Topic Area: Fisheries
Geographic Area: Australia
Focal Question: What is the role of ITQs in the management of a fishery?
(1) Pascoe, S. 1993. Thalassorama. ITQs in the Australian South East Fishery. Marine Resource Economics, v.8, pp. 395-401.
(2) Sanger, C. 1986. Ordering the Oceans- The Making of the Law of the Sea. Zed Books Ltd. London.
Reviewer: Matt Chisholm, Colby '96

The third United Nations Conference on the Law of the Sea (UNCLOS) addressed the issue of defining property rights of coastal seas in order to manage and protect fish stocks. Australia took a leadership position at the conference by pressing the need to define Exclusive Economic Zones (EEZs) which gave the coastal state the sovereign right to manage and protect their zone.

In the 1970s, Australia gained an interest in defining a coastal zone as its fishing industry was commercializing within the diverse waters off of the south eastern shore. The multispecie fishery provided vast populations to be exploited, and Australia was concerned with foreign fishing vessels (Japanese, Taiwanese, Soviet and Eastern European fishers) harvesting fish off their own coast. Australia also supported the 200 mile exclusive zone because due to its geography, Australia would control the third largest EEZ in the world. The large EEZ provided an even greater wealth for the Australian fishing industry.

Australia established a 200 mile exclusive economic zone in 1976 amongst 60 other countries. With foreign vessels prohibited from fishing off of Australia's coast and a set of defined property rights, Australia then began to look domestically at what could be done to manage and protect their newly defined resource.

Initially, the Australian fishing industry relied upon stocks of flathead, whiting, and most importantly, orange roughy. The survival of the Australian fishing industry relied on the discovery of alternate stocks which could be substituted toward when a targeted stock has been fully exploited. The industry moved toward gem fish in the 1970s when research showed declines in the stocks of orange roughy. The abundance and profitability of the gem fish allowed the fishing industry to expand, putting increased pressure on the fish populations.

Concerns about fishing capacity arose at the end of the decade, and further research called for a limit on the gem fleet to only 150 vessels in 1985. A unitisation scheme was also implemented which was basically an non-transferable permit system where catch units were distributed according to the size and engine power of the fishing vessel. By 1988 a total allowable catch (TAC) was established to protect the orange roughy stocks, but it reached an inefficient and unsustainable conclusion. The TAC set a limit on the number of fish to be caught; yet because the quotas were not transferable an incentive to over invest in their catch efforts was created to avoid unfulfilled quotas and a loss income, a "race for fish" began.

Individual transferable quotas (ITQs) were established in the South East Australian fishery for orange roughy in 1989. By making the quotas transferable, rational behavior is facilitated amongst fishers. The quotas can be transferred which creates efficiencies by using the resources in their highest valued use. In conditions where there is a surplus of quotas, they can be sold; therefore not only do the resources go to the highest valued user, the transferability also avoids the potential losses in income to the fisherman if the quotas were not transferable. The ITQ system allows for an efficient use of the resource (fish) while at the same time providing protection to the fish stocks in order to provide the industry with future resources.

Australia's ITQ system contains vessel catch quotas which are a portion of a larger total allowable catch. The quotas are transferable, yet licenses are required to fish thereby restricting access into the industry as another protective measure. The permits are distributed on a historical catch and vessel size basis, and must be renewed each year as the TAC is reduced over time, therefore reducing the amount of harvested stock and allowing the stocks to naturally replenish. Initially only the orange roughy was regulated under the ITQ system, but in light of its successes some 15 more species of fish in the South East fishery were being managed by ITQs by 1992. The South East fishery lands approximately 100 species of fish of which the 16 regulated species comprise the majority of the total catch.

The South East fishery has had success under the ITQ system, especially concerning its off-shore fleets. The off-shore fleets target only a single fish species per fleet which increases efficiencies As knowledge and efforts are more concentrated, the system is gear specific, meaning that all vessels must fish with regulated equipment. The choice of equipment is determined by the desire to protect catches as well as reduce the levels of bycatch which inevitably occur. The establishment of the EEZ also allows the ITQ system to be regionally specific (segregating the region into sectors) which decreases uncertainties within the industry as monitoring and enforcing becomes easier due to a smaller geographic area and transportation costs can decrease within and between those regions. The implications of a decreasing annual TAC and the ability of the industry to adjust to the downsizing are that the fishery is showing signs of acceptance to the system and a movement toward sustainable management.

The Australian in-shore fleets are not finding the same successes. The in-shore waters are much more biologically diverse and bycatch is a problem due to the large number of fish species located in a densely populated region. Quota species are not only target fish, but are also bycatch fish which makes the management of the species more difficult.

Overall the system is a good example of the possibility of sustainable management within fisheries. Improvements to the fish stocks and the South East fishery are already evident which is encouraging in the early stages of implementation. Increases in monitoring and equipment regulation could aid in relieving the bycatch effects and therefore strengthening the system. The south East fishery provides a good model to other states in creating an effective system, especially considering the diversity of the resource base being managed.

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