Self-interest lure to reel in fisheries solution

Elizabeth Brubaker
The Ottawa Citizen
July 30, 1997

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How do fishers behave? When holding clear rights, do they exploit fisheries recklessly or manage them sustainably? Can we trust them?
Such questions are at the heart of the debate over the wisdom of estab­lishing property rights in fish. They inform David Lavigne’s article, “Private fisheries won’t work,” which appeared on these pages on July 17.
In claiming that privatized fisheries would be unworkable, Mr. Lavigne raises the spectre of fisheries owners “aggressively exploiting” their stocks. “The interest of large corporations,” Mr.Lavigne asserts, “is not in conserving fish stocks.”
Fortunately, most fisheries owners – be they large corporations or sole owners of small boats – do not operate as Mr. Lavigne fears. Indeed, experience in fisheries governed by rights holders indicates the opposite. Fisheries owners understand that their economic welfare, as reflected in the market value of their rights, depends on the health of their stocks. Rather than maximizing short-term gains, they tend to harvest conservatively and to invest in long-term stock growth.
The most common form of property rights in commercial fisheries are In­dividual Transferable Quotas, which  have been most fully developed in Iceland and New Zealand. ITQs confer on their holders permanent, divisible, transferable rights to specific quantities of fish or, more frequently, to fixed percentages of a variable annual catch. Iceland, a country with a history of private ownership of inland fisheries, pioneered experiments with ITQs in ocean fisheries in the late 1970s. It started with the herring fishery, which had collapsed from overfishing in the previous decade. Ragnar Arnason, professor of fisheries economics at the University of Iceland, calls the move to stronger property rights a biological success: Despite steadily increasing harvests, the herring biomass has grown to a level not seen since the 1950s.
Mr. Arnason also tentatively credits property rights with reversing the de­cline in cod stocks. While the stocks have not yet been rebuilt, fishing ef­fort has decreased substantially since the introduction of ITQs. The quotas’ greatly increased market values re­flect optimism about the stocks’ fu­ture.
A story told by the University of Ice­land’s Birgir Runolfsson illustrates the revolution in fishers’ attitudes: In Jan­uary 1996, in response to indications of healthier cod stocks, Iceland’s prime minister suggested increasing the cod catch. But the association rep­resenting boat owners rejected his pro­posal; it proposed increasing the catch only in the following year, and then only if stocks remained healthy.
In New Zealand, too, stronger prop­erty rights have reversed the trends of declining stocks and poor profitabili­ty. While catches have increased since the introduction of ITQs in the 1980s, key stocks have remained stable or improved.
As quotas have become more se­cure, New Zealand’s fishers have had greater incentives to manage their stocks sustainably. Quota owners have begun to organize themselves in­to associations that finance stock en­hancement and scientific research and set rules ensuring sustainable fishing. The shellfish divers holding quotas to the abalone of the Chatham Islands, for instance, have financed a seeding program through a levy on members’ sales.
Lincoln University’s Rodney Hide and Peter Ackroyd point out that such an investment is in the fishers’ eco­nomic interest: “If the resource is overfished, divers will find it harder to fill their quota. The price of the quota will fall accordingly. On the other hand, if the resource is enhanced, the quota will become easier to fill and its price will rise.” In a system of strong property rights, economic and envi­ronmental interests coincide.
But David Lavigne isn’t concerned only about the state of our fish stocks. He also fears that undesirable social and economic changes will accompa­ny the privatization of our fisheries. Chief among his concerns is corporate concentration. “Over time,” he warns, “ownership will become the exclusive right of a privileged few…. [W]e can speculate that it will eventually end up in the hands of big business, probably some large multinational corpora­tion.”
If experience elsewhere is any indi­cation, Mr. Lavigne has little to fear. In Iceland, numerous small firms contin­ue to characterize the fishing industry. The 11 largest fishing companies, which hold less than a third of the cod quotas, have increased their share of quota by approximately five percent in the last five years. And if measured as a percentage of total groundfish catches, these large firms’ shares have actually declined.
Iceland’s large firms hardly fit Mr. Lavigne’s description as being run by “the same folks who run the World Trade Organization.” Samherji Ltd., the country’s largest quota holder, owned just one rusting trawler when ITQs were introduced. Under the ITQ system, skill and efficiency, not money or political power, enabled the compa­ny to succeed.
Iceland’s fishing fleet remains di­verse. In addition to 484 large and medium sized vessels, the fleet boasts 344 part-time owner-operated boats with crews of between one and three people. For a country of only 270,000 people the numbers are striking.
Nor has corporate concentration presented problems in New Zealand. Tom McClurg, representing the Treaty of Waitangi Fisheries Commission, disputes the myth that property rights are hostile to the interests of small fishers, calling the number of smaller boats in the fleet “surprisingly constant.” Between 1986 and 1995, the number of quota holders increased from 1356 to 1733: The holdings of the top ten quota owners increased by on­ly one percent.
Experience with ITQs should also assuage Mr. Lavigne’s fears regarding unemployment. While he rightly claims that “the interest of large cor­porations is not in … maximizing the number of jobs,” he errs in thinking that privatized fisheries will increase unemployment.
In 1995, New Zealand’s fishing in­dustry employed 9,838 people — up from 7,900 in 1986. These jobs are far more secure than their predecessors, which depended on subsidies and were threatened whenever govern­ment priorities changed. Similarly, in 1995, Iceland fisheries employed 6,800 fishers — up from 5,800 in 1983. Ice­land’s fishers are also increasingly productive: The value of the catch per fisher has increased by more than 20 per cent since 1990.
Fishers, like the rest of us, tend to act in their own self interest. Iceland and New Zealand have set up systems that harness that self interest — sys­tems that ensure that pursuing per­sonal gain will act to sustain rather than deplete the fisheries. These sys­tems rely on strong property rights.
Ken Erikson, president of Canada’s Pacific Coast Fishing Vessel Owners Guild, explains that salmon fishermen can’t afford not to move towards stronger rights. A quota system that gives fishers incentives to catch fewer fish more efficiently and to maintain a higher quality product will benefit fish and fishers alike.
“If we fish for dollars,” Mr. Erikson explains, “we’re going to survive.”
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