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Changes in Fleet Capacity and Ownership of Harvesting Rights in the Fishery for Patagonian Toothfish in Chile, E.P. González, M.A. García and R.C. Norambuena

E.P. González Interamerican Centre for Sustainable Ecosystems Development (ICSED)
Casilla 27016, Santiago Chile,
<exequiel@icsed.org>

M.A. García and R.C. Norambuena
Fisheries Department, Under Secretariat of Fisheries, Chile
Casilla 100-V, Valparaíso, Chile
<mgarcia@subpesca.cl <mailto:mgarcia@subpesca.cl>> and <rnorambu@subpesca.cl>

I. INTRODUCTION

The Chilean fishery for Patagonian toothfish[162] is conducted by both small-scale and industrial fishing fleets. The two fleets operate in different, but adjacent, areas off the Chilean coast (Figure 1).

Figure 1. Chilean Patagonian toothfish fishery

The commercial fishery for Patagonian toothfish in Chile was initiated by the small-scale (artisanal) fishing sector in waters off central Chile during the 1970s and rapidly expanded to the south of the country, due to the existence of fishing grounds with higher yields (Lemaitre et al. 1991). At present, the small-scale fishery takes place from the northern border of the country in the Ist Region (18º15’S) to the XIth Region (47º00’S). Its southern border is defined by the fishing area reserved for the industrial cod fishery (Under-Secretariat of Fisheries 1999).

Landings of Patagonian toothfish by the small-scale sector have continuously increased since the beginning of the fishery, reaching approximately 6000t in 1986. Since then, the annual landings of the small-scale sector have fluctuated between 3300 and 5600t with a slightly decreasing tendency towards the end of the 1990s (Figure 3). Data from the Chilean National Fisheries Service (SERNAPESCA) indicates that at present the official number of small-scale fishing boats operating in the fishery is approximately 120, generating employment for about 900 fishermen and 400 positions ashore.

The industrial sector fishing for Patagonian toothfish began in 1992 and was a fishery managed under the “Regime of Fisheries of Incipient Development” [Pesquerías en Régimen de Desarrollo Incipiente] as defined by the Chilean Fisheries Act of 1991.

Figure 2 shows the area reserved for the industrial-sector fishery (a combination termed the Unidad de Pesca). The northern limit of this area is the parallel 47ºS and the southern limit is the parallel 57ºS. The eastern boundary of the fishing area is the “straight baseline”[163] and the western boundary is the line drawn parallel 70 nautical miles west of the baseline.

Figure 2. Region of operations of the industrial fishing fleet in Chile waters

The industrial fishing fleet (13 factory - vessels and 2 freezer-vessels) use deep-water long-lines and each vessel operates with an average of 10 000 hooks per set. The fleet operates for 7 months (January to May and September to December) in Chilean waters and the rest of the year (April to August) in international waters. This fleet also targets Chilean hake (Merluccius australis) from the beginning of January to mid March of every year.

The industrial fishery generates employment for a total of 520 fishermen and 150 people in land-based support services just for the fleet - this does not include personnel occupied in processing.

The Under-Secretariat of Fisheries (1999) reports that the industrial fishing fleet not only operates in the area reserved for it (Figure 2) but also on the high-seas in the Chilean EEZ (Coast of the Argentinean Patagonia, Malvinas/Falkland Islands, Southern Georgia, and Kerguelén).

Industrial-sector landings of Patagonian toothfish in Chile started in 1991 and they consisted of harvest obtained inside the Unidad de Pesca and outside the Chilean EEZ (refered to hereafter as ‘international waters’). After a peak volume of approximately 25 000t was landed in 1992[164], the landings of the industrial-sector have steadily decreased, reaching a new minimum of approximately 5900t in 1996 (Figure 3). Over 1997 to 1999 a moderate recovery was observed in industrial-sector landings which reached approximately 9 000t in 1999.

Figure 3. Total landings of Patagonian toothfish in 1980 – 1998

The total of industrial-sector landings correspond to captures taken in international waters as well as in the Unidad de Pesca area (Chilean EEZ between 47ºS and 57ºS). Landings taken in international waters have there represented, on average, approximately 40% of the total of the industrial-sector landings. Figure 4 shows a peak landing in 1992 that was mainly due to catches from international waters (approximately 16 800t). After this, was a dramatic drop in landings from international waters (a 85% decrease) between the years 1992 and 1994. Since 1995, landings from the international waters have shown a moderate increase, reaching approximately 5200t in 1999.

Figure 4 also shows that landings from the Unidad de Pesca follow a similar but lower pattern to the captures from international waters. The peak landings in the Unidad de Pesca took place in 1994 (approximately 12 000t) with an 84% drop in 1996, reaching only 1992t of Patagonian toothfish landed. Thereafter, the landings experienced a moderate increase, ranging around 4400t per year.

Figure 4. Industrial landings of Patagonian Toothfish in Chile 1980 – 1999

Approximately 99 % of toothfish landings are directed to processing and export markets. Statistics of Chilean seafood exports shows that annual exports of Patagonian toothfish averaged about 15 000t during the period 1992 to 1999, 87% of it as frozen products. Patagonian toothfish export - volumes show and overall decreasing behavior during this period, both as total export volume and as frozen exports (Figure 5). In fact, from 1992 to 1999 total export volumes of toothfish decreas - ed by 14%, from approximately 13 780t in 1992 to 11 860t in 1999.

Nonetheless, during the same period, the total annual value of exports showed an impressive 80% increase, going from approximately $57 million in 1992 to $104.5 million in 1999 (Figure 6). This increase was due to a stronger price which grew at an annual rate of 10% during the period considered: going from $4200/t in 1992 to $8800/t in 1999 (Figure 7).

Finally, the most important foreign market for the Chilean fishery for Patagonian toothfish is Japan, which takes 58% of the total volume of Chilean Patagonian toothfish exports. Frozen products represented approximately 82% of the export value (FOB.) to Japan in 1998. The USA is the second most important foreign market for Chilean toothfish exports. Twenty-seven percent of the total export volume are fresh refrigerated products, representing 99.3% of the export value (FOB) in this market (Central Bank of Chile, 1999).

2. THE NATURE OF THE HARVESTING-RIGHT

2.1 General aspects

From legal, institutional and management perspectives, the Chilean Patagonian toothfish fishery can be divided into two types of fishing activities operating under different management schemes: the small-scale fishery (SSF) and the large-scale industrial fishery (LSF).

The SSF is conducted north of 47ºS. Its two most important management regulations are: (a) limits on boat size (18m overall length, MINECON DS 43 and 439, 1986) and (b) gear restrictions (only deep-water long-lines may be used, with a limit of 12 000 hooks per cast, MINECON DS 439, 1986). No user-rights or property-rights are considered to exist in this fishery and it has been conducted under an open-access regime since its beginning. However, it may be better defined as quasi-open-access, because, although almost anyone may enter the fishery, to do so, the small-scale fishermen and their boats must be registered in the “National Registry of Small-scale Fishermen” (or Non-industrial Registry)[165]. In 1999, the National Registry reported that a total of 12 356 fishermen targeted Patagonian toothfish in Chile. The small-scale fishing fleet included 230 non-processor boats, 1266 dinghies powered by outboard-motor, and 1088 boats powered by inboard-motors.

Figure 5. Chile Export Volume (tonnes) of Patagonian Toothfish, 1992-1999

Figure 6. Chilean Export Value ($ FOB) for Patagonian toothfish, 1992-1999

Small-scale fishing pressure on Chilean Patagonian toothfish has steadily increased over time, induced by increasing national exports to international markets, triggered by both increasing international demand, and a government policy directed at streng - thening the national economy through exports. This trend continued until 1986 when a limit on boat-size and number of hooks per cast was enacted (Decree 439, 1986). These limits were trig - gered by decreas-ing yields observed by small-scale fishermen, due to the effect of their increased fishing - power and effort on stock abundance as well as to the new, and increasing, redirection of indust-rial fishing effort in the fleet from hake to toothfish (Pers. comm., F. Ponce, Chilean Under-Secretariat of Fisheries).

Figure 7. Apparent Price ($/t FOB) for Chilean Exports of Patagonian toothfish 1992-1999

Simultaneously with this, the Fisheries Act of 1991 was passed, which included a number of new regulatory measures applicable to Chilean fisheries. Consequently, the Under-Secretariat of Fisheries (USF) decided to officially initiate a LSF under one of these newly-created access-regimes: the Regime of Fisheries in Incipient Development (RFID). In this way, the Chilean USF established incentives leading to the achievement of a sustainable industrial Patagonian toothfish fishery (MINECON DS 328, 1992).

The large-scale industrial fishery (LSF) takes place south of 47ºS and north of 57ºS. Article 40 in the Fisheries Act [Ley General de Pesca y Acuicultura de 1991] states that in a fishery under a RFID regime, an annual total allowable catch (TAC) must be calculated and distrib uted among a number of eligible fishing companies and/or fishing operators.

Patagonian toothfish (Dissostichus eleginoides)

Photo: Karl Hermann Kock, Institute of Sea Fisheries, Germany
In the LSF, the fishing - or harvesting-rights are allocated to fishing companies and according to the Chilean legislation they are known as “Extraordinary Fishing Permits” or EFP. These fishing-rights are divisible, transferable once a year, and can be leased or lent freely (Article 31, 2nd Paragraph, National Fisheries Act of 1991). Even though this Act does not explicitly indicate so, according to the Chilean legislation these fishing-rights may be banked.

Other regulations applying to both the SSF and the LSF are:

i. The establishment of a seasonal (biological) closure from 1 June to 31 August each year, between 53ºS and 57ºS (DS 273-ex).

ii. Only ‘trotlines’ or long-lines may be used to harvest toothfish (USF Res. 1249, 1992).

iii. toothfish harvested as by-catch may comprise no more than 2% by weight of the total harvest of southern hake or king clip, between 41º 28’6”S and 57º 00’S (MINECON, DS 679, 1993).

2.2 Responsibilities for recording

Once a fishery has been declared under a RFID, the Under-Secretariat of Fisheries must calculate an annual TAC, which is allocated among fishing companies or operators by means of a public auction (Articles 39 and 40 of the Fisheries Act of 1991). Successful bidders are issued an Extraordinary Fishing Permit (EFP) declaring their right to harvest annually, for a 10-year period, a maximum amount of fish equivalent to the product of the corresponding TAC and the fraction of the TAC they are awarded (i.e. the percentage of the TAC sold to the respective bidders). These EFPs (fishing-rights) enter into effect in the calendar year followng the auction.

Figure 8. Fleet size (number of vessels) 1992-2000

SERNAPESCA is the institution in charge of keeping records of EFPs issued under the RFID-system. SERNAPESCA has created a registry of EFPs for each fishery managed under the RFID-system. This registry records all EFPs, including those awarded by public auction as well as those permits issued later (due to the division, transference or transmission of fishing - rights)[166]. The registry records the full name and identification of the owner of the EFP and the fishing-vessel or vessels that will be used to exploit these fishing-rights. The owner of the EFPs may replace the registered vessels or add others, as long as its fishing permit is currently valid, and the regulations with respect to vessel-replacement do not apply[167]. Nonetheless, replaced or additional vessels must be registered before initiating operations in this fishery.

3. MEASUREMENT OF FLEET-CAPACITY

3.1 Total values and fleet dynamics

The fleet-capacity and subsequent changes as a consequence of the implementation of the rights-based management system are given only for the industrial-sector, which is the one managed under the RFID system. Fleet-capacity has been measured in terms of: Number of vessels, Gross Registered Tonnage (GRT) and Engine-Power (Horsepower - HP), but only for only six points in time since the beginning of the RFID-system.

Figure 8 shows the evolution of fleet-capacity due to the implementation of the RFID-system. In 1992, just before the implementation of the fishing-rights, the fleet consisted of 33 industrial vessels (26 long-liners and 7 trawlers). The long-liner fleet represented approximately 79%; the trawlers the remaining 21%. During 1993, the first year of operation of the RFID-system, the fleet experienced a drop of 58% in number, declining to 14 vessels, all long-liners. In subsequent years (1995, 1998, 1999 and 2000) the total number of vessels operating in the Unidad de Pesca fluctuated around 15, with an additional 1 or 2 vessels in, or out, each year. As shown in Figure 8, long-liners have represented approximately 90% of the total fleet-capacity since 1993 and at present there remain only two trawlers operating in the Unidad de Pesca.

Figure 9 shows the evolution of the fleet in terms of its total tonnage (GRT) from 1992 to 2000. In 1992 the total was approximately 16 700 GRT: long-liners represented 90% of this with approximately 15 000 GRT and the trawlers only 10%, with approximately 1600 GRT.

In 1993 the fleet experienced a fall of 49% in total tonnage down to approximately 8500 GRT operating that year. In subsequent years (1995, 1998, 1999 and 2000) the total tonnage operating in the Unidad de Pesca fluctuated between 7000 and 8800 GRT with an average annual variation of 7% only. Figure 9 illustrates that long-liners have represented approximately 95% of the total annual GRT in the fleet since 1993, and shows that the importance of trawlers drastically decreased after the implementation of fishing-rights (in 1993). Thus, even though two trawlers have returned to fishing since 1998, they represent only about 7% of the total fleet capacity (GRT).

Figure 9. Fleet Gross Register Tonnage (GRT), 1992 - 2000

3.2 Fleet structure

Table 1 presents the structure of the long-liner fleet in terms of GRT for six years over 1992-2000. The available data show that the most important category is the class 451-550 GRT, which includes 42 to 55% of the long-liner vessels over 1992-2000, with a peak of 63% in 1995.

Table 1. GRT structure for the long-liner fleet, 1992-2000

Range GRT

Number of long-liners

1992

1993

1995

1998

1999

2000

0 - 400

1

0

1

0

0

0

401 - 450

2

0

0

0

0

0

451 - 550

11

7

10

6

7

6

551 - 650

1

0

0

0

0

0

651 - 750

7

4

3

3

4

3

751 - 850

3

3

2

2

2

2

851 - 900

1

0

0

0

0

0

Total

26

14

16

11

13

11

Source: Elaborated from USF data
The second and third classes in importance are the 651-750 GRT category, which represents an annual average 27% of the fleet-capacity, and the 751-850 GRT category comprising an annual average of 16% of the total fleet-capacity.

From data presented in Table 1 it is possible to infer that the relative importance of the classes 451-550 GRT and 651-750 GRT have been moderately increasing over time, with an average annual change of 7% and 4% respectively. The relative importance of the 751-850 class has increased over time at an average annual rate of 18%.

Table 2. GRT structure for the trawler fleet, 1992-2000

Range GRT

Number of trawlers

1992

1993

1995

1998

1999

2000

0 - 100

3



0

0

0

101 - 200

0



0

0

0

201 - 300

3



2

2

2

301 - 400

0



0

0

0

401 - 500

0



0

0

0

501 - 600

1



0

0

0

851 - 900

0



0

0

0

Total

7



2

2

2

Source: Elaborated from USF data.
Table 2 shows the structure of the trawler fleet in terms of GRT for four years since 1992. These data show that the most important class (that of 201-300 GRT), which represented 43% of all the trawlers in 1992, and 100% since 1998. The second most important category, prior to the implementation of the RFID-system, were those under-100 GRT, being 43% of all trawlers in 1992. There have been no changes in the GRT structure of trawlers since 1998.

Table 3 shows the distribution of engine-power (measured in horse-power HP) of the long-liner fleet for six years since 1992. The most common class is that of 1251-1500 HP, which included 44% to 27% of the long-liners from 1992 to 2000. The classes with the next largest number of vessels are those of 1751-2000 HP (representing an average of 28% of the fleet), and those of 1001-1250 HP, contributing an average of 23% of the fleet.

The data presented in Table 3 show that for long-liners the relative importance of the categories 1251-1500 HP and 1001-1250 HP are decreasing over time, with average rates-of-change of - 8% and - 1% per annum respectively. The class 1751-2000 HP is increasing in relative importance over time (average rate of 27% per annum).

Table 3. HP-structure for the long-liner fleet, 1992-2000

Range HP

Number of long-liners

1992

1993

1995

1998

1999

2000

750 - 1000

3

1

2

0

1

1

1001 - 1250

5

3

4

3

3

2

1251 - 1500

11

5

5

3

4

3

1501 - 1750

0

0

0

0

0

0

1751 - 2000

4

4

3

4

4

4

851 - 900

2

1

1

1

1

1

Total

25

14

15

11

13

11

Source: Elaborated from USF data.
The most important engine-power class for the trawler fleet (not tabulated) is that of 351-500 HP, accounting for 29% of the vessels in 1992, and 100% since 1998.

The age structure of the long-liner fleet since 1992 is shown in Table 4. The data show that between 55% and 45% of long-liners operating in the Unidad de Pesca were constructed between 1971 and 1980. Vessels constructed between 1950 and 1970 are the second most important category representing, on average, 38% of the fleet. The third most important category of vessels is those constructed between 1981 and 1990, which represent on average 11% of the fleet. Most of the important trawlers operating in the Unidad de Pesca were constructed between 1981 and 1990 (not tabulated).

Table 4. Age structure for the long-liner fleet, 1992-2000

Year built

Number of long-liners

1992

1993

1995

1998

1999

2000

1950 - 1970

9

5

6

4

5

5

1971 - 1980

14

7

8

6

7

5

1981 - 1990

3

2

2

1

1

1

1991 - 2000

0

0

0

0

0

0

Total

26

14

16

11

13

11

Source: Elaborated from USF data.
4. CONCENTRATION OF OWNERSHIP

4.1 Status prior to programme

Prior to 1992 there was no ownership of fishing-rights. In 1992, just before the implementation of the RFID system (in 1993), there were eleven fishing companies (rights-holders from 1993 on) who owned a total of 33 vessels. Five companies (45% of the total) owned 63% of the fleet, i.e. 21 vessels in the fishery (Figure 10). These same companies owned 75% of the total tonnage (GRT) in the fishery, i.e. 12 560 GRT (Figure 10).

Figure 10. Structure of fleet-ownership (numbers, and GRT) prior to the RFID-system in the Patagonian toothfish fishery in Chile, 1992

GRT (ton)

Number of Vessels

Right Holders: A, B, C,...

4.2 Status of the programme following implementation

The implementation of the system of fishing-rights has greatly increased the concentration of fleet-ownership in the Unidad de Pesca, with three fishing companies or rights-holders owning (on average over the period) 84% of the total fleet GRT, with a peak of 93% in 1998 (Figure 11). Moreover, just one fishing company owned (on average) 52% of the total GRT in the Unidad de Pesca, reaching a peak of 61% in the year 2000 (Figure 11).

Figure 11. Structure of fleet-ownership (GRT) during the RFID-system in the Patagonian toothfish fishery in Chile, 1993 - 2000

1993

1995

1998

1999

2000

Figure 12 shows a similar pattern in of the structure of fleet-ownership (in terms of numbers of vessels operating in the Unidad de Pesca): The same three fishing companies owned (on average over 1993 to 2000) 80% of the total fleet, with a peak of 92% in 1998. The single most important fishing company (“A” in Figure 12) owned (on average during 1993-2000) 50% of the vessels, with a peak of 62% in 1998.

Figure 12. Structure of fleet-ownership (Number of vessels) during the RFID-system in the Patagonian toothfish fishery in Chile, 1993 - 2000

1993

1995

1998

1999

2000

Figure 13 shows an analysis of the fishing companies’ share of the TAC. The quantitative variable used corresponds to the number of fishing-rights accessed or held by each fishing company every year (including rights bought by auction, direct sale, rental and/or free lending) expressed as a percentage of the annual TAC. As Figure 13 shows, three fishing companies (A, B and C) have competed for the major part of access to the annual TAC since 1993.

4.3 Transfer of ownership

4.3.1 Types of transfers

Under the RFID-system, fishing-rights or EFPs may be transferred by auctions, direct sales, rentals, or free loans. The three methods used in the Patagonian toothfish fishery in Chile so far are: auctions (ordinary and special), direct sales, and rentals.

4.3.2 Regulations, procedures and restrictions

There are no explicit regulations governing the transfer of EFPs under the RFID system in the Patagonian toothfish fishery. Nonetheless, the USF has established the following procedure in the event of future transfers of fishing-rights either by direct sales, leases, or free loans.

Direct sale of fishing

If fishing-rights or EFPs are directly sold, the USF will issue a certificate that formally establishes who is the new owner and the person responsible for the financial obligation to the government (annual management fees). The certificate issued states the name and identification of the new owner of the EFPs. The procedure followed includes the following:

i. The buyer of the EFPs must send a letter to the USF informing that he is the owner of one or more lots of fishing-rights and from whom they were bought. This enables the transfer to be formalized.. A notarized receipt of purchase must be attached to this letter along with a copy of the certificate showing the award of the EFPs to the original owner.

ii. The USF issues a new certificate in the name of the buyer showing that he is the new owner of the specified fishing-rights (EFPs).

iii. The new owner is responsible for paying the annual payments due on the EFPs that have been bought.

Figure 13. Structure of access to fishing-rights during the RFID-system in the Patagonian toothfish fishery, 1993 - 2000

1993

1994

1995

1996

1997

1998

1999

2000

Lease or free loans of fishing rights

Since under a lease or a free loan of fishing-rights there is no transfer of ownership, new certificates are not issued by the USF. In this case, the original owner of the fishing-rights is responsible for the payment of the annual management fee to the government. SERNAPESCA is the institution that records the temporary change in the fishing-right (EFP), since it must monitor all changes so as to maintain an accurate record of amounts harvested and to conduct efficient monitoring-and-control of the fishery.

The required paperwork in this case includes the following:

i. The owner of the EFPs must advise SERNAPESCA in writing (Department of Fisheries Statistics and Information) that he has leased or lent one or more lots of fishing-rights to the recipient, and wishes to formalize this situation. A notarized lease or free-loan contract must be attached to his letter along with a copy of the certificate of the previous registration of the EFPs to the original owner.

ii. SERNAPESCA verifies the situation, and if everything is correct, issues a letter stating its agreement to the transfer.

iii. The original owner remains responsible for paying the annual fees/levies on the EFPs, whether leased or lent.

Restrictions

At present, there are no major restrictions related to the transfer of fishing-rights under the RFID-system. The existing restrictions relate to the need to be duly registered in the National Industrial Fishing Registry and in the Special Auction Registry, in order to be eligible to bid in any future auction of fishing-rights. An additional restriction is that no single bidder may be awarded more than 50% of the TAC being auctioned every year. There is no explicit limit to the cumulative number of EFPs (percentage of TAC) that a single company may hold over time.

4.3.3 Prices received

Under the existing regulations and procedures for allocating and transferring fishing-rights in the Unidad de Pesca, the only prices recorded are auction prices (ordinary and special); these are accurate. Prices or transaction values actually used in direct sales need not be recorded as a requirement of the USF. The USF is only interested in knowing who is responsible for the annual management-fee due from the original auction of the EFPs. Thus, the price data available correspond only to auction-prices.

Average auction-prices recorded have normally ranged from approximately $600/t to $2000/t, but with two exceptional records of $15 333/t and $11 372/t, observed in 1994 and 2000 respectively (Figure 14).

5. CONSEQUENCES OF IMPLEMENTING FISHING-RIGHTS

5.1 Changes in fleet-capacity arising from introduction of transferable property-rights

Figure 14. Auction-price ($/t), amount auctioned (tonnes), and TAC (tonnes) for the Patagonian Toothfish Fishery in Chile, 1991 – 2000

In the initial period the comparison of indexes of fleet-capacity from 1992 and 1993 (Figures 8 and 9) shows that the effects of introducing the RFID-system were: a drop of 58% in the number of vessels (33 to 14), and of 49% in the total fleet tonnage (16 700 to 8500 GRT). Further, from 1993 through until 1997 deep-water long-lines were the only fishing gear used. In the medium-term, analysis of the total fleet-capacity in the Unidad de Pesca between 1993 and 2000 showed a 17% reduction, with a decrease from approximately 8500 in 1993 to approximately 7100 GRT in 2000. This decline has not been uniform as the fleet tonnage increased by a small amount in 1995 and 1999. An analysis of the total number of vessels during the same period shows no relevant changes in the size of the fleet of 13-16 vessels, with minor fluctuations only between years (Figure 8).

In the medium term, the analysis of the long-liner fleet (based on weighted-average per-vessel figures) shows a small increase in the average vessel-capacity of the long-liner fleet[168]. In terms of GRT, there was a 5% increase in weighted-average GRT per-vessel, increasing from 590 in 1992, to 622 in 1993. In terms of engine-power, there was a 7% increment in the weighted-average HP per vessel, going from 1305 HP in 1992 to 1393 HP in 1993.

In addition, a medium-term analysis for the long-line fleet shows a small decreasing trend (-2%) in the average individual vessel GRT, falling from 622 in 1993 to 610 in 2000. The weighted-average HP per-vessel, to the contrary, shows an increase in engine-power of the long-liners, with an equally small increase in vessel-power (2%), going from 1393 HP in 1993 to 1421 HP in 2000[169].

In spite of these small fluctuations observed after the implementation of the system of fishing-rights, it can be said that the total capacity of the fleet has been reduced, both in terms of GRT and number of vessels, and that per-vessel-capacity (weighted-average GRT and HP) has increased. The age-structure of the long-liner fleet (Table 4) does not show any significant changes between 1992 and 2000.

Even though the available data does not allow to direct inferences about the change in fleet-efficiency, both industry and USF representatives agree that the fishing fleet in the Unidad de Pesca has been able to increase its economic efficiency through better planning of fishing-effort and when to harvest the quota.

5.2 Changes in fishing-rights ownership

An analysis of the aggregation of fishing access-rights as a percentage of the TAC (Figure 13), shows that the implementation of the RFID-system has been accompanied by increasing concentration of fishing-rights among a few of the companies participating in the fishery. Figure 15 presents the number of fishing companies with access to approximately 80% of the TAC in the Unidad de Pesca since 1993 (i.e. fishing-rights owned, or rented). The trend depicted in Figure 15 shows that approximately 80% of the TAC is being owned by a decreasing number of fishing companies: available data show that nine companies had access to 78% of the TAC in 1993 but that by the year 2000 82% of the TAC was owned by only three companies.

Figure 15. Number of fishing companies holding approximately 80% of the TAC in the Patagonian Toothfish fishery, Chile, 1993-2000

This tendency to the concentration of fishing-rights in few hands is also evident from an analysis of the per-company access to fishing-rights in the Unidad de Pesca since 1993. Figure 16 shows the percentage of the annual TAC controlled by the three most important fishing companies in the Unidad de Pesca. It is apparent that the fraction of the TAC controlled by these three companies has increased from 52% in 1993 to 82% in 2000. The plotted trend line shows an increase in concentration of control at a decreasing rate from 1993 to 1998 and an increase in the rate since 1998.

Figure 16. Percent of the TAC accessed by the first three fishing companies in the Patagonian Toothfish Fishery, 1993 - 2000

Further analysis of the data in Figure 13 shows that the three companies are acquiring their control of fishing-rights through auctions, sales or rental of EFPs. Figure 17 shows the trend in the percent of the total TAC contolled by companies A, B and C each year: Company A has increased in importance since 1993 to control 56% of the TAC in 1997, although by 2000 it still controlled only 44% of the TAC. Company B, on the other hand, decreased its EFP holdings during the first 5 years of implementation of the RFID-system, reaching a minimum of 2% of the TAC in 1997. Nonetheless, since then it has recovered its level of access, reaching 21% of the TAC in 2000. Company C has increased its participation slowly, reaching 16% of the TAC in 2000.

5.3 Fleet-capacity, fishing-effort, harvest-levels and system-effectiveness

As Section 5.1 shows, the implementation of fishing-rights in the Unidad de Pesca resulted in a large reduction in fleet-size and fleet-capacity. In addition, the expected effects of implementing a rights-based management system are: the adjustment of fishing-effort and harvest to sustainable levels, and eventually their adjustment to levels that will maximize the net economic benefits generated over time. If the starting point is a fully-exploited or over-exploited fishery, the expected adjustments will be a reduction in fishing-effort with an increase in harvest-levels and net economic benefits. If the starting point is an under-exploited fishery, expected adjustments will be an increase in fishing-effort, harvest-levels and net economic benefits. In the case of the Chilean Patagonian toothfish fishery, the starting point was an under-exploited fishery.

Figure 17. Participation in the Annual TAC (%) of the two most important companies in the Patagonian toothfish fishery, 1993 - 2000

The available data on total fishing-effort and harvest-level for the Unidad de Pesca (Figure 18) show an overall trend of increasing fishing-effort with decreasing harvest-levels and catch-per-unit effort. If the data analysis is expressed on a per-vessel basis (Figure 19) over the 9 years the values show an increasing trend in fishing-effort but a decrease in harvest-levels.

Figure 18. Histograms of fishing-effort, TAC and catch for the Patagonian toothfish fishery - Chile, 1991 - 1999

Figure 19. Fishing-effort per vessel, harvest per vessel, and fleet-size in the Patagonian toothfish fishery in Chile, 1991 - 1999

The data for the fishing-effort and harvest (figure 19) indicates that the Unidad de Pesca may be heading towards over-exploitation. This may be caused by: (a) a lack of compliance by rights-holders with individual quotas, and (b) the fishing-rights having been established in a fishery based on transboundary or shared fish-stock resources.

Figure 20. Size of the Patagonian toothfish stock in the Unidad de Pesca, 1991 - 1999

Source: Under Secretariat of Fisheries
The data available regarding abundance of the fish-stock resource over time (Figure 20) show a decreasing trend over 1992 to 1996, that stabilized at lower levels from 1997 to 1999.

5.4 Lack of compliance

Figure 18 shows that during 1992-1995 harvest-levels were greater than the annual TAC permitted for the Unidad de Pesca. Fisheries Officers reported that this had happened as a consequence of the lack of adequate means of enforcement of the individual quota, as well as a lack of understanding of and commitment to the RFID-management system by rights-holders. Even though since 1996 the harvest-levels have been smaller than the TACs, through comparison with export data, Fisheries Officers have been able to identify significant under-reporting of the catch statistics.

Thus, even though personnel from the USF have in the past been able to detect and correct some compliance problems, if the RFID-system is to be effective for the management of the Patagonian toothfish fishery in Chile, improvements in the operational capabilities of the Chilean National Fisheries Service are essential (González et al. 2001). Furthermore, communication and the means for dialogue, between Fisheries Officers and fishing rights-holders should also be improved if sufficient awareness is to be achieved regarding the benefits of the system and the need for compliance.

5.5 Transboundary stocks

Stock assessments by the Commission for the Conservation of Antarctic Marine Living Resources (CCAMLR) have shown that the Patagonian toothfish stocks in the Unidad de Pesca have strong migratory links with the resource distributed in the southern Atlantic and the CCAMLR area. Thus, this fishery is based upon a transboundary fish-stock, and the expected benefits of the fishing-rights system could be outweighed by the fishing being undertaken outside of the Unidad de Pesca area, and thus the harvest of some toothfish beyond the control of the Chilean management-system.

Therefore, given the transboundary nature of the resource, for the RFID-management system to be effective, three conditions must be met in the medium - and long-term: (a) a transparent flow of information regarding the fish stocks, their population dynamics and abundance, as well as the amount of fishing-effort inside and outside the Unidad de Pesca, including both national and international waters; (b) the creation of co-ordinated and collaborative research-efforts regarding the fish stock, its population dynamics and biology both inside and outside the Unidad de Pesca, including parties from all involved countries and; (c) the implementation of co-ordinated and collaborative joint-management of the Patagonian toothfish fishery, over its full extent, inside and outside Chile, and including all parties from all involved countries.

5.6 Auction prices, fish-values, concentration of fishing-rights, and equity issues

As Figure 14 shows, the average auction-prices have mostly ranged from approximately $590/t to $2000/t, but two unusually high prices were realized in the years 1994 and 2000. A comparison of the auction - and declared export-prices (FOB) of Chilean Patagonian toothfish (Figures 14, and 7) indicates that these two out-of-the-range auction prices occured in years when export prices also showed large increases[170]. These two auction-prices were higher than export-prices (three times higher in 1992, and 77% higher in 2000).

A typical Chilean industrial-scale longliner in the Patagonian toothfish fishery

A black browed albatross is flying astern of the ship, the birds on the water are petrels.

Photo: C. A. Moreno, Universidad Austral de Chile

These extremely high auction-prices, seemingly inconsistent with economic rationale, may be the result of the strategic behavior of current fishing rights-holders trying to avoid the entrance of new players in the presence of increasing market prices[171]. The observed jump in the auction-prices for 1994 (Figure 14) may have been supported by high expectations of large future profits, based on the facts that: (a) market prices were rising significantly, (b) production costs at that time had not significantly increased (since the volume auctioned and awarded at this price was only a small fraction of the total production of each of the current holders of fishing-rights), and (c) there was a growing supply of product from 1991 up to 1994. The observed jump in the year 2000 may be explained by expectations of further decreases in supply and the need to keep control of the current market-share because of: (a) recovering and increasing market-prices, (b) current production costs not significantly increasing (since the volume auctioned and awarded at this price was only a small fraction of the total production by each current holder of fishing-rights), and (c) fish landings and production have had decreased since 1994.

As mentioned in Section 4.3.2, the USF and the National Fisheries Service do not record any sale - or rental-values for the harvesting-rights. Thus, since only the original auction-price is of interest to the USF, these auction-prices are used to calculate the obligatory annual payments due against the allocated EFPs. The National Fisheries Service is only interested in recording landing statistics and their origin, in order to track of harvest levels with respect to the annual TAC. Thus, no attention is paid to market-dynamics, nor to the value of the “uncaught” resources, since only the original auction-prices, along with other physical fisheries data, are used to monitor the fishery.

In recognizing the need to pay for the right of exclusive access to a specified fraction of a natural resource, one recognizes that these resources have both a current market-value and a future value (i.e. the value of the Patagonian toothfish stock in the water). That payment of this value is made to the state or the government, implies recognition that this natural resource belongs to all nationals, not just to those who have the means to harvest them.

Therefore, the current practice of not recording either direct sale-prices or rental-values has social equity implications. If actual prices or values are higher than the original auction-prices, society is forgoing a portion of the resource-value. If actual prices or values are lower than the original auction-prices, the rights-holders are paying too much to society for their right to use the resource base.

Finally, the process of an increasing concentration of fishing-rights in the Unidad de Pesca (Section 5.2, Figures 15 and 16) is regarded around the world as a negative effect of this type of management-system, and monopolies are often portrayed as the maximum expression of social inequity. This is true in the following two cases.

First, when the monopoly-operator is able to set his production at levels whereby his marginal-revenues are equal to the marginal-costs, he obtains a market-price that is higher than he would achieve under perfect competition. Nonetheless, this is not the case here since the Unidad de Pesca exports its entire production (representing only a small portion of total supply of Patagonain toothfish) to international markets. Thus, any variation in its supply (exports) will not affect prices in the market, as the fishery is a “price taker”, selling its production at the price available on the international markets.

Second, under conditions of perfect competition, an operator produces at a level in which average revenue (i.e. price) is equal to the marginal-cost and average-cost at the same time, therefore he only earns producer surplus beyond the normal rent (this normal rent is already included in costs-curves). In monopolies (the case of the sole-owner in the fisheries sector) an operator produces at levels for which his marginal-revenue is equal to his marginal-cost and therefore he is captures all the extra rent (the resource-rent in the case of fisheries).

Further, when the value of the fish in the water (i.e. the potential resource-rent) is accrued by those operating in the fishery, equity-issues may be raised if these rights-holders are just a few, or even a single owner. But, if a mechanism to recover and distribute this value among members of society is set in place, as in Chile, equity-issues do not arise regarding the concentration of ownership, provided that the control of concentration is appropriate (González et al. 2001). Thus, appropriate recording of the values of sales and rentals, and the proper setting of floor-prices for auctions, become important issues in order to correctly determine the values of fishing-rights over time. If properly determined, these values should equal the resource-rent to be collected and distributed by the government.

6. LITERATURE CITED

González, E., E.R. Norambuena and M. García 2001. Initial Allocation of Harvesting Rights in the Chilean fishery for Patagonian Toothfish (Dissostichus eleginoides). In: Shotton, R. (Ed.) Case studies on the Allocation of Transferable Quotas Rights in Fisheries. FAO Tech. Fish. Pap. No. 411, FAO, Rome.

Government of Chile 1991. General Law of Fisheries and Aquaculture. SD 430 of 1991. Santiago: Official Gazette of the Republic, Chile.

Government of Chile 1996. Regulations for the Auction of Extraordinary Fishing Permits. SD. Number 97, 1996. Santiago: Official Gazette of the Republic, Chile.

Lemaitre, C., P.S. Rubilar, P. Gebauer and C.A. Moreno 1991. Regional Catch Analysis of Long-line Fisheries of Dissostichus eleginoides in Chile. Document WG-FSA-91/10 CCAMLR. Hobart, Australia.

National Fisheries Service 1999. Registry of Artisanal Fishermen of Chile. Santiago: National Fisheries Service (SERNAPESCA), Ministry of Economy.

Under-Secretariat of Fisheries 1999. Total Allowable Catch Quota for the Deep Water Cod Fishery, Year 2000. Valparaíso: Fishery Resources Department, Under Secretariat of Fisheries, Ministry of Economy. Technical Report Nº 67.


[162] Dissostichus eleginoides is a long-lived fish species (up to 55 years of age) with a low fecundity rate and slow growth, reaching its first sexual maturity at 5-8 years of age and full maturity between 9-12 years.
[163] The “straight baseline” is the hypothetical straight line, drawn between the most seaward points of the coastal border of the country, which is used as geographical reference for fisheries management purposes.
[164] This peak in landings was generated during the research-cruise fishing conducted in 1992, which got “out of hand”.
[165] The National Registry of Small-scale Fishermen is a record kept by the National Fisheries Service, containing a list of people authorized to conduct small-scale fishing activities in Chilean waters.
[166] For leased or free lent EFPs it is enough to have an entry on the margin of the registry of the permit.
[167] Regulations for vessel substitution (DS. 64/92 and DS. 500/94) are used in those fisheries declared as fully-exploited. Limitations refer to the need that a new vessel must not exceed the total values of a combination of GRT, HP and size (LOA and D) of the vessel replaced.
[168] The weighted-average GRT and HP per vessel is estimated from the frequency-distribution of the vessels’ GRT and HP ratings in the fleet for both years.
[169] The weighted-average values of GRT and HP per vessel are estimated from the frequency-distribution data presented in Tables 1 and 3 for the long-liner fleet during the five points in time considered since 1993.
[170] Apparent export price (FOB) experienced an increase of 42% in 1994, going from $3670/tonne in 1993 to $5202/tonne in 1994. The increase in year 2000 was of 59% (jumping from the $5546/tonne in1999, to $8809/tonne in 2000).
[171] Figure 6 shows an increasing trend in export values since 1991, which reached a new high in 1999.

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