Catch shares, part 2: use the right tool for the job

A blog of Bridge Environment

As seen on eBay! In this line of work, sometimes a
6-pack seems like the right tool for the job

Last week, I introduced the concept of catch shares, a system that assigns percentages of each year’s annual catch quota to individual fishermen or fishing companies. I highlighted that catch shares have the potential to address some of the major challenges we face in fisheries, including the race for fish, unprofitability, and the ecological effects of stock depletion. I also pointed out that they raise concerns for many people, for example that they are a conspiracy to hand a public resource over to corporations, and that they will lead to displacement of smaller scale fishing operations in favor of a few large players. I left you with the idea that, in order to understand the value of catch shares, we need to look at them in the context of the full fisheries management toolbox.

Let me address one concern about economic consequences and then move on to discuss the conditions necessary for catch shares to provide conservation benefits. Recall from last week that the profits that catch shares may provide are returns on labor or capital investment above market rate. It is not necessarily a good thing to exclude some fishermen to allow others to profit in this manner. Moreover, profit comes in two forms. One is efficiency of operations, which are fairly easy to achieve. These changes are not without negative consequences, though. One common form of efficiency gain is a reduction in the number of boats, along with crew. While these changes lead to profits for those who are lucky enough to get permits, the process can also shut out fishing operations who are unlucky, particularly small-scale operations that are less likely to be granted shares and less able to afford to buy them. I’ll leave it to others to evaluate the presence of a corporate conspiracy, but there is solid evidence to support the idea that catch shares lead to consolidation of fisheries into the hands of a few large boats and fewer jobs. The other form of efficiency gain comes from giving incentives to rebuild stocks, the conditions for which overlap with those for conservation benefits.

Necessary conditions for conservation benefits: The conditions for conservation benefits are pretty restrictive. First, the economics of the fishery have to be such that they lead to overfishing. Second, catch shares do not operate in a vacuum, and other management tools are capable of maintaining healthy fish stocks. In fact, catch shares only work if there is a quota to partition into catch shares. In order for catch shares to provide conservation benefits, it must be the case that the catch shares lead to better quota-setting. This point is crucial and often neglected. In a recent review of catch share programs, two articles argued that they led to a lower chance of stock collapse and higher overall catches. However, both articles only compared catch share fisheries to non-catch share fisheries, without taking into account other management details, for example the presence of quotas. Arthur van Benthem and I wrote a rebuttal article, which can be found here if you are interested in learning more. In sum, catch shares will improve upon other forms of quota-setting if economic conditions would motivate overfishing, if government agencies are susceptible to pressure from the fishing industry, and if the fishing industry has a short-term focus.

There certainly are fisheries where the economics would justify overfishing, particularly because governments often subsidize fishing through policies such as discounted fuel and tax breaks. These conditions are not always the case. I have worked on the Caribbean spiny lobster fishery in Colombia, for example, and found that recent high fuel prices and weak demand have led to stock rebuilding to extremely healthy levels without any form of restrictive management. Many governments may also be susceptible to industry pressure. However, I have greater confidence in the U.S. government than that. They are not perfect in my eyes, but their weakness is freezing up in the face of uncertainty, not corruption. I also have confidence in fishermen. Though they are human and we are all often short-sided, most fishermen have invested their lives into their occupation. To most, losing their ability to fish would be devastating. When I work directly with them, they show strong preferences for policies that will provide long-term security, even if doing so invokes short-term costs. As a result of my confidence in the U.S. government and in the interests of fishermen, I do not see catch shares as a silver bullet to help our fisheries.

I am not alone. Though catch shares have been used in Alaska as much as in any other region of the US, the regional management council’s own economist believes that their utility depends on the detailed circumstances, and their effective use requires careful design and extensive process (Fina 2011). In fact, not all economists agree that property rights are the best or only solution to the tragedy of the commons. Elinor Ostrom won the Nobel Prize in Economics in 2009 for work that highlighted the many formal and informal ways that communities regulate common property resources without official government intervention. Her thoughts on fisheries can be found here.

Catch shares do offer potential for improving economic conditions, although not without negative consequences in the form of inequity and jobs. They also offer potential to improve fish stocks, although this potential is much more restricted. For some fisheries, they may offer overall improvements. For others, they will not. We should not jump to apply them everywhere, as is the current trend. Nor should we ban them, as was the case in the US in the late 1990s. The principle “use the right tool for the job” applies to catch shares, just like any other tool.

Best,

Josh

For more information, read our other blog posts and visit us at Bridge Environment.

Catch shares, part 1: them’s fighting words

A blog of Bridge Environment

Catch shares
<For  Against>

Catch shares, also referred to as individual quotas, are a system that assigns percentages of each year’s annual catch quota to individual fishermen or fishing companies. The concept has slowly been gaining traction in fishery management circles, though it still remains highly controversial. Some advocate catch shares a wonder tool to address all fisheries ills. Others oppose them on purely ideological grounds. In a two-part blog entry, we will discuss what catch shares can and cannot do. This week, we will discuss common fisheries problems and the potential for catch shares to help. Next week we will consider them the way that every management tool should be, in the context of a full fisheries management toolbox.

Economists like to talk about programs like catch shares as a property right, which has led to the impression that catch shares are tantamount to the public giving up control of the fishery. In reality, a catch share entitles a fisherman to ownership over a portion of current and future catches, but ownership of the fish population and responsibility for setting quotas remains with the public. As Dan Pauly pointed out over 15 years ago, people have negative reactions to the concept of catch shares because of various assumptions, among them that catch shares are part of a right-wing conspiracy to give the ocean away to big corporations or that this sort of system will lead to the concentration of a fishery into the hands of a privileged few while leaving most high and dry. These assumptions are still widespread today and are major themes of a recent article on catch shares by Suzanne Rust. Next week, I promise to come back to them.

Let’s first talk about why catch shares, or property rights in general, are at issue. In short, economic evidence and common sense dictate that people take better care of things they own than things that are common property. To describe this phenomenon, Garrett Hardin coined the term “tragedy of the commons” in an article of that name published in 1968, although similar ideas were espoused by H. Scott Gordon back in 1954. The idea that property rights matter to the state of public resources actually stretches much farther back. There was a political movement that began in late 18^th Century England aimed at dividing and privatizing public farming areas, known as commons. Data suggested that enclosing an area would increase its value, although thoughtful analysis published in 1998 by Gregory Clark would suggest that those gains were modest and mostly offset by the costs of building fences. In fisheries, the tragedy has three potential consequences, and catch shares can reduce or eliminate them if certain conditions are met.

Potential consequence #1: In a fishery without catch shares, competition for a bigger slice of the quota can lead to inefficiencies. This leads to a phenomenon known as the race for fish. Under these conditions, fishing operations may race to catch as much fish as possible before the fleet collectively meets the annual quota. As a result, a fishing fleet develops that is too big with too much fishing capacity, too few safety standards, and delivering a product en masse so that prices are low and supply only available for a short season.

Necessary conditions: In order for catch shares to address this consequence, there must be an established annual catch limit but no allocation of that among vessels. This condition is very different from the ones that motivate catch shares as a solution for the other two consequences.

An example: Catch shares have been used effectively in Alaska as detailed in a 2012 paper by Keith Criddle (see his homepage for details on several related projects). Previously, Pacific halibut fishing operations would race to catch as many fish as quickly as possible because the fishery closed when the annual quota was hit. As a result, there were too many boats fishing too intensively and recklessly. When this fishery switched to catch shares, the pace of fishing slowed dramatically. Now, fewer boats catch higher quality halibut and with far fewer accidents.

Potential consequence #2: An open access fishery can be unprofitable. Gordon’s 1954 paper on the tragedy of the commons elegantly lays out the logic behind this idea, and how property rights may help. When a fishery is open to anyone and healthy enough that it is profitable to fish, we can expect heavier fishing by existing operations and new entry by others seeking a share of the profits. The collective increase in fishing pressure will drive down the fish stock until it is no longer profitable for anyone. Thought of another way, the incentive to conserve is negated because anyone making a sacrifice today cannot be sure they will receive the resulting benefits tomorrow. Thus, people face economic incentives to heavily fish open access fisheries, to the detriment of the fish stock, their neighbors, and themselves. Catch shares change this dynamic in two important ways. First, they prevent new entrants. Second, they change the incentives for existing fishing operations. Because a catch share applies to the current and future fishing years, there is now incentive to conserve. This point is subtle. It is not in anyone’s interest to unilaterally make sacrifices, either by fishing below their quota or even passing up opportunities to catch more than their share. However, catch shares do give owners the incentive to collectively lobby for a quota that would allow for an overfished stock to rebuild. Conservation interests have taken note of this point and, in many cases, are the driving force behind the implementation of catch shares in fisheries today. Their hope is that catch shares will change the incentives of fishing operations towards more abundant fish stocks.

Necessary conditions: Here we have a couple of outstanding issues. First, let’s examine the concept of unprofitability. It’s not as bad as it sounds. Remember from the theory that people will stop entering the fishery when it’s not worth their while to do so. Since entering requires some investment in terms of a boat, fishing gear, permitting, and fuel, not to mention time and energy, we need to consider someone who is choosing between fishing and an alternate use of their money and time. The zero profit condition still allows someone to be paid for their time and investment. Zero profit simply means they will get the going rate. Second, other management measures matter, but we will cover this next week.

An example: Chile has a growing history of conservation-minded coastal management that has resulted from granting communities exclusive access to their local fishing grounds. I did a small project in Chile in the late 1990s when this program was still new and communities were already celebrating the exclusive access by adopting highly restrictive regulations for themselves. My favorite dive during that project was in an area that decided it would only allow a single day of fishing each year for the highly prized loco, an abalone-like snail. In short, in response to having control over their local marine resources, Chileans have adopted plans that include short-term sacrifices which have resulted in long-term benefits.

Potential consequence #3: When stocks are driven down to unprofitable levels, they are depleted well below natural levels, and brings up two conservation concerns: loss of ecological functions and, in extreme cases, risk of local extinction. These conservation concerns have led to the coalition that is currently increasing the use of catch shares in fisheries. They are also the most controversial.

Next week we will discuss necessary conditions, because they are intimately tied to other tools in the fisheries toolbox.

Have your own thoughts on catch shares? Leave us a comment.

Best,

Josh

For more information, read our other blog posts and visit us at Bridge Environment.

Working on location in the Virgin Islands. Be back next week.

Are 3rd graders going to destroy the Earth?

A blog of Bridge Environment

In last week’s blog entry, I put wild-caught seafood production in perspective and offered suggestions for how to make it an even more responsible dining choice. It quickly became my most-viewed blog entry ever. I also got my first comment, albeit a thinly-veiled advertisement. Please consider adding to the comments, preferably holding off on any ads, by letting me know why that particular entry caught your attention. I’d love any feedback that helps broaden the appeal of this blog.

I ended that entry with a story about pollution posters at a local elementary school, all of which seemed to carry the message “pollution is bad.” I didn’t want to single out some 3^rd graders in my critique of this topic so I am not going to show you the kids’ posters. I did find some gems online, though, presumably made by adults. One, which can be purchased at the website watermarked into the image, is pictured here è

So, what’s the problem with teaching that pollution is bad? I mean, it is bad, right? In fact, it is by definition. Pollution stems from the Latin word pollutio, meaning defilement. Feel free to look up defilement if you want further proof that pollution is dirty and bad, but I’m guessing your Safe Search filter may come in handy, particularly if kids are around. In the end, teaching kids that pollution is bad amounts to nothing more than a vocabulary lesson.

The problem is that we all pollute. What a terrible burden to put on a 3^rd grader, no? I’d rather not have it as an adult. If we want to teach about pollution from a scientific perspective, we can go over the details of how various activities produce a range of pollutants, and how these pollutants affect the health of humans and ecosystems. I believe that this was the intention of the posters I saw, and I am all for that intention. But we shouldn’t forget the resulting guilt trip, which is not a motivator of good behavior, especially when the best we can do is to be less bad, not actually good. Since the guilt trip brings us into the realm of values, ethical considerations are unavoidable when teaching about pollution.

From an ethical perspective, our consideration will only be complete if we include an entirely different perspective: that pollution can actually be thought of as a good. It’s rarely produced by mistake or out of malice. Pollution is usually a byproduct of something that we value, whether it be an activity (e.g., driving) or the production of a good (e.g., apple pie).

You can’t have your car or your apple pie without pollution. Driving and apple pie are quintessentially American. Are you anti-American? (friends from other parts of the world, please accept this as a rhetorical question designed to provoke my American readers, not to provoke you)

In sum, every 3^rd grader pollutes, and the message “pollution is bad” is an inappropriate guilt trip to put on them. Instead, we should be teaching them that polluting involves choices and that the details matter. Some pollutants have much more severe effects on people or the environment than others. Also, we should keep in mind that one person’s trash is another’s treasure. Most pollutants eventually break down and are resorbed by the environment. They do vary in the amount of time this process takes, though, which is another important consideration.

Let’s face it—pollution is complicated. Whether educating young kids or discussing public policies, we’d be better off if we avoided the classic pitfalls of ignoring pollution or treating it like it is evil. Teaching about pollution will invariably lead kids to be concerned about the negative effects. Leaving them with the simple concept that pollution is bad does them a disservice, and we can do better. Does this discussion sound a lot like my perspective on fisheries regulations? It should. The new mindset that Bridge Environment is advocating would serve us well in addressing virtually every environmental issue.

Next week, I will be working on location on St. Thomas and will make a blog entry if I can. If so, I may talk more about my work there on fisheries. If you have other ideas you would like me to address, feel free to make suggestions.

As always, your comments are appreciated.

Best,

Josh

For more information, read our other blog posts and visit us at Bridge Environment.