Industry Perspective on Rights-based Management: The Shetland Experience - J. Goodlad
No rights, no Responsibility - M. France and M. Exel
Rights-based Fisheries Management: A Perspective from the Western United States - R. Moore
Fishing Rights - An Industry Perspective ITQ'S and Fishermen's Attitudes: The Change from Hunter to Farmer - P. Talley
A Comparison of British Columbia’s ITQ Fisheries for Groundfish Trawl and Sablefish: Similar Results from Programmes with Differing Objectives, Designs and Processes - B.R. Turris
Shetland Fish Producers Organisation, The Shetland Seafood
Centre, Stewart Building
Lerwick, Shetland, ZE1 OS Scotland
<john.goodlad@sfpo.zetnet.co.uk>
1. INTRODUCTION
Shetland is one of the communities most heavily dependent on fishing within Europe. The islands have a long tradition of fishing and fish processing and, within the last 15 years, have developed an impressive aquaculture industry largely based on farming Atlantic salmon.
Shetland seafood (whether caught, farmed or processed) is worth around £170 million per year. Over 2500 people are directly and indirectly employed in the seafood industry; a figure which represents around a quarter of the workforce. Perhaps the best indication of how the seafood industry dominates the Shetland economy is the fact that over 80% of all Shetland’s exports consist of fish and fish products.
The real importance of the seafood industry to Shetland lies in the fact that alternative employment and economic prospects are limited in this northerly, infertile and fairly remote archipelago.
Fishing has underpinned the Shetland economy throughout history. Its importance continues undiminished with a fleet of around 150 boats catching upwards of 100 000t of fish every year. The annual catch generally consists of 15 000 to 20 000t of high-value ground-fish (cod, haddock, monkfish, whiting and saithe), 20 000 to 25 000t of herring, 35 000 to 40 000t of mackerel, 15 000 to 20 000t of industrial species (blue whiting and sand eels) and around 2000t of shell-fish. The fleet is modern, competitive and efficient. At the same time the traditional shareholding pattern of working fishermen owning their own boats continues.
The Shetland fishing industry has remained important at a time when fishing has declined throughout much of the UK. Shetland has therefore become one of Britain’s principal fishing centres and has been at the forefront of many fisheries management initiatives in recent years. In particular, the fishermen’s representative organisation, the Shetland Fish Producers Organisation (SFPO) has played an important role in the development of the UK quota-management system.
2. THE ORIGINS OF THE UK QUOTA-MANAGEMENT SYSTEM
Before 1984, fisheries within the UK were managed on the basis of fortnightly or monthly quotas, which were allocated to individual vessels by Government Fisheries Departments. For example, if North Sea whiting or West of Scotland herring were subject to catch limits, all UK fishing vessels would receive the same fortnightly or monthly quota from Fisheries Departments. From time to time these quota allocations varied depending on vessel-size. Such a system took no account of regional variations nor of the requirements of different sectors of the UK fleet. This system was also rather remote in that fishermen, through their organisations, were not directly involved in the decision-making process as such. There were regular consultations with the fishing industry, but the final decisions on setting vessel quota-limits were made by Government.
The absence of any real involvement in the decision-making process, together with the lack of a regional, or sectoral dimension in the quota-allocation process, led to much criticism. Nowhere was this criticism more marked than in Shetland. During the early 1980s there was a lucrative industrial fishery for sand eels around Shetland during the summer months. This fishery regularly attracted a large number of vessels that would otherwise have been catching ground-fish. This left only a small number of trawlers to supply the local ground-fish processing plants. In 1983 the UK haddock quota-limits were particularly poor during the summer months. One unforeseen result of this quota was that the reduced number of Shetland trawlers were unable to land enough haddock to supply the needs of the local fish-processing industry. By the time the sand-eel fishery had finished in September, the haddock catch-limits had been raised. But, although the entire Shetland trawler fleet was now able to fish for haddock, the ‘summer haddock fishery’ had been lost. The possibility of landing sufficient haddock during the summer months, when a large proportion of the fleet usually diverted to industrial fishing, only seemed possible if larger per-vessel-quotas could be allocated, something which was patently impossible under the national quota-system which existed at this time.
In view of this, the Shetland fish-catching and fish-processing industries argued that a more flexible system of quota management was necessary to take account of the particular circumstances pertaining in Shetland at that time. The Shetland Fish Producers Association (SFPO) had been established in December 1982 in order to improve the marketing of its members’ catches. Since the effective marketing of the haddock catch to the local fish-processing industry was being prevented by an inflexible quota-management system, the SFPO began to promote an alternative system.
Why not, it was suggested, allocate to the SFPO that share of the UK haddock-quota that the Shetland fleet would normally catch during a full year? This quota could then be shared between member vessels in the manner best suited to local market conditions. The Scottish Office Fisheries Department was persuaded and the SFPO received its own haddock quota-allocation for 1984. The first tentative steps had been taken to decentralise quota management within the UK. This system of allocating quota to fishermen’s organisations became known as the sectoral quota (SQ) system.
This experiment, in so far as the Shetland fishing industry was concerned, was successful. Unlike the previous system, it allowed fishermen, through their representative organisations, to manage fisheries. At the same time Fisheries Departments welcomed the opportunity to devolve the increasingly burdensome and time-consuming job of fisheries management. As a result there was a rapid move towards adopting sectoral quotas throughout the fishing industry at large. By 1985 most haddock, cod, whiting and saithe fisheries were being managed under the SQ system. Within two years the herring and mackerel fisheries were also being managed under this system.
3. PRODUCER ORGANISATIONS
Producer Organisations (PO’s) are a relatively new type of fishermen’s organisation. Unlike the long-established trade organisations (many of which have been in existence for most of this century), POs are the direct result of British membership of the European Union (EU). The first British PO was established in 1973 - the year Britain joined the then Common Market.
Under the terms of the EU Common Fisheries Policy (CFP), POs play a central role in the common organisation of the market. The principal objectives of the POs throughout Europe are “to encourage rational fishing and to improve conditions for sale of their members’ products”. In order to achieve these objectives all European POs have a responsibility to implement the marketing regulations of the CFP. The PO system enables fishermen to enjoy the benefits of the EU minimum-price scheme and market-support mechanisms. POs therefore must ensure that fish landed by member vessels are properly graded according to EU size and freshness criteria. The EU official withdrawal price (i.e. the minimum price below which fish cannot be sold) must be strictly observed if PO member vessels are to benefit from the market-intervention system (i.e. the system whereby financial compensation is paid for fish which cannot be sold at the official withdrawal price).
All POs throughout Europe are now involved, to a greater or lesser extent, in the implementation and administration of the EU marketing regulations. Some POs have become involved in related activities such as the establishment of quality-control systems, the marketing of fish and the establishment of fish-processing plants. It is only within the UK, however, that POs have come to play a central role in fisheries management. This new role for POs was recognised in 1993 when the EU marketing regulation was amended to allow POs, at the discretion of member states, to manage national catch-quotas. With this change in the relevant regulation, the EU has clearly signalled its approval of fisheries management by the PO sector. It will therefore be interesting to see if other member states follow the UK approach and develop fisheries management systems based on PO participation.
Within the UK there is now a total of 19 POs. These are largely, although not entirely, regionally-based. These POs now represent the vast majority of Britain’s fishermen, boats and catch. There are (on the latest figures available) 2939 fishing vessels over 10m in length in the British fleet; of these 1725 are in membership of the PO sector. While this represents only around 60% of the total number of boats, but in terms of gross registered tonnage and total engine power the PO sector accounts for 80% and 77% respectively of the total UK fleet over 10m. In terms of fish-quotas it is estimated that the PO sector manages over 95% of all quotas. The 19 POs reflect the geographical and sectoral diversity of the British fleet.
That proportion of the British fleet which is not in membership of the PO sector is referred to as the ‘non-sector’. Although the non-sector accounts for a fairly large number of boats, it represents less than 5% of British quotas. The non-sector is managed in much the same way as all fisheries were managed before 1984, i.e. by individual vessel monthly-allocations set by Fisheries Departments. The non-sector largely consists of smaller vessels, but in addition to the non-sector, there is also a very large number (5372) of ‘under 10 metre vessels’ within the UK fleet. While very large in terms of numbers of individual vessels, this sector obviously consists entirely of small boats, many of which are operated on a part-time or seasonal basis, and is also managed directly by Fisheries Departments.
4. THE DEVELOPMENT OF SECTORAL QUOTA MANAGEMENT
Since its introduction in 1984, the Sectoral Quota (SQ) system has continued to develop and adapt to changing circumstances. Each year Fisheries Departments issue a consultation paper which proposes certain changes to the basic SQ system. On the basis of the response from the POs and the non-sector, changes are made to the management system for the ensuing year.
Through regular changes and modifications, the SQ system has now developed into a complex and comprehensive system of fisheries management. POs must now manage all fisheries for which there are UK quotas in the North Sea (Area IV), West of Scotland (Area VI) and the Irish Sea and English Channel (Area VII). It had previously been possible for POs to manage some fisheries and opt to remain under non-sector management (i.e. management by Fisheries Departments) for others. Sectoral quotas have been calculated on the basis of the actual catches (track-record fishing performance) of member vessels during the previous three years. Pelagic quotas had previously been based on the catches of the previous two years. Since 1992, track - record fishing performances have been attached to, and transferable with, vessel licences, rather than to the vessels themselves.
Having established the sectoral quota available to each PO, Fisheries Departments then monitor catch uptake and will close a fishery when the sectoral quota has been caught. Apart from this, the management of the quota is largely at the discretion of the PO concerned. As one would expect, different POs adopt different quota management strategies depending on their individual circumstances. In so far as ground-fish quotas are concerned, most POs continue to allocate quotas to member vessels on a monthly basis. Sometimes these quotas vary according to vessel-size bands, but more often similar quotas are allocated to members regardless of vessel size. Several POs, however, began to allocate individual annual vessel-quotas based on the individual vessel licence track-record fishing performance. In other words the quota-allocation which a PO receives on behalf of a member vessel is simply reallocated to that vessel on an annual basis. Some POs allocate all their quotas on this basis, others only for some species, and others only for some vessels. Other POs have made similar arrangements but on an individual-company basis as opposed to an individual-vessel basis.
Pelagic quotas are essentially allocated to only two POs (the main Scottish PO and the Shetland PO) with individual pelagic quotas being allocated to those pelagic vessels not in membership of these two POs. Both POs in turn allocate individual annual pelagic quotas to their pelagic members. Again these quotas are related to individual track-record fishing performances.
A further development of the SQ system was to allow POs complete discretion in swopping fish among each other. This ensures that UK quotas would not remain uncaught. Quota-swops are now becoming very commonplace with POs swopping away fish-quotas unlikely to be caught in return for fish-quotas which are in short supply. Direct fish-for-fish quota-swops are most usual although quota-gifts (which can be re-paid in future years) have become more common.
Purchase of fish-quotas has been possible since 1993 through a special scheme which was introduced to complement the fleet de-commissioning scheme introduced at that time. Under this scheme, vessel owners interested in de-commissioning their ships could, as an alternative, sell their quota entitlement (arising from their track-record fishing performance) to the PO they had been a member of for the past three years. In return for selling quota entitlement to the PO, the vessel owner had then to relinquish his vessel licence in the same way as when a vessel owner accepts a de-commissioning grant. This scheme is essentially a form of industry-funded de-commissioning, and since the requirement to have been a member of a PO for three years was subsequently relaxed, a vessel’s quota entitlement can now be sold to any PO. The SFPO has purchased the quota entitlements of seven vessels to date, with a view to owning these quota entitlements on a communal basis.
As already noted, Fisheries Departments continue to manage the non-sector. Over recent years the size of the non-sector has been reduced. Most larger vessels are now in membership of POs and the non-sector now consists of a large number of small vessels. The departure of larger vessels from the non-sector to the PO sector has resulted in substantial track-record fishing performance being lost from the non-sector. This has in turn resulted in the non-sector quota allocations being further reduced with very poor individual vessel-quotas being allocated to non-sector vessels by Fisheries Departments.
As a SQ system developed so did increasing awareness of the importance of track-record fishing performance. As each PO endeavoured to maximise its sectoral quota allocation, increased attention was focused on the catch record of vessels applying for membership. Most POs adopted a policy of only admitting as member those vessels that had a track-record of fishing performance comparable to vessels of a similar size who were already members. It became widely recognised that admitting vessels as members with inadequate catch records would simply result in new members requiring quota-allocations but be unable to contribute significantly to the quota pool.
The non-sector consequently became a residual for that proportion of the fleet that had poor track-record catches and were therefore unable to secure membership of a PO. Real fears were expressed that, if more of the non-sector fleet with reasonable track-record catches were to join the PO sector, the already poor non-sector quota-allocations would become even worse. In response to this, Fisheries Departments have, since 1995, guaranteed a minimum quota-allocation to the non-sector.
Throughout the development of the SQ system, UK fishermen remained almost unanimously opposed to the buying and selling of quotas. The SFPO quota-purchase initiative was therefore roundly criticised by many UK fishermen. In response, the SFPO pointed out that it was simply trying to secure future fishing opportunities for member vessels and that this option was open to all UK PO’s under the SQ system rules. While no other PO followed the Shetland example, increasing numbers of fishermen began to consider securing additional quota on an individual basis.
5. FIXED QUOTA ALLOCATIONS
One of the main advantages of the SQ system, based on the three-year rolling reference period, was the fact that quota-allocations were directly based on the historical landings of vessels. In this way quota-allocations would always bear a close resemblance to actual landing patterns. The principle disadvantage was, however, the scope for individual vessels to increase their track-record fishing performance by deliberately increasing their landing records. In other words fish which had not been caught were “landed and sold” in order to improve a vessel's track-record during the reference period. This became known as “ghost fishing” and is, of course, the opposite of over-quota or “black fish” landings. The scale of “ghost fishing” increased during the mid 1990s as more and more fishermen realised that fishing vessel licences with large track-records were worth more than licences with small track-records.
In an effort to prevent “ghost fishing” spiralling out of control, UK Fisheries Departments and the fishing industry established a Working Group to examine this issue. The Groups concluded its work in 1997 and recommended that, in future, the SQ system should be based on fixed quota-allocations derived from vessel landings made during the three year reference period of 1994, 1995 and 1996. This would, the Group argued, fix track-records and thereby remove the incentive to “ghost fish”. It would also simplify the SQ allocation system in that every vessel licence would have a fixed track-record attached which would not be subject to annual variation depending on catch performance.
Fixing track-records, detractors argued, would remove the flexibility inherent in the rolling reference period. It would also, it was argued, take the industry closer to a system of property rights based on individual transferable quotas (ITQs), something which had hitherto been opposed by British fishermen. In the event, UK Fisheries Ministers accepted the Working Group recommendations and have managed UK fisheries in 1999 on the basis of fixed quota-allocations. Each vessel licence has been allocated a fixed quota-allocation (FQA) based on its landings from 1994 to 1996. This allocation is expressed by species in 100kg units and, when related to the total UK quota during this period, is effectively the individual vessel-quota entitlement of the UK quotas.
Apart from the change from a rolling to a fixed reference period, the SQ system has remained unchanged with quota-allocations being made to POs on the basis of member vessels FQA’s. In reality, however, a fundamental change had been made to the SQ system which focused the attention of licence holders on the size of individual quota-allocations and their value in terms of selling and renting. The UK fishing industry had consequently taken a huge step towards a management system based on property rights.
6. THE INDUSTRY RESPONSE
Although UK fish-quotas are not assets with legal title of ownership (as is the case with property rights), for some time now fish-quotas have been seen as having a monetary value. Ever since POs allocated individual quotas to individual member vessels (based on that vessel's track-record catch), fish-quotas have become tradeable. Although the change to FQAs did stop the deliberate enhancement of track-record performance for subsequent resale, it also focused attention of all fishermen on what their track-record fishing performance actually was. For the first time, all UK fishermen had to confirm their agreement with the quota allocations attributed to their licence. This raised the profile of quota value in a way which had never been the case under the old SQ system.
The fact that fish-quota is not a legal asset in its own right, and is inextricably linked to a vessel licence, has not discouraged the emergence of quota-trading as a growing activity. Standard legal agreements are now used to separate quotas from licences and the industry itself is arguing that Fisheries Departments should formally reallocate individual FQAs every year to reflect the quota-trading which has taken place during the preceding year.
Most quota-trading has taken place in the ground fish sector as the pelagic sector has fewer vessels and a much smaller number of quota transactions. The clear trend has been the purchase of additional quota by the more successful fishing partnerships who have in turn made arrangements with their PO for an individual annual quota to reflect the enhanced catch-opportunities which they have purchased. This has inevitably hastened the decline in fishing vessel numbers as less successful partnerships, or licence owners wishing to retire, have sold their FQAs.
In addition to the sale of FQAs, quota-rental is now becoming more widespread. Fishermen, who are perhaps short on quota during a quota period, or lack the capital to purchase FQA, often rent quota from those with quota surplus. Again, because of the fact that quotas do not have separate legal title, rentals are subject of standard legal agreements involving the ‘swopping’ of fish between POs. The development of a market for quota rental has in turn encouraged the emergence of a group of FQA holders who have decided it is easier to rent quota rather than to fish it. This is a development which appears to be commonplace wherever ITQs have been introduced.
The inevitable consequence of the developing market for quota-purchase and quota-rental is a call for the system to be further simplified whereby the quota would be separated from the licence and would thereby assume a legal entity of its own. This would eliminate the need for costly legal agreements covering quota-purchase and quota-rentals, but would of course be a change which would further transform the SQ/FQA system and move it even closer to a system based on property rights.
Despite the ever increasing scale of quota-trading which is now taking place, the official policy position of the national fishermen’s federations is still one of opposition to ITQ’s. This reflects the fact that the majority of fishermen have not yet participated in the quota-trade. But a sizeable, and ever growing, minority have bought, sold or leased quota. These fishermen are becoming increasingly vocal in defending the system of quota-trading. There are now clear signs of the beginnings of a fundamental shift of opinion amongst British fishermen regarding the issue of property rights.
7. THE LEGAL POSITION
This debate on property rights within the UK fishing industry has given rise to an interesting legal question. It is clear that independent states (such as Iceland and New Zealand) can confer a legal property right of fish-quota to individuals out of what has hitherto been regarded as the property of the State. Within the EU, the situation is different. Member States do not “own” fish-quotas as such. Fish-quotas are essentially a “common resource” under the terms of the CFP. Each member State receives an annual entitlement to fish a proportion of this “common resource”. These national allocations are determined by an agreed allocation key which is known as relative stability. While management of these national allocations are clearly the responsibility of each member State (and hence the variety of fisheries management systems adopted within the European Union) the national allocation is not the “property” of the member State as such.
There is therefore an interesting debate as to whether or not the conferring of property rights can be done by the member States or can only be done by the European Union. If property rights were to be conferred by the European Union, and these were to become freely tradable amongst community fishermen, the principle of relative stability would be compromised. This would cause enormous political problems for many member States and would therefore be resisted. On the other hand, member States may not have legal competence to confer property rights on their own fishermen. Until this question is resolved, it is unlikely that British, or other E.U fishermen, will be able to obtain full property rights over fish-quotas.
8. THE SHETLAND RESPONSE
The Shetland PO recognised at an early stage that quotas were becoming valuable commodities. As early as 1993, the SFPO took advantage of the Government scheme to purchase fish-quota in association with the de-commissioning of vessels/licences. As already noted, the SFPO have purchased (between 1993 and 1997) a total of seven vessel-quotas under this scheme. The SFPO took a decision to make a substantial investment in purchasing fish-quotas under this scheme with the aim of holding this quota in common ownership for the benefit of all member vessels, both present and future. This total investment amounted to some £850 000 enabling the Organisation to purchase 2386t of ground-fish.
As quota-trading has become more widespread, so the cost of acquiring quota has increased. This was particularly marked in 1998 as a result of the introduction of FQAs in 1999. An indication of how quotas values have increased, is that the SFPO paid £250/t for cod in 1995; by 1999 the cost of buying a tonne of cod has increased almost eight-fold to £2000/t; ground-fish quota held by the SFPO is probably now worth well over £4 million.
This quota investment by the SFPO has obviously been financially successful and has enabled the Organisation to provide member vessels with enhanced fishing opportunities. Largely as a result of this, few individual Shetland fishermen have seen the need to purchase their own additional quota. The Shetland PO has also been unique amongst UK PO’s in becoming a quota-holder in its own right. With the enormous changes taking place in the UK fishing industry in terms of quota-ownership, there is concern within fishery-dependent communities, such as Shetland, that unless there can be greater security over quota, quota could be sold outside the islands never to return. Shetland’s economy, after all, is dependent on the fishing industry and, without fish-quotas future economic and employment prospects for Shetland would be bleak. While the initiative that had been taken by the SFPO was commendable, this FQA of 2386t represents only 16% of the total SFPO ground-fish FQA.
After much debate the local government of Shetland, the Shetland Islands Council (SIC), took the decision to invest in quotas to create a pool of community-held fish-quota. The SFPO agreed to act as agents for the SIC and to hold any quota purchased in a separate “community FQA”. The funding for this community investment came from Shetland Leasing & Property Development Ltd (SLAP) which is a commercial investment agency of the SIC. A total of £2.5 million was invested in acquiring 2445t of ground-fish quota in 1998. So far this year a further 2000t of ground-fish quota has been acquired at a cost of £3.3 million.
The SFPO therefore holds two pools of ground-fish quota; one representing its own investment of 2386t of FQA with another held by SLAP on behalf of the wider Shetland community of 4445t of FQA. Taken together, these two quota-pools amount to some 6831t of fish. This is a significant quota-pool compared with the 12 489t of quota owned privately by the Shetland fleet. In summary therefore, out of the total ground-fish quota of 19 320t administered by the SFPO, some 6831t, or 35%, is held in community ownership (either by SFPO itself or by SLAP).
The fact that a significant proportion of Shetland’s ground-fish quota availability is effectively held in common ownership is unique within the UK. But what makes the “Shetland ownership” of the marine resource so significant is the use which is made of this quota.
9. THE NEW ENTRANTS SCHEME
With the development of quota-trading, the cost of entering the fishing industry has escalated. Not only does a prospective fishermen have to pay for a boat and fishing licence, he must also now finance the cost of fish-quota. In many cases the cost of quota is as much as the combined cost of a boat and fishing licence. This has the inevitable consequence of making entry into fisheries much more difficult for young fishermen. There is now a clear trend for existing successful fishing partnerships and companies to acquire additional quota and thereby expand their operations. In short, the UK fishing industry is becoming concentrated into fewer hands as quota is traded.
While Shetland has many successful fishing partnerships, there is no guarantee that their FQAs will not, in the fullness of time, be sold out of the islands. At the same time, there may be many young Shetland fishermen who lack the capital to buy quota and thereby become successful fishermen in their own right. It was this scenario of an island group, surrounded by fish and dependent on the seafood industry, seeing its marine resource being eroded away which prompted first the SFPO and then the SIC to enter the market and purchase quota.
The SFPO quota-pool is used to augment member vessels' monthly quota-allocations and will continue to enhance member fishing opportunities in the future. There are no circumstances in which the SFPO quota-pool would ever be sold and it will therefore continue to provide additional fishing opportunities for future generations of Shetland fishermen. This is the “return on capital” which the SFPO is obtaining from its quota investment, quite apart from the considerable appreciation in value over time.
In contrast, the SLAP quota-pool is being used to help new entrants get started in the industry. The SLAP quota-pool is set aside by the SFPO as a quota reserve for fishermen who cannot afford to purchase quota. These fishing partnerships are able to become full members of the SFPO, and are able to fish out of the general quota-pool (and thereby obtain the benefit of the additional SFPO quota-pool) despite not having any individual FQA. Instead they pay a proportion of their gross earnings to the SFPO in order to “rent” a share of the SLAP quota-pool. To date a total of 8 “new entrants” have been able to acquire a boat and licence and start fishing without having to purchase quota. The total numbers of new entrants able to start fishing under this scheme will ultimately be limited by the size of the SLAP quota-pool. The intention is, however, to continue to invest in quota in order to enable more new entrants to join the industry. So far only ground-fish quota has been purchased but there is the possibility of acquiring pelagic quota in the future.
The “return on capital” for SLAP is the rental income (which the SFPO collects and remits to SLAP), the appreciation in quota values and, finally, the fact that investment in these quotas is enabling fishing activity to continue to develop within the islands. As well as creating jobs at sea, an additional Shetland fishing vessel will create employment onshore in the fish-processing and ancillary services.
Despite considerable original criticism, there is now growing interest in the Shetland scheme. A number of other UK PO’s are now considering quota-purchase and rental schemes in order to secure fishing opportunities for their own membership.
10. CONCLUSIONS
The system of UK fisheries management is firmly based on quota-allocations and is therefore a classic resource-based management system. The development of the SQ system, and especially the recent introduction of FQAs, has resulted in fish-quotas being bought, sold and leased. Although there is no legal title to UK fish quotas, increasing numbers of fishermen are prepared to invest in an administrative system which confers most of the advantages of an ITQ system. For many people the UK system of fisheries management is virtually a system of ITQs by another name.
At the same time there are important differences. The fact that FQA holders do not have a legal title over their investment is clearly important. In reality, it would however be inconceivable that any Government would consider abandoning quotas as the method of managing fisheries. Another important difference is that POs play an important role in the management of UK quotas. Under a classic property-rights system it would be difficult to envisage a role for POs as fishery managers.
The debate over whether the UK should formally introduce ITQs, with legal title for fish-quotas, will continue. The UK Fisheries Minister has rightly said that there is presently no consensus within the fishing industry for such a system. Having said this, increasing numbers of fishermen (who have bought FQAs) are now calling for ITQs to be introduced. Indeed, there is now the beginnings of what could be a seismic shift in attitudes amongst UK fishermen on the issue of property-rights. It may only be a matter of time before the majority opinion favours a system of ITQs. It is therefore probable that further changes will in due course be made to the SQ system which will separate FQAs from vessel licences and thereby confer legal title on fish-quotas.
Whether or not there is a further move towards ITQs, the Shetland system of “community-owned fish-quota” will continue to secure access to the marine resource for a fisheries dependent island community. In particular, this pool of community fish-quota will continue to be used to help young fishermen start their fishing careers without having to invest in fish-quota. There is no reason why the concept of community fish-quota cannot be as valid under an ITQ system as it is under the SQ/FQA system.
Shetland has pioneered the concept of community ownership of marine resources which provides the necessary security of fish quota to sustain the islands' fishing industry into the foreseeable future. This system of community fish-quota could be relevant to other fisheries dependent areas where alternative employment opportunities are limited.
Kailis and France Group, PO Box 280
Mt Hawthorn, WA 6915 Australia
<mfrance@newfish.com.au> and
<mexel@newfish.com.au>
1. INTRODUCTION
The aim of this paper is not to preach to the converted. It is widely accepted that rights-based management is a fundamental tenant of effective fisheries management practices. Yet this concept has faltered in its application to international fisheries - particularly high-seas fish-stocks. The reluctance of nations to challenge the oft-quoted “freedom of the high seas” is in direct conflict with national and international responsibilities for conservation, management and protection of the environment and fisheries.
As an Australian company, we have significant concerns at the lack of rights-based management on the high-seas. We are recent entrants to high-seas fishery operations having only been involved over the past decade though we have been involved in domestic fisheries for over 40 years. We operate in the international arena, with experience variously in high-seas fisheries such as tuna, orange roughy, Patagonian toothfish, and other international resources.
We have located new resources in several instances and have had the distressing experience of watching as these are rapidly over-exploited, often by vessels from nations that have stringent, effective rights-based management regimes in their domestic fisheries.
It is time for nations to deal with the problems of high-seas fisheries management and begin to embrace the proven requirement to move to rights-based management. Most recently, we have located a new resource of several species including orange roughy, on the high-seas in the Indian Ocean. We have sought assistance from governments to effectively manage, enforce and research the area. Yet the problem appears almost insurmountable, as all parties become tangled in the debate of “freedom on the high-seas”. The fact that this approach is directly opposite to the strong stance these same nations take on conservation appears lost on their governments. The United Nations can only move forward at the behest of concerned parties - and it is time to raise those concerns significantly at an international level. We offer more detail on these issues later in the paper.
There is no single cause for the problems of high-seas management yet lack of effective access-rights is certainly one of the biggest. There are many others - politics is a common example - often linked to sovereignty issues or allocations. Yet too often the last factor that seems to get consideration in the debates is the fate of the resources and the environment. Simple delays of a couple of years can result in the over-exploitation of a resource to a point of commercial non-viability. The Louisville Ridge orange roughy fishery (approximately 1000 miles east of New Zealand) was a classic example of the speed with which this can occur.
We recognise there are still paternalistic attitudes of some governments and organisations against rights-based management for industry members and it is these attitudes that are directly impeding progress towards effective conservation and management of fisheries resources.
At the 2nd World Fisheries Congress held in Brisbane, 1996 it was clear that over-capitalisation was one of the largest problems facing our fisheries, world-wide. The underlying cause of this problem is the lack of tradeable, secure fisheries access-rights. With no incentive for the fishermen to protect the environment or the fish-stocks, they are forced to compete by purchasing larger, faster, better boats than others in the fleet, and catch as much fish as they can before someone else gets a larger share. Little wonder the environment comes last in this equation and no surprise that over-capitalisation and over-exploitation are the results of a history of fisheries management without secure access-rights being allocated.
Environmental groups have a perception of fisheries as being ove-rexploited generally and are increasingly expressing major concerns over the lack of sustainability of current fishing practices. It is time to listen to some of these concerns and take proactive steps to prevent unsustainable practices in the future.
The United Nations Convention on the Law of the Sea (UNCLOS) is a conservation-based Convention, yet it deals haltingly with international rights-based fisheries management regimes. References to cooperation in management can be found in various Articles, but the challenge of dealing with international rights was too great at the time UNCLOS was prepared. This is not meant to criticise UNCLOS, which has resulted in significant progress for fisheries management over time, but rather is to identify the single biggest challenge that has yet to be resolved.
Recognition of the difficulty in dealing with high seas issues under UNCLOS has recently resulted in formation of the “Agreement for the Implementation of the Provisions of the United Nations Convention of the Law of the Sea of 10 December 1982 relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks, 1995” (the Fish Stocks Agreement). This has gone part way towards addressing the problems of management of international fisheries. But, it still stops short of addressing the fundamental issue of rights-based management, leaving that to the Regional Fisheries Management Organisations to deal with as best they can. Without guidance, and without acceptance that rights-based management is a fundamental requirement to effective and long-term fisheries resource sustainability, international fisheries are going to suffer a more accelerated fate than national fisheries have in the past. For boats to be able to operate on the high-seas they must necessarily be larger, more efficient and able to harvest more fish than the typical inshore domestic fleets. This exacerbates the problem of over-exploitation as they are able to take large quantities of fish in a relatively short period of time. Without rights-based management, boats will be over-capitalised, stocks over-exploited and the environment will be a secondary consideration.
It is axiomatic that any person will look after their property better when they own it, compared to when they rent, lease, or worse yet, squat in it. House owners are more willing to put time, effort and money into their property compared to when they are renting accommodation. It is no less the case for fisheries access-rights. The problem is exacerbated in fisheries as operators have to compete directly with their peers for a share of the stocks - hardly a recipe for success.
It is beyond time to deal with allocation of fisheries access-rights for high-seas fisheries. Everyone is aware of the problem, but it is necessary to locate someone prepared to deal with it.
2. WHAT IS RIGHTS-BASED MANAGEMENT?
Rights-based management need not be individual transferable quotas (ITQs), which are simply one mechanism for fishing access-rights that are often confused as being the mainstay requirement. To date, ITQs are probably the strongest form of rights allocated in fisheries, but they are not applicable in all instances. This paper does not deal with the issue of “which rights are the best”. That debate must necessarily be linked to the particular management requirement, fishery and circumstances at the time.
There are a myriad of options for rights-based management tools ranging from the most simplistic, that being a “limited-entry” regime where boat numbers are restricted. The options move through all manner of input-controls (vessel size, shape, engine power, net sizes etc) to the more commonly discussed output-controls, which operate on the basis of restricting the amount of fish that can be harvested from a particular fishery, or region. Recent environmental literature is moving into the use of “indicator species” to determine the health of the fishery ecosystem, and moving away from the focus on target species as the main management tool - perhaps this will become yet another form of right in the future?
What is important for any rights-based management regime is that the rights must be secure, easily definable, adjustable and preferably tradeable. The rights can stand totally separate from the level of permissable catches - for example they could simply be restrictions on the number and sizes of vessels. Alternatively, they could take the form of proportional shares of the Total Allowable Catch (TACs), as in the case of most ITQ schemes. This allows the TAC to be varied upwards or downwards, without affecting the rights allocated to individuals, so maintaining the security of the rights. In extreme situations, TACs can be set at zero - yet the operator will still hold a share of the rights to that fishery or fish-stock.
Managers should avoid the desire to take away fishing rights for breaches of rules or regulations as this simply undermines the strength of the rights as management tools. Fines, suspensions, prison sentences and many other administrative measures are available to ensure adherence to rules and regulations. And the greater the security of the rights, the greater the imperative for industry to work with managers, scientists and environmental agencies.
3. WHAT ARE THE FISHING INDUSTRY’S RESPONSIBILITIES?
To harvest fisheries resources is no longer a right that everyone can say is theirs, with any conscience. Resources are too limited and recognition of the damage that can be done by unregulated access is increasing. Given this, those of us who operate in fisheries must take responsibility for:
i. sustainable resource harvesting practicesHow these responsibilities are implemented will vary among nations. In some cases, industry will be expected to pay the full costs of these management responsibilities and meet license requirements to an extreme level.
ii. maintaining environmental integrity
iii. research into the fisheries and associated species
iv. effective surveillance and compliance, and
v. sharing the costs of management.
In other cases the governments may pay all, or a portion, of the costs and industry may only have to meet limited requirements towards maintaining overall environmental integrity. The mechanisms to meet these responsibilities is not the focus of this paper, but the fact that they must be implemented is unquestionable.
To apply these responsibilities to high-seas fisheries should not be difficult. They are basic principles of management for any fishery and should be followed by all.
4. WHY WILL THE FISHING INDUSTRY NOT DEAL WITH THESE RESPONSIBILITIES WITHOUT RIGHTS-BASED MANAGEMENT?
While there is an obvious answer for many, there is still some debate over the efficacy of rights-based management in various parts of the world and probably among various groups involved with fisheries.
It would be unusual for the fishing industry as a whole to agree on any single issue, but it would be safe to say that the vast majority of the industry agree with the need for rights-based management. How to define and implement it is a different matter, as is how to allocate those rights, once defined. But the principles are certainly clear.
The passion for, or against, rights-based management on the high-seas flows often from the position you hold within the industry itself. If you are a “follower” waiting for someone to locate resources, then moving in to participate in the over-exploitation of resources, you clearly do not want rights-based management. More specifically, a follower will not support rights-based management until they have managed to catch their share of the resource or create sufficient catch-history to assure their vessel of an allocation in future. A pioneer who believes in defined rights (just as a gold prospector seeks to stakes his claim) will despair at the senselessness of it all when nothing happens.
Operators have no security of tenure without secure access-rights. This means they have no future in the fishery past the point where they and their competitors over-exploit it to the point of commercial non-viability. They can do little other than work on the principle of “making a quick buck” from the fishery, and hopefully, doing it faster, more efficiently and effectively than their competitors. There is an imperative for operators to get into the fishery before others do, and to get as much from that fishery as fast as they can before others destroy it.
There is no incentive for the fishing industry to be responsible in its actions without rights-based management. In fact, there is a positive disincentive to being responsible. Rules and regulations can be implemented to mitigate this partially. Yet, as with all rules and regulations when they are forced upon human beings, they are not embraced or treated with enthusiasm when compared to regulations developed with input and genuine understanding of the benefits to individuals.
Without rights-based management, the fishing industry is forced to take the short-term approach, and will pay limited regard to the environmental and regulatory regimes in place, past meeting the bare minimum requirements. With sensible, structured rights the industry has a positive incentive to improve all aspects of its fishing responsibilities - from the starting point of research and compliance through to sustainable environmental practices.
5. WHY IS THE ISSUE OF RIGHTS-BASED MANAGEMENT ON THE HIGH-SEAS
SO IMPORTANT?
5.1 Origins of the problems
To extend the concept of rights-based management onto the high-seas fisheries was impossible at the time UNCLOS was developed - it was hard enough coming to grips with domestic management arrangements.
Over time, operators have been forced to travel further afield to locate new stocks, new regions and new uses for their over-capitalised fleets. As national fisheries management began to slowly solve the fundamental problems of over-capitalisation and over-exploitation by introducing rights-based management regimes, the excess fleets had to go somewhere. National management agencies paid limited regard to where the excess vessels moved to - as long as they were no longer in their backyard and in fact subsidies were often paid to re-deploy the excess fishing-capacity elsewhere.
As excess capacity was moved out of domestic fishery opportunities, they moved into Developing Nations’ Exclusive Economic Zones, or Fishing Zones, and the high-seas. The problem continued. An increasing number of boats began to explore high-seas regions in the hope of locating new stocks as there was limited scope for alternative uses for the vessels. It became a choice of tying the bigger, better, faster boats up to the wharf for many months of the year, or explore new regions. This increased competition for those fleets that had been fishing the high-seas for many years and who had endured the additional costs and complexities of large scale fishing with only limited competition for some time. The race was on.
5.2 Highly-migratory species
Over the past decade there has been increasing recognition of the problems created with unregulated high-seas fishing activities on highly-migratory species. Southern bluefin tuna are now being caught on the high-seas at higher levels than ever before by vessels from nations outside the management group of Japan, New Zealand and Australia. The rights-based management regime in the Commission for the Conservation of Southern Bluefin Tuna is neither all-encompassing in terms of current participants in the fishery, nor is it enforced against those outside the management regime. Yet it has assisted management of the stocks by those nations included in the regime, but they are constantly faced with the battle of having to deal with “outsiders” undermining their efforts.
Those outside the southern bluefin tuna management regime continue to increase their activities on the high-seas, even though the tuna stocks are recognised as under pressure. They have virtual freedom to do this, as there is no scope to allocate and enforce high-seas rights for a highly-migratory species at present. Implementation of the Fish Stocks Agreement should change this - one can only hope so.
5.3 International management regimes’ failure to deal with rights-based management
In the Sub antarctic, the Commission for the Conservation of Antarctic Marine Living Resources (CCAMLR) is responsible for conservation of fisheries resources as well as other species. Scientifically it is one of the more impressive international groups and deals with environmental interactions, not just the target species. But a management agency it is not. Not only does CCAMLR refuse to deal with the issue of rights-based management (allocations), it still operates in the world of competitive TACs - the very management mechanism that has proven disastrous in numerous cases around the world - probably hundreds. Yet the political problems of allocation have stifled progress on rights-based management.
What is the result of CCAMLR's inability to deal with rights-based management? Icefish stocks, fished to commercial non-viable levels in the late 1980s; grey rock-cod stocks, fished to commercially non-viable levels in the mid 1980s; marbled rock-cod, fished to commercially non-viable levels in the mid 1980s; Patagonian toothfish - currently being fished extensively by illegal and unregulated vessels both inside and outside the CCAMLR regions - to the extent that some NGOs are urging the species be listed as endangered under CITES!
Because there are no rights allocated it is not in any one particular CCAMLR member’s (or group's) interest to enforce the management regime - and there are limited benefits to undertaking the role of policeman alone. In the example of toothfish, responsible industry members from around the World are taking action with environmental groups and some government agencies to curtail at least the illegal and unregulated fishing aspect of the problem. Yet the more fundamental problem of non-rights-based management within the management framework remains.
The competitive TACs under the CCAMLR regime increase the need for industry to get better, bigger and more efficient boats. This increases the costs of fishing and speeds up the race to catch “their share” of the competitive TAC. Once the season closes, these newer, bigger and better fishing vessels must either be tied to a wharf until next year, seek new resources on the high seas, or participate in illegal fishing activities in CCAMLR waters knowing there is a low risk of being caught. Some do a mix of all three. Others remain positive in the face of adversity and challenge the conventional “wisdom” of a management body that supports outdated and internationally derided practices like competitive TAC-fishing to take place.
Whatever the approach, it is clear that rights-based management is essential if the toothfish fishery is to remain viable in many regions. Nations like Australia, France, South Africa and the United Kingdom which have EEZs around islands in CCAMLR waters can continue to protect their portion of the toothfish stocks and do so vigorously. Interestingly, both Australia and France have allocations of quota to limited numbers of vessels - they have recognised the essential need for rights-based management in fisheries.
5.4 Straddling stocks
Orange roughy stocks are not found exclusively on the high-seas but also within EEZs, and straddling stocks are recognised by the Fish Stocks Agreement as being another group that has not been effectively managed over time. Canada probably began the main push for this management as a result of the collapsing (now collapsed) cod stocks and fishing by other nations in waters just outside their EEZ off Newfoundland. Yet the issue is still present, as evident by recent activities on straddling stocks less than 20 miles to the south of the Australian EEZ.
Aggregations of orange roughy had been located by Australian operators, who fished them alone for several months before they were joined by New Zealand vessels wanting to take part. Meantime, the Australian industry had convinced the Commonwealth management agency to limit the permissible Australian licenses to the number of boats operating, or intending to operate. No further entrants were to be considered. This limitation was the first step towards effective rights-based management.
The New Zealand fleet, joining the fishery, created some understandable opposition within Australia, and negotiations over the following 12 months resulted in an agreement between the two countries, and industries, to a TAC, and appropriate shares of the fishery. This was a major step forward for rights-based management and it was recognised that the Fish Stocks Agreement specifically covered such eventualities, albeit not currently in force internationally.
Within one month of both Australian and New Zealand catches of the precautionary TAC and respective allocations being filled this year, 4 foreign vessels “arrived” on the aggregation and began to harvest orange roughy in defiance of the Agreement between Australia and New Zealand. That three of them came from one country with crew or officers aboard who were known to have been fishing the region previously under the legal New Zealand and Australian regimes is regarded as no coincidence in the fishing industry. The fourth boat carried a Flag of Convenience, and has been linked also to groups known to have fished the area previously within the regulations.
For the legitimate industry members in Australia and New Zealand, who were avoiding fishing the region to protect the stocks, and taking responsibility for their actions, to say that there was “considerable anger” is a significant understatement. We sat back and watched while four vessels - claiming rights to participate under the “freedom to fish the high-seas”- plundered the very stock we had agreed to manage responsibly.
Interestingly, and to the point of this paper, those operators with the rights-based management allocations have NOT broken ranks and sought to plunder the stocks in the face of extreme provocation. They have chosen to act responsibly, to deal with the issue through diplomatic and international channels, and to make sure that those identified as linked to these irresponsible practices eventually pay for their actions. With rights allocated to the existing group, it is in their interests to protect the resource, see it properly managed and researched, and ensure it is sustained for the long term.
5.5 High-seas stocks
The discovery of orange roughy concentrations on the now-famous “Louisville Ridge” is another classic example of where the lack of rights-based management on the high-seas is failing to protect resources. The fishery was discovered by two vessels. Within 12 months there were about 20 vessels fishing for orange roughy on the same spot. One year later, there were over 40 fishing vessels catching the species. The fishery was literally commercially non-viable within three years of its discovery. The speed of over-exploitation is often what impedes proper management - and is used as an excuse not to act internationally, as it is recognised as a slow, painful process likely to lead nowhere.
More recently, we have discovered localised aggregations of orange roughy and several other species of fish on the high seas in the Indian Ocean, in an area we have named “Halliville”. There are few secrets in the fishing business, and within a month there were an additional four vessels fishing alongside our vessels. Fortunately the other companies are willing to discuss the concept of rights-based management for the fishery, but it is only a matter of time before others begin to plunder the resources.
We directly approached the Australian government with details of the fishery, the region, and all aspects of our operations. They in turn have approached their foreign-country counterparts to gain support for the implementation of a regional Agreement, using the Fish Stocks Agreement as a possible model for introducing effective management. But the governments appear hampered by the lack of definition of high-seas rights. They are confronted with the problem of possibly regulating the legal industry, but being unable to control the unregulated operators, claiming “freedom of the high-seas” to participate in the plunder of high-seas stocks.
How long before these newly discovered resources are commercially unviable depends on the will of governments to grapple with the problems of having no rights-based management for the high-seas. As a company we are resigned to being more heavily legislated and regulated than those outside the management regime that becomes implemented. We may well have to sit on the boundary having filled our quota and watch others decimate the fishery. No-one should accept this as reasonable practice in this day and age.
On the high-seas, the fishing industry is unable to take firm responsibility for its actions without suffering financial losses. In some cases (i.e. for the ‘followers’) these losses are short-term, as they would only regard the fishery as an opportunity to make a quick buck and then move on. For those with a more responsible approach, it is more likely to be a long-term loss as they abide by regulations and end up watching others plunder the stocks.
Many in the industry are being forced to adopt other priorities instead of responsible management as a result of the inability or unwillingness of governments to deal with conservation of high-seas resources. Industry have to survive amongst the many competitors who will rapidly leap in and take their share regardless of the fishery or environmental implications, and irrespective of the morality or otherwise of their actions. Many of those prepared to fish in an unregulated manner are fighting for their survival, as explained earlier. This problem will not be resolved until governments are prepared to implement conservation-oriented management and introduce effective rights-allocation on the high-seas.
The attitude of governments to the “freedom of the high-seas” is often driven by politics. This must change if we are to see high-seas resources still available in coming years.
6. WHY IS IT SO DIFFICULT TO IMPLEMENT RIGHTS-BASED MANAGEMENT ON THE HIGH-SEAS?
High-seas fisheries resources should be treated no differently than national resources. Governments and industry have a responsibility to protect, sustainably manage, and effectively enforce exploitation of high-seas resources. Over-exploitation of a resource is just that - no matter where the over-exploitation takes place. It is easier to “blame others” for creating the problem when it is on the high-seas, so no single nation, group, or industry member has to take responsibility for the decimation. That means we must all take responsibility for the problem and resolve it together.
Articles 117, 118 and 119 of UNCLOS talk about cooperation of States in the conservation and management of living resources in the areas of the high seas. Notably, the last subparagraph of Article 119 says:
“...3. States concerned shall ensure that conservation measures and their implementation do not discriminate in form or in fact against any fisherman or any State.”Clearly this is open to many interpretations and needs to be clarified. If it means that it is impossible to limit entry to fisheries resources (the most basic approach to conservation and rights-based management) then the UNCLOS Convention cannot be said to deal with conservation and management of fish-stocks on the high-seas. We do not believe this statement precludes sensible conservation and management practices, but this debate is yet to be had.
The difficulty of implementing rights-based management regimes on the high-seas lies in the same as that for any national management regime - allocations. Until the precept of “freedom of the high-seas” is eliminated, allocations are going to be extremely difficult to deal with. There is no painless mechanism to allocate fishing access-rights, it is a matter of identifying the issues and principles, and then implementing them in a fair and equitable manner. Nations must accept their responsibilities and work together to implement rights-based management on the high-seas. Granted this is easier said than done, but the alternative is for fisheries to continue being over-exploited. Using the excuse of it being “too difficult” to implement is no longer acceptable.
7. CONCLUSIONS AND RECOMMENDATIONS
Rights-based management is integral to conservation of resources and the environment and it must be extended to high-seas fisheries as a matter of urgency. To ignore the matter is to support unsustainable fishing practices and unregulated fishing.
It is vital that nations agree on the importance of rights-based management for high-seas fish-stocks - whether they be highly-migratory, straddling stocks or separate resources. More vital again is that they then implement their words - take action. The choice is simple. Nations can claim the issue is too difficult and knowingly allow, if not directly encourage, over-exploitation to occur on high-seas stocks. If International Commissions continue to “manage” stocks on the high-seas in the knowledge that their techniques are not just outdated, they are directly causing over-exploitation and over-capitalisation, then they must take the criticism and the consequences. Or they can work to resolve the problem. Allocation of resources is a difficult process nationally, much less internationally, yet non-allocation of resources results in the worst possible of all outcomes.
Some problems appear insurmountable but be assured they are not. There are many examples where rights-based management regimes have been implemented successfully, and it is well past time for the high-seas fisheries to be conserved for the future, along with domestic fisheries. An example of a remote, distant fishery which is well managed with existing access rights, is the Heard Island and McDonald Islands fishery in the sub-Antarctic, managed by the Australian Fisheries Management Authority. The problems of surveillance, enforcement and allocation of rights are not simple to overcome, but they can be resolved.
8. ACKNOWLEDGEMENTS
Particular acknowledgements must go to the dedicated seagoing and shore-side people from Austral Fisheries and Kailis and France Foods who continue the high risk business of exploratory fishing, and then have to accept the raftload of regulations that are an inevitable consequence of responsible fishing. Thanks also to the Australian authorities for their cooperative approach and recognition of the rightful place industry has in the scheme of responsible fisheries management.
West Coast Seafood Processors Assn.,
P.O. Box 1477, Portland, OR 97207 USA
<seafood@attglobal.net>
1. INTRODUCTION
Before beginning of any discussion of rights-based management as it pertains to United States fisheries some background on US fisheries and some explanation of US laws is necessary. The United States is blessed (or cursed, depending on your perspective) with a large variety of fisheries occurring along all of its coasts, in marine waters within the US Exclusive Economic Zone, on the high-seas in international waters, by licence or treaty arrangement in the waters under the jurisdiction of other nations, and in many inland waters. These include commercial fisheries using just about every type of fishing gear imaginable; recreational fisheries; subsistence fisheries (in Alaska); and fisheries conducted under tribal treaty rights (especially in the Great Lakes, Washington, Oregon, and California).
Accompanying this diversity of fisheries is a maze of regulatory arrangements and agencies, including: the US Department of Commerce; several other Federal agencies that regulate fishing in water areas under their jurisdiction; eight regional fishery management councils; fifty State fish and game agencies and several similar agencies covering fishing in other political jurisdictions; three Marine Fisheries Commissions involving, respectively, the Atlantic States, the Gulf States, and the Pacific States, and which are composed of the fish and game agencies from those constituent States; numerous tribal governments; several Community Development Corporations comprised of villages in Alaska; the occasional city Parks and Recreation Department; international organizations, such as the International Pacific Halibut Commission; and probably a good many other political entities that I have not discovered. Of course, one can add to this list the various agencies - federal, State, and local - that are involved with public health and safety, water quality protection and regulation of weights and measures.
The cost of all this “management” is staggering and would take several years of diligent research to uncover. Suffice to say that for fiscal year 1999, the amount of money appropriated by the US Congress to the Department of Commerce simply for marine fisheries research and management was over $290 million. Just as another example, a recent report by an Oregon newspaper estimated that the total cost to all federal, State, and tribal entities in fiscal year 2000 of dealing with salmon species in the Columbia and Snake River watersheds will approach $1 billion. Why this staggering cost and plethora of bureaucratic entities? It evolves from a combination of law, history and tradition, and social policy.
2. LEGAL PRINCIPLES
2.1 The US situation
Under US law and legal principles no individual owns a fish until they have physically taken possession of it. The fish are owned by the people as a whole. Even in the case of fish found within the US EEZ - but outside of US territorial seas - the United States does not argue a legal claim of ownership; rather, have claimed sovereign rights to conserve and manage those fish including the right to regulate harvest.
Extending this legal principle further, no individual or other entity - with two exceptions - has the right to harvest fish. Harvesting fish is a revocable privilege, whether granted by a general licence, a permit under some form of access limitation programme, or as a quota share, which may or may not be transferrable. Thus, a fisherman exercises his skill under a grant of privilege from some governmental entity and does not even own his fish until he gets it into his boat.
The two exceptions to which I refer involve tribal treaty rights and - to a limited extent - subsistence fisheries in Alaska. Under the former, the United States courts have interpreted various treaties to require a grant of a certain percentage of some fisheries to specific Native American tribes. The exact amount of fish that can be taken can vary from year to year depending on the size of the fish stocks. Under the second exception, the United States Congress has specified that use of some fisheries in Alaska for personal consumption, trade, or barter will have a priority over other uses and that such subsistence use will be the last to be constrained if reductions in harvest are necessary for conservation reasons.
2.2 The law
Under the US Constitution, powers not specifically delegated to the federal government or denied to the States are reserved to the States. While this concept works well for such things as declarations of war, it becomes confusing when dealing with fish species that migrate over large areas and the fishermen who chase them. Regulation of wild stocks of fish (and wild stocks of fishermen) has been a continuing sore point in the relationship between government entities and continues to be so to this day. Compound this with separate federal laws that govern protection of endangered species (including some species of fish) and marine mammals, treaties between the United States government and Native American tribes, and treaties between the United States government and other national governments and you begin to get some idea of why there are so many players in the management game.
I should also point out that the concept of reservation of powers embodied in the US Constitution is also found in the constitutions of the individual States, thus leading to such things as the separate State of New York and City of New York fishing licences that I had to obtain as a young man.
2.3 History and tradition
Historically, fishing occurred only within internal waters of the United States or along the coast. Thus, most regulation - and conservation, to the extent it was practiced - fell under the jurisdiction of the State agencies. In areas which were federal territory, the Bureau of Commercial Fisheries - an arm of the US Department of the Interior - regulated fishing.
As both our country and its fisheries expanded more power was placed in federal hands in the case of marine fisheries. However, since recreational fisheries had traditionally been the province of State governments, many recreational fisheries were left under State authority even though they occurred in marine waters. The same was true for certain commercial fisheries where the federal government chose not to exercise control for reasons of cost or political expedience.
Even on the federal level, political in-fighting - rather than logic or efficiency - drove the organization of fisheries management. When the President and the Congress created the National Marine Fisheries Service in 1970, which incorporated most of the former Bureau of Commercial Fisheries, they placed it in the Department of Commerce. However, fisheries management in inland waters - to the extent not exercised by individual States - was left in the Department of the Interior’s US Fish and Wildlife Service. When - two years later - the Congress passed the Endangered Species Act and the Marine Mammal Protection Act, jurisdiction was again split between the two departments. Thus, a Kemps-Ridley turtle, while in the water, is under the jurisdiction of the Department of Commerce. As soon as she crawls ashore to lay her eggs, she falls under the jurisdiction of the Department of the Interior. I will not even attempt to describe the maze of jurisdictions through which an anadromous fish has to swim.
2.4 Social policy
It has long been the social policy of the United States to maximize employment and provide every person with an opportunity to pursue the livelihood of his or her choice. Commercial fishing especially, with its individualistic and independent nature, its small economic cost of entry, and its pursuit of a resource that is owned by the people, has been seen as a career that should be open to all.
The price paid for this is the enormous cost of licensing, data collection and regulation of a large number of individuals and commercial operations. However, removing individuals from the fishery has its own set of social and economic costs and - given the near invulnerable nature of bureaucracies - there is some question whether simply removing fishermen will result in a lowered cost of fisheries management.
3. RIGHTS-BASED MANAGEMENT IN THE USA
3.1 Some examples
Now that I have imparted a complete understanding of US law and policy in the course of 3½ pages, I will turn to some examples of rights-based, or quasi-rights-based, fisheries in the US. Since most of my personal experience is confined to the Pacific Coast and Alaska with the most recent being the former, I will confine my examples to those areas. Please note, however, that other regional examples exist in the US. Near certain towns in New England, local control and rights have been exercised over shellfish beds since the 18th century. In the mid-Atlantic States, an individual quota programme exists in the surf clam fishery, as does one in the wreckfish fishery in the South Atlantic - a fishery about which I profess complete ignorance.
In some respects, nearly all fisheries management in the United States is quasi-rights-based. After all, we are a government of, by, and for the people - and the people own the resource. Most States require by law that the public be allowed to participate in setting fisheries management policy. At the federal level, the eight regional fishery management councils, which recommend regulations for most marine fisheries, are composed of both public and governmental members and the requirements for public notice and comment are enshrined in law. Even though the final arbiter of regulations is a federal official, most recommendations of the councils are agreed to as long as they meet the standards set by law. The councils are even required to maintain advisory committees so that the views of the fishing industry, recreational fishermen and the public can be heard.
3.2 Tribal fisheries
There are few “pure” examples in the United States - on where harvesting rights are conferred in exchange for monetary compensation, conservation and management responsibility, or both - under a more traditional definition of rights-based management. Again though, keep in mind our legal principles regarding both ownership and “rights” vs. “privileges”. The closest thing to a true rights-based system is the tribal fisheries exercised under treaty rights in the Pacific. Here is a case where a right has been established under law, constrained only by the judicial limits imposed on that right and by the need to exercise conservation.
Four tribes in Washington State - the Hoh, Quileute, Quinalt, and Makah - were granted the right to take fish in common with citizens of the United States in usual and accustomed areas. Although there are several legal issues still unresolved - including some in which my Association is involved as a plaintiff - the general theory is that the tribal fisheries are entitled to up to 50% of that portion of those fish stocks that they traditionally harvested in certain discrete areas.
From a practical standpoint, once the allowable catch for certain species has been established, the tribal “share” is taken off the top before the rest of the allowable catch is allocated among other users. The tribes generally negotiate among themselves and with the federal government (which has a Constitutional responsibility to act as trustee for the tribes) to determine which tribe gets how much of the tribal share. Once the amount is divided up and each tribe knows how much it is getting, they are free to allocate it among tribal members, allow it to be caught as they wish, etc. In most cases the tribes require their tribal fishermen to register with the tribal fisheries department before fishing. In this way, all interested tribal members can be assured of some opportunity to participate in the fisheries. Most tribes employ their own fisheries biologists who not only monitor the tribal fisheries but also participate in fisheries research and in management discussions with their contemporaries in State and federal fisheries agencies.
3.3 Community development quotas
A different example is found in Alaska with the Community Development Corporations. Two of the major fisheries in Alaska - crab and groundfish - occur just offshore of small coastal villages. Other than seasonal salmon harvests, many of these villages have no economic base. Unemployment and various social ills are high, and communication and transportation can be haphazard at best. As a result, the fisheries were developed by fishermen from other areas of Alaska and the western United States. Fish are landed in a small number of ports and there is - or was - virtually no economic return to the nearby residents.
In the late 1980's, an interesting twist in social and economic policy was developed by several representatives of the villages. They argued that if the villages were given a dedicated share of the harvest of the adjacent marine resources and required to put those resources to good use for the villages, then such things as welfare payments and unemployment benefits could be reduced. They also argued that the villages had been pre-empted from developing their own fisheries for these resources due to the presence of other fishermen from areas with more economic power. The result was a mandate by the US Congress in 1996 that a guaranteed share of the total allowable catch of certain fisheries be set aside for the Community Development Corporations. These shares - known as Community Development Quotas, or CDQs - can be used or leased. To date, most of the CDQs have been leased to larger fishing or processing companies. The economic gain has been useful to the villages; whether it has achieved the suggested results of reduction in social payments is still, to my knowledge, undetermined.
3.4 Halibut and sablefish
The other, more traditional, rights-based system involves the fishery for sablefish (black cod) species and halibut species in Alaska. The fishery is prosecuted using bottom longline gear (pot and trawl fishing are prohibited in the Alaskan halibut and sablefish fisheries). Halibut is marketed as both fresh and frozen product in the United States and overseas; sablefish is marketed almost exclusively as frozen product in the Asian market.
In these fisheries, eligible fishermen are granted a percentage share of the annual quota based on their level of participation during a “window” period of several years. These individual fishing quotas, or IFQs, can be bought, sold, or leased. A certain minimum quota was established to recognize smaller participants. Fish can be harvested at any time during the season, which runs for most of the year. Landing of halibut is restricted to certain specified ports. Restrictions exist on ownership by non-US citizens and by corporations and on the total percentage any individual can own.
Establishing the system was highly controversial and often pitted large-vessel owners against small-vessel owners, harvesters against processors, residents of one part of the United States against residents of other parts and vessel owners against vessel crew members. Success has been difficult to judge, in part, because there are so many different ways to judge success and failure. For the most part, those who have received IFQs consider it successful.
3.5 Other examples
Access limitation programmes are in effect in many fisheries in Alaska and on the Pacific coast of the United States, including those few salmon, Dungeness crab, and Pacific groundfish. Unfortunately, many of these programmes were established piecemeal leading to a large number of qualifying participants; some have large loopholes (Pacific groundfish in particular); and some are not completely under limited access arrangements, e.g. Pacific shrimp, which is limited in Oregon and Washington but not in California. In addition, because each programme was established separately by a State or federal management entity the inevitable spillover occurred with vessels not qualifying for one fishery scurrying into another thereby increasing capacity in that fishery.
One interesting recent example of a rights-based fishery was established by a segment of the fishing industry themselves. The Pacific whiting fishery, a trawl fishery prosecuted off Oregon, Washington and California is allocated among three sectors: vessels which deliver their catch on shore (the onshore sector); vessels which deliver their catch at sea to motherships (the mothership sector); and catcher-processor vessels (the factory trawler sector). The allowable catch, after deducting for a tribal fishery, is allocated as a set percentage to each sector. Season starting times are determined by regulation and the season ends for each sector when its percentage of the TAC is caught. All harvesting vessels - including factory trawlers - must hold Pacific groundfish limited-entry permits.
In 1998, the four companies that owned the ten factory trawlers with permits to participate in the fishery entered into a cooperative-harvesting arrangement where - by each company would agree to harvest only that portion of the whiting harvest percentage allocated to the factory trawler sector which that company’s vessels had on average harvested over the previous few years. These portions were included in the contract. The result was that each company could reduce the number of vessels used in the fishery, bycatch was somewhat reduced and less waste occurred during processing. Since this arrangement was accomplished by private contract, once it was blessed by the US Department of Justice (the Department was asked to review it to ensure that no anti-trust violations were occurring) it could be put into effect by the participating companies. Unless one of the participants decides to withdraw, this arrangement is likely to continue.
A similar cooperative arrangement, specified by a convoluted piece of legislation known as the American Fisheries Act, is also being established in the Bering Sea pollock fishery. Legislation was required to establish this arrangement for reasons too complicated to explain here and so it has all the impracticalities and unanticipated external effects of any system created by committee. We will have to wait and see how successful this version will be.
4. RIGHTS-BASED MANAGEMENT
4.1 Some points of view
The biggest problem in creating - or in judging the success of - a rights-based system is that every such system has winners and losers. If you are a winner, then it’s the greatest thing since the invention of bottled beer. If you are a loser, then it is a product of Satanic influences and causes pregnancy in unmarried teenage girls. Consider also that rights-based systems are viewed by the participants - correctly so, in my opinion - as economic systems. Although there may be ancillary biological or ecological benefits to establishment of a rights-based system, the underlying purpose is to make money for somebody. Given that background, I will try to at least characterize some of the views on rights-based management that are commonly heard in the western United States.
4.2 The fishermen
An old adage in the United States says that “where you stand depends on where you sit.” This is certainly true in any discussion of rights-based management. Leaving aside the winners and losers in the Alaskan halibut/sablefish fisheries, most fishermen base their views on what they have seen elsewhere and on whether they perceive that they will be winners or losers. Owners of smaller fishing operations, in particular, tend to oppose any sort of quota system because they fear that they will be left out or forced out economically. Larger vessel owners, who often are operating at far less than peak economic efficiency tend to like quota systems because they can make a bigger (or perhaps even some) profit.
An interesting example can be found in the Pacific groundfish fishery, which - for the most part - is operating under a limited-access permit system. Fish are harvested by both fixed gear (pots and longlines) and by trawl gear. Other than in the fishery for sablefish, there is no allocation of harvest among gear types; in practice, most of the fish is landed by trawl gear.
Recently, both gear-sectors have begun separate discussions on an individual quota system. Fixed-gear participants want quotas to be assigned differently to fixed-gear and trawl-gear and to require vessels to use only the gear for which they qualify. Trawl vessels, while willing to have different requirements for initial allocation of quota shares but want a share-holder to be able to harvest fish using any gear he wishes. Even in agreement there are differences!
Another brief anecdote illustrates the complexity of establishing a rights-based system. During the initial discussions on creating a quota-share system for trawl-gear, discussion leaders insisted on first talking about what the system would look like after shares were initially allocated. The meeting went well and a rather creative set of options was developed. Then, the topic of who would qualify for initial shares was raised. The formerly cooperative, productive meeting turned into a shouting match with every vessel owner arguing for a distribution arrangement that would most benefit his operation. The meeting was adjourned without agreement on this issue.
4.3 The processors
I will do my best to be unbiased here, though admittedly it will be difficult. In the Pacific fisheries the majority of catch landed is processed by a group of “traditional” processors, many of whom have been in business for several generations. Plants, some larger than others, are established in several ports. Fish are generally marketed as fresh fillets although some are exported in frozen form. Crab are sold cooked unfrozen, as fresh or frozen meat and in frozen sections.
In recent years, the number of large “traditional” processors has decreased along with reductions in harvest levels. At the same time, many small processors have moved in and out of the business, comprising anything from a fisherman selling his catch off his boat to small custom-processing operations. There is also a growing sector that generally sells live fish to ethnic markets in major west coast cities. Thus, the profitability of traditional processors with fixed establishments and large capital investment has decreased.
The general attitude of processors is that a rights-based system can be acceptable if the economic needs of processors are recognized equitably with the economic needs of fishermen. Processors have invested capital in the fishery along with fishermen to provide a market for those fishermen. They have weathered the same economic storms and thus they argue, if rights (and resulting economic benefits) are granted to fishermen then some sort of similar rights and advantages should be granted to processors.
One particular problem for processors is the effect of a reduction in fleet-size - by whatever means - on product flow. Plants are built to handle a certain volume of fish and employ workers to handle that fish. If the fleet-size decreases, then even though the total volume of fish landed may remain the same, the volume landed at any particular processing plant may vary greatly. Thus, they are concerned that some mechanism be found to enable them to operate with the reductions that inevitably occur with a quota-share system.
Of course, not all fishermen agree with this approach. At a recent meeting, a fisherman waxed eloquent about a proposal he was making to reduce competition among vessels by restricting participation from a certain class of vessel. When my turn came, I suggested a similar proposal for restricting new processor construction from capital sources outside our area pointing out that the same over-capacity arguments applied to both the plants and the boats. The fisherman became incensed and began proclaiming loudly that he believed in competition, not monopoly. Evidently, based on his prior proposal, that belief ended at the water line.
4.4 The environmentalists
Environmental groups are relatively new players in the fisheries management field, but their size, fund-raising capability, public relations machines and political connections make them viable players in the game. And, to be fair, they have a right to participate: they are members of the public and we are dealing with public resources. Nevertheless, to many in the seafood industry, they are outsiders.
Environmentalists in the United States are divided on whether or not to support rights-based management, with the division following no particular line that I can discern. Some see rights-based management as a way to extract economic rent; others as a way to control harvest. On the other hand, some see it as a way to perpetuate certain fishing practices they oppose. Suffice it to say that environmentalist's views are mixed.
4.5 Fisheries managers
The tendency of fisheries managers in the United States is to support some sort of rights-based management, usually on the grounds that a reduction in vessels is needed to achieve conservation and management goals: i.e. there are too many vessels chasing too few fish. Managers also tend to make the same economic arguments about the fishery being more profitable and efficient. Unfortunately, in making those arguments they usually gloss over the fact that there are winners and losers, a fact that does not escape the attention of the potential losers. This usually does not enhance any cooperative relationships between managers and fishermen.
4.6 The Congress
In 1996, the US Congress passed a wide-ranging suite of amendments to the Magnuson-Stevens Fishery Conservation and Management Act, our central federal fisheries law. A large part of the debate between the two houses of Congress involved how to handle individual quota programmes. The House of Representatives advocated a series of standards and restrictions designed - in their view - to protect the public interest and ensure fair play when quota-share programmes were being debated and established. The Senate advocated a complete moratorium on quota-share programmes along with a study. In the end, the Senate view prevailed. We now have a federal ban on any individual quota management programmes, a ban which has been extended by regulatory definition to include several things that one would not normally think of as an individual quota. Although the ban expires on 1 October 2000 there is a good chance that it will be extended for at least one year.
Why did the Congress enacted such a sweeping measure? Much has to do with internal politics within the fishing industry; some has to do with the aforementioned division within the environmental community. I will not attempt to explain the Byzantine intricacies of either, or how they affected public policy in this instance. However, given Sir Isaac Newton’s Laws of Motion, it will take a considerable outside force to change the status quo.
4.7 The consuming public
If you ask the average restaurant customer what they think of rights-based fisheries management, they will probably call the “maitre-de” and ask him to eject you. So, be polite and ask another series of questions about what kind of fish the customer is eating and whether it would matter if fish of a different species, but similar quality, color and texture, were substituted. In most cases, it would make no difference whatsoever.
Sadly, at least in the United States, although I suspect that the same holds true for urban areas in other countries, most consumers do not know what they are eating, where it comes from, whether it is wild-caught or farm-raised, what kind of vessel and gear is used to catch it and certainly not how it is managed. They do, mostly, care about quality (although not as much as they should) and they certainly care about price. Will rights-based management make a difference to them? With certain exceptions dependent on a good marketing programme it will only attract their attention if the price goes up. So much for public management of a publicly-owned resource.
5. WHERE DO WE GO FROM HERE?
Before I suggest some ideas for the future, I must make a confession. In my earlier discussion on social policy in the United States, I mentioned that commercial fishing was sometimes thought of as the last chance for a rugged individual to make a living with a small capital investment, and that rights-based management schemes would destroy that opportunity. In my heart, I still have this illogical and romantic illusion, so any discussion of quota-shares or other rights-based schemes causes an almost automatic twinge of disapproval. But I can look at reality too and the reality I see - at least for the United States fisheries - is that a big change is needed.
We are not all going to be winners. We need to accept the fact that we are facing amputation of limbs in order to survive. The only question is whether we develop a dignified and painless as possible way for some to leave the fishery or whether we go through the upheavals and disruption of economic chaos and revolution. I prefer the former.
So what will the brave new world look like? Here is my “Top 10” list of suggestions of what it could look like based on what I see now and on the experiences of other fisheries around the world:
i. Management based on recognition that fish have value as food and not just as creatures swimming in the ocean.What kind of rights-based management system will get us there? If I knew the answer to that one, I would be rich and retired. However, with everything changing around us, I think now is the time to get together and develop that magic system.ii. Fewer harvesting and processing participants.
iii. Harvesting and processing participants operating in some sort of cooperative fashion, even if financially independent.
iv. Catch-accounting, data-collection, and other scientific and management information electronically linked so real-time data can be obtained.
v. Fisheries participants playing a major, meaningful role in both scientific research and management decisions.
vi. Management measures (and thus need for enforcement) kept to a minimum.
vii. Recognition that a “whole ecosystem” approach means we manage species that are currently sacrosanct.
viii. Clear lines of management-agency jurisdiction.
ix. Clear and final allocation of harvest-rights among different participants.
x. Everybody making money.
6. ACKNOWLEDGEMENT
The author is the Executive Director of the West Coast Seafood Processors Association, a non-profit trade association representing seafood processors in the States of Washington, Oregon and California. The views presented here are those of the author. This is not a scientific paper but a descriptive one; thus any mis-statements of fact are solely the fault of the author. The author is indebted to the hundreds of people whom he has known and with whom he has worked over the past 25 years and is grateful for the knowledge imparted in every classroom, meeting and late-night bar-room discussion. In particular, this paper is dedicated to the late David Harville and Oscar Dyson, two fine fishermen and good friends who are now fishing somewhere over the rainbow.
Talleys Fisheries, PO Box 5, Port Motueka, New
Zealand
<caroline.talley@talleys.co.nz>
1. INTRODUCTION
In line with my directive as a conference speaker I intend to focus my address on an “Industry Perspective” from my personal point of view and from our company's experience of the Quota Management System (QMS). I shall attempt to relate the thinking of the New Zealand (NZ) Industry that prevailed at the time when the QMS concept was first introduced to us by Lee Anderson and Phil Major and to recall the changes that have occurred to both the QMS and our industry since 1986.
I, like many of my counterparts, was initially extremely suspicious of the concept of individual quotas. As a fish-processor I was concerned that the introduction of quotas would severely restrict our ability to purchase raw material for our fish-processing plants. The model used for introduction of quotas made no provision for the investment in onshore processing facilities. There were concerns that quotas would be tightly held by fishermen and the opportunity to acquire quotas would be very restricted. I, like many others in the industry, never envisaged that fishermen would sell their quota-rights in the way they did immediately after the QMS was introduced and catch-history rights became tradeable. This massive 'sell-down' of quota caught many operators by surprise and contributed to a major and rapid restructuring of the NZ industry.
My other major concern at the time was the introduction of Resource Rentals even though the initial level was set at $NZ3/tonne to entice our acceptance of the concept. Our worst fears were soon to be realised when after the first three-year period Treasury officials spotted the opportunity to use the QMS as a revenue gathering mechanism rather than a resource management tool for which it was designed.
The opportunity to collect revenue from the industry attracted all kinds of economic geniuses, some of whom believed that resource-rents should be such that controlled quota values were near zero level to facilitate trading in quota. They were concerned at the high value at which quotas were being traded in perpetuity. They believed high resource-rentals would lower the incentive to own quota and thereby lower quota values. It took approximately three years of pain and zero growth in our industry for these economists and their theories to be sidelined.
The fishing industry is labour intensive, capital intensive, energy intensive and catch rates are known to fluctuate wildly from season to season. For these reasons it is essential that the industry utilises retained earnings for expansion rather than a high percentage of borrowed capital.
Fishing vessels are unable to carry high debt-loads and if earnings are siphoned off by resource-rentals, expansion will simply not occur. It is understandable to tax mature-industries such as the beverage, gambling and tobacco industries but it is wrong to deprive immature-industries, such as fishing, of the capital flows essential for their development.
As an example of the vagrancies of the business of fishing there were 49 fisheries companies in NZ in 1963 - the year I started in the business. Today only 4 of that original “year-class” remain in the seafood industry.
2. DEVELOPMENT OF THE NEW ZEALAND QUOTA MANAGEMENT SYSTEM
Our Quota Management System was built out of a crisis - both of fisheries and the economic state of the country as a whole.
This QMS has provided a means of managing over-exploitation and has facilitated industry shifting its efforts from increasing harvesting power to seeking greater efficiency, quality and sustainability.
The need to race for fish is no longer present. There is a high level of world-wide interest and support for the QMS and a reasonable and increasing understanding in the community of its contribution to conservation.
The fishing industry, along with other primary industries in New Zealand, developed in the 1960’s and 70’s in a climate of central government support, subsidy and investment. A statutory board was established to promote the development of the fishing industry in 1963. Fisheries licensing systems were deregulated and access protected by the establishment of exclusive economic zones (EEZs).
Direct subsidies to the industry focussed on building, catching and processing capacity. Subsidisation ranged from that of government-guaranteed mortgages for purchase of new fishing vessels to subsidised vessel ownership, savings schemes and the direct allocation of funds for development. Just as subsidies for pastoral farming were leading to over-capitalisation on farms and development of sub-marginal land so too did they stimulate over-investment in fishing our inshore stocks. Inshore finfish and shellfish stocks were becoming depleted in the late 1970s and government moved to re-regulate fisheries.
By 1982 the state of the stocks and the decline in catch-per-unit-effort (CPUE) was such that in New Zealand it was clear that something had to be done. And that it had to be something more radical than a continuation of input-controls or limited-entry, both of which are run in accordance with government edict rather than from an industry perspective. The fishery needed to be re-structured.
The state of our inshore stocks reached crisis level in the early 1980s. At the same time our deep water fisheries boomed. This boom was stimulated by the declaration of the 200 mile EEZ.
3. OWNERSHIP OF RIGHTS
It is important to understand that there can be no value or property-rights established on a fishery resource until a fishery has been “developed”. Fishery resources by themselves do not constitute a realisable value, as a fishery is not just having the resource in the ocean. A fishery is only formed when there is a direct inter-action between that resource the fishermen and their vessels. Without this inter-action between men and resource there can be no fishery. So by their very presence the fishermen have created a fishery and in doing so have in effect created a property-right and should receive free access to these rights based on their previous history in the fishery.
Property values exist in the form of limited access rights to a fishery. These rights can be enhanced by:
i. public support and public understanding of the benefits that can be derived by hosting a viable fishing industrySuch enhancements can only take place within the confines of a Quota Management Scheme and only with the co-operation of the fishermen involved.ii. sustainable harvesting regimes
iii. proven reliability of stock assessment methods
iv. delivery of efficient fisheries-management services
v. enhancement of the wild fish-stocks through the co-operative actions of access-rights holders
vi. the adoption of integrated management plans to ensure that all users of the marine environment are catered for.
There is a grave misconception about the QMS as to who actually owns the resource. The ownership of quotas does not constitute ownership of the resource. The Crown retains the ownership of the parent stock and all an Individual Transferable Quota (ITQ) allows is the right to harvest the annual surplus produced from that parent stock. An ITQ is in theory a harvest-right.
The Deep-water Trawl Policy in 1983 provided for the introduction of Deepwater Enterprise Allocations. These were a prototype for the Quota Management System. Quota was allocated politically and pragmatically to the nine New Zealand fishing companies that had a demonstrable investment in deepwater fishing and processing.
The year 1983 also saw the enactment of new fisheries legislation. The 1983 Act provided for the establishment of government-administered fisheries management plans and also provided a politically expedient, although morally reprehensible, mechanism to remove some fishing effort. By administrative-means about half of our fishermen were declared “part-timers” and excluded from the industry. Part-timers where classified as all those fishers who had “declared gross income” from fish of less than $10 000 per annum. It also inadvertently effected Mâori subsistence fishers, and ultimately opened the debate on traditional Mâori fishing rights. Convoluted planning legislation however did not address the immediate need to reduce effort and address over-capitalisation problems in our inshore stocks.
In August 1984 the Government agreed to help fund a scheme to reduce capital and effort along with the introduction of ITQs into our inshore fisheries. Quota tenure for deepwater stocks was extended in perpetuity at the same time.
Initial quota was allocated on catch histories which were priorated downwards to be allocated as a proportion of Total Allowable Catch limits (TACs). On average, 40% of catch histories were removed in some stocks through the need to reduce TACs. Fishermen were given the option of surrendering (i.e. selling) their quota to Government under a tender-scheme or retaining their reduced quotas in the knowledge that fish stocks would eventually recover.
In establishing the buy-back scheme the Government placed individual values on the various fish stocks and entered the market to buy quota-rights from those wishing to exist the industry rather than face the prospects of attempting to carve out a living based on a restricted-access management regime. Many fishermen accepted the pay-out as it offered them the opportunity to leave the industry with dignity.
Those who choose to remain and take their chances with the new management regime were rewarded in three ways:
i. The Government buy-back scheme reduced the extent of the Total Allowable Commercial Catch (TACC) reductions quite considerably.Few understood the complexities of this system. Arguments about the fairness of initial quota-allocations have pervaded our QMS to this day. It is important to understand that the QMS was introduced to protect fish stocks, not to protect fishermen's way of life. There can be no doubt that the introduction of the QMS has achieved its principal objective.ii. The Government buy-back price had the effect of posting a “bench price” on quotas and offered remaining participants the comfort of knowing that they could always “sell out” in the future.
iii. Those fishermen who had decided to remain in the industry were guaranteed preferential access to future increases in TACCs to a level that would restore the compulsory cuts imposed by the Crown.
The concept of the Crown operated by-back scheme was a pivotal instrument in persuading fishermen to accept the introduction of the QMS. Government had to promote the model and get it right. Banks would not finance the industry for the industry-changes that were needed. It was essential that Government became involved with the buy-back. Without the safety net of a Government-funded buy-back scheme to reduce effort, the introduction of the QMS would not have received the necessary level of support from fishermen.
4. DESIGN OF THE QUOTA MANAGEMENT SYSTEM
When designing a rights-based fisheries management system for the commercial sector it is natural that other interest groups such as indigenous fishers and recreational fishermen would demand that their rights be specified and provided for in shared fisheries. Work is currently being undertaken in New Zealand to address this vexed question. While indigenous rights have been satisfied the debate is now developing as to the rights of recreational fishers. It is accepted by both the recreational and commercial sector that improved-management of recreational fisheries is paramount and that recreational fishers do have a role to play, especially in the management of those fisheries that are shared with the commercial sector.
If a fixed-quota allocation is awarded to the recreational sector, the issue of how to measure the output from the fishery and the cost of administration will pose a difficult task. But, it would be pointless allocating a specific tonnage to the recreational fishing sector if there were no means to accurately record the total catch from this sector. It is for this reason that I believe a special tonnage allocation to the recreational sector will not work.
5. MÂORI ISSUES
Mâori used to put stakes in the ground to define the extent of their tribal fishing rights. Case law had determined that our fisheries law did not apply to Mâori commercial fishermen. Mâori viewed the introduction of ITQs as an alienation of their rights and in 1987 were successful in obtaining an injunction stopping the introduction of further species into the QMS.
In my opinion this legal action subsequently became a saviour of New Zealand’s ITQ system. An interim settlement was made with Mâori in 1989 which involved a cash settlement and the allocation of 10% of all quota to Mâori-dom. A final settlement was reached in 1992 which included the purchase and allocation of 50% of New Zealand’s largest fishing company along with allocation of 20% of any new species brought into the QMS.
ITQ rights became not simply a fisheries management tool but also part of the Crown’s settlement with our indigenous people. It gave the industry additional strength in arguing against our fishing-rights being eroded in nature and extent.
Prior to the 1989 Mâori Fisheries Act there were many interest groups strongly opposed to the principal of private ownership of our fisheries. Their opposition to the QMS was intense and in some cases professionally executed. It was not inconceivable that future governments could undermine the property rights. Once the Crown had used quotas as a currency to settle indigenous grievances they had unwittingly locked the QMS into place. If they, or future governments, attempted to tamper with quota-rights they could be accused of attempting to once again settle indigenous claims with a basket of empty promises or a bag of “trinklets”.
6. MANAGEMENT COSTS
The final settlement with Mâori claims led to a debate on the appropriateness of retaining resource-rental on quota. Mâori successfully argued that they should not pay the Crown annual rental payments for an asset that was rightfully theirs. With the support of Mâoridom our industry entered into discussions with government to remove resource-rentals and replace them with a regime that recovered the costs of management. It was clear to us this would involve getting the delivery of services and the conflicts of interest out of government's hands.
Government agreed that cost-recovery would include institutional reform of the fisheries management agency. Government then immediately moved to restructure the fisheries Ministry and put the research arm into a separate, and profit-motivated, Crown research agency. The new Ministry of Fisheries was left with the roles of purchasing the research, providing the policy advice to Government, running the quota information-systems and enforcing fisheries rules. It was also given the job of recovering its costs incurred in performing these functions from industry via a cost-recovery regime.
Whilst we were to be “consulted” as a means of holding government legally accountable for the “Nature and Extent” of the costs, we had no say in the efficiency of their expenditure. Costs are recovered against government outputs agreed between the Minister and the Ministry. Costs are levied against all QMS transactions and quota. Quota-based costs are levied using an arbitrary tonnage times port price allocation formula. This has caused considerable tension given the difficulties of identifying port price figures for particular fish species in a vertically integrated industry. The economic naivety of this approach is obvious.
With the development of the “user pays” philosophy, fishermen are being bombarded with a rising number of fees that are collected and protected with statutory powers.
The industry is struggling under the costs associated with:
|
access fees |
survey fees |
|
oil pollution fees |
pilot fees |
|
lighthouse levies |
primary industry inspection fees |
|
weather forecasting duties |
scientific observer fees |
|
harbour levies |
quota management fees |
7. QUOTA MANAGEMENT
Our industry remains plagued by decisions of the past and we are still locked into debate over the proper process for allocation of new species within the QMS. But it is fair to say that our relationship with the Ministry of Fisheries on issues is changing. Our initiatives are being acknowledged and acted upon. In August this year, the responsibility for managing the registries for the Quota Management System were transferred to a subsidiary of the Seafood Industry Council. Inequities of the cost-recovery regime are being recognised and some removed.
Unfortunately that is only part of the story and we are now being faced with the task of ensuring our rights and responsibilities are integrated with the wider management of the marine environment.
New Zealand was quick to adopt “sustainable management” as the principle for the management of our natural and physical resources. Reform of our environmental legislation culminated in the establishment of the Resource Management Act in 1991 where “sustainability” is firmly entrenched. Under a banner of “sustainable management”, this legislation delegates the power to manage our land and the coastal environment to regional and local government. Importantly that power includes the functions of allocating rights to occupy the coastal zone to marine farming activities. The control of harvesting and enhancement of fish species, however, remains with the Ministry of Fisheries but only for defined purposes.
As the natural resources become more valuable, more people will become politically active and their attention will be directed at the actions of industry. Government and their advisors are interpreting the rules to mean “compensation shall not be payable” when large areas of fertile coastline is effectively taken for the public good. Struggling fishermen are expected to surrender major property-rights to achieve biodiversity, marine parks, and anything else that is flavour of the month. The conservation movement is being used or abused to justify theft of property-rights on a scale that would have shamed the ancient barons.
The Act, whilst solid in principle has not resolved the conflicting demands now being placed on our inshore coastal zones and presents major challenges to the security of our property-rights. The provisions of the Resource Management Act have created tension between marine farmers and the rights of holders of finfish ITQ. The presence of marine farms can exclude traditional fishing methods. It has facilitated a conservation movement hell-bent on undermining the established property rights given by our Quota Management System.
These property-rights central to the ITQ system are being gradually eroded by 'environmental creep'. Issues of biodiversity, marine reserves and other 'ideals' are being fertilised by the loosely worded provisions of the Resource Management Act. These marine property-rights do not enjoy the same recognition and security of land-based rights which have been constrained by a host of rules and regulations, but have been developed and fined-tuned over a long period.
Common law restraints on property-rights which have been developed over centuries recognise that use of one's land can degrade your neighbour's enjoyment of theirs. And it works both ways - hence with land issues we have well-developed laws against nuisance and damage. These laws restrain our neighbours' rights but our rights are similarly restrained and protected. We all benefit from these mutual restraints and benefits. But when struggling fishermen are told that large areas of productive fishing grounds are to be fenced off, they can rightfully ask - “but what will the nation do for us”. The answer they get is nothing. The rest of society want your fishing grounds for the public good. “This is otherwise known as ‘theft of a property-right’.” In response fishermen will have to be very professional in administering their businesses to protect their rights because those opposed to commercial fishing will be relentless in their pursuing it.
It is alien for fishermen to discuss the business of fishing in these new forums, consequently many of our traditional fishermen and fishing families are leaving the industry, fed up with the complexity of the operation of a hunting-style business in today’s environment.
Most of the fishermen I know are tired of the complexities in operating a fishing vessel. They complain about their landing logs, catch effort logs, rental invoices for fish they haven’t caught, TACs, CAYs, MSYs, MCYs, MAYs and the mountain of paper work associated with ACC, GST, IRD and of course their QMRs.
The business of fishing has unfortunately become very complicated. The editor of the NZ Seafood Magazine invented a new term in fisheries management, M.S.F.L, which stands for “Maximum Sustainable Frustration Level”. Fishery managers for their purposes are attempting to introduce a degree of complexity into the system that is neither practical or acceptable, and in many cases, impossible to comply with, let alone administer. This complexity is not necessary if fishermen are given responsibility for managing their own system. Fishermen understand that to manage a fishery effectively a sound information-base is required but it is the duty of those responsible to ensure that the systems are kept simple. Any management system must maintain the goodwill of fishermen to be totally effective.
8. FUTURE DEVELOPMENTS
With the Quota Management System successfully up-and-running fishermen are now examining ways of enhancing the wild fish-stock to further improve their earnings. This development is particularly exciting as all over the world aquaculture development has resulted from the demise of the traditional fishermen. With wild fish-stock enhancement schemes the role of the fishermen, vessel and crew is preserved. The opportunities for increasing the productivity of our oceans are indeed mind-boggling.
The fertility of the oceans that surround both New Zealand and Australia could be the most valuable national asset we have. It is an indictment on our industry that the development of this gigantic farm has not even started because New Zealand's and Australia's success as a nation of farmers was only achieved through the use of modern technology in animal-husbandry and plant-nurseries. By the use of technology the world-wide production of land-based food increased 30 or 40 times in the past 20 years. With the technology that is available today it is possible to rear millions of juvenile fish in shore-based hatcheries, nurse them through their critical growth-stage and then release them into the ocean to supplement the natural recruitment to the fisheries.
Once fishermen are issued with a property-right in a fishery in the form of exclusive or individual quotas or permits there is an in-built incentive for them to join forces with other rights-holders and jointly fund fisheries enhancement schemes. There is a risk that this exciting development of our wild fisheries could be restricted if Government policies fail to recognise and provide well defined property-rights.
Fishermen accept and acknowledge the fact that unrestricted fishing will lead to the virtual extinction of any fish resource. Fishermen are equally well aware that to survive as an industry future fisheries-management policies must be constructed to enhance fleet profitability.
Fisheries decision-makers of the future need to be aware of the absolute necessity to preserve the fishermen's way of life as well as to preserve the resource. In the past it has been too easy to protect the resource by simply placing restrictions on the activities of our fishermen.
The task of fishing industry leaders will be to ensure that fishing is as economically efficient as possible. This management objective must be strictly adhered to. It is in my mind the critical success-factor in the business of fishing. Those who are assigned the task of conserving our fish stocks will be forced to look further than the age-old habits of the past where they simply applied restrictions that limited efficiency, such as:
i. increased mesh sizesUnder a Quota Management System fishermen are required to sacrifice the thrill and flexibility of open-access exploitation of the resource. If they are forced to accept restrictions on access it is imperative that unnecessary restrictions to efficiency are removed. Quota is our most valuable asset. It measures our profitability. Like any industry, we want to improve our profitability and enhance our assets.
ii. restricted entry by adding lines on charts
iii. imposed horsepower restrictions
iv. fishing-method restrictions
v. closed seasons and
vi. imposed size-restrictions on the construction of vessels.
The extraordinary thing is that industry does not have the right to manage our assets. The Government manages them for us. While we cannot manage our assets we suffer the consequences of bad decisions made on our behalf without compensation. The Government is the supplier of services to our industry. But, unlike any other supplier, they are not accountable to us for what they do. And we have no choice but to use them.
There is light at the end of the tunnel. Fisheries research is now a contestable government service. Management-support services are being devolved to industry. Cost-recovery is becoming better aligned with government and industry functions, industry organisations are restructuring around fisheries and their management, and industry-led fisheries management is emerging.
Progress is nonethel