Using Property Rights in Fishery Management

NCPA April 11, 2014

Some fish industries -- such as the Atlantic cod industry -- are suffering from mismanagement, which has ultimately led to depleted fishing stocks. A property rights-based fishery management system, by contrast, would create incentives that can solve overfishing problems, say Jonathan Adler, a senior fellow at the Property and Environment Research Center, and Nathanial Stewart, a visiting fellow at the Buckeye Institute for Public Policy Solutions.

• Regulatory structures create little incentive to fish less because those fishermen are unlikely to capture the value of their own fishing reductions -- greater stock would only encourage inactive trawlers to begin fishing again and encourage current trawlers to fish with greater intensity.
• And because ocean fish are common property, fisherman have every incentive to bring as many boats and large crews as possible to catch fish as soon as possible, which has led to overexploitation and extremely shortened fishing seasons.
• The fishery regulations that have emerged -- time and area closures, limits on types of boats and gear that is allowed, license controls to cut down on the number of fishers -- have been ineffective at dealing with these problems. Licenses for example, limit only the number of fishermen, not their intensity.

Adler and Stewart contend that a property-based system would solve many of these problems.

• By allocating a seasonal catch quota to each fisherman (known as an Individual Transferable Quota, or ITQ), each quota owner would have the right to a specific percentage of the total allowable catch (TAC) in the season.
• For example, the owner of a 5 percent ITQ would be able to catch 10 tons of fish if the season's TAC was 200 tons.
• These ITQs would be transferable, so boats, firms and individuals could trade and sell them.
• Studies of these types of systems (only 2 percent of the world's fish stocks are governed by catch-share programs, though 25 percent of the fish caught each year come from catch-share systems) indicate that they improve efficiency, lengthen the fishing seasons and increase revenues.

Those opposed to catch-share programs often argue that the transferability of shares could result in consolidation, hurting local communities. Adler and Stewart say that this is a legitimate concern, but they argue that it has been exaggerated.

Source: Jonathan H. Adler and Nathaniel Stewart, "Learning How to Fish," Regulation Magazine, Spring 2014.