Industry Perspectives: Taking the Initiative for the Management of New Zealands Commercial Fisheries - M. Harte
Property Rights in Australia's Northern Prawn Fishery - An Industry Perspective - A. Jarrett
New Zealand Seafood Industry Council, Private Bag
Wellington, New Zealand
The management of the worlds fisheries has reached a turning point. Government-centred management of fisheries resources is by and large a failure (Jentoft et al 1998, McGoodwin 1990, Sharp 1997, Townsend, 1995). Behind its failure is an ignorance or denial by regulatory agencies of the importance of property-rights. Compounding the failure is their reluctance to acknowledge the potential of fishers to manage fisheries resources under decentralised, or devolved, management regimes.
New Zealands fisheries management system is arguably an exception. In 1986 New Zealand was one of the first countries to adopt a comprehensive property rights-based quota management system (QMS) in which catch limits for each fish stock are set by government and allocated to fishers through Individual Transferable Quotas (ITQs). An ITQ is a perpetual harvest-right. It permits the holder to catch a proportion of the total allowable commercial catch (TACC) for a fish stock. ITQs can be bought, sold or leased in the same way that property is bought, sold or leased.
The government has also implemented far reaching reforms that provide for: a) devolution of fisheries management functions to rights holder associations and b) approval of fisheries management plans developed by representative and accountable rights-holder associations
This paper describes briefly:
i. the evolution of rights-based fishery management in New Zealand2. COMMERCIAL FISHERIES MANAGEMENT IN NEW ZEALAND 1908-1999
ii. the development of fisheries plans as the basis for self-management initiatives by commercial rights-holder associations.
Although commercial fisheries have a decade and a half of experience of rights-based management since the introduction of the QMS in 1986, opportunities for devolved and/or decentralised management of commercial fisheries are a recent feature of New Zealands fisheries policy. The southern scallop fishery represents potentially the start of a new chapter in the history of the countrys fisheries. In describing three previous phases of commercial fisheries management in New Zealand this section aims to demonstrate why the concept of decentralisation and devolution has become a practical management option only with the maturing of the rights-based quota management system (QMS). A more detailed description of the history of New Zealands fishery management can be found in Batstone and Sharp (1999), Sharp (1997) and Gaffney (1997).
Fisheries management has its legislative origins in the Oyster Fisheries Act 1866 and the Fisheries Act 1908. The 1908 Act provided statutory authority for regulations aimed at the purpose of biological protection until 1983. During this period most fisheries were small and confined largely to an inshore domestic industry. Over-exploitation of inshore stocks led to the introduction of a limited-entry management system in the late 1930s.
A Royal Commission examination of the fisheries in the late 1950s concluded that the regulatory environment was detrimental to the development of the fisheries in that there was little or no technological advancement, no competition among fishers, and a range of resources that were not being exploited.
Regulated open-entry 1963-1986
In 1963 the system of limited-entry was dropped in favour of open-entry development under a permit system. The system provided for a range of regulatory measures restricting gear, the size of harvests and where fishing could occur. Economic objectives, rather than conservation, shaped the management of the fisheries. The government sought to encourage investment in the fishing industry through investment incentives, capital grants, allowances and tax breaks.
However, the governments desire to facilitate economic gain was unfocused and its policies encouraged the natural tendency of commercial activity towards over-capitalisation. Citing economic and biological objectives, the government took measures to correct this, beginning in the late 1970s when a moratorium was placed on the issuing of new fishing permits. The moratoriums and regulatory environment compromised economic efficiency. Restricting new entrants dampened competitive pressures. Restrictions on inputs, such as boat-size and net-size, and activity merely served to increase the cost of fishing.
The measures never got to the heart of the problem. Fishers were left with a common stock and no constraints on how much fish they could catch. A significant and unintended effect of the regulatory environment was to encourage an investment in extracting as much fish as was commercially profitable, when and where fishers could fish, using allowable fishing techniques.
Evolution of a property rights-based system 1978-1999
By declaring a 200-mile exclusive economic zone (EEZ) in 1978 the government expanded the range of fish and stocks under national control. Deep-sea fisheries were previously exploited by foreign operators with few controls placed on their harvest. The government had to develop policies to manage the fish resource of a large and unfamiliar area. Initially, the EEZ and inshore fisheries were managed separately. Subsequently, the government applied a policy of limited domestic expansion, joint-venture arrangements and licensing of foreign fleets to the zone outside 12 miles.
In 1983 the government introduced an economically-oriented management system based on individual transferable quota (ITQ) for seven species in the new 200-mile zone. This quota management system served later as a model for inshore stocks and its existence offshore made it easier to persuade fishers of the effectiveness of such a system.
Also in 1983 the government passed the first new Fisheries Act since 1908. The Act introduced the concept of fisheries management plans. And, significantly, for the first time in New Zealand fishing history, the government gave legislative recognition not only to biological objectives but to the goal of encouraging an optimal return from the fisheries. The Act, however, did not address the fundamental question of how these biological and economic goals could be linked.
The potential for the advancement of both goals was provided by a 1986 amendment to the 1983 Act. The amendment recognised economic goals more comprehensively by introducing the quota management system for 21 inshore species and providing for its broader application to the offshore fisheries. The offshore fisheries quota granted in 1983 were transformed along with the newly-introduced individual transferable quota, into tradeable entitlements in perpetuity.
The seven founding aims of the quota management system (Luxton 1997) were to:
i. rebuild inshore fisheries where requiredIn 1990 individual transferable quota was changed from a specified tonnage of a total allowable commercial catch, which could be repurchased by government, to a proportion of the total allowable commercial catch that varies as the total allowable commercial catch varies. The change reflected the reality that the process of government buying and selling quota to change levels of total allowable commercial catch was cumbersome and costly.
ii. ensure that catches are limited to levels that can be sustained over the long-term
iii. ensure that catches are harvested efficiently with maximum benefit to the industry and to New Zealand
iv. allocate catch entitlements equitably based on an individual permit-holders commitment to the fishery
v. integrate management of inshore and offshore fisheries
vi. develop a management system that can be applied both nationally and regionally
vii. enhance the recreational fishery.
There is general recognition that the quota management system has played a significant role in improving the biological status of the fisheries resource and commercial return to fishers (Annala 1996). Further discussion of New Zealands quota management system can be found in Clark et al. (1988), Dewees (1989), Memon and Cullen (1992), and Sissenwine and Mace (1992).
Today there are over 250 fish stocks managed by New Zealands QMS covering 40 species (out of the 100 species caught commercially). This represents over 85% of the total known fish catch in the EEZ. Owners of individual transferable quota have a large incentive to invest resources into the sustainability of the fishery because any lowering of catch limits reduces the value of their investment in the fishery. As Jentoft et al. (1998) suggest, the private nature of QMS rights has given a more accurate indication of who the users are than under previous management regimes. Importantly, a clearly defined set of holders of exclusive rights makes it easier to assign responsibility for devolved and/or decentralised management of a fishery.
Responding to the productive incentive structures of the quota management system, New Zealands quota owners/leasees are increasingly following the example of the southern scallop fishery and organising themselves into management associations based on functional and/or territorial communities. Depending on the fishery, these associations have a number of purposes but, at this stage, they appear to have several key functions:
i. to facilitate the collection of funds to finance fisheries management activities such as research or re´-seeding and to manage the delivery of such services3. CO-MANAGING FISHERIES: THE FUTURE FOR NEW ZEALAND
ii. to make fisheries management rules and to impose sanctions on non-compliance of company shareholders
iii. to represent the interests of shareholders in government processes that involve consultation - such as determining (government required) fisheries management services and the setting of total allowable commercial catches
iv. to defend against erosion of harvesting-rights and to promote the expansion and development of management rights.
Although New Zealands fisheries management system has successfully devolved management responsibility to rights-holders in some fisheries, it has yet to fulfil its potential to provide for profitable and sustainable fisheries (Harte and Bess, in press). There needs to be a change in attitude towards fisheries management by many in government, some ITQ owners and other fishery stakeholders if the potential of New Zealands marine resources is to be realised. Although many ITQ owners are critical of government, not many are prepared, like the Challenger Scallop Enhancement Company (CSEC), to take on additional responsibility for the management of fisheries.
Nevertheless, the success of the southern scallop fishery, and other fisheries with more limited management responsibilities such as the rock lobster fishery, has increased awareness that the management of New Zealands fishery resources needs to move away from a centralised regime. To facilitate an increasingly positive relationship between property rights-holders and government, that leads to mutually beneficial outcomes, the government must devolve additional rights, responsibility and authority for fisheries management to resource users and local and regional communities.
Co-management is the model favoured by advocates of less government control and more say by resource users as the management alternative with the greatest likelihood of resolving fisheries problems. Jentoft et al. (1998 p 426) wrote:
It [co-management] is a social system that changes the nature of the game, the relationships between players and what each of them strives for. Co-management means an ongoing collaborative and communicative process, where resource users and other actors are in an entrepreneurial and creative role.Co-management and the reshaping of governments role
The governments role in co-management is to define how, through legislative and policy instruments, power is shared and decision-making arrangements established. Only government can legally establish and defend user-rights and security of tenure (Pomeroy and Berkes 1997). The government may, in addition, address issues beyond the scope of stakeholder arrangements to support the sustainability of stakeholder organisations. It may also undertake a co-ordinating role to enable the various parties in a co-managed fisheries environment to interact.
The New Zealand Fisheries Act 1996 outlines the role of central government in New Zealand as providing for the utilisation of fisheries resources while ensuring sustainability. In practice this means:
i. establishing the rules and regulations that enable successful and sustainable fishing activityCo-management and devolution of management roles to fisher associations
ii. ensuring that fisheries harvesting rights are clear, appropriate and enforceable
iii. transferring management responsibilities to fisheries rights-holders
iv. co-ordinating the collection and provision of information to fisheries stakeholders
v. ensuring the effectiveness of management frameworks and systems, including:- setting standards for fisheries management plansvi. prosecuting offenders who break the law.
- monitoring and auditing the performance of fisheries management plans
Pomeroy and Berkes (1997) emphasise that unless government and its officials can be convinced of the desire and ability of fishers to manage themselves, little progress can be made on devolution and co-management. New Zealands fishers have a responsibility to demonstrate a high level of organisational and management ability.
The role of commercial, recreational and customary rights-holder groups in fisheries management is to develop management frameworks that provide for and deliver the utilisation of fishery resources while ensuring sustainability.
In the near future, rights-holders and the Ministry of Fisheries see rights-holder associations becoming increasingly responsible for developing fisheries plans that:
i. set management objectives and performance measuresAfter developing a fisheries plan, rights holders associations must implement them by:
ii. specify rules for management and governance
iii. define necessary services including: a) research, b) administration, c) monitoring and compliance and d) establishing funding arrangements.
i. managing decision-making processesAll rights-holders, stake-holders, government officials and scientists will need to continue to work together to evaluate fisheries management performance. The government needs assurance that such management systems provide for sustainability; rights-holders need a clear framework in which to formulate the details of sustainable harvesting and management practices. This approach will increase innovation, reduce conflict between alternative stake-holder groups, reduce transactions costs and provide for the utilisation of fisheries resources while ensuring sustainability.
ii. purchasing research services
iii. administering access
iv. monitoring fishing activity
v. providing information/education services
vi. enforcing non-criminal rules;
vii. collecting levies to fund management activities.
Rights-holder groups and government will jointly decide devolution decisions based on the capabilities of rights-holder associations to handle management functions. Commercial fishers are already a long way to achieving this experience and capability in New Zealand closely followed by some iwi and distantly by recreational fishers.
Most fisheries issues will not find resolution on scientists computers or in policy-makers offices. They will be solved by the collective actions of fishers on the water, by fishers who are willing to listen and learn and are ready to change in response to the management needs of fisheries.
Notwithstanding the challenges ahead, the New Zealand seafood industry has confidence in the future. At every challenge the property rights-based fisheries management system has emerged stronger and better specified. The door is opening for co-management, devolution and the decentralisation of fisheries management to rights-holder associations. It remains to be seen how far it opens and who is prepared to pass through it. At best many rights-holders will seize the opportunities offered, at worst rights-holders must ensure the door is not slammed shut by those who wish to protect their own standing conferred by a centralised management regime.
5. LITERATURE CITED
Annala, J. 1996. New Zealands ITQ system: have the first eight years been a success or failure? Reviews in Fish Biology and Fisheries, 6:43-62.
Batstone, C.J. and B.M.H Sharp 1999. New Zealands quota management system: The first ten years. Marine Policy, 23, 177-190.
Clark, I., P. Major and N. Mollet 1988. Development and implementation of New Zealands ITQ management system. Marine Resource Economics, 5:325-349.
Dewees, C. 1989. Assessment of the implementation of individual transferable quotas in New Zealands inshore fisheries. North American Journal of Fisheries Management, 9(2)131-139.
Gaffney, K.R. 1997. Property Right Based Fisheries Management: Lessons From New Zealands Quota Management System, unpublished Masters Thesis, Victoria University of Wellington.
Harte, M.J. and R. Bess 2000. The role of property rights in the development of New Zealands Marine farming industry. In: Use of Property Rights in Fisheries Management, FAO Fisheries Technical Paper 404/2, pp. 331-337. FAO, Rome.
Hartevelt, T. 1998. Fishing for the Future: Review of the Fisheries Act 1996 Ministry of Fisheries, Wellington.
Jentoft, S., and B.J. McCay 1995. User participation in fisheries management, lessons drawn from international experiences. Marine Policy, 19(3) 227-246.
Jentoft, S., McCay, B.J. and D.C. Wilson 1998. Social theory and fisheries co-management. Marine Policy, 22(4-5)423-436.
Luxton, J. 1997. Stakeholder Management of Recreational Fisheries, address to the Recreation Fishing Council Annual General Meeting, Bay of Islands.
McGoodwin, J.R. 1990. Crisis in the Worlds Fisheries: People, Problems and Policies, Stanford University Press, Stanford, Memon, A.P. and R. Cullen 1992. Fisheries policies and their impact on the New Zealand Mâori, Marine Resource Economics, 7:153-167.
Memon, A.P. and R. Cullen. 1992. Fisheries policies and their impact on the New Zealand Mâori. Marine Resource Economics, 7, pp 153-167.
Primary Production Select Committee 1998. Inquiry into the Governments Fisheries Cost Recovery Regime, New Zealand House of Representatives, 18-19.
Pomeroy, R.S. and R. Berkes 1997. Two to tango: The role of government in fisheries co-management, Marine Policy, 21(5):465-480.
Sen, S. and J.R. Nielson 1996. Fisheries co-management: a comparative analysis, Marine Policy, 20(5) pp. 405-418.
Sharp, B.M.H. 1997. From regulated access to transferable harvesting rights: policy insights from New Zealand, Marine Policy, 21(6):501-517.
Sissenwine, M.P. and P.M. Mace 1992. ITQs in New Zealand: The era of fixed quota in perpetuity, Fisheries Bulletin, 90:147-160.
Townsend, R.E. 1995. Fisheries self-governance: corporate or cooperative structures? Marine Policy, 19(1):39-45.
Australian Fisheries Management Authority
8 Harwood Close, Brinsmead, QLD 4870 Australia
During the past few years we have seen subtle, and sometimes unsubtle, changes in approaches to commercial fishing and fisheries management. Gone are the cavalier attitudes of governments and industry which resulted in the excess fishing-effort and over-capitalisation which has left many of our fish stocks decimated. Gone is the disinterest of the community and our environmental groups who were previously busy saving forests, not fish.
That has been replaced with conservatism by fisheries managers, respect and concern for our marine resources by most fishers, and a keen awareness and increasing focus on fisheries worldwide by environmentalists and the general community. Lessons have been learned along the way. We have learned that fish stocks can be depleted - who would have thought that 20 years ago? We have learned that none of us are islands and that we must all work together. We have learned that we must adapt our fishing and management practices to reduce pressure on our heavily-depleted fish stocks, and to protect our marine environment. We have learned to change.
One fishery which has managed to keep pace with change, and which has often been ahead of it is Australia's Northern Prawn Fishery, known as the NPF. The NPF has the reputation of being one of the best-managed fisheries in the world. There are a number of things which have contributed to its success. To me the most significant are industrys involvement in the management process, and the strong well-defined fishing property-rights held by the commercial fishers.
The Northern Prawn Fishery covers a vast area and extends across the top of Australia from Cape York to Cape Londonderry. Prawn fishing began in the NPF in the 1950s when a few adventurous souls discovered banana prawns in the Gulf of Carpentaria. This discovery created interest in both fishing and scientific communities and as a result of collaborative efforts by industry and the Commonwealth Scientific and Industrial Research Organization (CSIRO), a commercial prawn fishery was established by the late 1960s. The main species caught were banana prawns but the fishery was slow to develop due to the remote area and lack of infrastructure.
Interest in the fishery escalated in 1974 when, as a result of huge monsoonal rains, in excess of 12 500t of banana prawns were caught. The bumper season, coupled with the 'come all ye faithful' approach of the government of the day which was intent on developing Northern Australia, and the 'gold rush' mentality of the industry, resulted in vessel numbers and fishing effort rising at an alarming rate over the next couple of years - a classic case of over-exploitation. At this time the fishery was an open-access fishery with no input or output-controls in place. Catches of tiger prawns were also being recorded at this time and the negative impact on the stocks was inevitable.
As industry had taken the initiative in developing the fishery, it began to take a leading role in management. The first formal advisory committee, Northern Prawn Advisory Committee (NORPAC), was established by the Government in 1977 and provided for industry participation in the management process. It was at the behest of industry members of NORPAC that, in response to concerns about the increases in vessel numbers and the resultant fishing effort, a moratorium was introduced on new vessels entering the fishery, and limited-entry was introduced in 1977. The effect of the limited-entry policy was to provide the participants in the fishery with exclusive commercial access to the area. It was not acknowledged at the time, but this was an important step in the establishment of property-rights in the NPF and the pathway to improved management of the fishery.
A refinement of the limited-entry policy occurred when all NPF licensed vessels were 'unitised' as an additional means of restricting and controlling fishing effort in 1984. Each vessel was granted a B-class unit which represented the right of the boat to access the fishery, and a number of A-class units based on vessel size and enginepower, broadly representing a boat's individual fishing power. A and B-units were tradable and thus had a commercial value. As a result they soon became recognised as the currency in the fishery. This was an interesting development in an input-control fishery as popular wisdom of the time was that property-rights were only conferred by the allocation of ITQs.
The 1980s were lean years in the Northern Prawn Fishery (NPF) with nearly 300 highly efficient, purpose-built freezer-trawlers targeting banana and tiger prawn stocks. Industry again took the initiative to reduce fishing pressure and in 1985 convinced the Government to introduce an industry government-funded buy-back scheme. While the purpose of the buy-back scheme was to remove boats, and thus reduce fishing effort, it was an interesting test of the strength and legality of NPF units as fishing-rights, as buy-back prices were based on A and B units. As a result, A and B units became further entrenched as the currency of property-rights in the fishery.
The real test of whether NPF units were property occurred when the initial buy-back was not as successful as hoped and a dedicated restructuring programme was implemented in 1990 to overcome falling prawn prices, biological concerns and the ongoing problem of excess capacity. The restructuring programme included an accelerated buy-back scheme, again based on A and B class units, with a compulsory surrender of A units if the total number of A units in the fishery was not reduced to 50 000 through the accelerated buy-back scheme. The target was not reached through the buy-back scheme and the accelerated restructuring programme culminated in operators either selling out of the fishery, or surrendering approximately 30% of their A unit holdings in 1993.
The restructuring programme successfully reduced the number of vessels to 130 but resulted in two Federal Court challenges being mounted on whether the compulsory surrender of A units constituted an acquisition of property under Constitutional Law. In considering the evidence, the Courts accepted that NPF units were property but determined that as the compulsory surrender was proportional across the fishery, it did not constitute an acquisition of property. These decisions were significant milestones in the history of property-rights in the NPF as they laid a strong foundation on which to base future management decisions to ensure there is no diminution of these fishing-rights over time. It was also good news for the industry and financiers who had for some time been treating NPF units as collateral for business loans.
Industry continues to take the initiative in the NPF today. Industry pays 100% of the fishery's attributable management-costs and is a driving force on the Northern Prawn Fishery Management Advisory Committee (NORMAC). Industry takes a leading role in reviewing management-costs, initiating and funding research projects, and developing closures regimes, enforcement programmes and other management strategies to protect target and non-target species, and the marine eco-system. It is widely recognised that input-control fisheries such as the NPF require ongoing restructuring of the fishery to ensure that technological advancement and effort-creep do not result in stock depletion. Even prior to the completion of the 1993 restructuring programme, NORMAC at industry's behest, began investigating alternative management approaches to seek a more flexible and responsive system than the existing unitisation system. As a result, NORMAC has recommended that a gear-unit system be implemented in the fishery in the year 2000. Under the gear-unit system, the fishery will be managed through net sizes and numbers, rather than through vessel size and horsepower. The change to gear-units will include an immediate 15% reduction in gear towed to further reduce fishing pressure on the fragile tiger prawn stocks.
Industry has played a vital role in the development of the gear-unit system, including the decision to further reduce fishing effort by reducing the amount of total gear towed and in the development of the transition formula. Legal advice indicated that as A units are the recognised property-right in the fishery, the transition to gear units must be proportional to A unit holdings. This advice was adopted by the majority of industry and the Australian Fisheries Management Authority (AFMA) Board, who are keen to ensure there is no diminution of the existing property-rights in the transition to gear units. This approach is testimony to the strength, legality and acceptance of the existing NPF units as property and is important to the financial institutions which continue to recognise fishing-rights as property, and therefore collateral against borrowings.
It is my experience that where strong, well-defined property-rights exist, whether in the form of quotas or input-control rights such as boat or gear-units, fishing habits change and operators are more prepared to become involved in the management process. This is certainly the case in the NPF where industry continues to take a leading role in management and remains committed to implementing management strategies to achieve sustainable management and economic efficiency. Hard decisions to reduce fishing-time, fishing-effort and fishing-capacity have been, and will continue to be taken when necessary to improve the management of this fishery.
I know many people share my view that secure property-rights are integral to sustainable fisheries management. The NPF experience is a good example of how secure property-rights result in greater awareness by industry of sustainability issues in relation to target and non-target species and the marine eco-system in general. NPF industry has greater ownership over management direction and decisions and is now working in partnership with managers, environmentalists and other user groups to protect both the marine environment and their fishing property-rights. Today the NPF has a gross value of production of approximately $A130 million. NPF units are valued at around $A6500 each. An average size NPF vessel licence is worth almost $A3 million. None of this would have been achievable without strong property-rights.
I am personally committed to improving the strength and security of commercial fisheries property-rights and it is to the credit of my AFMA Board colleagues that positive steps are being taken in this regard in relation to property-rights in Australias Commonwealth fisheries. However there will be new and ongoing threats to our property-rights as threats to fish stocks evolve and increase around the world. Industry must continue to take up the challenge in all fisheries to ensure they are granted secure, well defined access-rights and must be prepared to take their place in the management framework. Managers and legislators must be encouraged to accept the need for, and benefits of, secure property-rights in commercial fisheries and must move to enshrine those rights in relevant legislation. Only then can our mutual aspirations for sustainable fisheries management begin to become a reality.