Topic Area: Fisheries
Geographic Area: Norway
Focal Question: How can a multispecies fishery begin to sustainably manage its fish populations?
Sources:
(1) Salvanes, K., Squires,D. 1995. Transferrable quotas, Enforcement Costs and Typical Firms: An Empirical Application to the Norwegian Trawler Fleet. Environmental and Resource Economics, v.6, pp.1-21.
(2) Sanger, C. 1986. Ordering the Oceans- The Making of the Law of the Sea. Zed Books ltd. London.
Reviewer: Matt Chisholm, Colby College '96
Review:

The third United nations Conference on the Law of the Sea (UNCLOS) established exclusive economic zones (EEZs) in order to manage and protect the resources which are located off the shores of coastal states (fish, sea bed minerals...). The exclusive zone was a 200 nautical mile limit which gave the coastal state sovereign rights over the zoned waters and the resources within those waters.

In the 1970s, Norway relied on fishing as a main source of income for the country. Norway's reliance upon its fishing industry created an incentive for Norway to define its territorial waters and then manage them sustainably since the future of the country is so dependent upon the sustainable management of their fish resources. By 1976 Norway had established it own 200 mile exclusive zone, amongst some 60 other countries.

The Norwegian fishing industry consists of a very modern fleet having over 85 highly mobile ocean vessels. The main waters fished by the Norwegian fleets are the Barents Sea and the North Sea. The Norwegian industry processes fish both on land and at sea on processing vessels.

Cod, saithe and haddock were the main catches of the industry in the 1970s which had historically fished a species until it was fully exploited, and then would shift efforts toward a substitutional species such as redfish and halibut as the industry did through the 1980s. The most important species to the industry is the Arcto Norwegian cod because of its abundant quality and high market value. (Norwegian diets are heavily dependent upon fish) The Arcto Norwegian cod is also fished by Russian fleets; therefore the total allowable catch (TAC) is a shared stock. The TAC is set for the species, and then that catch is split between Norway and Russia.

The Norwegian portion of the TAC is shared between inshore fleets and offshore trawlers. The fishing industry regulates and only allows passive catch gear (gillnets, troll) which are less harmful to harvested fish and help to decrease bycatch levels to promote sustainability. Entry is limited into the trawler fleet by requiring vessels to be licensed, and a boat quota has been set for cod trawlers. The combination of limited entry into the industry and having non-transferable quotas creates a situation of over capacity and excess effort. Once the TAC is set, a race to get as much of the TAC as possible begins because as soon as the TAC is reached, fishing halts, and so do income flows. These policy tools in combination with one another result in unsustainable and inefficient conclusions.

In 1987, Norway began to look for more sustainable management procedures as it began to see serious declines in its prized stocks, especially the Arcto Norwegian cod. An individual transferable quota system was suggested as a means to recovery. The transferable quotas would remove the race for fish as each vessel would have an allowable catch for a one year increment, and the vessel has the entire year to plan and extract his/her quota in the most efficient way possible. This accomplishes the feat of protecting fish stocks, while enabling the fishers to put their efforts toward the highest valued returns, thus creating efficiencies within the industry.

In attempting to construct an ITQ system, Norway struggled with the problems of monitoring and enforcement of the quotas. An ITQ system creates incentives to misreport catch data, and to "high grade fish" (keeping the most valuable fish, while throwing the rest back) in order to get the highest vale for each allowable catch. The costs of monitoring and enforcing the quota systems are high, making negotiating a system difficult. Fisherman are not willing to pay for monitoring of their own practices, and yet monitoring is an essential ingredient in assuring compliance.

A second issue which faced the Norwegian fishing industry was technology transfers within the industry. The industry wanted to implement high information sharing and technology transfer in order to harvest the allowable catch in the most efficient way. If the catches were to be limited, then the catch should be obtained by the most efficient means in order to ensure maximum value and promote efficiency within the industry.

Currently an ITQ system is in place managing the Arcto Norwegian cod, yet a more comprehensive system has not yet been established to manage more of the species within Norway's EEZ. The lesson to be taken from this case is that despite a need for sustainable management of the fish populations in Norway as the country's economy is so dependent upon the fishing industry, past action has driven the state toward a crisis. Norway's attempt at implementing a more solid, comprehensive policy is a step toward sustainable management within the fishing industry, as it gives hope to the future of the industry and to the population of Norwegian peoples. An ITQ system has been successful in other regions of the world (Iceland, New Zealand , Australia) using a combination of the ownership of property rights (EEZ) and the protection of renewable resources (TAC), which if applied effectively and sufficiently can protect the Norwegian fishing industry, while promoting the recovery of the fishery.