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Changes in Fleet Capacity and Ownership of Harvesting Rights in the United States Wreckfish Fishery, J.R. Gauvin

Director, Groundfish Forum, Inc.
4215 21st Avenue West, Suite 201, Seattle, Washington 98199, USA


During the mid-1980s, swordfish and tilefish fishermen discovered commercial concentrations of wreckfish (Polyprion americanus) on the Blake Plateau, a deep fishing-ground located about 120 nautical miles due east of Savannah, Georgia, on the Atlantic coast of the United States. Although wreckfish resemble grouper in appearance, wreckfish are members of the temperate bass family found in the Atlantic Ocean. Found only at considerable depth in northwestern Atlantic waters, they are thought to be closely related to striped bass (Morone saxatilis) also found off the east coast of the United States. Wreckfish are known to occur in commercial landings in fisheries off mainland Portugal, Madeira and the Azores Islands.

The initial development of the U.S. fishery for wreckfish is described in detail by Sedberry et al. (1993), and the wreckfish fishery management plan (FMP) by the South Atlantic Fishery Management Council (Snapper/Grouper FMP Amendment 3), being one of the eight regional management councils in the United States (SAFMC 1990).

Wreckfish are caught in the northwest Atlantic at depths from 450-600m over benthic structures characterized by rock ridges and relief features extending vertically more than 30m (Sedberry et al. 1993). Although wreckfish can exceed 100kg in weight, most taken from the Blake Plateau weigh approximately 15 kilos (Vaughan et al. 1993).

The fishery was developed by harvesters using hook-and-line gear employing hydraulic reels spooled with steel wire, and terminal rigs consisting of a monofilament spine with eight to twelve monofilament leaders deploying a single circle hook per leader. Frozen squid is the primary bait used for wreckfish and 10 to 20kg lead weights are deployed to bring gear and baited hooks down to the ocean floor in a semi-vertical fashion. Typically, four to six hydraulic reels are used per vessel, spaced evenly across both sides of the fishing deck. Vessels fishing wreckfish range in length from 15 to 25m (SAFMC 1990).

In some respects, the initial phase of management in the wreckfish fishery was similar to other U.S. efforts to regulate commercial fisheries. The fishery developed rapidly with little or no long-range planning or control, expanding from fewer than five vessels in 1988 to more than 40 vessels in 1990 (Sedberry et al. 1993). In the spring of 1990, a rapid influx of refitted shrimp trawlers, and the concurrent introduction of bottom long-lines by some fishermen, resulted in increased landings and harvester conflicts (SAFMC 1990). With the addition of vessels from the shrimp fishery, managers estimated that as many as 60 to 70 vessels were geared to fish for wreckfish in 1990-1991, two years prior to ITQ management (SAFMC 1991a). There were approximately 90 vessels permitted to fish for wreckfish during the first year that permits for the fishery were required (Gauvin et al. 1994).

To establish control over the burgeoning fishery and attempt to resolve user-conflicts, the first of a series of fishery management plan amendments was approved in June of 1990. These initial measures were “fast tracked” by federal Emergency Rule to “prevent a fishery that would seriously interfere with the necessary protection of the resource” (United States Department of Commerce 1990a, b). The fishery management plan and emergency rules established several management measures including: an April-to-April fishing year, a two million pound total allowable catch (TAC of 0.9 million kg) for the 1990-1991 fishing year, a prohibition on the use of bottom long-line gear for wreckfish, and a vessel catch-per-trip limit of 10 000lb (4,100 kg). Even with these emergency measures, the fishery effectively exceeded the TAC by landing roughly 3.6 million pounds (1.6 million kg) during 1990-1991, effectively catching fish faster than the new regulations could be implemented. From that point in time forward, fishermen continued to press managers for measures to address declining earnings and increasing user-conflicts (SAFMC 1991a).

Responding to the rapid expansion, managers moved expeditiously to request public comment and develop measures for different proposals for limited-entry and individual quota systems during 1991. The end result, achieved approximately one year later, was the development of an individual transferable quota (ITQ) system for wreckfish, only the second such programme implemented for a fishery under federal management in the United States.

This paper evaluates the changes in catch-capacity attributable to the implementation of a rights-based management regime for the fishery, although attribution of all changes in capacity to ITQs cannot be made unequivocally. The paper also reviews the degree of share-concentration in the fishery under ITQs, and evaluates what is known of the effects of concentration on such issues as: prices received by fishermen; and the functioning of markets for permanent and annual rights in the fishery. A very cursory evaluation of effects on prices to consumers, and a conceptual evaluation of social effects of rationalization of the fishery are also provided. Information used for this paper was drawn principally from three sources: the fishery management plan amendments developed by the management council (SAFMC) responsible during the development of the wreckfish ITQ programme, and two separate follow-up studies of the programme (Gauvin et al. 1994, Richardson 1994).

The focus of this analysis is limited to the first five years (1990-1994) of the fishery, because roughly four years after the ITQ system became effective, the fishery, in effect, began to collapse. Because this failure of the fishery is not likely directly related to ITQ management, the fishery still serves as a reasonable case-study for the issue of share-concentration and effects on fishing capacity. One has to recognize, however, that the collapse probably influenced incentives for share-concentration although the latter is evaluated for the early period of ITQ management, and the factors contributing to the eventual decline of the fishery are not thought to have been of major consequence during the early period.

The reason for the failure of the fishery is not known exactly, but fishermen and managers cite several possible explanations. Below, I have reported, without prejudice, some of the leading opinions to explain the fishery’s demise. These opinions represent the current thinking by fishermen and managers as conveyed by Mr. Robert Mahood (pers. comm., Executive Director, SAFMC).

One explanation is that the fishery suffered from an initial over-estimation of sustainable yield from the “stock” (assuming wreckfish off the southeastern United States is a separate stock, a question that has never been resolved). Hence, according to some managers and fishermen, wreckfish are no longer found in concentrations that support economically feasible harvests. Another explanation is that former wreckfish fishermen are taking advantage of more profitable inshore fishing opportunities in lieu of exercising their options to fish wreckfish. Still others contend that the ex-vessel price does not adequately compensate fishing operations. Whatever the reason or combination of reasons that might best explain the situation, I will focus on the first few years of the ITQ fishery because participation in the fishery today is apparently limited to one or two full-time vessels per year. Although the annual total allowable catch has been maintained at the 2 million pound level, only approximately one-tenth of that harvest has been achieved in recent years (1999 and 2000).


Before ITQs, the fishery was virtually unconstrained, since the aggregate annual catch-limit for the fishery first constrained the fishery only one year prior to the formation of the ITQ programme. As the fishery developed, the rapid expansion in participation and catch-rates prompted fishery managers to implement control measures to stem harvest-rates and user-conflicts. These measures generally failed, however, to address declines in economic returns to fishermen. Trip-limits probably contributed to the erosion of profits, especially for the larger vessels, which according to public comment, would operate more profitably if allowed to catch more than the allowed amount of fish per trip (SAFMC 1991a and 1991b). The erosion of economic performance as a result of the fishing-derby itself, and the manner in which the trip-limit quantity of harvest affected vessels of different sizes, are identified as key considerations in the selection of objectives for the ITQ plan (SAFMC 1991a). Related objectives of the plan are economic efficiency, long-term incentives for resource conservation, reductions in user-conflicts, and lower management and regulatory costs.

The documents summarizing public comment during the development of the ITQ plan’s amendment elaborate on the concerns of fishermen regarding the erosion of earnings in the fishery. Of note are comments submitted by fishermen claiming to have developed the fishery. These comments state that the lack of real restrictions on entry and effort, in conjunction with rules established to make the fishery more manageable under open-access, contributed to the loss of economic viability on an individual-firm basis (SAFMC 1991b).

The requirement for harvester permits in the fishery (implemented in 1990) also failed to create an effective barrier to entry or exclusivity of rights, because virtually anyone could obtain a permit simply by filling out and submitting an application to the Southeast Regional Office of the National Marine Fisheries Service (NMFS), and paying what amounted to a nominal fee for the processing and handling of the permit application. In fact, the Magnuson Fishery Conservation and Management Act as it stood when the wreckfish ITQ programme was developed, expressly prohibited the NMFS from collecting fees in excess of the costs of processing and handling permit applications (SAFMC 1991a).

The prohibition on collecting fees even extended to the collection of fees or resource royalty/rent recaptures once ITQs were in place, a limitation that according to the management-plan amendment establishing the ITQ system, troubled some managers and temporarily served to persuade some council members not to vote in favor of an ITQ system (SAFMC 1991a).

Once the ITQ programme was established, however, the rights provided to harvesters were relatively free from restrictions. Rights were assigned in perpetuity and were allowed to be traded freely to anyone, regardless of whether or not that person or business entity was able to document a vessel in the United States (SAFMC 1991a).

ITQ rights were granted to a percentage share of the annual TAC. Recipients received a percentage share-certificate and paperwork entitling them to the quantity of wreckfish (annual individual quota) for a given year amounting to the share-holder’s percentage share of the annual total allowable catch.

The only limitation placed on the rights distributed by the initial allocation was that recipients had to be qualified wreckfish fishermen (see below), and that no single entity could receive an initial allocation of more than 10 of the 100 (10%) of the shares initially distributed (see below). An additional minor requisite was that leases of annual rights could only be between permitted wreckfish fishermen. This leasing restriction amounts to little more than a requirement that any owner of a vessel not granted an initial share, simply had to complete the appropriate paperwork in order to fish for leased wreckfish quota.

There are several statements of intent in the management plan that appear to be aimed at further limitations on the rights granted to qualified wreckfish fishermen. These are, ostensibly, guidance to NMFS rather than actual elements of the management plan. For instance, in several places the plan notes that it is the council’s intent that major violations of the ITQ regulations be met with forfeiture of the shareholder’s permanent rights in the fishery (percentage shares) (SAFMC 1991a). Another similar statement is that management fees and royalty or economic-rent extractions, should be considered for the wreckfish fishery under ITQs if, and when, such collections become allowable under the applicable laws governing fishery management (SAFMC 1991a). While possibly helpful for NMFS’ interpretation of the intent of the plan, in reality, the council members recommending the plan for final approval by the Secretary of Commerce actually have no purview over the matters of enforcement and collection of fees. Those areas of management are the responsibility of the NMFS Enforcement Branch and NMFS respectively.

Although the programme established a relatively unimpeded market for wreckfish harvesting rights, it did require that transactions of annual or permanent rights to the fishery be recorded by the National Marine Fisheries Service, Southeast Regional Office. Paperwork requirements established that transactions of permanent shares of the fishery were not official until recorded by the agency, although the “coupon” paperwork for transfers of annual rights allowed for the recording of the transfer on the coupon itself, provided that the permit numbers of the parties were recorded on the forms and the coupons were signed by both parties.

The management plan also established that the NMFS would make public each year the percentage shares of all holders of permanent rights to the fishery, through its regular public information activities.

NMFS collects nominal fees for transactions of percentage shares, and annual rights can be transferred by filling-out and signing transfer paperwork attached to the coupons denominating quantities of catch. No fees are collected for transfers of annual rights.


3.1 Wreckfish fleet capacity prior to and since ITQ management (1990-1994)

Reliable indices of fleet capacity prior to ITQ management are not available. Estimates of the number of vessels fishing wreckfish during the open-access period are thought to be of limited accuracy, because the state fish-ticket data-systems in some south Atlantic, states probably overlooked marginal or infrequent participants. More critically, the data-collection systems were generally not set up to handle the situation where a vessel was permitted in one state, but landed its wreckfish catches in other states. The practice of landing out-of-state was apparently common for wreckfish because many of the buyers were located in northern Florida, while many wreckfish boats had South Carolina home ports (SAFMC 1991b). To further complicate matters, the requirement to possess a permit only became effective one year prior to the ITQ programme, and thus a comprehensive list of vessels that potentially landed wreckfish was not available for most of the years during which the fishery was expanding.

Given the data-limitations, the generally accepted estimate of the minimum number of vessels equipped to fish wreckfish during the two years before implementation of ITQ management, is approximately 60-70 (SAFMC 1991a, Gauvin et al. 1994). Table 1 below lists the number of vessels with documented wreckfish landings during the last year of open-access management and the first two fishing years of ITQ management. The table is divided into two vessel-classes: “fish boats” and “shrimp boats”. This division is meaningful because the transferable rights programme appears to have reduced the number of larger “shrimp boat” vessels more profoundly than for the smaller “fish boat” vessels.

Table 1. Indirect measures of fleet capacity

Vessel type

Fishing year

Number of vessels making wreckfish trips

Fishing trips

Mean vessel length (feet)

Fish boat













Shrimp boat














Source: E.J. Richardson and Associates 1994
Given the significant decline in the number of vessels with documented landings, the wreckfish ITQ plan appears to have markedly reduced fleet capacity during the first two years the programme was in place. If the data-system overlooked any vessels that fished in the early years of the fishery, then the reduction could even have been larger than the official numbers suggest.

The original participants in the fishery were mostly vessels belonging to the “fish boat” category, and the larger shrimp vessels came into the fishery in anticipation of obtaining some of the profits that were apparently being garnered by the early participants (Richardson 1994). Vessels principally used for shrimp trawling installed hydraulic reels and started fishing wreckfish in the waning days of open-access, mostly in 1991. While these vessels could fish more reels at once than fish boats, this did not necessarily provide an advantage to the larger fishing platforms, because the “fish boats” were apparently more maneuverable and thus possibly more effective at the vertical fishing technique (Richardson 1994). The fishing technique that was apparently easier for smaller vessels, involved positioning lead weights suspended by cables so that the baited hook rigs came close to, but did not snag on, the extreme vertical relief of the bottom where wreckfish are found.

The early years of the wreckfish ITQ programme likely brought about the expected effect in terms of fleet-capacity reduction, such has been observed in many cases where an ITQ system replaces open-access. Data in Table 2 strongly suggest that the smaller, possibly more efficient, “fish boats” purchased rights from the larger vessels. This occurred despite the fact that the SAFMC had lifted the catch-per-trip limit which it had imposed in order to control the fishery in its rapid development phase. Commenting on the proposed plan, the public apparently still believed that the trip-limit had protected smaller vessels and if lifted, even under ITQs, the larger vessels would regain an advantage (SAFMC 1991b). Despite this lingering concern over domination by larger vessels under ITQs, data on share-transfers suggest smaller vessels were more efficient fishing platforms, particularly given the removal of incentives to race for fish (SAFMC 1991b; Richardson 1994).

Table 2. Landings, landed price, and total annual revenue


Landings quantity (pounds x1000)

Price ($US/lb)

Total revenue ($US)




$4.45 million




$3.00 million




$2.20 million

While the rights-based system appears to have functioned to remove redundant fishing-capacity according to expectation, it is important to recognize that wreckfish catch fell short of the total allowable catch during the first year of the ITQ system (and from then on as well) (Table 2). While catch undershot the TAC by a only a relatively small amount in the first year of the ITQ (0.7 million pounds of the 2 million pound TAC, or 35%), that was the year of the most precipitous decline in the number of vessels active in the fishery, particularly the larger shrimp boats. Overall, however, for the first year of the ITQ programme, the decrease in the number of vessels is most probably attributable to economic rationalization of fishing capacity, not attrition caused by whatever brought about the eventual collapse of the fishery. Most of the annual and permanent share-exchanges happened right at the outset of the first fishing year under ITQs, before the shortfall in harvest of the TAC took place (Gauvin et al. 1994). For later years, it is probably more difficult to distinguish economic rationalization from other incentives for egress.

Using the available data on changes in the overall number of annual trips taken for wreckfish, is even more problematic for measuring changes in fleet-capacity. These data suggest that the number of trips declined from 307 for fishing year 1991-1992 (the year prior to ITQs) to 216 in 1992-1993 (Table 1). This is roughly a 30% decrease, which appears to be almost directly proportional to the quantity of TAC not harvested, and so one might be tempted to conclude that the same amount of fishing effort occurred per unit of catch. This would seem to dismiss the possibility of fishing-efficiency gains with the ITQ system, but several considerations prevent this type of conclusion. First, no data are available to compare trip-length, so changes in the number of trips could be misleading. Secondly, trip-length was artificially constrained during the last year of open-access because a limit on the quantity of catch per trip was enforced. This limit was dropped under ITQ management. Lastly, as will be discussed below, changes in allowable-gear may not have become effective until ITQ management was in place, and this could have greatly affected trip-length. In summary, the change in the number of trips based on available data, needs to be viewed with some caution.

3.2 ITQ incentives as a possible reason for adjustments in gear and techniques

With the elimination of the race for fish afforded by the assigned-rights system of management, one could possibly expect gear and other fishing practices, to be modified so as to increase efficiency over what was achievable before. This may have occurred but is largely impossible to establish from available data.

The fishing gear that was the most likely candidate for no longer being employed under ITQ management was bottom longlines. This is because although long-lines caught wreckfish faster than vertically-fished rigs, the gear-loss rate was apparently quite high (SAFMC 1991b). It was also frequently reported that parted long-line cable ‘soured’ fishing grounds, making them practically un-fishable for the “traditional” vertical gear (SAFMC 1990; SAFMC 1991b). In the absence of a race-for-fish, fishermen could avoid some of the expense of lost gear, and the problem of ‘souring’ of fishing grounds due to the “hangs” created from parted cable, by using only vertical fishing gear (SAFMC 1991b).

The reason that the change in gear-type is not attributable to a change in incentives imparted by ITQ management, is that managers actually mandated changes in gear just prior to the advent of the ITQ system. Regulations prohibited the use of bottom long-line fishing for wreckfish, essentially allowing only the vertical-fishing method, and this became effective just prior to the ITQ system (SAFMC 1991a). Although it was often reported that despite the ban, some fishermen continued to use long-lines up until the ITQ system was in place, there is no way of establishing that ITQ incentives curtailed the use of long-lines (Mr. Robert Mahood, pers. comm.).

In addition, fishermen commenting on the proposed ITQ management-system claimed that they would consider reducing the number of hydraulic reels per boat and the number of deck hands operating the reels, once the premium for catching fish faster was removed (SAFMC 1991b). Unfortunately, a follow-up study to collect data on these types of adjustments was never undertaken.

3.3 Longer term social and economic consequences of changes in fleet capacity

While the ITQ system likely induced considerable egress of fishing capital from the wreckfish fishery, as well as fishing and service-industry jobs soon after the programme went into effect, there are several considerations for evaluating social and economic effects of the programme. The wreckfish management plan itself provides a theoretical framework for evaluation of expected economic and social effects of “shake out” from economic rationalization of the wreckfish fishery (SAFMC 1991a). The expectations under ITQ-management were: fewer fishing jobs for wreckfish, fewer processor jobs in packing houses, and a decrease in gross economic activity in the related service sector. The plan states, however, that the remaining jobs and economic activity under ITQs, were expected to be more viable and profitable than before.

According to the plan, potential negative social effects of economic rationalization and consolidation were considered by the SAFMC prior to its approval. It is interesting that the plan actually concluded that decreases in gross employment and support-industry activity from ITQs would probably occur under continued open-access. This is because managers assumed that an over-capitalized wreckfish fishery could lead to an inability to manage the fishery in a biologically or economically sound manner. The plan presumed that political or economic pressure would not allow managers to limit catches, because the same outcome had occurred in the southeast region with the tilefish fishery. Managers reportedly had allowed that fishery to develop unbridled, and the end result was overfishing and a collapse of the stock (SAFMC 1991a).

Ironically, it appears that the same outcome may have occurred for wreckfish (either for biological or economic forces), in spite of the existence of a rights-based management system. Nevertheless, this outcome is unlikely to be attributable to the ITQ programme. The failure of the fishery under ITQs does point out that if biological management is inherently unsound and risks are not appropriately assessed, many of the same risks exist even with a rational economic management system. In the case where an ITQ system is in place, an advantage is probably that an efficient market for fishing-rights facilitates the economic transition.


From the record presented in the management plan, it is clear that managers considered constructing limitations on concentration of ownership, but their final decision was to allow the unfettered accumulation of shares if that is what the market would eventually dictate. Essentially, the SAFMC opted to let existing anti-trust laws sort out issues of market-concentration or price-control (SAFMC 1991a). Written public comment during development of the plan certainly addressed problems stemming from share-concentration, and several letters expressed concern for the specter of monopolistic pricing or control if the council did not construct direct controls on share-accumulation (SAFMC 1991b). One letter even predicted that foreign control of the fishery would be imminent.

In 1994, a preliminary evaluation of share-concentration in the fishery was undertaken (Gauvin et al. 1994). Focus on the wreckfish fishery was largely due to the fact that it was one of the first ITQ systems in the United States, and the decision not to construct limits on share-accumulation had been controversial for the SAFMC. That decision had also received considerable attention in the trade press (Biro 1992). Outside the south Atlantic region, the question of restricting ownership accumulation was proving to be pivotal for many managers considering ITQs at the time. Because the SAFMC had established a data system to track share-concentration that was accessible to the public, wreckfish appeared to be an ideal case study for the question of concentration. It is also important to note that one and one-half years after implementation of the ITQ for wreckfish, there was no obvious sign that the fishery was experiencing problems that might be affecting incentives for egress and concentration, outside of the normal incentives for increasing efficiency and profitability.

Data made available for the study by the SAFMC indicated that the number of vessels landing wreckfish from 1992 to 1993 had declined from 44 to 14. Three points in time were selected to evaluate shareholder-concentration: share-holdings at the time of the initial allocation, share-holdings in October of 1992 (which amounted to roughly the midpoint in the time series of data), and in June 1993 - the latest point in time for which information was available.

The study relied mostly on the Herfindahl index, an index of concentration that was selected because its application is possible in cases where individual share-information is readily available. That index was also appealing because it was thought to be one of the easiest indices for interpretation of concentration-changes. The Herfindahl index is thought to provide an unbiased assessment of concentration-changes over time for an industrial structure that is made up of a relatively small number of firms with small nominal differences in market share (Scherer 1970). The index essentially normalizes share-holdings by summing squared individual shares, thus creating a theoretical range from close to the zero for “perfect competition”, to approaching one, for “perfect monopoly”.

Applying this approach to wreckfish shareholder-information, the study noted an increase in the index from 0.027 to 0.042 from share-holdings in the programme from the outset of the programme to October of 1992, and 0.042 to 0.064 from October of 1992 to June of 1993 (Gauvin et al. 1994).

While this amounted to a more-than-doubling of the index over the period, which indicated that share-consolidation had certainly taken place, the end point still suggested a rather competitive structure for a fishery. The question of the number of boats remaining in the fishery was evaluated both in the context of the number prior to ITQs, and the practical number of vessels that the fishery could economically support. It was concluded that, in practical terms, the fishery was only likely to be able to support less than twenty vessels of the scale needed for the fishery (Gauvin et al. 1994).

Given that managers had elected not to construct limitations on consolidation, it is unlikely that the shareholder data failed to accurately reflect ownership and control in the fishery. Limits on ownership often induce incentives for structuring layers of ownership such that it is veiled. This can be accomplished by creative corporate structures, or “proxy” ownership, through placing title to ownership in the names of individuals who effectively carry out the decisions of the actual owner. The array of possible ways of structuring ownership and control, so as to thwart ownership restrictions, can be impressive and can make assessment of share-accumulation impossible in some cases. This was likely not the case for wreckfish because the programme placed no restrictions on ownership after the initial allocation.

Regarding the possibility of price-setting power, the study noted that wreckfish was essentially functioning as a substitute for grouper and other grouper-like fish that are popular in the southeastern United States (Gauvin et al. 1994). Annual production of grouper and grouper-like fish in the region was estimated to be more than 10 times greater than wreckfish production, and annual consumption (including imports) was at least 20 times greater (United States Department of Commerce 1992). From this information, a conclusion was made that it was highly unlikely that any entity in the wreckfish fishery could exert much control over wreckfish prices.


Ex-vessel prices increased over the period just prior to ITQ management and every year thereafter (Table 1). The reason for price increases is not easily determined, however, because quantity supplied over the same period varied considerably, and an adequate measure of price flexibility for wreckfish or the “grouper and grouper-like fish” is not available. Total ex-vessel revenue from the wreckfish fishery decreased over the period, indicating that the change in quantity supplied was not fully compensated by any price response, either through changes in the bargaining power of fishermen, or price response to the decrease in quantity supplied (Table 1).

From this cursory information, it is virtually impossible to evaluate whether the ITQ system had the theoretically-expected effect on price to fishermen, although one cannot eliminate the possibility that fishermen made price and total-revenue gains compared to what would have occurred under a significant decrease in landings over time, in the absence of the ITQ programme.

Richardson’s cost and earnings study of the wreckfish fishery evaluates the question of annual economic-rent formation for wreckfish quota-holders, in the context of performance from wreckfish fishing and from other fisheries in which wreckfish fishermen participated during the years studied. While he came to the conclusion that “highliner” rents were achieved by some operators in the fishery (and the other fisheries in which they participated in those years), from an overall perspective the study found that no rents were created (Richardson 1994). This, however, may have been driven by one single dominating factor: most dedicated wreckfish fishermen paid what turned out to be fairly high prices to regain the amount of catch they had had prior to the outset of the ITQ programme (see Gauvin 2001).

In the end, most of their purchases of annual and long-term rights amounted to complete net losses for the year for which the pro forma analysis was undertaken. As it turns out, the year analyzed was one where most fishermen did not land all the fish for which they had acquired rights (whether through additional purchases or their initial allocation shares). Expenses incurred to increase rights to wreckfish were, in many cases dead losses, and this clearly affected the potential for rent-generation (Richardson 1994).

5.1 Fleet capacity and ownership concentration: actual changes compared to theoretical expectations

As can be gleaned from the above discussion of share concentration, capacity, price, and revenue changes in the fishery, the effects of the wreckfish ITQ are confounded to a large degree by the reduction in catches that occurred in the years following the formation of the ITQ programme. Because such a great decrease in capacity occurred during the first year of the programme, it is likely that the ITQ system was achieving the expected effect of elimination of excess fishing-capacity. One can speculate that dedicated wreckfish fishermen must have believed that they would be able to achieve higher margins on the quota-shares they were acquiring, than the initial recipients from whom they purchased these rights. One has to believe that their purchasing decisions reflected rational behavior, but that the information upon which those decisions were based was rather imperfect.

On the issue of concentration of shares, the wreckfish programme did not reflect any obvious signs of concentration that observers would conclude was problematic, to the market or even to the local economies of fishing communities in the southeastern United States. Had the stock or the market for wreckfish been capable of sustaining harvests of the two million pound TAC for a period of time after the ITQ became effective, then a later evaluation of the fishery would have revealed whether concentration would have increased, and whether economic-rent generation was achieved.

Assuming the fishery was able to sustain the two million pound harvest, would it have been problematic if the number of vessels had decreased to ten or fewer? Given the variable - and fixed-cost structures of the firms owning fishing vessels detailed in the cost and earnings study, it is actually hard to imagine the fishery being able to economically sustain more than ten full time vessels (Richardson 1994). This is because in the absence of large increases in wreckfish ex-vessel prices, which seems unlikely given that wreckfish is a substitute for grouper and prices are probably affected largely by quantity of grouper supplied to the market, the wreckfish fishery was in reality a fishery capable of producing between $3 million and $4 million on an annual basis (assuming an annual sustainable yield of 2 million pounds). There seems to be no way such a fishery could sustain the 60 to 70 vessels that had apparently geared up to fish for wreckfish, or the 40 or so boats that made wreckfish landings just prior to the formation of the ITQ.

In this sense, the ITQ probably brought about a more rapid, and perhaps more thorough, economic rationalization of the fishery than would otherwise have occurred once the fishery was over-capitalized and the boom of the initial development turned to a period of economic “shake-out”. What is unfortunate is that managers and fishermen invested considerably in the development of a management programme that might have worked well for the fishery, had a stock collapse or market erosion not occurred.

Even if one writes-off the wreckfish experience as a pilot programme to learn about ITQs in United States fisheries, the problem is that the “crash” of the fishery that occurred for reasons other than the ITQ programme, occurred too early to tell how well the programme would have worked. For this reason, most of the SAFDC’s efforts to craft compromises and proactively address expected problems for ITQ management were, for all intents and purposes, squandered.


The author thanks Mr. Rober ‘Bob’ Mahood, Executive Director of the South Atlantic Fishery Management Council (SAFMC) for the information provided and insights on reasons for the decline of the wreckfish fishery. The author also wishes to thank Mr. Ed Richardson for information provided to supplement his 1994 study of the wreckfish ITQ programme.


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