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EVOLUTION OF RIGHTS-BASED MANAGEMENT - Chairman: Lee Anderson, University of Delaware


Enhancing Fisheries Rights through Legislation - Australia's Experience - M. Tsamenyi and A. McIlgorm
Development and Implementation of Access Limitation Programmes in Marine Fisheries of the United States - G.H. Darcy and G.C. Matlock
Property Rights on the High Seas: Issues for High Seas Fisheries - A. Stokes
From Social Thought to Economic Reality: the First 25 Years of the Lake Winnipeg IQ Management Programme - G.S. Gislason
The Use of Individual Fishing Quotas in the United States' EEZ - A.C. Wertheimer and D. Swanson
Development of Property Rights-based Fisheries Management in the United Kingdom and the Netherlands: a Comparison - G. Valatin
Rights-based Fisheries Development in Australia: has it Stalled? - A. McIlgorm and M. Tsamenyi

Enhancing Fisheries Rights through Legislation - Australia's Experience - M. Tsamenyi and A. McIlgorm

M. Tsamenyi
Centre for Maritime Policy, University of Wollongong, NSW 2522, Australia
<[email protected]>
and
A. McIlgorm
Dominion Consulting PTY Ltd, suite 7&8, 822-824 Old Princes Highway, NSW 2232, Australia <[email protected]>

1. INTRODUCTION

This paper has two main objectives. First, it reviews judicial approaches to the concept of property and the recognition of fisheries entitlements as property. It will be shown that Australian Courts have recognised various types of fisheries entitlements as property. Second, the paper reviews Australian Commonwealth, states and territory fisheries legislation to assess the extent to which fisheries property rights are recognised. The review will be conducted under the following headings: (i) Types of Access Rights; (ii) Duration of entitlements; (iii) Transferability; (iv) Recognition of dealings in entitlements; (v) Payment of compensation. Following the summary, a general assessment will be made regarding the extent to which the legislative framework as a whole enhances fisheries property rights.

2. WHAT IS PROPERTY IN LAW?

The term 'property' is commonly used to refer to a 'thing' or to denote ownership of a 'thing'. Legally, however, this approach has been rejected. Property is not a 'thing' but 'a description of a legal relationship with a thing (see: Yanner v Eaton [1999] HCA 53 Per Gleeson C.J., Gaudron, Kirby and Hayne J.J. at para. 17 citing Bentham, 'An Introduction to the Principles of Morals and Legislation' in W. Harrison (ed.) (1948) sy 337, note 1; K. Gray and S. F. Gray, 'The Idea of Property in Land', in Bright and Dewar (eds.), Land Law: Themes and Perspectives, (1998) 15 at 15 and 27-30. See also Yanner v Eaton [1999] HCA 53 at 86 per Gummow J., citing the observations of Finkelstein J., in Wily v St. George Partnership Banking Ltd. (1999) 84 FCR 423 at 431, Hohfeld 'Some Fundamental Legal Conceptions as Applied in Judicial Reasoning' (1913) 23 Yale Law Journal 16 at 21-22). Neither can property be equated with ownership, as it is a far more complex relationship.

This legal relationship has been described by Australian courts as a 'bundle of rights' (first use by H. Maine; Minister of State for the Army v Dalziel [1944] 68 CLR 261 at 285 per Rich J. Also Yanner v Eaton [1999] HCA 53 at para 27 per Gleeson CJ, Gaudron, Kirby and Hayne JJ although they recognise that 'this may have its limits as an analytical tool or accurate description'). Such an approach is consistent with that of Honoré who has suggested 11 indicia of property. Australian courts have, at various stages, attempted to identify these rights, or incidents, of property. Indicia identified have included identifiability, transferability, a degree of stability, a right to exclude and a right to use and enjoy. For example in R v Toohey; ex parte Meneling Station Pty. Ltd. Mason J noted that 'before a right or interests can be admitted into the category of property, or of a right affecting property, it must be definable, identifiable by third parties, capable in its nature of assumption by third parties, and have some degree of permanence or stability' (National Provincial Bank v Ainsworth [1965] AC 1175 at 1248 per Lord Wilberforce; adopted by Mason J in R v Toohey; ex parte Meneling Station Pty. Ltd. (1982) 158 CLR 327 at 342). The Courts have held that these indicia are not all necessary to establish 'property' but neither are they individually sufficient. By way of example, in Yanner v Eaton, Gummow J noted that transferability is not itself a necessary incident of property (Yanner v Eaton [1999] HCA 53 at para 85 per Gummow J).

Australian courts have taken a broad view of property, recognising possession, managerial control, common law rights and privileges, (Georgiadis v Australian & Overseas Telecommunications Commission (1994) 179 CLR 297 where it was held that property exists in a chose in action), and statutory rights and privileges as property. For example, a statutory right to payment was considered property in Health Insurance Commission v Peverill (1994) 179 CLR 226. It has also been said that property extends 'to every species of valuable right and interest including real and personal property, incorporeal hereditaments... rights of way, rights of profit or use in land of another, and choses in action' (Minister for the State of the Army v Dalziel (1944) 68 CLR 261 per Starke J at 290). With respect to statutory rights which receive the status of 'property', the limits of the property are defined by the statutory instrument creating them. Accordingly, the content of the term 'property' becomes a question of statutory interpretation1.

1 Yanner v Eaton [1999] HCA 53 at para 85 per Gummow J.
3. JUDICIAL APPROACH TO FISHERIES ENTITLEMENTS AS PROPERTY RIGHTS

Australian courts have generally acknowledged that various fisheries entitlements in the form of licences are capable of being considered 'property', although in a sometimes restricted sense. In Harper, the High Court considered the statutory right to fish to be analogous to a profit-à-prendre2. In the Northern Prawn Fishery cases a single judge of the Federal Court held that a fishing licence can be considered as property: it brings with it a privilege and a right that is proprietary in nature, subject only to constraints in the legislation3. However, on appeal to the Full Court it was said that the right to fish is based upon Commonwealth sovereignty rather than a private law proprietary right. The right to fish was held to be a public right, although amenable to change by a competent legislature. Each judge was, however, prepared to assume that the units were property. In Bienke, the full court of the Federal Court held that a fishing boat licence does not create an interest based on antecedent property rights. Rather, the licence is a new species of statutory entitlement dependant on the terms of the statute4. In Gasparinatos, the Tasmanian Supreme Court held that fishing rights were 'capable' of being valuable property rights.5 Finally, in Pennigton the South Australia Supreme Court held that a fishing licence did confer proprietary interest given that it had the indicia of property under the relevant statute.6

2 Harper v Minister for Sea Fisheries and Others (1989) 168 CLR 314.

3 Fitti and Others v Minister for Primary Industries and Energy and Another; and Davey and Others v Minister for Primary Industries and Energy and Another (1993) 40 FCR 286 at 292. O'Loughlin J; Davey and Others v Minister for Primary Industries and Energy and Another; and Minister of Primary Industries and Energy and Another v Davey and Another; and Minister for Primary Industries and Energy and Another v Fitti (1993) 47 FCR 151.

4 Bienke and Others v Minister for Primary Industry and Energy and Others (1996) 135 ALR 128 citing as authority Harper v Minister for Sea Fisheries and Others (1989) 168 CLR 314.

5 Gasparinatos v State of Tasmania (1995) 5 Tas. R. 301 citing Harper v Minister for Sea Fisheries (1989) 168 CLR 314.

6 Pennington v McGovern (1987) 45 SASR 24.

From these cases it can be observed that Australian courts have been willing to view fisheries licences as property.

4. FISHERIES RIGHTS IN LEGISLATION

4.1 Status

Fisheries entitlements are creatures of statute conferring a statutory right to fish. The scope of these rights as property must therefore be considered with reference to the relevant statute. This Section reviews Commonwealth, state and territory legislation to determine the extent to which the legislation accords property rights to fisheries entitlements.

4.2 The Commonwealth

4.2.1 Types of access rights

The governing legislation is the Fisheries Management Act (Cth.) 1991. Rights are categorised in two ways. The first is a Statutory Fishing Right (SFR) (Div. 5) (s21); and the second is a Fishing Permit (Div. 5) (s32).

SFR apply to both the right to take certain fish and the right to use certain equipment for fishing. These rights include the right to take a particular quantity, type and proportion of fish, and the right to use a particular type and size of boat and equipment (s21(1)). Where a management plan terminates, the holder of a SFR has the option of exercising his or her entitlements in another fisheries subject to a management plan; in which case the SFR becomes a SFR Option. A Fishing Permit, on the other hand, provides for the use of an Australian boat for fishing within a managed area (s32(1)).

Statutory fishing rights are issued by the Australian Fisheries Management Authority (AFMA) (s22) under management plans imposed by AFMA which the holder of the fishing right must comply with (s22(3)(a)). The rights may be granted by auction, tender, ballot or other procedure prescribed by AFMA (s25(b)). Fishing Permits are also granted by AFMA subject to specified conditions being met (s32(5)(a)-(e)).

SFR are renewable if the management plan remains in force until the date specified on the SFR. This is conditional on the holder having committed no offences in contravention of the SFR. The permit ceases to have effect if the holder surrenders the permit by written notice to AFMA (s32(9)).

4.2.2 Duration of entitlement

The duration of the SFR may be specified (s22(4)(b)). However if not specified, it remains in force until cancelled or surrendered or otherwise ceases to have effect under the Act (s22(4)(c)). The duration of a fishing permit is specified, but must not be greater than five years (s32(6)(c)).

4.2.3 Transferability

A SFR may be transferred provided conditions specified by AFMA in the SFR are met (s22(4)(a)). In addition, the holder of a SFR option also has the option to deal with the option, subject to giving a good discharge for any such dealing (s31J(1)). Except where a fishing permit is stated to be non-transferable, it can be transferred subject to the approval of AFMA (s32(10)).

4.2.4 Recognition of dealings in entitlements

Interests can be created in SFR options (s31F). Those interests, having the effect of creating, assigning, transmitting or extinguishing an interest must be registered with AFMA (s31F(3)). If the dealing creates a charge over the assets of those registered as having an interest, they must be notified of proposed changes, transfers etc. (s31F(9)). AFMA can only refuse to register an interest when it would be contrary to the proposed management plan, which the option relates to (s31F(7)). The act is silent with respect to dealings relating to fishing permits.

4.2.5 Payment of compensation

The act provides that no compensation is payable because a SFR is cancelled, ceases to have effect or ceases to apply (s22(3)(e)). Likewise with respect to fishing permits (s32(5)). However if the operation of the act results in acquisition of property otherwise than on just terms, the Commonwealth must pay reasonable compensation to that person (s167a).

4.3 Queensland

4.3.1 Types of access rights

The regulating Act, the Fisheries Act 1994 classifies entitlements as either a Statutory Fishing Right (Div. 5) (s21); or a Fishing Permit (Div. 5) (s32). An Authority can be a licence, permit, quota or other authority in force under this Act. A licence may relate to fishing, crew, boat, storage or buyers licence. An Authority is renewable if the agency is satisfied the application is in the best interests of the management, use and development of the protection of fisheries resources (s59(1)). Conditions can be imposed on renewal (s61). A permit provides for a variety of activities, including possessing regulated fish, permit the use of boats, or permit the removal or destruction of marine plants (s51(1)).

4.3.2 Duration of entitlements

The tenure for an Authority is for a term as specified on the Authority (s53(c)).

4.3.3 Transferability

An Authority (other than a permit) is transferable unless otherwise specified under a Regulation (s65(1)). Entitlements stated as not transferable are a fisher licence and crew licence, and a licence bearing fish or shell symbols (Cl. 59 Fisheries Regulations 1995). A permit is not renewable (s57(1)).

4.3.4 Recognition of dealings in entitlements

The holder of an Authority can apply to have a third party interest noted on the Register of authorities (s73(6)).

4.3.5 Payment of compensation

No compensation is payable if a fisheries agency cancels or suspends an Authority (s68(7)), if the agency refuses to issue or renew an Authority (s59(2)), or if the agency amends the Authority (s63(7)). Likewise no compensation is due amends or repeals a management plan (s4040(1)). However the Act does provide that compensation may be payable if specified under a particular management plan or regulation (s68(8)). Compensation can be awarded for fishery resources or property destroyed in an emergency if the Chief Executive so decides (s103).

4.4 New South Wales

4.4.1 Categorisation

The governing legislation for fisheries in New South Wales, Fisheries Management Act 1994, does not provide an explicit statement with respect to fishing licences as property. Fishing rights are granted through a Commercial Fishing Licence or Shares. There are five classes of commercial fishing licences (Cl. 141). These include:

Licences can also be endorsed for fishing in restricted areas such as lobster fishery (Div. 2). All fishers must have a commercial fishing licence. Shares are issued with respect to any fishery declared as a share-Managed Fishery (s42) under a management plan.

Without a commercial fishing licence no person can take fish for sale from waters to which the Act applies (s102). In addition, a fisher cannot use a boat for commercial fishing unless it is licensed (s107). A commercial fishing licence can be endorsed to fish in a share-Managed Fishery if the licensee holds enough shares (s68). Licences are issued by the Minister to an eligible person upon application and meeting the criteria prescribed by the Regulations(s104). Shares are also issued by the Minister when a fishery becomes a share-Managed Fishery (s46(1)).

A commercial fishing licence is renewable, upon application in writing (Cl. 139(1)) at the discretion of the Minister if all the conditions prescribed in the Act are met (Cl. 139(3)). Shares are also renewable after their initial term if there has been no new management plan issued (s73(2)(3)).

4.4.2 Duration

A commercial fishing licence remains in force for a period of one year or such other time as prescribed on the licence (Cl. 139(4)). Shares are issued for an initial period of ten years, calculated from the commencement of the management plan (s73(1)). Shares are renewable for a further ten years after this initial period (s73(2)(3)).

4.4.3 Transferability

Licences are not transferable, as an applicant for a licence must prove he is an eligible person to the Minister (Cl. 135). A shareholder may transfer his share holding in a fishery to any other shareholder in the fishery subject to any restrictions imposed by the management plan (s79(1)).

4.4.4 Recognition of dealings

All dealings with respect to shares must be registered in the Share Management Fisheries Register (s89). Shares may be held by persons other then the holders of a commercial fishing licence (s49(1)). A share can also be mortgaged and assigned (s71(1)).

4.4.5 Payment of compensation

Compensation is not provided for in the Act with respect to licences. Compensation is not payable if a fishery ceases to be restricted (s115). Compensation is only provided for if the Minister cancels shares in a share-Managed Fishery (s44(3)).

4.5 Northern Territory

4.5.1 Types of access rights

The relevant legislation is the Fisheries Act (as amended by the Fisheries Amendment Act 1997). The Act provides for the following categories of entitlements: (a) licences (s11), (b) permits (s16), and (c) special permits (s17). A licence enables the holder to take any fish to sell, process for sale, for the purposes of aquaculture, or exhibiting any of them for profit, and to use certain equipment (s10(7)).

A permit does not entitle the holder to do things that affect the marine environment; e.g. among other things, to release fish, or pollute waters or use an electric fishing device (s15(1)). A permit may be subject to conditions as the Director considers appropriate or as may otherwise be prescribed (s16(3)).

A special permit allows fish to be taken and certain fishing gear to be used for the purposes of education, research, sport or recreation in the case of a disabled person who, in the opinion of the Director, would otherwise be unable, by reason of the person's disability, to fish by the methods permitted by this Act; or any other purpose approved by the Minister. All fish or aquatic life taken must be disposed of as the Director directs or as specified in the permit (s17(2)).

A licence is renewable (s12(1)) subject to a charge and conditions as outlined in s 12. The Director must be satisfied that the applicant has a commitment to the fishery in respect of which the applicant is licensed and to the fishing industry generally; that the conditions of the licence have been complied with (s12(c)); and that nothing in an instrument of a legislative or administrative character made under the Act prevents it (s12(d)).

If the applicant is a corporation, an application for renewal of a licence must contain a statement indicating the current nominal and beneficial ownership of the shares in the corporation and each sale or transfer of that ownership since the grant or transfer of the licence to the corporation, or the last renewal of the licence, whichever is the later (s12(3)). The corporation must also provide statements as to the share structure of the corporation (s12(4)(b)). If these criteria are satisfied, the Director must renew the licence on payment of the prescribed fee (if any) (s12(4)(d)).

Every renewal of a licence is granted on the same terms and conditions as apply to the original licence, unless the terms and conditions have been or are amended pursuant to Section 11 (s12(5)). There act is silent on the issue of renewing permits and special permits.

4.5.2 Duration of entitlements

A licence may be granted for a period of not more than 5 financial years on payment of the prescribed fee (if any) for each financial year of the licence (s10(7)). A permit may be issued for such period as the Director thinks fit (s16(3)). A special permit may have a time specified in the permit (s17(1)(a) (iii)) but can be revoked at any time by the Director serving notice in writing on the holder (s17(3)). A licence or registration can be suspended or cancelled by the court (s20(1)), or a licence can be suspended by Director if the holder is found guilty of a related offence (s20(2)).

4.5.3 Transferability

The Act provides for temporary licence transfer (s12A) or a permanent licence transfer (s12B). A licensee may only permit another person to use the licence with the approval of the Director in writing (s2A(1),(8)), and on payment of the prescribed fee (s12A(3)). This is subject to the regulations, a fishery management plan or condition of the licence (s12A(1)). This decision is 'in the Director's absolute discretion' (subject to Section 12C) (s12A(4)). This temporary transfer expires at such date, if any, specified in the agreement or at the end of the financial year in which it was entered into, whichever is the sooner (s12A(6)). This approval can be revoked at any time on application by either party (s12A(10)).

A licensee may permanently transfer the licence, on approval of the Director and payment of the prescribed fee (s12B(2)). The transfer is subject to Section 12B, the Regulations or a fishery management plan made in respect of the fishery for which a licence has been granted or a condition of the licence (s12B(1)). This decision is in the Director's absolute discretion (subject to 12C) (s12B(3)).

A licence or permit can only be transferred to Australian residents or Australian corporations (s12C). The act is silent on the transfer of permits except for the above statement in Section 12C.

4.5.4 Recognition of dealings in entitlements

Section 9 provides for the maintenance of a register to record, among other things, any interests held in a licence, permit or vessel (s9(1)). Section 9(2) outlines the conditions on which persons may have access to the register.

4.5.5 Payment of compensation

The act is silent on the issue of compensation.

4.6 South Australia

4.6.1 Types of access rights

The relevant legislation considered includes Fisheries Act (SA)1982; Fisheries (Gulf St. Vincent Prawn Fishery Rationalization) Act (SA) 1987; and Fisheries (Southern Zone Rock Lobster Fishery Rationalization) Act (SA) 1987 The act uses the term 'authority' to refer to a licence, permit, registration or lease provided for by the Act (s5(1)).

Specifically of interest is the licence (s34(1)) and registration (s34(2)). Licence means a fishery licence and registration means registration of a boat by endorsement of a fishery licence or registration of the master of a boat by endorsement of a fishery licence (s33). A licence is required to engage in a fishing activity of a type that constitutes a fishery for the purpose of trade or business (s34(1)). The Director can impose, vary or revoke conditions for the licence, as set out in s37. Registration is required for a boat to be used to engage in a fishing activity for the purpose of trade or business (s34(2)).

4.6.2 Duration of entitlements

Licences and Registrations remain in force until the expiry of the term prescribed for licences in respect of the fishery (s39(1)). The licence and registration 'run together' so that if a licence is cancelled or surrendered the registration is automatically cancelled or surrendered (s39(2)(a)). If a licence is suspended, the registration is also suspended for that period (s39(2)(b)). An authority may be cancelled or suspended by the Minister if it is shown that the authority was obtained improperly, or, the holder has been convicted of a particular offence (s57(1)). An authority may be cancelled or suspended by the Court if the holder has been convicted of an offence against the Act (s56). The holder of an authority may at any time surrender it to the Director (s61). The Fisheries (Gulf St. Vincent Prawn Fishery Rationalization) Act 1987 allows the Minister to cancel licences until there are no more than 10 licences in force in that fishery (s5).

The Fisheries Act does not contain a direct provision regarding the renewal of authorities. However, the act does refer to renewal indirectly when it states that any Authority that has been suspended by the Minister in accordance with s57 may be renewed, but remains subject to suspension until the expiration of the period of suspension (s57(3)). And again, any Authority that has been suspended by the court in accordance with s56 may also be renewed but remains subject to suspension until the expiration of the period of suspension (s56(8)).

4.6.3 Transferability

Generally, a licence is not transferable. A licence can, however, be transferred if the scheme of management for a fishery allows a licence to be transferred with the consent of the Director (s38(2)). In the event that a licence is transferred, the registration of the boat may also be transferred (s38(4)). If a licence is transferable and the holder dies the licence vests in the personal representative of the deceased and forms part of the deceased's estate. However, it cannot be transferred in the course of administration of the estate except with the consent of the Director (s38(5)).

If the deceased was also registered as master of the boat then, while the licence is vested in the personal representative, the boat can continue to be used for fishing if it is in the charge of a person acting with the consent of the Director (s38(6)). If the licence is not transferred within two years (or a further period approved by the Minister) of the death of the licence holder, the licence is suspended, pending such transfer (s38(7)).

The Fisheries (Gulf St. Vincent Prawn Fishery Rationalization) Act 1987 permits the transfer of a licence with the consent of the Director. This consent must be given if the criteria prescribed by the regulations are satisfied and the licensee's accrued liabilities by way of surcharge under the Act are paid to the Director (s4).

4.6.4 Recognition of dealings in entitlements

The Director is to keep a register of all authorities granted under the Act (s65(1)). The Director can make notations on the register that a specified person nominated by the holder of the licence has an interest in the licence (s65(3)). Where the register includes such a notation the interested parties must consent to the surrender (s61(2)) or transfer of the licence (s38(2)(b)).

4.6.5 Payment of compensation

The Fisheries Act 1982 is silent on the issue of compensation. However, the Fisheries (Gulf St. Vincent Prawn Fishery Rationalization) Act 1987 and Fisheries (Southern Zone Rock Lobster Fishery Rationalization) Act 1987 both establish legislative schemes for the provision of compensation for the cancelled and surrendered licences with respect to the rationalisation of those fisheries.

The Fisheries (Gulf St. Vincent Prawn Fishery Rationalization) Act 1987 provides for compensation in s6 in the event that a licence is cancelled by the Minister in accordance with the rationalisation scheme. The amount of compensation is to be determined as outlined in s 6. Under the Fisheries (Southern Zone Rock Lobster Fishery Rationalization) Act 1987 the amount is to be determined under s10.

4.7 Tasmania

4.7.1 Types of access rights

The governing legislation is the Living Marine Resources Management Act (Tas) 1995. The Living Marine Resources Management Act (Tas) 1995 explicitly says that the State owns all living marine resources present in Tasmanian waters (waters defined by s5(1)(a)-(c)) (s9(a)). Further, any fish specifically provided for under a marine farming licence are not owned by the State but are the property of the holder of that licence (s9(b)).

The act establishes a system of 'licences' and 'permits'. The three categories of licence are the Fishing licence (Pt. 4 Div. 1, s60), the Marine farming licence (Pt. 4 Div. 2, s64) and the Fish processing licence (Pt. 4 Div. 3, s67). There can be many different classes of fishing licence (s34).

A Fishing Licence authorises the holder to carry out fishing in accordance with the licence (s61). The licence is subject both to the rules of a management plan applicable to that licence and any condition specified in the licence (s62(a)-(b)). Generally, a fishing licence allows a person to participate in fishing in state waters and to take fish, or use apparatus, for the purpose of fishing or take any other action permitted under the licence (s60(1)(a)-(d)).

A Marine Farming Licence authorises the holder to carry out marine farming in accordance with the licence (s65). The licence is subject to marine farming development plan and conditions specified in the licence (s66(a)-(b)). Generally, it enables a person to carry out marine farming in State waters or to take live fish for that purpose, or operate a fish hatchery or breed, culture or farm fish in inland waters or on land where fish would have ended up in state waters (s64(1)(a)-(c)).

A Permit allows the holder to take action which would otherwise contravene the Act for the purpose of scientific research, promotion of fishing or fish products, development of fishing technology, educational and community awareness programs, fish stock depletion or enhancement, collection, keeping, breeding, hatching or cultivating rare or endangered fish or sport and recreation purposes due to the holder's disability, that require methods otherwise illegal under the Act (s12(1)(a)-(h)).

A licence holder can apply to the Minister for the licence to be renewed (s81(1)). The Minister must renew the licence if the applicant has complied with the conditions of the licence in the previous 5 years, has not been convicted of an offence under the Act which the Minister considers relevant to holding the licence, has not been disqualified from holding the licence, is a fit and proper person, where there are no environmental or resource constraint on doing so and the Minister thinks it appropriate (s81(2)). The licence can only then be renewed on the payment of the prescribed fee (s81(2)).

4.7.2 Duration of entitlements

A Licence remains in force for a period not exceeding 10 years as specified in the licence (s80(1)). A Permit, on the other hand, remains in force for a period not exceeding 12 months, specified in the permit unless the Minister sooner revokes it (s16). The Act is silent on the issue of renewing a Permit.

4.7.3 Transferability

The holder of a licence can apply to the Minister to transfer either the licence to another person (s82(1)(a)) or a quota or under the licence to another licensee (s82(1)(b)). The Minister may grant the application for transfer on payment of the prescribed fee (s82(2)). With respect to entitlements under a licence, rules may be made in relation to the authorisation of the temporary transfer of any entitlement (s36(g)). A fishing licence can be leased, sub-leased, or lent under with the Minister's approval (s87).

4.7.4 Recognition of dealings in entitlements

The Secretary is to keep a register of details relating to grant, renewal, variation, transfer etc. of authorisations (s298(1)). A person may apply for registration of an interest in a deed of agreement (s101).

4.7.5 Payment of compensation

Compensation is not payable to the holder of an authorisation if a management plan is amended or revoked, or limitations are prescribed for fishing, or there is a reduction in total allowable catch, if the Minister takes any reasonable action under the act or as a result of any requirement complied with under an order made under Section 272 (s300 (1)). However, if the Minister takes action, which is not consistent with the purpose of the Act, s300(1) does not apply (s300(2)).

4.8 Victoria

4.8.1 Types of access rights

The governing legislation is the Fisheries Act (Vic) 1995 which explicitly states that the Crown in the right of Victoria owns all wild fish and other fauna and flora found in Victorian waters (s10(1)). The Act provides that property passes: to the holder of licence or permit when taken in accordance with the licence or permit (s10(2)(a)). to any other person when lawfully taken or where no licence or permit is required under the Act for that purpose (s10(2)(b)).

The Act provides for two categories of access rights: 'Licences' and 'Permits'. Licences can be either fishing licences or any category of licence created by the regulations under Clause 3.2 of Schedule 3 (s4).

The main fishing licence is the Access Licence (s38). The regulations may create different classes of access licences and may specify that the holder of an access licence of a particular class can do certain things. Other licences include the Aquaculture Licence (s43), Recreational Fishing Licence (s45 (individual), s46 (group)) and Fish Receivers Licence (s41). The main permit is the General Permit (s49). Other permits include the Protected Aquatic Biota Permit (s72) and Noxious Aquatic Species Permit (s81).

An Access Licence may enable the holder to take specified fish and, or, fishing bait for sale, or use a boat and certain equipment for fishing (s38(1)(a)-(g)). The Secretary must give a quota notice setting out details of individual quota allocated to the licence (s65 (1)).

A General Permit may authorise the holder to take fish for research, education, fish management, aquaculture, compliance or scientific purposes; to take fish from a developing fishery; to carry out research, exploitation, work or operation for the purpose of developing any fishery or aquaculture; to investigate any species of fish or any fishery or any device; to sell or dispose of any fish obtained under the permit; or to use certain equipment (s49(2)).

An Access Licence is renewable in accordance with s57 (s38(6)). The holder must continue to satisfy the eligibility criteria, be a fit and proper person and be actively, substantially and regularly engaged in the activities authorised by the licence. In addition, the holder must show sufficient cause for renewing the licence. If the Secretary considers these criteria satisfied and the holder has a record of compliance with the Act, the Secretary must renew the licence (s57(2)-(6)).

A General Permit is not renewable. However, the Secretary can issue another general permit to a person whose permit is about to expire or a person who has previously held a permit (s49(6)).

4.8.2 Duration of entitlements

An Access Licence continues in force for up to one year, as specified in the licence, unless it is cancelled or suspended in accordance with the Act (s38(4)-(5)). A General Permit continues in force for up to three years, as specified in the permit, although it may be cancelled at any time without notice (s38(3),(4),(8)).

4.8.3 Transferability

Fishery licences (of which an Access Licence is a specific type) of a particular category or class are not transferable unless the regulations allow (s50B). If the regulations allow a particular category or class of fishery licence to be transferable, the transfer is dealt with by s56.

If the regulations allow an Access Licence to be transferable, when the holder dies the benefit of the licence is deemed to be an asset of the estate of the deceased (s38(7)(a)). The personal representative of the deceased is deemed to be the holder of the licence until it is transferred from the personal representative to an eligible person in accordance with the Act (s38(7)(b)). An Access Licence permits the transfer of quota subject to the approval of the Secretary (s65(3)). A General Permit is not transferable (s49(7)).

4.8.4 Recognition of dealings in entitlements

A person who is not the holder of an access licence, but who has a financial interest in that licence can register details of that financial interests with the secretary (s59(1)). The Secretary must notify the holder of a registered financial interest within 21 days of receiving an application to transfer the licence (s59(3)). The holder can then give his or her approval or disapproval of the proposed transfer (s59(4)). If the holder disapproves, the Secretary must not transfer the licence (s59(5)). If a transferable licence is cancelled by the court the secretary must notify each holder of a registered financial interest in the licence of the cancellation (s60 (1), (2)).

4.8.5 Payment of compensation

The Minister may issue directions for licence reduction arrangements and requiring the Secretary to cancel licences (s61(1)(b),(c)). If licences are cancelled in this way, compensation is payable to the person who held the licence, and any person who held a registered financial interest in the licence at the time it was cancelled (s63(2)).

Compensation is for the financial loss suffered as a natural, direct and reasonable consequence of the cancellation of the licence, in proportion to the extent of their respective interests (s63(2)). The amount of compensation is to be determined by the Secretary in accordance with the regulations (s64(4)) and Parts 10 and 11 and Section 37 of the Land Acquisition and Compensation Act 1986, with necessary modifications also apply as if the claim were a claim under Section 37 of that Act (s64(6)). Apart from this, no compensation is payable by the Crown to any person for any loss or damage as a result of the enactment of the Act and the repeal of the Fisheries Act 1968.

4.9 Western Australia

4.9.1 Types of access rights

The governing legislation are the Fish Resources Management Act 1994 and the Fishing and Related Industries Compensations (Marine Reserves) Act 1997. All Access Rights are generally referred to as an 'authorization' which can either be a licence or permit (s4(1)). Authorization' is used to refer to two particular types of licence and permit in relation to managed fisheries and interim managed fisheries in particular: the Managed Fishery Licence (s53(a)) and the Interim Managed Fishery Permit (s53(b)). The Act also allows for the issue of an Exclusive Licence (s251).

Generally, a Managed Fishery Licence and an Interim Managed Fishery Permit authorise a person to engage in fishing or any fishing activity in a Managed Fishery or interim Managed Fishery (s66(2)). A commercial fishing licence, or any other licence, does not authorise a person to engage in fishing in a Managed Fishery or interim Managed Fishery (s73). A Managed Fishery Licence and an Interim Managed Fishery Permit are subject to conditions in the relevant management plan and any conditions specified by the Executive Director in accordance with s69 (s69(1)).

An Exclusive Licence allows a person to take fish from a specified area of coastal waters and the foreshore above high-water mark (s251(1)). It can be granted subject to such terms and conditions as the Minister things fit (s251(3)). These conditions can include the period/s which fish can be taken, the type and quantity of fish and the method and fees, etc. (s251 (4)).

Both Managed Fishery Licences and an Interim Managed Fishery Permits are issued by the Executive Director (s66). An Exclusive Licence is issued by the Minister (s251 (1)). An application can be made to the Executive Director for the renewal of authorizations generally (s135). It must be accompanied by the fee prescribed (if at all) or specified in the relevant management plan (s135(1)(b)). An authorization can be renewed if an application is made within 60 days after the day on which it expired (139(1)). In this event, the authorisation is of no effect between the date of expiry and the date of renewal (s139(2)(b)). The regulations may prescribe, or a management plan may specify, an additional fee payable by way of penalty if renewed after the date of expiry (s139(3)).

A Managed Fishery Licence and an Interim Managed Fishery Permit are renewable. If a person applies for a renewal the Executive Director must renew them (subject to s 143 which relates to times when the Executive Director does not have to renew an authorisation generally) (s68). However, the Managed Fishery Licence and Interim Managed Fishery Permit can be renewed subject to such conditions as the Executive Director thinks fit and specifies in the authorisation (s69(2)). An Exclusive Licence may be renewed by the Minister from time to time for any further period or periods not exceeding 7 years in each case (s251(2)(b)). It may be renewed subject to such terms and conditions as the Minister thinks fit (s251(3)).

4.9.2 Duration of entitlements

Managed Fisheries Licences and Interim Managed Fishery Permits remain in force for 12 months, or such other period as is specified in the relevant management plan, from the day on which it is granted or renewed (s68). However, if the management plan is revoked, or expires, the authorisation also ceases to have any effect (s70).

A Management plan can specify a period for which a Managed Fishery Licence and an Interim Managed Fishery Permit remain in force after it has been granted or renewed under Section 58(2) (i). If a subsequent management plan is determined for that fishery, the fact that a person had a previous Managed Fishery Licence or Interim Managed Fishery Permit does not confer any right to the grant of another (s72(1)). However, the Executive Director must take that fact into account when determining whether or not to grant the person another Managed Fishery Licence or Interim Managed Fishery Permit (s72(2)). An Exclusive Licence may be granted for an initial term not exceeding 14 years (s251(2)(a)). The Minister may vary or revoke an Exclusive Licence in the manner provided for in the licence (s251(5)).

4.9.3 Transferability

An application can be made to the Executive Director for the transfer of any Authorization or part of an entitlement under an Authorization (s135). It must be accompanied by the fee prescribed (if any), or specified, in the relevant management plan (s135(1)(b)). The Executive Director must transfer the Authorization or part of the entitlement if the Director is satisfied that the requirements under s 140(2) and (3) are satisfied (s140(1)).

4.9.4 Recognition of dealings in entitlements

The Fish Resources Management Act recognises 'security interests' in authorizations. A security interest, in relation to an authorisation, is defined as an interest in the authorization (however arising) that secures payment of a debt, or other pecuniary obligation, or the performance of any other obligation (s4).

The Act establishes a register of authorisations and exemptions (s126). A holder of an authorization may apply to the Registrar to have noted on the register that a specified person has a security interest in the authorization (s127). Upon application and payment of the prescribed fee (if any), the Registrar must make a notation on the register (s128) with the details required in s128(2).

The effect of the registration is that a person with a security interest in an authorization must be notified if the holder is convicted of a prescribed offence, if there is an application for transfer or a partial transfer of the authorization, if the Executive Director proposes to cancel or suspend, or not renew the authorization or, if a fisheries adjustment scheme is established in respect of authorizations of that class (s130).

4.9.5 Payment of compensation

The Fish Resources Management Act 1994 is silent on the issue of compensation except to say that no compensation is payable in respect of anything done or omitted to be done in good faith relating to the register (s133).

The Fishing and Related Industries Compensation (Marine Reserves) Act 1997 establishes a scheme for the provision of compensation to holders of leases, licences and permits under the Fish Resources Management Act 1994 on account of the effect of marine nature reserves and marine parks constituted under the Conservation and Land Management Act 1984 (CALM). The Compensation Act specifies the particular events which cause an entitlement to compensation, including the CALM Act coming into operation (s4). The Act states that a person who holds an authorization is entitled to fair compensation for any loss suffered as a result of a relevant event (s5(1)). Generally, a person is considered to suffer 'loss' if and only if the market value of the authorisation is reduced because an authorization will not be able to be renewed (s5(2)(a)), or, that the authorisation relates to an area and will only be able to be renewed in respect of part of that area or another area (s5(2)(b),(c); or because an area will not be available for commercial fishing after the renewal of the authorization (s5(2)(e)). However, in the latter case, it is noteworthy that this only applies to a person who obtains a certificate from the Executive Director stating that, in the Executive Director's opinion, the history of the authorization shows that the area has been fished under the authorization on a long term and consistent basis (s5(5)). Section 5 outlines the method for determining the amount of compensation.

5. CONCLUSIONS

In respect of property rights, the following conclusions can be drawn from the review of cases and fisheries legislation:

i. Generally, Australian courts have generally acknowledged that various fisheries entitlements in the form of licences are capable of being considered 'property.'

ii. Fisheries licences are 'capable' of being property, but, as statutory rights, this is entirely dependant on the terms and interpretation of the relevant statute.

iii. The issue for industry is not so much whether fisheries entitlements constitute property rights in the legal sense, but the extent to which the legislative framework enhances such rights. In this respect, then generally it can be said that current Australian fisheries legislation provides for weaker property rights. The factors contributing to the lack of stronger rights include:

a) the discretionary powers to intervene granted to fisheries administrators

b) the limitations on transferability of entitlements (generally transferability is subject to the consent of the fisheries administrator)

c) the various Fisheries Acts provide for the suspension, or cancellation, of entitlements for the commission of specified or unspecified offences

d) inadequate provisions for the payment of compensation for loss of entitlements and

e) the limited duration of most entitlements (one year in many cases).

6. THANKS

We thank the Fisheries Research and Development Corporation (FRDC) Project 99-161 "Sustainable fisheries management through enhanced access rights and resource security" Part I. We thank the South Australian Fishing Industry Council (SAFIC) "Fishing Rights Benchmarking Project" project, Dr A. Mcilgorm, principal investigator and Prof. Martin Tsamenyi, University of Wollongong, co-investigator. We thank the Fish Rights'99 Committee for the invitation to the Conference.

Development and Implementation of Access Limitation Programmes in Marine Fisheries of the United States - G.H. Darcy and G.C. Matlock

G.H. Darcy and G.C. Matlock
Office of Sustainable Fisheries
National Marine Fisheries Service, 1315 East-West Highway, Silver Spring, Maryland, 21042, USA
<[email protected]> and <[email protected]>

1. INTRODUCTION

The management of marine fisheries of the United States has changed dramatically in the last 25 years, much of it brought about by important legislation that has reflected the increasing public interest in the protection and conservation of American fisheries and the resources that sustain them. The fairly straightforward biological and economic aspects of commercial fisheries that were the initial concern of most managers and scientists have evolved and expanded to include such issues as: biological integrity and sustainability of living marine resources; biodiversity, ecosystem, and habitat protection; economic and social implications of management decisions and resource allocations. Not only have the issues changed, but the participants in the fishery management process have become more diverse, the public's knowledge of, and interest in, marine issues has increased and numerous technological changes have significantly increased the efficiency and effectiveness of fishing effort. The result is an extremely complex landscape of interests, constituencies and conflicts that must be taken into account in making management decisions.

While many tools are available to fishery managers, expanding fishing effort in U.S. fisheries and other fisheries worldwide in the last several decades has focused attention on use of effort and access limitation measures to deal with problems such as overcapacity, safety at sea, gear conflicts, overfishing, bycatch, and habitat damage. This paper reviews the development and implementation of access limitation measures in the federally-managed U.S. marine fisheries, examines the current status of those measures and provides an assessment of the effectiveness of some of the access-limitation schemes that have been implemented.

2. HISTORY OF MANAGEMENT

Prior to the mid-1970s, there was little Federal regulation of U.S. marine fisheries; activities were instead focused primarily on exploration, development, monitoring and assessment of living marine resources. Within the territorial sea (generally from shore to 3 nautical miles seaward), the individual coastal states had management authority. With the establishment of the Fishery Conservation Zone (now known as the Exclusive Economic Zone (EEZ)) and the passage in 1976 of the Fishery Conservation and Management Act, the United States took a major step in "Americanizing" its marine fisheries. In so doing, the U.S. Congress implemented a unique system of management of public resources, based on eight Regional Fishery Management Councils (Councils), to provide a mechanism for bringing diverse interests together to develop and recommend fishery management plans (FMPs) and management measures for approval and implementation by the National Marine Fisheries Service (NMFS) on behalf of the Secretary of Commerce (Secretary).

Early fishery management actions in the EEZ were relatively simple and were intended to address the most obvious problems in some of the major commercial fisheries, such as gear conflicts and reductions in certain stocks. Both the Councils and NMFS faced a necessary, but substantial, learning curve in dealing with their new responsibilities. A management process was required that involved the public, protected the resources, sustained the fisheries in the long term and complied with numerous Federal statutes. Further, substantial new efforts were needed to gather information necessary for the management of these fisheries, many of which had never been managed before. The first FMP, for the Atlantic surf clam and ocean quahog fishery, was developed by the Mid-Atlantic Council and was approved and implemented by NMFS on behalf of the Secretary, in 1977.

In the late 1970s and 1980s, an increasing number of fisheries came under management through the Councils' development of new FMPs. The number of approved FMPs grew from nine in 1980 to 32 by 1990; over the same time period more than 100 FMP amendments also were implemented. But as more and more management measures were developed it also became clear that many of those measures were not adequate to accomplish the FMPs' objectives. Although some of the problems that had been identified in the FMPs had been successfully addressed, many continued or worsened despite the good intentions of scientists, fishermen and managers. Most of the early FMPs regulated the fisheries primarily through standard management measures such as gear restrictions (e.g. mesh-size restrictions in New England groundfish fisheries), or on the basis of outputs of the fishery (e.g. quotas). However, because there were few, if any, barriers to entry in most U.S. fisheries, as foreign effort exited domestic effort entered and expanded. Quota management and gear restrictions often proved inadequate on their own to address the biological problems caused by this increasing effort. And quota management, though useful in capping total catch, did nothing to address the problem of increasing fishing pressure and competition for the quotas. The result was continued overfishing and proliferation of fishing effort and capital investment in many fisheries.

The failure to restrict effort adequately and the increased participation in many fisheries led to other problems as well. Biological productivity, even under ideal management, is finite and open-access fisheries create an incentive to fish faster and harder to get as large a share of the total allowable catch as possible before the quota is filled and the fishery closed. Technology "helped" by offering fishermen increased efficiency in locating, identifying and catching fish. The result was often an abnormally compressed commercial fishing season, market gluts (with subsequent low prices for the fishermen and poor product quality and/or reduced availability for the consumer), unsafe fishing conditions, poor match of capital investment to the available resource and a variety of other problems. There were repercussions in the processing sector (e.g. the need for far greater capital equipment investment and difficulty in matching labour to large pulses in landings), as well as the retail markets. Pressure from competing groups vying for quota share, including commercial and recreational sectors of many fisheries, continued to increase, as did pressure from those outside the fisheries (e.g. environmental groups and non-consumptive users) who became increasingly vocal about their concerns regarding ecological implications of expanded effort, such as habitat damage, large bycatches and decreased biodiversity. In short, the well known "tragedy of the unmanaged commons" associated with open access resulted.

Because of the problems associated with open-access fisheries in the 1980s and 1990s, NMFS began encouraging the use of limited access (NMFS 1991). NMFS could not unilaterally develop a limited access programme for a fishery subject to Council jurisdiction because Section 304(c)(3) of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) requires a Council recommendation (NMFS 1996). However, with encouragement, the Councils amended many of their FMPs to supplement the existing measures with at least some controls on commercial fishing effort. By October 1999, the number of approved FMPs had risen to 41 and more than 300 FMP amendments had been implemented. Several new FMPs were also under development by the Councils. Hundreds of regulatory amendments, emergency rules and other management actions had also been undertaken. Although biological problems, such as overfishing continued to be addressed through many of these actions, most dealt with allocational issues including measures to limit access to all or a portion of commercial fisheries.

Because management actions that restrict or allocate access to fishery resources typically are controversial and can have a broad range of economic and social impacts, many of which are difficult to assess thoroughly, they are often more difficult and time consuming to design and implement than the more traditional management measures. The fishery management process created by Congress in 1976 is complex and often deliberate, but it was designed to involve the broad range of interested parties such that management and conservation decisions could be made in full view of the public. Both the Councils and NMFS are critical players in this process - the Councils to provide a public forum for decision-making and NMFS to provide scientific support and review of the Councils' recommended FMPs and management measures. How, and in what time frame, these activities are conducted is determined by available resources and numerous statutory requirements and constraints. Several of the access limitation programmes took many years for the Councils to develop and, even when approved, required years more for NMFS to implement.

The single most important statute that relates to management of fisheries in the EEZ is the Magnuson-Stevens Act, which was substantially amended by the Sustainable Fisheries Act (SFA) in 1996. Among other things, the SFA placed increased emphasis on ending and preventing overfishing of all stocks, reduction of waste and bycatch in the fisheries, identification and protection of essential fish habitat and consideration of effects of fishery management decisions on fishing communities. In passing the SFA, Congress sent a clear message that there were unacceptable problems in many U.S. fisheries, that changes needed to be made and a longer-term view taken in their management.

The SFA added three new national standards to the seven existing standards in the Magnuson-Stevens Act (Appendix A), to focus attention on specific areas of concern. The national standards are statutory criteria with which all FMPs and amendments prepared by the Councils and the Secretary must comply. Existing standards required, among other things, that overfishing be prevented, that best scientific information be used and that efficiency be considered in selecting management measures. However, Congress, in creating the new standards, reflected public concern about three other issues: impacts of management actions on fishing communities, bycatch and safety at sea.

The three new national standards are relevant to the discussion of access limitation in that such measures, if carefully chosen and creatively applied, can address many of the problems the new standards were created to solve. National Standard 8 requires that conservation and management measures shall, consistent with the conservation requirements of the Magnuson-Stevens Act (including the prevention of overfishing and rebuilding of overfished stocks), take into account the importance of fishery resources to fishing communities in order to provide for the sustained participation of those communities and, to the extent practicable, minimize adverse economic impacts on the communities. Under appropriate conditions and with thoughtful development and incorporation of suitable constraints, access limitation measures can play a role in maintaining viable fisheries that support local communities and that take into account the economic and social needs and heritage of those communities. National Standard 9 states that conservation and management measures shall, to the extent practicable, minimize bycatch and, to the extent bycatch cannot be avoided, minimize the mortality of that bycatch. Certainly there are technological and fishing behavior modifications that can be (and have been) applied to address bycatch problems. However, effort controls and measures that achieve a more rational and efficient application of effort should also be explored, developed, and adopted, as appropriate and effective effort, applied more efficiently to target stocks, would reduce bycatch in the fishery as a whole. Finally, National Standard 10 requires that conservation and management measures shall, to the extent practicable, promote the safety of human life at sea. Measures that encourage fishermen to fish as fast and hard as possible have been shown to create risks to safety at sea; measures that allow fishermen to decide when to go to sea, with less pressure to catch fish before someone else does, reduce such risks.

3. ACCESS LIMITATION IN U.S. FISHERIES

3.1 Status of implementation

While there remain numerous challenges in fishery management today, among the most difficult is dealing with overcapitalization and excessive effort. Solving the biological problems of overfishing and bycatch are an imperative and the recent changes to the Magnuson-Stevens Act through the SFA reflect that. However, a root cause of those problems and a major impediment to solving them is the enormous effort, both active and latent, that exists in the U.S. fisheries. The more capital that is amassed in the fisheries, particularly capital that is out of balance with the available natural resources, the greater the pressure to overfish, to take undue risks in setting quotas, to prematurely reopen or release restrictions on effort in rebuilding fisheries and to engage in allocation battles (Ginter and Rettig 1978).

In recognition of the need to address problems associated with overcapitalization and excessive effort, the Councils have recommended, and NMFS has implemented, access limitation measures in every major commercial fishery in the United States except the penaeid shrimp fisheries in the Gulf of Mexico and South Atlantic region. As of October 1999, of the 41 approved FMPs, 27 contain measures that restrict access to at least some extent and three others allow no harvest at all in the EEZ (Appendix B). Approved measures range from licence and/or vessel moratoria to freely transferrable individual transferrable quotas (ITQs). Licence/vessel reductions, restrictions of effort through Days at Sea (an allocation of effort to individual vessels in the fishery) or other constraints, effort buyout programmes and non-transferrable IFQs have also been implemented. In addition, the Councils have informed the public through announcement of "control dates" that access may be limited in the future in many other U.S. commercial fisheries.

The United States has also begun to limit access of its citizens participating in international commercial fisheries. A treaty (South Pacific Tuna Treaty) was negotiated with the Forum Fisheries Agency in 1987 that included authorization for a limited number of permits (50) to be issued to U.S. tuna purse seine vessels to fish in the domestic waters of 16 Pacific island nations; longliners also may apply for these permits. About 35 U.S.-flagged tuna purse-seiners have actively fished in the last few years in the western tropical Pacific. The Inter-American Tropical Tuna Commission has recently begun discussions that would limit the number of tuna purse-seine vessels (including U.S. vessels) fishing in the eastern tropical Pacific.

3.2 Control dates

Control dates have been used by the Councils and NMFS to inform the public that a limited access programme is being considered for a particular fishery and that anyone entering the fishery after the control date is not assured that he/she will be given access to the fishery once the limited access programme is adopted. The intent of control dates is to reduce speculative entry into fisheries. The public is notified of the control date and its significance through publication of an Advance Notice of Proposed Rulemaking in the Federal Register. As of October 1999, control dates had been established for 26 federally managed fisheries and others were under consideration. Legal considerations require that control dates be relatively recent in order to be valid and, when a control date is established, there should be a reasonable expectation that an access limitation programme will be developed and implemented in the near future. Control dates that are several years old generally must be rescinded or replaced with more recent dates, if a Council still intends to develop an access limitation programme in that fishery.

3.3 Licence/vessel moratoria and limitations

Licence and vessel moratoria and limitations are designed to cap or reduce the number of participants and, or, vessels in a fishery by establishing criteria for their continued inclusion, such as historical participation at some threshold level. As of October 1999 there were 15 moratoria and 11 licence/vessel limitation programmes in place in federally managed U.S. marine fisheries. The extent of use of these programmes varies considerably among regions of the country. In the northeastern United States, seven of the 11 approved FMPs contain licence or vessel moratorium provisions and another (Atlantic salmon) allows no harvest in the EEZ. But in the Southeast, only three of the 16 approved FMPs contain such provisions; two others (South Atlantic and Gulf of Mexico Red Drum) allow no harvest in the EEZ; and one (Atlantic Billfish) allows no commercial harvest. Five out of seven FMPs on the Pacific Coast and in the Western Pacific region include licence or vessel moratoria (and a sixth, for the salmon fisheries, has limited entry programmes run by the states); four out of five Alaska FMPs include these provisions. This distribution reflects, in part, the choices of the regional Councils, since they are given considerable flexibility under the Magnuson-Stevens Act to recommend management measures to address problems and issues in fisheries in their areas of jurisdiction. The North Pacific Council, for example, has chosen to implement moratorium measures even though the majority of stocks in that area (the EEZ off Alaska) are not overfished. The New England and Mid-Atlantic Councils have taken similar actions, but in response to problems resulting from severely overfished and overcapitalized fisheries. The extent to which such programmes actually reduce effort varies, as is discussed below.

3.4 IFQs/ITQs

IFQs and ITQs (a subset of IFQs, distinguished by their transferability) are among the management tools that can be used to constrain effort and to achieve rational application of capital to the available fish resources. Their primary purpose has generally been to achieve a better match of capacity to resource productivity and to address economic inefficiencies by eliminating derby fisheries and allowing for consolidation and distribution of fishing effort. IFQs are unique in their reliance on market-based forces to distribute effort and benefits. Traditional fishery management tools have focused on input controls (e.g. restrictions on gear, days at sea, seasons) and output controls (e.g. quotas, bag and, or, trip limits). These traditional tools, particularly input controls, seek to limit the productivity of fishing vessels with resultant effects on the efficiency and profitability of both fishing vessels and processors. The input/output control approach also places a significant administrative burden on fishery managers as they are often required to issue "command and control" measures for the fishery to replace decisions that might better be made by the individual entrepreneur (e.g. When and how should I fish?) or by the market. Fishery management based on transferable individual shares of the harvest meets the same goal of output controls, but with the added efficiency of private ownership and market transferability of the access to that output.

The United States currently has five fisheries under IFQ management: Surf clams and ocean quahogs (Mid-Atlantic), halibut (Alaska), sablefish (Alaska), wreckfish (South Atlantic) and the bluefin tuna purse seine fishery (North Atlantic). IFQs are currently subject to a moratorium in the United States, which was imposed by Congress through the SFA in 1996. The Gulf of Mexico Council had developed, and NMFS had approved but not yet implemented, an ITQ programme for a sixth fishery - the commercial red snapper in the Gulf of Mexico - when the SFA moratorium was imposed. That programme has, therefore, not been implemented. The major impetus behind the moratorium appears to have been concern over the design and implementation of the North Pacific halibut/sablefish ITQ programme though there are a number of social and economic issues associated with IFQs (e.g. afffects on fishing communities and on vessel crew members) that have fueled vigorous public debate in the United States. The Magnuson-Stevens Act also includes a prohibition on the sale of initial ITQs, which is particularly troublesome to both economists and environmentalists - albeit for different reasons. Many economists feel that the most expeditious and efficient method for allocation of quota shares is by open sale to the highest bidder(s). Some environmentalists, and others, are opposed to what they view as a "giveaway" of the fish, which are a public resource. A more detailed discussion of these IFQs is provided by the National Research Council (1999) and Wertheimer and Swanson (2000).

4. FISHERY COOPERATIVES

Fishery cooperatives are relatively new in U.S. fisheries. Although developed as alternatives to IFQs, cooperatives have thus far not faced the same level of public and political resistance and, at least under certain circumstances, may not be subject to the SFA moratorium on IFQs. Instead of allocations of fish being given to individual vessels, participants in cooperatives agree among themselves on how to share an allocation made to the cooperative or to the industry sector operating as a cooperative. Vessel owners or operators then coordinate their fishing activities to achieve economic efficiency or to meet other mutual objectives.

There are currently two cooperatives operating in the United States - one for whiting vessels in the Pacific Northwest and one for Alaska pollock vessels fishing in the Bering Sea. Four companies holding limited entry permits in the catcher-processor sector of the offshore whiting fleet off Washington and Oregon voluntarily formed a cooperative in 1997 to allocate among themselves the quota available to that sector of the fishery; there was no government involvement. Their main objective was to eliminate derby fishing and to reduce bycatch of other species. The U.S. Department of Justice was consulted regarding potential antitrust violations; the Department concluded that the cooperative did not appear to have an anti-competitive effect (NRC 1999). The Bering Sea cooperative resulted from the American Fisheries Act of 1998, which included statutory authority for catcher-processors, shore-based processors and motherships in the Bering Sea pollock fishery to form cooperatives. Cooperatives are also being considered for possible use in the Gulf of Alaska pollock fishery.

5. BUYBACK PROGRAMMES

These programmes have been used to reduce capacity in U.S. marine fisheries by purchasing permits, vessels, and/or fishing gear from fishermen. Latent or active effort, or both, can be reduced through buybacks, depending on the criteria of the programmes. Since 1976, the U.S. Government has authorized 10 buyback programmes under various statutory authorities, including the Interjurisdictional Fisheries Act 1986, the Sustainable Fisheries Act 1996, and the American Fisheries Act 1998. Most programmes have focused on buying back commercial fishing permits, though some have bought vessels or placed restrictions on their future use. Some have also provided economic assistance to fishermen exiting the fishery. Congress has recognized the potential value of buyback programmes; the Magnuson-Stevens Act explicitly provides for fishery capacity reduction programmes, including industry-funded programmes under certain conditions (Section 312). Five U.S. marine fisheries have thus far been the subject of buybacks: Pacific Northwest salmon, New England groundfish, Texas shrimp, Bering Sea groundfish, and Alaska Dungeness crab. The summaries below are based on a U.S. General Accounting Office report prepared for Congress in 1999 (GAO 1999).

The Pacific Northwest salmon fishery has recently been plagued by excessive harvesting capacity, declining stocks, and increased numbers of salmon stocks listed as threatened or endangered under the Endangered Species Act. There have been five separate buyback programmes; none are currently active. All of the programmes were used to buy back state-issued commercial limited access permits, primarily in the State of Washington. The Washington State buybacks were largely in response to shifts in allocation to tribal fishermen or were a form of disaster relief. One of the programmes purchased vessels; another paid vessel owners a portion of their vessels' value in exchange for a 10-year abstinence from commercial salmon fishing. Most of the purchased vessels were resold, but with restrictions on their future use in the fishery.

Many of the major stocks in the New England groundfish fishery (e.g. cod, haddock, yellowtail flounder) have been severely overfished and are in the process of recovery. To accomplish this, drastic cutbacks in effort (through an annual Days at Sea effort allocation) have been required. At the same time, the number of vessels landing groundfish in New England has doubled from the 1980 level (Kitts et al. 1998). Two programmes have been used to buy back permits and vessels since 1995, neither is currently active. Vessels were purchased through a reverse auction (lower bids, weighted by groundfish catches, were accepted first in order to maximize effort purchased per dollar) and were scrapped, sunk or converted to uses other than commercial fishing. All Federal permits associated with purchased vessels, whether for the multispecies fishery or other fisheries, were also surrendered.

The Gulf of Mexico shrimp fishery is heavily overcapitalized and participants have had to face issues such as incidental takes of sea turtles and large bycatches of juvenile red snapper and other commercially and recreationally important finfish. Imports and aquaculture of shrimp have also created economic problems in the U.S. industry. A buyback of Texas state bay and bait shrimping permits began in 1996 to reduce the shrimp trawl effort in the western Gulf of Mexico.

Stocks in the Bering Sea groundfish fishery off Alaska are not overfished, but fishing capacity is large and there are significant allocational and other socio-economic issues (e.g. large non-Alaskan vessels competing with smaller Alaskan vessels and with fishery-dependent communities in western Alaska). A programme to buy back nine large pollock vessels and their associated permits was undertaken in 1998. Eight of the vessels were scrapped and the ninth is prohibited from fishing in U.S. waters.

The Dungeness crab fishery in Glacier Bay, Alaska, takes place largely within the boundaries of a national park. Because the National Park Service is interested in reducing commercial fishing activities in the park, a buyback programme, administered by the Park Service, was begun in 1999. The programme will purchase state permits and possibly vessels and gear.

The total cost of these buyback programmes was approximately $140 million. More than 3000 permits have been bought back and about 600 vessels have been purchased or had their use in the fisheries restricted. Additional buyback programmes have been proposed in 1999 by the commercial fishing industry and the State of Washington, which would potentially affect Bering Sea/Aleutian Islands crab, Northwest salmon, Atlantic swordfish, Atlantic sea scallop, and Atlantic shark fisheries. A programme proposed by West Coast groundfish fishermen is also being considered though recent reductions in quotas due to declining stocks may make it difficult for the industry to afford to fund the cost of such a programme in that fishery.

6. EFFECTIVENESS OF ACCESS LIMITATION MEASURES

Limited access programmes are now an integral component of the U.S. fishery management system. However, their success in addressing the biological, economic and social problems of our fisheries has varied among the regions, fisheries and type of approach selected.

Control dates, in themselves, are the weakest tool employed to control access in the U.S. marine fisheries in that they have no direct regulatory effect and impose no obligation on a Council or the Secretary to use those dates as cutoffs for entry into the fishery. Thus, declaration of a control date does not in itself cap effort. Whether or not control dates have a significant effect in reducing the number of fishermen that might have entered a fishery, or in inhibiting increases in vessel numbers, size and/or fishing power that might otherwise have occurred, is difficult to assess. There may be some discouragement of speculative entry or investment by putting the public on notice that, after a certain date, a person's participation in a fishery may not result in his or her inclusion, should a limited entry system be implemented. However, there is also some evidence that, at least in some fisheries, there has actually been an increase in effort by fishermen hoping to establish a history that may result in their being "grandfathered" into the fishery should the Council or NMFS ultimately choose not to apply the published control date.

Those fishermen who pay attention to Council actions appear to take control dates seriously; control dates are discussed on VHF radio at sea and even on the internet. Anecdotal information suggests that when a control date is anticipated many fishermen make sure that their landings of the species in question are increased and, or, recorded and that they hold the appropriate permits. In the West Coast groundfish fishery for example, there is evidence that the control date and Pacific Council discussions of the qualifying period for inclusion in the fishery under a limited access programme influenced fishermen's actions. One factory trawler entered the whiting fishery 15 days before the end of the qualifying period in an attempt to qualify for a permit. At least two vessels were purchased and several more were built with the intent of qualifying for the fishery in a larger size class and several fishermen sold vessels without their "fishing history", i.e. they reserved the qualifying history for use on another vessel.

In the Alaska halibut fishery, the North Pacific Council established the first "cut-off" date (equivalent to a control date) for limiting entry as December 31, 1978. However, while the date was being discussed and a limited entry programme developed, effort was increasing in the fishery and the length of the commercial fishing season in area 3A decreased from about 150 days in 1970 to less than 100 days in 1979. In 1982 the Council voted to establish a moratorium on new entrants to the halibut fishery, and established a new cut-off date of December 31, 1981. The proposed moratorium was ultimately disapproved, but effort in the fishery had further increased and the season shrank to only about 20 days even though quotas were actually increasing. By the time the Council adopted a halibut ITQ programme in December 1991 the season in areas 3A and 2C had been reduced to only a few days. Although the cut-off date for the ITQ programme was 31December 1990, it was not implemented until March 15, 1995. A study by the State of Alaska's Commercial Fisheries Entry Commission in 1996 (P. Smith, NMFS Alaska Regional Office, Juneau, Alaska, pers. com.) found that between 1991 and 1995, 836 new operations entered the area 2C halibut fishery, 1023 entered the area 3A fishery and 366 entered the area 3B fishery in spite of the well publicized cut-off date. Thus, the public process of development of an access limitation system was paralleled by spiraling effort, much of which ultimately was included in the fishery.

In the Atlantic highly-migratory species (HMS) fishery, establishing a control date encouraged some permit holders, even those who did not fish their permits, to apply for permit renewals year after year to increase the likelihood that they would be included in any access limitation programme that might be developed. In effect, latent effort was inadvertently maintained. In June 1999, NMFS implemented a limited access programme in the HMS fisheries for swordfish, sharks and the pelagic longline fishery for Atlantic tunas. As of 31August 1999 the number of permit holders in the fleet was 498 for swordfish, compared to 1000 in 1997; 906 for sharks, compared to 2257 in 1996; and 505 for tunas, which was unchanged as a result of the limited access programme. However, while there was a significant reduction in the number of permits issued in the swordfish and shark sectors of the fishery there may have been little reduction in the number of active permits in the fishery and, thus, little immediate reduction in effort in the fishery.

The fact that control dates are often established well after the public has become aware of a Council's intention of declaring a date and long after the first indications that the Council may ultimately limit access in a fishery, likely results in many fishermen taking action to establish some history in that fishery, either through fishing or acquisition of a permit. By the time the Council is ready to adopt final measures for a limited access programme, years may have elapsed and there may be considerable pressure to include those who entered the fishery after the control date. Under these circumstances the control date has very limited effectiveness. Control dates that are set without years of prior public discussion, that are announced widely, and that are followed quickly by access limitation programmes are probably more effective. There may also be some reduction in the willingness of lenders or prospective buyers to purchase vessels or equipment in fisheries for which control dates have been declared, especially if the borrower cannot demonstrate a solid history in the fishery.

The mere imposition of limitations on the number of permits has generally succeeded in eliminating the expansion of fishing effort, at least in terms of the number of vessels in the fishery. However, it usually has not solved the problem of overfishing. Often, the limitation followed a moratorium that resulted in little, if any, reduction in the authorized number of participants (e.g. the Hawaii longline fishery, the Gulf of Mexico red snapper fishery, and the Alaska groundfish and scallop fisheries). In many (probably most) cases, the Councils have been inclusive when it came time to approve a limited access programme and set criteria for continued participation in the fishery. The New England Council for example, has in some fisheries (Northeast multispecies, summer flounder, scup, black sea bass, American lobster) accepted proof of a single landing of any quantity of a species in that fishery as proof of historical participation (H. Goodale, NMFS Northeast Regional Office, Gloucester, Massachusetts, p.c.). There are also cases however, including the Atlantic swordfish and shark fisheries, in which qualification criteria were set such that significant reductions in permits resulted. In addition, Councils have sometimes established long qualification periods that have allowed the inclusion of a large number of fishermen and vessels (e.g. Illex and Loligo squid, and butterfish fisheries of the Mid-Atlantic). The inclusion of large numbers of historical participants can mean that a large amount of latent effort may be built into the limited access programme. Under those circumstances, when the fishery rebuilds, dormant effort could be reactivated and the potential benefits that might otherwise have accrued to those fishermen who remained in the fishery through the hard times could be dissipated.

In establishing the moratorium on the development and implementation of new IFQ programmes in the United States through the SFA, the Congress also required that the National Academy of Sciences (NAS) review the existing IFQ programmes in the United States and to make recommendations on their future use. The results of that study (NRC 1999) are given by Wertheimer and Swanson (2000). In general, the study concluded that U.S. IFQ programmes are meeting most of their objectives and are successful, though not without problems. Clearly, IFQs are not a universal solution to all the problems of fishery management. They require a considerable initial investment in design and implementation and, in most cases, are subject to significant implementation and monitoring costs. IFQ management requires sound science for determination of quotas and considerable enforcement to ensure adherence to regulations. When appropriate however, IFQs can be a powerful tool in ensuring effective and efficient fisheries management.

IFQs are consistent with the precautionary approach to fisheries management to the extent that they allow permit holders a vested interest in the fishery through ownership of the right to harvest. One of the greatest concerns regarding the use of IFQs is their impact on the historical and cultural aspects of the fishery. For some fishery participants, and even environmental groups, privatization of fishing rights smacks of corporate ownership, concentration of wealth by powerful vessels and, or, worse yet, foreign ownership. Yet the Alaska halibut and sablefish ITQ programmes are examples of closely regulated IFQ systems that were designed specifically to address the safe-guarding of the social and cultural fabric of this fishery.

Cooperatives have shown promise in filling the gap between: permit or vessel-limitation programmes that are so inclusive that derby-style fisheries continue, and true IFQ programmes. The first few years of experience of the West Coast whiting cooperatives indicated that economic efficiency, including product recovery rates, improved, and bycatch of other species that were of biological and regulatory concern decreased. Success of the whiting cooperative has been attributed at least in part to the relatively small number of homogeneous participants. There have been negative consequences as well: some excess capacity from the whiting fishery moved into other groundfish fisheries (e.g. the yellowfin sole and rock sole fisheries in the Bering Sea) that were already overcapitalized (NRC 1999).

While there are no data yet available on the effectiveness of the majority of buyback programmes, results of the capacity reduction programme for the Northeast multispecies fishery have been examined (Kitts et al. 1998; NMFS 1998). As of October 1995 there were 5128 vessels with associated permits for the Northeast multispecies fishery; of these, 2451 were known to have sold at least some marine products (not necessarily groundfish) (Kitts and Thunberg, unpublished). The vessel buyback programme removed 79 vessels from the fishery between 1995 and 1997, in two phases, which accounted for 10.1% of baseline physical capital, 4.9% of all allocated days-at-sea (DAS), and 16.8% of all DAS that were actually used in the 1996 fishing year. The vessels bought back were, on average, larger and more active than other vessels holding permits in the fishery. Kitts and Thunberg (unpublished) examined the economic considerations of the programme and concluded that it was unlikely that the buyback programme would significantly reduce incentives for input substitution or "capital stuffing" by those remaining in the fishery, nor would it be likely to reduce existing fishing power enough to constrain, or ameliorate, the derby effects of a quota management system (though the New England Council has yet to adopt a "hard" quota for the fishery). However, they also concluded that the vessel buyback could slow the pace of a derby and capital-stuffing.

While conservation benefits of the Northeast multispecies buyback programme were difficult to distinguish from management measures implemented by the New England Fishery Management Council during the same period (i.e. Amendment 7 to the FMP), the programme likely did result in reduced fishing mortality, at least in the short term (NMFS 1998). Further, the programme achieved its goal of providing a means for distressed fishermen to exit the fishery (Kitts et al. 1998). Substantial latent effort remained in the fishery, even after accounting for the capacity removed through the vessel buybacks and there is continuing concern that a substantial amount of this latent effort could be reactivated as the stocks rebuild (e.g. only 21.1% of the groundfish fleet's allocated DAS were actually used in the 1996 fishing year (Kitts et al. 1998)). Owners whose vessels were bought-back were not required to surrender the right to reenter the fishery provided they purchase a vessel with the necessary permits. An additional benefit of the programme was that, since all Federal fishery permits associated with each purchased vessel were also retired, a total of 463 permits (e.g. for American lobster and Atlantic sea scallops) were also removed from service through the purchase of only 79 vessels (Kitts et al. 1998), thus reducing effort in those fisheries.

7. EXPANSION OF LIMITED ACCESS MEASURES

Most of the U.S. marine fisheries limited access management experience to date has been with commercial fisheries. However, that is changing. In 1999 NMFS published at the request of the Gulf of Mexico and South Atlantic Councils control dates for the for-hire (charterboat and headboat) sectors of the Gulf of Mexico reef fish fishery and the Gulf of Mexico and South Atlantic king and Spanish mackerel fisheries. For-hire vessels are transitional between purely commercial and purely recreational endeavours, and may be the next sector to which limited access measures are applied in the United States. The extent to which limited access programme will actually be implemented in for-hire fisheries and what the programmes will look like is yet to be determined.

8. CONCLUSIONS

Fishery management in the United States has evolved from relatively simple responses to biological problems in the 1970s to the much more complex problems of allocation and overcapitalization in the 1990s. Access limitation schemes have been developed in response to these problems and span a range from control dates, which may have little real impact in controlling effort, to full-blown IFQ programmes, which allocate rights to the resource to a finite number of participants on an individual basis. The Councils have developed, and NMFS has implemented, numerous FMPs and FMP amendments with the intent of limiting effort and, or, reducing capitalization in the commercial fisheries. However, the Councils have generally adopted inclusive programmes, such that actual effort has seldom been significantly reduced upon implementation. Limited access permit programmes have provided for further evolution of the concept of rights-based fishery management in the United States and experimentation with several forms of its application. Examples of the range of management schemes that have resulted include: co-management, as reflected in the Alaska Community Development Quotas; industry-based programmes, with minimal government intervention, such as the West Coast whiting cooperatives; IFQs in fisheries on both coasts of the United States; and government and, or, industry-funded buybacks of fishing effort. There is evidence that limited access may next be applied to the for-hire sectors of many fisheries. Given that the US population continues to increase and that the productivity of living marine resources is finite, it is very conceivable that some form of access limitation may ultimately be applied in the marine recreational fisheries. The heat of public debate can be expected to directly correlate with the effectiveness of limited access measures in controlling effort and capitalization in the fisheries.

9. ACKNOWLEDGMENTS

The authors thank the following for their comments regarding the effectiveness of control dates in U.S. fisheries: Rod Dalton, NMFS Southeast Regional Office, St. Petersburg, Florida; Peter Fricke, NMFS Headquarters Office, Silver Spring, Maryland; Jay Ginter, NMFS Alaska Regional Office, Juneau, Alaska; Hannah Goodale, NMFS Northeast Regional Office, Gloucester, Massachusetts; Rod McInnis, NMFS Southwest Regional Office, Long Beach, California; Richard Raulerson, NMFS Southeast Regional Office, St. Petersburg, Florida; Phil Smith, NMFS Alaska Regional Office, Juneau, Alaska; John Ward, NMFS Headquarters Office, Silver Spring, Maryland.

10. LITERATURE CITED

GAO 1999. Commercial fisheries buyback programmes, United States General Accounting Office, GAO/RCED-00-SR, Washington, D.C.

Ginter, J.J.C. and R.B. Rettig 1978. Limited entry revisited, in R.B. Rettig and J.J.C. Ginter, eds., Limited entry as a fishery management tool, Proceedings of a national conference to consider limited entry as a tool in fishery management, Denver, Colorado, 157-174.

Kitts, A. and E. Thunberg. Economic considerations in the design of northeast U.S. fishing vessel buyout programmes, National Marine Fisheries Service, Northeast Fisheries Science Center, Woods Hole, Mass., 43 p., unpublished.

Kitts, A., E. Thunberg and G. Sheppard 1998. The Northeast groundfish fishery buyout programme, NOAA Technical Memorandum, NMFS-NE-115, 39-45.

National Marine Fisheries Service. NMFS 1991. Strategic Plan of the National Marine Fisheries Service, National Marine Fisheries Service, Silver Spring, Maryland, 21 p.

National Marine Fisheries Service. NMFS 1996. Magnuson-Stevens Fishery Conservation and Management Act as amended through October 11, 1996. NOAA Technical Memorandum, NMFS-F/SPO-23, 121 p.

National Marine Fisheries Service. NMFS 1998. Report to Congress on Northeast multispecies harvest capacity and impact of Northeast fishing capacity reduction, 19 p.

National Research Council. NRC 1999. Sharing the fish: toward a national policy on individual fishing quotas, National Academy Press, Washington, D.C., 422 p.

Shotton, R. 2000. (Ed.) Current Property Rights Systems in Fisheries Management. In Use of Property Rights in Fisheries Management. Proceedings of the FishRights99 Conference. Fremantle, Western Australia, 11-19 November 1999. FAO Fisheries Technical Paper No. 404/1, FAO, Rome.

Wertheimer, A.C., and D. Swanson 2000. The use of individual fishing quotas in the U.S. EEZ, [this symposium].

Appendix 1
National Standard Guidelines of the Magnuson-Stevens Act

1. Conservation and management measures shall prevent overfishing while achieving, on a continuing basis, the optimum yield from each fishery for the United States fishing industry.

2. Conservation and management measures shall be based on the best scientific information available.

3. To the extent practicable, an individual stock of fish shall be managed as a unit throughout its range, and interrelated stocks of fish shall be managed as a unit or in close coordination.

4. Conservation and management measures shall not discriminate between residents of different states. If it becomes necessary to allocate or assign fishing privileges among various United States fishermen, such allocation shall be (a) fair and equitable to all such fishermen; (b) reasonably calculated to promote conservation; and (c) carried out in such manner that no particular individual, corporation, or other entity acquires an excessive share of such privileges.

5. Conservation and management measures shall, where practicable, consider efficiency in the utilization of fishery resources; except that no such measure shall have economic allocation as its sole purpose.

6. Conservation and management measures shall take into account and allow for variations among, and contingencies in, fisheries, fishery resources, and catches.

7. Conservation and management measures shall, where practicable, minimize costs and avoid unnecessary duplication.

8. Conservation measures shall, consistent with the conservation requirements of this Act (including the prevention of overfishing and rebuilding of overfished stocks), take into account the importance of fishery resources to fishing communities in order to (a) provide for the sustained participation of such communities, and (b) to the extent practicable, minimize adverse economic impacts on such communities.

9. Conservation and management measures shall, to the extent practicable (a) minimize bycatch and (b) to the extent bycatch cannot be avoided, minimize the mortality of such bycatch.

10. Conservation and management measures shall, to the extent practicable, promote the safety of human life at sea.

Appendix 2
Limited Access Management Measures in U.S. Fisheries

Fishery Management Plan

Licence or vessel moratorium

Licence or vessel limitation

ITQ or IFQ

Control date

Buyback programme

Comments

Atlantic Sea Scallops

Yes

No

No

Yes

No

Days at Sea (DAS) effort controls.

American Lobster

Yes

No

No

Yes

No


Northeast Multispecies

Yes

No

No

Yes

Yes

DAS effort controls.

Atlantic Salmon

No

No

No

No

No

No fishery allowed in the EEZ.

Atlantic Surf Clam & Ocean Quahog

Yes

No

ITQ

Yes

No

First ITQ program in the U.S.

Atlantic Mackerel, Squid & Butterfish

Yes

No

No

Yes

No

Control dates for squid and butterfish; different control date for Atl. mackerel. License moratoria for squid and butterfish; no license moratorium for Atl. mackerel.

Summer Flounder, Scup & Black Sea Bass

Yes

No

No

Yes

No


Atlantic Bluefish

No

No

No

No

No


Spiny Dogfish

No

No

No

No

No


Atlantic Herring

No

No

No

Yes

No


Monkfish

Yes

No

No

Yes

No


South Atlantic Snapper/Grouper

No

Yes

Yes

Yes

No

Wreckfish fishery is ITQ; implemented April 1992.

Atlantic Coast Red Drum

No

No

No

No

No

No harvest allowed in EEZ.

South Atlantic Shrimp

No

No

No

Yes

No

Control date for rock shrimp only.

South Atlantic Corals

No

No

No

No

No

No harvest in the EEZ for most species.

South Atlantic Golden Crab

No

Yes

No

Yes

No

Controlled access regime; specific criteria for permits for 3 fishing zones.

Gulf/S. Atlantic Spiny Lobster

No

Yes

No

No

No

FMP has adopted Florida's trap reduction program for the EEZ.

Coastal Migratory Pelagics

Yes

No

No

Yes

No

Control date for commercial king and Spanish mackerel (1995). Commercial license moratorium for king mackerel. Control date for commercial gillnet fishery for Atl. Group kings N. of Pt. Lookout, NC (1999). Control date for dolphin/wahoo commercial fisheries in S. Atl. (1999). Control date for recreational for-hire fisheries in Gulf of Mexico (1999).

Gulf of Mexico Corals

No

No

No

Yes

No

Control date for live rock (1994). No harvest in the EEZ for most species.

Gulf of Mexico Red Drum

No

No

No

No

No

No harvest allowed in the EEZ.

Gulf of Mexico Stone Crab

Yes

No

No

Yes

No

Temporary moratorium on Federal permits for vessels, ends no later than 06/30/02.

Gulf of Mexico Shrimp

No

No

No

No

No


Gulf of Mexico Reef Fish

Yes

Yes

No

Yes

No

Red snapper ITQ program approved in 1995, but not implemented due to Congressional action to freeze ITQ programs. Reef fish fishery permit moratorium through the end of the year 2000. License limitation for red snapper only. Control date for recreational for-hire fisheries for reef fish (1999).

Caribbean Spiny Lobster

No

No

No

No

No


Caribbean Shallow-water Reef Fish

No

No

No

No

No


Caribbean Corals/Invertebrates

No

No

No

No

No


Caribbean Queen Conch

No

No

No

No

No


Washington, Oregon, California Salmon

No

Indirect, through state programs

No

No

Yes

No Federal permits, but states have limited access programs that serve to control effort in these fisheries through restrictions on commercial landings.

Coastal Pelagic Species

No

Yes

No

Yes

No

Limited entry system in the commercial fishery (except for squid), south of 39o N. lat.

Pacific Coast Groundfish

No

Yes

No

Yes

No

Limited entry and open access fisheries. Cooperative in the offshore whiting fishery.

Western Pacific Crustaceans

No

Yes

No

No

No

Limited access permit for Permit Area 1; harvest guideline for Permit Area 1.

Western Pacific Precious Corals

No

No

No

No

No

No harvest allowed except by 1 permittee.

Western Pacific Bottomfish

No

Yes

No

Yes

No

Limited access permit for Ho'omalu Zone and Mau Zone.

Western Pacific Pelagics

Yes

Yes

No

Yes

No

Limited access permit for longline only; former control date; 1991-94 moratorium on new entry.

Gulf of Alaska Groundfish

Yes

No

Yes

Yes

No

ITQ is for Pacific halibut and sablefish fixed gear only. Vessel moratorium.

Alaska High Seas Salmon

No

Yes

No

No

No

License limitation is by the State of Alaska.

Bering Sea/Aleutian Is. Groundfish

Yes

No

Yes

Yes

Yes

ITQ is for Pacific halibut and sablefish fixed gear only. Vessel moratorium. Cooperative in pollock fishery.

Bering Sea King and Tanner Crab

Yes

No

No

No

No

Vessel moratorium.

Alaska Scallops

Yes

No

No

Yes

No

Vessel moratorium.

Atlantic Highly Migratory Species







(Sharks)

No

Yes

No

Yes

No

Directed and incidental limited access permits.

(Bluefin Tuna)

No

Yes (purse seine, longline)

Yes (purse seine only)

Yes

No

Individual vessel transferable quotas for purse seiners. Longline permits are limited access; must have limited access swordfish/shark permit to longline for tunas

(Yellowfin, other tunas)

No

Yes (purse seine, longline)

No

Yes

No

Longline permits are limited access; must have limited access swordfish/shark permit to longline for tunas.

(Swordfish)

No

Yes

No

Yes

No

Directed and incidental limited access permits

Atlantic Billfish

No

No

No

No

No

No commercial sale is allowed.

Property Rights on the High Seas: Issues for High Seas Fisheries - A. Stokes

A. Stokes*
Department of Agriculture, Fisheries and Forestry
GPO Box 858, Canberra ACT, Australia 2601
<[email protected]>

* This paper was written with the assistance of Matthew Gleeson and Jennifer Doust both of the Department of Agriculture, Fisheries and Forestry, Australia. However, all errors are the responsibility of the author alone. The views expressed in this paper are those of the author alone and do not necessarily represent the views of the Department.
1. INTRODUCTION

The open access characteristics of the world's fisheries that existed up until the last few decades of the 20th century contributed to the overexploitation of many of the world's major fish stocks as demand and catching capacity outgrew biological productive capacity. This forced a rethink of the appropriateness of preserving the concept of 'freedom of the seas' which was the pillar of the open access argument. Some concerned coastal states took unilateral action by making claims to adjacent territorial seas and in effect expanded the areas and resources over which they claimed sovereign jurisdiction. Other states entered into agreements for various high seas fisheries to promote cooperation.

The culmination of these events was the development of the 1982 United Nations Convention on the Law of the Sea 1982 (1982 Convention), which seeks to balance the preferences of coastal and distant water fishing nations and provide a better foundation for the conservation and effective use of fish stocks. The Convention provides for the establishment of a 200nm Exclusive Economic Zone (EEZ) in waters adjacent to coastal states, granting the state sovereign rights of access, exploitation and management within the zone. In addition the Convention reinforces the rights of parties to fish on the high seas subject to the duty to cooperate (either directly or through sub-regional, regional or international organisations) in the conservation and management of high seas living resources.

While the 1982 Convention provides a more stable and certain environment for around 90% of the world's marine fish resources, events with respect to transboundry and discrete high seas stocks1 made it clear that even this Convention was inadequate to prevent overfishing of high seas stocks and conflict between fishing nations. The fleets of distant water fishing nations, now banished from fishing grounds within the EEZ of coastal states, intensified their fishing of high seas stocks. Improved harvesting and processing technology assisted this intensification. The ambiguous nature of the rights of nations under the 1982 Convention with regard to high seas stocks perpetuated this situation by reducing the incentive to cooperate and in effect creating an open access environment. Further international reform was required.

1 The stocks which are of issue include straddling stocks (found in both EEZ and adjacent high seas waters), highly migratory stocks (primarily tunas, with the capacity to travel across many EEZ's and high seas areas), and discrete high seas stocks (are exclusively a high seas stock).
Agenda 21 of the Rio Declaration 1992 called for the convening of a United Nations conference on straddling and highly migratory stocks to assist the implementation of the 1982 Convention on the high seas. The United Nations Conference on Straddling Fish Stocks and Highly Migratory Fish Stocks commenced in April 1993 and concluded in December 1995. The resulting agreement (known here as the UN Fish Stocks Agreement, or UNFSA), which is yet to come into force, attempts to improve the application of the 1982 Convention provisions relating to high seas fisheries by:
i. promoting the adoption of compatible management strategies between EEZs and the adjacent high seas, most notably through the establishment of Regional Fisheries Management Organisations (RFMO)

ii. establishing special access rights to those states participating in or abiding by the RFMO and

iii. establishing cooperative enforcement rules.

While UNFSA is as yet untested, there is growing interest in its proposed effectiveness (e.g. Munro 1996, 1998). Most of this interest centres on the tools that UNFSA will employ to achieve better conservation and utilisation. The right to fish qualified by the obligation to cooperate parallels a system of property rights. However, how strong these rights are is questionable, and there are doubts surrounding the capacity to maintain cooperation, with the principle thesis being that the value of the right must be maintained if there is to be any hope of success. This issue is the topic of this paper.

The paper first briefly reviews the history of high seas management up to the development of a uniform framework under the 1982 Convention. The purpose of this is to highlight the historical forces that moulded the debate between coastal and distant water fishing nations over access to resources. This provides insight into the formulation of the framework of the 1982 Convention. In doing so, I examine the importance of effective property rights for the management of fisheries. Second, the paper provides an overview of both of the 1982 Convention and UNFSA to more precisely outline the issues. Third, I examine whether either agreement establishes an effective system of property rights over high seas fish stocks. The paper will argue that the arrangements mandated by the agreements do not in themselves sufficiently fulfil the criteria for an efficient property rights structure, and the structure and policies of the individual RFMO's will largely determine the success of the agreements. The underlying argument is that without an effective right there is unlikely to be cooperation between members and discord will undermine property rights further. Fourth, the paper uses a number of economic concepts (such as strategic behaviour theory) to determine the factors that impinge upon cooperation, and suggest ways in which the activities of the RFMOs could be conducted to improve the cooperative environment. Last, the issues are considered in an Australian context by examining the management arrangements of two of Australia's main high seas fisheries, the southern bluefin tuna fishery and the Tasman Rise orange roughy fishery.

2. BACKGROUND

2.1 A brief history of high seas management

The principle of freedom of the seas has been a powerful catch-cry, resisting attempts by various nations throughout the centuries to monopolise access to the sea and its increasingly important fish stocks. By the late 1890s a number of factors arose to challenge the uncompromising notion of the right to uninhibited access to marine resources. Most notably improved technology had resulted in a massive increase in fishing effort that exceeded beyond the productive capacity of a number of important fisheries. It was the overfishing of these shared stocks and the inability of any one nation to enforce control that was the catalyst for integrated action, resulting in a number of multilateral and bilateral management agreements for various Atlantic and Pacific fish stocks. During this period a number of coastal states had made claims to territorial seas to provide solitary access to, and control over, stocks. The debate over property rights cumulated in the Hague Conference for the Codification of International Law in 1930. This lead to the recognition of the rights of coastal states to claim territorial seas, although the extent of such a claim was not resolved, while maintaining freedom of the high seas (OECD 1997). The problem of unregulated open access in high seas fisheries was therefore unresolved. However the notional principle of demarcated rights was firmly enough entrenched within the international arena to set the direction for future debate.

The period after the Second World War saw further deterioration of fish stocks due to excessive effort and overexploitation. This was the result of a number of factors, including (a) insufficient scientific data resulting in excessive yield expectations, (b) technical progress in harvesting and processing, (c) expansion of distant water fleet, particularly due to depleted local stocks, (d) increased market demand for seafood, (e) domestic political pressures (notably pertaining to unemployment and the push for industrial development) which resulted in the use of such instruments as subsidies, (f) the lack of success of traditional management measures, and (g) the lack of well defined property rights (OECD 1997). While catches grew rapidly, rents were dissipated by competition and excess capital as the lack of property rights discouraged incentives to invest in the natural capital of the fishery to improve future returns.

Throughout this period there was increasing recognition that the concept of freedom of the seas was not conducive to maintaining either the biological or economic integrity of fisheries. The obsolescence of this concept lead many coastal states to implement extended fishery jurisdictions to promote effective management of coastal stocks. Importantly, during the 1970s there was a growing consensus among nations that a 200nm jurisdictional zone was required for effective management given that around 90% of the global fish harvest were taken within this area (Munro 1998). Nations also exhibited an increasing reliance on international and regional regulatory fishing bodies and conventions in an endeavour to provide consistency and cooperation in fisheries management. However, while coastal waters were afforded more effective management frameworks, fisheries beyond the territorial sea still remained relatively unregulated. To the frustration of many, the international regimes established by the Geneva Convention on Fishing and Conservation of Living Resources of the High Seas (1958) and the United Nations Convention on the Law of the Sea (1960) failed to rectify the problem of open access in high seas fisheries (OECD 1997).

The first real attempt to consolidate the piecemeal reforms implemented to overcome the common property problems created by open access in fisheries, particularly on the high seas, came with the United Nations Third Conference on the Law of the Sea 1973-1982 and the subsequent ratification of the 1982 United Nations Convention on the Law of the Sea in 1994. This Convention formalised the trend of expanded fishery jurisdictions by establishing a 200nm Exclusive Economic Zone for the sovereign rights of coastal states. While this provided exclusivity of management for the majority fish stocks, the issue of transboundary and discrete high seas stocks remained.

2.2 The 1982 United Nations Convention on the Law of the Sea

The 1982 Convention entered into force on the 16 November 1994. Parts V and VII deal with the issue of rights and obligations in fisheries. Part V establishes the EEZ under Article 56, providing the coastal state with essentially what are full property rights to the fishery resources within the zone. Articles 61 and 62 identify coastal state responsibilities with respect to the conservation and utilisation of living resources within the zone. Article 61 requires the coastal state to:

i. determine the allowable catch

ii. take into account the best available scientific evidence to be utilised to determine measures to avoid over-exploitation, including cooperating with the appropriate international organisations

iii. collect and share scientific information and

iv. install measures which will maintain and restore fish populations at a level allowing the maximum sustainable yield to be produced, subject to economic and environmental factors (including species interdependence).

Article 62 requires the coastal state to:
i. promote optimum utilisation of living resources and

ii. determine the harvesting capacity of its fleet and make agreements to permit other states to access the surplus.

The focus of the 1982 Convention is the conservation of resources. Economic considerations relate to the minimisation of adverse impacts on fishing communities and the full utilisation of fishing capacity. There is no mechanism mandated to provide for the economic efficient utilisation of resources within the zone, and in particular, the articles do not allude to the provision of property rights at the domestic level through quota or similar arrangements.

Articles 63 and 64 have provided for a continuing area of confusion in relation to high seas management: they attempt to seek a compromise to the conflicting wishes of coastal and distant water states with regards to the rule of law over highly migratory species, most notably the high valued tunas (Kaitala and Munro 1993). Article 63(1) identifies the need for states to coordinate measures, either directly or through subregional or regional organisations, to ensure cooperation and development of shared stocks (stocks which are found within the EEZs of two or more coastal states). Article 63(2) calls for similar measures to be applied for straddling stocks (stocks that are found within the EEZ and in the high seas adjacent to the zone). Unusually however the conservation of stocks is not raised and the focus of cooperative efforts is in the area adjacent to the EEZ and not over the whole stock (inside and outside of the EEZ).

Article 64 provides a somewhat dubious separation between the Article 63 species and highly migratory species (listed in Annex 1 of the Convention, which may be defined as moving across multiple EEZs and high seas areas). Paragraph 1 calls for cooperation in the conservation and optimum utilisation of these species either directly between nations or through appropriate international organisations. The much stronger focus on international management forums and utilisation than for the Article 63 species is in line with the wishes of distant water fishing nations not to allow coastal states to dominate the management regimes for these species (Munro 1998), which seems to be the case in relation to straddling stocks.

The direct guidance for high seas fisheries management is provided by Part VII. Article 87, subparagraph 1(e), institutes the freedom to fish on the high seas subject to exercising due regard for the interests of other states and abiding by the rights and obligations laid down under Articles 116 to 120 (Bernaerts 1988: 48-9). Article 116 qualifies high seas fishing freedoms by the requirement to take into account the interests of relevant coastal states and other treaty obligations. Articles 117 and 118 stress the requirement to cooperate and negotiate management measures to ensure the conservation of living resources. Article 119 details the process for determining allowable catches to achieve conservation. Article 120 applies to the conservation of sea mammals.

The role of Articles 116-120 in clarifying the rights of states on the high seas has been the subject of much debate, particularly the question of whether coastal states or distant water fishing nations interests dominate. Kailala and Munro (1993: 316) summarise this debate with the view that the Articles are "a model of vagueness and imprecision". Property rights for straddling and highly migratory fish stocks on the high seas are not clarified by the 1982 Convention. Instead heavy reliance is placed upon the ability of states to voluntarily cooperate, either directly or through regional organisations, to obtain a working compromise in the face of ever increasing conflict on the high seas. As alluded to above, Article 63(2) adds to only further confusion and internal contradiction.

Finally, the strain began to show. The decade after the Law of the Sea Conference concluded is littered with examples of conflict over fish resources. Disgruntled coastal states aired their discontent with threats to expand the EEZ beyond the 200nm limit to prevent what they saw as continual overfishing by high seas fleets (OECD 1997), which negatively affected the conservation efforts by the coastal states for these same stocks. High seas fish stocks came under increasing pressure as cooperation gave way to competition and the 1982 Convention became under threat of becoming an obsolete international instrument. Agenda 21 of the Rio Declaration (1992) called for a United Nations Conference to be held to resolve the issue of overfishing of straddling and highly migratory stocks on the high seas and thereby assist with the implementation of the 1982 Convention. Program C of Agenda 21 identified the problems associated with high seas fishing as:

i. the lack of regulation
ii. overcapitalisation and excessive fleet size
iii. vessel re-flagging to escape controls
iv. insufficiently selective gear
v. unreliable databases and
vi. a lack of effective cooperation between states.
By identifying these problems, and with the general moral authority which was provided by the Rio Declaration, Agenda 21 set the focus for the Conference.

2.3 The United Nations Conference on Straddling Fish Stocks and Highly Migratory Fish Stocks

The role of the Conference was to provide an agreement that would establish the implementation regime of the 1982 Convention in relation to straddling and highly migratory fish stocks. The failures of the 1982 Convention as identified under Agenda 21 (inadequate scientific data, lack of enforcability, re-flagging problems and the problems relating to the ambiguous interpretation of its provisions) established the agenda for the development of the new agreement (Barston 1995).

From the onset of the Conference there was division between the coastal states and the distant water fishing nations (Barston 1995, Munro 1998). Coastal states aimed at securing a binding agreement that would protect their rights under the 1982 Convention in relation to high seas fisheries (as defined by Article 116(b)). Distant water fishing nations, in contrast, wanted a non-binding agreement that would provide broad guidelines in relation to high sea management. They also sought to have any proposed management arrangements conducted by regional or sub-regional organisations in an attempt to mitigate the influence of coastal states in adjacent waters. An important aspect of this was the push for the coherence of measures across the whole of the migratory range of straddling stocks. Two opposing views had developed: those who wanted the management regime in the adjacent area to be consistent with that of the coastal State (the coastal State regime therefore being dominant), and those who wanted to avoid 'creeping jurisdictionalism' by having the cooperative management regime administered through an international organisation (Kaitala and Munro 1993). The aims of the distant water fishing nations were not surprising given that at that stage they accounted for around 65% of all high seas fishing (Munro 1998), making them major stakeholders.

Despite this division, positive steps were promptly taken to set a credible agenda for negotiations. It was agreed that:

i. there would be consistency between the management regimes of the EEZ and adjacent high seas area

ii. stocks would be managed on a sub-regional basis and

iii. management would be conducted by RFMO's (Munro 1998).

The Conference sat for six sessions. During the initial negotiations spanning the first three sessions a number of issues emerged as focal points, including:
i. the level of coherence and compatibility of conservation and management measures inside and outside areas of national jurisdiction

ii. principles of fisheries cooperation and management

iii. international cooperation through regional and subregional organisations

iv. flag and port state duties

v. action with regard to non-parties

vi. the form of compulsory dispute settlement and review procedures and

vii. special requirements for developing countries (Barston 1995).

Of the issues, three emerged as significant sources of dispute: (a) the compatibility of management measures, (b) enforcement and (c), flag state responsibilities. These divisions were driven by the reluctance of high seas fishing states to grant any concessions which would undermine the traditional regime2 of flag states; ambiguity over the form of any agreement and a reluctance to reach consensus; and a lack of support for developing a precise definition for adjacent area. This last point skewed the focus of the Conference towards the 'open ocean' and subsequently resulted in the failure to deal with rights within areas of dispute (Barston 1995) and therefore the fish stocks. This was to manifest itself in ambiguity within the subsequent agreement over where the powers of resource management reside within the RFMO (Munro 1998).
2 Flying flags of convenience masks the identity and origin of vessels and provides a means for states to by-pass enforcement responsibilities.
A consensus position over the form of the agreement was finally attained. The agreement would be binding (reflecting the will of the coastal states) and would apply to stocks within and without of the EEZ (emolliating the concerns of distant water fishing nations over coastal State dominance of management arrangements (Munro 1998).

2.4 The United Nation Fish Stocks Agreement

The Agreement for the Implementation of the United Nations Convention on the Law of the Sea of 10 December 1982 Relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks (known here as UNFSA or the Agreement) will come into force thirty days after it has been ratified by thirty countries. To date, 23 countries have ratified the Agreement and a number of others are close to finalising legislation to ratify.

The UNFSA is intended to provide rights, obligations and fisheries management principles for the long term conservation and sustainable use of straddling and highly migratory fish stocks. The terms of the Agreement require nations to join and cooperate with each other to sustainably manage these stocks.

Part II contains the general principles for conservation and management. Parties to the Agreement are obliged to adopt measures to ensure:

i. the long term sustainability and optimum utilisation of stocks (Article 5(a))

ii. the best scientific evidence is used to retain or restore stocks to sustainable levels (Article 5(b))

iii. a precautionary approach is applied to the management of fish stocks (Articles 5(c) and 6(1)) and

iv. the application of comparable conservation and management measures with respect to highly migratory and straddling fish stocks through direct cooperation or through a RFMO (Article 7).

Part III contains the mechanisms for international cooperation. Most important is the dominant role given to RFMOs under Article 8. Relevant fishing states have the duty to join existing RFMOs (Article 8(3)) or establish such organisations (Article 8(5)), particularly where stocks are threatened by overexploitation. Importantly, Article 8 seems to define access (if not property) rights and obligations at the regional or fishery level. Paragraph 3 emphasises that states "having a real interest in the fisheries concerned" may become members, although the terms of participation shall not preclude or discriminate against any states with a "real interest". Paragraph 4 goes further by granting those member states, or states agreeing to abide by the measures adopted by the RFMO, exclusive access to the fisheries resources over which the measures apply.

The reason why it may be more appropriate to describe the UNFSA as providing access rights, as opposed to property rights, is because the Agreement provides no formula to distribute the total allowable catch among RFMO members. This is left to the discretion of each individual RFMO, it may be subject to strategic manoeuvring by individual members and is unlikely to be based upon economic efficiency criteria.

In contrast, the participatory right of new members or participants, which includes the allocation of allowable catch, is subject to a number of considerations. Article 11 grants new members or participants in the fishery qualified participatory rights (which may, but not necessarily, be interpreted as a loose and convoluted set of factors that define real interest) subject to such factors as:

i. stock status and existing effort

ii. the interests, fishing practices and patterns of these states

iii. their contribution to management goals, including level of research

iv. the needs of coastal fishing communities and states whose economies are highly dependent upon the exploitation of the stock and,

v. the special needs and interests of developing states.

Within Part III there exist a potentially damaging contradiction that may limit the ability to establish and maintain an effective property rights structure. Relevant participatory parties are granted exclusive access to the resources governed by the RFMO. However the 'exclusiveness' of the access right is compromised by the inability to discriminate and exclude those with a "real interest" who are prepared to join or abide by the regional agreement. The concept of "real interest' is not defined, but is likely to depend upon economic need as much as catch history. It shall be shown later that such an arrangement adversely affects the incentive to create or join an RFMO, particularly in fisheries where stocks are being rebuilt.

The UNFSA mandates a number of obligations to ensure compliance with regional management arrangements. Articles 12, 13 and 14 seek to make decision-making processes transparent, oblige parties to collect and exchange scientific and other information and cooperate to improve the general effectiveness of RFMO's. Enforcement measures (Part VI) identify flag State responsibility and international cooperation procedures in relation to enforcement. An extension of enforcement measures to the high sea sallows any RFMO member, not just the flag State, to take action against vessels suspected of breaching regulations.

Part VII gives special consideration to developing states and their capacity to implement conservation and management measures3. Cooperation that is required with such states includes financial assistance, technology transfer and consultancy services. The special consideration granted to developing states has obvious implications for the ability to exclude such states from RFMO membership for non-compliance. Part VIII outlines dispute settlement procedures, provides the framework for grievances to be negotiated and conciliated, and where need be, compulsorily arbitrated by various international or UNCLOS-constituted tribunals and courts.

3 One concern is that this may provide the incentive for other nations to invest in the fleets of developing countries to by-pass more stringent access conditions and reduce fishing costs.
In summary, while it is clear that the UNFSA provides a more appropriate instrument for management of stocks on the high seas, it may not establish a strong property rights structure.

3. PROPERTY RIGHTS IN HIGH SEAS FISHERIES

3.1 The theory of property rights

For economists, property rights refer to a bundle of entitlements defining the owner's rights, privileges and limitations for use of the resource (Tietenberg 1988:39). Property rights affect people's incentives to use a resource by providing certainty as to the impact of resource use on the users own welfare. When rights are well defined, people who own the rights can be certain how their actions will affect their current and future welfare and therefore they will have an incentive to use resources efficiently.

For renewable resources such as fish, the certainty which property rights provide enhance both conservation and utilisation outcomes4. The ability for long term planning, which is nonexistent under an open access regime, will promote more sustainable use. Fishers will reap the benefits of their actions to invest in the natural capital stock without the risk of having the benefits appropriated by others. Therefore, where there are property rights in fisheries there is likely to be better scientific research, market research and development, investment in management systems, better and more sustainable gear and lower catch rates in the short term5.

4 This is the rule rather than the exception. In the rare cases where the discount rate is greater than the biological growth rate of stock, a purely rational individual may have the incentive to fish the stock to extinction (assuming price does not fall below a threshold level). However, if the ecosystem affects are considered, this is an unlikely scenario and regulation to prevent extinction will be the norm.

5 In the long term, catch rates will grow with the expansion of the stock.

This example shows an important distinction between a right and the value of that right. It is the value of the right, not the right in itself, which determines fishers behaviour. The right of access to a stock is meaningless to the extent that it merely provides a fisher with the opportunity to compete for a scarce resource. The benefits from fishing will depend solely on how much they can catch before the total allowable catch or economic and, or, biological extinction is reached. However, a right that allocates a certain percentage of the stock has an estimated value against which planning can be undertaken. This value will be affected by the actions of the individual. Where a group of individuals share rights, there are incentives to reach consensus on how the stock should be managed for the wider common good6. This common goal will provide the catalyst for cooperation, which will be assisted by the existence of a stable group of participants, providing for more efficient communication and administration channels.
6 Even if rights are well-defined, shared rights may be subject to externalities such as crowding.
3.1.1 Efficient property rights structures

The effectiveness of property rights in governing the efficient use of resources is a function of four characteristics (Tietenberg 1988:39):

i. Universality: all resources are privately owned and all entitlements completely specified

ii. Exclusivity: all benefits and costs from owning and using the resource accrue to the owner either directly or by sale

iii. Transferability: all property rights are transferable between owners in a voluntary exchange

iv. Enforceability: rights should be secure from involuntary seizure or encroachment.

It is when these criteria are met that true property rights are established. Criteria i, ii and iv promote certainty that only the owners of the property right will suffer the consequences of their actions. Criterion ii provides the incentive to internalise costs. Criterion iii ensures that rights and the resources they oversee will be allocated to the most efficient (highest valued) end use.

3.2 The structure of property rights under the 1982 Convention and UNFSA

Both the Convention and UNFSA attempt to manipulate party's rights and conditions of access to entice better conservation and management of stocks. The Convention successfully establishes rights at the national level by creating EEZs, bringing the majority of the world's fish resources under single jurisdiction management. However, the rights and obligations pertaining to stocks on the high seas (straddling, highly migratory and those uniquely high seas in location) are less well defined. Consequently, a number of the world's high seas fisheries have seen problems closely resembling common property outcomes.

The UNFSA seeks to deal specifically with the problems that have affected these resources. The principle instrument for resolving these problems is the establishment of RFMOs to conduct management arrangements in a manner consistent with the principles of the 1982 Convention and UNFSA. These management bodies have a high level of discretion over the entire range of the stock. Significantly, the UNFSA specifies that:

i. only members of the RFMO, or those abiding by its rules, shall have access to the stock and

ii. membership is qualified by a "real interest" in the fishery and obligations to cooperate, share information and operate transparently are explicit to membership.

However, it is unlikely that the arrangements under RFMOs qualify as full property rights and are more likely to resemble access rights, which do not in themselves have the capacity to resolve common property problems7. This is supported by several factors:
i. The proportion of total allowable catch allocated to individual members is a function of the total number of members. Because membership of or participation in an RFMO is flexible and indiscriminate, membership can readily vary. This situation increases the degree of uncertainty with respect to the allocated catch that each party will acquire and prevents long term planning of investment in production and processing capacity, skill enhancement and management at the national level. In a fishery where the number of participants is stable the allowable catch is determined by the state of the fish stock, which is a function inter alia of the level and selectivity of fishing. Fishers understand that their current fishing effort will affect future catch rates and economic returns through changes in the total allowable catch, and they will have an incentive to better manage the stock (including as a cooperative). Fishers will also be in a position to plan more effectively because they know in advance the likely catch quota. When the number of participants is unstable, fishers' catch allocation is related less to their own catch history and more on the level of membership, which is uncertain. This increases the risk of individual members losing their investment in the fishery and therefore they do not have the same incentives to use the stock efficiently. The value of the right is therefore likely to be highly unstable.

ii. Catch allocations are only seen as one of a range of possible management tools and are not explicitly mandated (paragragh 10(b)).

iii. The total allowable catch and its allocation lack an explicit economic dimension other than to maintain an industrial base. No effort is made to direct restructuring in the long term, the likely outcome being pressure to maintain the status quo.

It is useful to consider the capacity of the Agreements to determine whether they can implement and uphold property rights to meet each of the criteria that yield an efficient property rights structure. Table 1 makes this comparison for a range of different stocks. Five stocks are highlighted. Discrete zone stocks are those occurring explicitly within the EEZ of a State. Shared stocks travel between two or more EEZs but do not venture onto the high seas (covered by Paragraph 63(1) of the 1982 Convention). Straddling stocks occur within a State's EEZ and on the high seas and are the same stock body (covered by Paragraph 63(2) of the Convention). Highly migratory stocks are defined under Annex I of the Convention (Article 64). Discrete high seas stocks are unique to the high seas.

The universality criterion is divided into two components: (a) whether the resource is owned and (b) whether the entitlements are specified. The two are not mutually inclusive. For example, a shared stock is owned by the fact that it can be found within adjacent EEZs. However, the entitlements to the stock (allocation) are an outcome of the bargaining process between the owners.

The Table attempts to indicate if the Agreements' conditions are consistent with the criteria or at least establish a framework that is potentially consistent. To this end, there is a high degree of subjectiveness with regard to the interpretation of the Agreements and their respective elements. One factor that muddies the interpretation of the Agreements in relation to these criteria is Paragraph 63(1) and 64(2) of the Convention, which refer to shared and highly migratory species respectively. Both specify that the actions taken to ensure conservation of these stocks apply "without prejudice" and "in addition to the other provisions of this part" (Part V). This may be interpreted as meaning that the management arrangements detailed for discrete zone stocks under Articles 61 and 62 also apply to highly migratory species. If this is the case, then the management arrangements of transboundary and high seas stocks may be seen in a more positive light against the criteria. However, this does not take away from the thrust of the argument, which is that property rights are not effectively defined within the UN Agreements and will be determined by the structure, capacity and willingness of the RFMOs to implement property rights that maintain the value of the right.

Table 1
Efficient property rigth structures and the United Nations agreements

Criteria

1982 Convention

UNFSA

Universality
All resources are privately owned and all entitlements completely specified


Owned

Entitled


Owned

Entitled

Discrete zone stocks



Territorial stocks



Shared stocks


?

Shared stocks


?

Straddling stocks

×

×

Straddling stocks

?

?

Highly migratory

×

×

Highly migratory

?

?

Discrete high seas

×

×

Discrete high seas

?

?


Exclusivity
All benefits and costs from owning and using the resource accrue to the owner either directly or by sale

Discrete zone stocks


Discrete zone stocks


Shared stocks

? ()

Shared stocks

? ()

Straddling stocks

×

Straddling stocks

? (×)

Highly migratory

×

Highly migratory

? (×)

Discrete high seas

×

Discrete high seas

? (×)


Transferability
All property rights are transferable between owners in a voluntary exchange

Discrete zone stocks

? ()

Discrete zone stocks

? ()

Shared stocks

?

Shared stocks

?

Straddling stocks

? (×)

Straddling stocks

?

Highly migratory

? (×)

Highly migratory

?

Discrete high seas

? (×)

Discrete high seas

?


Enforceability
Rights should be secure from involuntary seizure or encroachment

Discrete zone stocks


Discrete zone stocks


Shared stocks

?

Shared stocks

?

Straddling stocks

×

Straddling stocks

?

Highly migratory

×

Highly migratory

?

Discrete high seas

×

Discrete high seas

?


The first point to note is that discreet zone stocks and shared stocks meet most of the conditions for property rights to evolve. This is not surprising given the special treatment these stocks receive. The 200nm zone established under the 1982 Convention gives coastal states exclusive rights over resources within the zone. The management practices within the zone are generally specified in terms of sustainable catch rates and the consideration of interdependent species in addition to the level of research and general competency of management. Sub-paragraph 62(4b) specifies the use of a quota system. However, as the table indicates, the transferability of quota is not dictated but is highly likely to occur.

Shared stocks also tend to have recognisable ownership (or at least access) rights. However, it is uncertain whether the arrangements for these stocks meet all the criteria, hence the question marks in the Table. This depends greatly upon whether Articles 61 and 62 of the Convention can be interpreted as applying to shared stocks. Overall, however, there are no outright negatives for shared stocks in relation to the criteria because the outcomes depend on the level of interplay and cooperation between the coastal states which share the stocks.

Turning to the criteria, we see that the Convention generally fails to provide for universality in relation to straddling, highly migratory and discrete high seas stocks. In contrast, UNFSA does have the capacity for universality. Resource access (if not ownership) under UNFSA is conditional upon membership of, or abiding by, an RFMO, which are also responsible for setting and allocation of the total allowable catch. However, there is a distinct ability to discriminate in relation to membership and consequently catch entitlements are likely to be uncertain. The issue that is likely to evolve in relation to universality is to identify the "real interest" as this may provide a mechanism for maintaining stability and cooperation within an RFMO.

Exclusivity is not guaranteed under the 1982 Convention for straddling, highly migratory and high seas stocks. There is the capacity to free-ride because cooperation and quota are neither mandated nor enforceable. Arrangements under UNFSA are potentially more conducive of exclusivity, however this is not a foregone conclusion. Unless all externalities can be identified, apportioned and internalised, exclusivity does not hold in a strict sense. As noted above, the capacity for the number of parties to an agreement to change will amplify the difficulty in dealing with these issues. Arrangements to promote internal stability and cooperation within the RFMO will assist in establishing exclusive rights.

Although a quota system is envisaged, transferability is not mandated in relation to any stock. The issue of transferability of fishing rights is at the discretion of the RFMOs and will depend upon the preferences of the individual members. However, conditions may not be favourable to entice participation in an international transferable quota market. At the national level, quota is traded between domestic fleets (ignoring joint-access arrangements in which quota may be leased8). These fleets tend to use domestic ports, processors, net and boat makers, provide fish to the domestic wholesale, retail and restaurant trade, and even support a domestic tourist industry. These inter-industry linkages produce multiplier effects that give the fisheries resource a value far in excess of the quota value9. This value is not recognised at the international level as domestic linkage effects are not considered and therefore it is unlikely that a country will willingly sell its quota10.

8 Quota leasing does not provide the same level of certainty as when quota is purchased outright.

9 Interrelated or co-dependant utility functions at the community level are likely to reinforce the high value of rights as the economic and social benefits of fishing have a reciprocal affect. Under these circumstances, communities are likely to be welfare maximisers, whereby Pareto improvements for the community as a whole may arise even if an individual is made materially worse off (eg. giving away some quota). The marginal utility of income of the individuals in the community will of course be important. In contrast, international fishing fleets will be profit maximisers, owned by multi-nationals, or a large body of socially independent shareholders whose utility is derived from the profits reaped from fishing.

10 This depends upon whether the quota is handled domestically by an administrative body or is given outright to fishers. Fishers's willingness to sell quota will be determined by their fishing costs and the price of fish relative to the value of quota.

Enforceability of the 1982 Convention fishing within discrete zones is determined by the domestic management arrangements. Article 73 of the Convention provides for strict enforcement arrangements pertaining to foreign vessels within the EEZ. Outside of the EEZ, the Convention attempts to build a transparent operating environment through the provisions for information sharing, research and dispute settlement procedures. UNFSA simplifies enforcement by defining a strict (yet flexible) division of access rights so that parties are readily identifiable. While this may assist in dealing with illegal fishing by non-members, the ability to enforce the value of recognised fishing rights is disputable. Because it is relatively easy to acquire access rights (and a proportion of the allowable catch) under the UNFSA there is likely to be encroachment on parties rights that negatively affect fishermen's behaviour because any redistribution of the allowable catch equates to a reduction in the value of the right to fish. This is likely to erode the willingness to cooperate and make enforceability difficult.

From this simple analysis we can draw two conclusions:

i. While the 1982 Convention fails or is unlikely to meet the criteria for establishing an effective property rights structure, the UNFSA provides a more sound foundation for success.

ii. Even though the chance of meeting the criteria is higher it depends on whether the value of the right is maintained, which is closely associated with the degree of cooperation within the RFMO which depends upon whether RFMO's can implement programs which induce or enforce cooperation, which in turn depends upon: (a) how closely the goals of the parties coincide, and (b) the benefits of cooperation, as determined by the value of the right to fish, relative to the benefits of non-cooperation.

3.3 Strategic behaviour and property rights

The application of strategic behaviour theory to high seas fisheries is a relatively recent academic pursuit (see Munro 1996, 1998; Hannesson 1995). It is an interesting area given the importance of maintaining cooperation and thereby the value of fishing rights. The standard analysis is based around dynamic game theory, which investigates situations where a party may have the capacity to undertake actions that improve their own welfare to the detriment of other parties. Game theory can be applied to the two situations that are likely to arise within the institutional framework of the UN Fisheries Agreements: competitive and cooperative. In competitive (noncooperative) games, it is assumed that parties will act in self-interest to maximise their own welfare, assuming that the actions which the other parties adopt are also be undertaken out of self-interest. In this situation aggregate welfare is minimised while the losses to the individual are minimised. Generally the outcome of this game is for all rents to be dissipated as competition drives the fishery to the common property equilibrium (Kaitala and Munro 1993, 1997).

In cooperative games, players act jointly to maximise the aggregate welfare available for distribution between the parties. The games core is based around the decision to cooperate or otherwise as determined by the relative benefits of cooperation and noncooperation. The game is complicated by many factors, including:

i. the homogeneity of goals across the players... capacity to adjust production

ii. the relative bargaining power of parties and degree of collusion

iii. the number and stability of membership (exit/entry costs)

iv. the stability or enforceability of cooperative arrangements and

v. the capacity for transfer payments or side payments as a means of bribe (Hannesson 1995; Munro 1996, 1998).

3.3.1 Homogeneity of goals

The goal of players in fisheries tends to be reflected in the desired harvesting rate (level of effort) as determined by the relative costs (labour, capital, fuel, etc.) and benefits (price) of fishing and the discount rate. All else equal, the lower (higher) are the fishing costs, the higher (lower) are the benefits and the higher (lower) is the discount rate, the higher (lower) will the harvesting preference be. Given that these factors are likely to differ between countries due to differences in inter alia social preferences, labour costs, subsidies, exchange rates and trade barriers, there will be a multitude of harvesting preferences that will encourage noncooperation and impede negotiation and settlement of the distribution of the allowable catch between parties.

In addition, there are likely to be other factors that influence the level of harvesting. The political persuasion of the various harvesting, processing and wholesale/retail sectors is important. The emphasis on employment policies also tends to impede the willingness of countries to negotiate and restructure fleets.

3.3.2 Bargaining power

Where one country has more bargaining power, there is likely to be a negotiated settlement that can be easily enforced. Bargaining power comes from a number of sources, including market access or dominance (which determine net benefits) in fisheries and other markets, access to infrastructure (such as ports) and fishing costs. Collusion also raises the bargaining power of the colluding parties. In general, the more a party has to lose from any settlement, the less bargaining power they have (Kaitala and Munro 1997). For this reason, the issue of new entrants is particularly important as they have little to lose from entry into an agreement.

There is an ambiguous allocation of bargaining power between coastal states and distant water fishing nations institutionalised within the UN Agreements. Article 116 of the 1982 Convention requires management arrangements for high seas fisheries to account for the interests of relevant coastal states, although as Munro (1998) points out such interests are ill-defined. This is not clarified by the UNFSA, which contains two contrary clauses under Articles 7(1) and 7(2) suggesting the power lies within coastal states and distant water fishing nations respectively.

This confusion of relative interests may be more inhibiting to a final solution than the imbalance of power itself. This is because, as Coase's Theorem specifies, the outcomes are independent of the assignment of property rights, suggesting that an efficient outcome will be achieved if either coastal states or distant water fishing nations have the dominant bargaining power. Therefore, this implies that explicitly instilling power within one party may be an appropriate basis for reaching an agreement without compromising efficient outcomes. Kaitala and Munro (1993:324) suggest that it may be optimal for the management preferences of the partner placing the highest value on the resource to be dominant.11

11 How the true value of the resource is determined is a difficult question. In a market system, preferences are reflected in the level of effective demand as represented by the amount of money a party is willing to forgo. A country with an advanced market economy will be in a better position to indicate preferences than a country with less wealth, even though the preferences of the later may be greater than the former. This is particularly the case for subsistence fishers, who are unlikely to actively participate global management organisations.
3.3.3 Number and stability of membership

A large number of parties will make agreement difficult, not only because the aims of the parties are likely to be different but also because of the administrative burden involved in negotiation and enforcement. When membership is variable, as is the case under the UNFSA, the renegotiation of allocation and responsibilities under any agreement is likely to be arduous, cause conflict and ultimately place stress upon parties continuing to abide by any agreement. This is particularly the case given the problems relating to the changing value of parties' rights with changing membership. As the numbers of new members increase and the value of members allocation subsequently declines, parties will weight up the benefits of continued cooperation with those of noncooperation (Kaitala and Munro 1997). The fact that new entrants have a certain level of power given their bargaining position (with nothing to lose), there may be an incentive to enter into an agreement after it has been negotiated, especially since new entrants can free-ride on the work already undertaken by existing members. Kaitala and Munro (1997) suggest that the use of side-payments as a bribe to new or potential entrants is one possible mechanism to promote stability within the organisation.

One possible avenue open to existing members to ensure stability of membership is through Article 11 of the UNFSA, which places conditions on access rights. Through article 11(a) it may be possible for members to declare a fishery fully utilised, in which case additional membership is likely to be inconsistent with the principle of optimum utilisation (article 5(a)).

3.3.4 Side payments and transfer payments

It may be possible for parties to offer payments as a means of limiting the number of members or limit the catch. The level of payment that would be made would be equivalent to the marginal benefits received from the payment. A problematic issue arises when there is more than one existing member: a transfer payment by one member will benefit all existing members (free-riders), therefore there is likely to be less incentive to provide a transfer payment unless the benefits can be appropriated by the payer.

4. THE AUSTRALIAN CONTEXT

4.1 Introduction

Australia participates in a number of fisheries in which the 1982 Convention and UNFSA are important regulatory instruments: the southern bluefin tuna fishery and the Tasman Rise orange roughy fishery are two examples.

4.2 Southern Bluefin Tuna12

12 This section is based primarily upon work undertaken by Cox, Stubbs and Davies (1999).
The Southern bluefin tuna (SBT) is a slow growing, highly migratory species that forms a vast single stock distributed throughout the southern ocean between 30°S and 50°S. Individuals live for up to 40 years and grow to around 200kg. They reach maturity at around eight years of age and aggregate to spawn in an area between Java and north Western Australia between September and March. Juveniles move south along the Australian coast where they disperse into deeper waters after reaching maturity (Cox, Stubbs and Davies 1999).

SBT is a high valued fish. The market for SBT is dominated by Japan, which consumes around 95% of the world catch, primarily in the sashimi market. Small niche markets have recently developed in the Republic of Korea, and in Taiwan - Province of China (Cox, Stubbs and Davies 1999).

Fishing for SBT has traditionally been dominated by Japan and Australia, and to a lesser extent New Zealand, because of the geographic location of both the stocks and the markets. In 1997, these countries accounted for around 36%, 34% and 2% of the global catch respectively (Cox, Stubbs and Davies 1999). However recent decades have seen an increase in the catches by other countries (Republic of Korea, Taiwan - Province of China, Indonesia).

Since May 1994 the activities of the three major SBT fishing nations have been managed under the Convention for the Conservation of Southern Bluefin Tuna (CCSBT). This agreement was prompted by the decline in stocks since the 1960s, and followed an informal trilateral agreement developed in 1984 between these nations to limit and allocate the total allowable catch. The objective of the CCSBT is 'to ensure, through appropriate management, the conservation and optimum utilisation of southern bluefin tuna' (Article 3). The aims of the CCSBT are pursued and managed by a Commission of member countries which aims at promoting cooperation and coordination in annually setting and allocating the allowable catch between parties. Parties are obliged to provide and exchange scientific and fishing information (for national and non-party nations) as the basis for decision-making.

One of the most important pressures on the CCSBT has been the presence of non-member fleets, whose catches in 1997 reached 28% of the global catch (Cox, Stubbs and Davies 1999). These non-members are acquiring the benefits of conservation efforts under the CCSBT, and reducing the value of the rights under it. It has also been suggested that the information-gap on catches that results from the inability to assess non-party impacts could make it difficult to detect cheating by members (Cox, Stubbs and Davies 1999). The mechanisms for dealing with non-member states are different to those for member states under the UNFSA. The enforcement rights of RFMO nations against the activities of non-members are fairly weak in relation to non-signatories of the UNFSA. If countries are signatories they have an obligation to join, or abide, by any RFMO, while RFMO members have the legal capacity to board and inspect boats of signatory nations to enforce RFMO arrangements. The gap in the law in relation to non-signatory states may close with time since the UNFSA is adopted into customary international law, thus providing extended coverage for its provisions.

While there have been moves to entice non-members to join the CCSBT, with some countries expressing an interest to do so, there are still obstacles to overcome. The size of the allocations required to persuade countries to join may become a sticking point to existing members, who will have to relinquish part of their share. Cox, Stubbs and Davies (1999: 44) suggest that non-parties may be increasing their catches to ensure a greater allocation when they join, assuming that such an allocation is based upon catch history. This suggests that the definition of 'real interest' in a fishery will prove a difficult concept to define and apply.

4.3 Orange roughy

Orange roughy is a slow growing, long-lived species that is widely distributed in temperate deep waters areas of both the southern and northern latitudes. Australia fishes for orange roughy in domestic and international waters. The international fishery in which Australia actively participates, along with New Zealand, is the South Tasman Rise fishery which extends from the Australian Fishing Zone into the adjacent high seas south of Tasmania. The area is significant in that it attracts spawning aggregations that are easily targeted. However, the slow growth rate and low fecundity of the species makes it susceptible to overfishing.

The fishery has been managed under a memorandum of understanding (MOU) between Australia and New Zealand since 1988. The MOU was a reaction to the increased fishing pressure exerted by both nations. The MOU is a non-binding cooperative management arrangement that establishes and distributes a total allowable catch between the two countries. The MOU lapsed in February 1999 as a result of a dispute over the share of the total allowable catch, which is based upon catch history. In negotiating new arrangements, both sides have agreed to respect the established total allowable catch (some 2400t), which is deemed sustainable, although New Zealand has refused to adhere to the previously agreed shares (75:25: Australia 1800t: New Zealand 600t). Subsequently, while the Australian Fisheries Management Authority closed the fishery to Australian vessels in April 1999 just short of the allowable national share of catch, New Zealand continued to fish beyond their agreed allocation and eventually caught more than 1900t. Concern about this overfishing has lead both parties to agree to a ban for fishing for orange roughy in the South Tasman Rise until March 2000 while new arrangements are being made.

In late June and early July four foreign vessels conducted unregulated fishing in the area while the self-imposed Australian-New Zealand precautionary ban was in place. The vessels were identified as being South African and Belizean flagged vessels. Surveillance and diplomatic action disrupted the boats fishing efforts (although it did not prevent them from fishing) and the boats eventually departed. The impact that this fishing activity had on the stock is unknown.

Both Australia and New Zealand have a duty and right under the 1982 Convention to sustainably manage the stock in the South Tasman Rise. The MOU is also likely to meet provisions under UNFSA, given that the parties have developed a cooperative research program aimed at providing information on stock structure, status and productivity. In relation to the issue of allocation between Australia and New Zealand both parties have a number of channels for resolution, although a conciliated outcome is preferable. Resolution of this issue is likely to rest upon the definition of 'real interest'. Consideration of 'real interest' under UNFSA is convoluted and no real formula exists for defining access rights, let alone the distribution of allowable catch. One factor that may help to clarify the relative interest of parties is the issue of whether the stock straddles the area between the Australian EEZ and the high seas fishing grounds. If so, then Australian interests may take precedence.

In terms of the unregulated fishing, UNFSA will provide a greater basis for Australia and New Zealand to defend their rights in the region. Enforcement measures will be firmer and parties wishing to participate in the fishery will be obliged to join or abide by the MOU arrangements. If the UNFSA had been in force during the incident of unregulated fishing, Australia would have been able to board, inspect, and potentially take enforcement action against the vessels. Since the incident of unregulated fishing South Africa has expressed its interest in joining the Australian - New Zealand arrangement. However it would be uncertain whether South Africa has a 'real interest' in the fishery. How this would equate into excluding such a party from fishing given the provisions under Article 8 of the UNFSA is unclear.

5. LITERATURE CITED

Barston, R. 1995. United Nations Conference on straddling and highly migratory fish stocks, Marine Policy, 19(2), 159-166.

Bernaerts, A. 1988. Bernaerts' Guide to the 1982 United Nations Convention on the Law of the Sea. Fairplay Publications, Coulesdon, UK.

Cox, A., Stubbs, M. and L. Davies 1999. Southern Bluefin Tuna and CITES: An Economic Perspective, Report for the Fisheries Resource Research Fund and Environment Australia, ABARE Research Report 99.2, Canberra.

Hannesson, R. 1995. Fishing on the high seas: Cooperation or competition? Marine Policy, 19(5), 371-377.

Kaitala, V. and G.R. Munro 1993. The Management of High Sea Fisheries, Marine Resource Economics, 8(4), 313-329.

Kaitala, V. and G.R. Munro 1997. The conservation and management of high seas fishery resources under the new Law of the Sea, Natural Resource Modelling, 10(2), 87-108.

Munro, G.R. 1996. Approaches to the economics of the management of high seas fishery resources: a summary, Canadian Journal of Economics, 29,S157-S163, Special Issue April 1996.

Munro, G.R. 1998. The Management of High Seas Fisheries and the United Nations Conference on Straddling Fish Stocks and Highly Migratory Fish Stocks: A Review, (unpublished mimeo).

OECD 1997. Toward Sustainable Fisheries: Economic Aspects of the Management of Living Marine Resources, Paris, France.

Tietenburg, T. 1988. Environmental and Natural Resources Economics (2nd edition). Scott Foresman. Glenview l11 and London. pp. 559.

From Social Thought to Economic Reality: the First 25 Years of the Lake Winnipeg IQ Management Programme - G.S. Gislason

G.S. Gislason
GSGislason & Associates Ltd.
PO Box 10321, Pacific Centre, 880 - 609 Granville Street
Vancouver, BC, Canada V7Y 1G5
<[email protected]>

1. INTRODUCTION

Individual quota (IQ) fisheries management was introduced on Lake Winnipeg in 1972 and became the first IQ fisheries programme in Canada. Lake Winnipeg is a large, 15 000km2 freshwater lake located in central Canada in the province of Manitoba. It has supported a commercial gillnet fishery for over one hundred years. The annual catch of approximately 5000t is taken by over 700 licence holders. Initially, the IQ Programme had a strong social development and income distribution focus. However, at the instigation of fishermen, adjustments have been made to the initial design to enhance the long term economic viability and sustainability of the fishery.

This paper outlines the unique political, management and resource components in place at IQ programme inception and charts the evolution of IQ management over the past 25 years. The Lake Winnipeg IQ programme, being one of the first in the world, can provide important lessons for other fishery management programmes.

2. BACKGROUND

2.1 History to 1970

Judson (1961) and Gislason et al. (1982) outlined the development of the commercial fishery on Lake Winnipeg. The fishery started on a large scale in the 1880s after the construction of the Canadian Pacific Railway and the arrival of Icelandic immigrants on the southwest shore of Lake Winnipeg. From the beginning, most of the catch has been exported to the United States, particularly the northcentral and northeast regions. In the early years, fishing took place during the summer season only and was restricted to regions with a ready transportation network to move the product from lakeside to the US market. Sailboats were used as fishing platforms and gillnets were the predominant gear used.

Around 1900, a winter fishery developed with the invention of the jigger, which made setting nets under winter ice easier. In winter, fish were hauled by horse teams to southern lakeside communities from which the railway moved the fish to southern markets. In the 1920s the gasoline engine was introduced and universally accepted by the larger whitefish boats and smaller skiffs alike. Tractor trains gradually replaced horse teams in transporting winter fish. Nylon nets were estimated to be more than three times as efficient as the cotton nets that they replaced in the 1950s.

Initially, the primary commercial species was whitefish, a species with high fat content that could easily be smoked or salted. Preservation was critically important. With the advent of speedier transportation and the introduction of refrigeration, other species became commercially important.

The technological changes and the increasing penchant of the consumer for convenience items such as fillets have resulted in a gradual shift in the focus of the fishery from whitefish to walleye and sauger. All three species are important economically today and comprise over 90% of the catch in weight and over 95% of the landed value. Other species harvested include pike, perch, mullet and goldeye.

Several new fisheries have emerged during the past 100 years in response to the increasing demand for walleye and sauger, e.g. fall fisheries. During the Second World War, in addition to meeting a high demand for fish, several "pocket" summer skiff fisheries were opened out of concern for the economic welfare of aboriginal people living in Lake Winnipeg lakeside communities.

Catches1 declined during the 1950s and 1960s and the economics of the fishery were poor by end of the period (see Figure 1). The aggregate catches of walleye, sauger and whitefish had fallen to close to 2000t and the landed value2 had fallen by two-thirds since 1950. Some fishermen were resorting to using small mesh nets or setting excessive amounts of gear thereby violating fishing regulations. Historical catches by individual species groups are given in Figure 2 with prices by species given in Figure 3.

1 In this paper, all catches are reported in round weight.

2 All landed values are reported in real, inflation-adjusted 1998 Canadian dollars

In April 1970, Lake Winnipeg was closed to commercial fishing because of mercury contamination in fish arising from pulp mill discharge into a major tributary to the lake.

2.2 The Freshwater Fish Marketing Corporation

Initially, entrepreneurs and fish companies purchased fish from fishermen and then handled the processing and distribution of fish to markets. Several complaints emerged, in part because of the monopolistic buying power of the few brokers and processors, namely: (a) fishermen received only a minimal price and were not paid on a timely basis, (b) prices fluctuated significantly during the season inhibiting business planning, (c) banks would not finance fishing operations so many fishermen became indebted to fish companies (to pay back equipment and cash grubstake advances) and, (d) the system did not provide high quality fish to the market. In turn, the companies argued that the fish business was a high risk and unstable industry and they were paying people what they could afford.

Figure 1: Lake Winnipeg Commercial catch and landed value, 1950 to 1998

Figure 2: Lake Winnipeg Commercial Catch by Species, 1950 to 1998

Source: Manitoba Conservation and Freshwater Fish Marketing Corporation
Figure 3: Real, inflation-adjusted landed fish prices for Lake Winnipeg, 1950 to 1998 - Whitefish

Figure 3: Real, inflation-adjusted landed fish prices for Lake Winnipeg, 1950 to 1998 - Walleye

Figure 3: Real, inflation-adjusted landed fish prices for Lake Winnipeg, 1950 to 1998 - Sauger

Source: Manitoba Conservation and Freshwater Fish Marketing Corporation
The generally poor economics of the fishing industry resulted in a persistent call for government intervention. At least half a dozen government Commissions of Inquiry or investigations were held between the late 1880s and the 1960s. The federal McIvor Commission Report of 1966 called for the formation of a government-run single desk selling agency for freshwater fish. This recommendation was enacted into law.

In May 1969, the Freshwater Fish Marketing Corporation (FFMC) was created as a federal Crown Corporation and given exclusive jurisdiction over the interprovincial and export trade in freshwater fish for Western Canada. Fishermen could still sell direct to the final consumer in province. The FFMC has three goals: (a) to increase returns to fishermen, (b) to promote orderly marketing and, (c) to increase interprovincial and export trade in freshwater fish.

2.3 Fishing methods

By law, gillnets are the only allowable fishing gear on Lake Winnipeg. Open-water fishing occurs in the summer and fall seasons and ice fishing during the winter season. Three broad classes of operations exist today, two types of "open-water" fisheries and a "winter" fishery.

i. The summer whitefish fishery occurs in the North Basin of the lake using 12m to 18m steel or aluminum boats equipped with diesel engines, hydraulic net lifters and essential living quarters (crews usually consist of 2 to 4 hired workers in addition to the owner-operator).

ii. The summer and fall skiff fishery occurs throughout designated areas in the lake using 5m to 8m aluminum open boats equipped with an outboard motor of 70 to 150 horsepower; the boats have no living quarters and nets are set and lifted by hand (usually the owner-operator works alone but some have a hired worker).

iii. The winter fishery occurs throughout the lake with normally a large 6m long two-tracked enclosed van, (referred to as a "bombardier") or less frequently, a recreational snowmobile towing a small caboose for transportation over lake ice. Both types of operations use an auger and jigger to set nets by hand under lake ice (the owner-operator may have one or two hired workers).

Open-water skiff and winter fishermen return to their home base each day after lifting and setting nets. In contrast, the operators in the much larger whitefish boats may be away from home a month or more (they deliver their fish to a lakeside station several times a week). Summer whitefish fishermen catch mainly whitefish and open-water skiff and winter fishermen catch mainly walleye and sauger.

The fishery is, by design, labour intensive. Gislason (1977) and others have characterized fishermen as of advanced age, low formal education, and few transferable skills. In remote areas of the Lake, particularly aboriginal areas, the fishery is seen as a generator of employment and regional development. Today, about two-thirds of Lake Winnipeg fishermen are aboriginal.

2.4 Regulation of fisheries

In Canada, two levels of government exercise control over non-tidal fisheries such as the Lake Winnipeg fishery. Prior to 1930 the federal government had both proprietary rights and legislative jurisdiction. Under the Resources Transfer Act of 1930, the Province of Manitoba acquired proprietary rights to natural resources of the province including the fishery and the responsibility for administration of federal fisheries legislation was delegated to the provincial government. Nevertheless, the federal government maintains a constitutional responsibility to provide for the regulation, protection and preservation of all fisheries in Canada. That is, the management of the fisheries of Manitoba, including Lake Winnipeg, is undertaken as a co-operative endeavour between federal and provincial governments. The provincial government recommends changes to fisheries regulation. The federal government then reviews and approves such changes, and enacts them into legislation.

Commercial fisheries are regulated on the basis of seasons, areas, allowable gear (gillnets), amount of gear, minimum fish size, etc. The Manitoba Department of Conservation is responsible for fisheries management in the province and can determine who can fish and what fees, if any, will be paid. Each person seeking to fish commercially must be licensed (the individual rather than the vessel is licensed). Prior to the closure of the lake in 1970, entry to the commercial fishery generally was not restricted and area quotas, rather than individual quotas, applied. Any resident paying the nominal licence fee was allowed to fish commercially. Table 1 shows the evolution of fisheries management on Lake Winnipeg.

3. THE 1972 INDIVIDUAL QUOTA SYSTEM - A FRESH START

3.1 The setting

In the early 1970s a set of unique ingredients came together to allow the launch of the individual quota (IQ) system on Lake Winnipeg. These included:

i. the continuing low profitability of the commercial fishery - the combination of low catches, low prices, and poor returns led to widespread discussion and debate as to a fresh approach to management

ii. the closure of the fishery for 2 years - this gave time for reflection as to desirable fisheries management changes, and a "window of opportunity" for consultation and study

iii. the FFMC Daily Catch Record (DCR) monitoring system - this made possible the tracking of individual catches and provided the compliance mechanism necessary for an individual quota system and

iv. the incubation of new ideas and energy, from the newly-elected provincial government and from senior fisheries management created an atmosphere of innovation.

These conditions, in combination, provided the will and the means to effect profound change in Lake Winnipeg fisheries management when there was no industry consensus about moving to an IQ system. In particular, the Lake closure was a "big event" that provided the impetus for change. Several meetings and discussions were held with fishermen in communities around the Lake. When Lake Winnipeg was fully re-opened to commercial fishery in 1972, a non-transferable individual quota system was adopted.

Table 1
The evolution of property rights in the Lake Winnipeg commercial fishery

Era

Year

Fishery management regime

Pre-IQ development

1867

Canada becomes country under the British North America Act

1870

Province of Manitoba joins Dominion of Canada

1880+

Management of open access gillnet fishery mainly through season, area, amount of gear, and mesh size restrictions (three seasons - summer, fall, winter)

1930

Provincial government can exercise property rights to fisheries under Resources Transfer Act

1969

Launch of single desk fish marketing agency (the Freshwater Fish Marketing Corporation or FFMC)

Closure

1970 to 1971

Lake Winnipeg commercial fishery closed due to mercury contaminationConsultations with licensed fishermen indicate support in most but not all quarters for individual quota system

Non-transferable IQs

1972

Non-transferable individual quota (IQ) system introduced with 12 area/season combinations



grandfathering of licence holders from late 1960s
all licence holders in same area/season get equal quota
licences restricted to "owner-operator" individuals
licences from fishermen who die or retire revert to the Crown
"points system" based on experience, dependency, and training used to re-allocate available licences to applicants from same area

1976

Licence transfers allowed between fishermen and son or daughter

1976

"Retirement Licences" with modest quota introduced for those 55+ years of age who relinquish regular licence to son/daughter or Crown (can hold retirement licence for one season and fish regular licence in another)

1981

Additional licences issued to some aboriginal communities to spur native economic development (now 17 area/season combinations)

1985

Referendum of licenced fishermen indicate support for transferable quota system

Transferable IQs

1986

Licences & quotas made fully transferable, i.e. "Quota Entitlement" system freely transferable subject to (area) residency and experience requirements



can acquire a second quota for a season (max. of 2 per season)
can redesignate season of purchased quota
can rollover uncaught non-winter quota to next season
maximum number of quotas per person limited to 4 to 6 (depending on area)

1993

Property rights under individual quota system entrenched in provincial legislation

1995

Possible for community organizations, as opposed to individuals, to hold quota

1997

Restrict retirement licence to one per person per year (cannot hold regular licence)

1998

Government provides funds for native community to purchase quota


3.2 Initial allocation

Individuals received licences and quotas in 1972 through the "grandfathering" of participants in the fishery from the late 1960s. To obtain a licence and quota a person must have held a licence to fish the season in 1968 or 1969 or have held a licence for the season in six of the last seven years prior to 1968. Under this initial allocation, a total of 690 people received 1222 licences/quotas with one quota per licence (439 summer, 551 fall, and 232 winter).

The level of individual quota for each season was established in steps. Firstly, biological data collected during the lake closure period were encouraging so area quotas were pegged at a level 50% higher than the average catch levels over the late 1960s. Then, the area quota was allocated to summer, fall or winter seasons based on the historical contribution of seasonal catch to annual catch. Finally, the level of individual quota for each season/area combination was established by dividing the total quota by the number of qualifying licence holders. The quota level varied by season and, or, area, but, apart from the summer whitefish fishery, was relatively small at 3200kg on average (the summer whitefish IQ was 12 000kg). All quotas were for the aggregate of whitefish, walleye and sauger.

3.3 Transferability and new entry

There was no provision for the transfer or consolidation of quota rights. It was illegal to sell or to lease a quota and the licence holder had to be on the lake during all times the quota was being fished, i.e. there was an "owner-operator" clause. Licences were automatically renewed for the same season in the subsequent year unless they were temporarily revoked for fishing infractions or low levels of production. In essence, licences and quota belonged to the Province of Manitoba, which issued them to fishermen on a temporary basis subject to renewal for satisfactory performance.

A "points system" was devised to allocate licences vacated through death, retirement or other reasons. Points were allocated on a declining scale for fishery participation in each of the last 10 years, and for taking courses at a government-sponsored Fisheries Training Centre. Applicants also had to satisfy certain criteria such as residency, dependency on fishing (one could not hold a full-time job) and access to equipment. Those with the most points in each of twelve Community Licencing Areas were allocated the vacated licences.

3.4 Programme adjustments

The provincial government made two adjustments to the IQ programme in 1976. The first allowed the transfer of a licence and quota between a fisherman and son or daughter. The second change was more substantial. The government created a new category of licence, the "Retirement Licence". Fishermen aged 55 years of age or older could relinquish their regular licence to a son or daughter, or the Crown, but could continue to fish under a retirement licence and modest quota of 650kg. Fishermen holding a Retirement Licence for one season could still hold a regular licence in another season.

In 1981, the provincial government created several new fall fishing areas and allocated new licences to fishermen (the Grand Rapids and Poplar River areas). The government also created new winter licences. The fishermen lived in aboriginal communities and the intent of the licence expansion programme was to spur aboriginal economic development.

The total lake quota of whitefish, walleye and sauger in aggregate increased from 4360t in the early 1970s to 5950t by the early 1980s (in response to these licence additions and certain IQ increases, e.g. the summer whitefish quota increased from 12 000kg to 15 880kg per licence holder).

3.5 Programme issues

According to Gislason et al. (1982) and Scaife (1991), several problems or issues emerged with the non-transferable IQ programme. These included:

i. A very low turnover in licences - only ten or so licences out of more than 1000 licences changed hands each year under the "points system" for issuing new licences and as a result, the fishermen population was aging rapidly (see Table 2). It was very difficult for new people to enter the industry, e.g. in some areas it would take 8 to 10 years of building "points" to get a licence.

ii. The inability to expand and tap economies of scale - a good fisherman could catch his or her seasonal quota in well under half a season but there was no mechanism to increase in-season quota holdings. The low turnover in licences meant that it was difficult for individuals to acquire a licence for another season.

iii. A heavy administrative burden - this was borne by the provincial government who recorded and verified "points" by individuals, wrote letters of rejection to the applicants not successful in acquiring a licence, etc. In addition, fishermen were constantly lobbying the government to increase quota levels as this was the only legal way to expand fishing opportunities.

iv. The lack of equity or resale value in fishery businesses - this was a constant source of irritation to fishermen. A set of fishing equipment without a licence or quota as part of the asset bundle was worth little. Fishermen worked their whole life in the industry and had nothing to retire on.

v. The strategic and illegal behaviour of fishermen - through fishing other people's quotas, "black market" sales, etc. became increasingly common as individuals strove to increase their production base.

These problems became apparent soon after the non-transferable IQ programme was implemented in 1972, but it took the better part of 15 years to address them.

4. THE 1986 QUOTA ENTITLEMENT SYSTEM

4.1 The setting

Most of the problems with the existing IQ management system stemmed from the non-transferability provision. There was support amongst government fishery managers and fishermen for making quotas transferable. In fact, the Lake Winnipeg Fishermen's Advisory Board, which consisted of 12 fishermen from around the lake, had endorsed the concept and had drawn up implementation guidelines for a transferable quota system. However, the concept of transferable quotas met considerable resistance at the political level and appeared to be shelved indefinitely.

What broke the impasse was a strong-willed Minister of Natural Resources (now called the Minister of Conservation) who believed passionately in transferable IQs, who was not going to seek re-election and who pushed the concept through caucus. Caucus insisted that: (a) a consultant hold a series of meetings around the lake on the topic and table a recommendation and (b), if the recommendation was favourable, that a referendum of licence holders on the topic be held. The consultant's report and the results of the following referendum both endorsed the concept of transferable quotas. In 1985 the government announced that licences and quotas would become transferable under the new "Quota Entitlement" programme. The year 1986 was essentially the first year that the new programme took effect.

Table 2
Socio-economic characteristics of Lake Winnipeg licence holders, selected years


Year

1961

1969

1973

1999a

Age groupa





< 25 years

11%

8%

4%

4%

25 - 34 years

31

22

15

18

35 - 44 years

20

30

32

33

45 - 54 years

21

15

20

20

55 - 64 years

13

17

18

15

65+ years

4

8

11

10

All

100%

100%

100%

100%

Average age

40.3

42.9

46.6

45.0


1973

1999

Regular licencesa

Retirement licencesb

All

Gender





Male

>99%

91%

96%

92%

Female

<1%

9%

4%

8%

All

100%

100%

100%

100%

Source: Gislason et al. (1982) and Manitoba Conservation

a 751 Regular Licence holders (excludes licence holders fishing the 17 summer whitefish licences at Norway House). b116 Retirement Licence holders.

4.2 Initial allocation

Everyone who had licences or quotas received the same quotas under the Quota Entitlement (QE) programme. The government also decided to allocate a quota to the top point holder in each season for each community area under the now obsolete "points system" (as some fishermen had built up significant points but had been unable to obtain quotas because of the extremely low vacancy rate).

4.3 Transferability and new entry

The Quota Entitlement (QE), or transferable individual quota system, unbundled the licence and the quota. A licence holder could sell a QE to anyone in the same Community Licensing Area who meets experience and residency criteria, provided the buyer had no more than two QEs per season and four overall (except in certain areas where the local fishermen's association voted to have a limit of six).

In addition, fishermen not filling their open water quota may roll over the unspent portion for which they hold a licence (but those not filling a winter quota cannot roll it over into the next open water season). Also, individuals can redesignate the season of a purchased quota (except for the winter season licences in the northern part of the Lake), e.g. it is common for a person to purchase a fall quota and redesignate it as a summer quota.

The QE system has greatly increased the annual turnover of licences. The QE system also has taken government out of the business of reissuing vacated licences and decreased their administrative load significantly. Table 3 presents a snapshot of the Lake Winnipeg fishery, before and after the move to transferability.

4.4 Programme adjustments

The fishermen of lake winnipeg were generally satisfied with the qe system but constantly feared that the government would revise or cancel the programme without due notice and fishermen, through the Lake Winnipeg Fisheries Management Advisory Board, pushed the government to entrench their property rights in legislation. This, the government did in 1993. The Government of Manitoba (1993) recognized in legislation that "the allocation of an individual quota entitlement to a fisherman...constitutes a property interest of the fisherman in a right to fish the specified quota". In addition, the government under stated policy could not cancel the QE programme without giving five years notice. In 1995 the provincial government, through a policy change, made it possible for a community organization in addition to individuals to hold quota. Community organizations needed the support of 75% or more of fishermen in the area.

In 1998 the Norway House Fishermen's Co-operative became the first community organization to hold quota by acquiring the QEs associated with 17 summer whitefish licences (the government funded the purchase). The Co-operative chose not to fish the 270 aggregate tonne quota using 17 large summer whitefish boats but rather to allow more than 50 individuals to fish the quota with smaller skiffs under a "catch as catch can" non-IQ system.

The government has also allowed other areas or communities, where many quotas had not been fully used, to divide the local season into two. The initial phase operates under the normal QE system. The second phase, if the local fishermen support the concept, is run as a "catch as catch can" open season for the remaining aggregate quota, i.e. licensed fishermen can catch as much as they want subject to the integrity of the overall area quota.

This system has been implemented in several aboriginal communities for fall and winter fisheries in the northern part of the lake.

A major change to the Retirement Licence provision occurred in 1997. Many individuals greater than 55 years of age were selling or transferring their quotas and taking out retirement licences (many individuals held two or three retirement licences). By the mid-1990s, these retirement quotas represented an appreciable amount of quota in total. Starting in 1997, the individual was restricted to one retirement licence and no new retirement licences were to be issued.

The restriction on retirement licences was recommended by Symbion (1996). Other aspects of the Symbion report were more controversial. Fishermen in certain communities held diametrically opposite views to those of fishermen in other communities. One consequence was the disbanding of the Lake Winnipeg Fisheries Management Advisory Board.

4.5 Programme issues

The move to a transferable IQ system in the mid-1980s addressed most of the pressing issues of the day. For example, the number of licences changing hands increased from 10 a year pre-1985 to 200 or more a year in the late 1980s. Young people now can enter the fishery through buying an existing holder's licence rather than applying to government. However, a number of new issues have emerged in the 1990s. These include:

i. The long term sustainability of the resource - the approximate 40% increase in the aggregate lake quota since the early 1970s has raised the concern that the lake quota may be too high (catches declined during the 1990s, but the commercial catch has been very good in 1998 and in 1999 to date). Less than 80% of the aggregate quota has been taken in recent years.

ii. The wisdom of having one aggregate quota for whitefish, walleye and sauger - the biology of the three species is different and the price of walleye and sauger is much higher than for whitefish (see Table 3). High grading has become a problem. But moving to separate species quotas, however biologically sound, dilutes the property rights of certain segments of the fishermen population and therefore is controversial. At present, the summer whitefish fishery is the only one with a walleye-sauger tolerance. Up to 4545kg of the 15 880 QE can comprise walleye and sauger.

iii. The maximum allowable number of quotas held by an individual, of four to six depending on the community area, may be too low - advances in technology over the past 25 years such as larger skiffs, more powerful motors, monofilament nets, Global Positioning Systems (GPS), etc. mean that the catching power of the industry is much greater today. Fishermen have circumvented the restriction by having family members (e.g. their wives) acquire licences but this strategy, in many cases, is dependent on the government not rigidly enforcing the licensing provision that the quota holder must be on the lake during all times the quota is fished.

iv. The concentration of harvest in open water seasons - as a result of the rollover clause and the season redesignation clause of purchased quotas, many fishermen will try to catch all their quota in open water seasons (to minimize the risk their winter quota will not be caught, to not require a second set of winter equipment, etc). This practice inhibits the marketing of fresh fish by the FFMC throughout the year and can create processing bottlenecks, e.g. the FFMC did not accept deliveries of fish for several days this fall due to an overtime labour dispute at a time of peak deliveries.

v. The demise of the Lake Winnipeg Fisheries Management Advisory Board and its consultative process created a void for implementing change - the Board was critical to ushering in the QE system of the mid-1980s. Without the Board, or some effective substitute, it is not clear how needed change to QE management can occur.

vi. The low licence fee may impinge on maintaining rights in the future - the commercial fishermen of Lake Winnipeg collectively pay less than C$25 000 in licence fees annually, or less than 0.2% of the revenue base of $C14 million (currently the fees are $C52.50 per summer whitefish licence, $C17.50 per other open water licence, and $C22.50 per winter licence with $C2.50 of each representing an enhancement surcharge). The basic licence fee in nominal dollar terms has not increased in over 50 years. The low licence fee may create problems in maintaining property rights to the fishery in the face of encroachment of other fish and, or, water users that pay more, e.g. licence fees paid by recreational anglers, royalties or water rentals on hydro-electric development. Gislason (1999) has asserted that those who pay more have greater say and, by implication, have stronger rights.

5. CONCLUSIONS

The Lake Winnipeg individual quota system has been successful in large measure due to its ability to evolve and adapt since its inception in 1972. Each fishery around the world has its unique characteristics; what works in one fishery is not necessarily advisable for another fishery. However, the Lake Winnipeg situation does offer several "lessons learned".

Lesson #1: An individual quota (IQ) management system must be flexible and must continue to evolve as issues emerge, technology changes, and markets fluctuate.

Lesson #2: To launch an IQ programme and to make substantial changes over time takes the collective will and energy of three interests - the fishermen, the fisheries managers, and the elected politicians. The fishermen drive the process, the managers facilitate the process and the politicians execute the process. Leadership is required from all three groups.

Lesson #3: A formal process of dialogue for collating fishermen's input is essential to sound fisheries management initiatives, including the development of IQ programmes. This process generally takes at least two forms: (a) a regular, meaningful advisory process and (b), an industry-wide vote or referendum on major issues, e.g. the move to a transferable IQ system.

Lesson #4: The impetus for change to existing IQ management programmes will be driven largely by business planning and economic issues of licence holders. The "agent of change" will be the economic circumstances of fishermen and not the broad social goals of government.

These lessons are broad and should be applicable to fisheries around the world.

Table 3
Overview of the Lake Winnipeg Commercial Fishery, selected years


Non-transferable IQs

Transferable IQs

1973

1984

1986

1999

No. of quotas held





Summera

439

468

535

891

Fall

551

642

626

375

Winter

232

309

318

213

All

1 222

1 419

1 479

1 479

Total quota tonnesb





Summera

1 530

1 970

2 320

3 650

Fall

2 100

2 450

2 280

1 390

Winter

730

1 530

1 570

1 130

All

4 360

5 950

6170

6 170

Activity measures





Catch (tonnes)b

3 780

5 540

5 170

4 150d

Landed value ($ million)c

11.9

14.9

19.7

14.2d

No. of fishermen

690

720

750

768

Source: Manitoba Conservation (formerly Manitoba Natural Resources) and Gislason et al. (1982)

a Includes 44 summer whitefish quotas at 12 000kg each in 1973 and 15 880kg each in other years, but excludes quotas associated with Retirement Licences and the Mossy Bay fishery.
b Refer to whitefish, walleye and sauger only.
c $C millions of real, inflation-adjusted 1998 dollars.
d 1998 figures.

6. ACKNOWLEDGEMENT

The author has benefited from discussions with and information provided by several people, namely: Ken Campbell, Sherman Fraser, Worth Hayden, Stephen Kendall, David Olson, Karen Olson, Richard Peters, Barbara Scaife, Ellen Smith, and Gordon Wakeling. Edna Lam provided valuable comments on drafts of the paper. Notwithstanding this assistance, the author has final responsibility for the analysis and conclusions of the study.

7. LITERATURE CITED

England, R.E. and J.R. Peters 1971. Fisheries Adjustment Study, Manitoba Department of Mines, Resources and Environmental Management, Winnipeg.

Gislason, G.S. 1977. Socio-economic characteristics of selected Manitoba commercial fishermen 1974-75, Natural Resource Institute, University of Manitoba.

Gislason, G.S., J.A. MacMillan and J.W. Craven 1982. The Manitoba Commercial Freshwater Fishery: An Economic Analysis, University of Manitoba Press, pp. 311.

Gislason, G.S. 2000. Stronger rights, higher fees, greater say: linkages for the Pacific halibut fishery in Canada. In Use of Property Rights in Fisheries Management. Proceedings of the FishRights99 Conference. Fremantle, Western Australia, 11-19 November 1999. FAO Fisheries Technical Paper No. 404/2. pp.383-389, FAO, Rome.

Government of Manitoba 1993. The Fisheries Act (Manitoba), Part V.

Judson, T.A. 1961. The commercial fishing industry of Western Canada, Doctoral Dissertation, University of Toronto.

Manitoba Natural Resources 1994. Five Year Report to the Legislature: Year Ending March 31 1994.

McIvor, G.H. 1966. Commissioner, Report of Commission of Inquiry into Freshwater Fish Marketing, Government of Canada.

Scaife, B. 1991. Evaluation of the Lake Winnipeg commercial fishery quota entitlement system, Manitoba Department of Natural Resources, pp. 12.

Symbion Consultants 1991. An investigation into the status of issues affecting the Manitoba commercial fishery, Report prepared for the Ad Hoc Committee on the status of Manitoba commercial fisheries, pp. 111.

Symbion Consultants 1996. Third party review of Lake Winnipeg commercial fishery management issues, report prepared for Manitoba Department of Natural Resources, pp. 39.

Thompson, P.C. 1974. Institutional constraints in fisheries management, Journal of Fisheries Research Board of Canada, 31 (12). 1965-1981.

Thompson, P.C., L.E. Anderson and D.E. Topolniski 1994. Lake Winnipeg: quota entitlement programme, in Experience with Individual Quota and Enterprise Allocation (IQ/EA) Management in Canadian Fisheries 1972-1994, Canada Department of Fisheries and Oceans, November 1994.

Wysocki, W. 1981. Property rights and the Lake Winnipeg commercial fishery: a case study, Practicum submitted to the Natural Resource Institute, University of Manitoba, pp. 134.

The Use of Individual Fishing Quotas in the United States' EEZ - A.C. Wertheimer and D. Swanson

A.C. Wertheimer
Auke Bay Laboratory, National Marine Fisheries Service
11305 Glacier Highway, Auke Bay, AK 99801 USA
<[email protected]>
and
D. Swanson
International Fisheries Division, National Marine Fisheries Service
1315 East-West Highway, Silver Spring, Maryland, 20910 USA
<[email protected]>

1. INTRODUCTION

Concern over declining marine fishery catches and clear signs of overexploitation of many important fish stocks worldwide have led governments and international organizations to seek new management policies and approaches to rebuild and sustain marine fisheries (Fujita et al. 1998). Traditional management tools have not always been effective at conserving fish populations and preventing exploitation (e.g. NMFS 1999a), or at avoiding overcapitilization and maintaining employment and fishing communities (Munro et al. 1998). One of the new management approaches is the granting of exclusive privileges to harvest portions of an overall quota of marine fish or shellfish. Such quota privileges have been given a variety of names depending on the characteristics of the management application, including individual quota, individual transferable quota, and individual vessel quota. In this paper we will use the term individual fishing quota (IFQ), consistent with its use and definition in the U.S. Sustainable Fisheries Act (SFA) 1996.

The SFA included amendments to the Magnuson-Stevens Fishery and Conservation and Management Act, the law that establishes the regional-council management system for regulating the fisheries in the United States. EEZ. This law, originally passed in 1976 as the Fishery Conservation and Management Act, has been amended several times as the emphasis and course of management policy has evolved (Darcy and Matlock this symposium). Initially, the principal policy goals were to assert U.S. authority and "Americanize" the fishery in the U.S. 200-mile EEZ. These policy objectives were achieved, but the rapid growth of the domestic fisheries led to many problems associated with open access and the race for the fish, including overcapacity; economic inefficiency; short, dangerous fishing seasons; ghost-fishing by lost gear and excessive bycatch; and continuous pressure to maintain high exploitation rates when faced with scientific uncertainty. To redress, or avoid such problems, management councils began developing and implementing limited access programmes, including IFQs.

The rationale for IFQs is to provide incentives to avoid the negative consequences of open access fisheries and limited entry systems and overcapitalization by individual fishers. Resource economists have long held that for a common-property natural resource, the incentive for the individual is to harvest as much as possible as quickly as possible and to compete for the greatest possible share (Gordon 1954, Scott 1955). Under open access fisheries with no overriding community constraints, the result can be the well-known "tragedy of the commons" (Hardin 1968), gross overcapitilization that is economically inefficient and threatens the biological viability of the resource. Even under limited entry systems, the 'race for fish' drives overcapitilization as the participants compete for their shares with improved technology and increased capacity (Grafton 1996). To address these problems, IFQs are intended to (a) improve economic efficiency by providing incentives to reduce excess harvesting and processing capacity; (b) improve conservation by creating incentives for stewardship activities, such as reduced bycatch and lost gear; and (c), improve safety by reducing incentives to fish in dangerous conditions. It must be recognized that IFQs do not remove all incentives for individual fishers to circumvent regulations for their own short-term benefits; highgrading of catch to increase its value and illegally exceeding individual allocations ("quota-busting") are concerns in enforcement of these programmes (Grafton 1996, Fujita et al. 1998).

The use of IFQs is controversial. Concerns have been raised about the basic equity of gifting a public trust resource, the fairness of initial allocations, increased costs for new fishermen to gain entry, and decreased employment and the disruption of fishing communities (McCay 1995, McCay et al. 1995). In the United States, these concerns have resulted in legislative intervention. The U.S. Congress, as part of the SFA, placed a moratorium on the implementation of new IFQ programmes in the United States' EEZ. In the SFA, Congress also directed the National Academy of Sciences (NAS) to undertake a review of existing IFQ programmes and to make recommendations on their use.

The SFA did much more than establish the moratorium on IFQs in U.S. fisheries; it enacted changes to the Magnuson-Stevens Act that reemphasized its goal of conservation and sustainability of living marine resources (Darcy and Matlock this symposium). The SFA established an explicit mandate to end overfishing and to rebuild overfished stocks, and to protect essential fish habitat and reduce bycatch. Conservation and management measures must consider efficiency in utilization, but they must also consider the impact on fishing communities and the equity and fairness in the distribution of the benthey must also consider the impact on fishing communities and the equity and fairness in the distribution of the benefits from fishing.

This paper reviews the recent application of Individual Fishing Quotas (IFQs) to fisheries in the United States' EEZ and reviews the findings and recommendations from the NAS study evaluating the role of IFQs in achieving the mandates of U.S. fisheries law.

Figure 1: Landings of western Atlantic bluefin tuna by U. S. Purse seiners, 1964-1998. The IFQ programme was implemented in 1982. Source:NMFS (1999c)

2. REVIEW OF EXISTING PROGRAMMES

2.1 Fisheries under IFQ management

Five U.S. fisheries are under IFQ management: the purse seine fishery for bluefin tuna off the northeast Altantic coast of the U.S.; the surf clam/ocean quahog fishery off the mid-Atlantic Coast; the wreckfish fishery in the South Atlantic region; and the halibut fishery and sablefish fishery in the Pacific Northwest and Alaska regions. Prior to implementation of IFQs, most of these fisheries were characterized by overcapitalization and problems associated with the race for available fish. The objectives of the IFQ programmes included biological conservation (effective implementation of the TAC, reduction in ghost fishing and bycatch); economic (reduced overcapitilization, increased availability and value); social goals (increased safety, preserving traditional fishing patterns); and administrative improvements (better en-forcement, more cost-efficient administration).

2.2 Bluefin tuna purse seine fishery

The first fishery to come under a form of IFQ management in the United States' EEZ was purse seining for western Atlantic bluefin tuna. Vessels using purse seines have landed bluefin tuna regularly since the 1950s, with some landings as early as the 1930s (Sakagawa 1975). Up to 21 purse seine vessels participated in the fishery, in some years landing in excess of 2500t (NMFS 1999b). The fishery primarily targeted small, schooling fish. Catches generally declined during the 1970s (Figure 1) and by 1982, five vessels were participating in the fishery. In response to concerns over declining catches and stock assessments, the International Commission for the Conservation of Atlantic Tunas (ICCAT) imposed quota restrictions on the western North Atlantic stock in 1982. While the total catch of all U.S. fisheries for bluefin tuna was limited by the quota, only the purse seine fishery was placed under limited access. Individual vessel quotas were assigned to the five vessels then participating in the fishery with each vessel receiving equal portions of the purse seine allocation. The purpose of the specific allocation to the purse seine fleet was to maintain the economic viability of the traditional fishery while meeting the mandated harvest constraints. Under current quota allocations, catches in recent years have been held to around 250t (Figure 1).

Since the implementation of the ITQ system, the purse seine fishery has been able to enhance its economic return by switching from targeting low-value, schooling bluefin to high-value, giant bluefin. Average size of fish in the landings has increased from less than 10kg in the late 1970s, to over 170kg in the late 1990s (Figure 2). Fishermen are now able to target the larger fish at times when their market value is maximized. Prices for purse seine catches have increased from less than $1/kg in the 1970s to as high as $19/kg in recent years (Figure 2).

The IFQ programme has met the objective of maintaining the traditional fishery while greatly reducing catch. The individual vessel quotas have been transferable in whole since 1983, and in whole or in part since 1996, but there has been no permanent consolidation of quota shares. The major controversy over this IFQ fishery has been the fairness of allocating such a large portion of a highly valued resource to a small number of permit holders (NMFS 1999b). While the purse seine fishery has been limited to five vessels, the number of vessels permitted in other gear categories (commercial and recreational) has increased to over 20 000.

2.3 Surf clam/ocean quahog fishery

These two closely related fisheries are conducted by vessels using hydraulic clam dredges (Serchuk and Murawski 1997). Surf clam fishing began in the 1940s and ocean quahog fishing began in the 1970s. Prior to IFQs, the fisheries were managed with a combination of size limits, quotas, and time restrictions to spread out the fishing season. There is no discernable stock and recruit relationship and the TAC is set conservatively to allow sustained harvest of the occasional large year classes. A moratorium on new entrants was imposed in 1977 as part of an effort to rebuild surf clam populations depleted due to overharvesting and poor environmental conditions. Under the moratorium the number of permitted vessels remained constant at approximately 140, but the harvesting capacity continued to increased due to vessel upgrades and gear improvements (Wang and Tang 1996). The moratorium was successful in reducing overharvest of surf clams, but regulation was cumbersome and enforcement with short, derby-style openings spaced throughout the year was difficult and costly. Overcapacity, enforcement, and safety issues relating to fishermen' feeling they had to fish under poor weather conditions during derby-style openings were major factors in considering IFQs as a management alternative.

Figure 2: Average size and price for western Atlantic bluefin tuna landed by U.S. Purse seiners, 1976-1978 and 1996-1998. Source: NMFS (1999b, 1999c)

The IFQ programme was implemented in 1990. Its objectives were to conserve and rebuild the resources by stabilizing annual harvest rates; to simplify regulatory requirements and minimize the cost of administration and compliance; and to provide for economic efficiency and reduction of overcapacity. Initial allocations of quota shares were made to owners of permitted vessels based on catch history. Shares are transferable and there is no maximum limit to accumulation except as determined by U.S. antitrust law. Allocation permit fees are collected to help defray administrative costs.

The programme appears to be meeting most of its stated objectives (Wang and Tang 1996, Serchuk and Murawski 1997). TAC overruns have been reduced (Heaton and Hoff 1999) and the number of discards are down, which has been attributed to IFQs providing incentives to target on relatively pure concentrations of large clams. Overcapacity has been reduced as the number of vessels has declined by 74% in the surf clam fishery, and by 40% in the quahog fishery (Figure 3a). The remaining vessels operate more efficiently, make more trips per year and harvest more clams per trip (Figure 3b). Regulations have been simplified, derby openings have been eliminated and harvesters have more flexibility in fishing operations.

Major controversies with the programme include the concentration of quota share, which is uncontrolled except by antitrust law; the equity of the initial allocation, which did not recognize crew participation; and the ability to track and enforce quotas (McCay et al. 1995). Commensurate with the decline in vessel participation has been a decline in employment for crew and a concentration of shoreside processors. Effects among coastal communities have been mixed, depending on where the harvest and processing power was consolidated.

2.4 Wreckfish fishery

Wreckfish, a member of the temperate bass family, are caught with specialized hook-and-line gear in a relatively small area in the U. S. South Atlantic region, in deep waters approximately 100 miles offshore (Sedberry et al. 1999). The fishery began in 1987 when concentrations of these fish were first located in the region. Catch and participation increased rapidly. Catch jumped from 13t in 1987 to 1887t in 1989 (Figure 4) and the number of vessels increased from two in 1987 to 90 in 1991 (Gauvin et al. 1994). A TAC of 907t was imposed in 1990, a level that is considered conservative and the biological characteristics of the landed fish have remained relatively constant. The rapid expansion of the fishery and the uncertainty about the population dynamics of this long-lived, but poorly understood fish were the most compelling factors for developing an IFQ programme. By 1990, capacity had increased to the point of requiring reduction of fishing season length, thus resulting in a race for fish. The South Atlantic Fishery Management Council identified this fishery as an opportunity to "rationalize" a fishery at its early stages (Gauvin et al. 1994).

The IFQ programme for wreckfish was implemented in 1992. Its objectives were to create incentives for conservation and regulatory compliance, avoid overcapitilization and encourage economic efficiency, minimize gear conflicts, provide a cost-effective management regime, and maintain product quality and increase total producer and consumer benefits from the fishery (Gauvin et al. 1994). Initial allocations of shares were issued to permit holders who had landed more than 2273kg of wreckfish in 1989 or 1990. No single business entity could receive more than 10% of the initial shares. The shares are fully transferable and there is no limit on the accumulation of shares.

Most of the objectives of the IFQ programme are being realized to some degree (Gauvin et al. 1994). The programme has reduced capitilization in the fishery. The number of participants in the fishery dropped from 90 to 49 with implementation of the programme. Further consolidation has occurred, with the number of shareholders declining to 25, of which only eight landed wreckfish in the 1996-1997 season. The small number of IFQ holders has made administration, monitoring, and enforcement much easier and more cost-effective than prior to IFQs. Catch has been constrained since implementation of IFQs. Full utilization of the TAC occurred in 1990 and 1991, prior to IFQs, but landings then declined continuously; in 1998, only 10% of the TAC was landed (Figure 4).

Figure 3: Number of vessels (top) and number of bushels of clams harvested per trip (bottom) for the surfclam and ocean quahog fisheries off the northeast Atlantic coast of the U. S., 1979-1998. The IFQ program was implemented in 1990.

Source: Heaton and Hoff (1999).
The consolidation of quota shares and the decline in landings are controversial aspects of this IFQ programme. Consolidation of shares can be viewed as market efficiency in operation, but it is unclear why effort and landings have continued to decline. Under IFQ management, improved availability to better match market prices was reflected by increased ex-vessel prices, from around $2.90/kg to $4.07/kg (Gauvin et al. 1994); prices have continued to increase and now are around $5.00/kg. Some shareholders may have decided to pursue other more profitable fisheries, and may be either holding their shares as a reserve, or they may be willing sellers but there may be no market demand for quota. For whatever reason, underutilization fails to meet the stated objective of maximizing total producer and consumer benefits from the resource.

2.5 Alaska halibut and sablefish fisheries

Commercial fisheries for Pacific halibut and sablefish occur off the coast of the U.S. Pacific Northwest, British Columbia and Alaska. These fish range from the Sea of Japan, through the Bering Sea and Gulf of Alaska and along the Pacific coast of North America to central California. The distribution of sablefish extends even farther south to Baja California. Each species is considered to be a single stock throughout its range. The directed U.S. fishery for halibut uses longline gear, while the directed U.S. fishery for sablefish includes longline, pot, and trawl gear. Although these fisheries are managed under separate IFQ allocations they share many of the same characteristics and the programmes for the fisheries off Alaska were developed concurrently by the North Pacific Fishery Management Council (Pautzke and Oliver 1997).

Catches of halibut and sablefish have been historically controlled with a combination of area, season, gear and TAC limitations. There are highly refined stock assessment programmes for both species that include fishery-independent surveys and advanced population dynamics models (Sullivan et al. 1999, Sigler et al. 1999). The halibut fishery has long been recognized as a successful example of international cooperation and of scientific management maintaining sustainable catches from an exploited fish population. The United States and Canada negotiated the Halibut Treaty of 1923 and subsequently established the International Pacific Halibut Commission (IPHC). The IPHC sets the TAC for a number of management subareas. With the extension of U.S. and Canada EEZs, fishermen from each country were excluded from the waters of the others; allocation decisions for a specific subarea are made by the country with jurisdiction over that subarea. For sablefish, allocations of TAC have also been made between the gear types.

Figure 4: Landings of wreckfish, prior to and post-implementation of invidual fishing quortas (IFQ), and the total allowable catch (TAC) for the fishery.

Source: Sedberry et al. (1999).
The circumstances that led to development of IFQs in these fisheries are a classic litany of the problems associated with the race for fish. Perhaps the most striking example is the reduction in season length in the fisheries; the halibut season declined from about 50 days in the 1970s to an average of 2-3 days in most areas from 1980-1994 (Figure 5). The North Pacific Fishery Management Council noted that while traditional management measures could keep catch within biologically acceptable limits, substantial waste, economic inefficiency and unsafe fishing conditions would continue under such conditions (Pautzke and Oliver 1997). The Council identified ten problems that the IFQ programme was intended to address: allocation conflicts; gear conflicts; deadloss due to lost gear; bycatch loss; discard mortality; excess fishing capacity; product quality; safety; economic stability in the fishery and communities; and rural coastal community development of a small-boat fishery.

The IFQ programmes were implemented in 1995. Quota allocation was specific to management area, gear, and vessel size categories. Shares less than the equivalent of 9090kg have been "blocked" so they cannot be subdivided on transfer. Quota shares were allocated to vessel owners and leaseholders who had verifiable commercial landings during 1988, 1989 and 1990. More than 5000 fishers were allocated halibut quota shares and more than 1000 fishers were allocated sablefish quota shares. These numbers exceed the maximum number of vessels participating in any pre-IFQ fishing year. There are limits on transferability between vessel size categories; vessels in larger size categories cannot fish quota initially allocated to a smaller vessel size category. There are also limits on total accumulation of quota shares. For halibut, the limit is 0.5-1.0%, depending on the area; for sablefish the limit is 1% within specified management regions.

The implementation of IFQs in these fisheries has changed both the biological and socio-economic characteristics of the fisheries. In general, the programme has met most of its stated objectives. Overfishing the TAC, common before IFQs, has been eliminated (Figure 6). The IPHC estimates that halibut fishing mortality from lost and abandoned gear has decreased by over 75% and that discard of halibut bycatch has decreased by over 80%. There has been no evidence of high-grading and statistical analysis of size distributions indicate it has not been a problem. Season length has now increased from less than 5 days to 245 days per year for both species (Figure 5), decreasing gear conflicts and improving product availability, quality and value. In the sablefish fishery, age at catch has increased as reduced gear concentrations on the grounds have allowed fishers to target larger, older fish (Sigler et al. 1999). The numbers of vessels in the fisheries have declined by 40-50% (Figure 7). Some consolidation of shares has occurred, with a 24% decline in halibut quota holders and an 18% decline in sablefish quota holders (Smith 1999). The elimination of the race for fish has improved safety by reducing the pressure to fish under dangerous conditions. The number of Coast Guard rescues in the 3 years since implementation has been 31, less than half the 83 rescues in the 3 years prior to implementation (Figure 8). The complicated restrictions on accumulation and transfer of quota shares has maintained the diversity of small and large vessels and has provided opportunities for entrance into the fisheries.

Figure 5: Season length for the longline fisheries in the Gulf of Alaska for halibut (area 3A) and sablefish (West Yakatat). The IFQ program was implemented in 1995.

Sources: IPHC (1998); NMFS (1999)

Figure 6: Percent deviation from total allowable catch (TAC) for the longline fisheries for halibut (Alaska region) and sablefish (West Yakatat region). The IFQ programme was implemented in 1995.

Sources: IPHC (1998), NMFS (1999).
The fairness of the initial allocation process remains an issue of contention. Crew members and processors are discontent that the process rewarded only vessel owners. With consolidation and reduced vessel participation, crew numbers have been reduced with vessels using smaller crews and some shareholders crewing for each other (Pautzke and Oliver 1997). The complexity of the system and the long season has resulted in increased costs for administration and enforcement. At present, these costs are not recovered from the fisheries, but a plan is being developed to assess up to 3% of the ex-vessel value of landings to cover these costs (Smith this symposium).

Community impacts have been mixed. While there has been a net increase in quota shares in Alaska fishing communities, there has been a decline in the proportion of shares held in smaller, village communities (Smith 1999). Changes in fishing patterns in response to IFQs have occurred (Gilroy 1996) and there is concern about local depletion and loss of recreational and personal use opportunities around some communities to the point where specific management actions are being considered to address such concern (DOC 1999).

Figure 7: Number of vessels participating in halibut and sablefish directed longline fisheries in Alaska prior to (1992-1994) and after (1995-1997) implementation of the IFQ programme.

Source: Smith (1999).
Figure 8: Number of search and rescue cases and associated deaths in the Alaskan IFQ fisheries prior to (1992-1994) and after (1995-1997) implementation of the IFQ programme.
Source: NRC (1999).
3. NATIONAL ACADEMY OF SCIENCE STUDY

3.1 Findings and recommendations

The National Research Council of the U.S. National Academy of Sciences (NAS) has completed its report on IFQs (NRC 1999a). The report, "Sharing the Fish: Toward a National Policy on Individual Fishing Quotas", is comprehensive, detailed and presents a balanced perspective on the outcomes of IFQ programmes in both the United States and other nations. We highlight only some of its principal findings and recommendations for the purpose of this report.

The NAS analysis of U.S. programmes, as well as the experience of other nations, found that IFQs can effectively address some fishery management problems, especially issues associated with the race for fish - overcapacity, economic efficiency, product quality and safety. IFQs are not primarily a conservation measure; application of a scientifically determined TAC, combined with protection of essential fish habitat, size limits, gear restrictions, and other such management measures remain the main conservation tools in many fisheries, including those with IFQ programmes. There are numerous examples of meeting conservation goals for heavily exploited fish stocks without the application of IFQs. However, the NAS found that IFQs can contribute towards conservation by developing incentives for stewardship of the resource, decreasing TAC overruns and reducing wasteful fishing mortality sources such as ghost fishing and bycatch.

Because of the effectiveness of IFQ management systems at addressing long-standing problems in modern fisheries management, the NAS report recommended that the U.S. Congress lift the moratorium on the development and implementation of IFQs in U.S. fisheries as they considered IFQs an important tool that fishery managers should be allowed to consider and use.

3.2 Stakeholder participation

Successful application of an IFQ programme requires specific objectives and broad stakeholder support. The NAS found that IFQs have had different effects in different fisheries, partially due to differing objectives and partially due to unanticipated outcomes. They concluded that biological, social, and economic objectives should be clearly defined in a process that invites public and stakeholder participation. In the development of an IFQ programme, consensus among all those affected is unlikely, given that limited access programmes, including IFQs, involve a restructuring of the social and economic characteristics of a fishery. The NAS noted that every effort should be made to address issues of equity and fairness, and that the social and economic impacts on individuals and communities be considered, to ensure public support and industry compliance. The NAS also noted that it is equally important to consider these impacts in the context of alternative, or no, action as IFQs are typically proposed to either help avoid overfishing and its negative biological and economic impacts, or as an attempt to reverse the effects of overfishing and fleet overcapacity.

The NAS recommended that regional fishery management councils be allowed the flexibility to adjust existing IFQ programmes, consider IFQs as a management option for other fisheries and develop new IFQ programmes where they are deemed appropriate. The Magnuson-Stevens Act established the regional councils as a mechanism for the development of fishery management plans by those knowledgable in the fisheries of each region of the U. S. (Darcy and Matlock this symposium). Because there is no "one size fits all" IFQ programme, each fishery must be approached on a case-by-case basis. As noted above, broad stakeholder participation and support are needed in the development and implementation of the programmes. In complex, dynamic systems, it is best to address problems close to their source. The national responsibility for stewardship is not ignored in this process, however and the Secretary of Commerce retains oversight and must approve the management plans.

Although IFQ programmes can sometimes reduce management costs (e.g. as in the wreckfish fishery), implementation of these programmes has also resulted in large increases in administration and enforcement costs. Tracking and monitoring individual quotas can be complex and expensive and enforcing compliance can be difficult. In the Alaska halibut and sablefish fisheries, one of the major benefits has been extension of the season from a few, to over 200 days, improving product quality, availability and value. However, this has resulted in a substantial increase in resources needed for monitoring and enforcement throughout the longer season (Smith this symposium). Also, while IFQs provide incentives to the individual for conservation, considerable public and stakeholder concern exists about the potential for quota-busting, highgrading and poaching. Adequate enforcement is required to address these concerns and in many cases, on-board observers may be a necessary part of monitoring and enforcement. The NAS recommends that these management costs should be borne by those who are granted the exclusive privilege to harvest the resource, as is allowed under U.S. fisheries law.

3.3 Allocations of rights

The NAS study found that the initial allocation is the most contentious and controversial aspect of the implementation of IFQ programmes. Eligibility for quota shares has typically been limited to the catch history of vessel owners, which has been perceived as inequitable to captains, mates, deckhands and processors, all of which have large vested interests in the fishery. To meet the equity goal of the Magnuson-Stevens Act, the NAS recommended that a broad range of allocation criteria should be considered in structuring the allocation, such as extent of participation and dependence on the fishery.

Unlimited accumulation of transferable quota shares may result in consolidation of shares and regional changes in access to a fishery and community structure. The NAS found that limits on the transferability and accumulation of shares may be necessary in the context of the objectives of the programmes, especially where there is intent to promote an owner-operated fishery or conserve the geographic and community structure of a fishery. Such limits may include overall limits, restrictions by area or vessel category and restriction of ownership to bona-fide fishermen. The Alaska halibut and sablefish fisheries are examples of incorporating specific restrictions on transfers to maintain fleet diversity.

The NAS recommended that quota allocation programmes also consider alternatives to IFQs for accomplishing conservation and socio-economic objectives. Alternatives to private rights of access exist; communal rights, such as community development quotas (CDQs) may offer advantages for achieving management objectives in some fisheries (Reiser 1997). Allocation of quota share to communities is a possible mechanism for contributing to the sustainability of coastal communities that are heavily dependent on fishing and, or, have little alternative economic opportunity (Ginter 1995). The North Pacific Fisheries Management Council established CDQs in 1992 for certain groundfish species in the Western Alaska-Bering Sea region to coalitions of villages in the area. The programme is considered highly successful in fostering greater involvement in the fishing industry by the communities, with commensurate economic and social benefits including increased employment, infrastructure development and enhanced training and education opportunities for residents. These types of alternatives can be utilized for a fishery in conjunction with, or independent, of an IFQ programme; CDQs for Western Alaska villages have been incorporated into the IFQ management regime for halibut and sablefish in Alaska (Ginter 1995).

4. CONCLUSION

The NAS study and others have noted that IFQs are not a panacea (NRC 1999a, Fujita et al. 1998). Not all fisheries will be well suited for IFQ management regimes and alternatives exist (Reiser 1997). But the history of IFQs has shown their potential for addressing some long-standing problems in modern fisheries management. The allocation of permits to harvest a specified portion of a fishery resource can promote economic efficiency, increase benefits to the industry and the consumer and enhance conservation efforts. However, the U.S. experience has also shown that programmes must be developed to meet societal expectation for a public trust resource. As Christy (1996) noted, exclusive use rights, whether limited entry, IFQs, or communal rights such as CDQs, mean that some individuals will gain and others lose, either now or in the future, and questions of equity cannot be avoided. These questions must be considered in the perspective of the dismal history of open access fisheries management. Conservation, fairness and efficiency are all standards mandated by the Magnuson-Stevens Act. Policy makers must not only convince themselves and the stakeholders, but also society at large, that application of rights-based systems such as IFQs will meet the national standards and provide optimum utility of a public resource.

5. LITERATURE CITED

Christy, F. C. 1996. The death rattle of open access and the advent of property rights regimes in fisheries. Marine Resource Economics 11: 287-304.

Darcy, G.H. and G.C. Matlock 2000. Development and implementation of access limitation programmes in marine fisheries of the United States. In Use of Property Rights in Fisheries Management. Proceedings of the FishRights99 Conference. Fremantle, Western Australia, 11-19 November 1999. FAO Fisheries Technical Paper No.404/2. pp.96-106, FAO, Rome.

DOC 1999. Pacific halibut fisheries; local area management plan for the halibut fishery in Sitka Sound. Department of Commerce, NOAA 50 CFR Part 300. Federal Register 64 (81): 22826-22830.

Fujita, R.M., T. Foran and I. Zevos 1998. Innovative approaches for fostering conservation in marine fisheries. Ecological Applications 8 (1) Supplement: S139-S150.

Gauvin, J.R., J.M. Ward and E.E. Burgess 1994. Description and evaluation of the wreckfish (Polyprion americanus) fishery under individual transferable quotas. Marine Resource Economics 9: 99-118.

Gilroy, H., P.J. Sullivan, S. Lowe and J.M. Terry 1996. Preliminary assessment of the halibut and sablefish IFQ programmes in terms of nine potential conservation effects. International Pacific Halibut Commission.

Ginter, J.J.C. 1995. The Alaska community development quota fisheries management programme. Ocean and Coastal Management 28 (1-3): 147-163.

Gordon, J.S. 1954. The economic theory of a common-property resource: the fishery. Journal of Political Economy 62: 124-142.

Grafton, R.Q. 1996. Individual transferable quotas: theory and practice. Reviews in Fish Biology and Fisheries 6: 5-20.

Hardin, G. 1968. The tragedy of the commons. Science 162: 1243-1248.

Heaton, C. E. and T. B. Hoff 1999. Overview of the surfclam and ocean quahog fisheries and quota recommendations for 2000. Mid-Atlantic Fisheries Management Council, Dover, Deleware.

IPHC 1998. Report of assessment and research activities 1998. International Pacific Halibut Commission, www.iphc.washington.edu.

McCay, B.J. 1995. Social and ecological implications of ITQs: an overview. Ocean and Coastal Management 29 (1-3): 3-22.

McCay, B.J., C.F. Creed, A.C. Finlayson, R. Apostle and K. Mikalsen 1995. Individual transferable quotas (ITQs) in Canadian and US Fisheries. Ocean and Coastal Management 29 (1-3): 85-115.

Munro, G., N. Bingham and E. Pikitch. 1998. Individual transferable quotas, community-based fisheries management systems, and "virtual" communities. Fisheries 23(3): 12-15.

NMFS 1999a. Our living oceans. Report on the status of U. S. living marine resources, 1999. NOAA Tech. Memorandum NMFS-F/SPO-

NMFS 1999b. Final fishery management plan for Atlantic tunas, swordfish, and sharks. NOAA NMFS Office of Sustainable Fisheries, Silver Spring, MD.

NMFS 1999c. Fisheries statistics and economics. National Marine Fisheries Service, www.st.nmfs.gov.

NRC 1999a. Sharing the fish: toward a national policy on individual fishing quotas. Ocean Study Board, National Research Council, National Academy of Sciences. National Academy Press, Washington, D.C.

NRC 1999b. The community development quota programme in Alaska. Ocean Study Board, National Research Council, National Academy of Sciences. National Academy Press, Washington, D.C.

Pautzke, C.G. and C.W. Oliver 1997. Development of the individual fishing quota programme for sablefish and halibut longline fisheries off Alaska. North Pacific Fisheries Management Council, www.fakr. noaa.gov/npfmc.

Reiser, A. 1997. Property rights and ecosystem management in U. S. fisheries: contracting for the commons. Ecology Law Quarterlty 24: 813-832.

Sakagawa, G.T. 1975. The purse-seine fishery for bluefin tuna in the Northwestern Atlanticocean. Marine Fisheries Review 37 (3): 1-8.

Scott, A.D. 1955. The fishery: the objectives of sole ownership. Journal of Polit. Economy 63: 116-124.

Sedberry, G., J. Carlin, B. Chapman, B. Eleby, G. Ulrich and G. Wyanski 1999. Fishery biology, life history, and genetic population structure of globally-distributed wreckfish,Polyprion americanus. South Carolina Department of Natural Resources, www.dnr.state.sc.us.

Serchuk, F.M. and S.A. Murawski 1997. The offshore molluscan resources of the northeastern coast of the United States: surfclams, ocean quahogs, and sea scallops. Pages 45-62 in C. L. MacKenzie, V. G. Burrell, A. Rosenfield, and W. L. Hobart. The history, present condition, and future of the molluscan fisheries of north and central America and Europe: Volume 1, Atlantic and Gulf Coasts. NOAA Technical Report NMFS 127.

Sigler, M.F., J.T. Fujioka and S.A. Lowe 1999. Alaskan Sablefish Stock Assessment for 2000. North Pacific Fishery Management Council.

Smith, P.J. 1999.The Alaska halibut and sablefish individual fishing quota (IFQ) programme: a manager's perspective on its history, implementation, and performance. ICES Journal of Marine Science, vol. 56.

Smith, P. J. This symposium. Administration of the IFQ programmes for halibut and sablefish in Alaska.

Sullivan, P.J., A.M. Parma and W.G. Clark 1999. The Pacific Halibut Stock Assessment of 1997. International Pacific Halibut Commission Scientific Report 79.

Wang, S.D., and V.H. Tang 1996. The surf calm ITQ management: an evaluation. Pages 125-128 in Our living oceans. The economic status of U.S. fisheries, 1996. NOAA Tech. Memo. NMFS F/SPO-22.

Development of Property Rights-based Fisheries Management in the United Kingdom and the Netherlands: a Comparison - G. Valatin

G. Valatin
Laboratoire d'halieutique
Ecole Nationale Supérieure Agronomique de Rennes (ENSAR)
65, Rue de Saint-Brieuc, CS 84215 - 35042 Rennes Cedex, France
<[email protected]>

1. INTRODUCTION

Two essential characteristics of "property" are that they involve a bundle of both rights and responsibilities and that there is allocation of exclusive rights to a "benefit stream". These rights would have to value and there should be recognition, including willingness to enforce them, by the wider society (Bromley 1991). Because of measures that restrict access, property rights thus represent economic "goods" due to their scarcity and utility (Davidse 1997). Their value is dependent upon characteristics such as duration, flexibility, divisibility, and transferability (Scott 1988), upon regulations that affect these attributes, or the expected flow of benefits accruing from access.

The creation of property rights in fisheries is associated with measures that allocate exclusive access to fishing opportunities, fish stocks or fishing areas. These measures include limited entry, such as restrictive licensing and registration, which limit access to sea areas, as well as measures, including quota allocations, which determine the extent of access to resources. Enforcement and the extent of compliance with regulations governing access is crucial in determining the extent to which exclusive fishing rights are of value in practice.

General vessel licensing and registration requirements, Total Allowable Catches (TACs), area and seasonal closures, taxes and subsidies, and other regulations, may also significantly affect the returns from participation in a fishery and therefore also any market value of associated property rights. However, except where such management instruments confer exclusive access rights, they do not involve the creation of property rights, or lead to rights-based fisheries management.

Fisheries management in the United Kingdom and the Netherlands occurs within the framework of the European Union's Common Fisheries Policy (CFP), which in line with the principle of "subsidiarity", allows for national variations in implementing fisheries management policies. Research for this paper was undertaken within the context of the EU-funded ELSA-fisheries (Ethical, Legal and Social Aspects of Fisheries Management) project, which is reviewing and comparing fisheries management systems in ten European countries and is linked to current reviews on the CFP and potential changes after 2002.

The development of rights-based fisheries management measures in the UK and the Netherlands is described after briefly describing the development of exclusive national fishing rights in the context of international agreements and the evolution of the EU Common Fisheries Policy in particular. The development of property rights in each country is compared focusing upon limited access and quota allocation measures as the main types of management instrument conferring exclusive fishing rights.

2. INTERNATIONAL AGREEMENTS AND THE DEVELOPMENT OF EXCLUSIVE NATIONAL FISHING RIGHTS

The establishment of exclusive fishing zones and curtailing access of foreign fishing fleets was associated with the initial development of national property rights in fisheries, upon which subsequent developments were based. In the United Kingdom, a 3-mile exclusive fishing zone was established in 1878 under the Territorial Waters Jurisdiction Act, but although the North Sea Fisheries Convention of 1882 provided for North Sea coastal states to establish such zones, a 3-mile exclusive fishing zone was not established in the Netherlands until 1952 (United States Department of Defense 1997). The European Fisheries Convention of 1964 established the right of coastal states to establish a 12-mile exclusive fishing zone providing that the historic access rights of other countries within the 6-12 mile band continued to be recognised. Accordingly, limits were extended to 12-miles in both the United Kingdom and the Netherlands in 1964 (Davidse 1996) although this did not apply to the Channel Islands (UK).

On creation of the European Economic Community in 1957 by France, Germany, Italy, the Netherlands, Belgium and Luxembourg, the Treaty of Rome provided for the establishment of a common policy on agriculture, including sea and fresh water fisheries, although fisheries were viewed as of minor importance. Only in 1970, with applications to join the Community by the United Kingdom, Ireland, Denmark, and Norway, adjacent to existing Member States' fishing areas, was there sufficient incentive for agreement to be reached on an initial fisheries policy aimed at ensuring that access to traditional fishing grounds was maintained. Much to the dismay of the new applicants, the policy encapsulated in EEC Regulation No. 2141/70 and concluded just prior to their accession, stipulated that equal conditions of access to the fishing grounds under the jurisdiction of each Member State applied to all vessels registered within the Community. Although providing for the retention of existing exclusive 6-12 mile coastal limits, the policy otherwise effectively prohibited discrimination against vessels from another Member State purely on grounds of nationality, and was to be binding on all Member States for a period of 10 years. While Norway decided not to become a member of the Community, it was reportedly perceived by the other governments at the time to be relatively unimportant compared to the advantages of joining (Davidse 1997, Holden 1996).

In contrast to the principle of equal access agreed within the Community, from the mid 1970s the North East Atlantic Fisheries Commission (NEAFC) began recommending TACs and national quotas for some of the principal shared stocks, further laying the basis for the creation of exclusive fishing rights for member countries, including the United Kingdom and the Netherlands (Davidse 1996). Following the creation in 1976 of a separate Directorate General for Fisheries within the European Commission and the establishment of a 200-mile exclusive fishing zone from 1 January 1977, negotiations began in earnest within the Community to agree to a comprehensive fisheries policy covering the most important non-sedentary fish stocks. National interests campaigned for their government to negotiate the greatest share of access rights possible, and UK ports were blockaded by fishermen in 1975 in support of the establishment of a 100-mile exclusive fishing zone (Holden 1996).

After prolonged negotiations on questions including the retention and size of exclusive fishing zones, and the allocation of TACs into national quotas, the CFP was finally agreed in late January 1983, for a period of a further 20 years. An incentive to reach agreement had been the expiry of existing exclusive 6-12 mile coastal limits under the existing policy at the end of December 1982 (Holden 1996).

The CFP provides for the setting of TACs for all the main stocks in Community waters and their division between Member States on the basis of "relative stability", a formula reportedly established bearing in mind the wider Community principle of allocation based upon need rather than purely contribution to Community resources. The fixed allocation procedure adopted takes into account the historic catches of Member States' fleets, the needs of coastal areas heavily dependent on fisheries (including the northern part of the UK), lost fishing opportunities of certain Member States (including the UK) arising from the declaration of a 200-mile exclusive fishing zone by third countries and national priorities in terms of targe stocks. Where no data were available on which to base scientific advice precautionary TACs were set (Holden 1996).

While investment in the catching sector had previously been encouraged in an attempt to eliminate the Community's deficit in fish supplies, as part of the CFP Structural Policy, the first Multi-Annual Guidance Programme (MAGP) adopted in 1983 aimed to curb growth in the fishing fleets in an attempt to achieve a satisfactory balance between 'fishing capacity' deployed and available stocks. Henceforth, aggregate tonnages and engine powers of national fleets were to be constrained to try and create a balance between national fleets and Member States' shares of the TACs (Holden 1996), to reduce the risks of quota-busting and stock over-exploitation, with subsequent MAGPs further segmenting national fleets and stipulating associated fleet capacity targets. To achieve national MAGP targets required the introduction of limited access through closing national fleet registers to new entrants (except where at least the same amount of "capacity" was simultaneously withdrawn), and the inclusion of the relevant vessel "capacity" characteristics in national fleet registers, resulting in the creation of property rights for existing fishing vessel owners.

3. LIMITED ENTRY IN NATIONAL FISHERIES

Apart from access restrictions within national 3-mile coastal zones, the period prior to the mid 1970s was characterised essentially by open access and a lack of property rights in fishing both within the UK (Hatcher and Cunningham 1994) and the Netherlands. By contrast, the past couple of decades has seen the implementation of a wide variety of limited entry restrictions and the creation of associated property rights. Table 1 provides a summary of some of the principal limited entry measures introduced in UK and Dutch fisheries.

The introduction of limited entry in UK and Dutch fisheries was associated with attempts to protect the fishing opportunities of specific vessels or groups of vessels, and with attempts to ensure a balance between the catching power of national fleets and available resources in line with national quotas and MAGP targets. In most cases access rights were allocated purely on the basis of previous participation in a fishery, thus excluding potential new entrants. For example, in the UK in 1984 "pressure stock licences" were allocated to all vessels which had previously participated in, or held a licence for, the fisheries affected.

Cases of more restrictive allocation of access rights that excluded an important group of vessels which had previously participated in the fishery, unsurprisingly, have tended to be more hotly contested. For example under the Merchant Shipping Act 1988 an attempt was made to tighten the registration provisions by stipulating that owners of UK fishing vessels had to be British citizens, or if company-owned, 75% of the shares had to be owned by British citizens and 75% of the directors had to be British citizens, excluding vessels operated by nationals from other Member States (Morin 1998). The Spanish and Dutch vessel operators thereby excluded took legal proceedings against the British government. The European Court of Justice ruled in 1991 that the UK government had acted in violation of the right of establishment under Community law (Morin 1998), and the vessels were allowed to re-register; their owners were awarded £30million in compensation (Robinson, Pascoe and Hatcher 1998). Following subsequent lengthy negotiations (letter from Jacques Santer to Tony Blair dated 17 June 1997) between the British Government and the European Commission, to ensure that vessels maintain a genuine economic link with the country of registration, less restrictive criteria were introduced in 1999 related to landings, crew residence, and operating expenditure1, which seem less likely to result in existing vessels being excluded from the UK register, or be subject to legal challenge.

1 Answer from MAFF Minister Nick Brown to Parliamentary Question tabled by Austin Mitchell MP on 30 July 1998 on the introduction of measures to ensure that British registered fishing vessels maintain a real economic link with UK populations dependent on fisheries).

Table 1
Limited entry measures in UK and Dutch fisheries

Year

Country

Limited entry measure

1975

Netherlands

Permits for vessels herring fishing

1975

Netherlands

GK permits for vessels fishing for shrimp in Wadden Sea

1975

Netherlands

GV permits for vessels fishing for shrimp in 12-mile zone

1977

UK

Licences for vessels fishing for herring in northern Irish Sea

1980

UK

Licences for mackerel purse seiners and freezer trawlers

1981

Netherlands

K Permits for vessels mainly targeting cod

1984

UK

Pressure stock licences for vessels fishing for TAC stocks

1986

UK

Limited pressure stock licences for fishing new TAC stocks

1986

Netherlands

List I permits for beam trawling for flatfish within 12-mile zone

1986

Netherlands

List II permits for beam trawling for shrimp within 12-mile zone

1987

Netherlands

R Permits for other vessels mainly fishing for roundfish

1987

Netherlands

S Permits for other trawlers and netters seasonally fishing roundfish

1988

UK

Exclusion from register of vessels operated by non-nationals (temporary)

1990

UK

Miscellaneous species licences mainly for shellfish fleet

1992

UK

North Sea beam trawl pressure stock licences

1999

UK

Genuine economic link criteria for vessel registration


Although initial limited entry measures restricted fleet size in terms numbers of vessels in some specific segments it quickly became apparent that this would be far from sufficient to curb fleet catching power, as investment channelled instead into improvements to existing vessels in fisheries subject to restriction, or expanding fleet size in fisheries not subject to limitations. Thus, further limited entry measures were deemed necessary to curb such growth, including restrictions on transfer of access rights to larger vessels. In the UK, this resulted in a multiplication in restrictive licensing schemes, so that by 1992 there were 154 different types of licence; prior to simplification in 1995 licences were categorised into five basic types, with some vessels holding more than one type! (Europeche 1995). Table 2 provides a summary of some of the principal access rights transferability measures introduced in UK and Dutch fisheries.

Fundamental difficulties exist in adequately defining and measuring fishing capacity as the principal determinant of fishing mortality (Valatin 1992, Holden 1996), with its measurement differing between Member States. In the UK a «vessel capacity unit» (VCU) system was adopted in 1990 replacing existing restrictions based upon vessel length. This allowed almost unrestricted transfer of the licences between vessels of different sizes, providing that the total VCUs of the vessel to which one or more licences was transferred was sufficiently below the total of the original vessel(s), with vessel VCUs defined as {length(m) x breadth(m) + 0.45 x engine power (kW)}. In the Netherlands, engine power and tonnage measures were used to measure capacity in line with the units used at EU level for the MAGPs.

Not least due to the definitional difficulties, vessel operators soon found ways to circumvent such measures, so that restrictions on transfer of access rights were soon found to be only partially effective in limiting the growth of fleet catching power. For example, as measurement of engine power took account only of the main engine, this allowed vessel operators to install auxiliary engines. Main engines were de-rated to a fraction of their nominal continuous ratings, and auxiliary engines were installed whose combined power exceeding that of the main engine (De Wilde 1998). Capacity limitation rules resulted in widespread modification of vessel design characteristics to create so-called "rule beaters", increasing catching efficiency but not the level of capacity officially measured.

Once introduced, restrictions on transfer of access rights have not always proved easy to alter. For example, in the Netherlands, a change to measuring engine power using a system of "maximum continuous rating" had to be abandoned due to successful court action by the industry, who claimed the new measure to be unfair as it would have entailed significantly increasing the registered HP of some vessels (LEI 1997).

Decommissioning schemes have also been used in both countries to reduce fleet size in a further attempt to ensure a balance between the catching power of national fleets and available resources. In so far as they reduce the number of vessels allowed to fish, such schemes also represent a limited entry measure, with entry restricted to those existing vessels not decommissioned.

Table 2
Access rights transferability measures introduced in UK and Dutch fisheries

Year

Country

Quota allocation measure

1984

UK

Pressure Stock licence transfer restricted to within vessel length groups

1985

Netherlands

Engine power incorporated into licences, with 10% penalty on transfer

1990

UK

Vessel Capacity Units system introduced with 10% transfer penalty

1992

Netherlands

Prohibition on transfer of >2000HP licences

1992

UK

Capacity penalty increased to 20% on transfer of licence

1994

UK

Capacity penalty increased to 30% if 3 or more licences aggregated

1994

Netherlands

Transfers of roundfish permits allowed without transfer of vessel

1996

UK

Aggregate tonnage and horsepower restricted to previous level

1998

UK

Capacity penalties withdrawn for vessels fishing outside EU waters


4. QUOTA ALLOCATIONS IN NATIONAL FISHERIES

In addition to limited entry, a wide range of quota allocation measures have been introduced in the past two decades, reserving exclusive rights to part of the national quotas for specific vessels, creating property rights for the boats concerned. Table 3 below provides a summary of some of the principal quota allocation measures introduced in UK and Dutch fisheries:

Both in the UK and in the Netherlands, the implementation of national quota provisions by closing a fishery once the quota was taken, was quickly found to be unsatisfactory where catch rates were high relative to quota levels. Prohibitions on fishing at the end of the year not only caused problems for their shore sector, but, by concentrating landings earlier in the season, reduced the prices obtained by the fishermen.

Table 3
Quota allocations measures introduced in UK and Dutch fisheries

Year

Country

Quota allocation measure

1975

Netherlands

Division of herring quotas between freezer trawlers and other vessels

1976

Netherlands

Individual Quota system for sole and plaice

1977

UK

Fixed vessel quota system initiated (North Sea haddock/Western mackerel)

1984

UK

Sectoral quota allocation system initiated (Shetland Fish Producers Organisation)

1985

Netherlands

Individual Transferable Quotas for mackerel freezer trawler fleet

1985

Netherlands

Individual Transferable Quotas for sole and plaice

1986

UK

Individual Quota system initiated (The Fish Producers Organisation)

1988

Netherlands

Division of cod Quota between 3 fleet segments («Kistenregeling»)

1993

Netherlands

Biesheuvel quota management group system inaugurated

1994

Netherlands

Individual Transferable Quotas for cod and whiting

1994

Netherlands

Individual Transferable Quotas for seed mussels

1999

UK

Fixed track record system inaugurated for allocating quotas


To overcome the problem of early closures, mechanisms for allocating quotas to individual vessels were introduced. In the UK the first mandatory restrictions on individual vessel landings were introduced in 1977 in the North Sea haddock and Western mackerel fisheries (Hatcher and Cunningham 1994). In the Netherlands, following the early closure of the sole fishery the previous year, an individual quota (IQ) system was introduced for plaice and sole in 1976, with part of the quota retained as a national reserve to allow for any overshooting of quotas. In the Dutch parliament it was announced that allocating quotas to individual vessels would increase operational certainty, allowing vessel operators to plan their fishing activities in advance, discuss their plans with their financiers and maximise their profits (Hoefnagel and Smit 1996).

Besides overcoming problems associated with early closures, introduction of quota allocation measures often further reflected attempts to safeguard the fishing opportunities of individual vessels or specific fleet segments, being closely linked to limited entry measures. For example, in the Netherlands, following the early closure of the cod fishery in September 1979, to protect operators from early closures, from 1981 part of the cod quota (equivalent to 200t per boat) was reserved for the 20 vessels targeting cod that had long track records in the fishery, which were issued with special permits (K-documenten). Increased pressure on roundfish quotas, due to larger cod bycatches associated with an expansion of the beam trawl sector in the early 1980s, which led to early closures, resulted in separate quotas being allocated in 1988 to the two other sectors of the roundfish fleet, and the permit system was extended accordingly (Hoefnagel and Smit 1996).

In each case, quotas were initially allocated to owners on the basis of vessel characteristics, such as vessel size, or past catches. In the UK, for example individual vessels' landings of North Sea haddock were restricted on a per trip basis, while landings in the Western mackerel fishery were restricted on a crew member per day basis (Hatcher and Cunningham 1994). Allocations to Producers Organizations (POs) were based upon the historic track records of member vessels, reflecting their past fishing patterns (grounds fished, species targeted, etc.) (Hatcher 1997). In the Netherlands, following the introduction of TACs for herring by NEAFC in 1975, 68% of Dutch herring quotas for areas VIId (Eastern Channel), IV (North Sea) and IIa (Norwegian sea) were allocated to the freezer trawler sector (vessels over 59m length), with the remainder allocated to other vessels and managed by means of weekly landings limits (Davidse 1997, LEI 1996). Dutch quotas allocations for sole and plaice were initially based upon vessel catch records or engine power. Quotas for those vessels fishing prior to 1974 were based upon the highest annual sole and plaice landings during a 3-year reference period, and those for vessels having entered subsequently were based upon average catches in the same engine-power group, or set separately by the Ministry.

Mechanisms for allocating quotas initially adopted have often been contested and subsequently modified. For example, in the Netherlands, the method used in 1976 for initially determining sole and plaice allocations was much criticised as it resulted in large disparities in allocations to similar sized vessels, and was modified in 1977 to take account of both engine power and historic catch records, with bycatch quotas for non beamers over 250 HP capped at the level of 250 HP vessels, creating mini-quotas (Hoefnagel and Smit 1996). In the UK the reference period used to determine sectoral quota allocations was initially the previous five years, but due to pressure from the industry it was progressively reduced to three years in the case of demersal species, and to two years for pelagic and distant-water species (Europeche 1995). In 1999 a fixed track record system based upon 1994 - 1996 as the reference period was adopted to reduce annual fluctuations in allocations and overcome mis-reporting associated with the incentive for vessel operators to over-declare catches ("ghost fish") rather than risk losing future fishing opportunities by failing to fully take a current quota allocation.

To increase industry involvement in fisheries management, responsibilities for managing quota allocations have been largely devolved to industry groups. In the UK a sectoral allocation system devolving quota management to Producer Organisations was initiated in 1984, when the Shetland FPO was given responsibilities for managing its own Area IV and VI haddock quotas. The system gradually extended to other POs and other quotas, so that by 1996 sectoral allocations accounted for 96%, 91% and 84% of demersal quotas in Areas IV, VI, and VII respectively (Hatcher 1997). In the Netherlands, on the advice of the Stuurgroep Biesheuvel, in 1993 eight quota management (Biesheuvel) groups were established under the auspices of the Produktschap Vis, covering five-sixths of the fleet, to manage the aggregate quota of their members. In order to maximise returns, each prepares an annual fishing plans outlining the envisaged pattern of landings over the year (Ministerie van Landbouw, Natuurbeheer en Visserij 1993, Hoefnagel and Smit 1996).

To further increase the scope for decision-making by industry groups in shaping fisheries management, the UK POs were initially free to choose the quota allocation system applying to their members. Allowing POs to choose whether to manage a sectoral quota, provided an incentive to build up their track record prior to requesting a sectoral allocation so as to obtain a larger share, and except where deemed advantageous to prevent an early closure, to decline taking a sectoral quota in years when their members' track record was worse than that of the non-sector (Slaymaker 1992). This tended to reduce the non-sector allocation. To reduce problems associated with misreporting area of capture (Europeche 1995), the system was made more restrictive from 1995 when POs were obliged to accept sectoral allocations for all demersal species but not pelagics (Hatcher 1997).

Decisions concerning how to allocate quotas between group members after their initial allocation by the government have also been devolved to industry groups, notably in the UK, but also to some extent in the Netherlands. Under the UK sectoral allocation system, most POs tended initially to allocate fixed monthly quotas to member vessels, which in a few cases have varied allocations between different vessel categories (e.g. lengths groups) in an analogous manner to the non-sector allocations for vessels not in membership of POs or in membership of POs not having a sectoral quota for the particular stock (Hatcher 1997). However, an individual vessel quota (IQ) system with allocations based upon vessel track records has been used by the Fish Producers' Organisation2 since 1986, with similar systems increasingly introduced by other POs. IQs are generally allocated annually and sometimes monthly and can usually be combined to give added flexibility where the same owner has several vessels. Within POs, vessel operators are generally free to swap and trade their IQs (Hatcher, Holland and Cunningham 1995), thus resembling an individual transferable quota (ITQ) system for some vessel operators (Europeche 1995). In the Netherlands, mackerel quotas for areas other than the North Sea, which comprise the bulk of those available to the Dutch fleet, were allocated exclusively to freezer trawlers and since 1985 freezer trawler owners have divided these quotas amongst themselves without restriction on subsequent transfers (LEI 1994, LEI 1996).

2 The Fish Producers Organization, NFFO Offices, Marsden Road, Fish Docks, Grimsby DN31 3SG, UK.
While quota allocation systems have generally been initiated by the government, occasionally there has been a case for them to be inaugurated by the industry. In the early 1990s Dutch industry organizations drafted a plan to limit the impact of the mussel seed fishery on the marine ecosystem by setting a TAC for seed mussels and allocating IQs on the basis of historic fishing performance and culture plot sizes, with the smallest firms allocated an additional amount and a separate allocation made to off-bottom growers (Keus 1994). The initiative was reportedly taken in order to pre-empt more stringent restrictions following the decision in 1991 by the trilateral Ministers Conference on the Protection of the Wadden Sea to close large areas to cockle and mussel fishing to protect seabirds, which at the time were reportedly dying of starvation in large numbers. Despite some initial enforcement difficulties, the system is reported to have lessened the race to fish and led to more efficient use of the mussel seed stock without having reduced the sector's output (Keus 1995).

Apart from providing for the transfer of quota rights on replacing an existing vessel or change of ownership, transferability of quota allocations by individual vessel owners has tended to be restricted initially, and where transfers have subsequently become allowed, this has often been preceded by the development of an unofficial trade in fishing rights. In the Netherlands, for example, sole and plaice IQs could initially only be legally transferred between owners on the transfer of the vessel. However, in practice this restriction proved easy to circumvent (LEI 1997a) as vessel operators soon found that in order to acquire additional quotas, they could simply buy a vessel and its associated IQs and then re-sell it without its quota entitlements (Davidse 1997). Only in 1985 did transfers of quota entitlements by themselves became legal.

Quota transfers between groups have also been subject to restrictions, although generally less stringent than those applying to individual vessel owners. For example, the UK POs were free to swap quotas with other POs, although until 1993 such swaps had to balance in terms of "cod-equivalents" (Hatcher 1997)3.

3 Cod-equivalents are described by Holden (1994:47) as having been created in the course of negotiations with Norway, Sweden and the Faroes, to facilitate quota swaps for different species, by multiplying each quantity by an approximate market value (i.e. the "exchange rate") index, taken as 1.0 for cod, haddock and plaice, 0.77 for saithe, and 0.86 for whiting. Thus, one tonne of saithe counted as equivalent to 0.77 tonnes of cod, haddock, or plaice, or 0.90 tonnes of whiting.
Quota allocations to groups create a form of common property rights. In some cases mechanisms have been established to protect group rights. For example, in the UK, since 1994 POs have been allowed to retain and "ring fence" the track records of member vessels who voluntarily surrendering their licence, with the vessel's owners generally being financially compensated by the PO. In this way the PO retains vessel's track record in the event it leaves the PO, and around 20% of the Shetland FPO's cod quota is reportedly ring-fenced in this way (Phililipson 1997). In the Netherlands, members of Biesheuvel Quota Management Groups have to sign an agreement transferring the right to manage their ITQs to the board of the group, committing them to remaining within the group for the year and to submitting an annual fishing plan to the group board showing anticipated quota uptake and days at sea to be utilised during each quarter. This can only be modified with the board's permission (LEI 1996, Langstraat 1997). Members have to report all quota transactions to the group board and offer quota initially to other members of the group before entering into any agreement to rent out part to non-group members although transactions agreed on an exchange basis are exempt (LEI 1995).

To the extent that individual vessel owners retain rights to withdraw from the group taking quota entitlements with them, group common property rights have been of less importance than the private property rights of individual vessel owners. For example, UK vessel owners are always free to resign their membership of a PO if they disagree with the quota allocation method used, and a willingness of vessel owners with relatively high track records to leave POs allocating quotas on the basis of equal shares, may account for the increasing use of allocation schemes based upon individual vessel track records.

5. ENFORCEMENT AND THE VALUE OF PROPERTY RIGHTS

Enforcement within the EU has been described by a former head of the European Commission Fishery Directorate's Conservation Unit, as the "Achilles' heel" of the conservation policy as is neither efficient nor effective (Holden 1996, p.87, p.167). From the outset, the application of control measures within the CFP was devolved to individual Member States, who, by retaining implementation as a national responsibility, reportedly mainly aimed at rendering the policy ineffective (Holden 1996), with lax enforcement combined with widespread non-compliance making the allocations agreed at EU level of little relevance in practice and creating conditions for an international Tragedy of the Commons to develop3.

Subsequently the ineffectiveness of the Common Fisheries Policy in conserving fish stocks has become increasingly criticised. Calls for more effective enforcement gained increasing support, with a gradual tightening of control measures agreed at EU level. However, Commission fisheries inspectors have no legal powers to enforce legislation, and their role has been described as simply "looking over the shoulder of national inspectors" (Holden 1996, p.163). And, commission proposals to increase the powers of Community inspectors, to grant them real autonomy, or harmonise the sanctions applied, have been consistently rejected by the Council of Ministers (Holden 1996 and Fischler 1999). As implementation of control measures remains the responsibility of individual Member States, enforcement continues to depend to a large extent upon national administrations and perceptions of the legitimacy of agreements reached under the CFP with some Member States apparently continuing to regard their national interest as best served by allowing landings by their fleet to continue largely unrestricted.

In part to reflect changes agreed at the EU level and in part a national consideration in the early 1990s. The level of enforcement by the UK and Dutch administrations increased. In the aftermath of the resignation of the Dutch Fisheries Minister over misreported landings, a radical change of emphasis occurrred with the creation of the Biesheuvel Quota Management Groups. This apparently solved the country's "black fish" (quota-busting) problems. This was cited by a European Commission report evaluating implementation of fisheries regulations by Member States in the mid 1980's as the worst case in preventing over-quota landings (European Commission 1986) and the Netherlands is now widely regarded as a model of enforcement within the EU. Although this issue has never resulted in the resignation of a UK Minister, and is perceived to be a far greater problem in other countries, such as Spain, the problem was nonetheless declared a priority by the incoming Labour Government after the last elections, and although clearly not totally solved, recent measures are claimed to have met with considerable success (House of Commons 1998).

In some instances, attempts to improve enforcement involved the introduction of completely different types of regulations. For example, in the Netherlands days-at-sea restrictions (Zeedagenregeling) were introduced in 1987 to facilitate enforcement of quotas, with allocations of days to individual vessels dependent upon the fishery, engine power, quota entitlements and type of permit held (LEI 1994). In both countries a system of designated landing ports was introduced to improve enforcement.

Because of widespread non-compliance with regulations, differences in property rights on paper were at first of little significance in practice, and thus of relatively little value. However, as enforcement increased, or expectations of stricter enforcement grew, interest increased in ensuring that landings were made legally, generating a rise in demand for fishing rights and an associated increase in the value of individual vessel property rights. For example, in the Netherlands average prices of sole ITQs are reported to have increased seven-fold between 1986 and 1988 as a consequence of stricter enforcement, from an estimated NLG 1O-15/kg to NLG 7O-80/kg (Davidse 1997).

Fishing rights were initially allocated free of charge and have now acquired extremely high market values - millions of ECU in many cases - notably in Dutch fisheries, but also in some UK fisheries (MacNeill 1998). For example, as Table 4 illustrates, in 1994 the mean ITQ holdings of a vessel in the Dutch cutter fleet of 58t of sole and 173t of plaice was valued at NLG 4.4 million (i.e. around ECU 2 million).

As allocation of quotas had been based upon characteristics such as vessel size, or historic catches, the associated market values of individual fishing rights has varied accordingly. For example, as Table 4 shows, the 72 vessels in the Dutch cutter fleet with engine power over 2000 HP had mean ITQ holdings in 1994 of 121t of sole and 345t of plaice, valued at NLG 9.2 million, compared to the value of mean ITQ holdings of the 67 vessels with engine power under 260 HP of NLG 0.4 million. In the UK average values of vessel fishing rights also vary according to size and type of vessel, and past level of landings, with average prices reported of £776, £1222, and £2083 per VCU, for Category A, beam trawler, and purse seiner licences respectively in 1996, and for track record, of £700, £1200, £2500 and around £8000/t for mackerel, cod, hake and sole respectively in the first quarter of 1997 (Nautilus Consultants 1997).

In some cases, notably in the Netherlands, the market value of fishing rights has overtaken that of vessels themselves. For example, the price of a second hand Dutch beam trawler of average size was reportedly around NLG 2.5 million in 1993/4 compared to the value of the average flatfish ITQ of NLG 8.3 million for 103t of sole and 310t of plaice (Davidse 1997).

Amounts spent on acquiring fishing rights have in some cases exceeded investment in boats and equipment. For example, total investment in flatfish ITQs in the Netherlands is estimated to have been NLG 91 million in 1990 and NLG 115 million in 1991, exceeding total investment in boats and equipment, which for the cutter sector as a whole, reportedly amounted to NLG 64 million and NLG 31 million respectively in 1990 and 1991 (Davidse 1997).

Differences in enforcement and other factors, such as opportunity costs and proximity to markets has led to the market values of access rights differing between countries. This has tended to provide incentives for vessel operators to buy fishing opportunities abroad if costs were lower. In the Netherlands, the increasing cost of IQs and heavy enforcement reportedly led Dutch vessel operators to buy fishing rights in the UK, Germany, Belgium and to a lesser extent Norway, where the costs were lower (Davidse 1996). Although the CFP provides for TACs to be divided on a national basis between Member States, the British government's attempts to prevent citizens from other EU countries acquiring quota entitlements in the UK failed as any measures discriminating against other EU nationals are consistently ruled illegal by the European Court of Justice.

Table 4
Mean holdings, estimated prices and values of Dutch flatfish ITQs in 1994

Engine power

Number of vessels

Mean sole ITQ

Mean plaice ITQ

Total flatfish value
(NLG million)

Quantity
(tonnes)

Price
(NLG/kg)

Value
(NLG million)

Quantity
(tonnes)

Price
(NLG/kg)

Value
(NLG million)

<260 HP

67

4.75

60

0.28

15.13

5.5

0.08

0.37

261-300 HP

99

18.74

60

1.12

62.57

5.5

0.34

1.47

310-1100 HP

25

13.68

60

0.82

53.92

5.5

0.30

1.12

1101-1500 HP

33

65.52

60

3.93

221.52

5.5

1.22

5.15

1501-2000 HP

86

100.65

60

6.04

294.26

5.5

1.62

7.66

>2000 HP

72

120.94

60

7.26

344.60

5.5

1.90

9.15

All cutters

382

57.70

60

3.46

172.73

5.5

0.95

4.41

Flatfish sector

212

93.77

60

5.63

296.13

5.5

1.63

7.26

Source: Davidse, W.P. (ed) (1997). Property rights in fishing; Effects on the industry and effectiveness for fishing management policy (LEI-DLO, The Hague, The Netherlands).
6. SUMMARY AND CONCLUSIONS

With few exceptions, the period prior to the mid 1970s was characterised essentially by open access and a lack of property rights in UK or Dutch fisheries. By contrast, the past couple of decades has seen the implementation of a wide variety of access restrictions, which, often more by accident than design, have created property rights.

Fisheries management in the United Kingdom and the Netherlands occurs within the framework of the EU Common Fisheries Policy, which, from its inception, was largely concerned with the definition and allocation of fishing rights and involved a lengthy process of negotiation of national property rights before agreement was reached in 1983 on a policy to last the following 20 years. In line with the "Subsidiarity Principle", the CFP allows scope for national variations in implementing EU fisheries management policies, which initially was reflected by widespread lack of enforcement that undermined the fishing right allocations agreed at the EU level and allowed fishing pressure to increase largely unconstrained, creating the conditions for an international Tragedy of the Commons to develop.

Development of property rights has occurred in a somewhat haphazard fashion. Fisheries management measures resulting in the creation of property rights in UK and Dutch fisheries had two principal aims. Some were aimed primarily at improving fisheries management by overcoming the race to fish and problems associated with early closures when national quotas were fully taken, and the creation and maintenance of a balance between fleet size and resources. Others were primarily distributional in nature, aimed at the establishment and protection of particular access rights.

The process of regulatory change unwittingly resulted in some outcomes that were generally considered undesirable, such as the escalation in market values of fishing rights and distortionary affects associated with capacity controls and widespread modifications in vessel design to create the so-called "rule beaters". Rather than providing a stable regulatory framework for vessel operators, in many fisheries there have been frequent changes in limited entry and quota allocation measures.

Often governments did not foresee or proved unable to prevent the evolution of property rights. For example, while the introduction of IQs initially reflected an attempt to overcome apparent flaws in the existing pattern of exploitation, notably a race to fish followed by premature closure of the fisheries, the inability to constrain the powerful economic incentives for vessel operators to try to obtain the market value of property rights on transfer and thus the transition to ITQs was not foreseen. Despite official restrictions on transferability, an unofficial ITQ system developed spontaneously following the introduction of IQs in the Dutch fishery for sole and plaice, with regulations only later introduced to put the system on a statutory footing. The system subsequently extended to other fisheries. In the UK quota management was largely devolved to Producer Organisations, with adoption of individual quotas and trade in quotas and track records leading to a system which resembles an ITQ system in some cases. Despite Government statements that there are no plans to introduce ITQs (House of Commons 1999a), on the basis of past trends and the unplanned transition experienced in the Netherlands, it seems most probable that, more by accident than design, UK quota management will increasingly come to resemble an ITQ system.

Due to widespread non-compliance, differences in quota allocations on paper were at first of little significance in practice, but as enforcement tightened, the value of individual vessel fishing rights rose. In the Netherlands a radical change occurred in the early 1990s in the government's approach from being essentially "top-down" to being largely "bottom-up", with quota management responsibilities devolved to groups of vessel operators operating within a PO framework. By empowering groups of vessel operators to decide for themselves on the operational rules and penalties, the raison d'être for regulation and the impact of non-compliance on other group members became apparent, and fishermen's perceptions of the legitimacy of the management system increased. Incentives arose to encourage co-operation, and the associated institutional changes appear to have solved the Netherlands' "black fish" (quota-busting) problems. Quota management changed from a situation where misreporting led to the resignation of the Fisheries Minister, to one currently regarded as a model of enforcement within the EU. In the UK, recent measures, notably the designated ports scheme, are claimed to have met with considerable success in dealing with enforcement problems (House of Commons 1998).

While initially allocated free of charge, fishing rights have acquired high market values - in the Netherlands they are now worth millions of ECU in many cases. Relatively high prices of property rights in the Netherlands, associated partly with increased enforcement, provided an incentive for Dutch vessel operators to purchase fishing rights in other countries. Although the CFP provides for TACs to be divided between Member States, the UK government's attempts to prevent vessels from other Member States from acquiring fishing rights in the UK generally failed, as measures discriminating against other EU nationals were consistently ruled illegal by the European Court of Justice. The principle of common access to resources by nationals from all Member States and unofficial transfers in property rights to vessel operators from other EU states seem likely to increasingly weaken the basis of national quota allocations.

As the EU Common Fisheries Policy is currently under review, a possibility exists that a different management system will be instituted after 2002, altering, or negating the property rights that have developed nationally under the current policy, or changing the distribution of fishing rights between Member States. However, despite its major failings, in view of the difficulties encountered in negotiating the existing CFP, it seems unlikely that fundamental changes will be agreed.

In the UK the "Save Britain's Fish" campaign has gathered strength in recent years arguing that UK waters contain some four-fifths of EU stocks, while under the CFP the UK has been allocated only two-fifths of the TACs, with an associated value of around one sixth of the total, implying that British fishermen failed to receive their rightful share of fishing opportunities and the UK should withdraw from the CFP. Even though the necessity of reasserting national control over fisheries policy apparently now represents the position of the Official Opposition party (the Conservatives) in Parliament, if not the view of all its Members (House of Commons 1999b), it seems highly unlikely that the UK will withdraw from the CFP, thereby increasing its fishing rights. Such action would not be acceptable to the other Member States, probably necessitating complete withdrawal from the EU, a policy inconsistent with other UK interests.

From a situation of virtual open access in the early 1970s, the process of regulatory change in fisheries over the past couple of decades could be characterised as one resulting largely in the privatisation of the marine commons. New entrants have increasingly had to purchase access rights from existing vessel operators in order to enter a fishery.

While quotas have become largely a form of private property, vessel operators continue to have only indirect influence over the level of access these rights provide, as setting TACs remains the prerogative of the Council of Ministers. The TAC and quota system has conspicuously failed to conserve stocks, as TACs have consistently been set higher than justified by the scientific advice due to short-term political considerations and further undermined by non-compliance (Rodgers and Valatin 1997). However it is claimed that the IQ system has prevented more rapid deterioration than would otherwise have occurred. Counter to biological advice, a shift in Dutch policy in 1993 to maintaining the viability of the sector by simply ensuring that stocks remain above a safe biologically levels and otherwise allowing TACs to be determined by the industry (Ministerie van Landbouw, Natuurbeheer en Visserij 1993), was subsequently reflected in the higher TACs set by the EU. This was later reversed when the increased risks of stock collapse were realised (Pers. comm.). An initial public airing of scientific advice on the increased risks of the new policy simply led to the leading Dutch scientist who raised these concerns being suspended and subsequently transferred to another area of research (Köbben and Tromp 1999).

States retain powers to modify existing exclusive fishing rights, but these are tempered by vessel operators' campaigning skills and ability to mount legal challenges. Appreciation in value and the trade in property rights has increased policy inertia mitigating against further fundamental regulatory changes, as owners of such rights can be expected to resist changes which diminish the value of their assets.

Elements of common property have been established. However, these seem likely to diminish in importance as vessel operators continue to attempt to obtain the maximum value from their fishing rights. Creation of property rights, notably ITQs, has altered fishermen's outlook and way of life. Fishermen have been transformed increasingly from being primarily resource hunters to managers of fishing allocations (Davidse 1997).

7. REFERENCES

Bromley, D.W. 1991. Testing for common versus private property: Comment. Journal of Environmental Economics and Management, Vol.21, pp.92-96.

Clark, C. 1973. The economics of Exploitation. Science, 181, pp.630-634.

Davidse, W.P. (ed) 1997. Property rights in fishing; Effects on the industry and effectiveness for fishing management policy LEI-DLO, The Hague, The Netherlands.

Davidse, W. 1996. Strategic responses of dutch fishermen to limiting measures and property rights. First European Social Science Fisheries Network Workshop.

De Wilde, J.W. 1998. Effects of subsidies on the distant water and coastal fisheries of the Netherlands. Proceedings of the first workshop of the Concerted Action on Economics and the Common Fisheries Policy, Portsmouth

European Commission 1986. Rapport de la Commission au Conseil sur l'application de la Politique Commune de la Pêche. COM(86 301), The European Commission, Brussels, Belgium.

Europeche 1995. Inventory of the different systems for managing fishing efforts and quotas in E.U. Member States. DGXIV, European Commission, Brussels.

Fischler, F. 1999. (Commissioner-designate for Agriculture, Fisheries and Rural Affairs) reply to the questionnaire submitted by the European Parliament's Committee on Fisheries. August 1999.

Hardin, G. 1968. The Tragedy of the Commons. Science, 162, pp.1243-1247.

Hatcher, A. and S. Cunningham 1994. The development of fishing rights in UK fisheries policy. Research paper 69, Centre for the Economics and Management of Aquatic Resources, University of Portsmouth.

Hatcher A.C. 1997. Producers' Organizations and Devolved Fisheries Management in the United Kingdom: Collective and Individual Quota Systems. Marine Policy, 21, (6), 519-533.

Hatcher, A., P. Holland and S. Cunningham 1995. Producers' Organizations in the UK fishing industry. VIIth Annual EAFE Conference, Portsmouth.

Hoefnagel, E. and W. Smit 1996. Co-management experiences in the Netherlands. Report EC 94/60, LEI-DLO (Landbouw-Economisch Institut, Dienst Landbouwkundig Onderzoek), The Hague.

Holden, M. 1996. The Common Fisheries Policy. Fishing News Books, Oxford.

House of Commons 1998. Fisheries debate. Hansard, 15 December, pp. 825-868.

House of Commons 1999a. Written Answers by Fisheries Minister Elliot Morely to Questions from Mr Andrew George. Hansard, No. 1808, 11-14 January.

House of Commons 1999b. Fisheries debate. Hansard, 14 January, pp. 529-546.

Keus, B. 1994. Self-regulation in fisheries: The case of the mussel-seed fishery in the Netherlands VIth EAFE Annual Conference, Crete.

Keus, B. 1995. Shellfish farming and Bird Protection in the Dutch Wadden Sea. Conference on Shellfish farming and the integrated development of Coastal areas, La Rochelle.

Köbben, A. J. F. and H. Tromp 1999. De onwelkome boodschap of Hoe de vrijheid van wetenschap bedreigd wordt. Jan Mets, Amsterdam.

Langstraat, D. 1997. The Dutch co-management system for sea fisheries. Proceedings of workshop on Alternative Management Systems, Brest, 18-20 September.

LEI (Landbouw-Economisch Institut, Dienst Landbouwkundig Onderzoek) 1997. Licensing of Fishing Vessels in five EU Member States. Working Document No.5, EU AIR CT94-1489, LEI, The Hague.

LEI 1996 (Landbouw-Economisch Institut, Dienst Landbouwkundig Onderzoek). Phase III National Report: Attitudes to PO membership in the Netherlands. EU AIR -2 CT93-1392, LEI, The Hague.

LEI 1995 (Landbouw-Economisch Institut, Dienst Landbouwkundig Onderzoek). Phase II National Report: Attitudes to PO membership in the Netherlands. EU AIR - 2 CT93 - 1392, LEI, The Hague.

LEI 1994 (Landbouw-Economisch Institut, Dienst Landbouwkundig Onderzoek). Phase I National Report: Attitudes to PO membership in the Netherlands. EU AIR - 2 CT93 - 1392, LEI, The Hague.

MacNeill, F. 1998. Dead skipper's family to get £5m for quota. Press & Journal, Aberdeen. 20.10.98

Ministerie van Landbouw, Natuurbeheer en Visserij 1993. Balanced fisheries: A survey of the main points from the Dutch government's Policy Document on Sea and Coastal Fisheries. Den Haag.

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Rights-based Fisheries Development in Australia: has it Stalled? - A. McIlgorm and M. Tsamenyi

A. McIlgorm
Dominion Consulting Pty Ltd, Suite 7&8, 822-824 Old Princes Highway, NSW 2232, Australia
<[email protected] <mailto:[email protected]>>
and
M. Tsamenyi
Centre for Maritime Policy, University of Wollongong, NSW 2522, Australia
<[email protected]>

1. INTRODUCTION

Australia is a huge continent with a mix of fisheries. The reader should be aware of several characteristics of Australian fisheries:

i. their diversity and geographical extent - from Antarctic, mid-latitudes, to the tropics

ii. their administration, by the Commonwealth Government and 6 States, each with autonomous fisheries departments

iii. the coastline involved - 36 000km and a huge EEZ

iv. the limited continental shelves, few finfish, but many high value crustaceans

v. existence of many small producers in estuarine & inshore fisheries

vi. that the seafood industry is export oriented.

In the 1960s several Australian fisheries moved from open access to become limited entry licensed fisheries. This continued through the 1970s and 1980s by which time most commercial Australian fisheries were managed by limited entry. In 1980 a conference was held on limited entry licensing in Australia. In 1982, Meany reviewed the nature and adequacy of rights in Australian fisheries and since the debate, 20 years ago, we have come further than expected, but have made limited progress in codifying rights for the fishing industry in fisheries legislation.

During the 1970s various regulations were added to limited entry criteria primarily to address the rise in effective effort. In the 1980s the regulated licensing was found to have led to overcapacity and three approaches were taken:

i. Unitisation: Units based on different fishing vessel inputs were applied as a measure of vessel capacity and hence fishing effort.

ii. Buy-back and voluntary adjustment regimes: These were to address the over-capacity of fishing vessels, which had increased effort in many fisheries.

iii. Output regimes: A change of fisheries management to management regimes based on limiting catch, usually by Individual Transferable Quotas (ITQs).

Different rights and management approaches were being developed in different Australian jurisdictions.

The significant influences on the development of different fishing rights in the 1980s were:

i. Legal experience in the implementation of new fisheries management arrangements: Several decisions were handed down on fishing licences as "proprietary rights" from non-fisheries legal cases (Pennington v McGovern, inheritance case; and Kelly v Kelly, divorce settlement) in South Australia. Some fishers also took fisheries administrations to court to test their fishing rights (Fitti case, Commonwealth). These test cases became fundamental in subsequent rights development.

ii. Pressure to go to ITQs: Fisheries departments came under the influence of "economic rationalism" and the much publicised implementation of ITQs in New Zealand and in the Southern Bluefin Tuna (SBT) fishery in Australia.

iii. Changing management arrangements: A statutory authority model was implemented with the formation of the Australian Fisheries Management Authority (AFMA) in 1990.

In the 1990s the following features have been noted:
i. Legal issues: Significant legal challenges were made, particularly in association with the implementation of new ITQ arrangements in fisheries previously under management by input controls. The statutory fishing right (SFR) emerged at the Commonwealth level where fishing rights were linked to management plans.

ii. New rights-based regimes: Several ITQ schemes were introduced with controversy and legal action over wealth reallocation between the new, and former management, regimes. Most states implemented some ITQ regimes with NSW developing the "share management" system, possibly the most advanced rights fishery management system in Australia.

iii. New institutional arrangements: The inclusion of stake-holders in Management Advisory Committees gave them greater participation in the management of fisheries.

iv. Cost recovery: Recovering the costs of fisheries management from industry has led to more involvement in the management process by industry.

In spite of these developments the fishing industry has concerns over access security and debates the quality of fishing rights. Are fishing rights secure? Management and academics have been calling for implementation of output based regimes such as ITQs but this may have left fisheries which do not progress to ITQs with little advancement in real rights.

In this paper we will analyse the current state of rights development in Australia and review Australian rights-management regimes. This will show which industry sectors have gone to ITQ and which are under other rights regimes. It will also describe future rights development needs in Australian fisheries.

2. RIGHTS DEVELOPMENT

2.1 Antecedents

According to Scott (1988, 1989) new property rights develop through a process of demand and supply. Demandeurs seek an increase in the characteristics of their rights (i.e. duration, transferability, exclusivity, and security [quality of title], also their divisibility and flexibility. Scott notes these historical rights developments have been through:

i. informal processes
ii. violent means and conquests
iii. customary sources and processes
iv. judicial decisions and
v. government, political, bureaucratic means - legislation.
Scott proposes that historically the arena for demandeurs and suppliers to contest fishery rights development was in:
i. villages and manors where custom was law
ii. in conquered and lawless lands
iii. in the courts and
iv. in the legislating organs of government.
In the case of fisheries the villages and manors may be analogous to the culture of the fishing industry and conquering to the "new world" of rights development in the ocean. The courts and government refer to the political and legislative fisheries management process.

2.2 Demandeurs

Demandeurs are parties "that seek relief from the constraints of an existing standard interest" (Scott 1988) wanting change through combining one or more of its characteristics. The timing of change, the extent of change demanded and amount they are willing to pay for it, are crucial issues (Scott 1989). The absence of some characteristic has started to cost them more profit or rent than before (Scott 1989).

2.3 Suppliers

Scott (1989) suggests these are institutions, persons or groups who can add to, or subtract, from the characteristics in existing rights. Why do institutions respond to demands when they do? The extent of the change they provide and the reward they would ask are significant issues in rights development. In the Australian situation, rights are supplied by the policies of government, political opportunities, the courts and the fisheries administration. Government in Australia has jurisdictional divisions between the State and Commonwealth governments, which may affect supply of new rights regimes and these may differ between Commonwealth and State systems.

Management and enforcement costs are also part of the supply equation, as when they are high, the move to make demandeurs pay these under cost recovery may make the supply of increased rights through ITQs less attractive. Administration costs also influence supply with ITQs being desired by government, but contested by fishers who face resource fluctuations and uncertainty in revenues. Governments may also see rights for fisheries in the Exclusive Economic Zone as being desirable to defend national rights. In this paper we wish to analyse the progress towards fuller rights in this demand and supply framework using available empirical data.

The relationship between rent and the need to change rights will be difficult to test empirically as few fisheries have had rent assessments undertaken. Total fishery value may indicate potential rent. In this study average price is taken as potentially the most significant indicator of the existence of rent from the information available. Demandeurs may also be driven by resource scarcity which may be reflected in the market price of fish.

2.4 Analysis - the demand and supply of fuller fishery rights in Australia

The study reviews the data available for 105 fisheries listed in annual reports of all state and Commonwealth Fisheries Departments in Australia for the year 1997-98. These data give the type of fishery, species taken, licences held, value, volume and average price of product. From knowledge of management arrangements it is possible to work out whether a fishery is managed by ITQs or not. The fisheries are grouped by method and industry sector with the main species being indicated.

In this review all fisheries were under limited entry licencing regimes and the move to ITQ is taken as being an increase in rights characteristics (Scott 1989). The fisheries management data are analysed in this framework to appraise the rights status of fisheries and attempt to determine the impediments to rights development.

2.5 The data

The number of licences and gross revenue of product of fisheries at first sale are reported in Table 1 with production statistics. The data for 1997-98 indicate that the managed Australian fisheries sector, not including pearling, aquaculture or production of fish from fisheries not under management, had a Gross Value of Production (GVP) of $A1.47 billion representing 209 600t of product. This had a weighted average price of $A7.03/kg.

In all these fisheries there were a minimum of 14 585 fishing licences (the statistics on multiple endorsements held are complex). These are fishing rights of different qualities (McIlgorm and Tsamenyi 1999, and Tsamenyi and McIlgorm 1999). Some fisheries have gone to output management regimes, usually Individual Transferable Quota. Table 1 also reports ITQs management in Australia as number, value and volume for each production sector.

2.6 Results

2.6.1 ITQs in Australian fisheries

The data in Table 1 show that 28% of the 105 fisheries have gone to ITQ (including some in progress). These constitute 22% of the total value of production and 34% of the total volume of production.

From the sectoral review:

i. The Abalone sector is high value, with a high average price and has 100% management by ITQs;

ii. The long-line sector targeting tuna and snapper is 56% managed by ITQs

iii. The purse-seine sector landing a low-value product is 43% managed by ITQs

iv. The fish-trawling sector is 29% by number and 54% by weight (South East Fishery) under ITQ management

v. Other fishing methods e.g. higher value scallop species have 31% ITQ management

vi. The valuable Rock lobster and crab potting sectors have 29% by number managed by ITQs

vii. Net fisheries, yielding low average prices (<$A10) have minimal ITQ management (5%)

viii. No prawn fisheries have ITQ management (0%).

The limited number of fisheries under ITQ management in the Prawn and Rock Lobster sectors contributed 56% of the total value of Australian fisheries production.

Table 1
Review of the methods, fisheries licences, production and extent of ITQs in Australian fisheries

Method

Species/sector

Number of licences

Value$A million
(1997-98)

Tonnes

Average price
$A

ITQ by number

% ITQs by no.

% ITQs by value

%ITQs by weight

Diving

Abalone

294

181

5 249

34.48

7/7

100

100

100

Line/long-line

Snapper/tuna

2 449

131

18 558

7.08

5/9

56

59

61

Purse-Seine

Pilchards, etc.

155

33

41 543

0.79

3/7

43

23

42

Others

Assorted methods

1 460

50

9 150

5.50

5/16

31

63

43

Pots

Rock lobster/crab

2 656

440

19 539

22.52

6/21

29

31

38

Trawling

Finfish

2 024

182

59 125

3.08

2/7

29

36

54

Nets

Scale/fin fish

2 603

64

21 906

2.92

1/21

5

0

2

Prawn-trawl

Prawns

2 944

391

34 547

11.32

0/18

0

0

0

Total

14 585

1 473

209 617

7.03

29/105

28

22

34

x/y denotes that x fisheries out of a total of y are under ITQ management.
2.6.2 ITQs and fish prices

From earlier discussions our theoretical expectation would be that fisheries with high market price would be dominant in fisheries managed by ITQs. Figure 1 shows the relationship between the market price of fish and individual fisheries under ITQ or non-ITQ management. All Abalone and some rock lobster fisheries have gone to ITQ, but some rock lobster and scallop fisheries have not, nor have any prawn fisheries. Considering an average price greater than $A20/kg 12 of the 19 fisheries are under ITQ.

In the $A10-20 segment three of twenty of the fisheries are under ITQs management, mainly tuna and scallop fisheries. No prawn, scallop or high value fin fisheries are under ITQs.

In the under $A10/kg range, 14 of 56 fisheries are under ITQ - tuna, crab, pilchard, salmon and mackerel. Those not under ITQ are finfish, scalefish and estuarine prawn fisheries. Figure 2 shows that the frequency of managed fisheries for different average prices and indicates that lower-priced fish have less ITQ management than higher-priced species, but that is not to say all high valued species are managed by ITQ.

The scalefish, finfish and estuarine prawn fisheries with product priced below $A10/kg remain almost untouched by ITQ management, with the exception of the high volume purse-seine fisheries. These "small fisher" sectors represent a large number of licence holders (estimated >30% nationally), but are generally small fisheries having only 20% of national fisheries gross value of production.

From the price analysis it appears we have three distinct groups of rights managed fisheries in Australia:

Group I - ITQ managed fisheries (25% of all licences)
(a) High-priced/medium-priced - ITQ fisheries, representing 10% of licence numbers

(b) Low-priced - ITQ fisheries representing 15% of licence numbers

Group II - Individual Transferable Effort Quota (ITE) managed fisheries (14% of all licences)
High-priced/medium-priced - Other rights managed fisheries (ITE).
Group III - Other rights (61% of licences)
Low-priced - Other rights - some ITEs
Hence, it can be seen that the majority of fish licence holders in Australian fisheries have not seen any significant improvement in status in the last 20 years of management. Rights-enhancement for these fisheries may be limited by fears of overcapacity due to licence splitting.

Figure 1: Plot of average and number of fisheries under ITQ or other-rights management in Australia

Figure 2: Frequencies of ITQ or other-rights managed fisheries, against average fish-price in Australia

3. DISCUSSION

3.1 Rights development in Australia - has it stalled?

The international impression generated over the last 20 years is that Australia has moved significantly towards fuller fishing-rights regimes. Much attention has been given to ITQ implementation, particularly in the academic literature, yet the extent of ITQs across Australian fisheries is limited (approximately 25% of all licence holders). We can analyse the limitations under Scott's demand and supply framework.

3.2 Demands for increased rights

Scott (1988) predicts that fishers will demand increased rights due to some perceived inadequacy with the current rights or a profit opportunity. There is currently a desire among fishers across Australia for fuller access rights and greater investment security. Some of this position may be driven by potential erosion of their current rights by declaration of marine parks and a potential diminution of the resource through pollution. These groups have been identified in Section 2.6.2 above.

Group I - Moving to ITQs

Industry has been divided by the perceived need to move to ITQ management. Strangely the demand for ITQs has generally come from government. The rate of progress towards management by ITQs may have slowed in the 1990s, primarily due to a lack of demand among fishers. The price of fuller rights through ITQs may arise from restructuring, uncertainty in new allocations, and higher costs of administration, management and enforcement with the potential of paying rent charges to the community. There is a significant impasse because industry sees the move to ITQs being driven by political philosophy as well as administrative and financial expedience of government. Those in ITQ-rights regimes have also queried the rights advances incorporated in an ITQ (rights characteristics of ITQs can be enhanced as illustrated by the NSW share management regime).

Group II - Fisheries managed by ITEs

The prawn and crayfish sector are examples of these where greater rights are demanded, in forms other than ITQs. This is worthy of further investigation, but is probably explained by the uncertainty of their position under a possible new management regime, against the certainty of their current form of management. There may also be a mistrust of government, thought to be implementing rights management as a restructuring and income-reducing tool.

Group III - Licensed fisheries

In these the demand for rights is driven by fear of licence removals or reduction in economic returns due to the declaration of marine parks or pollution incidents. Similarly, the participants wish to maintain their continued access in order to promote investment security and provide more transparency for the banking sector.

3.3 Supply of rights - Impediments and restrictions

Scott suggests that institutions such as government, the courts, social groups and people can add, or to subtract from, fishery rights.

ITQs supplied by philosophy?

The Commonwealth government had a policy in the 1990s to supply fishers with output-based rights regimes under a "One size fits all" policy. At the state government level there has been less explicit promotion of ITQs; recommending them as the "best tool for the job". The meaning of Scott's riddle "When is a right not a right?; when it is a means of administration" has not been understood by many fisheries departments. ITQs may be granted as another form of management, not necessarily as a means of giving improved control and autonomy to industry in order to improve sustainable outcomes.

The push towards ITQ management has left some sectors of industry confused about fishing rights. Why can there not be diversity in fishing rights? There is a need to examine forms such as ITEs, other alternative rights regimes and their relative efficiency. ITEs are considered to be "optimal" on some rational basis by those fishers who endorse them but resist ITQs.

Statutory rights

Today fishing rights come from statute law and can be classed as statutory fishing rights (SFR). The SFR term has been used in Commonwealth fisheries to describe their mode of rights management in connection with management plans. One test of such rights developments is the possibility of compensation should the rights be appropriated. At the Commonwealth level there would have been "acquisition" under the Australian constitution. State jurisdictions vary in their policies to compensation.

Government can supply investment security for industry by making current rights more explicit. A simple increase in duration from a one year period to five or ten years, would assist the fisherman when seeking finance from bankers and financiers using his "rights" as colateral. Until recently Departments have not increased the duration of permits due to a lack of incentive to do so and the possible need for restructuring in the future of the management of the fishery.

3.4 Issues for rights development

Several key questions arise from the previous analysis concerning rights development in Australia.

i. What rights regimes and options are there?

There needs to be research on the design of rights systems, not just ITQs. For example prawns fishers see ITEs, contracts, and time and performance based agreements, as preferable to ITQs in their highly variable fishery. This should be investigated and evaluated in the light of Australian industry experience which has not convinced any other prawn fisheries in Australia to move to ITQs.

For the lower-priced fisheries it is recommended that ITQs will always be an expensive form of management. Fishers should investigate socially-based management alternatives using community structure.

ii. Increasing licence duration

If licences can be increased to a "5 years +" basis at minimal cost, this should be implemented for industry security.

iii. Statutory fishing rights

SFRs have potential for rights development based around management plans. They are really a permit with more recognised duration. But, are they more than this?

iv. Compensation

Compensation should be part of any rights regime. Adjusting rights systems creates winners and losers and hence the need for compensation to usher in the new regime.

v. Which fisheries can go to corporate governance?

Self-governance should be considered for fisheries which have more defined rights and no restructuring problems. The NSW Share management scheme is illustrative of this next step, as ITQs have been advanced into legally recognised and compensatable shares of resource access with ten years of duration and renewal. Other self governance initiatives may develop. This is another way that rights develop.

3.5 Rights development

The analysis revealed different segments in fishing rights development in Australian fisheries. Is Australia moving towards management by ITQs across all species? It does not look likely. At the "top end", where ITQs predominate, fisheries such as Abalone could consider corporate governance models for management.

Prawn fisheries show major resistance to ITQs, still preferring input regulations and ITEs. The reasons for this may be the variability of the prawn resource, the high cost of quota system management, and possibly wanting to avoid rent under an ITQ regime. Several major rock lobster fisheries have a similar perspective. The experience of the prawn sector is that ITEs are suited to prawn-fishery management.

In our price analysis the cases of low-priced scale fish or finfish present the most difficult management in each State. There is little economic surplus in these fisheries and there are many low income fishers. ITQs would be an expensive form of management. This sector need rights incorporated in a more socially-based management framework.

3.6 Impediments to rights development

Impediments to the development of fuller fishing rights come at different levels and from different sources. Impediments to further ITQ development are the cost of administering these systems and their high social impacts. Many fishers are not demanding ITQs and implementation has been a restructuring ploy rather than a rights development.

The demand for increased fishing rights comes from those seeking security of access and increased duration in their current rights. The granting of fuller rights will come from government and the courts. The administrative annual issue of licences is a major impediment to further rights development. A simple way to change this is to add to the duration of these licences, giving 5, 10 or 15 year licences. The linking of rights from statute (i.e. any licence) to a management plan under an empowering Fishery Act leads to a recognised statutory fishing right. These are becoming popular as a mechanism to increase security of industry access.

A fear among government fisheries managers is that fuller rights may augment fishing capacity and hence create an expensive restructuring requirement and sustainability problems. However some sections of industry are questioning the degree to which their rights have been increased. Our analysis indicates that fishing rights have not progressed uniformly for all sectors of industry.

4. CONCLUSION

Rights development has concentrated on ITQs with limited attention to rights development in non-ITQ fisheries. ITEs are an established mode of management in Australia's prawn fisheries where operators are not moving to ITQs.

The linking of licences with management plans have assisted in making statutory fishing rights a way to increase security of industry access.

There needs to be investigation of the benefits and impediments of further fishing rights development. In the high value fisheries under ITQ management, corporate governance experiments could be implemented; e.g. for Abalone. In low-priced fisheries there is a need for greater duration in fishing rights. It is apparent from the study that:

i. Industry needs real improvements in fishing rights and more security in resource access and

ii. More diverse applied research on fishing rights is required.

Has rights development stalled? It will, if we do not continue to go forward across the full range of Australian fisheries.

5. LITERATURE CITED

Meany, F. 1982. The nature and adequacy of property rights in Australian fisheries, Policy and Practice in Fisheries Management, DPI, Canberra, pp 57-76.

McIlgorm, A. 1999. Corporate Governance: an option for the fisheries management. Paper given at the 3rd International Rock Lobster Congress, Adelaide, September 1999.

McIlgorm, A. and M. Tsamenyi 1999. Fishing rights benchmarking project. A report to the South Australian Fishing Industry Council (SAFIC), Adelaide, S.A., October 1999.

Scott, A.D. 1988. Conceptual origins of rights based fishing in Ed. P.A. Neher, R.Arnason and N.Mollett, Rights Based Fishing, NATO ASI Series E: Applied Sciences, 169, pp. 11-38.

Scott, A.D. 1989. The emergence of ITQs as a distinct form of property right, A paper given at an international conference on the economics of fisheries management in the Pacific Islands Region. ACIAR Proceedings, 26.

Scott, A.D. 1993. Obstacles to fishery self-government, Marine Resource Economics, 8, pp. 187-199.

Townsend, R. and S.G. Pooley 1995. Distributed governance in fisheries in S. Hanna and Mohon Munqinghe (Eds), Property Rights and the Environment: Social and Ecological Issues. Beijer International Institute of Ecological Economics and the World Bank. pp 47-58.

Tsamenyi, M. and A. McIlgorm 2000. Enhancing fisheries rights through legislation - Australia's experience. In Use of Property Rights in Fisheries Management. Proceedings of the FishRights99 Conference. Fremantle, Western Australia, 11-19 November 1999. FAO Fisheries Technical Paper No.404/2. pp.88-95, FAO, Rome.

6. THANKS

We thank the Fisheries Research and Development Corporation (FRDC) project 99-161 "Sustainable fisheries management through enhanced access rights and resource security" Part I. We thank the South Australian Fishing Industry Council (SAFIC) "Fishing Rights Benchmarking Project" project, Dr A. McIlgorm, principal investigator and Prof. Martin Tsamenyi, University of Wollongong, co-investigator. We thank the FishRights99 Committee for the invitation to the Conference.


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