Community Transferable Quotas: Internalizing Externalities and Minimizing Social Impacts of Fisheries Management

Article excerpt

Ongoing changes in world fisheries, including those in the United States, are having dramatic impacts on fishers, their families, and their communities. The key drivers of these changes have been identified as open access and overcapitalization. The prevailing models being considered for addressing these issues are firmly rooted in the tenets of neoclassical economic theory and focus on establishing property rights or privileges in fisheries. The National Research Council has recently recommended that Congress lift the moratorium on the development of individual fishing quota (IFQ) programs established by the Sustainable Fisheries Act of 1996. In particular, among mainstream managers, a particular form of IFQ, the individual transferable quota (ITQ) has come to be viewed as the management tool of choice. ITQs, quasiprivatized property rights allocated to individual fishers, are expected to "rationalize" the fishery through market forces. Externalities (costs that fall outside the market process) associated with ITQs, however, may preclude them from achieving either their biological or economic goals. Meantime, they may cause significant social impacts. Rather than allocating transferable quotas to individuals, allocating them to communities (CTQs) may capture the benefits of ITQs while minimizing social impacts and internalizing externalities (assuring that those who reap the benefits bear the costs). Recent work on property rights in resource management provides a model for how CTQs could be structured.

Keywords: fisheries, fishery management, community management, IFQ, ITQ, property rights

The past 20 years have witnessed the transformation, downsizing, and status change of many industries in the United States, including the fishing industry (Collins and Wingard 2000). These changes have had dramatic impacts on the fishers, their families, and communities. Expansion of the fleet, the addition of new technology and global competition have resulted in new management dilemmas for all fisheries. Government measures to promote healthy fishing stocks have closed fisheries, minimized days at sea, limited access, closed areas to fishing, as well as a host of other measures. Traditional methods of harvesting once free and abundant natural resources have changed. Fishers, their families and their communities, along with resource managers, are currently facing difficult choices.

For decades, quotas have gotten smaller, fishing times have gotten shorter, and the list of allowable gear has shrunk. Meanwhile, the fish stocks continue to decline. The focus of management has increasingly come to bear on the question of open access. Under an open-access resource regime, there are no formal limits to how many fishers can enter the fishery. This in turn leads to overcapitalization as the level of investment in boats and technology exceeds that required to efficiently harvest the resource. The result is overfishing as more fishers attempt to cover the costs of more capital investment. Most managers feel that until access to the fish is greatly reduced, the problems of overfishing, overcapitalization, and often ineffective management will continue.

The prevailing models being considered for limiting access are firmly rooted in the tenets of neoclassical economic theory and its focus on economic efficiency. Economists point to resources being wasted in the overcapitalized, overexploited fishing industry. They argue that society benefits when resources are utilized in the most efficient (usually defined as profitable) way. In particular, the focus is on limiting access through the creation of some form of property rights (or privileges). Property rights are viewed as the best way to achieve the most efficient use of resources.

Property rights, particularly private property rights, are an integral component of the neoclassical model. According to the model, private property rights guarantee that the benefits of investment will be reaped by the investor. …