Topic Area: Individual Transferable Quotas (ITQ) in
Fisheries
Geographic Area: Australia
Focal Question: How successful has the introduction of ITQs
been?
Sources:
(1) Geen, Gerry and Nayar, Mark, "Individual Transferable Quotas in
the Southern Bluefin Tuna Fishery: An Economic Appraisal." Marine
Resource Economics. V No. 4 (1988): 365-388.
(2) http://www.nexus.edu.au/schools/plhs/tuna/ff9.htm#commercial
Reviewer: John Coombs, Colby College '97
Review:
By 1983 the Southern Bluefin Tuna (SBT) fishery was in a severe state
of decline. Catch rates and recruitment to the parental stock were
going down. In 1983, a group of biologists from the major bluefin
tuna fishing nations concluded that the total SBT catch should not
exceed its estimated 1980 level. This arbitrary target was set to
stabilize the size of the parental biomass and create a sustainable
fishery.
In response to this recommendation, the Australian government
implemented a total allowable catch limit of 21,000 tons in the
Australian fishery as an interim arrangement. This limit did not
serve as a binding constraint to the actions of the Australian SBT
fishery because the fishery was in an extreme state of depletion.
During the 1983-84 fishing season, Australian fishermen were only
able to catch 16,000 tons, thus falling 5,000 tons short of the total
allowable catch.
The total allowable catch limit implemented during the 1983-84 season
served as an interim arrangement while the Australian government
developed a system of Individual Transferable Quotas (ITQs) to manage
the fishery. In October of 1984 an ITQ system was introduced in the
Australian SBT fishery with a catch quota of 14,500 tons. Quota
allocations were based on catch history (75%) and investment in the
SBT fishery (25%). Individual fishermen received quotas totaling an
average of 40-60% of their total catch in the qualifying period.
An ITQ fishery management system was uniquely suited to the SBT
fishery for a number of reasons. Having only one species to control
eliminated the problems of balancing multiple species catches and
quotas. ITQ systems work best with a long-lived species, such as the
SBT, rather than shorter-lived species which exhibit larger annual
variations in parental stock. Lastly, the SBT fishery was
particularly amenable to a system of ITQs because the market outlets
are relatively few and well defined, reducing both black market sales
and the costs of enforcement.
The average market price of SBT rose from $988/ton during the 1983-84
season to $2000/ton during the 1986-87 season (both figures are in
1986-87 dollars). Although the rise in price of SBT is partially
attributable to smaller catch levels, most of the price increase is
due to a market change in the industry that resulted from the
introduction of ITQs. Before the introduction of ITQs, most fishermen
concentrated their efforts on catching as much SBT as possible, which
resulted in a relatively large proportion of smaller fish (<10kg)
being caught. These smaller fish were primarily distributed to
canneries. After the introduction of ITQs, most fishermen
concentrated their fishing efforts on catching the larger SBT
(>15kg), which were primarily distributed to the higher paying
Japanese sashimi market. The ITQ system allowed Australian fishermen
to maximize the value of their catches by concentrating on larger
fish rather than maximizing the total amount of their catch (as is
the incentive with aggregate quota schemes).
ITQs caused drastic changes in the fleet structure of the Australian
fishery. Because of the reduction in allowable catch limits with the
ITQ system, most fishermen were faced with the choice of either
selling their quotas and exiting the market or buying up additional
quotas from other fishermen. Each of the three Australian states
experienced different changes in their fleet structure as a result of
the ITQ system. By the second year of ITQs, South Australian
fishermen had purchased over half of the quotas initially allocated
to Western Australian and New South Wales fishermen. Most fishermen
in New South Wales had been operating at low profit levels during the
period prior to the introduction of ITQs. Following the introduction
of ITQs, most New South Wales fishermen elected to sell their quotas
and exit the market.
The departure of the Western Australian fishermen from the SBT
fishery seems illogical at first because they were the only fishermen
in Australia to be operating profitably before the ITQ system. Most
Western Australian SBT fishermen did not fish exclusively for SBT.
Instead, SBT was one among several species they fished. Many Western
Australian fishermen took advantage of the opportunity to sell their
SBT quotas and concentrated their efforts on other fish species.
Although the introduction of ITQs achieved its intended purpose of
reducing the SBT catch, it had the unintended consequence of creating
a spillover effect into other markets.
The ITQ system resulted in many fishermen selling their quotas and
exiting the market. Those who remained were forced to purchase
additional quotas and increase the scale of their operations because
of the relatively low allocation of quota to individuals. The result
was a smaller number of boats fishing for SBT, with higher average
catches per boat. SBT fishermen in Western Australia who did not sell
their quotas and exit the market after the introduction of ITQs had
average catches per boat approximately 67% higher than if the
aggregate quota system had been retained. Southern Australian
fishermen had average catches per boat 28% higher than they would
have had under an aggregate quota system. The increased average
catches per boat reduced the variable costs associated with the SBT
fishery, thus serving to increase efficiency. This increase in
efficiency reduced the level of fishing effort needed to catch a
given tonnage of fish by 20% in Southern Australia. By reducing the
effort needed to catch a given tonnage of fish, the ITQ system
harmonized short term and long term interests. Total resource rents
under ITQs were equal to $6.5 million, compared to an estimated $0
under an aggregate quota system.
Although ITQs reduced the amount of SBT caught by fishermen and
increased efficiency in the fishery, they failed to restore parental
biomass to desired levels. By 1988 the ITQ system had been in place
for four years, but recruitment to the fishery continued to decline.
The continued decline of the SBT fishery was not due to the inability
of the ITQ system to properly manage the species. Reductions in the
amount of SBT caught under the ITQ system were insufficient to make
up for the excessive fishing that had occurred prior to the
introduction of the ITQ system, causing the SBT population to
continue to decline. Although it initially failed to stabilize the
parental stock, the ITQ system created an efficient allocation of
permits while reducing the catch amount.
In 1994, the SBT fishery showed the first signs of recovery as
parental stock finally stabilized. Currently, the total of quotas
issued by Japan, Australia and New Zealand is about 11,750 tons per
year. Under current conditions, this catch level appears to be
sustainable. In response to declining quotas, many SBT fishermen have
recently turned to fish farming to maximize the value of their catch
by placing the tuna in containment facilities until they reach larger
sizes.