Sector Workshop Blog Archive

Intro to New England Fishing Sectors

Dan Holland, a resource economist at the Gulf of Maine Research Institute, gets up to tell us about groundfishing sectors in New England. He begins with the history of fisheries management, tells us about the particulars in this region, explains what's wrong, and tells us what the economists think the solution should be.

"Wealth that is free for all is valued by none because he who is foolhardy enough to wait for its proper time of use will only find that it has been taken by another...." H. Scott Gordon (The Economic Theory of a Common Property Resource: The Fishery, 1954)

Open access to fisheries leads to overuse and decline in the fish stock, and in the catch. Generally, the response by resource managers has been to limit new access, but to permit those already permitted to continue to use the fishery. This rarely works. The next step is to layer additional technical constraints, with the intention to limit the catch of those who are still fishing. Or, hard caps are imposed on the fishery, which leads to a race by individuals to fish out the limit.

Basically, even if the catch is constrained, there's generally a low profitability of the catch (higher costs due to the technical constraints, or boom of supply due to the race to fish).

In New England, we've seen this cycle play out: decline of fishery in the 1980s and 1990s, followed by an individual restriction (closed areas, limitations on days at sea) imposed in the mid 1990s. These have been tinkered with over the last dozen years or so -- year round and seasonal closures instead of effort allocations. This seems to have worked in reducing catch levels, but it's really inefficient.

Where we're at currently: Less than 50 days per vessel, generally. There's 2:1 counting in some areas (a fishing day counts as two if you fish in particular places). Where the fish are, you can't fish (yearly and seasonal closures in best fishing grounds). Trip limits on cod and yellowtail.

Why it's not so good: trip limits lead to discarding of marketable fish. Indirect controls lead to poor management -- some species are overrestricted in order to get results in other species. The industry's hurting financially. There's been inconsistent controls, so there's less trust between industry and resource managers. The new Magnuson Act is going to put a hard cap on fish, so will there be a race-for-fish?

What the economists think we should do: Eliminate the "commons" of the fishery, and create property rights (or 'quasi-property rights') in order to create incentives for stewardship. But how? Can't fence Blackacre on the water. Create ITQs (individual transferable quotas) and allocate them to cooperatives. Limit how many fish are caught, but let people choose how and when to catch them. This lets fishermen be flexible and efficient about when and how to fish.

Sectors are groups of permit holders (fishermen), voluntarily joining together to manage a combined allocation of fish. To be in a sector, you've got to sign a binding contract, and as a group you must not exceed the allocated limit. Sectors get to decide how to ration the allowable fish catch among the members. There's no geographic limit or vessel type limitation on a sector.

Why does Dan Holland like sectors? Simpler, more flexible, and more responsive than current regulatory structure. Fishermen have some assurance that they won't be punished or hurt by the bad actions of fishermen outside the sector -- those who behave right get to keep their allocation. (Will they really? We don't know, exactly, because of course the whole fishery must be protected). Sectors might also help with marketing, bargaining, and group buying.

But what's wrong with sectors? They have to be managed and set up. They've got to organize and govern themselves and one another. They'll have to monitor and report differently than individuals do, which could be a hassle. All the members of a sector might be punished if one bad apple exceeds the allocation for the group, or if one species is overfished. Sectors might get hit by the government for the increased workload that government monitors will have watching the sectors.

Experience in the area: the Georges Bank Hook Sector was formed in 2004 to allocate codfish in the Georges Bank. This got GB cod fishermen out from under trip limits, but not days at sea limits. In 2007, a Georges Bank Gillnet sector began operating. There are still effort controls in the form of days at sea limits. There are 17 new groundfish sectors proposed, which could absorb just about all the fishing activity in the region.

Meanwhile, there's an ad hoc committee of the NEFMC convened to authorize sectors in all northeast fisheries management plans. They decided not to globally authorize sectors, but rather to introduce sector rules by fisheries. Their recommendations: hard TACs for all species caught. Fixed baseline for allocation (e.g. the average catch of the last 5 years?), trading amongst sectors allowed, and multi-year limits, not single year limits, for sectors.

Here are the rules that exist now: sectors need to submit a proposal a year in advance, and get authorized by NMFS and the Council. Sectors need to submit an operations plan, an environmental assessment, and a binding contract governing the members. Allocations based on share of commercial catch the five years prior to the beginning of the sctor. Sector operations stop once the hard TAC is reached; and sector members are jointly and severally liable for violations. If you break the rules of your sector, you're out for the whole year (you can't reenter the general pool). There are more rules; I didn't catch them all. Talk to Dan!

Expected changes: sectors will have to seek allocations of all regulated species that they catch. There are likely to be increased monitoring and reporting requirements. Allocation baseline formula will probably change, as will the 20% cap. Sectors will probably be able to trade annual catch entitlements with other sectors.

What operations plans will need to figure out:

• how is the catch rationed amongst sector members? competitive, individual, cooperative?
• how is trading inside the sector handled?
• how is trading between sectors handled? What leeway is the sector manager given to make these determinations?
• no individual rights -- rights held at sector levels. what is an individual sector members' recourse against sector manager?
• what operational rules do sector members have to follow? do they report fishing practices to sector managers? landing location limitations?
• monitoring requirements -- cameras, hailing, reports, observers, paperwork, etc?
• what are the penalties for members who break sector rules
• who pays for the sector management costs?
• who gets into sector? what if people want to leave?
• how long do agreements and sectors restrictions last?

Useful acronyms: TAC = total allowable catch (?)
ITQ = Individual transferable quota
DAS = days at sea
ACE = annual catch entitlements

Comments

A fisherman in the audience speaks up to point out the advantages of sectors:
1) recovery of the value of the fish that die now
2) chance to improve fishery
3) marketing improvement of branding as a sector and selling jointly

Workshop Partners

The following organizations jointly produced this event: