Individual fishing quotas (IFQs), also known as "individual transferable quotas" (ITQs), are one kind of ''
catch share
Catch share is a fishery management system that allocates a secure privilege to harvest a specific area or percentage of a fishery's total catch to individuals, communities, or associations. Examples of catch shares are individual transferable quot ...
'', a means by which many governments regulate fishing. The regulator sets a
species
In biology, a species is the basic unit of classification and a taxonomic rank of an organism, as well as a unit of biodiversity. A species is often defined as the largest group of organisms in which any two individuals of the appropriate s ...
-specific
total allowable catch
The Common Fisheries Policy (CFP) is the fisheries policy of the European Union (EU). It sets quotas for which member states are allowed to catch each type of fish, as well as encouraging the fishing industry by various market interventions. I ...
(TAC), typically by weight and for a given time period. A dedicated portion of the TAC, called quota shares, is then allocated to individuals. Quotas can typically be bought, sold and leased, a feature called transferability. As of 2008, 148 major fisheries (generally, a single species in a single fishing ground) around the world had adopted some variant of this approach,
along with approximately 100 smaller fisheries in individual countries. Approximately 10% of the marine harvest was managed by ITQs as of 2008.
The first countries to adopt individual fishing quotas were the
Netherlands
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,
Iceland
Iceland ( is, Ísland; ) is a Nordic island country in the North Atlantic Ocean and in the Arctic Ocean. Iceland is the most sparsely populated country in Europe. Iceland's capital and largest city is Reykjavík, which (along with its s ...
and
Canada
Canada is a country in North America. Its ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, covering over , making it the world's second-largest country by tot ...
in the late 1970s, and the most recent is the United States Scallop General Category IFQ Program in 2010.
The first country to adopt individual transferable quotas as a national policy was New Zealand in 1986.
Command and control approaches
Historically, inshore and deepwater fisheries were in
common
Common may refer to:
Places
* Common, a townland in County Tyrone, Northern Ireland
* Boston Common, a central public park in Boston, Massachusetts
* Cambridge Common, common land area in Cambridge, Massachusetts
* Clapham Common, originally com ...
ownership where no one had a property right to the fish (i.e., owned them) until after they had been caught. Each boat faced the zero-sum game imperative of catching as many fish as possible, knowing that any fish they did not catch would likely be taken by another boat.
Commercial fishing evolved from subsistence fishing with no restrictions that would limit or direct the catch. The
implicit assumption
A tacit assumption or implicit assumption is an assumption that underlies a logical argument, course of action, decision, or judgment that is not explicitly voiced nor necessarily understood by the decision maker or judge. These assumptions may be ...
was that the ocean's bounty was so vast that restrictions were unnecessary. In the 20th century, fisheries such as Atlantic cod and California sardines collapsed, and nations began to limit access to their fishing grounds by boats from other countries, while in parallel, international organizations began to certify that specific species were "threatened", "endangered", etc.
One early management technique was to define a "season" during which fishing was allowed. The length of the season attempted to reflect the current abundance of the fishery, with bigger populations supporting longer seasons. This turned fishing into a race, driving the industry to bigger, faster boats, which in turn caused regulators to repetitively shorten seasons, sometimes to only a few days per year. Landing all boats over an ever-shorter interval also led to glut/shortage market cycles with prices crashing when the boats came in. A secondary consequence was that boats sometimes embarked when the fishery was "open" regardless of weather or other safety concerns.
[
]
A move to privatisation and market-based mechanisms
The implementation of ITQs or IFQs works in tandem with the privatisation
Privatization (also privatisation in British English) can mean several different things, most commonly referring to moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation when ...
of common assets. This regulatory measure seeks to economically rationalise access to a common-pool resource
In economics, a common-pool resource (CPR) is a type of good consisting of a natural or human-made resource system (e.g. an irrigation system or fishing grounds), whose size or characteristics makes it costly, but not impossible, to exclude potenti ...
. This type of management is based in the doctrine of natural resource economics
Natural resource economics deals with the supply, demand, and allocation of the Earth's natural resources. One main objective of natural resource economics is to better understand the role of natural resources in the economy in order to develo ...
. Notably the use of ITQs in environmental policy has been informed by the work of economists such as Jens Warming, H. Scott Gordon and Anthony Scott. It is theorised that the primary driver of over-fishing is the rule of capture externality. This is the idea that the fisherman does not have a property right to the resource until point of capture, encouraging competitive behaviour and overcapitalisation
Overcapitalisation or Overcapitalization, refers to an economic phenomenon whereby the valuation/price of an asset is superior to its ‘real’ value, however difficult to define, therefore putting a strain on attempts to obtain a reasonable retu ...
in the industry. It is theorised that without a long-term right to fish stocks, there is no incentive to conserve fish stocks for the future.
The use of ITQs in resource management dates back to the 1960s and was first seen in ‘pollution quotas’, which are now widely used to manage carbon emissions from power utilities. For both air and marine resources ITQs use a ‘cap-and-trade’ approach by setting typically annual limits on resource exploitation (TAC in fisheries) and then allowing trade of quotas between industry users. However, ITQ use in fisheries is fundamentally different from pollution quotas, since the latter regulate the by-product of an industry, whereas fishery ITQs regulate the actual output product of the fishing industry, and thus amount to exclusive industry participation rights.
The use of IFQs has often been related to broader processes within neoliberalism
Neoliberalism (also neo-liberalism) is a term used to signify the late 20th century political reappearance of 19th-century ideas associated with free-market capitalism after it fell into decline following the Second World War. A prominent fa ...
that tend to utilise markets as a regulatory tool. The rationale behind such neo-liberal mechanisms situates itself in the belief that market mechanisms harness profit motive
In economics, the profit motive is the motivation of firms that operate so as to maximize their profits. Mainstream microeconomic theory posits that the ultimate goal of a business is "to make money" - not in the sense of increasing the firm's s ...
to more innovative and efficient environmental solutions than those devised and executed by states. Whilst such neo-liberal regulation has often been cited as a move away from state governance, in the case of privatization
Privatization (also privatisation in British English) can mean several different things, most commonly referring to moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation when ...
the state is integral in the process of creating and maintaining property rights
The right to property, or the right to own property (cf. ownership) is often classified as a human right for natural persons regarding their possessions. A general recognition of a right to private property is found more rarely and is typically ...
.
The use of neoliberal
Neoliberalism (also neo-liberalism) is a term used to signify the late 20th century political reappearance of 19th-century ideas associated with free-market capitalism after it fell into decline following the Second World War. A prominent fa ...
privatising regimes has also often raised contradictions with the rights of indigenous communities. For example, the exclusion of Māori
Māori or Maori can refer to:
Relating to the Māori people
* Māori people of New Zealand, or members of that group
* Māori language, the language of the Māori people of New Zealand
* Māori culture
* Cook Islanders, the Māori people of the C ...
tribes in the initial allocation of fishing quota in New Zealand's quota management system The Quota Management System (QMS) is a type of individual fishing quota that is used in New Zealand to manage fish stocks.
New Zealand fishing industry
Seafood is one of New Zealand's largest export markets, with 85% of catches being exported. Over ...
led to a lengthy legal battle delaying development in national fisheries policy and resulting in a large settlement from the crown. There have also been similar legal battles regarding the allocation of fishing rights with the Mi'kmaq
The Mi'kmaq (also ''Mi'gmaq'', ''Lnu'', ''Miꞌkmaw'' or ''Miꞌgmaw''; ; ) are a First Nations people of the Northeastern Woodlands, indigenous to the areas of Canada's Atlantic Provinces and the Gaspé Peninsula of Quebec as well as the northe ...
in Canada and the Saami
The Sporting Arms and Ammunition Manufacturers' Institute (SAAMI, pronounced "Sammy") is an association of American manufacturers of firearms, ammunition, and components. SAAMI is an accredited standards developer that publishes several Americ ...
in North Norway. Aboriginal fishing rights are said to pose a challenge to the authoritative claims of the state as the final arbiters in respect of access and participation in rights-based regimes.
Catch shares
The term ''catch share'' has been used more recently to describe the range of programmes similar to ITQs. Catch shares expanded the concept of daily catch limits to year-long limits, allowed different fishermen to have different limits based on various factors, and also limited the total catch.
Catch shares eliminate the "race to the fish" problem, because fishermen are no longer restricted to short fishing seasons and can schedule their voyages as they choose. Boom/bust market cycles disappear, because fishing can continue throughout a typically many-month season. Some safety problems are reduced because there's no need to fish in hazardous conditions just because the fishery happens to be open.
A crucial element of catch share systems is how to distribute/allocate the shares and what rights come with them. The initial allocation can be granted or auction
An auction is usually a process of buying and selling goods or services by offering them up for bids, taking bids, and then selling the item to the highest bidder or buying the item from the lowest bidder. Some exceptions to this definition ex ...
ed. Shares can be held permanently ("owned") or for a fixed period such as one year ("rented"). They can be salable and/or leasable or not, with or without limits. Each variation has advantages and disadvantages, which may vary given the culture of a given fishing community.
Initial distribution
ITQs are typically initially allocated as grants according to the recent catch history of the fishery. Those with bigger catches are generally allocated larger quotas. The primary drawback is that individuals receive a valuable right at no cost. Grants are somewhat analogous to a "homestead
Homestead may refer to:
*Homestead (buildings), a farmhouse and its adjacent outbuildings; by extension, it can mean any small cluster of houses
*Homestead (unit), a unit of measurement equal to 160 acres
*Homestead principle, a legal concept th ...
", in which settlers who developed farms in the American wilderness eventually received title without payment to what had been public land. In some cases, less than 100% of the TAC becomes ITQs, with the remainder allocated to other management strategies.
The grant approach is inherently political, with attendant benefits and costs. For example, related industries such as fish processing
The term fish processing refers to the processes associated with fish and fish products between the time fish are caught or harvested, and the time the final product is delivered to the customer. Although the term refers specifically to fish, in ...
and other non-participants may seek quota grants. Also, fishermen are often excluded from receiving quota if they are not also boat owners, however boat owners who do not fish do receive quota, such as was the case in Alaskan IFQ distributions. The offshore pollock
Pollock or pollack (pronounced ) is the common name used for either of the two species of North Atlantic marine fish in the genus ''Pollachius''. ''Pollachius pollachius'' is referred to as pollock in North America, Ireland and the United Kingd ...
co-operative in the Pacific Northwest allocated initial quotas by mutual agreement and allows quota holders to sell their quotas only to the co-operative members.[
Quota auctions recompense the public for access to fisheries. They are somewhat analogous to the ]spectrum
A spectrum (plural ''spectra'' or ''spectrums'') is a condition that is not limited to a specific set of values but can vary, without gaps, across a continuum. The word was first used scientifically in optics to describe the rainbow of colors i ...
auctions that the U.S. held to allocate highly valuable radio spectrum. These auctions raised tens of billions of dollars for the public. The auction for crab quota in Russia in 2019 raised about 2 billion euro. Note however that the television
Television, sometimes shortened to TV, is a telecommunication medium for transmitting moving images and sound. The term can refer to a television set, or the medium of television transmission. Television is a mass medium for advertisin ...
industry did not have to pay for the necessary spectrum to switch from analog
Analog or analogue may refer to:
Computing and electronics
* Analog signal, in which information is encoded in a continuous variable
** Analog device, an apparatus that operates on analog signals
*** Analog electronics, circuits which use analog ...
to digital broadcasting
Digital broadcasting is the practice of using digital signals rather than analogue signals for broadcasting over radio frequency bands. Digital television broadcasting (especially satellite television) is widespread. Digital audio broadcasting is ...
, which is more like quota grants for incumbent fishermen.
Trading
ITQs can be re-sold to those who want to increase their presence in the fishery. Alternatively, quotas can be non-tradeable, meaning that if a fisherman leaves the industry, the quota reverts to the government to retire or to grant/auction to another party.
Once distributed, quotas can be re-granted/re-auctioned periodically or held in perpetuity. Limiting the time period lowers the quota's value and its initial auction price/cost, but subsequent auctions create recurring revenues. At the same time, "privatising" such a public resource reduces the remaining amount of public resources and can be thought of as "giving away our future". In the industry, rented quotas are often referred to as "dedicated access privileges" (DAP).
Another issue with tradability is that large enterprises may buy all the quotas, ending what may be a centuries-long tradition of small-scale operations. This may benefit the sellers (and the buyers and those who buy the fish) but can potentially cause large changes in the culture of fishing communities. Consolidation of quota accompanies every IFQ programme, and typically works to phase out smaller, less profitable fishing operations in favour of larger, often corporate-owned fleets who have better financing capabilities.
Some fisheries require quota holders to be participating fishermen to prevent absentee ownership and limit the quota that a captain can accumulate. In the Alaska halibut
Halibut is the common name for three flatfish in the genera '' Hippoglossus'' and ''Reinhardtius'' from the family of right-eye flounders and, in some regions, and less commonly, other species of large flatfish.
The word is derived from ''h ...
and black cod fisheries, only active fishermen can buy quota, and new entrants may not sub-lease their quota. However, these measures have only served to mitigate outside speculation in IFQs by non-fishermen. A lack of regulatory policy or enforcement still results in the prevalence of "armchair fishermen" (those who own quota but do not materially participate in the fishery). Since IFQs began in 1995, the commercial longline fleet has never exceeded these fisheries' TACs.
Other characteristics
ITQs may have the effect of changing the criteria that fishermen apply to their catch. Highgrading involves catching more fish than the quota allows and dumping specimens that are less valuable because of size, age or other criteria. Many of the discarded fish are already dead or quickly die, increasing fishing's reduction of stocks.[
]
Effectiveness
In 2008 a large scale study concluded that ITQs can help to prevent collapses and restore declining fisheries when compared to a data set including 11,000 fisheries of various management structures (some entirely unmanaged).[ While nearly a third of open-access fisheries have collapsed, catch share fisheries are only half as likely to fail.][ However, when compared to other modern fishery management schemes, IFQ managed fisheries exhibit no long term ecological advantages. A study of the 14 IFQ programmes in the United States revealed that fish stocks are unaffected by these management schemes. In terms of productivity, a study that exploits a 2009 reform that introduced IFQ for Peruvian anchovy finds that quotas do not increase within-asset or within-firm productivity in quantities.
In 1995, the Alaskan ]halibut
Halibut is the common name for three flatfish in the genera '' Hippoglossus'' and ''Reinhardtius'' from the family of right-eye flounders and, in some regions, and less commonly, other species of large flatfish.
The word is derived from ''h ...
fishery converted to ITQs, after regulators cut the season from about four months down to two or three days. Today, due to the pre-allocation of catch that accompanies IFQs, the season lasts nearly eight months and boats deliver fresh fish at a steadier pace. However, halibut stocks have been in continuous decline for over a decade, as poor stock assessments leading to overfishing
Overfishing is the removal of a species of fish (i.e. fishing) from a body of water at a rate greater than that the species can replenish its population naturally (i.e. the overexploitation of the fishery's existing fish stock), resulting in th ...
have caused a substantial decline in biomass
Biomass is plant-based material used as a fuel for heat or electricity production. It can be in the form of wood, wood residues, energy crops, agricultural residues, and waste from industry, farms, and households. Some people use the terms bi ...
.
Additionally, despite the increase in landings value, the number of quota holders has declined by 44%, as consolidation and quota pricing has served to prevent new entrants.
Not all fisheries have thrived under ITQs, in some cases experiencing reduced or static biomass levels,[ because of factors such as:
* TACs may be set at too high a level
* Migratory species may be overfished in parts of their habitat not covered by the TAC
* Habitats may incur damage
* Enforcement may be lax
]
Countries
Iceland
Iceland introduced a quota market for cod in 1984 and made those quotas transferable in 1990. Iceland became one of the first countries in the world to adopt a quota system to manage its marine resources.
The quota system is contentious in Icelandic politics. Critics of the quota system criticize the manner in which the quotas were initially distributed, arguing that the quotas should have been auctioned to the highest bidders. Critics have called for quotas to be gradually returned to the state, which can then auction the quotas to highest bidders. They argue that this would ensure that the state receives its fair share of the profits whereas the current system where the state taxes a share of the profits leads to suboptimal returns for the state. They also criticize the tendency of the market to result in consolidation of quotas.
Supporters say the initial distribution of the quotas to fishermen was fair, as they would have incurred the costs of the implementation of a quota system and thus deserved a share of the quota. Supporters also say that the current system has successfully ensured the sustainability of Icelandic fish stocks and led to prosperity.
Political parties such as the Independence Party
Independence Party may refer to:
Active parties Outside United States
* Independence Party (Egypt)
* Estonian Independence Party
* Independence Party (Finland)
* Independence Party (Iceland)
* Independence Party (Mauritius)
* Independence Part ...
, the Progressive Party Progressive Party may refer to:
Active parties
* Progressive Party, Brazil
* Progressive Party (Chile)
* Progressive Party of Working People, Cyprus
* Dominica Progressive Party
* Progressive Party (Iceland)
* Progressive Party (Sardinia), Italy
...
and the Left-Greens largely support the current iteration of the quota system. Parties such as Social-Democratic Party and Viðreisn
The Viðreisn (, officialy known in English as Liberal Reform Party) is a liberal centre-right political party in Iceland that was founded on 24 May 2016 but had existed as a political network since June 2014. It split from the Independence Party, ...
have called for a quota system that increasingly relies on auctions.
United States
The Magnuson-Stevens Fishery Conservation and Management Act defines individual transferable quotas (ITQs) as permits to harvest specific quantities of fish of a particular species. Fisheries scientists
Fisheries science is the academic discipline of managing and understanding fisheries. It is a multidisciplinary science, which draws on the disciplines of limnology, oceanography, freshwater biology, marine biology, meteorology, conservation, e ...
decide the maximum annual harvest in a certain fishery, accounting for carrying capacity, re-generation rates and future values. This amount is called the total allowable catch
The Common Fisheries Policy (CFP) is the fisheries policy of the European Union (EU). It sets quotas for which member states are allowed to catch each type of fish, as well as encouraging the fishing industry by various market interventions. I ...
(TAC). Under ITQs, participants in a fishery
Fishery can mean either the enterprise of raising or harvesting fish and other aquatic life; or more commonly, the site where such enterprise takes place ( a.k.a. fishing ground). Commercial fisheries include wild fisheries and fish farms, both ...
receive rights to a portion of the TAC without charge. Quotas can be fished, bought, sold, or leased. Twenty-eight U.S. fisheries have adopted ITQs as of 2008.[ Concerns about distributional consequences led to a moratorium on moving other fisheries into the programme that lasted from 1996 to 2004.][
Starting in January 2011, fishermen in California, Oregon and Washington will operate via tradeable catch shares. Fishermen have been discarding ]bycatch
Bycatch (or by-catch), in the fishing industry, is a fish or other marine species that is caught unintentionally while fishing for specific species or sizes of wildlife. Bycatch is either the wrong species, the wrong sex, or is undersized or juve ...
that is not their target, typically killing the individuals. Catch shares allow trawlers to exchange by-catch with each other, benefitting both. Goals of the system include increased productivity, reduced waste, and higher revenues for fishermen.
More than a dozen other U.S. fisheries are now managed by catch shares. Fishery managers say that in Alaska, where catch shares have been in place for several years, fishermen are now achieving higher prices for their catch.
Criticisms and controversies
Private control of public resource
IFQs are usually initiated through the de facto privatisation of an otherwise public resource: the fisheries. Initial recipients of quota receive windfall profits through the gifting of share ownership, while all future entrants are forced to purchase or lease the right harvest fish. Many have questioned both the ethical and economic repercussions of dedicating a secure, exclusive privilege to access this public resource. For example, in the US, during a presentation given to the Gulf Fishery Management Council, Fishery Manager Larry Abele stated that the present value of the Gulf Fishery IFQ Harvest amounted to $345,000,000 and this was given without requiring of any return to the public from IFQ holders.
Quota consolidation
Virtually every IFQ programme results in substantial consolidation of quota. For example, it is estimated that eight companies control 80% of New Zealand's fisheries through quota acquisition, four companies control 77% of one Alaska crab fishery, and 7% of shareholders control 60% of the US Gulf Red Snapper quota.
The consolidation results in job loss, reduced wages, and decreased entry opportunities into the fishery.
Leasing practices
Many IFQ systems involve the temporary transfer of fishing rights, whereby the owner of quota leases the fishing rights to active fishermen in exchange for a fixed percentage of the landed value of fish. Since quota acquisition is often beyond the financial means of many fishermen, they are forced to sacrifice substantial portions of their income in order to lease fishing rights. For example, Bering Sea crab lease fees can be as high as 80% of the landed value of the crab, meaning that the active fishermen only retain 20% of the revenue, much of which is needed to cover costs. In some fisheries, the majority of quota is leased to active fishermen, often by individuals who do not physically participate in the fishery, but have been able to acquire shares. This makes quota acquisition even less likely for active fishermen, results in diversion of wealth away from fishing communities and into the hands of private investors, and can cause major financial strain on fishermen along with the economic contraction of fishing communities.
Economic depression of coastal communities
The transition to IFQ management tends to cause considerable economic harm to coastal communities that are dependent on commercial fisheries. Although IFQ management systems are designed to enhance the economic performance of the fishing industry, this usually comes at the cost of coastal communities whose economies rely principally on their fishing fleet. This cost results from the re-equilibration of the quota-regime market, revealing the inefficient over-investment that had taken place in the industry prior to implementation of the quota regime.
See also
* List of commercially important fish species
This is a list of aquatic animals that are harvested commercially in the greatest amounts, listed in order of tonnage per year (2012) by the Food and Agriculture Organization. Species listed here have an annual tonnage in excess of 160,000 tonnes ...
References
Further reading
* Branch, TA (2004
"The influence of individual transferable quotas on discarding and fishing behavior in multispecies fisheries"
PhD dissertation, University of Washington
The University of Washington (UW, simply Washington, or informally U-Dub) is a public research university in Seattle, Washington.
Founded in 1861, Washington is one of the oldest universities on the West Coast; it was established in Seattle a ...
.
* Costello, Christopher and Deacon, Robert (2007
''Efficiency Gains from Fully Delineating Rights in an ITQ Fishery''
Marine Resource Economics, 22: 347-361.
*
{{DEFAULTSORT:Individual Fishing Quota
Fishing industry
Quotas