Catch shares the indigenous way

A blog of Bridge Environment, updated most Thursdays

Salmon, by often-uncredited artist, Bill Reid

Over the past two weeks, I’ve discussed catch shares, a system that assigns percentages of each year’s annual catch quota to individual fishermen or fishing companies. In the first blog entry, I focused mostly on benefits. It was one of my most viewed entries ever. In the second, I focused on weaknesses. Readership dropped to levels not seen since I introduced a new graphical technique or pressed my lucky by posting a third consecutive entry about climate change. Maybe there is something to keeping it positive, or perhaps the third time is the failure, not the charm. From that feedback, you’d think I wouldn’t post a third entry about catch shares…I guess I’m just stubborn. Rest easy, though, I will not attempt to introduce a new graphical technique in this blog entry!

Back in mid-January, I discussed the concept of sustainability and its embodiment in certain forms of traditional fisheries management. I then asked the question: does it take a dictator to manage a fishery? In particular, I noted that sustainable traditional fisheries management seemed to come from societies with authoritarian rule, and suggested that a more effective dialog with fishing communities, along with long-term planning regarding sustainability options, was an alternate solution. This week, I consider whether property rights might also be a sustainable alternative to authoritarian rule.

This topic came to my mind shortly after I posted the first entry about traditional fisheries management. My office is located across the street from the University of Washington’s School for Fisheries and Aquatic Sciences. In late January, the speaker at the School’s weekly seminar was Virginia Butler, from Portland State University. She described indigenous cultures in the Oregon/Washington area as well as those in Alaska, and had a similar message of sustainability to the one I had written about that week. However, her belief was that the sustainability came from a strong affinity with the salmon resource, very different from mine of authoritarian rule. This made me think carefully about how a system of sustainable management might evolve, noting that an unstructured society would probably suffer from the tragedy of the commons, where too many people were pursuing too few fish.

Because of that, property rights would most likely be an essential and natural part of the process. Consider that the salmon resource passes through a bottleneck that, with simple weir technology, can be monopolized if the key location, in the case the river mouth, can be defended from others. This phenomenon of people monopolizing salmon resources by controlling river mouths is not purely speculation. According to Keith Criddle, fish packers regularly created these sorts of monopolies in Alaskan salmon fisheries following European contact, and dissatisfaction with the authoritarian methods used by fish packers contributed to the movement for statehood and a ban on salmon traps enacted shortly after Alaska that  movement succeeded. Indigenous people may have had similar monopolies long before European contact. This sort of monopoly is very much akin to having a catch share, in this case the whole share. Along with the current and future benefits from controlling the resource would come the incentive to manage it sustainably. According to Dr. Criddle, monopolist fish packers revitalized and sustained salmon fisheries under their control through sustainable management practices. Management systems like the ones I described in my blog entry about traditional salmon fisheries of northern California would have been sustainable and relatively easy to enforce from the mouth of the river by indigenous people. Successful monopolization of the salmon run would bring power and wealth to those in control. In this way, sustainable harvests and authoritarian rule may have evolved together. That religious beliefs also played a role may mean that religion, in this case, was co-opted to further a dictatorship, just the opposite of Dr. Butler’s view that reverence for salmon drove management.

Though my hypothesis involves a number of emotionally-laden concepts, the world that resulted may not have been terrible. In pre-State Alaska, apparently the fish packers abused their standing to shut out subsistence fishing operations and exploit their workers. Among indigenous tribes, though, it appears that power and wealth were shared more generously. In both cases, salmon resources were managed in a way that produced a greater bounty for communities as a whole. However, there may have been problems with such principles as equity, liberty, and the potential for the abuse of power.

These same concerns drive opposition to modern-day catch shares. If you think about it, it is a form of authoritarian rule to give fishing rights to a select few and prevent others from using a public resource. So, rather than serving as an alternative to authoritarian rule, catch shares are really just a mild version. As with indigenous tribes, this may or may not be a bad thing because it involves trade-offs. When it comes to conservation considerations, we should keep in mind that there are alternatives, for example a system of catch limits designed to meet the needs of the ecosystem and fishing communities. Catch limits of this sort should be enacted with or without catch shares. In the end, using catch shares is more of an economic decision than a conservation one and should be treated as such.

Best,

Josh

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

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.