A retrospective analysis of the effects of adopting individual transferable quotas in the Tasmanian red rock lobster, Jasus edwardsii, fishery

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Fisheries management with individual transferable quotas

Combined with an appropriately set total allowable catch (TAC), the predicted outcomes of ITQs include a higher economic efficiency of fisheries and, indirectly, sustainable stocks. The later outcome is expected to result from the fact that, although the TAC alone controls the total catch and the stock sustainability, ITQs are believed to increase the stewardship and the compliance of participants (Anderson, 1995). However, the main expected outcome of ITQs is increased economic efficiency, as was argued by Christy (1973) in his seminal work. For a given TAC, fisheries profitability can increase by increasing the value of the product and decreasing the costs of fishing. In many fisheries in a state of overcapacity, a direct way of reducing fishing cost is to reduce the number of vessels in the fishing fleet (so-called rationalization) and adjust the capacity to a lower level. This can be facilitated by the transferability of fishing rights. Less efficient fishers can sell their quota to more efficient fishers and exit the fishery, with “windfall gains” as the fishing rights are often given for free to the first generation of fishers (Brandt, 2007).
In addition to decreasing their costs, fishers in an ITQ system can increase their revenue from fishing by changing their fishing behaviour to land more valuable fish categories and increase the value of their landings. Multiple strategies have been used by fishers to increase their revenue within the constraints of their quota allocation. One of the most famous example is the British Columbia halibut fishery (Casey et al., 1995), in which under “derby fishery conditions”, the fishing season had shrunk to two d ays per year and most of the fish was frozen. Once ITQs were introduced, fishers were allocated a share of the TAC and did not need to race for fish anymore. Subsequently, fishing occurred all year long ensuring a continuing supply of fresh fish fetching a higher price. In other fisheries, fishers have switched to less damaging gears (Dewees, 1989), shifted their fishing effort to months when beach-prices are higher (Annala, 1996) and increased the value of products by onboard processing (Annala, 1996).
Despite the largely positive outcomes expected of the ITQ management system in terms of economic efficiency, some of its economic and social outcomes have raised criticism (Copes, 1986, McCay, 1995, Pinkerton and Edwards, 2009). Although the transferability of fishing rights has positive effects as it leads to the reduction of excess capacity of fleets, the aggregation of fishing rights in the hand of a few owners observed in some ITQs fisheries has been considered to have negative economic effects. In particular, the consequence of quota accumulation is the change in market power with a small group controlling the market for fishing rights, which can lead to market inefficiencies (Anderson, 2008). In addition, equity and wealth distribution issues have been regarded as the main drawbacks of the management system. Equity concerns have focused on the risk of eviction of smaller fishing firms, with bigger or wealthier companies only having the capital to expand their fishing allocation (Bernal et al., 1999). Moreover local economies can be impacted if the fishing rights are transferred to other regions (Campbell et al., 2000, Arnason, 1993). In most cases, rules have been enforced to avoid or limit consolidation, by restricting the proportion of total allowable catches owned or used by an individual or a company.

Catch-and-effort data

The catch and-effort data analysed in this paper were extracted from the DPIPWE database, which consists of compulsory logbook data recorded daily by fishers since 1993. In addition to catch–and-effort data, various spatial and techn ical details concerning fishing trips are recorded in the database. The catch- and-effort time series were completed with monthly aggregated historical data available for the period 1970-1992.

Price data

The monthly ex-vessel price of rock lobster was derived from processor records, also collected by DPIPWE. Individual processors must inform the Department of the average monthly price at which they bought rock lobster from fishers and of the amount of lobster bought per month. The monthly price of rock lobster was thus calculated as the average price paid by individual processors weighted by the quantities of red rock lobster bought. Nominal prices (i.e. non-deflated) were used for the price analysis, while the Australian consumer price index was used to deflate the total value of the fishery using 2006 as reference year (source: Reserve Bank of Australia (http://www.rba.gov.au).

Retrospective analysis

The retrospective analysis was carried out with the aim to assess the changes observed in the fishery with respect to the three broad categories of effects, namely, rationalization of the fleet, change in fishing strategies and concentration of activity and fishing rights. Analyses are based on the compilation of the different data sets describing the evolution of the status of the fishery over the last decade following implementation of the scheme.

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Analysis of the fleet

The evolution of the fleet in terms of total number and composition was assessed through simple analysis of vessel characteristics. Length and tonnage were the only characteristics included in the analysis because of the quality of the coverage of the data, respectively 100 and 95% of vessels covered.

Changes in fishing strategies

Several factors affect the profit of the fishery: the operating costs, the fixed costs and the revenue generated from fishing. While fishers can hardly influence their fixed costs, they can seek profit maximization by decreasing their operating costs, depending on costs per unit of effort and effort, and increasing the revenue from fishing, which mostly depends on the price they received for their landings, given that the amount of rock lobster landed is fixed by their quota shares. Unfortunately, data were not available for costs which could not be included in the analysis of the evolution of fishing strategies. However, we did examine extensive time series and evolution of revenue through catch and price. Changes in fishing strategy were expected to occur with fishers seeking to maximize the return from their quota allocation due to the existence of market categories fetching different prices (Frusher et al., 2003, Bradshaw, 2004). The market categories of a rock lobster depend on several factors including (i) physical condition, (ii) colour and (iii) weight resulting in “split” prices, with “premium” lobsters with a rigid shell (i.e. not soft due to recent moulting), completely red in colour and weighing between 0.8 and 2 kg, receiving up to AUD 10 more per kg (C. Gardner, pers comm.). These characteristics are affected by spatial and temporal parameters, i.e. latitude, depth and season. To investigate potential changes in effort allocation related to premium prices, we compared the proportion of effort in the high-prices categories (premium size, shallow waters and winter) for periods of 5 years before (1993-1997) and after (2002-2006) introduction of the ITQ system.

Results: the effects of adopting ITQs on the fishery

The introduction of ITQs in 1998 involved the setting of a TAC which had not previously been implemented. The initial TAC was set at 1500 t, which was lower than the pre-ITQ catch. In 2002, the TAC was raised to 1523 t (Haddon and Gardner, 2008).
Prior to the introduction of ITQs, total effort and catch increased mainly as a result of fishers building catch history, while discussions went on regarding the implementation of the scheme. This is supported by the reduction of effort in the summer (November to February) of 1997, five months prior to the introduction of the quota management scheme, which was not taken into account in the definition of catch history.
Fishing effort continued to decrease after the introduction of quotas, in the absence of further regulations on the input side (figure II-2). Following adoption of the TAC, and the capping of catch at a constant level, the stock has been rebuilding. This has contributed to an increase in average catch rates (figure II-2), as in 2006/2007 fishers used 20% less trap-lifts to catch the TAC than in 1998/1999 (Haddon and Gardner, 2008).

Table of contents :

I Introduction
1 Background
2 Fisheries management with individual transferable quotas
3 Thesis objectives
4 The Tasmanian rock lobster fishery
5 Structure of the thesis
II A retrospective analysis of the effects of adopting individual transferable quotas in the Tasmanian red rock lobster, Jasus edwardsii, fishery.
1 Introduction
2 Materials and methods
3 Results: the effects of adopting ITQs on the fishery
4 Discussion – Conclusion
III Response of the Tasmanian rock lobster fishing fleet to the introduction of individual transferable quota
1 Introduction
2 Material and Methods
3 Results
4 Discussion and Conclusion
IV Simulation of the effects of quota trading limitation in an ITQ fishery using an agent based model of fishing allocation and quota trading
1 Introduction
2 Model
3 Model calibration
4 Quota trading scenarios
5 Simulation results
6 Discussion
7 Conclusion
V Adaptive behaviour of fishers to external perturbation : Simulation of the Tasmanian rock lobster fishery
1 Introduction
2 Models
3 Results
4 Discussion
5 Conclusion
VI General discussion
1 Summary of findings
2 ITQs in the Tasmanian rock lobster fishery
3 Modelling behaviour in an ITQ fishery
4 Perspectives for future research
5 On the use of ITQs to manage fisheries
VII Addendum
1 Appendices
A Correction of regions of origin
B Allocation rules of trips to métiers
C Initialisation of the fleet dynamics model
D Calculation of commercial catch
E Data and model calibration
F Simulated catch and effort by area
2 References
3 Summary
4 Résumé long
5 Acknowledgements
6 Publication list


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