non-extractive values.


3.1 Background

Along with other jurisdictions, New Zealand has adopted institutional and property rights approaches that focuss on achieving an approximation to the incentives facing a "club" as a proxy for a single owner. How adequate has this approach been in protecting fish stocks in the deep sea? What about the ecosystem? What about other values?

There have been many reports that the New Zealand fisheries management QMS has been a success (Annala 1996, Shallard 1998, Clark, Major and Mollett 1988) and this view has been asserted by officials (MoF 1997a, 2004; Tuck 2001), Ministers (Minister of Fisheries 1998a), and fishing industry representatives (Treaty of Waitangi Fisheries Commission 1999).

Internationally, deepwater fisheries have been defined as fisheries that occur beyond the continental shelf break. DEEP SEA 2003[311] defined the deep sea as 200 m and deeper. At the International Council for the Exploration of the Seas (ICES) 400m and deeper has been used to define deepwater fisheries (ICES 2003).

In New Zealand, deepwater fisheries have been defined for stock assessment purposes as those deeper than around 700 m (Annala et al. 2003). The New Zealand fisheries covered here, following this definition, include orange roughy (Hoplostethus atlanticus), smooth and black oreos (Neocyttus rhomboidalis and Allocyttus niger), black cardinal fish (Epigonus telescopus) and ribaldo (Mora moro). Ribaldo is a bycatch species in trawling for hoki (Macruronus novaezelandiae), for orange roughy and for ling (Genypterus blacodes) and in longlining for ling. There is a range of other species that would meet the ICES or Deep Sea 2003 definitions, which are not considered here but are listed in Table 1. These species represent about 45 percent of New Zealand wild fisheries exports (NZ Seafood Industry Council 2002a).

The main deepwater target fisheries managed under the QMS include orange roughy, two of the three species of oreos (only smooth and black oreos are caught in large numbers), black cardinal fish and ribaldo. Orange roughy and the oreos have been managed in the QMS since 1986. Black cardinal fish was added in 1998 for Quota Area 2 to 8 and in 1999 for Areas 1 and 9. Ribaldo entered the QMS in 1998 for all areas. Black, smooth and spiky oreos are managed as a combined species group with a single catch limit per quota management area (QMA) (Figure 2). Spiky oreos (Pseudocyttus maculatus) are a minor part of the catch and are not targeted.

This paper primarily examines the orange roughy fisheries for evidence as to whether the property rights regimes protected fish stocks. This is because orange roughy has been the dominant deepwater species over the 20 years of quota system management by ITQs, both in terms of volume and in terms of price and value. A time line of important events in the development of deepwater fisheries in New Zealand is given in the Appendix.

3.2 Evolution of the New Zealand QMS

New Zealand declared a 200 nm EEZ on 1 April 1978 that covers 1.2 million nm2. Until this time there had been little New Zealand deepwater fishing - such fishing had been done, if at all, by distant water fleets (Insall 1978, NZ Fishing Industry Board Annual Reports 1975-1989, Struik 1980, MAF 1973-1995, MAF 1982, Belgrave 1984). New Zealand’s inshore fisheries were under stress and the government encouraged New Zealanders to "think big" and expand into the deepwater (MAF 1979). After the declaration of the EEZ, initially most deepwater fishing was done under government-to-government licensing but this was rapidly replaced by foreign vessels on charter to New Zealand companies (MAF 1982). Often the arrangement was not much more than a tolling arrangement with the fee going to the company rather than to the government. These were initially described as "joint ventures" (MAF 1982) but became charter arrangements (Wallace 1998a, Batstone and Sharp 1999, MAF 1987c). The orange roughy fishery first developed on the Chatham Rise in 1979 (Belgrave 1984), with other grounds subsequently being found.

Main deepwater and middle depth species in New Zealand fisheries


New Zealand

Depth of
fishery (m)

Target or bycatch

Year into

Catch in 2001-2002
fishing year (t)

Orange roughy
(Hoplostethus atlanticus)


700 - 1200+



14 381

Black oreos
(Allocyttus niger)


600 - 1200+


1986 oreo combined

4 565

Smooth oreos
(Neocyttus rhomboidalis)


650 - 1200+


1986 oreo combined

13 003

Black cardinal fish
(Epigonus telescopus)


600 - 900



2 349

(Mora moro)


500 - 1000



1 311

(Lepidopus caudatus)


50 - 600



2 913

(Rexea solandri)


50 - 550




(Macruronus novaezelandiae)


300 - 800



196 000

Dark ghost shark
(Hydrolagus novaezelandiae)


150 - 700



2 063

Pale ghost shark
(Hydrolagus sp. B2)


400 -1000



1 649

(Merluccius australis)


250 - 800



11 826

(Genypterus blacodes)


200 - 800



19 561

(Metanephrops challengeri)


300 - 500




Silver warehou
(Seriolella punctata)


200 - 800



8 551

Southern blue whiting
(Micromesistius australis)


250 - 600



32 500

White warehou
(Seriollela caerulea)


150 - 800



1 941

The evolution of the New Zealand QMS began in 1983 with a trial in the deepwater fisheries of a quota management regime called the Deepwater Enterprise Allocation System comprising a small number of companies with deepwater fishing arrangements (MAF 1982, Sissenwine and Mace 1992). Thus, New Zealand experience of the QMS in the deepwater fisheries spans over 20 years.

About this time - 1983, 1 500 to 1 800 inshore fishers were removed without compensation from the fisheries if they earned less than 80 percent of their income, or less than $NZ10 000 from fishing, or were disqualified in other ways (Waitangi Tribunal 1988). This was an attempt to reduce pressure on inshore stocks and to simplify and cut down the costs of fisheries management and was done prior to the 1986 introduction of the QMS to the inshore fisheries. This exclusion of part-timers, many of whom were Maori, was one issue that led to later Maori claims to quota (Waitangi Tribunal 1988, 1992).

In 1986 inshore species were introduced into the QMS. The system involved the setting of TACs, from 1990 also TACCs and the issue of ITQs. In the deepwater, there was no recreational or customary catch. All of the catch, beyond that taken for scientific purposes, is commercial. ITQs were allocated after considerable debate on "grand parented" catch history. Allocations were of quota in perpetuity on an absolute tonnage basis to those with a catch history in the fishery. This allowed people to nominate their quota surrender prices and leave the fishery voluntarily (Wallace 1999). Quota constitutes not a right of ownership of the fish but a perpetual right of access to harvest a certain amount of fish under the conditions imposed by the authorities. In the inshore fisheries, initial "over-allocations" of quota were removed from the fisheries by a system of competitive tenders to "buy back" and retire quota.

Orange roughy QMAs Annala et al. 200

Oreo QMAs Annala et al. 2003

Prior to the operation of the QMS, allocations and fishing operations were subject to sustainability constraints and other laws including a variety of regulations and input controls for biological reasons. Quota was issued for each of the ten QMAs (Figures 1 and 2) with few biologically determined restrictions on the location of fishing within each one. Sustainability constraints remain, but there is, to date, no environmental management planning in place though there has been discussion of the need for these since 1991 (Fisheries Task Force 1991) and these are being developed. The Fisheries Act 1996 has environmental principles, which have never been matched with any systematic environmental impact assessment or other systematic environmental effects management beyond catch limits and control of bycatch of marine mammals and birds.

The expectation under the QMS was that the government would buy and sell quota, buying if fish stocks were such that quota needed to be retired for sustainability and other reasons, selling if more fish could be harvested (Clark and Duncan 1986). As it turned out, there was considerable overestimation of the sustainable yield of some stocks and hence over allocation of catch, often under industry pressure. For instance in the mid 1980s New Zealand fisheries managers were persuaded by experts brought in by the fishing industry to accept a figure for natural mortality of 0.2 rather than 0.1 for the important Challenger Plateau orange roughy stock, as the scientists had originally suggested and as was applied to other orange roughy stocks (Robertson and Grimes 1983, Robertson 1985).

This change in the assumption of natural mortality allowed the catch limit to be doubled from 6 000 t to 12 000 t. Despite clear warnings from the scientists of high probability of catch collapse if high TACC levels persisted (Robertson, Mace and Doonan 1988), fishery managers, under pressure from fishers and their advisors, allowed continued high catch rates or did not reduce the catch rates sufficiently (Zwartz 1986, Weeber 1986). Subsequently, as the scientists had predicted, the Challenger Plateau stock collapsed to 3 percent of the unfished biomass (Annala et al. 2000). Industry submissions to officials and ministers frequently lobbied for higher catch limits than those suggested by stock assessments prepared by scientists (e.g. MAF 1991, 1992, 1993, 1994a, MoF 1995, 1996, 1997b, 1998, 1999a, 2000a, 2001a, 2002a, 2003a).

When the need for catch reductions for orange roughy and later hoki became glaring the government baulked at the fiscal implications of spending large sums on a buy-back of quota. On 9 October 1989, after extensive bargaining with the industry and with more bargaining in prospect, the government agreed to convert the ITQs from absolute tonnage allocations to percentage shares of the TACC. The Cabinet also agreed in 1989 to freeze resource rentals rates and to compensate fishers for reduced catch limits to the value of the uncollected resource rentals (MAF Cabinet papers 1989a)[312].

In the subsequent "Accord" reached in 1989 between the government and the industry, all resource rentals plus $NZ5 million were put into a fund over six years to compensate fishers for downward adjustments in the TACCs for orange roughy and hoki. This came to a total of $NZ128.5 million plus interest of $NZ 5 million (MoF 1997c).

The change to ITQs as a proportional share of TACCs (Fisheries Amendment Act 1990) altered incentives. Whereas before the government had faced most of the risk of total catch limit adjustments and the expense of buying quota and selling to lower or raise the catch limit, now quota owners had pro rata reductions in tonnage allocated as catch limits fell (as they mostly did, reflecting too optimistic initial catch limits) or in some cases, benefited from pro rata increases. As indicated, industry argued for, and got, compensation for catch reductions in 1989 in orange roughy and hoki. The Fisheries Act 1996 does not provide any requirement for compensation and is specific that TAC or TACC adjustments for sustainability reasons are not subject to such claims (Section 308(2)).

One effect of the change to percentage shares is that changes in TACC affect the balance sheets of quota owners. Thus, there is usually considerable resistance to catch reductions and pressure to maintain, or to increase, catch limits. The main exception to this has been outside the realm of the subject of this paper - from either small coastal communities with a big stake in the local shellfish or rock lobster or from one group of hoki fishers who were selling into a market with a price elasticity of demand such that increases in catch depressed total revenues.

In some cases industry has proposed to "shelve" quota (i.e. not fish it) rather than face TACC reductions. Examples include the paua (abalone) fishery and the East Coast North Island orange roughy fishery (Paua Fisheries Management Company 1999, MoF 1999a, MoF 2000a). A reduction would reduce the quantity of quota they owned and list on their balance sheets, so affecting their ability to borrowing. This arrangement leaves balance sheets unchanged even though there are in fact no fish to match the "shelved" portion of TACC, i.e. "ghost" ITQ on the balance sheets[313].

The Fisheries Amendment Act 1990 also allowed for consultation on setting TACs and TACCs. This process (Section 28D) allowed, for the first time, consultation with a range of parties in addition to the NZ Fishing Industry Board. Commercial fishers, recreational fishers, Maori fishing interests and environmental groups are consulted under this provision, which was reinforced by the provisions in Part III (Sustainability Measures) of the Fisheries Act 1996 that replaced most of the 1983 Act.

During the 1990s and the early 2000s, there have been on-going changes and evolution to the QMS. The ITQ which contained both a catching rights and the property right was divided to create a further right, an Annual Catching Entitlement (ACE). ACE is generated at the start of the fishing year in proportion to the quota owned and ceases at the end of each fishing year. It can be sold or leased. The ACE system started on 1 October 2001.

Quota owner associations were formed in the mid-1990s, e.g. of the Orange Roughy Management Company in 1991 and the Hoki Fishery Management Company in 1997. From 1983 as the New Zealand fishing industry expanded with its own or charter vessels into the 200 nm zone, fishing companies hired vessels to find new seamounts within the zone and beyond. There has been a process of serial depletion of seamounts as new ones were found (Clark 1999, Francis 2001).

Over the years as information was gained about the fish and fisheries some of the original QMAs were subdivided under agreement between the Minister of Fisheries and the industry - but for the most part the QMAs remain large. Fisheries management processes have evolved and are further described in Starr, Annala and Hilborn (1998).

3.3 Other institutional developments

The quota management system is not the only institutional development in fisheries management in New Zealand. The 1980s and 1990s were times of major public sector restructuring and the application of new norms and processes of public management and finance (Boston 1995): fisheries were no exception. When the deepwater fishery QMS trial began in 1983, there was a Ministry of Agriculture and Fisheries (MAF). The MAF Fisheries Research Division was parceled off in 1995 and became part of the National Institute of Water and Atmospheric Research (NIWA), a government research agency in a corporate institution. The fisheries management section of MAF was subsequently set up as a stand-alone Ministry of Fisheries (MoF) in 1995 with policy, management, legal, compliance, monitoring, enforcement, and catch effort and quota registry functions. At the behest of the fishing industry (NZ Fishing Industry Association 1997, Pfahlert 1999) the business of tracking and managing the fisheries quota registry was handed to an industry run company in 2001. The government retains ownership of the information.

3.4 Maori share and resource rentals

At the beginning of the QMS, the government instituted a modest resource rental charge. When Maori in 1987 (Grieg 1987) intervened with legal and political challenges to the quota allocations on the grounds that the Treaty of Waitangi 1840 between the British Crown and Maori guaranteed possession of fisheries to Maori, negotiations ensued. Maori were partially successful in this challenge and emerged with 10 percent of the quota allocation of the time, (Maori Fisheries Act 1989), a promise of 20 percent of future allocations and a half share in a large quota-owning fishing company, Sealords (Treaty of Waitangi (Fisheries Claims) Settlement Act 1992).

3.5 Cost recovery and influence

The fishing industry seized the moment of Maori intervention to challenge resource rentals and emerged with an agreement for a cost recovery scheme instead. This provided for the fishing industry to pay fisheries management and research costs attributable to the industry. The total to be paid has been whittled down under intense pressure from the industry, shrinking below what the government expected (Wallace 1998b).

The cost recovery scheme was introduced in 1994. Costs are recovered for research, management, and observers undertaken by, or for, the MoF and a smaller conservation services programme managed by the Department of Conservation (DoC). Industry has often disputed government fisheries management services, in particular policy and research (Primary Production Committee 1998; NZ Fishing Industry Association 1997; Fishing Industry 1995a, 1995b, 1996, 1997). For example: "We wish to make it clear that many of the projects and activities outlined in the policy area are not regarded as required services by the fishing industry... It is very difficult for the industry ... to understand the need for 12 policy analysts/advisors based in Auckland, eight based in Nelson and nine based in Dunedin" (NZ Fishing Industry 1995b).

One effect of the cost recovery system has been to enhance the industry’s ability to influence and control the activities and priorities of the MoF (NZ Fishing Industry Association 1997). This demand was encapsulated in the slogan "user pays, user says", which was used frequently by industry representatives in meetings with the MoF to press home their desire that the Ministry not do activities that they did not care for (e.g. NZ Fishing Industry 1995a, NZ Fishing Industry Association 1997).

Fishing industry representatives have used the processes of consultation with the MoF over its business plans and cost recovery intentions to exercise considerable influence on the fisheries management and research services undertaken or commissioned by the Ministry[314]. For example, in the 1996-97 financial year the MoF proposed a research budget of $NZ18m, the fishing industry proposed $NZ7.5 m (NZ Fishing Industry 1996) and the Minister agreed to cut research to under $NZ14.5m (Minister of Fisheries 1996a). For the next three years research budgets stayed under $NZ14.5m. This was the lowest fisheries research budget funded since the late 1980s and is well below the $NZ 22.4m funded in the 1991-92 fishing year prior to the cost recovery regime being implemented (MAF 1992 Annual Report). By the 2003-04 financial year the research budget had recovered to about $NZ21.6m. The MoF’s costs recovered from the fishing industry fell from $NZ35.3m in 1995/96 financial year to $NZ31.4m in 2002-03. At the same time the total proportion of the cost of the Ministry’s operation recovered from the fishing industry fell from 72 percent in 1995-96 to less than 40 percent in 2002-03 (MoF 2003b, c).

3.6 QMS "success": catch exports expansion

The original intention of the QMS was to relieve over-fishing, to restore profitability and to conserve inshore stocks while expanding effort into deepwater fisheries (NZ Fishing Industry Board 1985, and MAF 1987 c). Sometimes "success" is portrayed as the rising export revenues from fish (Clark, Major and Mollett 1988, Major and Wallis 1995c). These rose from $NZ50.4m in 1978 to about $NZ1.5 billion in 2002, of which $NZ1.3 billion is from capture fisheries (NZ Fishing Industry Board 1986, NZ Seafood Industry Council 2004). About 88 percent by value of the total New Zealand fish catch is exported (MoF 2004). About 40 percent of the total catch is caught by chartered vessels (NZ Seafood Industry Council 2003), a figure that has declined as New Zealand companies gradually picked up both fishing and marketing. Several companies now deploy their vessels outside the New Zealand EEZ in the Southern Ocean, in the Indian Ocean, around the Pacific and around Southern Africa. Deepwater species make up about 13 percent of capture fish exports in 2002 by value. This rise in total export earnings has been due partly to catch increases that exceeded long-term sustainable harvest rates (so-called "fishing down" to, and often below, BMSY[315]) and the replacement of foreign licensed vessels with chartered and new domestic vessels (MAF 1987c, Batstone and Sharp 1999).

"Success" of the QMS is less evident if it is judged on the state fish stocks. There has been a rapid decline in deepwater fish stocks since 1983 when quota management started in the deepwater. As noted by Clark (2001), there have been significant catch reductions from annual catches of 40-50 000 t in the orange roughy fisheries during the 1980s, which peaked in 1989/90. In the major established orange roughy fisheries, catches were supplemented with harvests from newly developed fisheries. These were often from newly-found seamounts, sometimes found by the New Zealand government’s research vessel R.V. Tangaroa on charter to the deepwater fishing industry. Catch reductions have been closely fought by the industry (Fishing Industry Board 1989, submissions by industry bodies to the Minister and MoF and its predecessor (Starr, Annala and Hilborn 1998).

3.7 Ownership concentration and capacity

The New Zealand experience with the QMS and ITQs is that quota ownership has concentrated ownership of vessels, reduced over-capacity and enhanced financial benefits to fishers (Falloon 1993, Major and Wallis 1995c, Connor 2001, Newell, Sanchirico and Kerr 2002). Those in the first round of allocations of ITQs received windfall gains as the beneficiaries of first-round grand parented allocations. Vessel numbers fell by 22 percent between 1983/4 and 1986/7, then by a further 53 percent by 1994/5 (Major and Wallis 1995c), primarily in the inshore fishery.

3.8 Legislative and policy environmental requirements

The 1996 Fisheries Act introduced new objectives for the management of fisheries in New Zealand. The provisions require decision-makers to "provide for utilisation while ensuring sustainability" (Section 8). "Utilisation" is defined as "conserving, using, enhancing, and developing fisheries resources...". "Ensuring sustainability" is defined as "maintaining the potential of fisheries resource to meet the reasonably foreseeable needs of future generations" and "avoiding, remedying, or mitigating any adverse effects of fishing on the aquatic environment" (Section 8).

The environmental principles (Section 9) include requirements to maintain biodiversity, maintain associated and dependent species and protect habitats of particular significance to fisheries management. There has been some progress in identifying "associated and dependent species" but little in identifying habitats of significance to fisheries management. Pressure from environmental groups has resulted in a range of research contracts to look at impacts on the aquatic environment.

Section 13 of the Fisheries Act 1996 requires the Minister to set the TAC at a level that "maintains the stock at or above the level that can produce the maximum sustainable yield..." but the evidence below shows that for the most part stocks in the deepwater fisheries have been allowed to drop below biomasses that will support the MSY (BMSY), or its proxies, the biomass that will support the maximum average yield (BMAY) or the biomass that will support the maximum constant yield (BMCY) (see Tables 4, 5 and Figure 3).

The Controller and Auditor General (1999) criticized the MoF for the small budget for research on the aquatic environment. It considered that the "Ministry is not able to make informed recommendations to the Minister on issues such as the effects of fishing on the environment and the inter-relationship of fish species" (p54). It noted that "little work on this subject has been contracted for in 1999-2000" (Controller and Auditor General 1999). Since then funding on the effects of fishing has changed little. This repeated a finding ten years earlier that the "system [was] struggling to provide the necessary information for management decisions which can control fishing at sustainable levels and ensure sustainability of the fishery resource" (Controller and Auditor-General and Parliamentary Commission for the Environment 1990).

Orange roughy stock declines

The dotted line represents 30 percent of the unfished biomass, the biomass calculated to provide the MSY. This is the legal minimum for target fish stocks, which the Fisheries Act 1996 requires to be fished to "at or above" the level that would give MSY.

Note: Letters on the graphs refer to the type of stock assessment: c= catch per unit effort; a= acoustic survey; t=trawl survey; e=egg survey.

Source: M. Clark, NIWA, New Zealand.

3.9 Environmental impacts controls

It is sometimes argued that ownership of quota will cause fishers to be more ready to protect the environment as well as the stocks (NZ Seafood Industry Council 2001, Sanford 2003, Harte 2000). There has been little evidence of this in New Zealand. Under heavy pressure from industry, and conditioned by habit and inertia, the New Zealand MoF has been slow to develop any form of environmental impact assessment or integrated environmental management, despite the environmental principles (Section 9) in the Fisheries Act 1996, and the purpose of Act (Section 8) including the "avoiding, remedying and mitigating the adverse effects of fishing on the aquatic environment".

The annual "sustainability round" administered by the MoF, at which catch levels may be changed, and other controls imposed, modified or lifted has approached environmental issues in a largely ad hoc way to the extent that they have been considered at all. To date, environmental administrative processes remain largely notional though a process for developing policy for environmental standards finally started in 2000. By April 2004 these had not yet come into existence. There is virtually no spatially based environmental planning though there are some area fisheries closures and vessel limits. There are many ad hoc regulations relating to gear restrictions for biological protection purposes and in some cases to season and area restrictions. There is a well-embedded but much challenged set of processes for considering marine mammal and seabird impacts (e.g. MoF 2003d, Minister of Fisheries 2003b)[316]. Driven by public opinion, measures have been put in place to protect marine mammals and seabirds - though large mortalities of fur seals, sea lions and seabirds have been tolerated for years in the mid-water hoki fishery, the squid trawl fishery, domestic tuna fishery and various others (Baird 2001, Manly, Seyb and Fletcher 2002a, b, c).

Fishing impacts on marine invertebrates, ecosystems, non-target fish, the effects of fishing on invertebrates and fish removal received little attention despite environmental organizations’ pressure until the late 1990s. In late 1999 environmental organizations finally persuaded a new Minister of Fisheries to pressure the industry and Ministry into developing administrative processes for environmental assessment. These are still in development, are largely not operative and may be sidelined. To the concern of environmental organizations[317], such measures will be administered within a framework of industry-written fisheries plans with many fisheries management and research functions devolved to the industry. The Ministry intends to develop environmental standards for such management (MoF 2002b and 2003e), but other stakeholders are to make their submissions to the fishing firms or quota owner associations and not to the government. The Minister, it is planned, will then approve or disallow fisheries plans but may not change these (MoF 2002c, 2003b).

Environmental organization pressure has also resulted in funding for research on marine biodiversity since 2000 and to some extent on the impacts of fishing - but this effort is small compared to the range and scale of impacts, particularly of trawling on the benthic invertebrates. Such pressure has rarely if ever been welcomed by significant players in the fishing industry: it is not apparent that there is any deepwater industry pressure for environmental protection.

Research carried out in the early 1990s showed a decline in genetic diversity of orange roughy stock on the Chatham Rise, Challenger Plateau and East Coast of the North Island that was attributed to fishing pressure (Smith, Francis and McVeaugh 1991). Later Smith and Benson (1997) found a smaller but non-significant effect over a longer time period. Managers have yet to consider how they would respond to a decline given the obligations under the Fisheries Act 1996 to maintain biodiversity including genetic diversity, and international obligations under the Convention on Biodiversity and the 1982 United Nations Convention on the Law of the Sea (Section 5 of the Fisheries Act 1996).

Trawl surveys undertaken between 1984 and 1994 to monitor orange roughy stocks on the Chatham rise also showed a significant decline in biomass of most of the main bycatch species that were monitored (Clark et al. 2000). In the principal bycatch species they found levels of decline of 85 percent for basketwork eel (Diastobranchus atlanticus) and nearly 80 percent for white rattail (Trachyrincus aphyodes). Of current quota species, ribaldo fell by 60 percent and black cardinalfish by over 90 percent. Managers have not responded to the decline in bycatch species.

3.10 Seamounts

All fisheries targeting deepwater species are undertaken by bottom trawl. Initially deepwater fisheries targeted flatter areas but there has been an increasing trend towards targeting seamounts or hill features.[318] According to Clark and O’Driscoll (2003) between 1980 and 1984 less than 30 percent of tows were associated with seamounts or hill features. By the 1990s this had risen to 60-70 percent.

There has been concern over the impact of deepwater bottom trawls on seamount biodiversity (including hill features) since the mid-1990s (Probert, McKnight and Grove 1997, Koslow and Gowlett-Holmes 1998, MoF 1998). In 1998 the Minister of Fisheries directed the Ministry to prepare a strategy on the impacts of trawling on deepwater seamounts and to prepare advice on closing four representative seamounts to fishing in 1999. The same year the MoF produced a draft strategy to address the impacts of fishing on seamounts but the four areas were not progressed that year. A final strategy has never been produced. In 2000 a new Minister consulted on a proposal to close 19 "seamount" areas to trawling. Submissions from the fishing industry in general opposed closing "large areas of seamounts" as "totally unreasonable and unacceptable" (Orange Roughy Management Company 2000). Many in the industry saw the proposed closures as "the thin edge of wedge" with regards to the erosion of property rights" (NZ Seafood Industry Council 2000). In 2001 the Minister of Fisheries decided, after consultation, to close 19 seamount features to all trawling. These features represent about 2 percent of the 800 seamounts identified in the New Zealand region. This decision is under challenge by the Orange Roughy Management Company in the New Zealand High Court.

The impact of trawling on "flat" areas has also been highlighted in a 2002 review of the impact of bottom trawling for scampi, tarakihi and gemfish in depths of 200-600 m in the Bay of Plenty by Cryer, Hartill and O’Shea (2002). They found a significant impact on a range of benthic biodiversity based on research trawls undertaken over three years. They considered the impact to be indicative of the effects of trawling occurring throughout the fisheries management area. There has been no management action in response to these results nor advocacy from the fishing industry for protection of seamounts. The MoF in 2001 refused to consider the impacts of trawling, but has foreshadowed future attention to this issue (MoF 2001b).

3.11 ITQs and perceptions of legitimacy

One subtle but powerful influence of the QMS and ITQs in New Zealand has been the effect on perceptions of the legitimacy of various claims to the marine environment and fish. The question of who, if anyone, actually owns the fish remains unresolved[319] but it is clear from the Fisheries Acts 1983 and 1996 that the Crown, on behalf of society, allocates access to fish. These allocations are to customary, scientific, recreational and commercial fishers. Environmental obligations are recognized in the Purpose (s8) and Environmental Principles (s9) of the Fisheries Act 1996 but are not systematically implemented. There are obligations to consult with environmental and harvesting interests (s12) when catch limits and setting of controls are to be decided.

The articulation of rights under the QMS in the form of ITQs has led some to believe that these commercial property rights trump other harvesting rights or those of the rest of society to an intact environment. This has led to the intensification of the power of the fishing industry and, for many years, to the neglect by the Ministry of its environmental responsibilities. For instance, after the passage of the Fisheries Act 1996, both industry and Ministry staff frequently referred in meetings to the environmental and future-regarding aspects of the Fisheries Act 1996 as "the religious bits". The Ministry treated these aspects as discretionary and did little to implement them. The Ministry has also allowed fish stocks to drop well below the legal target of "at or above a level that can produce the maximum sustainable yield.."(s13(2)a), and continues to allow fishing despite catches exceeding these limits, often for several years in a row.

The lack of resources on the part of the environmental movement in New Zealand, which lacks the infrastructure of grant making foundations found in most developed countries, has left the environmental organizations unable to challenge the deficiencies of the Ministry in court. In contrast, industry interests have been quick to challenge the Ministry in Court. Since the Fisheries Act 1996 environmental and recreational groups have yet to challenge the decisions of Minister of Fisheries or the MoF. In contrast the fishing industry has taken the Minister of Fisheries to the High Court (and the Court of Appeal) on a wide range of issues including the:

Industry opposition to the inclusion of other parties in discussions on fisheries management is indicated by the advice from the MAF to the Minister of Fisheries (2 August 1990, MAF 1990). This records industry opposition to the addition of recreational fishers, Maori and environmental groups to the TACC Advisory Council.

3.12 Spatial management and spatial property rights

Fisheries quota is issued by QMA, which are large areas and are not ecosystem or ecologically coherent areas. Neither does such right of access to harvest provide any exclusive rights over either space or fish. Access to fish using quota specified by area was never intended to convey a priority right for commercial fishers over recreational or customary harvesters. Over time however, some in the fishing industry have come to see their quota based rights as having priority over other fishers and providing more exclusivity than its specification provides. Industry attempts to challenge the right of the Minister of Fisheries to allocate greater proportionate shares of snapper to recreational fishers failed in the Court of Appeal (Tipping 1997) who found that the Minister could vary the proportion of the TAC between commercial and recreational interests.

The power to create marine reserves was established by the Marine Reserves Act 1971 and the protection of marine mammals was instituted by the Marine Mammals Protection Act 1978, both pre-dating the QMS and not repealed by the Fisheries Acts 1983 or 1996. Commercial fishing interests have argued that they should be compensated for the creation of marine reserve, marine mammal sanctuaries, and other protective measures (NZ Seafood Industry Council 2002b, 2003).

As commercial fishing has come into conflict with both recreational fishing and aquaculture, commercial fishers have also attempted to portray their rights as prior to other activities and have again demanded compensation for others’ use of fish and marine space (Harte and Bess 2000, Froude 2001). Fishers have also proposed that their rights are spatially defined or that they should be (McClurg 2002). This would give fishers greater powers to object to other interests and gain "compensation" if their rights are infringed.


4.1 Overview

Many deepwater species can be categorized as long-lived and of low-productivity. The main deepwater commercial species are slow to mature and long lived in the absence of fishing with values for natural mortality below 0.1. The biology of ribaldo is not well described, with no estimates of age or natural mortality (Table 2). Hoki is added to the table just for comparison as a species that is faster growing and has moderate natural mortality. All four deepwater species are long-lived. Orange roughy, black oreos and black cardinal fish have estimated maximum ages greater than 100 years. All deepwater species are estimated to mature at ages greater than 20 years and to have low levels of natural mortality. The values of von Bertalanffy K[320] are similar to the slowest growing galeoid sharks (Musick 1999). This makes the main deepwater species targeted by commercial fishers vulnerable to over-exploitation and is further reason why precautionary catch limits should be set when considering the uncertainty in assessments of stock status or yields.

The ranges of parameter estimates for orange roughy and oreos shown in Table 2 represent the range of estimates derived from assessments of these species in different quota areas. There is much uncertainty about recruitment variability in both orange roughy and oreo stocks.

Table 3 provides times series of catch history. Orange roughy, discussed in Section 4.6, shows a decline from the peak catches in the 1980s to levels less than a third of these catches.

Estimates of biological parameters for key deepwater species Annala et al. (2003)

Orange roughy

Smooth oreos

Black oreos

Black cardinal fish


Natural mortality (M)






Age at recruitment (yr)






Age at maturity (yr)






Max age (yr)






Von Bertalanffy k:













MCY[321] (%Bo)






BMAY[322] (%Bo)






* Hoki is included for comparison. MCY is the maximum constant yield, a proxy for MSY (maximum sustainable yield). BMAY is the biomass the biomass that will support the maximum average yield. The von Bertalanffy k figure shows that the main deepwater species have growth rates a third to a quarter that of hoki.

Summary catch history of deepwater species Annala et al. 2003


Orange roughy (t)

Smooth oreos (t)

Black oreos (t)

Black cardinalfish (t)

Ribaldo (t)


48 207

5 022

8 237




52 332

9 182

5 349

1 816



37 013

11 903

7 277

1 839



16 645

13 148

8 607

4 567

1 824


14 381

13 003

4 565

2 840

1 312

4.2 Oreos

Soviet Union vessels dominated the early oreos catches targeting black oreos, but there has been a switch to domestic vessels targeting smooth oreos. In later years in Southland and on the Southern Plateau there was some fishing by chartered Korean and Norwegian vessels (McMillan et al. 2002). There has also been an increase in oreo catches since 1992 associated with greater targeting of orange roughy in areas south of the Chatham Rise (MOF 1996, Coburn, Doonan and McMillan 2002). These are areas with relatively higher oreo bycatches.

The catch trends for oreos have risen, though not evenly. The QMAs do not fit with stock boundaries (see Figure 2). The OEO1 QMA is made up of four main fisheries: Southland, Puysegur, Snares and Wairarapa. The Wairarapa fishery is 500 km north of the Southland fishery. The OEO3A stock and the shallower waters of the Chatham Rise lie in between. The Southland fishery also covers part of OEO3A. This creates problems in establishing sustainable catch limits for these fisheries.

Stocks Assessments have so far been undertaken for OEO3A smooth and black oreos and OEO4 smooth oreos (Annala et al. 2003) and a 2003 stock assessment for smooth oreos in Southland fishery (OEO1) (Table 4) (Coburn, Doonan and McMillan 2003). The OEO3A assessments resulted in a staged reduction in the OEO3A catch by over 60 percent from 1996 to 2001. The industry opposed initial reductions (MoF 1996). The TAC for OEO6 (sub-Antarctic) was increased by the Minister of Fisheries in 1996 from 3 000 t to 6 000 t after advocacy from the fishing industry (MOF 1996). This increase occurred against the advice of the MoF and without any stock assessment advice or a proposal for an adaptive management programme (MOF 1996). Since the 1983 deepwater allocation, oreos have been managed as one species group despite being in fact three distinct species. Since the 1983 decision to manage these as one-stock fishery, scientists have argued for their separation into separate quota stocks and species (McMillan 1985). This advice has been repeated in subsequent stock assessment plenary reports (e.g. Annala et al. 2002, 2003) but managers have been slow to act on this recommendation.

The then Minister of Fisheries in 1996 recommended that work be undertaken to split the oreo species and to manage these separately from 1998 (Minister of Fisheries 1996a). This was not done by the Ministers of Fisheries apart from the establishment of a voluntary catch limit applied to smooth oreos in the South-West Chatham Rise (OEO3A) from 1998. No other sub-area or species limits apply for oreos. A proposal to limit black oreos catches in the South-East Chatham Rise (OEO4) was rejected by the Minister of Fisheries and the fishing industry in 2003 (MoFs 2003a, Minister of Fisheries 2003b). There is little evidence that precaution has motivated stock management of this species, shown vividly by the lack of industry pressure to manage the stocks separately and managers’ refusals to set separate catch limits despite scientific recommendations.

State of oreo stocks by area and species as a percent of the unfished biomass and the current catch limits and estimated yields in 2003


Current stock as %
of unfished biomass

TACC or sub-area
limits for 2003/2004 (t)

Estimated current
annual yield
[323] (t)

Estimated long-term
maximum constant yield (t)

OEO1 Southland

black oreos




smooth oreos




Other areas

5 033

smooth oreos




black oreos





black oreos


2 500

1 400 - 2 100

1 200 - 1 600

smooth oreos


1 400


1 400


black oreos


7 000



smooth oreos


7 700

4 200


black oreos


6 000



smooth oreos




BMSY is interpreted as BMAY which is 21-25% Bo for smooth oreos and 27-29% black oreos and BMCY[324] which is 34-48 percent Bo for smooth oreos and 27-29 percent black oreos (Annala et al. 2003).

* Mature biomass. (Annala et al. 2003; Coburn, Doonan and McMillan 2003).

4.3 Cardinal fish

The increase in black cardinal fish catch since 1982 is due to the targeting of this species in QMA2 and the bycatch associated with increased orange roughy catches in Area 1 in the 1990s. Catches of cardinal fish peaked in the 1996-97 fishing year. A stock assessment was completed in 2001 for cardinal fish in QMA2 (Field and Clark 2001) but was not accepted by the Stock Assessment Plenary (Annala et al. 2001). Catch rates (t/tow) have dropped by three-quarters since the peak rates of 1990-91. The fishing industry has not proposed catch reductions despite these dropping catch rates.

4.4 Ribaldo

Ribaldo was first reported to have been caught in significant numbers (up to 4 920 t) in the mid-1970s by Japanese and Korean longliners (Annala et al. 2003). In the 1980s most of the catch was taken as bycatch in the hoki, orange roughy and ling fisheries. Since the 1990s catch as bycatch in domestic longline fisheries has increased. Ribaldo reported catch history is likely to be an under-estimate of the total catch prior to 1998 due to possible discarding (Annala et al. 2003).

4.5 Orange roughy

Orange roughy serves as a further test of the thesis that property rights in the form of ITQs have provided an incentive to maintain stocks. As outlined in Section 2.2 economic theory suggests discount rates drive incentives to harvest. Property rights do not cancel such incentives. The evidence is largely supportive of this contention. As noted by Starr, Annala and Hilborn (1998) the fishing industry has vigorously contested proposed catch limit reductions (see also MAF 1990). It has required pressure from environmental organizations and at times strong-minded officials and, or, ministers to achieve TACC reductions. Stock assessment working group rules that prevent these bodies from making recommendations of catch limit changes have prevented scientific peer review of proposed TACs and TACCs. Over several years, at the request of industry, industry scientists and others who were attached to "stakeholders" were allowed to attend the meetings to recommend catch limits, but not the government stock assessment scientists who alone were deemed to have a vested interest.

As shown in Table 5 there have been rapid declines in orange roughy catches - as theory would predict. Graphs by Francis and Clark (2005) (Figure 3) show there has been a rapid and severe decline of most orange roughy stocks. The dotted line shows the target management reference point, defined in the Fisheries Act as BMSY and established for management purposes as 30 percent of virgin (unfished) biomass. BMSY is interpreted as BMAY which is 30 percent Bo or 51 percent Bo for BMCY11 for orange roughy). More detail is available in stock assessment papers - Annala et al. (2003), Clark (2001), Francis and Clark (2005), and Table 5.

Data in Table 5 are based on stock assessment information in the 2003 stock assessment plenary report (Annala et al. 2003). Clark’s graphs (Figure 3 and his 2005 paper) summarize the estimated change in stock size over time. The estimates use the results from base case model runs unless there was no base case. In this event a range of the model run results is presented. The stock assessment results indicate that for all but two areas the stocks have been reduced below BMAY (30 percent Bo). In one case (Challenger ORH7A) the stock was fished to three percent of its unfished size. Fishing was not closed before this despite protests from environmental organizations. The Challenger fishery was closed by the (then new) Minister of Fisheries in 2000. The fishing industry finally agreed to close the Puysegur fishery (part of ORH3B) in 1997 when that stock reached an estimated seven percent of its unfished size. This overfishing continued despite protests from environmental organizations.

State of the orange roughy stocks by area as a percent of the unfished biomass (Bo), current catch limit and estimated yields at 2003

Fishery and QMA

Current stock as a % of unfished biomass (Bo)

TACC or sub-area limits for 2003/2004 (t)

Estimated current yield (t)

ORH 1 - Mercury-Colville -Ohena Box

10 - 15


16 to 29

Other areas


1 370


ORH 2A - North/East Cape




ORH 2A (South), 3A and 2B - East Coast North Island




ORH 3B - NW Chatham’s Rise

21 - 44

2 000

930 - 2600

NE & E Chatham’s Rise

34 - 54

7 000

7 800 - 11 800

South Chatham Rise


1 400

1 540




90 - 340

Southern areas


1 300


ORH 7A - Challenger




ORH 7B - West Coast South Island




*BMSY is interpreted as BMAY which is 30% Bo or 51% Bo for BMCY[319] for orange roughy.

With the exception of ORH1, these fisheries have gone through a series of catch reductions. Most of these reductions have been opposed by the fishing industry (MAF 1991, 1992, 1993, 1994b and MoF 1995, 1996, 1997b, 1998, 2000a, 2001a, 2002a, 2003a). The Chatham Rise orange roughy fishery started in the early 1980s and provided over 90 percent of the orange roughy catch in 1981-82. This fell to just over 40 percent of the catch in 1991-92 and made up nearly 70 percent in the 2001-02 fishing year. These changes reflect the discovery of new orange roughy fishing grounds and then their subsequent over-fishing as fisheries declined throughout the New Zealand EEZ in the 1990s.

On the South Chatham Rise there appears to have been a sequential depletion of hill aggregations as the fishery moved further east and catch rates on hills fished in earlier years declined (Clark 1999, Francis 2001). Declines have occurred in the face of successive warnings from scientists. Frequently managers have moderated recommendations by scientists for TACC cuts (e.g. MAF 1990) and have largely resisted calls by environmental organizations for cuts[325].

4.6 "Hard" vs "soft" landings

Management of the orange roughy fisheries have been characterized by an absence of precaution. The fishing industry has on numerous occasions over the last 15 years been asked by the Minister of Fisheries to choose between large decreases in catch ("hard" landings) or small sequential decreases in catch ("soft" landings). The fishing industry has preferred to take higher catches and accept large catch reductions in future years. For example, in 1996 the fishing industry indicated in submissions that they would prefer a hard landing for the management of the 2A North fishery (MoF 1996, 2000b). As Table 5 indicates, the fishery was estimated in 2003 to be reduced to 24 percent of its unfished size and below the minimum target of 30 percent.

Legal requirements for management at, or above, BMSY (Section 13, Fisheries Act Source: Annala et al. 2003. 1996) have often been ignored despite environmental group protests and scientists recommendations. The MoF regards the requirements in the Fisheries Act 1996 as a "target" and not a limit. Environmental organizations have been unable to afford legal action apart from a case taken by Greenpeace in 1995 on Chatham Rise orange roughy catch limits (Gallen 1995).

4.7 Case study: East Coast North Island

In 1996 the MoF proposed a review of the 2A North fishery. The industry proposed maintaining the 3 000 t catch limit but the Minister cut the catch limit by 500 t to 2 500 t (MoF 1996, 1996b). In 1998 the Minister reviewed the catch limit for 2A North again. The industry advocated again retaining the catch limit. The Minister, under pressure from environmental advocates, agreed to cut it by another 500 t to 2 000 t (Minister of Fisheries 1998b).

In 2000 the Minister of Fisheries proposed a phased reduction of the East Coast North Island fishery TACC (ORH2A South, 2B and 3A) (Minister of Fisheries 2000a, 2000b), which the fishing industry opposed. Instead they suggested "shelving" 1 500 t of quota, which they would not fish against, but which would remain on their balance sheets. The industry advocated retaining the 2A North catch limit of 500 t (MoF 2000). The Minister agreed to a phased reduction and reduced the combined TACC for ORH2A, 2B and 3A from 4 600 t to 1 700 t, including a cut to 200 t for the ORH2A North fishery (Minister of Fisheries 2000b).

In 2001 the MoF proposed a further reduction in the fishery TACC on the East Coast of the North Island. The 2001 stock assessment estimated the stock could be around 11 percent of its unfished size (base case). Catch reductions were opposed by the fishing industry (MoF 2001a, 2002a). The Minister retained the TACC for a year, but in 2002 reduced the TACC to 800 t (Minister of Fisheries 2002) but did not close the fishery despite the requirements of the Fisheries Act 1996 that stocks be maintained at, or above, BMSY. This is set at 30 percent for orange roughy, yet stocks had already fallen to 11 percent of Bo.

4.8 The Challenger orange roughy fishery

The Challenger fishery has had two major reviews. The first occurred between 1989 and 1990 and second occurred in the late 1990s as it became evident that the stock was not rebuilding and further catch reductions were required.

In 1998 the MoF proposed a review of the Challenger fishery (ORH7A) after declining catch rates and the biomass was estimated as 15-19 percent Bo (mid-season 1997-98) (Annala et al. 1998). The fishing industry opposed any changes to catch limits (MoF 1998). The Minister cut the TACC from 1 900 t to 1 425 t and indicated that he would impose a further reduction in 1999 unless contrary assessment information became available (Minister of Fisheries 1998b). In 1999 the Minister decided on a much reduced fisheries sustainability review process. The Challenger fishery was not reviewed and no cuts were made.

In 2000 the Minister of Fisheries reviewed the fishery on the basis of new stock assessment advice which indicated the fish stock was around three percent of its unfished size (Annala et al. 2000). Fishing industry submissions supported catch reductions to a TACC of either 500 t or 750 t but opposed the closure of the fishery (MoF 2000a). The Minister of Fisheries agreed to set a TACC of one tonne effectively closing the fishery (Minister of Fisheries 2000b).

4.9 Small deepwater stocks

The sustainable yields for small deepwater stocks and those taken by bycatch are notoriously hard to assess and are easy to overfish. There has been an absence of precaution in managing these stocks. Two examples are the Southern ORH3B and the ORH1 Bay of Plenty stocks.

4.10 Southern orange roughy (ORH3B) stocks

The potential yields of the orange roughy fisheries in QMA ORH3B south of the Chatham Rise, except for the Puysegur stock, have not been estimated. The catch limit for the area south of the Chatham Rise is 1300 t. In the 1996-97 fishing year it was 5000 t. As reported in Annala et al. (2003), the unfished biomass required to support a catch limit of 1300 t at the long term MCY level would require an exploitation rate of 1.51 percent of the unfished biomass based on estimates from the Chatham Rise. The unfished population size to support this would be around 86 000 t (Table 6). This implies an unfished stock size equivalent to the estimated Challenger (ORH7A) (91 000 t) or the South Chatham Rise (95 000 t) orange roughy stocks. This size of unfished orange roughy biomass is unlikely given recent catch history, which, except for the closed Puysegur fishery, has seen relatively small catches. The fishery that developed west of the Antipodes Islands rapidly declined from 3 400 t in 1995-96 to just one tonne in 2000 - 2001 (Clark, Anderson and Dunn 2003).

Unassessed orange roughy fisheries

Fishery and QMA

Current catch limit

Implied Bo* (MCY)

Implied Bo* (MAY)

Sub Antarctic (ORH3B)

1 300

86 000

65 000

Northern (ORH1)

1 370

93 000

71 000

* Bo required to support this level of MCY or MAY.

4.11 Adaptive management

New Zealand started an adaptive fisheries management programme (AMP) in 1992. Fishers were allowed to fish against higher catch limits for stocks where the sustainable yields were unknown in exchange of the quota holders paying for extra research. The AMP has had a patchy history for deepwater species. Only two deepwater stocks have been covered - oreos in Area 1 and orange roughy in Area 1.

The Oreo Area 1 (OEO1) TACC was increased by 20 percent in 1992 on the basis that extra research and monitoring would be carried out by the industry to help assess the stock and potential yields. In 1996 the Minister of Fisheries noted that "with the withdrawal of the Puysegur trawl survey there is now little current monitoring of the OEO1 adaptive management increase" (Minister of Fisheries 1996b). In 1997 the MoF recommended that OEO1 be removed from the AMP because the "agreed monitoring programme is not in place for this stock" (MoF 1997b). The Minister decided, after receiving submissions, to permit the Orange Roughy Management Company to retain the increased TACC for another year to allow the industry to propose a new monitoring programme (Minister of Fisheries 1997). In 1998 the Orange Roughy Management Company agreed that an AMP for OEO1 was not possible and proposed an exploratory fishing programme (MoF 1998). The Minister decided instead to cut the TACC back to the level prior to the increase in 1992 and deferred the exploratory fishing proposal (Minister of Fisheries 1998a, b). Overall, no new stock assessment research information resulted from the AMP between 1992 and 1998.

Orange roughy 1 (ORH1) has been through two AMPs. The first started in 1995 and ended in 2000 with an assessment that estimated that the Mercury-Colville-Ohena box orange roughy stock size had been reduced to between 10 and 25 percent (µ = 0.05) of the unfished population (see Table 5). If a decision rule had been used as originally proposed, then the TACC could have been cut in 1998 after a low stock estimate from the trawl survey. This was not done. In a further risky move a third industry-run trawl survey was delayed a year in 1999 after an industry request to the Minister and Ministry and was not undertaken until 2000. This third trawl survey confirmed the 1998 decline. Through the Fisheries Act 1996 requires stocks to be managed at, or above, BMSY there has been no closure of this fishery despite the stock now standing at about 10-15 percent Bo (Annala et al. 2003).

The second five-year AMP started in 2001 with a total catch limit set at 1 400 t and a range of area and feature sub-limits. A catch limit of 30 t was set for the Mercury Colville "Box" (Minister of Fisheries 2001). The implementation of this AMP has been of concern to the Minister (Minister of Fisheries 2003b) who stated that he was "particularly concerned that the catch limit for the Mercury-Colville box was significantly exceeded in the 2001-02 fishing year, despite assurances that this would not occur." The 30 t catch limit for this box was exceeded in the 2001-02 fishing year with a reported catch of 116 t and it was exceeded by 14 t in the 2002-03 fishing year. The Minister agreed to review this AMP and whether it should continue in 2004. On the basis of this history we conclude that the AMPs for deepwater fisheries have not been a great success.

4.12 Overall review of state of deepwater stocks

The process of fisheries stock management, on paper, appears to have been diligent. Between 1990 and 2003 there were over 55 reviews of orange roughy stocks and 15 reviews of oreo stocks. But responses to the evidence of stock declines were sluggish and catch limit cuts were too slow. Interest groups were only allowed to make submissions on TACC changes from 1990 though the QMS began in 1986. Five changes in catch limits in oreos and orange roughy involved an increase in catch limit and all but two of these were due to the Minister of Fisheries agreeing to an adaptive management programme.

After fishing in the deepwater for 20 years, most of which was regulated under the quota management system, all but two of New Zealand’s assessed orange roughy stocks are below the size that would support the BMSY. In one case Challenger (ORH7A) the stock has been reduced to three percent of its estimated unfished size. The two Chatham Rise stocks are currently estimated to be in a more healthy state. In the two areas, to the north of North Island (ORH1) and the fishery south of the Chatham Rise, the current catch limits are unlikely to be sustainable and do not indicate a precautionary approach is being taken by the MoF or the Minister. An overall assessment of oreos, rubyfish and cardinal fish suffers from the absence of a current stock assessment in all or most QMAs.

4.13 The effects of the QMS in New Zealand’s deepwater fisheries

In summary, the effects of the QMS in New Zealand’s deepwater fisheries include the following.

i. As predicted by economic theory, and contrary to much optimism at the time that an ownership stake in ITQs imparts strong incentives to maintain stocks, (Environmental Defence Fund 2002), the QMS in New Zealand has not been a sufficient or even an apparent incentive to protect deepwater stocks. The stocks have declined, been "mined" or serially depleted, and fisheries managers have come under strong pressure to set catch limits that are too high even when stocks are well below the legal limit of BMSY. In addition it has not protected the environment. The evidence presented here contradicts the claims of "success" of the QMS in protecting deepwater stocks.

ii. In the QMS and industry-driven adaptive management programmes, fish stocks in all deepwater QMAs have declined. Even for the two stocks which are currently estimated to be above BMSY on the Chatham Rise, in the space of two decades large declines have occurred and stocks are now estimated to be rebuilding.

iii. Other scholars have shown that the quota markets have operated with increased profitability and increased concentration of ownership.

iv. The dangerous practice of managing as one stock several stocks or mixed species has persisted (e.g. oreo mixes or ORH3B, which consists of several stocks) with little industry pressure to avoid this practice. The legislative means to split stocks has been included in fisheries legislation since 1996 and to split species since 1999 (all in Sections 25 to 26). To date there has been no formal proposal by the Minister of Fisheries to either split stocks or species groups.

v. The change to ITQs as a percentage share of TACC in 1990 removed the fiscal burden on the Government but altered the source of resistance to TACC adjustments to quota holders.

vi. The dubious practice of "shelving" has continued unchecked and with official sanction. This allows firms to retain "ghost" fish quota on their books while promising the Minister of Fisheries to not fish this notional quota.

vii. Fishing by trawling has done considerable damage (Clark et al. 2000, Probert, McNight and Grove 1997, Koslow and Gowlett-Holmes 1998) to the environment. Attempts to reduce environmental damage have been met by considerable resistance from fishers.

viii. Cost recovery has enhanced industry ‘capture’ of the MoF. ITQs in combination with "cost recovery", have further distorted perceptions in the minds of many officials, industry and, at times, politicians of the legitimacy of quota owners compared to the environment, the other non-extractive values and uses of the environment. This has led to the use of language such as harvesters being "rights holders" while others are referred to as "other interests".

ix. Windfall gains were held by first round recipients of ITQs from the initial allocation of ITQs. Inadequate society capture of resource rents followed by the lack of resource rentals has allowed quota owners to invest uncaptured resource rentals into influencing officials and politicians and so have a disproportionate voice in fisheries management[326].

x. The MoF has yet to establish an environmental management strategy though work is underway to establish a system of environmental standards for judging harvester-written fisheries plans that are subject to ministerial approval.

xi. Fisheries management is being further disintegrated by stock-focused "fisheries management plans" to be done by industry.

xii. There is a myth of environmental commitment by the New Zealand fishing industry. The reality has been vociferous and ferocious opposition to environmental protection.

xiii. There has been no governmental support to non-extractive users or equal voice for others.

xiv. Pressure by environmentalists for ecosystem-based management with spatial dimensions is being used by fishers as a basis to extend ITQ rights into spatial property rights (McClurg 2002).

xv. Resource rentals were replaced with cost recovery but these are conceptually different from resource rentals, which are a payment to an owner for scarce resource use while cost recovery is for management and research. In 1995-96 about 70 percent of the total MoF budget was recovered from the fishing industry. Cost recovery has been a potent instrument of industry influence on the MoF and DoC.

xvi. The New Zealand adaptive management has failed in its promise to sustainably manage deepwater stocks.


Does theory suggest a property rights regime can be relied on to protect fish stocks and the environment of the deep sea? The short answer to this is no economic theory is clear if discount rates are higher than the net rate of growth of the capital value of the fish stock then there will be a dominant incentive to harvest the resource and to use the proceeds elsewhere. Quantity limits are important: it is vital for society that those with high discount rates are resisted. Quantity limits, if properly set and enforced, would help contain over-fishing but only if limits as such protect and are observed and enforced. Incentives to avoid damage to the environment are not provided by ITQs: harms continue to be externalized. Discounting applies as much to the slow-growing host environment as it does to fish stocks.

New Zealand’s deep water fisheries have been managed by ITQs from 19983, initially as a trial, then under the QMS from 1986. Evidence from official stock assessment reports was used to examine the state of stocks including deep-sea species such as orange roughy, smooth and black oreos and cardinal fish. We asked the question, how stocks in the deep sea have fared under New Zealand’s property rights based fisheries management? What protection has the marine environment had from the impacts of fishing? The evolution of some of the relevant institutions was tracked and the environmental policy and performance assessed.

The report card on stocks is mixed with assessed orange roughy stocks ranging from 3% to near 40% of the original biomass. Most orange roughy stocks and other deep water species had significant and risky declines. The environment fared little better with moves to protect it slow and reactive, not proactive. Although by 2003 2.5% of seamounts were closed to trawling, some after having been fished, there is still no systematic environmental management process. Despite quota owner companies, these stock declines and other outcomes would be expected in the light of dynamic economic theory of harvesting where discount rates are high and stock productivity low.

Fishing has continued to be allowed on stocks suffering major declines to well below BMSY. Many of the stocks have effectively been "mined". New Zealand has experienced continuing pressure by fishers for catch limits that reduce stocks below BMSY and officials and ministers have been reluctant to stand up to this pressure, particularly to industry litigation.

The highly defined property rights of commercial interests through ITQs, combined with the cost recovery mechanism, have resulted in considerable capture of fisheries management by these commercial interests, the evolution of institutions to benefit quota owners, marginalization of other interests and strong resistance to even basic environmental assessment or protection measures. Fishing industry representatives have successfully advocated for a reduction in fisheries research contracted by the MoF.

What lessons can be learned for the deep sea from the NZ experience? Property rights 18 Records of attendance at consultation meetings shows that there is regularly a considerable majority of industry representatives at stakeholders meetings, with few customary Maori, recreational or environmental representatives. Industry delegations, however, frequently are not only numerous but are accompanied by lawyers, scientists and others. There are, of course, many other meetings where industry and MoF staff or the Minister meet. can distort the perceptions of officials, industry and politicians as to who is the principal for whom officials and politicians becoming the agents. Officials and others lose sight that the principal is society and with the future, not the industry. Incentives for fishers to invest in lobbying and other measures to capture control of fisheries management, to contest environmental protection and to "capture" fisheries management and research remain strong.

The ITQ system, the industry capture of fisheries management and the cost recovery system have together substantially marginalized other interests in fisheries management, particularly those who want to retain higher fish stocks for non-extractive and ecosystem purposes. Institutional forms and who makes decisions on catch limits, how payment is made, and the levers of influence open to, and on, players are crucial to the management process.

Authorities should charge resource rentals and management costs and make provision for support for the expression, and defence, of policy discussions of non-extractive values of fish. This is important since these, and other non-commercial voices are likely to be swamped and marginalized by the resource rent-rich quota owning voices. Independence of research and management from pressure and influence is crucial. It is important to decouple cost recovery payments from control, or expected control, of the commissioning of research or management. Strong environmental controls continue to be needed. Property regimes do not provide effective environmental protection. Neither the theory nor the evidence of the New Zealand experience support the notion that property rights will protect the environment or slow-growing low-productivity deepwater fish stocks.


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Wilson, J.A., J.M. Acheson, M. Metcalfe & P. Kleban 1994. Chaos complexity and community management of fisheries. Marine Policy 18:4 291-305.

Weeber, B. 1986. Orange Roughy TAC Increased. Catch 13:8-9.

Young, R.J. 2002. Northern Inshore Fisheries Company Ltd v. Minister of Fisheries, (CP235/01) High Court, Wellington, March 4, 2002.

Young, R.J. 2003. Squid Fishery Management Co Ltd v Minister of Fisheries. (CP20/03) High Court, Wellington. 11 April 2003.

Zwartz, D. 1986. Revised Orange Roughy Quotas for 1985-86 Season. Catch 13:1-4.




Soviet fishing starts for black oreos on South Chatham Rise/Sub-Antarctic.


200 nm Exclusive Economic Zone declared.


Chatham Rise orange roughy fishing starts.


Challenger orange roughy fishery starts.


East Coast North Island orange roughy fishery starts.


First catch limit for Chatham Rise orange roughy (3B) of 23 000 t.


Deepwater fishing ITQs introduced.
First catch limits for oreos - Chatham Rise 3A and 4 of 10 000 t and 6 750 t respectively.


West Coast South Island orange roughy fishery starts.


Oreos and orange roughy move to Quota Management System and catch limits for all areas.


Indications that catches on Chatham Rise are unsustainable.


Orange roughy catch reported on Chatham Rise peaks at 32 700 t.


Reported orange roughy catch peaks at over 54 000 t with the peak TAC of over 62 000 t.
Non-Chatham Rise ORH3B fishery starts at Puysegur.
Challenger ORH fishery TAC cut from 12 000 to 2 500 t.


ORH 3B TAC cut from 32 787 to 23 787 t.
Challenger ORH fishery TAC cut twice: first from 12 000 to 2500 t and then again to 1 900 t.


Chatham Rise ORH spawning box "closed"; Puysegur ORH fishery reported catch peaks at 6 950 t.


Start of OEO1 Adaptive Management Programme (TAC increased from 5 033 t to 6 044 t.


East Cape ORH fishery takes off with reported catch of 3 400 t.
Mid-East Coast ORH (ORH 2A South, 2B and 3A) TAC reduced from 6 660 t to 2 100 t
ORH3B TAC cut from 21 300 to 14 000 t


ORH1 first Adaptive management programme starts with TAC increase from 190 t to 1 190 t.
Auckland Islands ORH fishery peaks at 1 250 t.
Chatham Rise makes up just under 36 percent of catch.
OEO3A TAC reduced to 6600 from 10 106 t.


Antipodes ORH fishery starts with a reported catch of 3 400 t.
OEO6 TAC increased from 3 000 to 6 000 t with no stock assessment.
OEO reported catch peaks at over 24 700 t and OEO3A TACC cut for the first time to 6 600 t.


Puysegur ORH fishery "closed".


OEO 1 removed from the Adaptive Management Programme.
Puysegur OEO fishery "closed"
Voluntary limit on smooth oreo catch in OEO3A introduced at 1 400 t.


Antipodes ORH fishery ends. OEO3A reduced further to 5 900 t.


Challenger ORH fishery "closed" with 1 tonnes TACC.
First ORH1 AMP Ends with Mercury Colville stock down to 10-15 percent of Bo.
TAC reduced to 800 t.
East Cape (2A North) catch limit cut from 2 000 to 200 t and the Mid-east coast limit cut to 1 700 t.


Second ORH1 AMP starts with TAC at 1 400 t.
Chatham Rise OEO catch falls below 50 percent of total oreos catch of over 18 700 t.
OEO3A TACC reduced to 3 900 t and OEO4 to 5 200 t.


Chatham Rise ORH catch limits adjusted to increase East Rise from under
5 000 t to 7000 t - sub-antarctic catches reduced from 4 000 to 1 300 t. Chatham
Rise makes up nearly 70 percent of reported orange roughy catch. Mid-East coast catch limit reduced to 800 t.


ORH3B makes up 84 percent of orange roughy reported catch.

[307] School of Government, Victoria University of Wellington
P.O. box 600, Wellington, New Zealand
<[email protected]>
[308] Royal Forest and Bird Protection Society
P.O. box 631, Wellington, New Zealand
<[email protected]>
[309] For an introduction to the fisheries economics dynamic theory, see Pearce and Turner 1990, Chapter 16.
[310] TAC includes TACC plus allowance for recreational and customary Maori catch and all other mortality to that stock caused by fishing (Section 21, Fisheries Act 1996).
[311] DEEP SEA 2003 Conference, Queenstown, New Zealand, 1-5 December 2003.
[312] This includes unpublished memo 13 October 1989 and supporting Cabinet papers including Dev (89) M14/8; Dev (89) 102; Papers to the Chairman of the Cabinet Economic Committee 19 May 1989, 23 June 1989 from MAFFish; Dev (89) 80) (MAF1989b, NZ Cabinet Economic Development and Employment Committee 1989).
[313] Such an arrangement has uncanny similarities with the dead serfs accumulated by the would-be landowner, Chichikov, at the centre of Gogol’s 1842 novel Dead souls (Gogol 1842).
[314] 6The authors observed this directly at meetings. There is evidence of this in the many documents that show the records of industry meetings with the Ministry, industry submissions and Ministry responses.
[315] BMSY is the biomass that will support the maximum sustainable yield.
[316] For example, the MoF has run consultation processes with stakeholders since 1992 to set limits on the number of endemic New Zealand sea lions (Phocarctos hookeri) that can be drowned in the squid fishery around the Auckland Islands. This process involves annual consultation with the DoC and a range of interest groups and finally an annual plan is signed off between the Minister of Fisheries and the Minister of Conservation.
[317] Expressed by the Environment and Conservation Organizations of NZ (ECO) and the Royal Forest and Bird Protection Society (Forest and Bird) in submissions to the Minister of Fisheries and MoF from 1998 onwards.
[318] In New Zealand seamounts have been defined as "identifiable geological/topographical feature that rise greater than 100 m above the surrounding seafloor in any depth of water, whether they are stand-alone features or part of a range" (MoF 1999b).
[319] In New Zealand there is no clear articulation over who, if anyone, actually owns fish. It is no one, the Crown or Maori. The Treaty of Waitangi acknowledges the rights of Maori to the "full exclusive and undisturbed possession of the Lands, Estates Forests Fisheries and other properties so long as it is their wish and desire to retain the same in their possession" (Art 2, part 1, English version). In the English version, Article 1 has Maori ceding sovereignty to the British Crown. When Maori challenged the Crown over the establishment of the Quota Management System, Maori settled for 10 percent of the quota, a half share of the Sealords company and 20 percent of future fisheries allocations. For discussion of the politics of the debate in New Zealand over the Treaty, see Sharp (1990).
[320] Von Bertalanffy "K" is the parameter in the von Bertalanffy growth model that describes how a fish grows towards a theoretical maximum length or weight. K describes the speed at which a fish reaches that maximum.
[321] MCY - maximum constant yield - The maximum constant catch that is estimated to be sustainable, with an acceptable level of risk, at all probable future levels of biomass. See <>.
[322] The MAY is the long-term average annual catch when the catch each year is the CAY. With perfect knowledge it would be possible to do better by varying the fishing mortality from year to year. Without perfect knowledge, adjusting catch levels by a Current Annual Yield (CAY) strategy as stock size varies is probably the best practical method of maximizing average yield. The CAY - the one-year catch calculated by applying a reference fishing mortality, Fref, to an estimate of the fishable biomass present during the next fishing year. Fref is the level of instantaneous fishing mortality that, if applied every year, would, within an acceptable level of risk, maximise the average catch from the fishery (same source as for footnote 13).
[323] CAY - current annual yield - this is the estimate of the maximum sustainable catch for one-year catch in reference to a reference level of fishing mortality that if applied every year and within an acceptable level of risk would maximise the average catch of the fishery.
[324] BMSY is the biomass that would support fishing at the maximum sustainable yield. BMCY is the biomass that would support fishing at the long-term maximum constant yield (MCY).
[325] For example, ECO 31/8/90 letter to Minister of Fisheries; p. 9 re: Challenger; Forest and Bird 1990, 27 Sept. 1990. Media Release.
[326] Records of attendance at consultation meetings shows that there is regularly a considerable majority of industry representatives at stakeholders meetings, with few customary Maori, recreational or environmental representatives. Industry delegations, however, frequently are not only numerous but are accompanied by lawyers, scientists and others. There are, of course, many other meetings where industry and MoF staff or the Minister meet.

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