Get ready for the look and feel of more efficient fisheries management. From NOAA's Fishnews:
NOAA Fisheries has published a final rule to implement Amendment 26 to the Fishery Management Plan for Reef Fish of the Gulf of Mexico. Amendment 26 establishes an individual fishing quota (IFQ) program for the commercial red snapper sector of the reef fish fishery in the Gulf of Mexico . Initial participants in the IFQ program will receive percentage shares of the commercial quota of red snapper based on specified historical landings criteria. The percentage shares of the commercial quota will equate to annual IFQ allocations. Both shares and IFQ allocations will be transferable. The intended effect of this rule is to manage the commercial red snapper sector of the reef fish fishery to preserve its long-term economic viability and to achieve optimum yield from the fishery.
Emphasis added: (1) transferability enhances the efficiency of individual quotas [the website for the quota trades will be http://ifq.sero.nmfs.noaa.gov. Check it out sometime in 2007], (2) optimum yield refers to the maximization of economic rent (i.e., profit) from the fishery. This is, typically, a more conservative managment plan than the biologist preferred maximum sustainable yield (which maximizes revenues, ignoring cost).
Here is a statement of the problem published in the Federal Register (06-9342.pdf):
Since the 1990’s, the harvest capability of the commercial red snapper fishery has far exceeded the level to harvest the quota in an economically efficient way. This has resulted in a derby-like fishery, with the usual negative results such as seasonally depressed ex-vessel prices due to market gluts and fishing during unfavorable weather conditions, among others. Management responded to these conditions by imposing more restrictive regulatory measures to alleviate the derby effects.
One concern with transferable IFQs is the potential for concentration of quota shares in a few hands and the resulting potential for the inefficiency of market power:
The Council’s choice of an ownership cap equal to the highest allocation an IFQ holder receives at the time of initial allocation (about 8 percent) was based on inputs from members of the public, including the industry advisory panel. The Council deemed this level not to result in market power concentration while at the same time it would not penalize the current largest operation. In the absence of market power, price fixing is not likely to happen. In addition, at least the current 17 fleet operations are expected to remain in the fishery under the IFQ programs and, thus, would provide enough competition to make price fixing very unlikely.
Another issue is the initial allocation of quota. Quota is money and, in effect, the government is giving away money:
The Council considered several alternatives on initial distribution of IFQ shares, including equal allocation among Class 1 and Class 2 licenses. NMFS agrees with the Council’s decision to allocate IFQ shares in proportion to landings although this may result in unequal initial distribution of wealth. The reason for this is that proportional allocation is more fair and equitable than equal distribution, because proportional landings are more reflective of historical participation in, dependence on, and commitment to the fishery. Entry into the fishery is actually expected to be less costly under the IFQ program than under the current system, since IFQs can be purchased in lower denominations whereas licenses can only be bought as whole licenses. New entrants can especially benefit from this, because they can first experiment on a limited basis and evaluate their performance before committing more resources into the fishery.
And a summary of the plan:
The Magnuson-Stevens Act provide the statutory basis for the final rule. The final rule will establish an IFQ program for the commercial red snapper fishery in the Gulf. Specifics for this IFQ program include the following: (1) no limit on the duration of the program, but a program evaluation is required every 5 years; (2) maximum IFQ share ownership equal to the maximum percentage issued to an initial recipient of IFQ shares; (3) restriction on initial eligibility only to owners of Class 1 or Class 2 license holders; (4) proportionate allocation of initial IFQ shares based on average annual landings for 10 consecutive years during 1990–2004 for Class 1, seven consecutive years during 1998–2004 for Class 1 historical captains, and five years during 1998–2004 for Class 2; (5) establishment of an appeals process and a set-aside of 3 percent of the commercial quota to resolve appeals; (6) restriction on transfers of IFQ shares/allocations only to those with a valid commercial reef fish permit during the first 5 years and, thereafter, to any U.S. citizen or permanent resident alien; (7) proportionate allocation of commercial quota adjustments based on percentage holdings at the time of the adjustment and phased-in issuance of IFQ allocations for the 2007 season; and, (8) provision for IFQ cost recovery fees to be paid by IFQ holders but collected by registered IFQ dealers/processors. The main objectives of the final rule are to address the excess capacity and derby problems in the commercial red snapper fishery.
Well done Gulf of Mexico Fishery Management Council and NMFS! This is so awesome. As far as I can recollect, this is the first transferable IFQ (i.e., ITQ) since I've been paying attention. A milestone in my life which I'm sure that you will want to help me celebrate by buying me, say, a beer. I'm working on the paypal stuff right now. Stay tuned.
The first commenter that says something like, John, don't get too excited, will be banned from further comments until I get over the pain and hurt. And I'm very sensitive.
