Catch Shares versus Sharing Catch

Lee van der Voo considers catch shares in the US to be, “one of the coolest vehicles environmental policy has seen in decades,” because they reduce fishing effort, diminish incentives to fish in dangerous weather, can boost the value of seafood, and most importantly, were designed to keep fishing rights with the fishermen and their communities. However this last attribute has not worked for most catch share programs and increasingly these rights are bought by large investment firms and offshore companies that find loopholes in the loosely-regulated catch share laws and regulations.

Van der Voo fears that over the long term catch shares will increase costs, fishermen will earn less because of higher rental payments owed to, “people in suits,” that own the fishing rights. Consumers would then pay more in this scenario while a handful of investors would become rich.

Atlantic coast clam fisheries are the first example of this cycle: Bumble Bee Foods which has exclusive rights to almost 25% of America’s clams, was recently acquired by Lion Capital, a British equity firm. The Alaskan crab fisheries have also experienced a disconnect in recent years between fishing rights ownership and the people actually harvesting the resource.

Proponents of catch shares need to, “acknowledge that it’s an investment vehicle too, and the fish councils that manage it lack resources and political savvy to keep fishing rights in the US and in the hands of fishermen.”

Comment by Stephen J. Hall, David J. Mills & Neil L. Andrew

In the context of US fisheries, the term “catch shares” refers to a system in which the government grants fishing rights (quotas) to individuals or companies on a de facto permanent basis and establishes a market for buying, leasing or selling those rights. In other parts of the world, this same approach is referred to as Individual Transferable Quotas (ITQs), or Transferable Fishing Concessions (TFCs).

For ensuring the sustainability of fish stocks, catch shares in the US are, “one of the coolest vehicles environmental policy has seen in decades.” Yet while the potential of catch shares to reduce fishing mortality to sustainable levels is clear, the long term benefits for fishers and fishing communities are much less so. Van der Voo describes how catch shares in the US clam fishery have accumulated in the hands of a few wealthy investors and offshore companies. Clearly, it is an issue that deserves much greater attention.

Lessons from Experience

The potential pitfalls of catch shares and other schemes to allocate private property rights in fisheries have not escaped scholars. For example, Benediktsson and Karlsdóttir (2011) describes how the ITQ system in Iceland saw 50% of quota in the hands of 10 companies by 2007, a result that arguably contributed to the country’s financial crisis. Analyses of events in Denmark and Chile point to similar concentrations of quota with marked negative impacts on traditional fishing communities. In Chile, an estimated 68% of people working in the fisheries sector had to share 10% of the quota with the remaining 90% was owned by just four companies.

Rights-based fisheries (RBF), the concept that environmental and economic objectives in fisheries are best served by introducing private property rights, has been a dominating proposition over the last two decades. Zealous promotion of RBF (e.g. Neher et al. 1989, Cunnigham et al, 2009), and experiences such as those described above, has led to equally zealous rebuttal, largely on the grounds of social justice, particularly for small-scale fishers.

In South Africa, that rebuttal ultimately took the form of class action to challenge the prevailing system. Based on ITQs, this system was intended to reduce poverty by creating small-scale fishing enterprises that generated wealth for fisher households. Unfortunately, it was a system that saw 90% of the country’s 50,000 small scale fishers lose their rights. As Isaacs (2011) notes:

This system failed as many new entrants were allocated unviable fishing rights, most of them were vulnerable, many sold their rights to established companies, and some fell deeper into poverty. At local community level, the wealth-based approach of allocating small quotas to many rights holders resulted in the community elite (teachers, artisans, shop-owners and local councillors) capturing the rights. Many bona fide fishers with limited literacy and numeracy skills were unable to comply with all the formal requirement of the rights allocation process.

In 2007, the courts granted an order requiring the government to develop a new small-scale fishing policy. This new policy was endorsed in 2012. Instead of being based on the principles of individual property rights, the focus was on collective rights granted to communities.

As with the US clam fishery, these examples suggest that, even when measures are put in place to try and avoid unwanted social impacts and retain an equitable distribution of benefits, catch share (rights based) schemes often fail to maintain social justice and the livelihoods of small-scale fishers and fishing communities.

A Confused Debate

Setting a total allowable catch and allocating rights can certainly be an effective way of ensuring the sustainability of a stock, provided that the level is appropriate, ongoing monitoring processes are well designed and there is compliance. Arguably, it is for this reason that many NGOs have convinced philanthropic investors of the merits of this approach. In the last decade, fisheries improvement projects in both the developed and the developing world have become big business; establishing “catch shares” is often a key selling point.

What is not always clear, however, is the extent to which these NGOs, in promoting “catch shares” are also advocating the allocation of private property rights in a market-based system. The language that distinguishes between this strict definition of “catch shares” and other approaches for ‘sharing the catch’ (which, of course, all systems must ultimately do) is terribly blurred.

Exploring this idea, Macinko (2014) argues that a tool (pre-assigned catch, i.e., catch shares) is being confused with an ideology (the sellable, but simplistic notion that private ownership promotes stewardship). everal social movements, for example, feared the now defunct Global Partnership for Oceans’ (GPOs) use of terms such as “community rights” reflected “a new euphemism and language strategy in pursuit of more private and individual access rights regimes.“

A more generous interpretation of the GPO terminology is that, after an early period of advocacy, the pitfalls of “catch shares” with respect to social outcomes were recognized and other ways of sharing the catch were acknowledged. The same interpretation can also be applied to NGOs currently involved in fisheries improvement projects around the world. The proof of that generosity will lie in the approaches that are adopted for inclusion of small-scale fishers. What should those approaches be?

Finding Solutions

Because of the widely differing social, economic and ecological settings in which fisheries occur, there is no single best approach for sharing the catch. Deciding how to make the most of an near shore canoe fishery that spans 500 miles of remote coast and serves both local consumers and a regional trade for dried fish is quite different from deciding how to manage a lake fishery that shows natural boom and bust cycles of fish productivity and meets the needs of a wide range of part time fishers, many of whom migrate to the region for the boom periods. Compare these two examples with the simpler challenges posed by a large-scale offshore fishery with relatively few boats, all of which land in one of a few ports to provide inexpensive fish for urban markets.

It is this diversity of context that led Jentoft et al. (2011) to argue for a “dexterity principle” when searching for solutions. The key to fostering dexterity is to focus first on how the management approach is decided and who participates. To this end, we offer two suggestions from Hall et al. 2013:

  1. Promote and support mechanisms that devolve responsibility for management and decision making to levels where incentives for fisheries to meet broader societal objectives are highest. This means putting inclusion, participation and democratic governance at the heart of fisheries governance. One must recognize, however, that when literacy, empowerment, agency and engagement are weak among key constituencies, the prospects for achieving sound and durable reform are poor. In these cases, parallel efforts may be needed to build the requisite capacities and competencies among stakeholders before fisheries reforms are attempted.
  2. Give primacy to effective and inclusive stakeholder dialogue over the goals of any fisheries reform and implementation policies. Effective dialogue will be especially important when identifying fisher food security and livelihood concerns such as maintaining fishing options to cope with periodic food shortage or economic downturn. Giving voice to those whose wellbeing is most affected will help ensure that such benefits are not lost in a reform process.

While we share the view that “catch shares” are an important and proven tool in conserving fish stocks, they are not universally appropriate. In deciding on their usefulness in any given context, the broader objectives of the fishery need to be considered from diverse perspectives, along with pragmatic issues of implementation. Some of the more breathless advocacy for catch shares conflates their potential environmental benefits with the societal consequences of different forms of implementation. In doing so, it also sidelines the most important voices for designing and sustaining effective and equitable governance – fishers and their communities.

Stephen Hall was Director of World Fish from 2004 until November 2015. You can contact him here or find him on twitter here.
Neil Andrew is Regional Director for East Asia & Pacific and a Principle Scientist at WorldFish.
David Mills is a Senior Scientist at WorldFish.
Posted in Uncategorized.

6 Comments

  1. There is no scientific evidence that the danish ITQ-system has been negative for the traditional fishing villages in Denmark or for that case in Sweden. The number of fishing villages in Denmark, Sweden and Norway have declined in numbers for more than 100 years due to technical advances in the fishery industry. After the herring-collapse in the seventies it accelerated.

    When ITQ (TFC) was introduced in Denmark it led to rapid decline in the number of fishing vessels. The decline was more than among the medium-sized vessels and average among the small fishing-vessel. There are no evidence that ITQ has caused problems for the smaller vessels at all.

    A concentration of the fishings rights to fewer vessel has been an ongoing development for more than 100 years as well. It is a natural development considering the necessity to diminish the number of fishing vessels in Denmark (in alla european countries in fact) as the main problem has been overcapacity and problems with profitability. Regardless of TFC or no TFC the number of fishing communities and fishing vessels are smaller today than 10 or 20 years ago. It is exactly the same in Norway, Denmark and Sweden. Norway do not have TFC and Sweden have TFC only in the pelagic sector so far.

    You can read more about this in the official report about Denmark, coastal fisheries and TFC (in danish).
    http://curis.ku.dk/ws/files/46895397/IFRO_Udredning_2013_1.pdf

    About the pelagic TFC-system in Sweden there is an official report that states that the numder of big fishing vessels has been lowered with 50%, from more than 80 vessels to around 40. The number of small vessels engaged in pelagic fisheries remained the same before and after the introduction of TFC. Around 300. The small pelagic vessels have their own quota (In fact, the coastal quota and the Baltic Sea-quota) and are excluded from the TFC-system. Reports (in swedish):

    https://www.havochvatten.se/download/18.203ea9d8149410b71c25c410/1415350008266/rapport-effekterna-av-systemet-overlatbara-fiskerattigheter.pdf
    https://www.havochvatten.se/download/18.203ea9d8149410b71c25c412/1415178647814/bilaga-rapport-overlatbara-fiskerattigheter.pdf

    There is a danger of capital concentration and that financial interests outside of the fishing communities buy the quotas and the fishing companies. This has however not been a problem in Denmark or Sweden as there are regulation against it. Traditionally Denmark had a lot of investors form outside the fishing communities in the fisheries. The number of such investors has decreased. In Sweden the fishing industry has always been collective, community and family based and have continued to be so even after the introduction of TFC. The more collective organisation in the swedish fishing industry has led to swedish family-based and community-based fishing-companies buying into the danish fisheries and so decreasing the amount of capital from non-fishery sectors. The biggest number of finance-capital in the fishing industry in the Scandinavian countries is to been seen in Norway where they have no TFC at all.

    The problem is not TFC in itself but how you implement the TFC-system and what kind of regulations you have to counter-act the possible negative consequences.

    I totally agree that TFC i s not a solution that you can apply to all fisheries, but it is the only proven effective method to rapidly get rid of over-capacity which is the main problem in a lot of the fisheries worldwide and for sure in Europe.

    Regards
    Anders Svensson, fisheries journalist (sorry, I know a lot about TFC systems in Scandinvaia, but not so much about systems in other parts of the world)

    • Thank you Anders for providing more context for the experience of ITQs in Scandinavia. Our comment concerning Denmark was simply to highlight that some scholars have expressed concerns about the social implications. Clearly, there are multiple sides to the issues, which was precisely the point we wanted to make.

      Regards,

      Steve Hall

  2. Catch shares management is an economic scheme.

    It has nothing, absolutely nothing, to do with conservation.

    The catch shares scheme has everything to do with the consolidation, financialization, and industrialization of the resource.

    This will play to and enrich a few huge fishing conglomerates such as the China Fishery Group as they gobble up quota worldwide and destroy small boat fishing operations.

    There’s no upside to catch shares, no “strengths”. When the fish are separated from the fishing license and thus from the fishermen, ultimately big money will come in and dissolve any “accumulation caps” on consolidation; then the well capitalized “market listed” companies will buy up groundfish quota, now a commodity up for grabs to the highest bidder.

    This kind of market capitalized ownership and industrialization will denigrate the fish stocks, the fishing communities, and the fish product. This is a loss already evident for many New England fisheries and it’s a result also predicted by the sorry state of the nation’s farm communities and the lack of quality in most of our industrialized farm food products.

  3. The axiomatic shift to management by output, with ITQs, marketable catch shares, etc., promoted by various NGOs and major financial interests that have become its ultimate product, resulted in impoverishment and devastation among small-scale fishing communities and particularly small owners.

    Time has come to reconsider management by input, based on specific character of different fisheries, mostly abandoned with the rise of the quota management concept. A fishery can be best managed by fishing gear rules, closed seasons and spawning areas, limitation of new entrants to fishery, and more. Inconveniently, it requires fisheries scientists to spend time and effort at sea, instead of being busy on land with mathematical models and formulas. It needs studying the life history of target species, and in some areas also of assigning fishing grounds to different industry scales, for example: inshore waters exclusively to artisanal and small-scale fishing fleets, offshore waters to medium-scale fleets, and oceanic areas to large-scale fishing ships.

    Capital and production concentration is a historical process. But, marketing quotas system is its dramatic, forceful and socially wrong acceleration.

  4. Within the Alaska Limited Entry Act, catch shares can only be owned by a “natural person.” This was also an idea, of U.S. Senator Warren Magnuson, who was defeated in a bid for re-election by state attorney general Slade Gorton in 1980.

    How any real fisherman voted for Slade Gorton, is beyond belief, the corporate fishing pimp, brought to the United States Supreme Court, and crucified.

    http://www.justice.gov/enrd/us-v-washington

    Today, it the Magnuson Stevens Act, and his American Fisheries Act; for sons of sharecroppers.
    http://gortons.com/who-we-are/the-gortons-fisherman

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