Posts in Fisheries

The conventional view is that resource rents arise from the existence of a natural resource and are not related to human entrepreneurship. Thought of in this way, rents created in a fishery following the adoption of individual transferable quotas (ITQs) merely reflect a return on Mother Nature enhanced by removing excesses in fishing effort built up under years of open access.

While the value of the resource itself cannot be doubted, there is strong evidence that additional rents arise from innovations in production as well as from users sharing information and coordinating harvests (see Deacon 2009 and Leal et al. 2008), both of which are stimulated by ownership claims to the fishery. Moreover, the amount of rents created is dependent on how the rights are allocated.

Some economists contend that ITQs are most efficiently allocated through auctions such as planning for Gulf shark fishery catch shares, but an article just published in the Annual Review of Resource Economics, by PERC senior fellows Terry Anderson and Gary Libecap, and Icelandic economist Ragnar Arnason, makes the case that “grandfathering” fishing rights to local users or recognizing historical  participation in a fishery generates more rents. Their analysis shows how grandfathering increases rents by raising expected rates of return for investment, lowering the cost of capital, allowing for specialized local knowledge, and providing incentives for collective action.

There is substantial theoretical and empirical evidence that property-based management schemes, such as catch-shares, prevent fishery collapse and ensure sustainability. The creation of property rights in ecological resources is also a principled conservative alternative to centralized regulation. Yet somehow a majority of House Republicans were bamboozled into voting to bar funding for further implementation of catch share funding along the Atlantic Coast and in the Gulf of Mexico. By supporting this amendment, offered by Reps. Steve Southerland (R-FL) and Ryan Grimm (R-NY), and endorsed by Rep. Barney Frank (D-MA), a majority of House Republicans managed to oppose property rights, market-based reforms, and environmental protection all at once.

Ronald Bailey has more here.

Written by Dylan Brewer, PERC Summer Intern

Québec’s zones d'exploitation contrôlée (ZECs) are one of the best kept secrets of conservation. Created in 1978 with the Ministère des Ressources naturelles et de la Faune’s (MRNF) launch of “Opération gestion faune,” ZECs are non-profit organizations in charge of managing wildlife resources. Each zone is headed by supervisors elected by paying members. In 1991, Terry Anderson and Donald Leal’s book Free Market Environmentalism looked at ZECs, praising their pricing system as “instrumental in maintaining high quality recreation.” Today, as the program nears its 35^th year, ZECs are thriving and now serve more than 250,000 visitors per year.

When ZECs were started in 1978, each zone was charged with managing hunting and fishing within a certain domain. Prior to ZECs, public lands were managed by private clubs. The main criticism of the club system was that it was too restrictive on community involvement -- many of the clubs were controlled by non-Canadians and non-residents, and poaching was widespread. The ZEC program began with the instrumental requirement that each ZEC obtain the necessary resources to cover their costs. Because the ZECs must be self-sustaining, there is an incentive to charge a reasonable and profitable price to users. Further, managers are incentivized to protect the flora and fauna of the area as a future revenue stream.

In 1982, the Fédération Québécoise des Gestionnaires de Zecs (FQGZ) was created to represent the ZECs before Québec’s provincial government. With this structure in place, the program grew without major change until 1999 when the FQGZ proposed to the MRNF that ZECs be given the opportunity to manage recreation beyond fishing and hunting. Following the MRNF’s approval of the proposal, activities offered by ZECs have expanded to include camping, hiking, and other activities. This expansion can be attributed to the requirement that ZECs generate their own funds. Recognizing demand for new goods, managers are able to change their business model rather than remain “frozen in time” like other government programs.

Over the course of 35 years, ZECs have been able to both make a profit as well as preserve wildlife. The question now is how to implement this system outside of Québec. While ZECs do not rely heavily on cultural norms unique to Quebec, the Québécios have had a history of paying to access recreational land. In the United States, new fees would be a barrier to the program at the local level, but giving locals the ultimate control of pricing and services may sidestep the problem.

by Shawn Regan

Today the National Oceanic and Atmospheric Administration (NOAA) released a policy advancing the use of catch share programs in U.S. fishery policy. Catch shares are a form of rights-based fisheries management that allocates a portion of the total allowable catch to individuals, cooperatives, or other entities — an approach PERC has advocated for many years.

The Environmental Defense Fund, which has partnered with PERC in promoting rights-based fishing, explains why this policy is welcome relief for marine fisheries:

For too long the government has propped up a failed system of ocean fishery management. Conventional management has resulted in shrinking fishing seasons, fishery closures, and increased waste.  Fishermen are faced with burdensome and ineffective regulations. Because of this today’s fishing jobs are dangerous, part-time, and relatively unstable, and more than 60 federal fish stocks are classified as overfished or undergoing overfishing. Rebuilt fisheries could increase the dockside value of commercially-caught fish by $2.2B (54% above current value) in the US.

Catch shares management is the right approach because it improves the conservation of the fishery, drives economic growth, and empowers fishermen to have stable, profitable businesses. Unlike conventional management, which manages the details of how fishermen conduct their business, catch shares provide fishermen with flexibility — allowing them to be more targeted and efficient. This means overfishing ends, wasteful bycatch declines, and revenues increase.

About 275 fisheries around the world have implemented catch share systems, including 25 in the U.S. However, at a global level, less than 2% of the world's fisheries have adopted such rights-based management.