Innovations in Property Rights for Fisheries Management

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PERC Workshop

Bren School of Environmental Science and Mangement
University of California Santa Barbara
October 19–21, 2009
Co-directed by Christopher Costello and Kurt Schnier
Agenda
 

SUMMARY
By Kurt Schnier, Co-director

PERC’s second “Workshop on Property Rights, Markets and he Environment” was co-directed by Christopher Costello and Kurt Schnier and held October 19-21, 2009 at the Bren School of Environmental Science and Management at the University of California at Santa Barbara. Leading researchers in property rights and fisheries management were assembled and papers were presented on such diverse topics as property rights in multi-use fisheries, property rights in aquaculture, the utilization of territorial use rights in fisheries (TURFs), property rights in the high seas, the efficient allocation mechanism for property rights in fisheries, and the utilization of spatial property rights. Furthermore, a number of applied research papers were presented by academics and agency representatives (both government and non-government) focused on the current utilization of property rights in fisheries. In addition, a number of graduate students working in this area were invited to participate and make short presentations on their current research.

Here we provide a brief synopsis of the research presented in each session. Section two contains a brief synopsis of the research presented by the participating graduate students. Section three contains a brief summary of the feedback we received from the workshop in order to facilitate the effective execution of future workshops.

 

Efficient Allocation of Marine Resources to Alternative Uses: To What Extent Can ITQ’s Help?
Ragnar Arnason, University of Iceland
Ragnar Arnason’s research investigates the efficient allocation of marine resources when one accounts for its multiple uses. Within his research four specific uses were focused on: commercial fishing, recreational fishing, tourism and pure conservation. He concluded that permanent and secure ITQs provide a certain, albeit not particularly strong basis, for efficiently allocating marine resources to these uses. In addition Ragnar discussed extensions of ITQ rights that would facilitate their effective utilization for the efficient use of marine resources in the presence of multiple uses.
Please contact the author if you want to read the full paper.

The Emerging Dominance of Aquaculture and Implications for Rights-Based Management
James Anderson, University of Rhode Island
James Anderson’s research focuses on how different governing decisions regarding the structure and limitation of property rights influences the aquaculture sector. His research investigates whether or not common property problems are being resolved and if the environmental externalities associate with aquaculture practices are being internalized. His research suggests that as aquaculture expands and becomes more efficient and competitive rights-based management regimes will be increasingly utilized within fisheries. As evidence for his arguments James Anderson uses information on the US salmon and shrimp industries, which are less economically resilient than their aquaculture based competitors.
Please contact the author if you want to read the full paper.

From Mobile Closures to Individual Incentives: Chinook Salmon Bycatch Reduction Efforts in the Bering Sea Pollock Fishery
Alan Haynie, National Marine Fisheries Service
Alan Haynie’s research investigates two recently proposed management regulations within the Alaskan Pollock fishery to address the salmon bycatch issue within this fishery: a hard-cap on salmon bycatch and a hard-cap (slightly larger amount) on salmon bycatch combined with an industry-operated individual incentive program. This later program is the first such program to be proposed within US fisheries and was brought forth by industry as a potential incentive-based mechanism to reduce salmon bycatch in the Pollock fishery. Alan’s research discusses the characteristics of these programs during high and low bycatch periods and the specifics of the programs proposed by industry.
Please contact the author if you want to read the full paper.

Analysis of Two Incentive Plans for Reducing Salmon Bycatch in the Pollock Fishery
James Wilen, University of California at Davis
James Wilen’s research investigates the same research topic as Alan Haynie. However, his research focuses on the latent properties present within the recent incentive-based management proposals brought forth by industry within the Pollock fishery to reduce salmon bycatch: the fishery incentive plan and the salmon savings incentive plan. Using a stylized theoretical model James’s research decomposes the incentive structures underlying the two recently proposed management regimes and compares the relative efficacy of each plan’s ability to meet management objectives.
Please contact the author if you want to read the full paper.

Conservation Easements and Incentives in the Ocean: Can New Collaborations and Private Agreements Between NGOs and Fishermen Improve the Economic and Ecological Performance of Fisheries?
Charles Cook, The Nature Conservancy
Charles Cook’s presentation was one of two property-rights in practice presentations made at the workshop. Charles discussed the process by which the Nature Conservancy has successfully purchased vessel licenses in the trawl fishery operating near Santa Barbara in an effort to create quasi-territorial use rights in fisheries (TURFs). His presentation highlights the role that non-governmental organizations can play in resource management and conservation.
Please contact the author if you want to read the full paper.

Rights-Based Fishing in the High Seas: Is it Possible?
Rögnvaldur Hannesson, The Norwegian School of Economics and Business Administration
Rögnvaldur’s research critically assesses the possible utilization of rights-based management regimes in high seas fisheries. He focuses on two vectors to facilitate rights-based management: the extension of a country’s exclusive economic zone and the utilization of regional fishery management organizations. Following his comparison of the two options he concludes that the extension of each country’s exclusive economic zone may provide the best hope for utilizing rights-based management regimes in high seas fisheries.
Please contact the author if you want to read the full paper.

Efficiency Advantages of First Possessing and Grandfathering: Allocations in Rights Based Management Programs
Gary Libecap
Bren School of Environmental Science and Management at the University of California Santa Barbara
Gary Libecap’s research (co-authored with Terry Anderson and Ragnar Arnason) compares the efficiency gains of grandfathering property rights in an ITQ fishery versus auctioning the ITQs prior to the utilization of a rights-based management regime. Focusing on the long-term investment decisions, innovations and capital structure of fishermen, their research argues that allocating property-rights according to a first-possession rule (grandfathering) would increase the long-run dynamic efficiency within a fishery.
Please contact the author if you want to read the full paper.

Marine Protected Areas in Spatial Property-Rights Fisheries
Christopher Costello
Bren School of Environmental Science and Management at the University of California at Santa Barbara
Chris Costello’s research (co-authored with Dan Kaffine) research investigates the utilization of marine protected areas (MPAs) in conjunction with territorial use rights in fisheries (TURFs). Using a game theoretic model parameterized from a complex spatially-integrated ecological model of California kelp bass they illustrate that the ability of MPAs to enhance or diminish profits hinges on the level of coordination present among the TURF owners. If coordination is complete, private MPAs may already emerge in some TURFs; implementing additional MPAs reduces profits. However, to the extent that coordination is incomplete, strategically-sited MPAs may be an effective complement to spatial property-rights based fisheries, increasing both fishery profits and abundance.
Please contact the author if you want to read the full paper.

Can Spatial Property Rights Fix Fisheries?
Dan Kaffine, Colorado School of Mines
Dan Kaffine’s research (co-authored with Christopher Costello) develops a sophisticated game theoretic model of decentralized spatial property rights with spatial externalities to investigate the conditions under which spatial property rights mitigate the open-access problem within fisheries. Their research indicates that the spatial connectivity between regions is an important factor in the efficient utilization of the resource and that profit sharing may enhance efficiency, but may not be individually rational.
Please contact the author if you want to read the full paper.

Free Form Property Rights for Fisheries: The Decentralized Design of Rights-Based Management Through Groundfish “Sectors” in New England
Dan Holland, Gulf of Maine Research Institute
Dan Holland’s research (co-authored with Joshua Wiersma) investigates the recent formation of the groundfish sectors within New England. Dan’s presentation was the second property rights in practice presentation made at the workshop. Dan’s presentation provided a detailed discussion of the political and economic process that generated the creation of the 17 groundfish sectors in New England that will be utilized beginning in 2010. Furthermore, his presentation compared and contrasted the utilization of “sectors” versus more traditional rights-based fishery management regimes.
Please contact the author if you want to read the full paper.

Employment and Remuneration Effects in IFQ Fisheries: The Case of the Deadliest Catch
Joshua Abbott, Arizona State University
Josh Abbott’s research (co-authored with Brian Garber-Yonts and James Wilen) investigates how the cessation of the “race to fish” within the Alaskan crab fisheries has altered the nature of the extensive and intensive margins of labor demand. In particular they focus on the impact that the recent transition to a rights-based management regime has had on the “lay system” within these fisheries. Their research indicates that fishermen participating in the Alaskan crab fisheries increased their remuneration rates compared to what they would have earned before the fishery transitioned to a rights-based fishery management program.
Please contact the author if you want to read the full paper.

Production Efficiency and Exit in Rights-Based Fisheries
Kurt Schnier, Georgia State University
Kurt Schnier’s research (co-authored with Ronald G. Felthoven) investigates a simple assumption of the transitions following a fishery’s conversion to a rights-based management: the most inefficient vessels leave the fishery whereas the most efficient remain. Utilizing a econometric model that models a vessel’s efficiency jointly with their decision to remain in the fishery following the implementation of a rights-based management regime, their research supports the conventional assumption that the most inefficient elect to leave the fishery.
Please contact the author if you want to read the full paper.

Section II

Measuring the Dynamic Efficiency Costs of Common-Pool Resource Exploitation
Ling Huang, Nicholas School of the Environment, Duke University
Ling Huang’s research (co-authored with Martin Smith) investigates the micro-level mechanisms that cause individually efficient exploitation to result in macro inefficiency, using data from the North Carolina shrimp fishery. Their research investigates the strategies employed by fishermen within this fishery using a dynamic game, combined with resource dynamics, and compares the fishermen’s actual exploitation paths to the socially optimal trajectory to determine the efficiency games that would result if the fishery transitioned to a rights-based management regime.

Discount Rates and Property Rights Security: Evidence from Individual Transferable Quotas
Corbett Grainger, University of California at Santa Barbara
Corbett Grainger’s research investigates the role of property rights security on fishery value. Corbett collected data from several hundred fisheries worldwide which have adopted ITQs. Property rights strength varies substantially across these fisheries. This fact allowed Corbett to conclude that the stronger the property rights, the more valuable is the fishery. For example, in the United States (where property rights in fisheries are relatively weak), ITQs are priced as if there was about an 8% chance of losing the right every year.

Economic Gains from Cooperation in a Trans-boundary Fishery: The Role of Marine Reserves
Rebecca Toseland, University of California at Santa Barbara
Rebecca is interested in cases in which a fish stock crosses an international border so two or more countries compete to extract it. In such cases, there is a strong incentive for all countries to over-harvest. Rebecca explores the ability of property rights, coupled with a marine reserve, to overcome this deleterious outcome. She finds that if the property rights are well defined, and if the marine reserve is sized appropriately, the prisoner’s dilemma can be completely reversed and the countries will act as if they were a sole owner.

Section III

At the conclusion of the workshop we asked each participant to fill out a short survey on expectations, topics, organization, research quality, future topics, etc. The feedback on our workshop was extremely positive, and the survey revealed a few areas for future improvement. Here are some highlights from the survey:

• Participants expected to see work in progress, a mix of theory and applications, and have an opportunity to discuss new ideas in detail. In every case, their expectations were met or exceeded. Several comments indicated that the workshop was “even better than I had hoped.”

 • One question asked what topics could have received more coverage. Here are some of the responses:

•  More on security of property rights
•  Synergies and conflicts between property rights and other approaches
•  More community-based approaches
•  Analyses from developing countries
•  More case studies

• Participants felt that they were the “owners” of the workshop, and that it was facilitated in a manner to promote lively and productive discussions.

• Many new research ideas and collaborations were formed to further analyze the role of property rights in fisheries management (among other applications).

• Suggestions for topics for future workshops included:

•  Distributional impacts of property rights approaches
•  Property rights for urban sprawl
•  Property rights and conservation goals
•  Fisheries in developing countries
•  Solving international (and other) coordination problems with property rights

• Participants indicated that the size, format, and moderation of the workshop was excellent, that its success exceeded their expectations, and that they would recommend it to a colleague.