APPLYING RIGHTS-BASED MANAGEMENT TO DEVELOPING FISHERIES - Chairman: Ross Shotton, Food and Agriculture Organization, Rome

Challenges to the Co-Existence of Marine Farming and Capture Fisheries in New Zealand - K. Drummond, P. Kirk and L. Nelson
The Role of Property Rights in the Development of New Zealand’s Marine Farming Industry - M. Harte and R. Bess
The Nature of “Rights” in the Western Australian Pearling Industry - H.G. Brayford and G. Paust

Challenges to the Co-Existence of Marine Farming and Capture Fisheries in New Zealand - K. Drummond, P. Kirk and L. Nelson

K. Drummond, P. Kirk and L. Nelson
Ministry of Fisheries
Private Bag 14, Nelson, New Zealand
<drummonk, kirkp or [email protected]>

1. INTRODUCTION¹

¹ The views in this paper are the views of the authors, and not of the Ministry of Fisheries or the New Zealand Government.

Faced with competing demands for a common pool resource, the government has established an institutional framework which has evolved whereby the government sets the environmental limits to harvesting and establishes rules for use and access to fisheries resources that enable optimal use to be achieved.

The government does not seek to determine or dictate the optimal use of fisheries resources. Its aim is to set the boundaries within which optimal use can emerge as a reflection of individual choices, which in turn reflect the individual values, both commercial and non-commercial that derive from harvesting fisheries resources.

The challenge this paper discusses is to extend this framework to better encompass the rivalry between marine farming and capture fisheries. Other papers presented to these proceedings discuss the challenge of improving the integration of recreational and customary fisheries into this framework in New Zealand.

The underlying principle is that optimal use of resources will emerge as a result of providing individuals with tools to enable them to achieve their own well-being. Such tools can only be exercised subject to not adversely affecting the environment (including not jeopardising the potential productivity for future generations). This principle is common across New Zealand’s natural resource management legislation.

The tools provided to achieve optimal use involve the definition and allocation of fisheries rights. Specification of rights, underpinned by regulatory requirements to ensure sustainability, provides a mechanism for environmental protection to be achieved at least cost and for optimal use to emerge through individual choices.

Imperfect or incomplete specification and allocation of rights occurs in New Zealand. This is due either to incomplete development of the policy, such as is the case for recreational fishing, or to difficulty in establishing a complete set of rights that accurately reflects resource scarcity and the full range of benefits derived from fisheries resources and coastal space. In these circumstances, the rights-based approach to fisheries management must have a complementary regulatory environment which facilitates consideration of the trade-offs associated with transferring, or abridging, use rights from one group to another.

2. EXISTING FRAMEWORK

2.1 Capture fisheries

The existing institutional framework to manage fisheries resources has established rights of access for customary fishers, recreational fishers, commercial fishers, and marine farmers. These rights may be represented within coastal communities, but the extent to which this occurs in practice varies between communities.

For capture fisheries an annual total allowable catch is set which covers all harvesting from capture fisheries. The stock-specific total allowable catch is set with reference to achieving maximum sustainable yield over time. Modifications to the catch limit are made to take account of the needs of interdependent species, and ancillary restrictions are put in place to control adverse effects of fishing on the environment, including effects on marine biodiversity.

Customary fishing is managed within a regime implemented by guardians nominated by Mâori. The guardians are responsible for sustainable management and authorising customary fishing within their area. This approach allows for area-based fisheries management rights to be established, and guardians are now being appointed around New Zealand.

Recreational fishing requires no authorisation. It takes place within an allowance determined by the government, and managed by the government using daily bag-limits, and controls on methods and seasons, all of which may be area specific.

Commercial fishing takes place within the constraint of an annual total allowable commercial catch (TACC) which is set after allowing for customary and recreational use. It is area and stock specific. Commercial harvesting rights are allocated as individual transferable quota (ITQ), which represents a share of the TACC. Any variation in the TACC, for instance due to changes in the total catch limit or the allowance made for customary and recreational use, results in a change in the tonnage represented by a particular ITQ holding. Commercial fishing rights cannot be exercised in some areas set aside for customary or recreational use, but such areas can only be set up after taking into account the effect on commercial fishers.

2.2 Marine farming

Marine farming is authorised on a case-by-case basis. The framework requires two ‘consents’: one (a ‘structure consent’) from the local government and one (a ‘farming consent) from the Ministry of Fisheries (a national government body). The consents are issued under separate pieces of legislation and deal with different aspects of marine farming.

The ‘structure consent’ authorises the placement of marine farming structures in the coastal area. In reaching a determination on this consent, the local government considers the impact of structures on the environment and on non-fishing interests in the coastal area. This structure consent is limited in duration, may be partly exclusive and is transferable. The local government decision can be appealed, in the first instance to an environment court.

The ‘farming consent’ authorises the possession, holding and growing of fish. In reaching a determination the Ministry of Fisheries is required to consider the impact of marine farming on fishing interests and on the sustainability of the fisheries resource. This farming consent can only be issued to the holder of a structure consent, is limited to the term of the structure consent, is exclusive in terms of ownership of the farmed product, and is transferable. The Ministry of Fisheries decision to either approve or decline a farming consent is not subject to appeal other than through judicial review. Given that this decision has the potential to affect existing fishing rights, it is unusual that there is no legal process available to challenge any encroachment of these rights. The farming consent also imposes requirements for farmers to record product flow, primarily to assist with detecting laundering of fish illegally obtained from capture fisheries through the marine farming system.

2.3 Coastal communities

The extent to which coastal communities exercise rights to capture fisheries or marine farming will depend on employment and leisure opportunities available to a particular community. In general, customary fishing has a strong community base and up to 20% of all New Zealanders are estimated to exercise their right to go recreational fishing in any one year. Direct community interest in commercial harvesting depends on factors such as the physical nature of the coast, the historical use of the area, recent demographic trends and proximity to processing capacity and freight services. However on the Chatham Islands a community trust has been established to manage certain ITQ rights.

Coastal communities also derive benefits from non-extractive use of the coastal marine area. The preferred form of use for a particular community may, for instance, focus on maximising the tourism benefit that can be derived from the maintenance of undeveloped seascapes, estuaries and wetland habitat. To manage the use of the coastal marine area, government has established a regional planning framework that allows the balance between resource development and production to be determined at a regional or local level via public participation in the creation of coastal management plans.

It is within the context of such plans that the opportunities for marine farming are effectively determined and applications for structure consents are considered by the local government authority. These plans are, however, prevented from establishing rules that are for the purpose of controlling the effects of fishing, the presumption being that any harvesting must occur within environmental limits. However, there remains potential for planning decisions to affect capture fishery rights-holders if the rules are determined for other reasons.

Coastal plans are at various stages of development in New Zealand. Decisions made under these plans have, in some cases, directed the potential for marine farming into an area where such development could undermine fisheries rights. This possibility has led to rights-holders in commercial capture fisheries taking legal action in an attempt to protect their rights under the coastal planning process. This action is occurring prior to the Ministry of Fisheries considering whether or not a farming consent can be issued.

2.4 Co-existence

In summary, within the existing framework harvesting rights provide customary, recreational and commercial fishing interest’s access to a fishery provided the adverse effects of fishing on the environment are adequately controlled. Marine farming rights are a right to use a defined area for the purpose of marine farming provided the adverse effects on the environment are controlled and there is no undue adverse effect on fishing or other coastal interests. The poor fit of rights arises because evaluation of the impacts of marine farming on fishing interests is not integrated with the evaluation of marine farming impacts on other coastal interests. Opportunities to reach mutually agreeable outcomes are foreclosed by the sequential nature of the dual authorisation process.

This ‘separation’ in the decision-making process matters because both marine farming and fishing are significant contributors to New Zealand’s social, cultural and economic well-being. New Zealand is predominantly a coastal society - fishing is a highly valued activity, both for its commercial and non-commercial benefits. Mâori cultural ties with fishing are strong. Recreational fishing is a popular activity. ITQs have provided a base for significant investment in harvesting and processing technologies, and marketing. Marine farming is a substantial production sector already with scope for further development. Progress is also being made in establishing capacity within the fisheries sectors to assume collective responsibility for fisheries resource management.

Failure to integrate the evaluation of impacts on existing users, both fishing and non-fishing, when authorising the establishment of new marine farms, leads to poor resource management outcomes and poor allocation of resources. As the fishing and marine farming sectors move to maximise their access to resources (be they fisheries resources or coastal space), effort is spent in securing outcomes through political lobbying (at both the national and local government levels) rather than through working agreements between the various interests. This has sometimes resulted in costly appeals to the courts, as fishing interests seek to protect their rights and marine farming interests seek to establish theirs, within the local government authorisation process.

Expansion of marine farming often can only come at the expense of capture fisheries production. Points of tension between marine farming and capture fisheries arise over access to:

i. the productive capacity of the ecosystem, e.g. nutrient flows or habitat

ii. water space and

iii. spat, juveniles or broodstock required to stock marine farms.

Agreements for the co-existence of capture fisheries and marine farming need to be stable. Stability encourages negotiating in good faith, and discourages parties from seeking to undermine the agreement outside of the process. A stable agreement between capture fisheries and marine farmers will depend on the agreement also embracing the legitimate interests of other users of coastal space. These interests may well be driven by non-fishing values.

Under the existing framework, decisions by local or national government, whether or not supported by agreements, may establish precedents for future decisions. This possibility actively discourages parties with collective management capacity from direct negotiations with other interested parties, for fear of having any agreement interpreted more widely than was intended by interests not bound by a collective body.

3. POLICY REFORM

Policy reform is required to create a mechanism whereby capture fishing and marine farming interests can negotiate their own durable access agreements. A pure rights-based approach suggests the need to create a new ‘development’ right to coastal space or coastal productivity that could be freely traded between the interests (including community interests). Definition and allocation of such a set of rights would enable coastal development to occur in the absence of a planning regime. However optimal resource allocation would be highly dependent on whether the right was correctly defined (i.e. whether it embraced all the relevant development features) at the start, and on choosing an efficient allocation method since transaction costs will not be negligible.

In New Zealand collective management capacity is in the early stages of development within the capture fishery and marine farming sectors. While considerable progress has occurred with some groups, most notably within the commercial sector, the government must retain a role in evaluating agreements to ensure they are equitable. This role should continue until such time as the parties have established sufficient collective capacity to be representatives of particular interests.

We suggest adopting a pragmatic approach to policy development for the use of fisheries resources. In our view incremental reform can secure a fair process to re-distribute access to coastal resources and enable optimum resource allocation. This could be achieved by ensuring that the marine farming planning framework complements the rights-based framework for fishing, by encouraging and recognising inter-sectoral access agreements. Such a reform encourages the use of a market mechanism without the need to create and allocate a new coastal development right.

If the best use of an area is for marine farming, it is desirable that market mechanisms reveal this best use. The costs to commercial and non-commercial fishing interests from restricted access to a particular area or from the downstream environmental impacts of marine farming (e.g. redistribution of nutrient flows or attraction of predator species) should be less than the benefits to marine farmers. In this situation there is a net gain to be made from changing the use of the area from fishing to marine farming. Agreement should be able to be reached between fishing and marine farming interests to enable marine farming to become established. Transaction costs associated with these agreements, and mechanisms that lower them, will be important considerations in designing a framework for managing the change in use.

The government should provide a framework for any re-allocation of resources between interests with collective management capacity to be dictated by individual choice. In time, that framework may be able to be extended to all fishing interests. This could be achieved through direct negotiation on behalf of an interest group, but more likely through a regulatory role by placing limits on the extent that agreements between parties with collective management capacity can affect other interests.

We consider that any agreements established between the marine farming and capture fishery rights-holders must also be considered alongside the interests of coastal communities. The government has already established a framework that has an underlying presumption that local government has knowledge of the resource management issues of its region, apart from those that relate to the management of capture fisheries - where it is presumed central government has that knowledge. This framework requires adjustment so that, where environmental limits permit, negotiated arrangements can be readily factored into the coastal planning framework. This approach would enhance the prospect of transparently considering the full range of costs and benefits of rules governing the use of the coastal marine area.

In situations where marine farming and capture fishery rights-holders are unable to reach agreements, adjustments to the coastal planning framework are still required to ensure the rights of existing capture fishers and marine farmers are explicitly considered in the context of the productive capacity of the ecosystem, including nutrient flows and habitat. This is to avoid local government inadvertently providing for marine farming in areas where it would have an undue adverse impact on production capacity for naturally occurring stocks or existing farmed stocks.

4. CONCLUSION

Since the mid-1980s the New Zealand government has progressively developed a rights-based approach to the management of natural resources. In the coastal marine area the approach adopted can be characterised as one of setting the environmental limits for development, while use has been enabled by a combination of:

i. allocating rights for use and access to fisheries resources in a manner that will, in time, enable the optimum use to be determined for each class of rights-holders and

ii. establishing a coastal planning framework that is intended to allow for optimal use of the natural and physical resources (other than for fisheries).

The main fault in the current approach is that it does not enable the full range of use-options that are available to capture fisheries interests, marine farmers and coastal communities to be considered concurrently. A regulatory environment that is complementary to the environmental limits and enabling goals is required, so that the full trade-off associated with transferring or abridging use-rights from one group to another, is explicitly recognised.

We suggest that the underlying principles that should guide the development of a revised framework are as follows:

i. within the context of firm environmental limits, the framework should maximise opportunities for innovative solutions to resource use conflicts

ii. redistribution of access or use-rights to resources should depend, to the extent practical, on individuals' evaluation of the trade-offs involved

iii. when a decision is made to reallocate coastal resources of any sort, the full cost and benefits of that decision should be considered and

iv. to ensure the cost and benefits of reallocation are considered, the institutional framework should encourage negotiation.

i. evaluation of agreements to ensure they do not adversely affect other interests, or interests involved in the agreements who do not have collective management capacity and

ii. registering agreements struck through negotiation so that the coastal planning process can take into account the internalisation of costs and benefits which has occurred.

The Role of Property Rights in the Development of New Zealand’s Marine Farming Industry - M. Harte and R. Bess

M. Harte
New Zealand Seafood Industry Council
Private Bag 24-901, Wellington, New Zealand
<[email protected]>
and
R. Bess
School of Business
Nelson Polytechnic, Private Bag 19, Nelson, New Zealand
<[email protected]>

1. INTRODUCTION¹

¹ Views expressed are those of the authors alone and not those of their respective organisations.

A recent independent review of fisheries legislation and its administration commissioned by the New Zealand Government found that legislation regulating marine farming in New Zealand is fragmented and outdated (PricewaterhouseCoopers 1998). These legislative arrangements and their historical development raise two critical issues for the marine farming industry:

i. Uncertainty and erosion of marine farming rights and
ii. Poor integration of marine farming rights with those of wild fisheries.

The first part of this paper describes the performance and management of New Zealand’s marine farming and wild fisheries. The section contrasts the quality of existing rights for ITQ owners with the rights of marine farmers. The second part discusses the future management of New Zealand’s fisheries and suggests two solutions to improve the security of marine farming property rights and resolve some inconsistencies in the rights and responsibilities for marine farming and wild fisheries. These solutions highlight the need for institutional changes to the management of wild fisheries and marine farming in order to strengthen the property rights basis for their economic and ecological success.

2. SUSTAINING THE SUCCESS OF NEW ZEALAND’S FISHERIES

2.1 Management and performance of the marine farming industry

Marine farming in New Zealand dates back to early this century when inter-tidal cultivation of rock oysters began. By the 1960s permitted marine farmers had developed more sophisticated catching and growing operations with the use of inter-tidal racks holding sticks and trays. In the early 1970s rock oyster farming accidentally introduced the pacific oyster, which continues to produce significant volumes for export. In the early 1970s the Greenshellä mussel became another farmed species. Since the late 1970s, the Greenshellä mussel has experienced substantial growth in the volume and value of exports. In the early 1980s the farming of salmon in seawater cages was established.

In the last decade the volume and value of marine farming exports have increased dramatically. Figure 1 shows the volume of exports from marine farming, and Figure 2 shows the value of exports. Most of the growth in marine farming has been driven by the outstanding success of the Greenshellä mussel, which has surpassed the rate of growth of all other seafood exports. From 1988 to 1998 Greenshellä mussel export volume increased by 473%, and export value increased by 413%. In 1998 Greenshellä mussels became the second highest valued seafood export species. The export volume of New Zealand’s farmed salmon also grew steadily from 1988 to 1996, but the export value grew at a lower rate. Salmon prices on world markets declined as record growth in farmed salmon, particularly from Norway and Chile, substantially increased availability (FIB 1996). Farmed oysters increased in export value from $NZ4 million in 1988 to $NZ8 million in 1992 and then remained fairly constant at $NZ10-$11 million from 1994 to 1998. The volume of farmed oyster exports increased steadily from 734t in 1988 to a high of 1436t in 1995.

Figure 1: Volume of exports from the New Zealand marine farming industry

Source: NZ Seafood Industry Council

Source: NZ Seafood Industry Council

i. an environmental policy and code of practice that help ensure a high level of environmental protection and sustainability

ii. export market studies that assist industry players to enter or expand overseas markets

iii. a portfolio of research projects that ensures relevant research is carried out with industry support and

iv. expansion of the Greenshellä trademark.

i. the Marine Farming Act (MFA) 1971, which applies to around 680 farms that were established before enactment of the Resource Management Act (RMA) in 1991 and

ii. the joint RMA and Fisheries Act 1983 (FA 1983) regime, which applies to approximately 120 farms that have been established since 1991.

Since 1991, applications for marine farms have come under the joint regim RMA and FA 1983 e. Under this regime marine farmers must obtain (a) a RMA coastal permit for occupation of space and management of environmental effects and (b) a FA 1983 marine farming permit for the possession of stock. Under this joint regime, coastal permits and marine farming permits can be granted for up to 35 years. In practice, however, permits for coastal occupancy are generally granted for much less than 35 years, and the granting of marine farming permits are matched accordingly. The marine farming industry regard the security of tenure provided them under the joint regime to be significantly less than the security provided under the MFA.

The RMA, FA 1983 and the Fisheries Act 1996 (FA 1996) set out obligations to manage the adverse effects of marine farm activities on the aquatic environment. The RMA resource-consent application for marine farming and spat-catching includes the obligation to avoid, remedy or mitigate any adverse effect on the environment arising from an activity carried out, by, or on behalf, of a person. The FA 1983 provides permits for those involved in marine farming or spat-catching who hold a resource-consent authorising the activity under the RMA. The Chief Executive of the Ministry of Fisheries (MFish) may only issue a marine farming permit if satisfied that the effects of the activity would not have undue adverse effects on fishing or the sustainability of any fisheries resource. The term ‘sustainability’ is not defined in the FA 1983, although it is defined in its successor, the FA 1996. However, ‘fishery resource’, according to the FA 1983, means any fishery, stock, species, habitat, or location of fish, aquatic life, or seaweed. This definition encompasses a range of environmental parameters that overlap with obligations under the RMA.

In line with the RMA, the FA 1996 contains an obligation to avoid, remedy or mitigate the adverse effects of, in this case, fishing on the aquatic environment. ‘Fishing’ includes the activity of harvesting, which is the end point of marine farming, but it does not refer to marine farming’s other core element, growing the marine stock. Therefore, it is unclear whether the environmental considerations of the FA 1996 apply to marine farming, and so far this point has not been tested in the courts. Despite this lack of clarity, marine farming continues to be managed jointly under the FA 1983 and the RMA.

Problems with overlapping environmental regulations stem from the jurisdictional boundaries between fisheries law and the RMA. Provisions in the RMA and FA 1996 attempt to define these boundaries, but they, as well as associated compliance costs, remain unclear. Overlapping environmental regulations and compliance costs should be rectified by legislative changes that clearly state which environmental effects should be regulated by which legislation.

As demonstrated, the joint FA 1983 and RMA regime provides little clarity about the rights of marine farmers. The existence of two management regimes, the MFA and the FA 1983/RMA, for marine farming generates confusion and unnecessary uncertainty for the industry about which regime applies to a particular situation. These two regimes make it difficult for the Government to provide an integrated and consistent approach to the management of marine farming. The continuation of these two regimes increases the likelihood that local and central government and other interests could erode the rights, and hence economic security, of the marine farming industry. Understandably, under this legislative confusion, the marine farming industry has experienced difficulty in securing investment financing and this industry continues to work towards legislation reform. Until its property rights are defined and established, the industry’s growth prospects will remain uncertain.

2.2 The quota management system and the performance of wild fisheries

The QMS and allocation of ITQ was introduced in New Zealand with the Fisheries Amendment Act 1986 (FAA 1986). This represented a radical departure from previous fisheries management regimes. Detailed descriptions of the management of New Zealand’s fisheries and of events leading up to the introduction of property rights-based management can be found in Sharp (1997), Gaffney (1997) and Harding (1991). The seven founding aims of the QMS (Luxton 1997) were to:

i. rebuild inshore fisheries where required

ii. ensure that catches were limited to levels that could be sustained over the long term

iii. ensure that catches were harvested efficiently with maximum benefit to the industry and to New Zealand

iv. allocate catch entitlements equitably based on individual permit holder’s commitment to the fishery

v. integrate management of inshore and offshore fisheries

vi. develop a management system applicable on both national- and regional-bases and

vii. enhance the recreational fishery.

The QMS has been revised continually, requiring substantial time and effort by the MFish and the industry to implement legislation and policy changes. The relatively simple QMS has become complex, bureaucratic and expensive to manage while the industry requests that fisheries management be simplified. The industry contends that the increasing complexity and bureaucracy of the QMS has imposed unnecessary financial costs on individual fishers and fishing firms and has not provided the industry overall with corresponding benefits (Horton 1997).

Figure 3: New Zealand seafood exports by volume and value

Source: NZ Seafood Industry Council

There is general recognition that the QMS has played a significant role in improving the biological status of the fisheries resource and commercial return to fishers (Annala 1996). Since implementation of the QMS, the industry has experienced steady and impressive growth in the volume and value of production. The surprising rates of growth experienced during the late 1980s and early 1990s was due primarily to the expansion of the deepwater fisheries. Between 1986 and 1989 the value of seafood exports increased by an astonishing rate of 69.3%. After a slight decline in the levels of production and value in 1990, the seafood industry again experienced dramatic growth. Between 1990 and 1992 the value of seafood exports increased 65.5%. Since 1992 overall seafood export value has remained fairly constant. In 1998 export value was $NZ1.237 billion, $NZ18 million higher than the 1992 export value. The gradual appreciation of the New Zealand dollar from 1992 to 1997 exacerbated poor international trading conditions and reduced returns to seafood firms. During this time catch-levels declined due to reductions in some TACCs (FIB 1996). Without the outstanding growth in marine farming exports, particularly Greenshellä mussels, overall seafood export value and volume would have declined beginning 1992. Figure 3 shows New Zealand’s seafood export value and volume from 1986 to 1998.

2.3 Comparison of property rights - ITQ owners and marine farmers

Scott’s (1988) six characteristics - duration, flexibility, exclusivity, quality of title, transferability and divisibility - are useful in comparing the property rights granted under the QMS and the marine farming legislation. For simplicity, the rights of ITQ owners are compared to the rights of marine farmers under the joint RMA/FA 1983 regime. This comparison is an important step in better defining the marine farming and fishing rights. Each combination of characteristics can be shown by the six-pointed, star-shaped figure formed by joining the measured points on the six characteristic axes as illustrated in Figures 4 and 5. A property-rights regime that maximises all characteristics creates a large hexagon when the end points of each axis are linked. The mapping of characteristic scores helps reveal the differences in the specification of property rights for ITQ owners and marine farmers.

Duration refers to the time-frame that property rights are in effect. A short duration leads to costly or uncertain renewal and, or, extension of property rights. More permanent duration is valuable to property rights holders as it reduces renewal costs and uncertainty and raises incentives to invest for the long term. Similarly, the more likely property rights holders will be to invest in enhancing their fisheries. ITQ owners have durable property rights since ITQ is in perpetuity, subject to changes in TACC.

Flexibility refers to the ability of property rights holders to structure operations to achieve goals of their choice such as maximising profits by way of increasing the value of their catch rather than the volume. Flexibility in the exercise of rights and responsibilities is similar for both ITQ owners and marine farmers.

Exclusivity refers to the extent that a person’s property rights overlap with the rights of others. More exclusive rights are less likely to have operational clashes with other property rights holders and more likely that similar rights holders will co-ordinate their activities. Since ITQ owners compete to exercise their rights to a common fishery and, or, common fishing grounds, their harvest rights are less exclusive than the rights of marine farmers who have sole occupancy of a portion of coastal space.

Transferability refers to the ability to transfer title to property rights, thereby providing more efficient operators the option to buy rights from less efficient operators. ITQ is an instrument for transferability, which assists retirement from fisheries and reduces overcapitalisation. Only ITQ owners’ rights are fully transferable.

Divisibility refers to the ability to divide (a) property rights more narrowly, producing new recognised rights specified perhaps by season, region, ground, species, age or other classification and (b), the amount of quota into smaller amounts and to transfer some quota to others. Only ITQ owners’ rights are fully divisible.

Quality of title refers to certainty and security. The more predictable entitlement of the property rights the higher the quality of their title. If property rights holders can expect little change over time to their entitlements, the more certain and secure are their rights, which increases the likelihood that they will invest in the management of their fishery. ITQ owners’ rights have considerably higher quality of title than marine farmers’.

Figure 4: ITQ owners

Figure 5: Marine farmers

Figures 4 and 5 show that the mapping of these six characteristics for both ITQ owners and marine farmers produces irregular shapes, signifying that there is still scope for better-defined property rights for both groups. However, Figures 4 and 5 demonstrate that ITQ owners’ rights score better than marine farmers’ rights on most characteristics. Without clearly defined, appropriate and enforceable rights and responsibilities for marine farmers there is no consistent basis for resolving durable solutions when conflicts arise between themselves and with ITQ owners.

3. MANAGING MARINE FARMING FOR THE FUTURE

3.1 Improving the marine farming property rights

A comparison of Figures 4 and 5 suggests the real difference in property rights regimes for ITQ owners and marine farmers is the duration of their rights. Extending rights in perpetuity, as is the case with ITQ, to marine farmers is a political issue rather than a policy problem. The seafood industry has proposed that fisheries legislation be amended to create a new marine farming regime that would specify the rights that all marine farms would have. These new marine farming rights would have the following characteristics:

i. Exclusive right to farmed stock, subject to the stock always being in the continuous and exclusive possession of the marine farmer

ii. The right to farm any species, subject to the environmental effects of farming the species being authorised, and not subject to any prohibition notice

iii. Perpetual first right of renewal and

iv. Ability to sub-lease and trade.

3.2 Integrating marine farming and commercial fishing rights

The challenge in integrating marine farming rights with those of commercial fishing, including rights granted through ITQ ownership and permits for non-ITQ fisheries, is competition between the two for coastal space. The QMS provides ITQ and non-ITQ fishers the right to fish almost anywhere in the relevant quota management area. In reality though, some commercial fishing is highly localised. The development of a new marine farm can, therefore, cause an unavoidable economic loss for some commercial fishing rights holders.

Present mechanisms available under the FA 1996 are inadequate for dealing with conflicts over coastal space. Though the RMA is often the vehicle used by commercial fishing rights holders to oppose the development of new marine farmers, the issue is largely about loss of income and rights to coastal space rather than environmental effects. The RMA is not designed to deal with economic and rights-based issues. Actions by commercial fishing rights holders to limit the impact of marine farms on their livelihood, unless conducted carefully and expansively, risk being dismissed as ultra vires. On the other hand, under current law there is no explicit requirement for new marine farming operations to compensate existing commercial fisheries rights holders for potentially adverse effects of their operations. There is little incentive, therefore, for those setting up new marine farming operations to seek non-regulatory solutions to conflicts over rights to coastal space and loss of income for existing commercial fishing rights holders. Such conflicts have the potential to stifle appropriate development, particularly where opportunities exist to move from lower value harvesting activity (per unit area) to higher value intensive marine farming. Resolving these rights-based problems means amending marine farming legislation to better integrate the rights of commercial fishing rights holders and marine farmers, which would provide greater investment certainty for both groups.

Better defined rights for marine farmers could encourage acceptance of voluntary or trade-off agreements for spatial use where both commercial fisheries rights holders and marine farmers can gain from the transaction. Commercial fisheries rights holders and marine farmers operating in the same discrete area are ideally suited to voluntary agreements, or decentralised management agreements (DMAs). DMAs could create fisheries where both commercial fisheries rights holders and marine farmers would have rights to fish and, or, farm in a defined and enforceable area governed by a series of rules over use and exploitation. These arrangements are suited to coastal areas with mixed fisheries and stocks of limited mobility such as occurs in many inshore fisheries.

However, DMAs are not encouraged under the current legislative framework since only the Chief Executive of MFish, or a delegated officer, can determine allocation of marine farming rights in coastal marine areas. Where adverse effects from marine farming could be demonstrated, trade-off agreements could be more attractive if the potential for compensation provisions were introduced. A DMA may also include transferable rights and the ability to expand or contract entitlements through purchases and disposal of rights. This way existing commercial fishing rights holders might not be as disadvantaged through the establishment of new marine farming activity in their fishery.

A DMA could alleviate pressure on a fisheries resource or marine area by direct restrictions on output (e.g. commercial catch limits, marine farming harvest) or by indirect restrictions on inputs (e.g. occupation of coastal space, methods and seasons for harvesting) and by modifying rules according to changing circumstances. How well a DMA may operate depends on the pressure placed on the resource and the effectiveness of institutional arrangements to respond to changes. The key characteristics of a successful DMA would be the robustness of its institutional arrangements, limitations on territorial use and the feasibility of exclusion.

Exclusivity is an especially critical issue for success. For example, ITQ owners are a readily identifiable community of interests better able to collectively negotiate a management agreement. The nature of the rights granted by the ITQ system allows ITQ owners, more or less, the ability to exclude and, or, bind new entrants to a fishery. In contrast, marine farmers do not become rights holders until they are granted harvesting and occupation rights under the joint RMA/FA 1983 regime. Marine farmers are, therefore, excluded from negotiating the potential impact of proposed marine farms prior to the granting of rights.

Negotiations could occur between the commercial fisheries rights holders and regulatory authorities. However, political and legal issues and power asymmetries limit the likelihood of this occurring. Instead, there could be a clear separation of the granting of occupation rights to coastal space from the authorisation of marine farming activity. This would allow a tendering or allocation process for a specific area of coastal space. A subsequent round of negotiations could then occur between potential marine farmers with a provisional occupation right and commercial fisheries rights holders. A successful outcome could be that marine farmers are granted a perpetual harvesting right having achieved a negotiated outcome with commercial fishers. Where agreement could not be reached an independent dispute-resolution process could facilitate access agreements between commercial fisheries rights holders and marine farmers. Where compensation to commercial fisheries rights holders could not resolve their loss of rights to coastal space, provisional occupation rights might be surrendered and costs incurred in applying for the occupation right could be refunded.

Provided commercial fisheries rights holders and marine farmers can protect their rights against external pressures, such as pollution, DMAs are likely to be effective in (a) eliminating wasteful effort, (b) establishing equity of rights between commercial fisheries rights holders and marine farmers, (c) providing incentives for innovative management, (d) resolving conflicts, and (e), achieving profitable and sustainable fisheries. The administrative feasibility of DMAs would be high while monitoring, policing and enforcement costs would be relatively low.

4. CONCLUSION

The decade since the introduction of a property rights-based management system has been accompanied by industry profitability, unparalleled levels of investment and generally improved fish availability due to developments in stock assessments and implementation of rebuilding strategies. In addition, the marine farming industry, particularly the Greenshellä mussel sector, has experienced dramatic growth in volume and value. However, the full economic and biological potential of New Zealand’s fisheries has yet to be realised. Failure to further develop the QMS and the management of marine farming would incline most harvesters to adopt short-term perspectives towards fisheries management. As Jentoft et al. (1998) suggest, fishers do not easily accept government intervention unless it makes sense in the way they see their problems, know their fishery and have learned to understand the marine environment.

The underlying mood within the seafood industry is one of confidence in the future and there is general agreement that more commercial species should be managed under the QMS. The main reason for this confidence is that at every major crisis point the property rights-based fisheries management system has emerged stronger and better specified. It has taken most of the last decade for ITQ to outgrow its experimental and tentative status, but now it is viewed as irreversible and secure. Although marine farming is less suitable to the QMS, there is growing recognition that its integration with wild fisheries must be improved. Recent government and stakeholder initiatives to better define and manage marine farming have been welcomed by the commercial sector, however, as outlined in this paper, many issues remain unresolved. Government must find ways to resolve the confusion caused by the current management of marine farming and its inevitable competition with commercial fisheries rights holders over use of coastal space.

Until security of tenure in marine farming is defined and established, including determination of current and proposed coastal space occupation and structures, its growth prospects will remain in jeopardy. Failure to explore and adopt innovative policies to address the potential insecurity of marine farming tenure could jeopardise the industry’s future growth and success in international markets. The integrity of the QMS for wild fisheries could also be undermined.

5. LITERATURE CITED

Annala, J. 1996. New Zealand’s ITQ system: have the first eight years been a success or failure? Reviews in Fish Biology and Fisheries, 6, 43-62.

Batstone, C.J. and B..M.H. Sharp 1999. New Zealand’s quota management system: The first ten years. Marine Policy, 23, 177-190.

Clark, I. Major, P. and N. Mollet 1988. Development and implementation of New Zealand’s ITQ management system. Marine Resource Economics, 5, 325-349.

Dewes, C. 1989. Assessment of the implementation of individual transferable quotas in New Zealand’s inshore fisheries. North American Journal of Fisheries Management, 9(2), 131-139.

Falloon, R. 1993. Individual transferable quotas: The New Zealand case. In The Use of Individual Quotas in Fisheries Management. OECD, Paris, 44-62.

FIB 1996. The New Zealand Seafood Industry Economic Review. New Zealand Fishing Industry Board, Wellington.

Gaffney, K.R. 1997. Property Right Based Fisheries Management: Lessons From New Zealand’s Quota Management System. Unpublished Masters Thesis, Victoria University of Wellington.

Harding, R.J. 1991. New Zealand Fisheries Management: A Study in Bureaucratisation. Unpublished PhD thesis, Victoria University of Wellington.

Horton, C. 1997. Open Letter to Minister of Fisheries. New Zealand Fishing Industry Board, Wellington.

Jentoft, S. B.J. McCay and D.C. Wilson 1998. Social theory and fisheries co-management. Marine Policy, 22 (4-5) 423-436.

Luxton, J. 1997. Stakeholder Management of Recreational Fisheries. Address to the Recreation Fishing Council Annual General Meeting, Bay of Islands, July 1997.

Memon, A.P. and R. Cullen 1992. Fisheries policies and their impact on the New Zealand Maori. Marine Resource Economics, 7, 153-167.

Pricewaterhouse Coopers 1998. Fishing for the Future: Review of the Fisheries Act 1996. Ministry of Fisheries, Wellington.

Scott, A. 1988. Development of property in the fishery. Marine Resource Economics, 5, 289-311.

Sharp, B.M.H. 1997. From regulated access to transferable harvesting rights: policy insights from New Zealand. Marine Policy, 21(6), 501-517.

Sissenwine, M.P. and P.M. Mace 1992. ITQs in New Zealand: The era of fixed quota in perpetuity. Fisheries Bulletin, 90, 147-160.

The Nature of “Rights” in the Western Australian Pearling Industry - H.G. Brayford and G. Paust

H.G. Brayford
Fisheries Management Services Division, Fisheries Western Australia
<[email protected]>
and
G. Paust
Locked Bag 39, Cloisters Square P.O., Perth, WA 6854
<[email protected]>

1. INTRODUCTION

Australian South Sea pearls are recognised as the purest, finest and most valuable pearls in the world. Pearls are produced from the pearl oyster Pinctada maxima in the pristine coastal waters of northern Australia. The farming of P. maxima for pearls and associated products is Australia’s most valuable aquaculture sector. Western Australia is the major producer with 16 licencees participating in an industry worth in excess of $A260m in exports.

Currently, the industry is substantially based on the collection of pearl oysters from the wild under a quota system for subsequent pearl production. However to maintain its leading position in the production and sale of quality South Sea pearls on the world market, the industry has also developed hatchery technology for pearl oyster production. As a result, the industry is going through a gradual, quota controlled phase of growth and the value of pearl production may exceed $A500m by 2010.

Under the current legislative and management framework, three categories of “rights” have emerged:

i. The right to access wildstock pearl oysters for pearl production

ii. The right to seed hatchery produced pearl oysters for pearl production

iii. The right to occupy an area of coastal waters to conduct pearl farming or hatchery activities (“pearl farm lease rights”).

2. BACKGROUND

Pearling in Western Australia comprises three main activities - the harvesting of wildstock oysters, the production and grow out of hatchery spat and the subsequent farming activity to produce pearls.

Prior to 1995, the wildstock pearl oyster fishery was managed as a Joint Authority Fishery by the State and Commonwealth under State law. Aspects relating to pearl production (i.e. farming) were managed solely by the State. Since 1995, following an arrangement between the State and the Commonwealth, all aspects of the industry have been regulated by the State under the Pearling Act 1990.

From the early 1970s to the early 1980s, there were major problems within the industry associated with the availability of shells and excessive mortalities of shell stocks. These problems led the Commonwealth and State Governments at the time to impose prohibitions and restrictions such as on the taking of pearl shell for Mother-of-Pearl and placing quota levels on the companies involved in the industry. The stock situation became so serious in the early 1980s that the Governments imposed a moratorium until December 1987 on the number of companies licensed to fish and farm shell.

In June 1987, an advisory committee, known as the Pearling Industry Review Committee (PIRC), was established to independently review and assess the structure and operations of the industry and to report and make recommendations with respect to the future development and management of the industry. The Review Committee was asked to study and review all aspects of the industry and present its recommendations for consideration prior to the end of the moratorium period. The final report was presented to the State and Federal Governments in February 1988.

The Review Committee made a number of recommendations. Those of relevance to this particular discussion included recommendations that the industry be quota-controlled with entry by licence transfer only. The licence holders at the time, plus some pending new applicants were recommended as the companies to comprise the initial licencees in the industry. The establishment of an advisory committee was also recommended.

The PIRC report was the forerunner to the preparation of new pearling legislation, the Pearling Act 1990, and the subsequent publication of Ministerial Policy Guidelines in 1992 which, together with the Act, provide the basis for the current management framework. It should be noted that P maxima is the only species declared for the purposes of the Pearling Act 1990. All other pearl oyster species are regulated under general fisheries legislation.

3. WILDSTOCK ACCESS RIGHTS

The industry is based mainly on pearl oysters from the north coast of Western Australia. Oysters are hand collected by divers from the wild shell grounds and following seeding and a period of rest in the same area (3 + months) are transported to pearl farms in coastal waters off north-western Australia or, in some instances, to farms in the Northern Territory.

The wildstock fishery is managed in a similar way to a number of other commercial fisheries in Western Australia. To ensure sustainability of the stock, catches are limited each year by way of a Total Allowable Catch (TAC). Individual pearling licencees are then allocated a portion of the TAC by way of Individual Transferable Quotas.

The report of the Pearling Industry Review Committee noted that the first major management measures related to quota were introduced in the fishery in the early 1980s in response to concern about lowered catch rates (although, it is understood that prior to this, approval was required from the Commonwealth and State, as joint managers, to take pearl shell). These arrangements included the commencement of a system of quotas aimed at setting limits to the quantity of pearl oysters taken for pearl culture. The quotas set were not specifically intended to reduce the numbers taken in previous years but was also structured to establish a system for discussion about future requirements and a mechanism whereby those requirements could be controlled.

The TAC throughout the 1980s varied from time to time, based principally on whether or not stocks were considered limiting the harvest. Individual quota levels within the TAC reflected the commitment of the various companies, their traditional catching ability and infrastructure investment. This approach to quota allocation was consistent with approaches taken in other fisheries at the time.

With the introduction of new pearling legislation in 1990, quota levels for existing licencees were based on historical catch levels or in some cases, it is understood, reduced. Two new licences had also been granted as a result of the Review Committee’s findings on the basis that shell was collected in Zone 3 (i.e. north of the main fishing grounds at Eighty Mile Beach.

During 1993, the then Joint Authority identified an opportunity for new entrants in the Zone 1 sector of the fishery (south of Eighty Mile Beach). Following a public expression of interest process - a first for the Western Australian pearling industry - three new pearling licences were granted in Zone 1, subject to conditions. The licencees were each allocated what was considered at the time to be the economically viable minimum quota level of 15 quota units (at the time 15 000 shell).

Under current arrangements, the TAC is normally 572 000 shells with one quota unit having a par value of 1000 shells. The quota for individual licencees ranges from 15 units to 100 units. In recent years, the quotas have remained relatively stable although the TAC in Zones 2/3 was increased by 55 000 shell for the 1995, 1996 and 1997 seasons as a result of a temporary increase in recruitment. This increase was allocated on a pro-rata basis across Zone 2 and 3 licence-holders. The quota was returned to its par value in 1998.

Quotas values are noted on pearling licences. Both quotas and licences are transferable with approval of the Executive Director of Fisheries. Quota units must be transferred in minimum parcels of 15 quota units. At present, the way is open for an applicant to be considered for a pearling licence, on the basis that quota units are acquired by way of transfer from an existing licencee and subject to both the transferee and the transferor having a minimum holding of not less than 15 quota units after approval of the transfer.

Pearling licences are renewable annually. Licences are not issued as a right and, if the Executive Director thinks it would be in the better interests of the pearling industry to do so, the Executive Director may refuse to issue a licence.

4. HATCHERY RIGHTS

In the last few years, hatchery technology has developed for the propagation of pearl oysters for subsequent pearl production. Pearl producers acquire pearl spat from licensed hatcheries (the majority of which are owned and run by existing industry licencees) who grow out the spat to the minimum seeding size which, in the case of hatchery oysters, is 90mm.

Under current arrangements, if a hatchery proponent does not hold a pearling licence, then a hatchery licence will only be issued where there is an agreement to supply spat to the holder of a pearling licence, or alternatively, if the hatchery licence is issued jointly between the proponent and a pearling licencee. Hatcheries will only be licensed for the purposes of providing spat or pearl oysters to the Australian pearling industry.

While there are no restrictions on the production of spat from licensed hatcheries or subsequent grow-out, there is a limit on the number of hatchery oysters that pearl producers can use for pearl production each year. This policy was introduced in 1992 and each pearling licencee, at the time, was allocated ‘hatchery options’ which entitled that company to seed a certain number of hatchery oysters each year for pearl production. Recent new entrants to Zone 1 have also been issued options following a review of individual performance.

There are currently a total of 350 000 hatchery options within the industry (350 units) with each company having been allocated 20 000 annual options. One company was allocated an additional 30 000 options following a general understanding within industry when that particular company made a decision to establish the first hatchery in 1989. Options are transferable among licencees. Hatchery options have a term of 10 years unless extended for special reasons such as approved development plans that have a longer life.

Licencees may apply to convert options within the ten-year period (expiring in 2002 although some companies have an “extension” until 2005 based on approved development plans) to permanent hatchery quota subject to meeting certain development conditions. To be eligible to convert options to permanent hatchery quota, licencees must demonstrate, over a three-year period, the successful production of a minimum average of at least 1000 pearl oysters suitable for round pearl production. Once converted, for all intents and purposes, hatchery quota is treated in the same manner as wildstock quota.

Options were initially issued with a ten-year life span rather than on a permanent basis for public policy reasons. The objective was to encourage licencees to develop the technology for hatchery development and grow-out or lose the options. It was also to ensure that the right to use hatchery shell was not seen as gifting a valuable asset to existing licencees without suitable investment and allocation of resources to the development of technology. The hatchery policy is also a balance between the need for pearling licencees to gain experience in hatchery and grow-out technology and, given the sensitivity of the market to rapid increases in production, the need to discourage over-production to maintain the current value of the industry and revenue back to Australia.

5. PEARL FARM LEASE-RIGHTS

As outlined above, following collection, seeding and a period of rest, pearl oysters are transported to pearl farms in coastal waters of Western Australia between Exmouth Gulf and the Western Australia/Northern Territory border and in some cases to farms in the Northern Territory. Shell can also be acquired from hatcheries. The oysters spend the remainder of their culture life (up to 4-10 years) on the farm. Shells are held in panels attached to longlines and are subject to regular cleaning to remove fouling. Pearls are harvested at the farm site on an annual basis (2 years of pearl growth) and some can be re-operated up to 4 times for round pearl production.

Under the pearling legislation, approval for a pearl farm site is by way of a pearl oyster farm lease. A lease confers a right to occupy an area of coastal waters to conduct pearling (or hatchery) activities. It does not confer a general right of exclusivity apart fr om pearling (or hatchery) activities authorised by licence.

Leases are only granted to the holder of a pearling (or hatchery) licence and the main ‘home’ leases are issued for a period up to 21 years, subject to renewal.

In December 1997, following community concern about the granting of licences and leases for aquaculture and pearling development, a Ministerial Policy Guideline was issued on the assessment process for pearl farm lease and aquaculture licence applications in coastal waters of Western Australia. The guideline process includes full public consultation with relevant decision-making authorities and interest groups. It also specifies the time-frames to apply at each stage of the assessment process and important matters to be taken into account. The guideline is not intended to limit in any way the statutory discretion of the Executive Director. All applications must also meet the requirements of the Act and other relevant legislation such as environmental and Native Title legislation.

Decisions made on pearl farm lease applications are subject to a statutory appeals process under the Act with appeals being determined by the Minister for Fisheries.

6. CONSULTATION AND COMMITTEE PROCESSES

Fisheries Western Australia (‘Fisheries WA’), operating under the Pearling Act 1990, is the lead government agency in Western Australia for the regulation and management of the pearl oyster fishery and associated pearling and hatchery activities. It is also responsible for leasing areas of coastal waters for use as pearl farm sites.

To assist in achieving its objectives, Fisheries WA works in co-operation, as relevant, with industry. The agency often consults with industry members and/or the Pearl Producers Association (PPA), either through formal channels or on an informal basis, on a range of policy and management issues. The PPA is the representative body for the pearling industry and its membership comprises all licencees engaged in the commercial harvesting of P. maxima and in pearl production in Western Australia. The PPA greatly assists the decision-making process. It provides an industry or corporate view on many issues which, while in the better interests of the industry, are not necessarily the same as individual company imperatives but are supported nevertheless.

The Pearling Industry Advisory Committee (PIAC) established by the Pearling Act 1990 is a statutory committee providing to the Minister for Fisheries and to the Executive Director of Fisheries WA advice on matters relating to policy, management and development of the pearl oyster fishery and pearling industry. PIAC members are appointed by the Minister and may include people directly involved in the industry, people external to the industry and people from Government. PIAC can seek additional technical and expert advice where necessary.

PIAC provides advice to the Minister and to the Executive Director on a range of issues including matters relating to the TAC for a particular zone or zones and quota levels. In providing such advice PIAC normally takes into account research advice on stock status.

7. ISSUES

The pearling industry is unique in some respects in that it incorporates both fishing and aquaculture components. As a result, a complex set of rights have evolved relating to the collection of wildstock oysters, the use of hatchery oysters for pearl production and pearl farm lease-rights. While collectively these form the basis of the management framework, a number of issues have emerged in each set of rights.

As outlined above, wildstock quota-rights in the fishery are managed in much the same way as quotas in other commercial fisheries principally on grounds of maintaining sustainability and currently TACs are only subject to minor changes. No significant change in the TAC or in quota levels is anticipated for the future. The fishery is zoned and, as with other fisheries, there are issues surrounding the potential diminution of rights and issues of equity within and across zones if, for example, boundary changes are suggested or changes in the TAC for a particular zone are proposed. In most cases, these issues are resolved in discussion between Fisheries WA, the PPA and PIAC providing useful examples of the co-operative approach to management and, in particular, the industry’s corporate approach to dealing with industry-wide issues.

While pearling licences are renewed annually and quota is issued on an annual basis, there is an expectation of permanency about licences and quotas even those these 'ongoing' renewals are not stated in the Act as a ‘right of renewal’. Since the new Act came into effect in 1990, there are no examples known to the authors of licences not being renewed. During 1995, 1996 and 1997, however, one licencee had 5 quota units suspended because of a breach of the Act. From an industry perspective, greater security over licences and quota would be preferable particularly in light of the large capital-investment required by licencees in the industry.

The pearling industry is market driven. The high value of South Sea pearls is based on their beauty, rarity and the image of luxury attached to them. To maintain market stability, pearl producers must be attuned to the sensitivity of the world market. Historically, Western Australian pearl production has been constrained by the availability of wildstock pearl oysters. However the development of hatchery technology within the industry provides a means for increased production without further exploitation of the wildstock. The current management framework, encompassed within Ministerial Policy Guidelines, encourages the development of hatchery and grow-out technology but also limits the use of hatchery oysters for round-pearl production with the objective of maintaining the price of Australian South Sea pearls in world markets.

Debate on the hatchery policy has, at times noted that the policy limits the use of hatchery oysters for pearl production to existing licensed pearl producers, although the way may be open for new entrants via the purchase and transfer of hatchery quota subject to minimum quota holdings.

The pearling legislation, including the hatchery policy, is currently subject to review under National Competition Policy (NCP) agreements. The review, which is being conducted by an independent consultant, is due for completion in 1999. It is focussed on the guiding principle of NCP, namely to ascertain whether:

i. the existing regulatory mechanisms restrict competition and, if so, whether the benefits of the restrictions to the community as a whole outweigh their costs

ii. the objectives of the legislation can only be achieved by restricting competition and

iii. the current regulations are the most efficient method of achieving these restrictions.

The allocation of pearl farm leases is becoming an increasingly complex issue given competing demands for marine resources. Traditionally, issues concerning property rights in fisheries have focussed on the right to harvest fish stocks. However, more and more, issues concerning the use of marine waters are coming to the fore, particularly given developments in aquaculture technology and stock enhancement.

Coastal communities are increasingly concerned about any expansion of pearling or aquaculture activities. The major issues include:

i. the potential direct impact of pearling and aquaculture activities on existing activities such as recreation and tourism

ii. in high use marine areas, a desire for unfettered access to, and use of, coastal waters and no further alienation of what is a common resource

iii. an expectation that applications for leases will be considered in an open, transparent manner and the views of other users and interest groups will be taken into account in the lease assessment process

iv. the perception of potential environmental impact of pearling and aquaculture activities

v. an expansion of pearling and aquaculture activities in existing or proposed marine reserves and the lack of a co-ordinated approach to marine planning

vi. the potential impact of pearling and aquaculture development on native title rights and interests.

The Guideline process does not preclude the requirement for applications to be assessed in accordance with the Pearling Act 1990 and with other relevant legislation relating to, for example, marine parks, environmental impact and native title. Processes and practices have been implemented by Fisheries WA to ensure compliance with relevant legislation including assessment of applications by the Department of Environmental Protection.

Notwithstanding the Guideline process and procedures implemented by Fisheries WA, it is difficult for pearl producers to secure lease sites in high and/or multi-use coastal areas and to secure long-term leases. A co-ordinated approach to marine planning across Government, with a high level of industry and community involvement may assist, however this is a complex issue given the various jurisdictions and lack of a statutory base. In addition, the setting aside of particular areas for pearling development can only be done based on rather gross parameters of site suitability. Currently there is no technical method that is feasible for ensuring that a site will be productive and produce high quality pearls. Industry practice is to test a site for several years to establish its suitability as a quality pearl-growth site. The risk for government in a marine-planning approach is that if this commits industry to culturing pearls in areas specifically set aside for that purpose and they prove to be unproductive and uneconomical, who is accountable?

This issue of availability of sites has also been recognised by the PPA and is being addressed by way of technology development, particularly in relation to: offshore farming systems; possible research in the areas of carrying-capacity; and working with other user groups, such as charter operators, to address issues of common concern and minimise potential conflict. The PPA also recently commissioned an independent report on the environmental impact of pearling activities through the fishing and farming stages. The report concluded that, in general, the industry was environmentally benign, producing a high-value product with a minimum of environmental disruption.

Ultimately, the major issue for fisheries-management inherent in the increased conflict over marine area use is how to measure, or determine, what is the most productive use of an area, i.e. what returns the best ‘value’ to the community as a whole. It is a simple process for the commercial usage of an area to have a dollar value attributed to its use but how does one measure, say, the ‘value’ of a ‘recreation use only’ area? Often decisions about allocation of coastal waters are based on subjective evaluation of optimum return to the community from what are essentially unmeasurable and uncomparable ‘values’.

8. CONCLUSION

The wildstock pearl oyster fishery is one of the most valuable commercial fisheries in Western Australia. The culture of quality pearls is also Australia’s most valuable aquaculture sector. Hatchery development is also well advanced. The industry is considered to be highly-developed with a complex set of management arrangements administered under one Act, separate to the general fisheries legislation.

Three sets of rights have emerged in the industry - wildstock access rights, hatchery rights and pearl farm lease rights. Currently the 16 licencees in the industry have each of these rights to varying levels. The rights have been allocated on differing bases, which included biological sustainability and economic considerations. Many of the issues surrounding rights of access, particularly in the wildstock sector, have been largely resolved in co-operation with industry and the management framework is considered to be relatively stable.

Industry’s ability to secure additional, and long-term, lease sites, particularly as hatchery production expands within the current industry, is an important issue. Government has implemented processes and guidelines to ensure that pearl farms develop in an ordered manner and potential conflicts with other user groups are minimised. Industry is also addressing this issue by way of technology development, consideration of new research areas and working with other interest groups to address issues of common concern. The main unknown for the future is the outcome of the NCP review, which may result in changes to the current management framework, most likely in the hatchery sector if there is to be any change.

A fundamental sequel to the creation of these rights from an industry perspective is the security of tenure over quota and marine leases. The considerable capital-investment that is required by licencees in the industry requires a high level of confidence in the security of tenure over the allocated rights. Financial institutions seem to have similar concerns. Industry and financial institutions would like to see more permanent types of tenure rather than annual renewal and short term leases that are not reflected as ‘a right to renewal’ in the Act.

This expectation requires Government to balance the need for security of tenure (which will encourage the level of investment to optimise returns to the industry and community) against the need for Government to be able to implement possible future changes in resource allocation of what is considered a ‘community resource’.

9. LITERATURE CITED

Fisheries Western Australia 1988. Report of the Pearling Industry Advisory Committee.

Fisheries Western Australia 1997. Pearl Oyster Fishery Ministerial Policy Guidelines FWA.

Centre for International Economics 1998. Review of the Western Australian Pearling Act 1990 under National Competition Review of Legislative Restrictions on Competition (Discussion Paper).

10. ACKNOWLEDGEMENTS

The assistance of Mr Michael Buckley, Executive Officer of the Pearl Producers Association, is appreciated.