Fish piracy

The Organisation for Economic Cooperation and Development (OECD) released their study entitled “ Fish Piracy: Combatting Illegal, Unreported and Unregulated Fishing,” after a meeting in April 2004 at Paris where OECD countries determined to take a more comprehensive look at Illegal, Unreported and Unregulated (IUU) fishing.

The OECD report, while offering several solutions to the problem of IUU, does not take seriously the idea that the introduction of a regime of property rights may be the solution. Numerous studies, and a number of recent books, all suggest that Individual Tradable Quotas both increase the population of fish, as well as introduce incentives to self-regulate fishing.

Instead, the OECD report recommends more command and control measures like harmonising the penalties associated with IUU fishing across countries, creating greater strictures on re-flagging vessels to take advantage of differences in regulatory burden from one country to another, and expanding enforcement.

Evidence from diverse fishing contexts, like in New Zealand, Canada, Alaska, Iceland, and Australia, suggests that the introduction of Individual Tradable Quotas (ITQs or what are sometimes referred to simply as IQs) has resulted in higher fishing stocks, and improved economic outcomes for fishers. The improvements are a consequence of the incentives that secure property ownership generally entails. Property ownership prevents the “tragedy of the commons” because it provides an incentive to sustainable husbandry for future profit. Those with quotas have good reason to ensure that there are plenty of fish in the sea—after all, those quotas can be sold, and the bigger the fish, the more plentiful the stock, the higher will be the value of the quota. Similarly, ownership encourages each person to act as a check on her neighbour—reducing illegal and unreported fishing through the informal mechanisms of social mores, and the threat of being reported by your neighbours.

ITQs are not a panacea, however, as some jurisdictions have reported troubles with implementation of the scheme, and a few unintended consequences. Introducing quotas has been found to be somewhat complicated, since the decision of how much fish one fisher should “own” can be decided in many different ways, with predictable controversy. Some jurisdictions have taken to altering the size of the quota each year, reducing the stability of each quota’s value over time. This instability in what the quota will amount to means that some fishers have found it difficult to leverage their quota for bank loans, or to feel secure in the investment that they hold in their quota. The problems, however, have little to do with property ownership, as such. Instead, the problems cry out for alternative implementation procedures.

Notes

Canada’s Fraser Institute has published “ Fish or Cut Bait,” a book on Individual Tradable Quotas (they refer to it as Individual Transferable Quotas) outlining reasons why the province of British Columbia should move towards ITQs in the Salmon fishery.

A report by the Australian government on their experience with Individual Tradeable Quotas entitled “Sharing in the catch or cashing in the share? Individual Transferable Quotas and the South East Fishery” is a useful resource.

For the New Zealand experience, you can take a look at “ Evaluating the New Zealand Individual Transferable Quota Market for Fisheries Management,” a paper written for the Social Science Research Network.

Iceland’s Institute of Economic Affairs publishes a number of working papers on ITQs, including an interesting analysis of the rise of ITQs in “ Changing Rules for Regulation of Icelandic Fisheries,” as an unintended consequence of regulation aimed at capping fishing.