Some Thoughts on Individual Transferable Quotas
The paper proposes an Individual Transferable Vessel Quota (ITQ)
system for the troll fleet. From a fishers perspective desirable
results of the system are:
- Stability of access to fish and/or income
- Stability of markets and prices
- Creation of asset value to fishermen
- Rationalization of Investment
- Stable business environment and opportunity
It is argued that some important issues which affect the fishery
and must be negotiated between fishery managers and fishermen are
independent of ITQ considerations and should be ignored when considering
the desirability of the ITQ system. These issues are:
- Total Allowable Catch (TAC)
At the onset of any fishery occurring a preset number is announced
- Variable stock strength
- Treaty commitments
- Catch distribution between fleets
The issues which must be resolved are:
- Formulae for sharing amongst quota holders
- Management cost
- Stock management impacts
Two methods of allocating quota are discussed. These are an equal
division of the TAC between boats with no consideration of size
or history and a 70-30 split with 70% of the TAC allocated equally
to each boat and 30% of the TAC allocated on the basis of boat length.
Examples are calculated using typical TAC’s for Area F. These
examples result in quota allocations of approximately 36,000 lbs/boat
under the equal split formula and a range of 33,000 lbs to 41,000
lbs for boats 30’ to 60’ under the 70-30 formula.
It is proposed that quota be allocated as pounds rather than pieces
to reduce high-grading and individual quota allocations be made
for each salmon species in each management area. Quota would be
issued on the basis of round weight and delivery weights adjusted
to account for processing method and glaze using standard ratios.
Catch monitoring will be required and it is proposed that a system
similar to that used in the halibut fishery be adopted. Vessels
would be required to hail out, hail in and have landings weighed,
recorded and reported to DFO by independent observers. In addition
daily catches would be reported electronically from the vessel at
The use of on-board observers is discouraged as impractical for
small vessels. It is proposed that a committee of fishers and managers
be established to design an on-board monitoring system that meets
with DFO approval.
Quota transferability is seen as critical to the success of an ITQ
program. It is proposed that quota be transferable in units of a
few hundred pounds between vessels licensed to fish in the same
area. Transferability between areas is unlikely to be acceptable
to managers. Transferability between gear types should not be allowed.
Limits of 1% of TAC are proposed as the maximum quota that could
be held by any one individual or company but as long as no transfers
between gear types occur there should be little need of this limit
since no troller could catch the amount of fish allowed.
The establishment of a quota fishery creates an asset for fishers.
The cost of using this asset must, therefore, be borne by the one
who gains, the fisher. It is proposed that an existing company such
as an accountant or management consultant be engaged to manage the
ITQ program. This firm would manage all quota transfers, delivery
monitoring and other activities required by the program. All fees
for service would be paid to the company.
An estimate of the cost of an ITQ program suggests that the services
required to manage delivery verification, quota transfers, data
reporting and DFO services would be in the order of $.10 - $.11/
lb of quota.
SOME THOUGHTS ON TROLL INDIVIDUAL TRANSFERRABLE QUOTAS (ITQ’S)
Prior to the development of any organizational concept it is necessary
to have a clear idea of the results to be achieved. This discussion
will begin with an outline of desired results and progress to proposals
designed to achieve the results. It should be reviewed in the same
order ie: Are the desired results correctly stated and complete
and if so will the suggested mechanisms achieve these results?
There has been extensive debate over the value of ITQ’s to
the salmon fleet over the past few years. The essence of this debate
has been the conflict between two fundamentally opposed views of
the fishing life. Historically fishing has been an activity in which
skill, hard work and efficient equipment has allowed some fishers
to catch more fish and earn greater incomes than those less skilled
or willing to work and take risk. Each year and each trip was a
gamble with the potential for a wide range of rewards. This system
has great appeal to many who choose the fishing life.
An ITQ system of management alters the traditional fishery fundamentally.
Under this system the fisher knows how many fish can be caught before
fishing begins. The gamble, which is a significant factor in the
appeal of the life style, is to a large extent removed. Variations
in income levels between those who wish to work harder or smarter
are achieved by more usual business methods rather than the traditional
While the difference between lifestyles may be important to fishers
the fact that an ITQ management system gives managers more comfort
may be more important. Recent years have shown that worried managers
can reduce fishers catches to a far greater extent than any other
factor. If managers take comfort from an ITQ system they are more
likely to allow fisheries to proceed. If they cannot estimate catch
rates in a derby fishery they are more likely to close the fishery.
The desirable changes the ITQ system brings to fishers are as follows:
Stability of access to fish and/or income –
With the establishment of quota each fisher knows at the start of
each year precisely how much fish may be caught. If this is inadequate
to meet the perceived needs additional quota can be purchased. Purchase
of quota increases input costs but this is often offset by overall
increase in fish prices. It can also be offset by the fishers ability
to time fishing activity to high price periods of the market year
or to meet the needs of a niche market paying higher than average
Stability of markets and Prices – The advent
of a quota fishery allows the development of fishing patterns that
make supply more nearly meet the needs of the market. Under these
conditions markets grow to count on a reliable supply and thus are
in a position to pay higher prices. Constant and reliable supply
also stimulates demand and again allows higher prices. The even
flow of this supply reduces the role of the processor and thus tends
to reduce the power of the processor to control or manipulate prices.
Creation of asset value to fishermen – The
creation of ITQ’s is the creation of an asset with value to
its owner. The ITQ represents a body of fish in the sea privileged
to and harvested by the fisher. This privilege may be bought, sold
or leased. As the ITQ program develops the value of the asset will
increase with rising value of fish.
Rationalization of investment – Under the
quota system a fisher may gear the operation to a scale sufficient
to efficiently catch and process the precise quantity of fish allowed
under the quota. There is no need to over invest in anticipation
of the high catch rates needed to prosper in a derby fishery. Capital
is thus more efficiently applied and overall profits from the operation
Stable business environment and opportunity –
The quota system reduces the number of variables within the individual
fishing business. The quota is subject to change as a result of
stock health and abundance and fish prices will vary with market
demand but these are the major variables. Weather and breakdown
are no longer an influence nor is competitive fishing pressure.
Ultraconservative management may also be reduced in that managers
have a less hectic environment in which to make their decisions.
Valuation of fish allocated to given sectors –
One of the more controversial issues in the salmon fishery is the
ongoing reallocation of usage priorities. In recent years the percentage
of the TAC given to the commercial fishery has been significantly
reduced by reallocation to Native and Sport fisheries. An ITQ management
system establishes a value for the privilege to harvest each pound
of fish landed. In the event of a change in government priorities
the ITQ systems makes clear the actual cost of these transfers and
allows fishers to argue their case in a more objective manner.
The foregoing are the results which the introduction of an ITQ system
to the troll fishery must achieve for fishers. The desired results
for managers are as follows:
Achievement of Total Allowable Catch (TAC) targets
– The traditional derby style fishery relies on the limitation
of fishing effort to control catch levels. In most fisheries this
has been crude and largely ineffective in achieving the needed level
of catch control. TAC’s have routinely been exceeded. In the
salmon fishery in recent years managers have erred on the side of
conservation and fishers have been unable to reach the TAC in the
time available to them. The introduction of ITQ management in fisheries
other than salmon has resulted in a much higher level of catch control
and in these fisheries TAC’s are routinely met. Their introduction
to the salmon fishery should give managers confidence that they
can control catches to the desired levels.
Accountability – The introduction of ITQ
management provides fishers with a vested interest in the health
and abundance of fish stocks. Experience in other fisheries has
shown that fishers respond to this with an increased awareness of
their responsibility to provide information to managers. There is
also an increased willingness to work with managers in the co-management
of the fishery. The net result is a significant reduction in the
pressure on managers from the fleet and an improved management climate.
Organizational Structure – In order to function
effectively an ITQ management system will require fishers to organize
a single organization to control catch monitoring, quota transfers
and other issues related to the program. This will require all,
or at least the vast majority, of trollers to become members of
the single organization and thus provide managers with a single
voice which can speak for the fleet. Managers will be freed from
the need to deal with multiple organizations and more importantly
from having to deal on an ongoing basis with individual fishers.
ISSUES THAT DO NOT AFFECT THE ITQ PROGRAM
There are a number of fundamental issues which must be resolved
before an ITQ program may be introduced. Some of these issues are
the sole concern of fishers, some the sole concern of managers and
some the concern of both. Those which concern only managers or are
not related to the ITQ program will not be discussed in detail but
must establish the general framework within which the system operates.
The principal issues of concern to managers are as follows:
Total Allowable Catch (TAC) – The TAC for
each species and stock will be established by managers using processes
that are not related to the ITQ program although they may be achieved
using input from fishers. A conservative TAC becomes an established
fact at the start of the fishing period and determines the amount
of fish available to each ITQ holder. As the season progresses the
TAC may be altered to reflect new estimates of run size. In calculating
the TAC managers may take into account issues such as by-catch,
mortality rates, illegal fishing and high-grading that will occur
during the fishery. In a derby fishery managers may also factor
in the inevitable over-run that will occur. In an ITQ fishery catch
over-runs are minimized and this may allow managers to actually
increase the TAC.
Variable Stock Strength
– Multiple individual runs of migrating salmonbecome
intermixed. Managers may be concerned that a weak stock mixed with
a strong stock may be subject to over fishing and endangered. Many
ways have been tried to prevent this over fishing but most have
resulted in very much reduced catch levels for fishers and underutilization
of strong stocks. Strategies for dealing with this issue are not
related to the ITQ program but the program may have a positive impact
on these strategies in that fishing pressure would be reduced under
the ITQ program and reduce the danger of damage to weak stocks.
International Treaty Commitments – Canada
is committed to certain catch levels as a result of International
treaties and these levels must be maintained and seen to be maintained.
These commitments will impact the TAC and may impact timing of allowable
fisheries. They are not related to the ITQ program.
Catch Distribution Between Fleets – The fishery
advisory process has as one of its principal duties the sharing
out of fish resources between competing fishing fleets and methods.
This process is of serious importance to each of the fleets and
determines how each species of salmon will be allocated and thus
how it will be captured. This will be a part of the process which
determines the TAC. It will determine how much fish is available
to be distributed through the ITQ program but it has no other relation
to the program.
ISSUES WHICH DO AFFECT THE ITQ PROGRAM
As noted above there are issues which solely concern fishers and
issues that concern both managers and fishers. The most significant
of these are as follows:
Sharing amongst quota holders – There are
an infinite number of possible formulae which could determine an
individual share of the TAC within any group. A decision as to which
formula is adopted is almost solely the prerogative of the participants.
In general its attributes must include fairness, the perception
of fairness amongst quota holders and workability. Although managers
should have no interest in this process other than its workability
they will be affected by its acceptance by the fleet and thus have
concerns regarding fairness. The program must thus be able to demonstrate
both fairness and general acceptance by the fleet.
Accountability – An ITQ program depends,
for its success, on the fact that it ensures that catches can be
controlled and the resource sustained. Each individual has an agreed
amount of fish that may be landed and there must be confidence amongst
managers and other fishers that this amount is not exceeded. The
program must regulate the locations at which fish may be landed
and provide methods of monitoring all landings to ensure quotas
are not exceeded. Methods must also be in place to monitor and control
unacceptable by-catch, high grading and similar at sea issues. In
planning the ITQ program care must be taken to identify those at
sea issues which are unique to the ITQ program and those which must
be addressed under any management system. Most abuses will be common
to all systems but there is a danger that High-Grading could be
encouraged under a badly designed IT Q plan.
Management Cost – Historically all citizens
had a right to participate in a fishery. As population pressures
mounted this right was restricted to certain license holders only.
Government assumed the responsibility of controlling the licensing
process and developed and enforced regulations designed to restrict
over harvesting of stocks. The introduction of ITQ’s effectively
confers a privileged share on fishers and the responsibility for
protecting that share shifts from the Government to the owner of
the resource, the ITQ holder. Methods must, therefore, be developed
to efficiently fund the cost of protecting each fisher’s share;
the fish in the sea. These methods must be carefully designed to
ensure that control of management costs remains in the hands of
fishers and their organizations not in the hands of government.
Transferability – Transferability or the
possibility of sale or lease of quota has been the subject of extensive
debate in many fisheries. The advantages of transferability are
that it allows each fisher to tailor the fishing operation to suit.
Those with large boats or greater skill than average are able to
lease or purchase additional quota to build maximum efficiency into
their operations. Those who are unable to fish in a given year or
wish to retire are able to sell or lease quota. The risk with transferability
is concentration of ownership in a few hands, particularly those
of large companies. Methods must be developed which allow fishers
maximum freedom to design their own operations without a transfer
of ownership of the whole fishery to a few over time.
Stock Management – Each quota holder effectively
has privilege to a small percentage of the total run and it is therefore
important to the individual that the total run size is as large
as possible. Responsibility for the size and health of the total
run lies with fishery managers. Thus both fishers and managers have
a similar interest in ensuring that management is effective and
results in maximum run size. It is therefore in both their interest
to develop within the ITQ system the best possible processes for
providing data and information as to fish abundance, movements and
Commercial Catch Protection – In recent years
there has been considerable change in the attitude of government
to the commercial fisheries. This has led to a significant transfer
of catch quota from the commercial salmon fishery to the sports
and native sectors. These pressures are unlikely to change and may
increase. The introduction of an ITQ management system gives fishers
a defined share of a TAC. Provided negotiators insist that the total
TAC for all sectors is used as a basis any future redistribution
between sectors would have an immediate financial effect on each
individual fisherman. The precise value of this effect is easily
calculated and would allow fishers to claim damages that are clearly
STRUCTURE OF AN ITQ PROGRAM
The specific structure of an ITQ program must be based upon the
issues which directly impact the program ie those listed above.
It must be assumed that a TAC can be and has been established and
the role of the ITQ program is to distribute the TAC amongst fishers.
It must also ensure that the quotas given are not exceeded, that
management costs are fairly distributed amongst quota holders and
government, that quotas can be transferred in a suitable manner,
that fishing practices are honest and appropriate and that stock
management information is communicated between fishers and managers.
The structures required are as follows:
Quota Shares or Distribution of TAC - Experience
in other fisheries indicates that some combination of equal shares
per license plus an allowance for either past performance or investment
in the industry is considered fair by a majority of fishers. The
disruption of traditional troll fishing patterns during the 1990’s
has made past performance a poor measure. As a result a formula
giving equal shares to each license holder has a significant degree
of support in the fleet. Probably the best way of deciding on the
acceptance of any proposal is by referendum on a single idea. Two
possible approaches are as follows:
Equal Split – Under this proposal, shares
would be calculated by dividing the number of license holders into
the TAC for each species. An example using assumed numbers for Area
F is shown in Table 1 .
Table 1 – Example ITQ for Equal Shares
|Total Per Boat
In the example shown, a TAC is provided for each species in a single
management area (Area F) and the total number of licenses for that
area is used as the No. of Boats. The ITQ for each license is calculated
by dividing the TAC by the number of boats.
Many boats now carry licenses for more than one area. Such boats
would carry the 36069 lbs of quota for Area F and another amount
for the quota assigned to each additional license. It is clear that
few trollers would be capable of catching the quota for two licenses
and almost none could catch a three license quota. This fact is
significant when considering the impact and risks associated with
An example calculation for similar TAC’s distributed using
the 70-30 split formula is given in Appendix A.
Quota Units – The quotas illustrated above
are stated in pounds rather than pieces as used at present. To continue
the practice of using piece counts would force fishers to indulge
in high grading their catches and have a seriously negative effect
on the fishery. This becomes evident when one considers the difference
in value of a 12 lb vs a 36 lb fish which under a piece count regime
would be a factor of 3. Under a poundage regime the difference in
value received for a pound of quota would be zero. The difference
in value between grades could provide an incentive to high grade
but this is not usually enough to cause a fisher to discard a medium
in hopes that there may be a large to replace it. It is much more
likely that fishers will adjust their gear and location to target
high value fish.
(There may be exceptions for piece count in other species ie sox,
,but this illustration is on Chinook.)
Adjustment of ITQ’s – The example ITQ’s
shown above assume round weight of fish landed. Adjustments to actual
landed weight will be required to account for processing and handling
methods. DFO maintains records which relate various processing options
to round weight. These ratios would be applied to the landed weight
at time of delivery and recorded against the quota. The items which
would be considered would be:
- Dressed Head On
- Dressed Head Off
- Glaze Allowance
At the time of landing fish will be graded and weighed in the usual
manner. Total weight by species will be identified and processing
option recorded. The recorded weight will be increased by the necessary
percentage to convert processed weight to round weight and reduced
by a fixed percentage to allow for glaze weight. The resulting total
will be deducted from the remaining quota and entered in a quota
Catch Monitoring – Under a quota fishery
it is necessary that some process be in place to record all landings
and relate them to the available quota. This process has been developed
over the past 15 years or so and is well established in other fisheries.
It is therefore unlikely that any fundamental changes to existing
models will be required. There may, however, be a need to ‘tweak’
the procedures to account for situations that are unique to the
Troll fishery. Some of these unique features are the following:
- Large number of small boats
- Wide distribution of boats
- Present practice of private dock sales
- Present practice of holding fish for private sale
All of the foregoing features contribute to an increased opportunity
for abuse of the system. They are, however, similar to those existing
in the halibut fishery and some of the other quota fisheries and
it appears reasonable to begin the ITQ program using the existing
system and allow experience to suggest any ‘tweaking’
that may be required.
The elements of the monitoring system would be as follows:
- Hail out at start of trip
- Daily catch reporting while at sea
- Hail in prior to landing
- Landings recorded by independent observer
- Landing report submitted to DFO
Accountability: Fishers - The creation of an individual
license share creates a corresponding duty for the fishers who receive
the privilege. This is the duty of accountability to the resource
and to the other resource owners. In practical terms this means
a duty to protect salmon and other species stocks from over fishing
and unnecessary mortality. Quota holders and fishery managers require
assurance that this duty is being carried out.
Fishery managers have been faced with the problem of reducing by-catch
and shaker mortality for many years. The favoured solution by managers
is the introduction of on board observers. This solution may be
acceptable in fisheries where boat size and the dollar volume of
the trip make it possible but it is impractical in the Troll fishery.
Many trollers have no accommodation for an extra body on board and
few can afford the cost of a full time, non producing passenger.
An alternative method must be designed.
It is proposed that on the introduction of an ITQ program no on
board observers be required. As a part of the program introduction
a committee made up of DFO experts and quota holders will be struck
to examine the question of on board monitoring. This committee will
work to design a process which is acceptable to both parties. If,
after the first season, no such system has been designed an observer
program may be implemented. In addition it may be possible for DFO
to require that either the agreed system be installed on a boat
or a DFO observer be employed. This would allow fishers to opt for
the solution which best suits their individual need while providing
DFO with the level of monitoring required.
Accountabilit: Managers – In order for an
ITQ fishery to function fishers must have a reasonable expectation
that they can catch their quota. The present system of management
with its short openings and area closures will make it unlikely
that quotas can be caught. If managers are serious in their desire
to implement an ITQ program they must ensure that the techniques
they adopt recognize the need to allow the quotas to be caught.
The obvious way to achieve assured quota catches is long or longer
openings and this is the case in all other fisheries. The salmon
fishery is, however, unique in that runs move quickly through the
fishery and there is a large number of individual stocks, some of
which are at risk. No fishery is allowed on stocks at risk and where
these are present fisheries are halted. Under the present management
regime DFO managers do not get sufficient or timely information
as to which stocks are present in any given fishery and are forced
to err on the side of caution. Methods must be found which give
DFO managers the information they need and the ability to restrict
fisheries on species at risk but at the same time allow fishers
to catch their quotas.
Individual runs of fish can be identified by DNA testing. This is
presently carried out but of little value to fishers in that results
are not timely and in most cases the fish have passed through by
the time DFO has the information available to allow fishing. If
it is a fact that timely and sufficient DNA data would provide managers
with the confidence to control the fishery with a lighter hand it
is proposed that the provision of this information be designed in
concert with DFO but implementation be the responsibility of the
ITQ management organization established by fishers. Arrangements
could be made with the landing monitoring firm to have testing done
immediately fish are landed. Data would then be relayed to DFO along
with other material delivered by the firm. This additional information
will include daily vessel location and other information related
to the trip and it should be possible to design a process which
relieves DFO managers of much of the work load while providing significantly
more information than a few test vessels can provide.
Transferability – The concept of quota transferability
is one of the most contentious features of an ITQ program. For those
who believe the purpose of the program is to provide a set share
in the fishery transferability is essential. Others believe it is
needed to allow fishers to tailor their fishing operations for maximum
efficiency. Those who oppose ITQ’s are concerned that fleet
size will be reduced and jobs lost as quotas are leased out or concentrated
or that large companies will purchase and control quota. Both these
attitudes are valid and have been addressed in varying ways in other
A review of the literature suggests that a reduction in the number
of vessels engaged in the fishery will occur. It also suggests that
incomes for those participating will rise significantly as will
the value of the quota privileges. The relationship between fishers
and processors also changes dramatically with the introduction of
ITQ fisheries. The traditional power of the processors to control
prices and market conditions can be reduced provided companies are
restricted in their ability to own and control quota. In short there
is, today, sufficient information to predict that most of the benefits
attributed to an ITQ program will be seen and many of the negative
results will also occur. The decision to implement the program must
accept this fact. It must also accept the fact that transferability
is an inherent part of the program and without transferability an
ITQ program cannot function.
In the case of the troll fishery it can be argued that some of the
negative effects may be reduced by the nature of the fishery. Trolling
is not an efficient method of catching fish and there is an upper
limit to the amount of fish that one vessel can catch. This limit
sets a peak to the amount of quota that can be usefully carried
on one vessel and thus the minimum fleet size required to catch
a given TAC is fairly large. The fleet reduction brought about by
transferability of quota will as a result be smaller in the troll
fleet than it might be in more efficient fisheries. Similarly the
troll fleet is relatively free of processor control and ownership.
A limitation on ownership of troll quota by processors would have
little impact on the present situation and could reduce the risk
of corporate concentration.
On the basis of the foregoing it is proposed that troll quota be
designed for maximum transferability. Quota units will be issued
as a percentage of the TAC but transferable in units of a few hundred
pounds. In the examples cited above a fisher in Area F might lease
out or sell 80 to 100 lbs of sockeye and 4000 lbs of Chum and lease
a few thousand pounds of Chinook or Coho. An individual wishing
to concentrate on sockeye and chum in Area F could build a quota
volume that made such a fishery economic.
Concentration of quota ownership - Concentration
is a concern to many in the fishery and is demonstrably undesirable.
Maximum ownership levels have been set in many fisheries. This method
would be difficult to enforce in the case of a determined attempt
to bypass it but there is little evidence that the issue has arisen
in other fisheries. It is proposed that a limit of 1% of total quota
of any species be set as the maximum ownership level which may be
held by an individual or company.
Control of Leasing Prices – The leasing and
sale of quota in other fisheries has demonstrated that the demand
for quota is high and that transfer prices reflect the demand. Many
argue that this produces ‘windfall profits’ to quota
holders and forces those who choose to fish leased quota to fish
for very low returns. On the surface this may appear to be a reasonable
argument but in most cases it does not withstand close scrutiny.
In the Halibut and Sablefish fisheries landed values have risen
dramatically since the introduction of quota. At the same time lease
prices have risen to the extent that almost all the price rise experienced
has accrued to the quota holder. Fishers are receiving net returns
that are equivalent to the price they received prior to the introduction
of quota. For this reason they are still willing to fish.
The argument as to whether or not the benefits of a quota fishery
should accrue to the quota owners or to others is akin to the much
broader arguments over social organization. In a free society it
can be argued that the benefits of ownership accrue to the owner.
Unions would argue that this is not so and that benefits should
go to the workers. Socialists might argue they should go to government.
This debate has not been resolved in BC and will not be resolved
in the salmon fishery. What may be resolved is to make the transfer
of salmon quota take place in a free market. This market will determine
whether or not benefits accrue to the quota owner or to those leasing
The organization and structure of the troll fishery will impact
the effect of quota on lease prices. In most fisheries it is possible
for very few boats to catch the full TAC. This creates the very
high demand for leased quota. In the troll fishery there is an upper
limit to the amount of fish that one boat can catch. As a result
the demand for extra quota will be limited. As a result of this
limited demand it is likely that a much greater share of the price
rise resulting from the ITQ program will be available to fishers.
Payment of Fees and Program Costs – With
the shift to an ITQ program quota holders will be responsible for
the costs of managing the fishery. These costs must be recovered
from each individual quota holder whose quota is used in the fishery.
The method of collecting these fees varies from fishery to fishery
but certain principles are common and the troll program must ensure
that it develops methods to ensure that all payable fees are collected
in an efficient manner.
The principles which must be adhered to are as follows:
- The right to fish a quota must be linked to the payment of required
- Fees must be based upon the amount of quota being used.
- The cost of transferring quota from one boat to another must be
borne by those involved in the transfer.
ORGANIZATION AND MANAGEMENT OF AN ITQ PROGRAM
The introduction of an ITQ fishery represents a fundamental shift
in the underlying philosophy of fishery management. By creating
a partnership to those participating in the fishery the responsibility
for funding the management of the fishery becomes a shared responsibility.
Sharing in the cost of this management should be paid by all those
who have gained by the change in method. Unfortunately government
is not able to relinquish its management responsibilities when it
passes the cost of this management to fishers. It is therefore imperative
that an organization be established by fishers to control and administer
the funds provided and ensure that government spending on the fishery
is in fact providing value for the monies spent.
The activities which will be managed and overseen under the new
system include administration of a landing verification program,
quota transfer activities, enforcement activities, and monitoring
of research and data gathering. The budgets for these activities
will be measured in the hundreds of thousands of dollars and management
of these amounts cannot be done on an ad hoc basis. An organization
which can undertake the full range of required management must be
created since none presently exist in the fishery.
Creating a new organization and a new management system at the same
time is both a daunting and risky task. The new system must be able
to function from the first day and it will take a new organization
some time to gather staff and become operational. Other fisheries
have dealt with this issue by engaging an established company or
consultant to undertake the management role until a dedicated organization
can be formed. This approach is recommended for the troll fishery.
An established firm with office staff and structure should be chosen
rather than a single individual consultant. Organizations such as
Accountants, Management firms or similar would be appropriate. Ideally
the firm will have some knowledge of the fishery but no direct involvement
or identification with existing fishing organizations.
The specific tasks which should be delegated to the new office would
be as follows:
Management Fee Collection – Experience in
other ITQ fisheries indicates that collecting management fees after
fish have been caught and sold is impractical and unfair. Many fishers
avoid paying their share and collection costs and lost fees increase
costs to other participants(example BCSMC). Fees must, therefore,
be paid prior to the start of fishing. In some fisheries this is
not a significant issue but in the troll fishery it may be. Many
trollers do not have the funds at the start of a season to pay fees
A number of methods of dealing with payment are possible but one
stands out as most desirable for the troll fleet. This is the leasing
of quota held by the fishery association. Under this method a defined
portion of each ITQ would be allocated to the industry organization
which manages the fishery. This quota would be available for lease
to any member of the organization. Funds gained by the leasing would
be available to cover the cost of the program.
The proposed method has the advantages that it requires no cash
outlay from fishers, it distributes the cost of the program equally
to each pound of quota held, and it establishes a pool of available
quota for those who require it. It has the disadvantage of not directly
charging for quota transfers however this cost could be recovered
as a separate fee for each transfer. A more significant disadvantage
is the lack of incentive for fishers to minimize the cost of delivery
verification. In order to provide this incentive it may be necessary
to allow a certain number of landings for a given amount of quota
and additional landings would be charged directly for the cost of
verification. This charge would be payable at the time of unloading.
Quota Transfers – The tracking and control
of quota transfers is the responsibility of the DFO but the management
and implementation of actual transfers is better done by an outside
agency. It is proposed that the management firm hired to manage
the program be responsible for all documentation of transfers and
the submission of necessary documents to DFO. In this way DFO has
only one entity to deal with and fishers are assured of prompt and
complete attention to their need to transfer quota. A fee for this
work based on the time involved would be developed and charged directly
to the transferred quota.
Delivery Verification – Working with the
new industry organization and DFO the management firm would design
a verification program to verify all quota landings, tender the
program and engage an independent verification company. Landings
would take place at designated ports only. These ports will ideally
be the designated ports used by the halibut fishery.
Enforcement – In the initial phases of the
ITQ program it is likely that enforcement will be the sole concern
of DFO. Experience in other fisheries shows that DFO enforcement
may not be adequate to satisfy quota holders and pressure will build
to have additional effort. This additional effort can take the form
of fisher funded DFO employees or privately hired investigators.
Usually the latter will be a cheaper alternative with better results.
Research – Some ITQ fisheries have been required
to fund portions of the research carried out for the benefit of
their fishery. This is unlikely to occur in the early years of the
program but may be expected. The organization must retain the right
to approve research projects to ensure that the work being funded
is useful to fishers and is seen as relevant.
COST OF AN ITQ PROGRAM
The costs which will be transferred from government to fishers must
be negotiated and carefully controlled. Fishers must take care to
avoid taking responsibility for any costs over which they have no
control or programs which are managed by government employees. Budgets
and activities funded must be established by fishers independent
of government priorities. An initial program should attempt to negotiate
fisher funding for landing verification only.
Verification Cost – The cost of present verification
programs has remained little changed since the inception of IVQ
management in the 1980’s. Archipeligo reports costs in the
range of $.03 to $.06/lb as their charge for the verification work
they do. Should additional work such as overseeing DNA testing be
initiated this cost will rise.
Management Cost – For initial estimating
purposes it can be assumed that the management firm engaged would
require three full time staff during the peak fishing months and
one full time equivalent in the winter months. At rates varying
from $40 to $80/hr this would amount to fees in the order of $180,000/annum.
In all likelihood DFO will require payment of the cost of some of
its officials engaged in the management of the fishery. Negotiators
should attempt to limit this to one person per license area or three
full time positions. This could amount to $300,000/annum.
Total IVQ Cost in early years – Based on
the above and assuming a 12 million pound troll TAC for all species
the cost of the program could be held to $1.1M or approximately
$.11/lb of landed round weight.
70-30 Split - A combination which distributes the
TAC at 70% allocated to the license and 30% allocated in accordance
with boat length has been proposed. Such an allocation would be
calculated as follows:
Species Allocation – Each IVQ holder would be allocated a
quota for each of the five species of salmon. For each species TAC
in an area each boat would be allocated an equal share of 70% of
the TAC. The total length of all boats in the fleet would be calculated
and an amount equal to 30% of the TAC would be allocated on the
basis of a calculated number of pounds of fish per foot of boat.
See Tables 2 and 3.
Table 2 Example – Input Data Required
Boats of boats
Table 3 Example -Quota for Varying Boat Lengths
The IVQ’s shown in Table 3 are calculated by the formula
IVQ=((TAC x 0.7)/(No. of boats))+
x 0.3 x Boat Length)/(Total length of boats))