An Intelligent Tale
of Fish Management

There are a number of different ways to manage a commercial fishery. A relatively new fisheries management reform involves using individual quotas (IQs) to divide the catch among harvesters. Since the 1980s, IQ management has come into use in a number of fisheries around the world. New Zealand, Australia, Canada, and Iceland all have a number of fisheries managed under individual quota.

The purpose of this article is to provide an update on the experience with individual quotas in British Columbia’s halibut fishery, which has been managed under an IQ regime since 1991.¹

Background

Commercial fisheries in Canada have traditionally been treated as common property, where the resource is shared in common by all licensed participants, where none own a particular share of fish. This basic characteristic creates what is called the “common property” problem. The common property problem has three key elements:

Threat of Resource Overexploitation: Shared access can lead to overexploitation of the resource. Without management controls to protect fish stocks, overfishing is inevitable. Fisheries managers can exercise strict control, but powerful fishing pressures remain a threat. Even if some harvesters recognize the need for restraint, as long as others still fish, that restraint is futile: “if I don’t catch the fish, someone else will.”

Economic Waste: Fish harvesting is typically a race for the fish characterized by increasingly effective fishing fleets, increasingly shorter and more hectic seasons, and a recurring cycle of investment in bigger, faster boats, and more powerful gear. The “race” is futile since each effort to increase catching power is matched by others. Commercial harvesters incur increasingly large debts, often fish in dangerous conditions, and have little flexibility to deliver fish to meet market demands for quality and timeliness. The end result is that the potential value of the fish is wasted due to unnecessarily high harvesting costs, lower quality (and thus prices) and high management costs.

Social Conflict: Competition for shares is the defining feature between the players in the fishery. Debate on fisheries issues—especially catch allocations—is often polarized, heated, and contentious. Consultation can at times become merely another avenue for the race for the fish, as competition for shares moves from the water to the meeting rooms. This undermines the co-operation needed for long-term planning and other initiatives beneficial to the fishery.

One solution

Individual quotas are pre-defined shares of the Total Allowable Catch (TAC) allocated to each fisherman or vessel. Essentially, the catch is divided between the harvesters before the fishing season begins. IQs stop the race for fish and focus harvesters’ incentives on maximizing their financial returns from the fishery. With a share of the catch assured, fishermen can focus on reducing their costs, operating under safer conditions, and increasing fish value.

IQ management has proven beneficial for certain fisheries suffering from classic common property problems: overcapitalization (too many, too powerful boats); wasteful and dangerous fishing practices; chaotic, short seasons; overfishing pressures; and conflict between users. Economists generally agree that an IQ management program can overcome the inefficiencies associated with the exploitation of common property resources. In practice, the performance of IQ management programs depend upon a number of factors such as the characteristics of the fishery, design and implementation of the IQ program, and the role of industry participants.

Overview of the Pacific halibut IVQ program

In 1980, the commercial fleet took 65 days to catch 5.7 million pounds of halibut. Over the next decade, technological advances such as circle hooks, snap-on gear, and automatic baiting machines improved the efficiency of the fleet enormously. Subsequently, in 1990, the fleet took only 6 days to catch 8.5 million pounds of halibut. The efficiency of the fleet had increased in one decade to the point that it took only one-tenth the time to catch almost 50 percent more halibut. Even as the total catch rose, the time needed to catch the fish declined dramatically.

Prior to 1991, the management of British Columbia’s halibut fishery was based on three main elements: (1) limited entry, introduced in 1979 when 435 commercial licences were issued; (2) a total allowable catch (TAC) set for each year; and, (3) a fishery closure when the TAC was reached. This management regime proved ineffective at controlling fishing effort; the TAC was often exceeded, and the ensuing race for the fish resulted in very short fishing seasons, unsafe harvesting conditions, large quantities of by-catch being wasted, poor product quality, gluts in supply and low prices for the landed fish.

In 1989 a small group of halibut licence holders approached Fisheries and Oceans Canada for assistance in developing an individual quota (IQ) program. As a result, an Individual Vessel Quota (IVQ) system was implemented in the halibut fishery in 1991 on a two-year trial basis with extensive input from industry participants. The main features of the IVQ program are as follows:

• The fishery is now open from March 15 to November 15.
• The initial individual quota allocations were calculated using a formula based on the licence holders’ vessel length and historical catch. The resulting 435 individual vessel quotas were expressed as fixed percentages of the annual TAC.
• Although transferability was not permitted during the first two years of the program, quotas can now be temporarily transferred to another licensed halibut vessel subject to the following restrictions:
  • each initial halibut quota was split into two equal shares.
  • a maximum of 4 shares can be held or fished by a licensed halibut vessel.
  • transfers must be approved by DFO prior to fishing those shares.
  • once a quota share has landings against it (i.e., once fish have been caught and subtracted from the quota share), the remainder of that share cannot be transferred.
• If an individual quota holder catches more fish than he is entitled to in a year, the overage is deducted from that holder’s next year’s IVQ. However, overages greater than 10 percent are relinquished to the Crown. Any vessel that falls short of their IVQ by 10 percent or less has the poundage added to their quota in the next year, but any shortfall exceeding 10 percent of their IVQ is foregone.
• A mandatory port monitoring program was initiated whereby fishermen must notify Fisheries and Oceans Canada prior to fishing, and 24 hours prior to landing. An observer then meets the vessel at the landing site, validates the weight of the halibut landed, and tracks each quota holder’s total landings.
• When individual quotas were first introduced, halibut licence holders were required to pay all the incremental costs associated with the management, monitoring, and enforcement of the IVQ program. The cost recovery program now pays for all direct costs associated with the fishery, such as enforcement, the DFO fishery manager, some stock assessment, and other research activities. In 1997, activities paid for by halibut licence holders under the IVQ program cost almost $900,000.

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Assessment of the IVQ program

The IVQ program has significant effects on biological management, economic efficiency, equity and distributional considerations, and administration and enforcement of the fishery.

Biological management

Individual vessel quota management has significantly increased the accuracy of the reported halibut catch. The International Pacific Halibut Commission (IPHC) was formed in 1923 and sets the TAC for the Pacific halibut fishery for Canada and the United States of America each year. Prior to IVQ management, the TAC for the British Columbia halibut fishery was exceeded in every season since 1979, with the exception of 1980. Since IVQs were introduced, the catch has been below the TAC in each year. Further, Fisheries and Oceans Canada estimates that waste in the halibut fishery, which results when undersized halibut are discarded (along with lost and abandoned gear), has decreased significantly under IVQs.

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Economic efficiency

The economic performance of the halibut fishery improved significantly after the introduction of IVQs. This improvement is attributed both to higher revenues (i.e., the landed fish are of better quality and are thus worth more) and to lower fishing costs.

The halibut season was open for 9 months in 1997 compared to 6 days in 1990. This has resulted in an increase in landed prices as fishermen can now time their landings to match periods of high market demand and can supply the high-value market for fresh fish over a significantly longer period. The market is now being served over a much longer period as a consistent supply of fresh fish is available to buyers for most of the year. Higher quality fish have also been available since IVQs were introduced. Fishermen have altered their fishing patterns to increase net revenues by fishing to meet market demand and by reducing operating costs. Further, the number of active vessels has decreased, reducing fleet crew payments and fixed costs.

Equity and employment

Employment reductions have occurred as the number of active vessels have declined through “quota stacking,” i.e., fishing more than one IVQ from a single vessel. For example, during the first two years of the IVQ program, the number of crew members declined from about 1,600 to about 1,300 fishermen. However, those who are still employed are generally working a longer season and earning higher incomes. Employment of shore workers has declined slightly too, because there has been a shift from frozen to fresh halibut, which requires less shore-based employment.

Prior to IVQ management, harvesters were under pressure to fish every day the fishery was opened, even if the weather was bad. Furthermore, they often had to overload their vessels. Now working conditions have improved, and a safer, more stable working environment exists.

Administration and enforcement

The level of enforcement has increased under IVQ management as quota holders pay for port monitoring and for fishery officers specifically assigned to the halibut fishery. This contribution provides for enforcement above previous levels, and the port monitoring program ensures that the landings reported are accurate and timely. Fisheries and Oceans Canada and quota holders can determine the balance of the licencee’s quota immediately after each landing.

The licence holders views

In December 1992, halibut licence holders were asked to vote on whether to continue the Pacific halibut IVQ program. Ninety-one percent of those responding voted in favour of IVQs. While there is a high degree of support for the IVQ program among the halibut licence holders, there is also criticism. The main complaints focus on two issues:

• the reduction in the number of individuals employed, and
• the “windfall profits” accruing to halibut-quota holders as the increasing profitability of the fishery is translated into higher market values for quotas.

Conclusions

Overall, the halibut IVQ program is regarded as a success by the majority of the participants in the fishery and by those responsible for managing it. The IVQ program is credited with improving both the biological management of the halibut fishery and its economic performance. The following factors have contributed to the success of the program:

• the halibut fishery is a single species fishery with selective gear, thereby minimizing bycatch problems associated with some fisheries;
• the program has been well designed with extensive input from participants;
• the implementation has been effective with most costs covered by participants; and,
• the participants have been highly supportive and involved in the operation of the program through the Halibut Advisory Board.

Note

¹This report is based largely on a paper presented at the 1996 Fraser Institute Conference “Managing a Wasting Resource” by Paul Macgillivray of Fisheries and Oceans Canada, Pacific Region.

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Last Modified: Wednesday, October 20, 1999.