Time to plan for individual transferable quotas

By Jim O'Malley & Dick Allen

(First published in the June, 2001 issue of Commercial Fisheries News.)

 

Individual transferable quotas (ITQs) have been praised as the certain course to a Golden Age of modern fishery management.  And they have been demonized as the road to a bleak future, where fishermen are little more than slaves to agribusiness interests. 

ITQs exist in a few fisheries, but there will not be any more until the congressional moratorium expires, which it will, even if the October 2002 deadline is extended.  That means that we need to talk about what shape ITQs might take, and what fisheries might use them.

Resistance to ITQs may have been a valuable political tool to slow the process down and make sure that a “Surf Clam Outcome” does not result from hastily drawn ITQ plans.  But at the same time, resistance to all ITQs in all fisheries will be a losing proposition. 

So what is needed now is to look at    the lessons and the principles and learn from them. 

At the time of the surf clam plan development, the potential drawbacks of ITQs had not made themselves apparent, and ITQ management was uncontrolled.  With the experience we have gained     since then, and the debate that has occurred, we now recognize that constraints are needed if ITQs are to be used without a disastrous — however that is defined — result.  This time around, we hope there will be no shredded documents at the National Marine Fisheries Service or falsified transcripts at the Mid-Atlantic Fishery Management Council.

The frequent objection to ITQs — the fact that a few people are given an exclusive right to take fish from the ocean — lost any validity when limited entry was first imposed in the fisheries, especially in New England.  Those who have permits represent a very small part of the American population, and they have a government-guaranteed privilege which is very valuable. 

Another objection — that the cost of purchasing fishing rights is an unfair barrier to the next generation — also lost credibility when entry was limited.  The cost of a permit is an ever-increasing part of the expense of going fishing.

The simple fact is that any philosophical criticism of ITQs has gone by the boards if we accept the fact that some form of limited access to fisheries is here to stay.

And even the “individual fishing quota” debate is nearly moot — deprived of practical significance by the actions we have already taken.  Combine days-at-sea with trip limits, and the fact of the matter is that we are already assigning a specific tonnage of fish to each boat. 

 

Transferability at issue

Transferability is the heart of the matter now — the right to sell a wild, free-swimming fish before it is captured, the traditional point of “ownership.” 

It’s possible that we already have  many of the bad parts about ITQs in  place, but by preventing divisibility and transferability, those aspects of ITQs      that might have some promise have not been allowed to happen.  An increasing number of fishermen are saying, “Just tell me how much fish I can catch and let me go catch them.”  The debate has already begun on the waterfront, and whether or not people realize it, that debate is       about ITQs.

But that doesn’t mean that ITQs are not without their own special dangers, and may shape an industry in ways that most of us would rather avoid. 

If we believe that it is a better thing for the economic benefits of the fisheries to stay in coastal communities, that those who do the actual work of fishing should get the revenue, that fishermen alone should make the decision of when and how to take their boats to sea, then special care must be given to any use of ITQs. 

ITQs may be a way out of some of the mess that characterizes fishery management in the Northeast today:  discards, allocation battles, unsafe fishing practices, derby fisheries.  At the same time, discards, allocation battles, and unsafe fishing practices are still matters of contention in some ITQ programs.

 

For and against ITQs

As individuals who have had sharply contrasting views on ITQs, we believe it is time to take a look at the possibility of reaching some compromise, when and where appropriate.  If ITQs are “just another fishery management tool,” we will all need productive discussion on when, where, and how to use that tool. 

Every aspect of fishery management, from discards to allocation to vessel safety, will need to be considered in the context of ITQs, and a consequent decision on whether ITQs would improve the situation or make it worse in each of those aspects.  It is not enough just to say ITQs are better than the current situation — or worse.  And even when ITQs may improve a situation, there may still need to be constraints or special applications to prevent problems, excesses, or undesirable outcomes. 

In the interest of promoting such a discussion, and having been two of the primary combatants in the ITQ battle, the authors offer this dialogue.

 

When the moratorium ends

The moratorium is going away.  The handwriting is not only on the wall, it’s in the legislation. 

But there are too many ways that an unrestrained ITQ management regime could turn fishermen into hired hands, working for low wages in unsafe conditions, with the money going to stockholders instead of the local economy.  And those are just the social effects if things go wrong.

There are also enforcement concerns, issues about high-grading and discards, and even a ripple effect on fishery science if these problems are not kept under control. 

How do you prevent the industry from falling into the hands of a very few,    well-financed people if you have ITQs? 

One of the things that can be done with limited access is to make an attempt to balance the number of fishermen with the available resource.  Too few permits means greater profits for those in the business at the cost of greater employment, and too many permits means that everyone goes broke together. 

Nevertheless, we can attempt to make those adjustments for what are admittedly social goals through a limited entry system.  That is the purpose of the Sustainable Fishery Act’s industry-funded buyout provisions. 

Of course, that is a one-way street, reducing the number of boats.  And it’s time to admit that we will never take any steps to increase the number of boats, despite any thoughts of doing so when the fisheries are “fully restored.”

 

Where should the money go?

Can ITQs be structured in some way that balances profits with employment?  Because that’s what it really comes    down to. 

The money that comes out of the fisheries can go one of three places. 

It can go into the federal treasury by charging fishermen for the right to go fishing.  After all, most other users of public natural resources, like oil and timber, compensate the American people for those exclusive rights.

Or, the money can go into pure profits through an unrestrained ITQ system.  Where those profits go is critical to our fishery management decisions, but not for the debate about the principles behind ITQs.

Or, the money can be distributed by relatively normal market forces, including the market’s usual inefficiencies.  Those inefficiencies include excess labor inputs (too many jobs?), excess fuel costs and insurance, and all the rest.  So far, our decisions in fishery management have tended to favor this last, sometimes inadvertently, and largely for social reasons. 

 

More questions to explore

Besides asking whether ITQs can be structured in some way that balances profits with employment, several other questions should be part of this dialogue:   

>  Can ITQs be designed in such a way as to preserve social goals and even improve on them?

>  How will we prevent the corporatization of the fisheries? 

The scallop plan, even without ITQs, makes a good start at that by restricting the percentage of the total number of permits that someone can own.  And the key to making it work in any future plan is to go beyond the nominal ownership — the name on the permit — to getting at “effective control.”  We need to be able to find out if product flow or distribution or marketing is effectively controlled by just a few people.  That is as much for the consumer’s benefit as the fishermen’s.  Remember that the consumer is part of this equation, too.

>  Will ITQs really reduce discards, as their proponents claim, or will they make the problem worse, as some people fear?

>  Will ITQs inevitably disadvantage small-scale fishermen, or can ITQs actually give them security?

>  As a practical matter, is an ITQ regime enforceable in this region?  For which fisheries?

>  How will we ever decide how initial allocations will be made?

>  Should the leasing of ITQs be allowed, or just their sale?  Who should be allowed to own ITQs, owner operators?  Natural persons?  “Active participants” in the fishery? Anyone?

>  Should we be talking about transferable days-at-sea or traps, as well as transferable quotas?

The authors hope to explore these and other questions in the coming months in Commercial Fisheries News.

 

Jim O’Malley is the executive director of the East Coast Fisheries Federation and a former member of the New England Fishery Management Council.  Dick Allen is a lobster fisherman and independent fishery conservationist from Wakefield, RI.