Thursday, March 28, 2013

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

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.


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

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