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4. Options for managing tuna fishing capacity


Taken as a whole, the various methods and initiatives by governments, international organizations and the private sector, have failed to halt the growth of tuna fleets on a global scale. Some of the output controls that have been implemented, such as catch limits, have served to prevent further overfishing of the tuna stocks, but unless the growth in tuna fishing fleets is curtailed, and some fleets reduced, the management measures that have so far been instituted will be placed in jeopardy, and the possibility of further subsidies to compensate for reduced catches will increase.

As has been pointed out in the IPOA-CAPACITY, and corroborated by the regional tuna bodies, there is an urgent need to get on with the task of limiting tuna fishing capacity. There are numerous legal and economic constraints that must be addressed if effective capacity limitation is to become a reality. In the following section several options for dealing with the capacity problem, and some of the constraints that must be overcome, will be presented.

4.1 General considerations with respect to controlling capacity

Most of the major issues of a technical and policy nature have been extensively reviewed by Gréboval and Munro (1999), Kirkley and Squires (1999), Newton (1999) and Cunningham and Gréboval (2001), and in this section only the highlights of issues discussed by them will be mentioned; the reader is referred to these documents for more detail.

The concept of open access has been the major cause leading to excess capacity in most fisheries. Historically, every individual has considered it to be an inalienable right to fish. Most of the world's commercially-important fish stocks are either fully exploited or overfished. Increases in fishing mortality must be halted, and in many cases fishing mortality must be reduced. The idea of open access to fish stocks must be re-thought, and, in fact, a change is underway. The concept of common property and open access has been rapidly eroding with respect to species that spend their lives inside the EEZs of single states. The assignment of property rights to fishers is becoming more commonplace in many coastal states. There is a broad body of national experience dealing with non-fisheries issues that can be useful in supporting the concept of assigning property rights with respect to stocks of fish found in an EEZ. For example, in nearly every country there is a limit on the number of taxis that can be licensed to operate in a city. A person who wants to own and operate a taxi must be authorized to do so by his government, and most often must purchase a licence from someone already in the business who is willing to leave it. In the state of California one cannot open a liquor store or bar without a liquor licence, and the number of licences is controlled by the state. The cost of liquor licences in California is high, and climbing. Similar limited-entry concepts are being increasingly applied in a variety of forms to many fisheries. Notable among these is the assignment of Individual Transferable Quotas (ITQs) in a number of coastal fisheries. In such cases, the allowable catch from a resource is allocated to a defined group of users, individuals and/or companies, with the right to transfer their shares to others. In general, these schemes have met with success, but there are problems (Batstone and Sharp, 1999; Cunningham and Gréboval, 2001) that can arise, such as how many ITQs an individual or a company can hold and provisions for subsistence and recreational fisheries and the traditional rights of indigenous peoples.

With respect to high-seas fisheries, and exploitation of highly-migratory fishes, such as the tunas, which spend part of their lives on the high seas and part in the coastal zones of various countries, the assignment of property rights is more complicated and difficult to achieve because the resources of the high seas have traditionally been considered to belong to whomever can catch them. Nevertheless, solutions are not impossible.

Article 116 of the LOSC provides the right to nationals of all states to fish on the high seas. Even though Article 116 goes on to say that this right is subject to a state's treaty obligations and to the provisions of Article 64, it nevertheless connotes the "idea" that the option is open to a state to freely enter into tuna fisheries on the high seas and, if applicable, in their own EEZs. Again, because most of the world's stocks of tuna are fully exploited, and some even overexploited, it is unrealistic to think that every state can enjoy open access to tuna fisheries. It will be necessary for states to work together to develop systems for controlling fishing effort and the size of fleets that exert that effort. In fact, there is ample legal basis for the obligation of states to cooperate. Article 118 of the LOSC mandates that states cooperate with each other in the conservation and management of living resources on the high seas, and in other areas where states harvest the same resource, i.e. inside an EEZ in which a state harvests a resource that entered from the high seas. Additionally, the FAO Code of Conduct for Responsible Fisheries and the UN Fish Stock Agreement state that the right to fish carries with it the responsibility to do so in a responsible manner, and calls on states to prevent overfishing and excess fishing capacity, and, if excess capacity exists, to undertake measures to reduce capacity to levels in keeping with the sustainable use of the resource. To carry out their mandate to conserve and manage tuna resources, many states have cooperated toward this end by working within the regional tuna bodies. Most of the early efforts at management were the implementation of output controls, specifically catch quotas and minimum-size limits. In some cases, but not all, these output controls, especially catch quotas, have prevented overexploitation. Fleets have increased as they raced to take greater shares of the quotas, and conservation controls have weakened as a result of pressure to increase catches. The problems of overfishing are generally the result of too much fishing mortality being generated by too many vessels. Fleet capacity needs to be brought into balance with the ability of the stocks of tuna to sustain certain levels of catch. Some form of property rights must be established to accomplish effective capacity controls in tuna fisheries. How to establish property rights, and how to distribute them among users in an international fishery, is a major problem because every user believes that it has a right to an equal share, and each sovereign coastal state controls access to a share of the harvest. This problem was recognized 25 years ago by Joseph and Greenough (1978) when they noted that disputes over how to allocate among users could intensify to the point where they become so dominant in everyone's mind that finding solutions to other important problems becomes impossible. More recently Clark and Munro (2002) have concluded that, unless some method of resolving the common-property problem is applied, limited success in capacity reduction will be likely over the long run. Regardless of these dire warnings, there has been progress made in allocating catches among participants. As noted in Section 3.1.3, ICCAT has allocated catches of bluefin, bigeye and swordfish among the nations harvesting these species in the Atlantic Ocean. The IATTC has initiated a Vessel Register (Section 3.1.2), which, in a way, allocates the fleet authorized to fish in the EPO among the nations currently participating in the fishery. Once the fleet is allocated, the corresponding catches are de facto allocated in the same general proportions. The process of allocation is negotiated among the participants. A series of criteria that can be used in making the allocations must be established. The regional tuna bodies have attempted to define such criteria (Joseph, 2003), but the two most important ones that are integral to nearly all of the negotiations are the historical catches taken by the nations with vessels in the fishery, and the proportions of the catch or the abundance of the resource in the EEZs of the coastal states of the region.

It is apparent in Section 2 that for all of the major tuna fisheries there is more fishing capacity than is needed to take the current harvests. The resolution of this excess capacity problem is a two-step process: halting the growth in tuna fleet capacity, and reducing the sizes of the current tuna fleets. The regional tuna bodies have begun the process of halting fleet growth, but, with the exception of the work of the OPRT, there is little being done about reducing capacity. The IPOA-CAPACITY is very clear on the obligation of nations and international organizations to reduce excess fishing capacity. One approach to reducing capacity is the introduction of incentive-adjusting measures (Cunningham and Gréboval, 2001), which attempt to remove the incentive of fishers to expand harvesting capacity. Measures such as ITQs and the imposition of taxes or resource-rental fees on the opportunity to fish tend to take away the incentive to build more vessels. If the tax is set high enough, and in proportion to the price of fish, then, barring any subsidies, there would be no incentive to acquire excess capacity.

Alternatively, rather than using self-regulating measures to reduce capacity, a more direct approach, which has been used in other fisheries, would be a mechanism to remove vessels from the fishery and compensate the owners of those vessels for their removal. The success of "buy-back" schemes to reduce fishing capacity has been mixed. Holland, Gudmundsson and Gates (1999) and Clark and Munro (2003) have identified several potential problems that can occur with buy-back schemes: 1) Unless a vessel that is bought-back is scrapped or converted to some other use, such as a research vessel or a supply vessel for offshore oil rigs, it is possible that it could move to another fishery and create excess capacity problems in that fishery; theoretically a vessel could be bought-back several times as it moves from fishery to fishery. The OPRT has addressed this problem by requiring that any longline vessel removed from the fishery through a buy-back be scrapped. Such a policy is critical to the success of buy-back schemes. 2) There is generally a tendency for the owners of less efficient vessels to offer them up for buy-back. If most of the buy-backs are inefficient vessels, the reduction in vessel capacity may be ineffective in reducing fishing mortality. 3) The opportunity to have vessels bought-back could motivate the construction of new, more efficient vessels in anticipation of having the less efficient vessels bought back. A limit on vessel capacity in the fishery could block this motivation. 4) Capacity growth of those vessels remaining in the fishery could negate any reductions in capacity. Therefore, monitoring efficiency changes of the vessels remaining in the fishery would be essential to the success of the program, because increases in the fishing powers of the individual vessels could result in the reduced fleet size being capable of exerting the same level of fishing mortality as before the reduction.

A final consideration is that nearly all tuna fisheries, with the possible exception of the troll fishery for albacore, fish for more than one species at the same time. Multi-species fisheries can create problems if one species is overfished or fully exploited, while another is underfished. This is the case for many tuna fisheries. Yellowfin and bigeye are fully exploited, or, in some cases, overexploited, while in many areas skipjack could sustain greater catches (Joseph, 2003). If only skipjack were considered in management of the fishery, yellowfin and/or bigeye would probably be overfished. If only yellowfin and/or bigeye were considered in management of the fishery skipjack would probably be underfished.

4.2 Open-access and common-property approaches

4.2.1 Maintaining the status quo

Most of the management measures for tunas have been in the form of output controls, which are concerned with the results of fishing, such as catch quotas and minimum-size limits, or input controls, which are concerned with the manner in which fishing operates, such as closed areas and seasons. Some of these output controls call on nations to restrict the harvest of certain species to levels experienced in earlier years, or to not capture individuals of designated species less than a certain minimum size. In most cases, such controls have met with limited success, as the total catches and/or the numbers of undersized fish caught have not declined. Most of the input controls have involved the establishment of closed seasons, particularly to fishing with FADs during certain months, and closed areas, such as for bluefin tuna in the Gulf of Mexico.

Although these measures represent attempts to keep levels of catch in balance with the ability of the resource to sustain those levels, they do not remove the incentive for fishers to increase capacity. In fact, these measures often work in the opposite direction in that they stimulate a race to harvest the available catch, which tends to increase capacity. As fishing mortality increases through fleet growth and increasing efficiency, more regulations are needed to prevent overfishing. As more regulations are imposed the fleets continue to grow. If economic profitability decreases, the governments may subsidize their fleets, which exacerbates the problem. Under the current system used to manage tuna fisheries, the cycle is likely to continue until there is either an economic or biological collapse of the fishery.

The regional tuna bodies realize that catch quotas and closed seasons and areas alone will likely not result in long-term solutions to the threat of overfishing. These bodies also recognize the need to undertake measures to control the sizes of the fleets harvesting tuna so that micro-management of the resource by the introduction of progressively more controls on how a fleet can operate is not necessary; consequently they have all expressed the need to implement measures to limit fishing capacity. As pointed out previously, most of the measures that have been introduced to limit fleet sizes to earlier levels have apparently not worked. Based on experience to date, it seems unlikely that the tuna fisheries can be managed by the implementation of TACs, minimum size controls, and closed areas and seasons, without addressing the excess capacity problem, so maintaining the status quo does not appear to be a good option for the future.

4.2.2 The World Wildlife Fund approach for limiting full use of existing capacity

In a recent study for the World Wildlife Fund (WWF), several options for reducing excess fishing capacity in the tuna purse-seine fleets have been suggested (Oliver, 2002). The options involved implementation of measures to restrict full utilization of existing capacity.

One category of options proposes various ways of closing off a proportion of each vessel's fish storage wells in order to reduce the overall capacity to a desired level. The example given is for the purse-seine fleet of the EPO, which currently has a capacity of 208 thousand cubic metres of well space. The target 2005 capacity for the fleet is 158 thousand cubic metres of well space. The reasoning behind this option is that by reducing the capacity of the fleet by closing off well space, the target capacity of 158 thousand cubic metres could be reached, and, as a result, the amount of time spent fishing would be reduced because more time would be spent in traveling to and from port. The author points out several shortcomings to this approach, but considers that, coupled with catch quotas, it would serve to protect the fish from overexploitation. However, the vessel operators might spend less time in port in order to make up for the reduced fishing time. From an economic point of view, the capital costs would not change, variable costs would increase, and overall profitability would decrease. It is possible that if profitability decreased sufficiently it would force some vessels out of the fishery, resulting in decreases in "true" capacity. It is, however, equally likely that as profitability decreased the fishing industry would pressure their governments to relax the conservation controls, which might cancel out the benefits of reduced fishing capacity.

The other category of options presented in the WWF study would place limits on the number of days a vessel would be allowed to fish, or require vessels to remain in port for minimum periods of time (as stated previously, the WTPO has already adopted requirements that purse-seine vessels remain in port for minimum periods between trips). Neither of these methods would alter the composition of the fleet, but would merely restrict its full utilization. These approaches would reduce the fishing mortality, but would not address the problem of excess capacity. There would continue to be capital wasted, and there would be pressure on governments to ease conservation controls, thereby placing the resources at peril.

4.3 Limited-entry and rights-based approaches

4.3.1 The IATTC model for a Regional Vessel Register

The IATTC's Regional Vessel Register (RVR) is a list of purse-seine vessels authorized to fish for tunas in the EPO. Vessels on the list can be transferred among nations participating in the RVR program, and vessels that leave the fishery can be replaced by other vessels of equivalent size.

The IATTC model, with some modifications, offers a potentially effective option for managing tuna fleet capacity. This approach considers that the capacities representing different flags do not really imply "property rights" for those flags, but rather signify a right for the vessel to fish. Any vessel on the list would be able to transfer its flag to any other participating nation, and its capacity quota would follow it to that new flag, but be lost to the flag from which it transferred.

The establishment of such a register, in essence, creates a limited-entry program and the right of access. The access right would be incomplete, because exclusive rights to the catch are not established in comparison to an individual quota (Townsend, 1990).

4.3.1.1 Establishing the register

When the WCPFC becomes operational there will be a regional tuna body for every major ocean area: the Atlantic and adjacent seas, the Indian Ocean, the EPO, the WCPO, and the extent of the distribution of southern bluefin tuna. A single global register could be established, but mechanisms would have to be built into the system to control the movement of vessels from one region to another as seasonal abundance and fishing conditions change; otherwise excess capacity could develop in some areas. A more functional approach would be for each regional body to establish a register of vessels authorized to fish in the waters for which it has management responsibility, which would eliminate the possibility of excess capacity in any region (provided the register for that region does not authorize excess capacity). If a vessel wished to fish in two regions, it would need to be entered in the registers for both of the regions. The two regional tuna bodies maintaining the respective registers would need to coordinate their activities regarding the vessel(s) in question, and take into account, when calculating the overall capacity limit, the fact that the vessel(s) would be fishing only part of the time in each of the regions.

The first objective of establishing the register would be, essentially, to place a moratorium on fleet growth. Each nation with vessels whose owners would like to fish in the region would be required to submit a list of such vessels. To qualify to be entered on the register a vessel would have to be considered to be actively fishing. The term actively fishing would need to be defined, e.g. an active vessel might be one that has fished in the region during at least 6 out of the previous 18 months. To stay on the register a vessel would have to continue to be active, according to the same or a similar definition. Establishing such a requirement would prevent vessels that had not been fishing from unduly adding to excess capacity. Also, it would prevent a flood of vessels entering a region as soon as the intention to limit capacity became public knowledge.

There will be a tendency for states to want to negotiate among themselves to allocate the total capacity of the extant fleet among participants, with those nations with small fleets, particularly developing coastal states, wanting guaranteed shares that they can grow into, and states with large fleets wanting to keep what they have. An important feature of this vessel register scheme is that the capacities belong to vessels, rather than to nations. When a vessel changes its registry from Nation A to Nation B, the total capacity of the vessels of Nation A is reduced, and that of Nation B is increased. Under this scheme, there will be opportunity for states desiring fleets to acquire them. These possibilities will be discussed in the following sections.

4.3.1.2 Vessel transfers

Two types of vessel transfers are envisioned in this proposed option. A vessel owner can transfer to another flag while retaining ownership of the vessel, or an owner can sell the vessel to a different owner who will register the vessel under a different flag. In either case the capacity quota would go with the vessel to the new flag and be removed from the old flag. The concept that the capacity follows the vessels will likely be raised as a problem by states that may potentially lose capacity due to transfers. In fact, however, the capacity can be retained or even increased, depending on the states' willingness to make it attractive for vessels to stay under their flag or to transfer from other flags. There would be an incentive for vessels to choose the flags of nations providing advantageous operating conditions, such as favorable port facilities, tax incentives, lower fuel costs, marketing advantages, etc. In essence, the market would determine which vessels stay under which flag. If a nation had a national policy to acquire a tuna fleet it could structure its conditions of flagging in such a way as to attract vessels.

As stated above, it is envisioned that each regional body would establish a vessel register. Since each regional body has indicated that there is sufficient or excess capacity in its region, and since this is corroborated by the DEA studies reviewed in Section 2 of this report, there would be little opportunity for vessels to transfer from region to region (the regional body for the WCPO is not yet operational, but a study by Reid et al. (this collection) indicates that there is already excess capacity in the WCPO, and during the preparatory conferences the nations agreed that increases in capacity should not be allowed). Transfers from one region to another could take place only if vessel capacity was removed from the region to which a vessel wished to transfer by sinking, scrapping or converting to some other use, or special arrangements were formulated among regional tuna bodies to allow designated vessels to move seasonally among areas.

4.3.1.3 Vessel replacement

The opportunity to replace old vessels with new ones is necessary to ensure an efficient fleet and a viable fishery. In the vessel register scheme to limit fishing capacity being discussed here, any replacement of a vessel would be permitted only if a vessel of equal or greater capacity was removed from the register. If a replacement vessel is of greater capacity than the vessel being removed, then additional capacity would have to be removed from the register; for example two 1000-tonne capacity vessels could be removed and replaced by a single 2000-tonne capacity vessel. It is likely, however, that any newly-entering replacement vessel would have a greater fishing power than the vessel being removed, so adjustments to the total fleet capacity would have to be made to account for increases in fishing power. This idea will be discussed further in the following paragraphs.

4.3.1.4 Reducing excess capacity through buy-backs

The information reviewed in Section 2 of this report shows clearly that there is more fishing capacity in the purse-seine and longline fleets operating in each major ocean region than is needed to take the current levels of harvest. If the fleets operated more efficiently, capacity could be reduced substantially without causing reductions in the catches. The problem is to identify a means of reducing capacity that is equitable, possible to administer and effective in reducing fishing mortality.

One means often suggested for reducing fishing capacity is to allow attrition to take its toll of vessels. When a vessel sank or became unserviceable it would not be replaced. There are many purse-seine vessels that are more than 40 years old, and still operating effectively. If owners were not allowed to replace their ageing vessels they would make whatever repairs were necessary to keep their vessels in service. They might even make extensive renovations that would increase the fishing powers of their vessels. Reduction of capacity through attrition would take decades to achieve, and would not be an effective means for addressing the current critical excess capacity problem.

Buy-backs offer a more direct approach to reducing fishing capacity. Tuna vessels are bought and sold on a regular basis. The market price depends on demand, which, in turn correlates closely with the price paid for fish, which affects vessel profitability. Under the vessel register scheme, which allows transfer of vessels among participants, there will be a continuing demand and an international market for tuna vessels. The respective management authorities could enter this market to purchase vessels to remove them from the fishery. There are several potential problems that have been identified in the paragraphs above that can influence this market and the success of any buy-back program. The problems however, are tractable, and solutions are available. As has been mentioned already, an essential requirement for the success of any buy-back program is that any vessel that is bought back is scrapped or converted to some other use, which would ensure that the vessel would not return to the fleet at a later date, or move to another fishery, creating an excess capacity problem there.

Funding these buy-backs can have a direct influence on the success of any buy-back program. If left entirely in the hands of governments, including the cost of the buy-back program, it would constitute a major subsidy to the fishing industry. The result would be that those vessels remaining in the fishery would be able to fish more profitably than if there had been no buybacks, because the TACs would be shared by fewer vessels. Also, the motivation of fishers to have the program succeed would diminish. If left entirely in the hands of fishers, the vessels would have to operate on an economically-efficient basis, and the interests of the fishers and their motivation to succeed would be greater. This has apparently been the experience with some buy-back programs in other fisheries. In fact, the government of Australia is leaving the issue of buy-backs in its fisheries in the hands of the fishing industry.

It is suggested that the vessel register scheme proposed here include a provision for buy-backs. To fund the buy-back program, an assessment or tax could be applied to each vessel on the register. Since the analyses presented earlier show that there should be reductions in the purse-seine and longline fleets for each of the major fishing regions, the assessment or tax would be applied to all purse-seine and longline vessels included in the register of each area. The assessments and development of a pool of buy-back funds would be region- and gear-specific. The amount of the assessment would be determined through economic analyses, which would be updated periodically as conditions in the fishery change. It would be expected that the catches of vessels that remained in the fishery would increase as other vessels were removed from it, so profitability would change. The tax or assessment could be based on the catches, so that the larger producers would pay more. Alternatively, all or part of the tax or assessment could be applied to the processed product, since the processors would reap the benefits of a well-managed fishery. These changes would have to be incorporated into the analyses used to determine the levels of contribution.

Determination of the level of assessments is beyond the scope of this report. In a recent study, the U.S. National Marine Fisheries Service (NMFS, 2002a and 2002b) suggested the use of a "rule-of-thumb" approach based on setting the price for a vessel equal to one year of gross revenue generated in the fishery. However, for international tuna fisheries in which abundances of the target species fluctuate widely from year to year, and the successes of the vessels vary widely, this rule of thumb may not be a good indicator of the true value of a vessel. Additionally, information on gross revenues is usually not available. There is more publicly-available information for the purse-seine fishery of the EPO than for any of the other fisheries, so data for this fishery are used to illustrate the magnitude of the costs that might be involved in a buy-back scheme. There are currently 227 purse-seine vessels listed on the IATTC register, with a total carrying capacity of approximately 208 thousand cubic metres. There is an option in the vessel register program for four coastal states to add an additional 20 thousand cubic metres of capacity. If the options were exercised, the total capacity would be 228 thousand cubic metres. The long-term target capacity for the program is 158 thousand cubic metres. To attain this target, assuming none of the options for the coastal states are exercised, there would have to be a reduction of 50 thousand cubic metres, or 24 percent of the current capacity. Since the average size of a vessel in the fleet is about 900 cubic metres, about 55 vessels would have to be bought-back in order to reach the target fleet size of 158 thousand cubic metres. At an assumed price for a used 900- cubic metres vessel of between $3 000 000 and $4 000 000, the total cost for the 55 vessels would be in the neighborhood of $200 000 000. If an objective was set to make the 55 buy-backs within a 10-year period, the annual cost would be about $20 000 000. If financed entirely by the industry, each vessel would have to contribute about $100 000 per year. Whether the vessels could afford that amount, given the current overcapacity, prices of tuna and operating costs, would have to be determined by the suggested economic studies. At the outset it might be necessary to have joint contributions from industry and government, or at least to have low-interest government loans to the industry, for carrying forward the program. As the fleet was reduced toward the target size, the average catch per vessel would increase, thereby increasing earnings, so the industry would be better able to maintain the buy-back program needed to account for capacity growth resulting from increasing efficiency, without government help. The government contributions made during the early years of the buy-back program would be a subsidy. Though government subsidies can contribute to the excess capacity problem and lead to inefficiency Milazzo (1996 and 1998), in this case the subsidy could be considered a "good" subsidy, since it would be for a fixed term, and the end result would be a fleet capacity in balance with the ability of the resource to sustain catches at current levels (Clark, Munro and Sumaila, 2003).

Used in conjunction with a vessel register program to limit capacity, buy-backs offer an effective option for reducing capacity to target levels. In fact, this is the approach the OPRT has taken to reducing longline capacity. The organization has already removed a number of vessels from the world longline fleet. The longline industry has administered the program and provided the money for the buy-backs (with loans provided by the Japanese government). The experience in the longline fishery can provide useful information for the development of a program for the purse-seine industry.

4.3.1.5 Further considerations of vessel register programs to limit and reduce capacity

Vessel register programs, as outlined above, apply to high-seas longline and purse-seine fleets. These fleets account for about 75 percent of the world catch of the principal market species of tunas. Pole-and-line vessels take about 18 percent, and all other gears take the remaining 7 percent. DEA analyses have not been conducted for these other fleets, so there is no quantitative evidence with which to determine whether there is excess capacity in the smaller fleets, and, if so, to what extent. Nevertheless, there is qualitative evidence that indicates that there is excess capacity in nearly all tuna fisheries, and most of the regional tuna bodies indicate there is excess capacity for nearly all gear types. It would therefore seem prudent to place a moratorium on capacity in the high-seas pole-and-line fleets by instituting a register for those vessels. Failing controls on the pole-and-line fleets, there could be a flow of capital into the construction of additional pole-and-line capacity from owners of purse-seine and longline vessels who have been limited by the regional registers to current fleet sizes, and also other potential investors in the tuna industry. Similarly, the high-seas troll fleets, which target mainly albacore, could be handled in the same manner as the pole-and-line fleets, if it were concluded that there was excess capacity in those fleets.

For the smaller vessels such as handline, small longline and small gillnet vessels that fish exclusively in inshore regions, vessel register programs as similar to those for the larger vessels may not be necessary. The total catch of these smaller vessels has been estimated to constitute only a small percentage of the world catch of tunas (Gillett, this collection). A practical option for managing these fleets might be by the introduction of TACs that would be part of the general conservation programs implemented by the regional tuna bodies.

It is emphasized that the cooperation of coastal states in a regional vessel register should in no way derogate sovereignty with respect to providing licences to vessels to fish in their jurisdictional waters. However, to discourage IUU fishing, licence sales should be restricted to vessels in the regional registers. Along these same lines, and in order to facilitate the objective of the register program to limit and reduce capacity, the nations participating in the fishery should be willing to work together to take joint action to ensure that vessels not on the register do not get a "free ride" with respect to enjoying the benefits of a managed fishery. This joint action by the participants could include (but not be restricted to) restricted access to their waters, restrictions on the use of port facilities and trade sanctions. It is only through such cooperative efforts and sacrifices of the participants that a regional vessel register can be successful in maintaining optimal fleet sizes. There are several examples of successful employment of such measures (Barrett, 2003), particularly the action taken by ICCAT regarding bluefin tuna.

4.4 Allocating quotas

An alternative means of addressing the excess capacity problem is through the development of self-regulating mechanisms to control capacity. The assignment of catch quotas to participating nations in an international tuna fishery, or to individual vessels in that fishery, can be such a self-regulating mechanism. They involve determining what the TAC for a fishery should be and the allocation of that TAC among the nations or vessels participating in the fishery. If quotas are assigned properly, the incentive to build excess capacity is reduced, and the participating nation or vessel does not need to race to take its share of the catch. Theoretically, the participant would not use more capacity than is needed to take the allowable quota. However, the assignment of quotas does not guarantee that excess capacity will not be a problem. On one hand, if the quotas are assigned to individual operators the self-regulating or incentive-adjusting measure would be particularly effective, as there would be no advantage to the operator to race to take the quota; it could be taken more leisurely, and with minimal capital investment. On the other hand, if quotas are assigned to countries, and there are no limits on the number of vessels allowed to participate in a country's harvest, there would be a race within each national fleet to take maximum shares of that country's quota.

4.4.1 Allocating quotas to countries

For this option the idea would be that the TAC for a region would be allocated to the nations participating in the fishery. Knowing what their allowable catch would be, each nation could then limit its fleet to the number of vessels needed to take the harvest. This could be done independently by each nation, as is the case for the southern bluefin fishery and the Pacific halibut fishery, or it could be done in accordance with a set of standards developed by the regional tuna body responsible for the fishery.

Though the concept of allocating catches is simple, the tuna fisheries themselves are very complex, and it will be difficult to find a workable solution acceptable to all participants. The difficulties in assigning quotas in fisheries in which there are multiple species taken and market variability have been reviewed by Squires and Kirkley (1996) and Squires et al. (1998). Many of the problems discussed by these authors apply to the tuna fisheries. They all involve several participating nations. Some of these are coastal states, and others (DWFNs) are not. Some have well-developed economies, while others are developing. Each of the fisheries takes more than one species of tuna, some of which are overexploited, some fully exploited and others underexploited. A variety of gears harvest the different species. Longline vessels harvest relatively small amounts of large tunas (and billfishes) destined for specialty markets, while purse-seine vessels harvest large amounts of smaller tunas destined for the canned market. The vessels of some nations direct most of their effort toward one species, while others direct their effort toward several species. Finally, tunas on the high-seas have historically been considered an open-access resource, belonging to whomever catches them. All of these complex factors must be considered if a workable means of limiting capacity by means of country allocations is to be achieved.

Ideally, allocation should be determined by an algorithm that employs a series of agreed-to criteria, thereby removing the intense political and economic debate from the process each time an allocation is made. In practice, allocations in international tuna fisheries have been mostly the result of intense negotiations among the involved parties (Joseph, 2004). Although there has been a great deal of attention given to the identification of a series of criteria that can be used in the allocation process, historical and current involvement in the fishery has been the overriding criterion used. Nearly all allocations in tuna fisheries reflect the current distribution of catch among the participants, with some provision being made for developing coastal states. Precedent for moving away from the concept of open-access or common property to one of rights-based management has been set in several tuna fisheries. As already mentioned, national allocations have been made by ICCAT for albacore and bluefin tuna, and by the CCSBT for southern bluefin tuna, and in the past by the IATTC for yellowfin tuna (Bayliff, 2001). Capacity quotas were allocated in the tuna fishery of the EPO by the IATTC, but, after the first two years agreement could not be reached to continue them. Considering these experiences, there appears to be ample precedent for allocating catch and/or capacity quotas in other tuna fisheries.

In most cases, deciding on TACs to be allocated for yellowfin, bigeye or bluefin is straightforward because those species are fully exploited, and, in some instances, overexploited, so TACs can be readily agreed to. Skipjack, however, particularly in the Pacific Ocean, are not fully exploited, and the catches could be increased, so setting TACs might be done on an economic basis, rather than a biological one. Reaching agreement on economic TACs might be more difficult, however, since the fleets of some nations direct more of their effort toward skipjack than do the fleets of other nations. Similarly, because longliners catch so many species at the same time, setting capacity limits will be complicated unless allocations are made for all the species combined that the longliners catch. If all target species are included in a country allocation, then the task of determining appropriate capacity levels is a more tractable problem, the issue of "high-grading" (continuing to fish after the vessel has filled its capacity, and discarding previously-caught less valuable fish to make space for recently-caught more valuable ones) notwithstanding.

Once allocations are made, the number of vessels authorized to participate in the harvest of that allocation could be determined. This can be accomplished in several ways. The most straightforward approach would be to leave the determination of fleet size in the hands of each country with an allocation. The hope would be that each country would determine the carrying capacity of its fleet, and, if it is found to be greater than that needed to take the allocation, capacity would be reduced. Each country would probably partition its allocation among gear types and then, if necessary, limit the number of vessels in each partition. In cases for which there are fleets of artisanal or small-scale fishing craft that fish exclusively in the EEZ of a country, rather than limit capacity for them, which might be difficult or impossible to do, a portion of the catch allocation could be allotted to that fishing sector.

Leaving the task of setting fleet capacity to each country might not resolve the excess capacity problem. Countries differ with respect to management objectives; some are more interested in maximizing profits and keeping fleet capacity in balance with the resource, whereas others may be more interested in maintaining vessel efficiency at relatively low levels to ensure more vessels operate and that employment stays high. The danger, if the latter occurs, is that fleets would be larger than needed to take the allowable harvest, profits would be low, and there would be pressure to weaken conservation measures.

A more effective approach for ensuring that capacity is set at levels in balance with the allocation is to vest authority in the regional tuna body to determine the levels at which the fleets should be kept. The regional tuna body could carry out analyses to determine the appropriate fleet size for each gear type within each allocation. In this manner overall fleet capacity for the entire fishery could be kept in check, and a program to reduce excess capacity initiated.

Under this option, a buy-back program, such as the one discussed earlier, could be implemented. In this case, however, each nation with an allocation and fleet would be responsible for establishing its own buy-back program. National buy-back programs could set a fee to be paid by the industry that would be used to make the buy-backs, the governments themselves could fund the buy-back program or a combination of the two could be employed.

4.4.2 Allocating the catches to individual vessels

The assignment of IQs has been used to manage a number of fisheries (Squires, Kirkley and Tisdell, 1995; Squires and Kirkley, 1996; Squires et al., 1998; Batstone and Sharp, 1999; National Research Council, 1999). These incentive-adjusting techniques have corrected problems of overcapacity. As mentioned above, the assignment of IQs removes the necessity for fishers to race to fill their quotas. Experience in other fisheries managed by IQs shows that fishers tend to utilize only enough capacity to capture their quotas. Economists have advised that, whenever possible, IQs should be used to manage fisheries (Cunningham and Gréboval, 2001). As with the case of assigning country allocations, the first step is to determine the TAC for the fishery in question, and then partition it among the users.

Because of the complex nature of most tuna fisheries, attempting to manage at the catch level, when that catch is assigned to participants, is difficult. These complexities were discussed above in the context of assigning quotas to nations. The situation is even more complex when attempting to assign the TAC to individual vessels or companies.

The first task that a regional body contemplating the assignment of IQs will need to address is the areas, species and gear types to which the IQs will apply. For example, will IQs be assigned to all gear types? In most fisheries purse-seines are the dominant gear, so any effective program would have to include this type of gear. Likewise, high-seas longline fleets operate in every major ocean area, and they harvest significant amounts of tunas, and also a variety of other species. They would also have to be included for any IQ program if that program is to be effective. In many coastal states there are fleets of small longline and handline vessels that confine their fishing activities to nearshore waters. Some of these fleets consist of large numbers of vessels, but their harvest of tunas comprises only a small percent of the total catch from the region. Many of these small vessels fish for species other than tunas for much of the year. To attempt to assign and monitor IQs for these small vessels may be impractical. A more efficient and practical means of handling such fleets would be to assign a certain share of the TAC to them as a single unit. Pole-and-line vessels also fish for tunas in all the regions. In some areas, such as the EPO, they number only a few vessels, but in other areas pole-and-line vessels take a significant share of the total catch. This category of vessel would also have to be included in any program of IQs for it to be successful. In some pole-and-line fisheries, such as that of the Maldives, in which there are many small vessels that fish during the day and return to port at night, the assignment of IQs to individual vessels may be difficult to administer. In such cases IQs might be better assigned to companies or fishing cooperatives, which would then be responsible for deciding on how many vessels would fish.

4.4.2.1 Gear and catches

In terms of tonnage, purse-seine vessels, on the average, catch several times the amounts of tuna caught by the other types of gear. Most purse-seine vessels capture various mixes of skipjack, yellowfin and bigeye tuna. Because yellowfin and bigeye are fully exploited in all oceans, it is anticipated that the TAC for these species would be the best current estimate of the surplus production for the period. For skipjack, however, because it is not fully exploited in most regions, a TAC would have to be determined on the basis of its impact on the catches of yellowfin and bigeye. Except when fishing for yellowfin tuna associated with dolphins in the EPO, it is generally not possible to catch a single species when setting the net. Without a TAC on skipjack, fishing could continue to the point that the yellowfin and bigeye would be overfished. It is, of course, possible to set limits on the catches of yellowfin and bigeye, but if the vessels were permitted to continue fishing for skipjack it is likely that they would discard yellowfin and bigeye at sea after their TACs for those species were achieved. The alternative would be to close all tuna fishing when the yellowfin and/or bigeye quota was filled, but this would discriminate against the vessels that had not filled their IQs. Therefore, in determining the IQs for purse-seine vessels, all three species would have to be considered. The species make-up by area must also to be considered. If so, then some IQs could be area-specific. In fact, Wilen (1988) suggested that if limited entry is area-specific, certain advantages would be gained. In the EPO, at least, different vessels operate in different areas of the region, and the species compositions of the catches are different in different areas. Ecuadorian purse-seine vessels fish mostly on fish associated with FADs in the area south of 5°N, where the catch is predominantly skipjack, mixed with lesser quantities of yellowfin and bigeye; Mexican and Venezuelan vessels fish mostly north of the equator on schools associated with dolphins and catch mostly yellowfin tuna, with much lesser amounts of skipjack. These characteristics of specific fisheries must be considered in determining the IQs.

Although longline vessels produce considerably less tonnage of tuna per year than do purse seiners, the value of their catch is much greater. Longlines are generally considered to be a passive gear, which has limited ability to select the target species. In reality, however, the species composition of the catch can be influenced somewhat by the areas of operation and the configuration of the gear (number of buoys between hooks, which determines the depths at which the hooks fish). Longliners normally catch two or three species of tuna, two or three species of billfish, and a variety of other species in each set of the gear. Because of these complexities in the longline fisheries, consideration should be given to computing IQs within strata of time, area and species.

Pole-and-line vessels fish mostly for yellowfin and skipjack, but occasionally harvest small amounts of bigeye. They can be much more selective with respect to the species that they target than can purse seiners and longliners. For example the Ghanaian and Maldivian pole-and-line fleets, which catch mostly skipjack, target mostly pure schools of skipjack where that species is the dominate tuna species available.

4.4.2.2 Determining IQs

The first step in determining an IQ is to select the area to which it will apply. This will be influenced by the distribution and movements of the various species and whether there are areas that are unique to certain species or gear types. IQs could be computed for each species separately, two or more species or all of species combined. Considering the fact that most of the catches by surface gear include yellowfin, skipjack and bigeye taken during the same fishing operations, the IQs might best be determined for all species combined. Before determining IQs, however, the TACs should be determined. As already mentioned, an overall TAC that includes the TACs for the individual species must be considered. For most of the species, with the exception of skipjack, the TACs would probably be set equal to the best estimates of the AMSY or the current sustainable production. Because in many areas skipjack is underfished, a TAC for that species would be set below what the AMSY might be. If appropriate, TACs could be computed for areas in which only certain species occur or in which only certain gear types operate. Initially, however, it may be more practical to compute the combined TAC for the entire region that the regional body implementing the program is responsible for.

Once the TAC is determined, the IQs can be determined. Because different fleets, and different components within the same fleets, target different species or mixes of species, it would not be practical to merely divide the TAC by the number of vessels operating in the fishery. This could require longliners to fish in a manner that is impossible for them to do, or some purse seiners to shift from catching mostly skipjack, to catching a mix of species for which they have had no experience fishing for in the past. Some means of assuring that a vessel could continue to fish in the same way, or nearly the same way, as it had in the past would have to be developed. One means of doing this could be accomplished by stratifying the recent levels of harvest into areas, gear types within these areas and average catches by species within these gear types. Based on these proportions, the IQ could specify the species compositions of the catches. If this were done properly, vessels would be able to fish their IQs in the same manner as they had been fishing before IQs were established. This would also tend to take away incentives that might develop for fishers to "high-grade." For example if an IQ were merely a percentage of the TAC, regardless of species, a vessel that normally fished for yellowfin would be able to discard any skipjack it caught to ensure that a full load of yellowfin was taken.

In some regions there are recreational and subsistence fisheries for tunas. In most cases the amounts of tunas taken by these fisheries are very small relative to commercial harvests, the most notable exception being the recreational fishery for bluefin in the western Atlantic Ocean. To attempt to assign IQs to individual noncommercial fisheries would be difficult, so the most practical approach might be to reserve a portion of the TAC for these uses. In addition, there are large numbers of small commercial fishing vessels in some coastal states, and it would be difficult to assign IQs to these vessels. One solution would be to reserve a portion of the TAC for all of these vessels, as was suggested for recreational and subsistence vessels. Alternatively, IQs could be assigned to groups of such vessels represented by fishing cooperatives or other such entities.

Tunas spend their entire lives in an oceanic environment, and, as conditions in the ocean vary, so does their abundance. In favorable years, recruitment, growth and survival increase, resulting in above-average levels of abundance, and in unfavorable years, abundance declines. Therefore any TACs set must be adjusted in accordance with natural fluctuations in abundance. Therefore, it would be unrealistic to attempt to set long-term TACs and IQs in absolute tonnages. As has been done for some other fisheries, this could be addressed by expressing IQs in terms of percentages of the TAC.

4.4.2.3 Assigning IQs

The analyses presented in Section 2 of this report concluded that all of the purse-seine and longline fleets in the oceans of the world have a greater fishing capacity than needed to harvest the available resources. If all the vessels in these fleets fished as efficiently as the most efficient ones, the numbers of vessels could be reduced without reducing the catches. Accordingly, when IQs are determined should every vessel receive a relatively small IQ, or should the number of vessels be limited and the amount of each IQ increased? If the latter, then fleet size could be brought quickly to lower and more efficient levels. However, to take this course of action would require the development of a method for selecting the vessels to receive IQs. The owners not receiving IQs would suffer severe economic hardship. One solution to this problem would be for the regional tuna body to auction off the IQs to the highest bidders, and to use the receipts from the auction to compensate the vessel owners who did not receive IQs. If this were done, a system to ensure that the vessels removed from the fishery did not move to other fisheries that already have an excess capacity problem would be needed. For example, the vessel owners who did not receive IQs would be required to scrap their vessels or convert them to some other use before receiving compensation.

Alternatively, all vessels currently in the fishery could be assigned IQs. This would mean that the excess capacity problem would continue. However, there would be a tendency for owners of more than one vessel to reduce the number of vessels that they operate to the least capacity needed to ensure that their IQ is harvested before the end of the fishing season. However, because many owners have only one vessel, there would continue to be an excess capacity problem. This excess capacity problem could be mitigated by making the IQs transferable. If they could be sold and purchased within the management scheme, the most efficient operators would tend to buy up the IQs from less efficient operators. The most efficient operators could then take their expanded IQs with less vessel capacity. Theoretically the fishery would become self regulating with regard to capacity, and the fleet would be reduced in capacity to the level that could take the allowable catch with fewer vessels.

The transferable IQs would provide a mechanism for those states that currently do not have tuna vessels, but would like to enter the fishery, to acquire them. Likewise, there would be the opportunity for individuals or groups who are opposed to fishing, for whatever reason, to purchase IQs and to then not use them to fish. Such groups might wish to acquire IQs from sectors of the fishery that have high bycatch rates of endangered, threatened or icon species.

The transferable IQs would, in essence, be a property right for those owning them. They could be bought, sold or utilized. Before assigning the IQs, the governments working through the regional tuna body would need to define the nature of the right. Would it be a right held in perpetuity that would form part of the estate of the owner, or would it be for a fixed period of years? In some fisheries IQs are held in perpetuity, are transferable, and are considered legal property (Batstone and Sharp, 1999). For many tuna vessels that are operated efficiently, loans for the purchase of the vessel are paid off within several years; therefore, the duration of the IQ might be set on the basis of the pay-off time, or on the basis of the expected life of the vessel. After that period the IQ would revert to the regional tuna body for sale to the same or other potential operators. Funds generated through such transactions could be used to offset the cost of management or to assist developing coastal states to purchase IQs.

IQs, particularly when they are transferable, offer a number of interesting possibilities for addressing the excess capacity problem in tuna fisheries. However, the tuna fisheries are so complex that developing efficient and workable means of implementing management systems that use IQs will be difficult.

4.5 Licensing

Another approach that can be used to manage fishing capacity is to limit the entry of vessels into a fishery by requiring licences to participate in that fishery. This form of limited entry has been used in many national fisheries (Sinclair, 1983; Wilen, 1988; Townsend, 1990). Unlike IQs, a licensing system does not remove the incentive for fishers to increase fishing capacity. Experience in some other fisheries where licensing has been used to control capacity is that fishers have attempted to get around the constraints placed on them by increasing the carrying capacity or efficiency of the vessel they have licensed. Such input substitution, or "capital stuffing", has rendered many licensing schemes ineffective in managing fishing capacity.

Limiting entry can be a useful tool in managing tuna fishing capacity if the potential problems created by capital stuffing can be overcome in a licensing scheme. In most cases, working at the vessel level, such as vessel licensing or the regional vessel register discussed earlier, managing capacity would be less difficult than managing catches, as is evident from the discussions in Section 4.4.2. In the following paragraphs some suggestions for a licensing system are outlined for tuna fisheries.

Of course, the implementation of a licensing system in the tuna fisheries is complicated by the international nature of the fishery, as are rights-based management approaches. There are multiple nations involved in all tuna fisheries, some of which are developing coastal states with small or no fleets, while others are DWFNs with large, modern fleets. Those with few or no vessels want to acquire them, particularly if they are coastal states, and those with large fleets want to retain what they have. Because most of the fisheries are fully exploited, and there is excess capacity to take the catches, there must be limited access to the fisheries. Therefore there must be some means to control access in these tuna fisheries. This could be accomplished in several different ways. One way would be for each nation with vessels participating in the fishery to allot licences for its vessels, but under the guidelines issued by the regional tuna body. Another way would be for the regional tuna body to be vested with the authority to limit the number of vessels in the fishery and to issue the licences for the vessels authorized to fish. The latter method would be the most efficient means of managing a licensing system, but the issue of a perceived derogation of sovereignty might make the participating governments reluctant to transfer this authority to the regional body. The following discussion assumes that authority is vested in the regional body to manage the proposed licensing system; the fishery would no longer be one of open access, but rights to fish could be assigned to the participants.

With a licensing system, a regional tuna body would determine the appropriate number of vessels and the associated capacity needed to harvest the allowable catch for its area of responsibility, and then it would issue licences. There are several approaches for estimating the appropriate number of vessels and the associated capacity for the region under consideration. The DEA analysis discussed in Section 2 could provide insight for the purse-seine and longline fleets, the "rule-of-thumb" approach of NMFS (2002a and 2002b) could prove useful or an in-depth economic analysis could provide helpful guidelines for establishing such estimates. Licensing would be at the vessel level, and licences would be allotted to vessels on the basis of gear type and capacity. By including a gear type and capacity in the licensing unit, some undesirable elements of capital stuffing could be avoided. However, the incentive for fishers to increase the efficiency of their licensed vessel would not be affected. To adjust for these efficiency changes, studies to estimate capacity and productivity growth would have to be conducted, and the numbers of licences adjusted downward to compensate for these increases in efficiency. As is the case for several of the other schemes for managing fishing capacity, the small vessels, including subsistence and recreational vessels, would likely have to be managed under a slightly different approach than that envisioned for the larger vessels. Because of the large numbers of these small vessels, and the difficulty in administering any complicated licensing scheme, it might be more practical to issue licences to groups of vessels through cooperative arrangements or to manage their activities through the assignment of catch quotas. To some extent, defining licence groups by gear, capacity, area, etc., might also help promote cooperation among industry participants by transforming the open-access property rights structure into a set of regulated local commons (Wilen, 1988; Balard and Platteau, 1996).

As already pointed out, in almost every case there is actually more capacity available than is needed to harvest the catch. Therefore the regional tuna body would need to decide on how to initiate the program once a target capacity has been determined. One means of doing this would be to issue a licence to every longliner and purse seiner authorized by its government to fish in the region, and then commence a scheme to reduce the capacity to the target level. Another means would be to restrict the number of licences issued at the outset to the target level.

4.5.1 Unrestricted licensing with buy-backs

Under this option, a licence would be issued to every longline and purse-seine vessel authorized by its government to fish in the region to which the licence applies. The licence would apply to a single vessel, and its associated capacity would be included with the licence so as to prevent any increase in its capacity. The licence would be for all species within the responsibility of the issuing authority, thereby allowing the vessel to select the mix of species it wished to target. If the TACs were properly determined a balanced fishery would result.

The licence could be considered as a right to fish that the holder could buy or sell, or it could be considered as "rental" of property that could be harvested over a fixed period of time, but did not imply ownership on the part of the licence holder. If the licence is transferable, then it would be held in perpetuity, and if and when it is transferred among vessels, care would have to be exercised to ensure that the transfer applies to a vessel that would not be capable of generating a greater level of fishing mortality than the vessel from which the licence is being transferred. Because of the inherent difficulties in trying to standardize different gear types which exhibit different age-specific and species-specific fishing mortality rates, it would be simpler from the management point of view to allow only transfers between the same gear types, i.e. purse seiner to purse seiner, or longliner to longliner, and vessels of equal size. If the licence did not vest a right for the holder, but instead was a "rental", it would revert to the regional tuna body after its term expired for reissue.

Because there may be excess capacity licensed for some species that are fully exploited or overexploited, additional management measures would be needed. In some regions the catch of yellowfin and skipjack would need to be controlled because the species are fully exploited or overexploited. In some of these same areas skipjack is underexploited, and could sustain increased fishing effort, but because it is taken in mixed schools with yellowfin and bigeye, its levels of harvest may need to be controlled as well, in order to protect the other two species from overexploitation.

Even though under this scheme there will initially be more licences issued than are needed to take the available harvest, the regional tuna body may wish to add still more licences to the list to provide a very limited opportunity for some developing coastal states to enter the fishery. At the same time, in order to help manage the excess capacity problem, a fee could be charged for a licence. If set high enough, this could discourage some vessels from buying licences, and, indeed, some states from entering the fishery.

The funds generated through the sale of licences could be used to fund a buy-back program to reduce the number of licences, and corresponding vessels, to the target level. The same concerns and considerations presented in the earlier discussions on buy-backs would apply in this instance as well.

4.5.2 Restricting the number of licences initially issued

In the preceding paragraphs a licensing system in which, when initially implemented, every vessel operating in the fishery would be issued a licence was discussed. The important issue then was to introduce mechanisms for reducing the number of licences over time to the target level set by the regional tuna body. In the following paragraphs systems to reduce the numbers of vessels licensed at the beginning of the program are discussed, along with mechanisms for maintaining capacity at the target levels.

4.5.2.1 Fractional licences

Townsend (1992), Townsend and Pooley (1995) and Cunningham and Gréboval (2001) have suggested an alternate approach to buy-backs, which utilizes the concept of transferable fractional licences for reducing excess capacity. The technique involves the issuance of some fraction of a licence for each vessel in the fleet. The fraction would be calculated on the basis of the target fleet size as determined by the regional tuna body. When the system is implemented each participant in the fishery would be issued a fractional share of a licence. Without a full licence a participant would not be able to fish. Therefore, to fill out the licence, fractional shares would have to be purchased from someone else. For example, there might exist a fleet of 200 longline vessels and 200 purse-seine vessels in a region for which the regional tuna body has determined target levels of 150 longliners and 150 purse seiners. In order to get to the target level the regional tuna body would issue a 0.75 fractional share to each participant in the fishery, all or any part of which is transferable. Transfers would be allowed only within gear types and within capacity categories. Because the shares would be transferable, a market would be created for fractional shares. Through the sale of fractional licence shares, the number of full licences would soon approximate the target capacity levels. The fractional licensing system would not need a separate buy-back scheme associated with it, as it is, in effect, an industry-funded buy-back program.

As a result of the sales of the fractional licence shares, there would be vessels (50 purse seiners and 50 longliners in the hypothetical example given above) that would not be authorized to fish. The owners of those vessels would have been compensated for not being able to fish by the sale of their fractional shares. Because all purse-seine and longline fisheries suffer from problems of excess capacity the vessels without licences would not be moved to other fisheries. They would have to be scrapped or converted to some other use.

As with most other systems for managing capacity, some means of monitoring changing efficiency must be implemented. As efficiency increased, the numbers of licences would have to be reduced correspondingly.

4.5.2.2 Auctioning licences

Economists have long advocated the assignment of property rights in fisheries, and suggested the use of auctions to generate resource rent from the assignment of those rights. Such approaches have been successfully used in national fisheries, but to date these have not been applied to international fisheries because of the open-access nature of most international fisheries and the difficulty many governments have in moving away from that concept. Auctions offer some advantages for implementing a licensing system for managing capacity in the world's tuna fisheries.

Once the regional tuna body determines the target levels for fleet capacity in its region, which in almost every case would be less than the current fleet size, and the corresponding number of licences that it wishes to allot within each gear type and vessel size class, it could use an auction to sell the licences to the highest bidders. Such an approach would result in an immediate reduction of the fleet to near the desired target level. The regional tuna body would have to determine the terms of the licences being auctioned. The licences could be for fixed periods, for example, 10 years, and then returned to the regional tuna body for re-auctioning, or retirement if efficiency has continued to increase, or they could be held in perpetuity. If held in perpetuity the decision as to whether there should be an annual fee associated with the licence would have to be made.

There would be a great deal of opposition to the idea of auctions to sell licences, particularly from the less efficient operators, because they would be less able to bid effectively against the more efficient operators who would have more financial resources available to them. Governments would most likely have to compensate the unsuccessful bidders in some way for being driven out of the fishery. All or part of the revenues generated by the auction could be used for this purpose.

Because the most successful operators would be the successful bidders, there would not be a proportional decrease in potential fishing mortality with the decrease in vessel numbers or capacity. Additionally, with respect to the longliners, those staying in the fishery might concentrate their effort more on the higher priced sashimi fish such as bluefin and bigeye, rather than on the relatively lower priced yellowfin and albacore. To adjust for these possibilities, the regional tuna body would need to monitor efficiency changes in the licensed vessels, and, based on these studies, make further reductions in fishing capacity. Likewise there would need to be additional management measures, such as catch quotas, to ensure that the more desirable species are not overfished.

These further reductions in fishing capacity, which would be made to compensate for increased efficiency of the licensed vessels, could be achieved through a buy-back program. The funding for the buy-back program could come from the revenues generated by the auctioning of the licences.

Another source of opposition to such a program would be from the coastal states that do not have large purse-seine or longline vessels, but would like to acquire them. These states would argue that, as coastal states, and under the provisions of Article 116 of the LOSC, they should have special rights to bring vessels into the fishery. However, there is no more room for additional capacity. There are at least means of addressing this problem. First, it could be argued that there is not room for additional capacity, so if a nation or an individual wants to enter the fishery it would have to acquire a vessel in the same manner as anyone else, in this case through the auction. Second, when determining the number of licences to be auctioned, the regional tuna body could reserve a certain number for developing coastal states of the region, based on some predetermined set of criteria. Third, the regional tuna body could use part of the revenues generated from the sale of licences to assist developing coastal states meeting certain predetermined criteria to acquire vessels through the auction.

5. Summary and conclusions

Although the studies referred to in Section 2 above have shown that there is more fishing capacity for purse-seine and longline vessels in all the major tuna fisheries than is needed to harvest the available resources, they do not show clearly by how much capacity should be reduced. Some idea of the magnitude of the excess capacity can be obtained from the data available for the tuna fishery of the EPO. The IATTC has suggested that the fleet of purse seiners in that region could be reduced by about 22 percent without decreasing the catches. It seems reasonable to assume that about the same reduction might apply to purse-seine fleets in many of the other major tuna fisheries. In the case of longline fleets, the OPRT has targeted a reduction of 20 percent. Purse seiners and longliners account for about 75 percent of the world catches of the principal market species of tuna. By resolving the excess capacity problem for these gear types, many of the threats of overexploitation could be contained and the fisheries could become economically more efficient. The problem would not be completely resolved, however, because other gear types take the remaining 25 percent of the catch. Unfortunately, data on the numbers and capacities of the vessels employing these gear types is limited.

Pole-and-line vessels account for about 18 percent of the remaining 25 percent of the world catch. Records of the numbers and capacity of pole-and-line vessels are not nearly as complete as they are for purse-seiners and longliners. There is an urgent need to collect such information and to undertake studies regarding the levels at which these fleets should be maintained. Each of the regional tuna bodies should collect and maintain lists of pole-and-line vessels, along with vessel characteristics, particularly characteristics related to vessel size, which operate in their regions. As a precautionary measure, once capacity limitations are implemented for purse seiners and longliners, consideration should be given to placing moratoria on the entry of new pole-and-line capacity into any of the fisheries for which limitations on the other gear have been implemented. This should be done for two reasons. First, pole-and-line capacity should be controlled until it is determined whether there is excess pole-and-line capacity. Second, if there are no controls on pole-and-line capacity there might be a flow of investment capital into new pole-and-line vessels because of restrictions on other gear types.

The remaining seven percent of the world catch of the principal market species of tuna is taken by a variety of other gear types. Most, but not all, albacore stocks are fully exploited. Therefore, from a practical point of view, it would be advantageous to implement capacity controls in the fisheries for albacore before the problem becomes acute, thereby rendering a solution more difficult. Trollers, which fish mostly for albacore, have already been the object of limited entry in some albacore fisheries. In New Zealand, consideration is being given to allowing no new entry of trolling vessels. In the Atlantic Ocean, ICCAT has requested that nations with vessels fishing for albacore limit the sizes of their fleets to the levels that they were a few years earlier. As is the case for pole-and-line vessels, there is some urgency for the regional tuna bodies to collect information on the numbers and capacities of trolling vessels, so that the need for capacity management can be evaluated. Tunas are also caught by small longliners, handlines, gillnets and other types of gear. As mentioned earlier, the numbers of small longline vessels that fish for tunas and related species are increasing in many coastal states. Most of these small longliners, and some hand-line vessels, take only small quantities of tunas during certain seasons, and they fish mostly within the EEZs of their flag states; most of their catches are other species, such as mahi-mahi and pargo. Some of their catch enters the commercial market, but some is for subsistence. Gillett (this collection) refers to the fisheries by small longliners, hand-line vessels, and other small craft, as "very small-scale fisheries", and estimates that they take about 320 thousand tonnes of tunas. It may be difficult for regional tuna bodies to monitor the number of vessels involved in such fisheries and to implement measures to control capacity for these fleets. It would probably be more efficient for controls on the numbers and capacities of these small fleets to be left in the hands of the coastal states, because the objectives of management for each of the states might be quite different than those for the region as a whole. However, there would need to be some conservation controls to prevent overfishing. These would come from the regional tuna bodies as catch quotas or closed areas or seasons.

Several options for dealing with the excess capacity problem for large purse seiners and longliners have been presented for consideration. These options have been grouped into two categories, one in which there is open access to the fisheries, and the other involving rights-based management.

5.1 Open-access options

All large-scale tuna fisheries were developed during a period when access to the resources was open to any fisher who wished to fish on the high seas, or who was willing to pay a licence fee to a coastal state to fish inside the waters over which that state had jurisdiction. It was, of course, partially a result of open access that heavy exploitation of tuna resources took place, leading to overfishing and the building of more fishing capacity than needed to harvest the available resources.

Although the concept of open access still prevails for most tuna fisheries, it is being eroded as regional tuna bodies are increasingly attempting to allocate the catches among participants and to limit the numbers of vessels authorized to fish. However, there still persists a strong desire on the part of much of the tuna industry and some states to continue open access for tunas. Therefore, the status quo was considered as one option for dealing with the issue of overcapacity in the world's tuna fisheries. Continuing the status quo implies that most measures for managing tuna resources would involve output controls such as catch quotas and minimum size limits, and would not address the problem of limiting fleet capacity. The result will be that fleets, which are already in excess of what is needed, will continue to grow. As fleets grow economic problems in the production sector of the fishery will grow as well. As economic pressures on fishers increase, there will be increasing efforts to weaken management controls. These patterns have prevailed in the past in many fisheries, including those for tunas. This is the primary reason that many of the fisheries resources of the world are overfished. It is clear that maintaining the status quo is not a desirable option for managing the fisheries for tunas.

Oliver (2002) suggested that the capacity of purse-seine fleets be reduced by closing off a certain percentage of the fish storage capacity of each vessel. This option would reduce the fish-carrying capacity of the fleet that was the target of these restrictions, but it would not reduce the number of vessels in the fishery, nor alter substantially the ability of the fleet to catch fish. The only reduction in the catches would be due to increased time spent running to and from port as a result of reductions in the carrying capacity of the vessels. In fact, due to improvements in efficiency not related to carrying capacity, the actual catches would probably not decline over the long term. Oliver (2002) also suggested an alternate scheme that would require vessels to spend more time in port than required for normal unloading so as to reduce the number of days spent at sea fishing. However, after unloading was completed, fishermen would probably use the extra time in port to conduct annual vessel maintenance, and would be able to substitute regular repair time in port with time at sea fishing. The net result in both cases would be no change in the number or size of the vessels fishing, and little change in the actual fishing mortality exerted by the vessels to which these controls were applied. Therefore, these two options do not appear to be the best means of addressing the excess capacity problem facing most tuna fisheries.

5.2 Limited-entry and rights-based options

Based on the analyses presented in this document, and the results presented in much of the literature cited herein, it seems clear that the common-property and open-access nature of fisheries has been the major cause of the decline in many of the world's fish stocks. If we are to move away from the problems of overfishing contributed to by the application of this concept of common property, the concept must be changed. Economists have long argued that by assigning certain rights for fishers to harvest a certain share of the resource, effective management of that resource could be more easily achieved. However, assigning property rights in fisheries is a delicate political issue. Vesting the authority in an international organization to assign property rights may be perceived as a derogation of sovereignty. However, to transfer such authority is recognition that the authority existed in the first place. It is also an issue of the "haves" vs. the "have-nots", i.e. nations with fleets vs. nations without fleets or with only very small fleets. Complicating this issue is the fact that many of the "haves" are DWFNs and many of the "have-nots" are developing coastal states. Some of these coastal states, particularly in the area of the western and central Pacific, control access to large portions of the tuna stocks, so without their input and concurrence in any program to assign property rights, the program would be doomed to failure. Therefore any attempts to address this issue must take into account the positions presented by the "have-nots". Several limited-entry and rights-based options for managing fishing capacity are presented in Section 4.3 of this report.

One series of these rights-based options is directed at the catch level, and deals with different ways of allocating the catch among participants, either countries or individual vessels.

It was pointed out that by assigning IQs, the incentive for fishers to increase fishing capacity beyond the level needed to harvest their IQs would be removed. These self-regulating mechanisms must be augmented by the introduction of programs to buy back excess fishing capacity, and to further reduce the capacity to compensate for increases in efficiency. It was pointed out, however, that the assignment of IQs in tuna fisheries would be complicated because of the complex nature of those fisheries. The fisheries are multi-species, multinational and multi-gear. Some fisheries have vessels from many nations fishing in the same area for the same species. Various types of gear are used to make the harvests, with some gear types being specific to certain nations. Some species are harvested mostly by a single gear type, or only two gear types. Some of the species being taken during a single operation of the gear are overexploited, while others are not fully exploited. Some nations concentrate on one species, and other nations on different species. The definition of IQs and the efficient administration of an IQ program would be difficult for many of the tuna fisheries.

A more practical approach to capacity management might be best directed at the vessel level, rather than the catch level, particularly given the state of property rights and sovereignty. Two such vessel-level options are presented in Section 4.3. One of these is a modification of the IATTC's RVR, (which is, in essence, a weaker form of limited entry), with a buy-back scheme for reducing the current capacity of tuna fleets, and to take account of increases in vessel efficiency. The other option outlines a system for limited entry of vessels into tuna fisheries. One scheme allots a licence to each vessel in the fishery, but includes buy-back mechanisms for reducing capacities to target levels. The other scheme provides for auctioning either full or fractional shares of licences, with a buy-back provision to compensate for increases in efficiency of licensed vessels.

Of the various options presented, it appears that those directed at the vessel level would be the easiest to design and administer. Over the short term, it appears that RVRs would be most likely to be accepted by the governments making up the various regional tuna bodies.

6. Recommendations

The foregoing discussion of the DEA results and the initiatives taken by the OPRT provide clear evidence that excess fishing capacity is endangering the health of the world's tuna stocks. There is an urgent need to implement programs to address this excess capacity problem. The process of developing acceptable programs to reduce capacity will be difficult to achieve. The regional tuna bodies should consider implementing, in the immediate future, measures to place moratoria on the growth of capacity in all tuna fisheries. Even though information is not available on the numbers and capacities of pole-and-line, small longline and other types of vessels that fish on the high seas, the moratoria should apply to these vessels as well. A moratorium for the western and central Pacific could be achieved by strictly adhering to the principles of the Palau Arrangement, and in other areas by the introduction of RVRs. The immediate implementation of moratoria, coupled with other management measures, would help to prevent any further overfishing of the tuna stocks.

Along these same lines, the WTPO has called for the establishment of a world-wide vessel register similar to the RVR of the IATTC, but without the provision for transfer of vessels, which would freeze capital stock. If implemented, this would limit world purse-seine capacity to present levels. It would be helpful if governments placed a high priority on assisting the WTPO to implement this initiative.

There is a strong need for the regional tuna bodies to collect information on the numbers, capacities and characteristics of other tuna vessels, such as pole-and-line vessels and trollers, so that it can be used to determine whether excess capacity exists for these fleets and, if so, to what levels they should be adjusted.

For a long-term solution to the excess capacity problem, rights-based management of tuna resources should be considered. Because of the complexity of the tuna fisheries, preference should be given at the outset to evaluating options that are directed at the vessel level, rather than at the catch level. RVRs, coupled with buy-back programs, provide good possibilities for achieving this objective.

Whatever mechanisms are selected for managing fishing capacity, it is essential that there be some means of ensuring that the provisions of the program are complied with. This will require surveillance and monitoring schemes, which might require the use of on-board observers and/or global positioning satellite (GPS) equipment aboard the vessels. This would be particularly important for areas where the boundaries of the areas of concern of the regional tuna bodies abut or overlap. It would also be important to have some means of exchanging information among the regional tuna bodies regarding their programs to limit capacity and what the effects of these may be on the programs in other regions. Also important would be some mechanisms for dealing with IUU vessels. These mechanisms could take the form of various multilateral restrictions and sanctions imposed by the participating governments. A permanent committee, comprised of representatives of each of the regional tuna bodies, would be necessary to accomplish these objectives.

Finally, it is clear that tuna fisheries are at a critical juncture. With the exception of Atlantic bluefin, southern bluefin and bigeye, most stocks of tuna are not overfished. Since overfishing is the result of too much fishing capacity, and since there is too much fishing capacity in most of the tuna fisheries of the world, it is urgent that programs be implemented to stop the growth in capacity before resource degradation and economic chaos result, and to bring that capacity to levels in balance with the productivity of the resources.

Acknowledgements

The author thanks the FAO Fisheries Department for financing this publication and the reported study. He is particularly grateful to Dr. Jacek Majkowski, Fishery Resources Officer, Marine Resources Service, of the FAO Fisheries Department for organizing it and for his assistance. The report was written within the framework of FAO Project GCP/INT/851/JPN.

The author also thanks Dr. William Bayliff of the Inter-American Tropical Tuna Commission and Dr. Dale Squires of the U.S. National Marine Fisheries Service for reviewing this manuscript.

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