Aspects of the history of quota management have been reviewed and it is evident from experience in a number of countries that the management of fisheries resources solely by a total allowable catch method has not resulted in effective stock conservation or in optimal economic utilisation of the resource. In most instances where a total allowable catch has been the prime or sole method of management, stocks and harvests have declined significantly. For example total allowable catches used alone did not prevent the collapse of major herring stocks in British Columbia, Iceland or Europe. In addition, total allowable catch management has resulted in significant over-capacity in the worlds fishing fleet with serious impacts on the economic viability of a number of major fisheries. Such over-capacity has been exacerbated by a program of government subsidies designed to ensure the viability of domestic fishing fleets. The painful exercise of reducing capacity, both to conserve stocks and to generate significant economic rent from a fishery, is presently being addressed, particularly within the European Union. The poor track record of quota management has resulted in a lack of confidence in this method of managing fish stocks. However, the recent development in a number of countries of a system of Individual Transferable Quotas has provided the effective economic incentives for improved efficiency, reduction in capacity and stock conservation. The record of ITQ management which subsumes the requirement for setting TACs is much more impressive than TAC management and has quickly become economists policy tool of choice in the management of fish stocks. This paper has examined ITQ management systems from the point of view of an integrated management system. Often ITQs have been introduced to address either biological or economic objectives, whereas this paper has attempted to demonstrate that the biological, economic and financial implications of ITQ management are intimately interwoven and should be considered as a single system. The paper presents a number of guidelines for examining ITQ management in such an integrated way.
The initial allocation of a Total Allowable Catch to participants within an ITQ management system has been the greatest practical difficulty in the introduction of ITQ management regimes. This paper examines this issue and has concluded that the most efficient allocation mechanism is through a suitably designed tender or auction system of the Total Allowance Catch. Such a tender or auction system, if suitably designed, is able to address not only economic policy objectives, but also broader stock conservation and social objectives. The allocation of economic rent between operators in a fishery is, however, only one part of the allocation process, the other being the allocation of economic rent between the fishing industry and the regulatory authority. It is shown that the process can most efficiently be handled by considering the two allocation problems together, rather than trying to separate them. If they are considered as separate issues, the result is inevitably economically inefficient with a resulting dissipation of economic rent. As ITQ management regimes gain greater acceptance and more experience is gained in their operation, the management regimes themselves will become more and finely tuned to the various objectives for a fishery. This paper presents a first attempt at examining these systems in an integrated way.