On Monday (9/19) the Bush Administration proposed to reauthorize the Magnuson-Stevens Fishery Conservation and Management Act. From the Washington Post (Bush aims for market approach to fishing):
The administration's bill would be the biggest change in fisheries management in a decade. It aims to double by 2010 the number of "dedicated access privileges" programs, which allocate shares of each fishery to individual fishermen, who can then can buy and sell their shares. In Alaska, for example, fishermen are granted a portion of the allowed halibut catch and can trade these quotas among themselves; in most U.S. fisheries, regulators govern the annual catch by limiting how many days fishermen operate and how much they collect each trip.
These "dedicated access privileges" programs are known as individual transferable quotes (ITQs) to economists. As the story points out ITQs have been successful in managing halibut in the North Pacific (e.g., fixing the infamous derby fishery) but have been banned in the U.S.
I don't know much about the details in the current proposal, but ITQs are a great idea.
Some reasons for the ban can be found in the environmentalist response to the Magnusen-Stevens Reauthorization proposal from the Daily Grist (3rd story):
The Bush administration has proposed a major overhaul of the nation's fishery management laws -- ignoring the recommendations of its own scientific commission, and provoking mixed reactions from eco-advocates. The legislation would phase out current regulations limiting the number of days fishers can operate and the amount they catch per trip, in favor of allocating shares in the year's catch that fishers can either use or sell. Supporters say such "free market" fisheries would provide an economic incentive to curtail overfishing. "It's probably the single largest change we can make that will advance conservation," says David Festa of Environmental Defense. But others fear that it would privatize a public resource, and give an edge to corporations over smaller operators. The idea behind ITQs is simple. First, allocate harvest quota shares to those participating in the fishery (this is not so simple but let me move on). The quota limits the overall catch (hopefully solving the tragedy of the commons problem by "privatizing a public resource"). The individual quotas limits each fishers incentive to race to catch as much of the quota as they can before their competitors do. This improves safety and lowers costs as fishers fish only on the best days.
The transferability makes sure that the quota is caught cost-effectively. To get at this last point, imagine a commercial fishing fleet that consists of two types of boat: old and slow, new and fast. The costs of catching fish are lower for the new and fast boats. Each fish caught by these boats will yield more profit (i.e., rent to the fisheries economist). The new and fast boats have an incentive to acquire quota shares from the old and slow boats. As long as the additional profit from the quota is greater for the new boats than it is for the old boats they can find an agreeable quota transfer price that makes both types of fishers better off than before.
I've heard the argument that ITQs give an edge to corporations over smaller operators. If I remember correctly, it is based on the idea big firms have lower average costs of production than small firms (i.e., economies of scale) and will, therefore, acquire all the quota. I'm sympathetic to the sociological and anthropological arguments that small, traditional fishing communities are important but I don't know what their value might be. This concern should be placed in the efficiency vs. equity hole, a place economists don't like to go.
The Daily Grist finishes up with this:
The proposal would also curtail public involvement in fisheries management policies, loosen rules on reporting bycatch, and fundamentally alter how depleted fish stocks are protected and restored. The administration is "turning back the clock on ocean protections by at least a decade," says the Marine Fish Conservation Network.
Some of these things sounds like typical industry-favoring by the Bush administration, but I haven't done my homework so don't trust me on this. My homework assignment is to read the details and analysis at the NOAA Fisheries webpage: http://www.nmfs.noaa.gov/msa2005. Someday, brother.
