Roger Bate
The Wall Street Journal
June 15, 2000

By any reasonable measure the European Union’s Common Fisheries Policy, the sickly sibling of its ailing Common Agricultural Policy, has failed. Created in 1971 to increase productivity, promote technical progress, open up access for European fishermen to all Community fishing grounds and “promote a fair standard of living” for fisherman, the CFP has netted the opposite result: Too many fishermen chase too few fish, fishing villages are as poor as inner-city slums, and competition from overseas markets is increasing due to technological advances in fish storage and shipping. To make matters worse, the CFP is run by Brussels bureaucrats who often set the so-called “total allowable catch” on the basis of political considerations while ignoring the fact that black-market fishing, which can run as high as 30% of the quota, renders the allowable catch a dead letter.

Yet to hear European (especially French) officials speak, one would not know that the industry is in crisis, much less that is a crisis of their own making. The latest opportunity for officials and left-wing intellectuals to defend the CFP came last week at a conference at the University of Aix-en-Provence in France.

This time, however, European bureaucrats did not have the floor to themselves. They encountered market advocates from New Zealand, Australia, Iceland and North America demanding the removal of the “welfare fishing” provisions of the CFP. They pointed out that fishing is no longer a viable industry in Europe, while the CFP is simply a political means of propping up failing communities. In its place, they proposed something called the individual tradable (catch) quota, or ITQ.

The system, which already operates in New Zealand, Iceland and the Philippines, sets a limit on the total allowable catch of any fish (such as the New Zealand orange roughy). Within that total catch, quotas are established, either by auction or by gift to incumbent fishermen. These quotas are tradable among individual fishermen. This offers an escape clause for some fishermen who no longer operate economically. It encourages more successful fishermen to buy fishing rights and exercise their property rights responsibly by fishing within their quota and monitoring others to make sure they do so as well. It also encourages brokers to speed up transactions and even allows environmentalists to enter the market and buy (and retire) quotas if they believe stocks are being overfished.

The success of this system is astonishing. In New Zealand the “value of the fisheries have doubled in recent years,” says Roger Beattie, a fisherman from Christchurch. The value of Icelandic fisheries has also soared, according to studies by Hannes Gissuarson, an Iceland University political science professor. Perhaps more importantly, fishermen in both locations have voluntarily reduced their catch to ensure sufficient stocks to provide a future livelihood. “Because they have the property right to secure future benefit from the resource, they are prepared to wait — to optimize their returns” says Mr. Gissuarson.

This is a situation that European fishery officials should observe with envy. Every year they have to fight off demands from EU fishermen, notably the Spanish, French, Danish and British, for larger catches. As Mr. Beattie explains, it’s a “classic ‘tragedy of the commons.’ There is no point in one fisherman holding back because some fisherman, possibly of another country, will have taken his catch. In Europe the incentives are all wrong, there is no point in delaying consumption and hence there is overfishing.” Security of fishing rights, and the ability to sell those rights, are essential if Europe wants good and efficient stewardship of its fisheries.

Yet EU officials, notably adviser to the European Fisheries Commission Christoph Nordmann, say that the ITQ system is not likely to be adopted by the EU because of cultural and jurisdictional differences. He is supported by a whole raft of left-wing intellectuals, such as Serge Collet from Hamburg University, who consider quota systems unfair and job-destroying.

There can be little doubt that a quota system across the entire EU would be hard to envisage because of the many fisheries and political interests at work. But as Mr. Nordmann acknowledges, any EU country could establish its own ITQ system within its own current EU quota — and thereby reap the benefits. Another way is to repatriate fishing policy to each nation. True, repatriation would be difficult because of the interconnected rights that the current CFP has established. Still, what interest do Italian fishermen have in the North Sea?

But it is Mr. Collet’s objections that are likely to be the hardest to overcome. The idea that the ITQ system leads to a concentration of major players and the demise of local villages weighs heavily on the minds of EU politicians. Evidence from New Zealand and Iceland demonstrates that fewer fishermen are needed with an ITQ system and the more efficient fishermen have become rich in the bargain. Mr. Collet portrays the result as that of winners (those who buy more quotas) and losers (those who sell, or in his terms, “those who are forced out of fishing”).

At the moment the support system barely keeps most fishermen above the poverty line — too many are below it. Giving fishermen a ready source of funds (a quota) allows them to leave the industry with dignity rather than be humiliated into submission, the cruel result of the current system. Still, there may be other ways. Michael De Alessi of the San Francisco think tank the Center for Private Conservation, puts it plainly: “We mustn’t get hung up on ITQs: from communal village tenure in the South Pacific to the capital-intensive orange roughy fisheries off New Zealand, experience shows that what matters is some form of private ownership. When fish quotas are renegotiated every year by government, politicians appease their fishing constituents, and allow overfishing. Sustainable solutions involve secure private tenure. The sooner Europe learns this lesson, the better.”

Roger Bate is a fellow of the Institute of Economic Affairs in London.

But as Elizabeth Brubaker of the Canadian green group Environment Probe pointed out: “There are too many fishermen in Europe to sustain the industry anyway; numbers have to fall.”