Will Catch Shares Reel in Overfishing?

Erik Ness

Fishery management worldwide is on the clock as commercial stocks dwindle and other threats to ocean health mount.  Ecosystem Marketplace examines the role that catch shares can play in promoting efficient management of fish stocks.

Third in a Series


Fishery management worldwide is on the clock as commercial stocks dwindle and other threats to ocean health mount.   Ecosystem Marketplace examines the role that catch shares can play in promoting efficient management of fish stocks.

Third in a Series

3 February 2010 | When and where the first humans caught the first fish is long lost in pre-history. But what happened next is pretty easy to imagine: First they wondered if they could catch another. Then they began to ponder whether there were enough fish to feed their family or village.

Fishing – along with agriculture – became a defining technological and resource foundation of many societies. The quest for fish and the accompanying maritime skills set the course for global exploration and trade. Fishing would become the economic bedrock of entire regions, making (and breaking) many fortunes. For centuries, the bounty of the sea seemed inexhaustible.

Hitting the Wall

Now we know better.

Of the 230 fish stocks under US management, about a quarter are still being exploited at unsustainable rates. Cod stocks in New England collapsed in the 1990s and still haven’t recovered. Atlantic halibut have been fished to commercial extinction, while other prized fish such as bluefin tuna are on the brink. Salmon stocks in the Pacific continue to decline, and the red snapper fishery in the southeast has just been closed for six months.

While researchers have reported the loss of 90 percent of large fish in 50 years since the advent of industrial fishing and warned of an overall collapse of most major global fisheries by mid century, some fishermen accuse the scientists of crying wolf.

Meanwhile, the US Congress has mandated an end to domestic overfishing by 2011, and the National Ocean and Atmospheric Administration, now under new chief Jane Lubchenco, is pushing “catch shares,” a promising but controversial market-based solution to fishery management.  

The Game Thus Far

Fisheries to date have run largely on a catch-it-while-you-can basis. Quotas are set, and then each vessel harvests what it can while the season is open. It was something of a lottery – stumble upon good hunting while prices are up, and you’re set; lose a net or blow an engine and you could lose out altogether.

Under a catch share, the quota is allocated to individual fishers.   If the overall quota is one million pounds and your share is one percent, you get to harvest 10,000 pounds of fish. Some 300 catch shares systems already operate in more than 25 countries. Catch shares use economic tools to vest fishermen in their resource like never before. Early indications are that the technique can work, but to be effective they must overcome questions about equity and ecological impact.

To Share a Fish

Dr. Chris Costello of the University of California at Santa Barbara is an economist at the forefront of the catch shares push. In a 2008 analysis in the journal Science, he and his co-authors examined the fate of 11,135 commercial fisheries around the world. They paid particular attention to 121 fisheries using a form of catch share called individual transferable quotas.

“Implementation of catch shares halts, and even reverses, the global trend toward widespread collapse,” the paper concluded. “Institutional change has the potential for greatly altering the future of global fisheries.”

Costello favors such programs over command-and-control because he believes they offer the right balance between regulation and flexibility.

“There are thousands of little decisions these guys make out on the water,” he explains. “We can either regulate every little thing they do and try to monitor it all, or we can try to create an institution, a set of rules, that creates incentives for him to want to do what we think is the right thing.”

Fishing policies vary by country, but usually a nation’s offshore fishery is a publicly-owned resource, with government-regulated access. In the US, for example, fisheries generally are governed by an overall catch limit. Called the Total Allowable Catch, or TAC, it’s supposed to be a scientifically-determined target that leaves enough fish in the water for the fishery to renew itself.

Unintended Consequences of TAC

TAC alone, however, has its limitations.

First, the formulas rely on imperfect data and are subject to political pressure. Second, the TAC formulation does not take into account ecosystem connections and effects, so while a particular target species may end up being fished within its own sustainable limits, the harvest may harm whole ecosystems.   Third, the TAC is enforced by regulating effort: season length, days at sea, trip limits, gear.

The result can be a race to fish: individual boats have no incentive to limit their catch, and the TAC is routinely exceeded. In the Alaskan halibut fishery, for example, regulators kept shortening the fishing season to try to reach their harvest goal. But fishermen just employed more boats and better technology. In 1990, the entire season was compressed into a six-day derby, and still the catch exceeded its target by 6%.

Ironically, the fishermen needed that overage because the catch overwhelmed the market, and prices dropped. Fishery and fisherman both lost.

Blending TAC and Catch

In 1995, the Alaskan halibut fishery adopted a catch shares system.   The TAC is now divided proportionally between participants, using a formula designed by the local fishery. Shares were divided according to catch history, and also divvied up between different sizes of boats to allow for a diverse fleet. Under the new system, if the harvest target of the fishery increases, so too does the amount that each share may harvest.

Now the fishermen have a vested interest in the sustainability target. And instead of managers struggling to come up with regulations to restrict the harvest, fishermen can fish any time during a nine-month season. Fishermen are accountable to harvest only their allowable share. But freed from the race to fish, they can also space out their catch, selling more to the higher-value fresh seafood market. Revenue per crew position nearly doubled from 1995 to 2008, and target harvests were finally attained.

Brad Warren of the Sustainable Fisheries Partnership explains how catch shares implementation transformed the Pacific groundfish fishery in British Columbia. It took time for the captains to trust the data, but once they realized just how significant their overfishing was, the tide turned. “We’re destroying our future,” they realized. Once catch shares was implemented, the fishermen insisted that each boat carry an observer. A bycatch trading system also allowed the boats to minimize their collateral damage to the ecosystem.

“You have a huge incentive for the industry,” says Warren. “It wasn’t just that their fishing practices changed, and they got cleaner. It was also that they started accounting for what they removed. Then the removals could actually be contained at the levels they were meant to be contained at.”

The catch shares downside?

“The smaller boats couldn’t afford it,” he says. “It crushed them. That was a tough political decision. It was necessary, but not fair.”

When issues of equity are not addressed, large operators can corner the market in catch shares. In fact, soon after Alaska adopted its successful halibut catch shares program, the US Congress placed a moratorium on catch shares development that was only lifted in 2002.

Share Trading

The ability to meet harvest targets is one strong argument for the conservation value of catch shares. Share tradability is another potential conservation tool, but it’s also more controversial. The market is set first by the right itself, which depends on the country. In New Zealand a share is essentially property, and the law requires compensation if the share is taken. In the US, however, the fishery is a public resource and access to the fishery is a revocable privilege, reviewed every decade.

Most catch shares fisheries have been designed so that shares can be traded, though rules may limit who can own the shares. Trading among vessels helps maximize efficiency – if a skipper’s hold is full but she still has share, she could plan another trip, or perhaps sell the remainder to another vessel, maximizing her own profit.

But tradability also worries some fishing communities. Overall, the industry has already seen significant consolidation over the last few decades, with bigger boats and fewer owners working out of larger ports and selling to larger processors. Catch shares opposition often comes from owners of smaller boats in smaller ports, who worry that they could lose out to bigger operations. And unless ownership is restricted strictly to those on board the vessels, argues Zeke Grader of the Pacific Coast Federation of Fishermen’s Associations, fishermen could become seagoing sharecroppers.

“At that point much of the stewardship that’s claimed for these programs … is lost,” he says.

What Drives the Fisherman?

It’s ultimately a design question: Is the performance goal of the fishery primarily economic, or social and biological as well?

Some of the first catch shares were driven by economic goals — to reduce a fishing fleet that had grown too large and thus inefficient. But in the Alaskan example, reserving shares for different size boats was intended to help support a diverse maritime infrastructure. In New England, some of the pushback on catch shares is because some people believe current plans don’t sufficiently support the small coastal fishery that helps maintain the state’s bucolic waterfronts, which could impact tourism down the line.

“The specific needs of the fishery are the first part of that equation,” says Amanda Leland, national policy director for the oceans program of the Environmental Defense Fund, a major proponent of catch shares. While it may make little sense for a lobster fishery with lots of small boats operating in many small communities to allow outside investment, o[2]ther fisheries may be more industrial in nature, with some fraction owned by investors.

Indeed, investors may be critical in salvaging at-risk fisheries where banks fear to tread.

“Transitioning to catch shares can be quite challenging economically in fisheries that are under-performing economically, as many of the most troubled fisheries are,” says Leland. “Financial arrangements are ways that fishermen can help stay in business in the short term as the fishery starts to rebuild.”

The Conservation Argument for Trading

Costello adds that when shares are tradable it opens up a new tool kit for ocean conservation.

“All of a sudden conservation easements and all of the other tools we use on land are now viable in the ocean,” he says. For example, the only way to establish a marine reserve right now is to lobby for legislative or executive action. With catch shares, it becomes possible to simply buy up the relevant shares.

“If you assign rights in an appropriate manner, it creates a platform for investment,” he argues. “From the fisherman’s point of view he can invest in his own fishery and make more money and be a better steward of the resource. But it also creates a platform for trade and investment from the conservationists who want to transact with that fisherman to make more conservation minded decisions. None of that is possible without the right.”


Neglecting the Ecosystem?

Lubchenco was a strong advocate of catch shares before her appointment, but she would be the first to acknowledge that single-species harvest management is not particularly ecosystem-oriented.

“What tends to happen is you only set limits on the commercially valuable parts of the system, while neglecting other parts of the ecosystem,” explains Tony Charles, a professor at Saint Mary’s University in Halifax, Nova Scotia. “You forget about the quality of the habitat and the ecosystem generally.”

What about the Costello Science paper, which predicts catch shares fisheries are less likely to collapse?

“What they couldn’t control for are the other management measures that came along with the catch shares system,” counters Charles. “People have said for decades that better enforcement will lead to better fisheries management and better stock rebuilding. There is no way they can separate what came along with the catch shares system at the same time.”

Costello admits this could be true, but counters that catch shares are more likely to set a better TAC because the fishermen are vested in the overall value, and understand that overfishing could cause the value of their share to decrease. “Lots of the fisheries that don’t have catch shares set TAC and they screw it up. They set them too high. If it takes a catch share to get the right TAC, then fine.”

Ocean Zoning

Catch shares won’t solve all the ocean’s problems, but the principals at least dovetail with potential solutions being put forward to overhaul ocean management on a grander scale.

When we look at the vastness of the ocean, some marine areas stand out for their exceptional biological value. Coastal wetlands, estuaries, reefs, submarine mountains, and major nutrient-bearing currents and upwellings are vital pieces of the oceanic ecosystem. Unfortunately, our current patchwork of national and international laws, regulations, and economic rights don’t allow us to use management tools and policy instruments in a practical, ecosystem-oriented way to protect these critical areas.

One alternative that’s gaining ground: Zoning the ocean. A few countries have set aside a few marine protected areas, but to make a difference zoning would have to be enacted on a far grander scale. Ocean zoning could play a role the development of markets for oceanic ecosystems because it would help establishes clear rights and responsibilities, reassuring potential investors. A comprehensive zoning approach could include “trading zones” where payments for ecosystem services transactions could be established.

Ideally, every blue spot on the map would be assessed for its value, from commercial to recreational to conservation. These plans should be developed locallyand not imposed from above. The waters of Asinara, a small island in the in the Mediterranean Sea, is but one place that has been zoned for mutliple use. And the North Pacific Fishery Management Council recently closed a vast stretch of western and northern coastal Alaska to commercial harvest.

In this context, catch shares, particularly territorial user right fisheries, or TURFs could be combined with marine protected areas. Both approaches are commonly advocated as solutions to failingfisheries.   Protected zones limit harvest to certain areas, but may enhance profits outside via spillover.   TURFs incentivize local stewardship, but may be compromised when the TURF is too small to retain the offspring of adult fish in the TURF.   Strategically-sited MPAs may be an effective complement to spatial property-rights based fisheries, increasing both profits in the fishery profits and the overall health of the local marine ecosystem.

To be Continued

In December the Proceedings of the National Academy of Sciences, seeing the debate unfolding, fast-tracked a new analysis of catch shares. Dr. Tim Essington, a fisheries biologist at the University of Washington looked at ecological indicators in catch shares fisheries in North America and found that they did more to improve the consistency of fisheries than the ecological health.

“They work very well to avoid erratic swings. They generally do not lead to more fish to catch,” says Essington. “Catch shares are one potential method for improving fisheries management, but we shouldn’t expect these programs to be a panacea.”

Ironically, both proponents and opponents of catch shares cite Essington’s research as supporting their case. Indeed, the seas are very rough indeed when it comes time to discuss catch shares policy. In some fishing circles EDF is viewed suspiciously as a tool of big business, with catch shares being akin to the same kind of financial instruments that brought on the current economic crisis. Meanwhile Pew Environment Group has put tens of millions of dollars into some of the research suggesting fisheries are in trouble. And because NOAA’s Lubchenco worked with both groups when she was an academic, the whole catch shares push is seen as tainted and top-down conspiracy, aligned with environmental special interests.

Dr. Bonnie McCay is a Rutger’s scientist who has studied social dynamics of fishery regulation for decades. NOAA’s draft policy “allows for the kind of decentralization of decision-making that many of us have called for a long time,” she says. Unfortunately, the “emerging reality is so narrow,” she adds. While catch shares can accommodate many different kinds of fisheries management through creative design, people in the industry see it as most likely to mean a highly tradable system that will favor the big players, continuing the trend of consolidation.

That’s partly because “NOAA as a fishery management agency has never, ever favored local management” she explains. “There is not much evidence that it could operate otherwise.”

It may just be that the short term reality is more governed by budgetary wrinkles. Implementing catch shares at the scale imagined by NOAA won’t be cheap, which could jeopardize other programs.

In the end, the biological backdrop doesn’t make the debate any easier, warns Leland, from EDF.

“Many of the stocks are not doing well. If a major goal of the program is to recover fish populations, the catch limits are going to have to be set at a level at which the recovery can occur, which is the really tough part of all of this. That is a core issue: whether they are going to catch shares or not.”

NOAA is accepting comments on the draft catch shares policy until April 10.

Erik Ness is a regular contributor to the Ecosystem Marketplace. He may be reached through his website at: http://erikness.com.

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About this Series

The Sixteenth Katoomba Meeting will take place on February 9 and 10 in Palo Alto, California, and focus on the role that payments for ecosystem services (PES) can play in promoting sustainable use of ocean resources.

Leading up to the meeting, Ecosystem Marketplace commissioned this series of articles to shed light on these issues.

Part One, Uncharted Waters, provides an introduction to the ocean’s ecosystem services and the evolving schemes for identifying their value and bringing this value into our modern economy.

Part Two, The “New” Ecotourism, examines the role that environmental finance can play in ensuring the viability of living ecosystems by persuading mainstream tourism providers to pay for the natural beauty these living ecosystems provide.

Part Three, Will Catch Shares Help Reel in Overfishing? examines the role that catch shares can play in promoting efficient management of fish stocks.

Part Four, What can Oceans Gain from Freshwater WQT?, examines existing schemes that provide an economic incentive for keeping lakes and streams clean, and asks whether these schemes can be expanded to include the oceans.

Part Five, Mangrove Forests as Carbon Sinks, examines the potential for using carbon finance to save and restore mangrove forests around the world.

Part Six, Marine Biodiversity, examines existing that provide an economic incentive to preserve natural habitat for endangered species on land, and provides a guide for adapting these schemes to the ocean.