AIMS (Atlantic Institute Market Studies)
The Beacon Vol. 1 No. 3
December 6, 1995
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What do the Derwent anglers club in England, some New Brunswick riparians, a number of Quebec fishing clubs and many New Zealand fishermen have in common? They all have established property rights to the fish they catch.
They have something else in common, too. They all have taken steps to protect and preserve the fish they own, just as Aristotle predicted 2,500 years ago.
Elizabeth Brubaker, Executive Director of the Toronto-based Environment Probe, in a recent AIMS paper. Making the Oceans Safe for Fish, argues that a similar system of private ownership on the east coast could have headed off the ecological and economic disaster which has ravished the fisheries here — and, she argues, it remains the best way to manage the fish-cries in the future.
Under a regime of property rights, where fishermen actually own a secure percentage of the total catch, Brubaker writes “fishermen need not waste money building bigger boats and equipping them with more advanced gear in a race to catch fish” before other fishermen get to them.
Property rights “promote conservation. With valuable resources tied up in their property rights to a certain percentage of the catch, fishermen have an economic interest in conserving fish stocks and in keeping out interlopers.”
Brubaker notes that a number of countries have already moved towards a fisheries sector based on properly rights by granting individual transferable quotas, (ITQs), under which fishermen are initially granted or sold a percentage of the catch. After that, they own their ITQs and can sell, buy, trade or rent them.
This eliminates a perverse incentive for fishermen to remain in the fisheries, even if they would prefer to shift to another line of work where they might be more productive. Fishermen now hold on to a valuable resource, their quota, only if they continue fishing; they lose it if they stop. Under ITQs, they could sell this resource at a fair market price enabling them to move to other activities without economic loss.
“In New Zealand, which introduced ITQs in the mid-1980s, the system now governs 32 different fisheries. More efficient fishermen have bought out their less efficient counterparts, eliminatingthe excess capacity that had previously characterized the fleet. And its economic incentives to preserve and enhance the fishery, quota holders are financing research, exploration, enhancement, and policing measures.”
Brubaker contrasts this with a system of government resource management. “Self-interest likewise motivates the politicians and the bureaucrats who are paid to manage common resources. But for them, personal gain often results not from protecting resources but from increasing their budgets, putting people to work, and ensuring re-election.”
These incentives led to the current Atlantic fisheries crisis, she writes. “Nowhere is the government’s failure to protect the fisheries more evident than on Canada’s East Coast.”
She cites government reports from the early 1980s which focused on expanding employment in the fisheries even as stocks dwindled. Matters were made worse, she says, by government subsidies designed to create even more employment in the fisheries, but which had the result of increasing capacity in a sector already plagued by over-capacity.
Attempts to create new jobs “prompted on-going assistance — including construction and insurance subsidies, tax breaks, loan guarantees, and unemployment insurance benefits for fishermen, boat owners and processors. Essentially, the government was paying people to destroy a valuable resource by enabling them to enter and stay in an industry that couldn’t support them; it was encouraging ecologically destructive and economically inefficient expansion.”
Although ITQs would have prevented the worst abuses of government management and would provide a sensible management regime for the future, Brubaker suggests further steps.
“Ideally, government-regulated 1TQ regimes for harvesting are just one stage in the evolution of private ownership of the fisheries. Although governments frequently set total allowable catches, ITQ systems can become completely self-regulating, with an association of all ITQ holders setting catches and taking on other management responsibilities. Such a shift in responsibility occurred in several New Zealand fisheries in the early 1990s. A further evolution could entail outright ownership of the fisheries, removing owners’ obligations to utilize their resources exclusively as fisheries when conservation, tourism or other uses proved more valuable.”
While property rights have been a practical option for fisheries management for some time. Brubaker notes that new technology can improve enforcement of such rights.
“Assigning property rights to ocean fisheries has traditionally been hindered by the difficulty of keeping out trespassers. Satellites make ‘fencing’ the ocean possible. In the United States, NASA has experimented in policing the oceans with satellites that can identify boats by the unique “fingerprints’ in their exhaust. Similar technology may likewise enable owners to monitor their fishing zones, and to enforce their property rights in fisheries.”
She warns that the establishment of properly rights would be a “two-edge sword,” at least initially, but argues that long-term benefits vastly outweigh adjustment costs.
“Inevitably, some owners would-either through error or ignorance-deplete their stocks. As long as their activities did not violate others’ property rights, the law would permit them. But with the removal of governments’ perverse incentives to harvest resources uneconomically, the destruction of private property would occur less frequently. That which did occur would be modest compared to the wholesale environmental devastation wrought directly or abetted by governments.”
“Making the Oceans Safe for Fish: How Properly Rights Can Reverse the Destruction of the Atlantic Fisheries ” is part of the AIMS commentary series, a forum in which new and interesting public policy ideas can he aired. The paper is an edited excerpt from Brubaker’s most recent book “Properly Rights in the Defence of Nature”, 1995, published by Earthscan, Toronto and London. A copy of the paper can be ordered through AIMS. Please see the order form in the back of this publication.
Aristotle’s wisdom revisited
“Making the Oceans Safe for Fish ” was published in the Saint John Telegraph Journal and it elicited considerable comment. In an opinion piece in the same newspaper, Elizabeth Brubaker responded to the comments and addressed a number of misconceptions about private ownership regimes. Also in the Telegraph Journal, University of British Columbia professor Peter Pearse, an authority in natural resource economics, discussed property rights-based fisheries management in New Zealand. Edited versions of their comments are printed below.
by Elizabeth Brubaker
Executive Director, Environment Probe
The theory that ownership generates good stewardship — often mistakenly considered a. modern concept — predates the modern era by more than two millennia. In the fourth century B.C., Aristotle argued that private property will be better cared for than public property. “What is owned by many is least taken care of, for all men regard more what is their own than what others share with them.”
Experience has confirmed Aristotle’s wisdom time and again. Forestry practices over the ages illustrate the environmental benefits of resource ownership. Government-held forests have suffered far greater indignities than have privately owned forests or those owned and managed communally.
Today’s rainforest destruction exemplifies the environmental disruption that can occur when governments fail to recognize or respect property rights. The conversion of rainforests into ranch land owes much to governments’ refusal to recognize the rights of indigenous peoples. Disregarding customary ownership and resource use regimes, governments have built access roads through and granted title to indigenous lands. The problem has been one of expropriation and redistribution rather than privatization.
One worry about property rights in the fisheries is that all ITQs will end up in the hands of a powerful few. But nothing in a property rights system inherently discriminates against the small-scale fisherman. Rights may be allocated in any number of ways. They may be assigned to individuals, businesses or communities; they may be distributed equally among all fishermen, or, alternatively in proportion to historical catches or capital investment. Initial holders may indeed choose to sell their rights. But if a fisherman would rather realize a capital gain than stay in the fishing business, who are we to stop him?
We should also realize that there are many different property rights regimes. Resources may be unowned, centrally owned or managed (by a distant government), communally owned or managed (by a local government or non-government body), or privately owned.
The regimes that work best are those with accountability mechanisms that internalize benefits and costs; resource users must have incentives to conserve and must not benefit at the expense of others’ rights. Privately owned resources often meet these criteria. To the extent that communally owned resources also meet the criteria, they may be sustainably managed. In contrast, unowned resources or those owned or managed by distant governments-categories encompassing most of today’s dwindling fish stocks-rarely meet the criteria and are, accordingly, unsustainable.
Governments, driven by short-term issues that affect their prospects for re-election, are inherently ill-suited to protect our resources. Anyone who doubts this has only to look at fisheries around the globe: most fisheries are now owned and managed by distant governments, and most are in big trouble. To hope against hope-and against all experience- that governments will change is to ensure continued destruction of our precious resources.