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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.