For the past few decades, PERC's Donald Leal has researched and written extensively on the topic of property rights to fisheries. He will co-direct, along with Kurt Schnier, the latest workshop. Don described the impact PERC has made promoting rights-based fisheries management in a recent video documentary:
Rights-based fisheries management has become a hot topic lately. Congress recently prohibited the creation of new catch share programs in the United States. Don Leal writes on the recent legislation here. Catch shares are the very rights-based programs that have encouraged stewardship of marine resources and saved many fisheries from collapse.
Recent attempts to limit Montana's Stream Access Law, the most permissive in the West, have reignited debates over the impact of access laws. The Michell Slough in Montana's Bitterroot Valley, once considered an irrigation ditch, has featured prominently in this debate:
The bill was backed by deep pockets in the Bitterroot, opponents say, but singer Huey Lewis says they weren't his. Still, he laments that the Mitchell Slough is now public. He and his neighbors tried to restore it into a healthy fishery, he says: They narrowed the channel, dredged out silt, added streamside vegetation, and worked with irrigators to increase stream flow. But when the state Supreme Court said it was a natural and publicly accessible stream, their incentive to continue restoration efforts slipped downstream...
That's because ownership encourages stewardship, says Reed Watson, of the Bozeman-based free-market think tank Property and Environment Research Center, or PERC. We tend to take better care of our own cars than we might of rentals, he adds, because we bear the consequences of our good -- or bad -- treatment.
"There are some positive things that can happen for restoration or the quality of streams from the environmental perspective that I think might go away if every single waterway is open to public access, including irrigation ditches," Watson says. He notes that landowners in Utah also halted stream restoration work when the state Supreme Court, in 2008, ruled in favor of public access.
Whether riparian landowners can legally limit public access to non-navigable streams is a key determinant in whether those landowners view those streams as assets or liabilities. In states that limit public access to non-navigable streams, landowners have an incentive to improve fish habitat and the stream’s natural hydrology. Those states that allow near limitless public access do so at the expense of private stewardship efforts that often create valuable public benefits. States that have yet to directly address the issue of non-navigable stream access would be wise to consider the incentives to private riparian landowners and the positive impact they can make on the state’s stream resources.
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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 empiricalevidence 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 principledconservativealternative 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.
World Oceans Day is meant to bring communities from around the globe together to celebrate the vast environmental, economic and social wealth of our oceans. It is also a day to remember the threats to ocean health and overfishing if we don't manage our ocean resources accordingly. Apparently some politicians have other intentions. In her latest op-ed, Laura Huggins highlights the political irony of new legislation to protect our ocean resources.
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 35th 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.
Michael Arbuckle, a senior fisheries specialist at the World Bank, is visiting PERC this week to attend our workshop on "Tackling the Global Fisheries Challenges." Arbuckle is working with PERC's Donald Leal on rights-based fisheries reform in developing countries with an emphasis on artisanal fisheries. Watch the video interview above or read a more detailed interview below. For more PERC Q&As, visit the series archive.
Q: What do you see as the biggest challenge facing global fisheries?
A: It’s a tragedy that worldwide the wealth of fish is being squandered. More than 200 million people in developing countries depend on fisheries and aquaculture for their livelihood, and fish account for 50 percent of the protein needs for the 400 million poorest people.
Each year, poor governance costs the fishing industry at least $50 billion. Yet more than $100 billion of market gains are possible when sustainable net benefits are considered.
This is bad for American markets, but it is an even greater tragedy for developing countries where wealth is needed most. The global challenge is to help recover the lost wealth in developing country fisheries and reinvest it.
Q: What do you hope to accomplish with the PERC workshop on global fisheries challenges?
A: Forms of property rights are not well recognized in most developing countries. Furthermore, the capacity of governance or the rule of law is often weak or non-existent.
So Donald Leal and I have not just been looking into whether we need property rights or what are the characteristics of these property rights, but how do you introduce them. The development of property right institutions must come from the bottom up. The importance of property rights are further emphasized in this manner because they empower users to manage their resources responsibly.
Q: What are a few lessons we can learn from the bottom-up management approach to some of the fisheries you have been examining in the developing world?
A: Often bottom-up property right institutions are the only entry point for reform in such countries. We are seeing a growing list of examples including Mexico, Bangladesh, Indonesia, Chile, etc., where bottom-up property right arrangements have helped develop more stable fisheries.
We are learning more and more about the characteristics of such systems. We now know it’s dangerous and often counter productive to invest in value chain improvements without reliable property rights, but we also know that if property rights are established a variety of gains are possible.
In addition, we know that one size does not fit all and the particular arrangement of property rights is unique. This is something that must be considered as we take away lessons from successful property rights regimes—the misalignment of property rights to the political economy of the country can easily undermine the rights that are being established.
Q: What is your vision for the future of fisheries and aquaculture?
A: Looking to the future, the supply of fish will be dominated by aquaculture and this will be up for meeting future demand. It will be critical, therefore, to not see fisheries as an end in itself, but also as a foundation for aquaculture development.
An important objective for the World Bank and PERC is to help identify and implement the property right institutions that will enable such innovations in the oceans.
The PERC workshop on "Tackling the Global Fisheries Challenges" is a good opportunity to examine high seas property rights issues from a clean platform, without thinking about the current constraints of the institutions in place. The workshop gives the participants a chance to think about fisheries from a theoretical perspective, consider some specific examples, and think innovatively about how to move forward.
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.
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.
The NOAA policy will make it easier to adopt rights-based fisheries management programs in the future — a change that could not happen too soon. Recent research warns that all of the world's fisheries could collapse in 40 years and that catch shares have the power to stop or reverse this collapse.
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.
Next month, fishers in the Pacific groundwater fishery will operate under a new management system called catch shares. This market-based system gives fishers the rights to a share of the total allowable catch, and has proven to halt or even reverse declines from overfishing. Don't expect results overnight; it will take time to get the system to function properly and to produce the economic and biological benefits possible with catch shares, but do expect positive outcomes down the road.
Founded 30 years ago in Bozeman, Montana, PERC—the Property and Environment Research Center—is the nation’s oldest and largest institute dedicated to improving environmental quality through property rights and markets.
The goal of PERC’s programs is to fully realize the vision of establishing “PERC University,” where scholars, students, policy makers, and others convene to expand the applications of free market environmentalism.
PERC's fellowships share a common goal of exposing new scholars, students, journalists, and policy makers to free market environmentalism, as well as enable scholars already familiar with FME to explore new applications.