0.19 Natural capital: fisheries  (Page 4/14)

Consider Iceland as an example. The Iceland ITQs give the ITQ holders the right to catch fish within Iceland’s economic zone (defined under international law). The catch is limited to the individual quota assigned to fishermen.

The itqs are

1. Permanent (long term)
2. Divisible
3. And freely transferable- i.e. they can be freely bought and sold.

In Iceland fisherman awarded ITQs pay a yearly fishing fee that is 9.5% of their estimated catch for the previous year. This is not usual under ITQs (most elsewhere the ITQ is free). Among other things, this fee supports enforcement activities for ITQs.

So, in Iceland, if the individual fishers catch in 2013 was valued at $1 million Kroner, in 2009 the fisherman pays 95,000 Kroner. In any case, the ITQ places fishing rights (quotas) in the hands of the most efficient fishers. These fishers are willing to buy the quotas of less efficient fisherman. Indeed, the less efficient fisherman may well decide to stop fishing altogether and sell their quotas if the value of the quotas increases enough (in fact, the total value of the freely traded ITQs in Iceland rose from US $500,000 in 1991 to $4.5 million in 2004).

Note one particular valuable feature of an ITQ system. If for some reason the government decides that there is an unexpected decrease in the fish stock because the TAC was too large in the past, or because the fish stock is declining too rapidly for other reasons (climate change, disease), then, the government can simply step in and buy back some of the ITQs it had already awarded, thereby decreasing the permissible fish catch for that year.

How well have ITQs worked in practice? Consider economic and biological effects since 1991 in Iceland, New Zealand, and Alaska. In Iceland fishing is typically about 12% of GDP, 7% of the total workforce. Iceland was the first to use the ITQ (see Figure 19-1).

Economic Effects in Iceland - Codfish is by far most important fish (others include Haddock, Redfish, and Saithe). The implementation of ITQs has resulted in a decrease in the volume of fish caught. That was expected and intended. It has, not surprisingly also resulted in an increase in the value of the catch (see Figure 19-2), a welcome outcome for fishermen. This system was partly adopted in 1986, and fully implemented in 1991.

Source :
Results for years 1998-2002 were not so good, because fish biologists overestimated the total stock of cod, and therefore resulted in a TAC “too high” value of catch in icelandva.

Why did the value of catch increase so much in iceland.

1. Quantity supplied decreased, so prices increased
2. Before ITQs, the total catch was limited by effort quotas (number of days you could fish). Fishermen had to catch fish when they could, not when prices were high.

Now with ITQs, Cod and Haddock are brought to market when prices are highest (seasonality issue).

What about profitability of fishing in Iceland under the ITQs?

That has gone up as well (see Figure 19-3).

Figure 19-4 shows what happened to the fishable stock of codfish (the total resource over time).