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Fishing With Property Rights

The following article is a shortened version of one that appeared in The Christian Science Monitor on July 30, 1992.

Overfishing has plagued the oceans for centuries.  In areas where no limits are set on harvest, fish populations dwindle because fishermen have no incentive to preserve fish for the future. Indeed, off the coast of New England, groundfish populations – that is, cod, haddock, and flounder – have been falling fast, costing the region $350 million and 14,000 jobs, according to a 1990 report by the Massachusetts Offshore Groundfish Task Force.

Governments, national and local, often deal with the problem by setting a limit on the overall catch of certain fish in their jurisdictions. Theoretically, such a limit will protect future catches by leaving enough fish to propagate.

But such a limit can cause havoc among fishermen. Knowing that the season can end as soon as the annual harvest level is reached, fishermen race to the fishing grounds and try and catch as many fish as possible. To stay competitive, fishermen are forced to invest in expensive equipment and bigger and faster boats and to take dangerous risks. With such a short season, they can suffer financial disaster if an equipment breakdown occurs on opening day

The Race to Fish

Governments can also try other techniques such as gear restrictions and split seasons. But fishermen typically find ways around these restrictions and the race to fish continues. In the end, both fishermen and consumers suffer. With seasons lasting a few hours or a few days, the markets are flooded with fish, lowering the price fishermen receive. Instead of fresh fish, consumers have to eat frozen fish for most of the year.

In recent years, however, a new technique-a new system of ownership-has emerged to manage fisheries. These are called individual transferable quotas or ITQs. Each fisherman has a property right in a fixed proportion of the total allowable catch each year. This right can be traded.

ITQs eliminate the race-to-fish atmosphere plaguing fisheries. With a secure right to a specific amount of fish each year, each fisherman can focus on harvesting that amount of fish as inexpensively as possible and at a time when it should bring the highest value.

Buying and Selling

The fisherman’s right, his ITQ, can be sold, all or in part, to another fisherman who wants to enter a fishery or expand his current share. Freedom to buy and sell these rights allows fishermen to operate at the scale they are comfortable with. Some may purchase additional rights and buy bigger boats. Others may sell part of their share and run a smaller operation, or sell out completely.

ITQs are being used in New Zealand, Australia, Iceland, Canada, and here in the United States. In­creased profits have been documented in ITQ fisheries in Iceland and New Zealand and in the Australian southern bluefin tuna and Wisconsin’s yellow perch fisheries. Profits rise because fish quality is higher and market gluts are avoided. Some fishermen claim that ITQs are the best thing to happen in fishery management.

A staff member of the Mid-Atlantic Fishery Manage­ment Council says, “Before the program went into effect, fishermen were calling the council to complain about something every working day. Now fishermen never call.”

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