Some Facts About Catch Shares

What was the problem?

Many US fisheries saw very short fishing seasons, often only a few days long. This was economically wasteful as large quantities of fish came on the market for a short period of time. It was dangerous because fishermen had to fish in bad weather if the short season happened to overlap with a storm. It was also difficult to manage because managers could not reliably predict how much catch would be taken in a short season. Furthermore, such fisheries encourage fishermen to buy bigger and faster boats so they can get a bigger share of the catch. This is wasteful investment because it does not lead to any more fish being caught in a regulated fishery. A bigger boat benefits the individual but not the fishery as a whole or the country’s fishery resources.

How were fisheries regulated before catch shares?

Most U.S. commercial fisheries have the annual catch regulated – in essence the fishery closes when the target catch is caught. Most also have what is known as limited entry, that is only a fixed number of permits for fishing are allowed, and for a new fisherman to enter the fishery he or she must buy a permit from an existing permit holder. But these permits only allow someone to participate in the fishery, they do not guarantee any level of catch as happens in catch shares. In profitable fisheries these permits are very valuable, often costing hundreds of thousands of dollars.

How have catch shares been allocated?

There are a number of methods that have been used. When the government makes the decisions it is usually based on the historical catch records – fishermen who have historically caught the most get the biggest share. Typically this is given as a percentage of the annual fleet-wide quota rather than a specific tonnage. Sometimes the amount of investment in their boats is taken into account as part of the calculation. In other forms of catch shares, groups of fishermen, called sectors, are collectively allocated a share of the total quota, and the fishermen within the sector negotiate the shares themselves.

We have seen major rebuilds in many US fish stocks that have had catch shares in place. Were catch shares responsible?

Here the evidence is not at all clear. Rebuilding of depleted fish stocks usually results from lowering the total catch following scientific recommendations, and this has often occurred without catch shares. Studies comparing the status of fisheries with and without catch shares do not show a major effect of catch shares after controlling for fleet-wide quotas being in place, i.e. there is a stronger effect of fleet-wide quotas on meeting management targets than of whether or not the fleet-wide quota is allocated among individuals. As a general rule, however, fisheries with catch shares do tend to see more fisheries management effort.

Are catch share fisheries safer?

Here the evidence is pretty clear – having a known share of the catch, boats do not need to fish in bad weather but can wait until the weather is good.

Do catch share fisheries increase the economic value of the fishery?

Again the evidence is that they do. The fishermen have incentives to maximize the value of the fish by producing higher quality, and timing their deliveries to when market prices are high. In many fisheries the end of the “race to fish” means that a higher proportion of each fish is used. Additionally, fishing costs may be reduced by not over-investing in big boats for short seasons, and may be spread over a greater season length which reduced annual variability for the fish processing and fleet service industries.

Do catch shares lead to fleet consolidation?

Again the evidence is strong that after entering catch shares, the size of the fleet does decrease, although often the fleet size was declining prior to catch shares. Fishermen who have a history of larger catches will generally buy the catch shares from those holding small amounts of catch share, or the smaller fishermen lease their share to a bigger boat and may work as crew on the bigger boat.

Do catch shares lead to Fish Lords who in effect own large parts of the fishery?

Certainly this has happened in many fisheries. Most catch share systems have limits on how much of the catch any individual can own, but some do not and the term Fish Lord is often applied to individuals who own a large portion of the shares.

Some catch systems have requirements that the owner of the quota are on-board fishing vessels for all or at least some portion of fishing operations. This maintains an owner-operated fishing fleet. Even with this rule investors have done some things like being on-board the vessel for the minimum amount of time but not taking part in the fishing operations. These investors are known as “slipper skippers” because they typically equip their cabin as mobile offices and rarely go on deck.

What are the major objections to catch shares?

There are several areas of concern. First is that the privilege to catch fish, a public resource, is granted to individuals, and this privilege often becomes very valuable. Because catch share fisheries often become much more profitable than they were before the transition, those granted big shares of the quota often become millionaires and many stop fishing and lease their share to other fishermen or simply sell their share. Of course if the fishery already had a limited number of permits (which is usually the case) then those holding permits had already been granted exclusive access to the public resource. It is just that with catch shares the value of the fishery may soar, and some people become very rich and do not need to keep fishing to enjoy the benefits.

The second big issue is one of equity. Almost all fisheries have a small number of fishermen catching a large portion of the catch. Catch shares lock this in, and permanently make this the case. Many view this as unfair. Another equity issue is that the public does not benefit directly from the value of the fishery – only indirectly through the higher profitability and the tax system. This doesn’t have to be the case, catch share systems could be designed so that every time a catch share is leased or sold it could be taxed, even heavily taxed, but so far that kind of system has not been put in place in the U.S. Alternatively some fraction of the quota could revert to the government each year to be sold at auction or allocated in some other way. In many cases as the fishery becomes more profitable government transfers many of the costs of management to the quota holders, and in some cases overseas all management costs are paid by the catch share owners.

Catch share systems usually require that an observer be on-board for every trip to assure that the quota holder is kept within the catch limits for each species. Most catch share systems make the vessel pay for the observer. This adds a significant cost to fishing, and unless the value of the fishery increases significantly, the observer costs decrease the profitability of fishing. The observer requirement is particularly onerous for smaller boats as the cost of an observer is the same for all sized boats, so someone with a small share simply cannot afford to pay observer fees and has to sell their share.

So who benefits from catch shares?

Certainly the country benefits by the fisheries becoming more profitable, often easier to manage, and safer. Consumers often benefit because the supply of fresh fish is made available over a longer season. Those who are granted large catch shares certainly benefit. Smaller scale fishermen, and the communities they live in are the most likely to be the losers. However, catch share systems can be designed with regulations that limit these losses while still providing the benefit of ending the race to fish. In the U.S. there is little evidence that catch shares have increased the profitability of the New England groundfish fishery and the West Coast groundfish fishery.

Do catch shares lead to better stewardship of the resource?

One of the original claims for catch shares was that by granting fishermen a long term stake in the fishery they would have stronger incentives to manage the fishery well. This certainly has happened in many catch share fisheries, but where ownership has drifted away from fishermen to investors, those incentives have sometimes been reduced. The investors are not on the water, they do not handle the fish, and in some cases the investors look only at the short term return on their investment.

 

 

Full Disclosure
This fact list was composed by Ray Hilborn with comments from a number of colleagues familiar with catch share fisheries. Hilborn’s research program is supported by a range of governments, foundations, commercial and recreational fishing groups including the Environmental Defense Fund.
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