Quotas give individuals incentive to fish wisely

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Quotas give individuals incentive to fish wisely

By: John A. Baden, Ph.D. Tim O’Brien
Posted on November 02, 1994 FREE Insights Topics:

"THE Tragedy of the Commons" appeared in Science magazine in 1968.

Though written by an ecologist, Garret Hardin, the article is a classic of political economy.

Understanding the logic of this article should be a requirement of running for political office. It explains how and why we should expect waste when biological resources such as fisheries are openly available.

The logic of the commons is straightforward. When no one has control over a resource, be it a parcel of ocean or a dormitory lounge, it tends to be poorly maintained, overused, or depleted. Without social or legal constraints, some people will maximize their personal advantages to the detriment of others. All users suffer, while benefits go to the exploiting individual. The incentive is for people to seek narrow personal advantages at the expense of the group and the resource. Few people act as wise stewards because others take a "free ride" on such actions, and rarely reciprocate.

The North Pacific groundfish fishery within the U.S. Exclusive Economic Zone off Alaska exemplifies a commons problem. Under the current open-access regime, there are only indirect controls on fishing. Short seasons and restrictions on fishing boats' size and horsepower are examples. These controls are extremely inefficient, have resulted in billions of dollars in excessive capital investment, and encourage chaotic races for fish that magnify the dangers of an already risky job.

Experience suggests the problem may get worse under the current open-access system. Human, ecological and financial losses are likely to increase as the race for the fish becomes more frenzied. Brief, hurried seasons will increase pressure on fish populations and promote bycatch - the incidental capture of non-target species. Fortunately, unlike many of the world's fisheries, the basic stock remains healthy for now.

A smart, honest and principled political leader could create huge safety, economic and ecological benefits by seriously addressing our fishery commons. Action need not be difficult, for we already have a solution. It is individual transferable quotas (ITQs) - a method of creating secure, transferable and reasonably well-defined property rights to fish. Here's how they work.

First, peer reviewed research establishes the biologically sustainable yield of a fishery: how many fish can be taken without reducing the quantity or quality of the catch over time. Because these are estimates, not certainties, the allowable catch is always less than the theoretical maximum. Based on this estimated yield, a set of quotas is issued. Each entitles its holder to a fixed percentage of the total allowable catch.

The initial distribution of rights has wealth implications. That's why parceling out quotas is the contentious feature of ITQ systems. Assigning quotas is one of the main factors delaying action by the North Pacific Fishery Management Council, the body overseeing the region's fisheries. The two principal alternatives for distributing quotas are a giveaway to existing fishermen, or an auction, perhaps one open to the public.

With an ITQ system, quota holders have secure claims to a percentage of the total allowable catch. Only those with quotas may fish. Fishermen need not race to get their share. An extended fishing season means fewer days at sea for long hours or in dangerous weather. We'd also expect reductions in bycatch.

Quotas give their owners incentives to conserve fish. As long as fisheries remain a commons, there are strong incentives to catch as many fish as quickly as possible. With ITQs, fishermen can increase the value of their quota and the size of their future catch, by allowing fish populations to increase. Such behavior has already been observed in the wreckfish, Southern bluefin tuna and various shellfish fisheries.

With ownership, quotas can be bought and sold. Some fishermen will exit the industry. The more efficient fishermen and those who love fishing will buy or retain quotas and remain. Fewer ships and less equipment will be needed to catch a given amount of fish, reducing overhead and improving efficiency. And ITQs do not necessarily favor large operations over smaller ones.

An increasing number of professional environmentalists, including well-respected economists with the Environmental Defense Fund, are showing an interest in ITQs. ITQs have the support of associations representing more than 80 percent of the seafood harvested in the North Pacific fisheries. They are the least painful way to downsize an industry made dangerous by short seasons and by federal subsidies that have promoted excessive investments in men, ships and equipment.

The North Pacific Fishery Management Council has, overall, resisted consideration of ITQs, although its own staff concluded such a system would solve many of the industry's problems.

Political entrepreneurs such as Greenpeace and the Alliance Against IFQs (IFQs being roughly similar to ITQs) have opposed ITQs because they fear the impact of such quotas on their private interests. Though we may sympathize with their concerns, political leadership is required to overcome their opposition to a valuable improvement in fishery management. Without it, more lives will be lost and politically sanctioned ecological plunder will continue.

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