Chris Williams: Ownership Models for Natural Resources: Fisheries. A presentation at the TheIU.org 2013 Conference 'Economics for Conscious Evolution', London, UK, July 2013.

1. Ownership Models for
Natural Resources:
Fisheries
Chris Williams, nef

2. Work with artisanal
fishing communities

3. Work with industrial
lobster divers
Community projects

5. www.neweconomics.org
the new economics foundation

6. The marine socio-economics project
(MSEP)
www.mseproject.net

7. This presentation covers:
• Context for the presentation
• A brief overview of property rights
• Issues that arise with property failures
• A focus on fishing
• Ownership and co-management
• Quota as property
• Quota in the UK
• Issues with private property rights in
fisheries
• Conclusions
Ownership models

8. Context: The bio-capacity of the earth in relation
to consumption trends (Wackernagel et al. 2002)

9. Context: we need more fish!

10. We are living of the natural capital
(stock), not the interest (flow)…
STOCK VARIABLE OF THE
RESOURCE
FLOW VARIABLE OF
THE RESOURCE
/OUTPUT

11. • Human activity is changing
ecosystems worldwide.
• Ecosystems are particularly affected
by large-scale
fishing, freshwater use, and
agriculture (MEA 2005).
• Degradation often occurs in settings
of unclear ownership regimes.

12. Property is fundamental
• Property rights are central to the way that market
economies work.
• Without clear and enforceable rights to
property, and the freedom to sell these rights to
somebody else, a market cannot function.

13. Aside from the practical challenges surrounding its
enforcement, there are clear theoretical problems
with the property rights system.
Conventional economic theory associates these
with „non-rival consumption‟, access rights, and the
unintended side-effects of use.
These (as we will see later) are all of relevance to
fisheries.
Private property failures

14. • …refers to the capacity of some goods to not
be depleted through use, e.g. lighthouses
• Additional consumers = no impact on the
availability of the commodity, so enforcing
private property rights does not guarantee a
fair or efficient use.
• For that to occur, the commodity must be
consumed as it is used, enabling the supply
and demand price mechanism to function. If it
does not, the commodity will almost certainly
be under-supplied by the market alone.
Non-rival consumption

15. Access Rights
• …refers to the ability of the property owner to regulate
access and use of the property, e.g. fences
But at least some things are
extremely hard to prevent
access to. e.g. the road network
or open seawater.
(*these are termed public goods
In economic models)

16. • Because of the impossibility of restricting access to public
goods, their use may become economically excessive.
• The sea becoming overfished, for instance, is a classic
example of the “tragedy of the commons” in which free
access leads to excessive consumption.
• A single fisher does not intend to deprive others of a
livelihood, but the effect of their fishing activities is to
reduce the number of healthy, breeding fish in the sea,
which in turn contributes to a steady depletion of stocks
over time.

17. Tragedy of the
Commons, Garrett Hardin
1968
• In other words, the action of fishing has a negative
externality – an unpaid cost that is paid for by others.
• Positive externalities sometimes exist, too: a lighthouse
may be paid for by taxpayers in one country, but sailors
from other nations would also benefit

18. • In many cases, a private property regime may not be the
best way of sharing out resources, due to the difficulty of
enforcing meaningful property rights.
• As environmental issues (and fishing in particular) very
often have this feature, private ownership models might
not be the most suitable way to deliver environmental
sustainability or social justice.
• There is, however, a classic argument in favour of
granting property rights on public goods called the
„Coase Theorem‟.
Different allocation mechanisms

19. Coase Theorem
• Impose at least some kind of property rights system over
public goods, in order to allow users to trade their rights.
• Even if imperfectly enforced, Coase Theory maintains they
would lead to a socially more optimal outcome than would
otherwise occur.
• The Theorem provided the theoretical rationale for the
introduction of carbon trading, in which a public good (the
earth‟s atmosphere) was subject to a trading regime. It is
so far unclear if the attempt has been successful...

20. Why are property rights relevant to the
marine environment and fisheries?
• Fisheries around the world have a dizzying array of
management structures.
• Generally, these fall into private, public, or community
cooperatives / co-management.
• In some cases, this has led to sustainable use of
resources, allocated by public bodies (or government by
proxy), rather than market-based mechanisms.
• In other cases, such as the EU, public management has
failed to reverse the decline in fish stocks.

21. Example: the cooperative or „common
ownership‟ approach
Alaskan salmon
In 1938 - 120 million fish harvested.
Within 20 years - only 20 million fish.
This resource was critical to coastal
communities this was a key driver
in Alaska‟s movement for becoming a US
state..
Pressures on the habitat, overcapacity, conflicts, inequality between
different gear types, and different harvesting methods were all
contributing to the decline. The complexity was hampering sustainable
management of the salmon fishery.
Conaty, P. and Lewis, M. (2012). The Resilience Imperative: Cooperative Transitions to a
Steady-state Economy. Gabriola Island, BC, Canada: New Society Publishers.

22. But, the fishing community decided to:
• Limit entry of new vessels
• Create hatcheries
• Start ocean ranching
• Work on stock enhancement
• Co-op Ownership with local Govt
• Common property harvest (70%)
• Set up RAAs
• Ownership change > outcome changed
• Success story for communities and salmon
• Co-management ideas are now widespread, with local or national
government, NGOs, and other stakeholder groups sharing
responsibility and the costs and benefits.
• This is more „physical‟ ownership, and there is a whole other side to
it…
Public ownership failed to halt the
decline! Privatisation was on offer..

23. But there is more to it…
…the issue of Quota
Lets look at the UK as an example

24. Who
owns
me?

25. A brief history of UK fishing
• In the old days, when offshore fish stocks were large and fishing
fleets were small, there was no call for either private ownership
or government regulation.
• Private ownership of fisheries was effectively banned by the
Magna Carta, in the 13th century.
• This action was followed by hundreds of years of free fishing in
English waters.
What came next?
• Industrialisation
• New gear
• Competition
• Declining catches
• CPUE

26. Declining
CPUE

27. What has declining CPUE lead to?
• „The race to fish‟
• …the vicious cycle of getting bigger boats, better
technology to out perform each other
• Where resource rent is not dealt with
explicitly, the incentive for each fisher to attempt
to catch fish before others do ensures that such
rent is eventually all dissipated - i.e. it is invested
in excess fishing capacity leading to
overexploitation in both economic and biological
terms.

28. • Gear
• Seasons
• Geographical
> Difficult as fishers want „assurance‟
Options: pay royalties on catch or restrict access
(licensing)
• Limit on licenses and effort
• Limit number of traps or nets
The need for regulation:

29. Quotas
• Limit catch per vessel
• Fishermen buy (or rent) quota for a
particular species
• More tricky to enforce than closed
seasons..
• Catch according to supply and
demand

30. Quota - is it private property?
• 17th century - two conditions for holding property in a thing.
(1) power to appropriate the thing and hold it in possession against
others
(2) scarce and exhaustible, so that it was worth-while going to the trouble
of holding it as property.
• Taken together, helps to explain why fresh-water fisheries, in
rivers, lakes are often private property
• Same for tidal and inshore areas (land ownership)
• Therefore the English common law says that wild animals and wild
fish (even fish reared in a hatchery) cannot be subject to property
law until they have been caught and brought into the possession of
the landowner, hunter or fisherman. This reasoning lies behind the
common-law origin of the current “law of capture”.

31. ITQs – Individual Transferrable
Quota
• The big change: ITQs
• Exclusive
• Powers to act as an owner
• Duration and security = ability to manage it
• Transferable
• Effectively private property
• They can be bought, sold and leased
• Permits and licences are seen as property rights
that are weak and have little of these
characteristics.

32. Who owns quota in the UK?

33. So, who owns the
right to fish?
• Industry is divided
<10>m
• Landmark ruling in
July 2013
• POs to <10s
• Enforced
redistribution
• „No one owns the
right to the fish in
the sea‟

34. • Transferrable Fishing Concessions –
TFCs
• „‟mandatory‟‟ TFCs are not going to
happen
At EU level…

35. Types of Quota allocation:
• ITQs are one of many types of quota allocation..
• 3 common characteristics regardless of name:
quotas, individual, transferable.
• TFCs; ITQs; IVQs; Catch shares…
• Lets have a look in more detail…

36. Type Allocated to Transferable
Individual Quota (IQ) Individual No
Transferable Quota (ITQ) Individual Yes
Individual Vessel Quota
(IVQ) Vessel Sometimes
Cooperative Group Sometimes
Community Fishing
Quota (CFQ) Community Sometimes
Territorial Use Rights for
Fishing (TURF)
Individual, Group or
Community Sometimes

37. The private property approach to fishing
quotas – „Catch Shares‟ (EDF)
What is a catch share?
• Managers allocate a secure privilege to harvest a specified amount
of a fishery's total catch to an individual or group
• managers establish a fishery-wide catch limit; assign portions of the
catch, or shares, to participants; and hold participants directly
accountable to stay within the catch limit.
What are the main points of this approach?
• The main aim is deregulation.
• Catch limits are set.
• The limited catch is shared among fishermen.
• Shares can be held by individuals, communities or associations.
• It give responsibility to the users.
• It gives them the freedom to fish when and how they want.
• They must, however, stay within agreed limits.
• They can be more profitable as a result.
http://www.edf.org/oceans/catch-shares

38. What do proponents of catch
shares say?
• ITQs have met some goals in terms of
conservation, safety and financial performance for
fishermen.
• They work well in enforcing „keeping to catch limits‟; this
contributes to adhering to TACs; this helps for fish stock
conservation.
• Quotas also give the fishers more flexibility to fish and
thereby meet market demand without „gluts‟ and the
corresponding impact on price.

39. A cautionary tale about ITQ fisheries
- Ecotrust Canada (2009)
‘’ITQs are being promoted as a panacea for global
fisheries. However, analysis of BC fisheries raises serious
questions about this approach.’’
• Background: in BC the „race to fish‟ meant that ITQs were brought
in, securing a % of TAC to individual fishermen.
• If properly designed they can be part of a multi-level approach, but if
badly designed they can lead to as many problems as they solve.
• Most criticism relate to the fairness and equity, especially
regarding the crew shares, the impacts on coastal communities
and first nations >> Distribution! (e.g. Maori)

40. What are the main lessons learned from B.C.?
1. Catch shares promote „slipper skippers‟ (absentee ownership)
and quota leasing of „secure asset‟. Even processors lease and
sub-lease quota, passing on the costs to the fishermen. This turns
working fishermen into „tenants‟ paying exorbitant „rents‟ to those
who don‟t even fish the resource (who in turn guarantee
themselves revenue for no risk).
2. ITQs give fishermen a false sense of security; quotas provide no
more legal protection than licenses. They also do not mitigate
ecological uncertainty (impacts of climate change, habitat
damage, ...).
Further, the agreement of ‘lease rates per lb of fish’ could be affected
by oil price hikes etc and actually increase risk for fishermen to market
forces.
However, there are issues with ITQs

41. 3. ITQs facilitate privatization; quotas are not de jure property, but
they are de facto property as they can be divided, capitalised and
transferred more easily..
4. ITQs increase capitalisation in fisheries; investment in quota
licenses has ballooned – these ‘intangible assets’, estimated at
1.8billion $ in 2007. More than 5x the value of the vessels and
equipment in BC fisheries.
5. Quota leasing hurts working fishermen- relative to those gifted
the initial quota. Crew shares usually drop as revenues are used for
quota leasing (often the main cost in BC).
6. ITQs do not guarantee better science, monitoring or enforcement.
7. ITQs actually offer fishermen market incentives to engage in
risky behaviour; e.g. higher fish prices in the winter due to less fishing.
As so much $ is needed for quota leasing, costs are saved elsewhere
(the crew, safety, training, ..)

42. 8. It is actually sound science and co-management that
underpins the sustainability of a fishery; science-based TACs and
inclusive, transparent co-management / governance are far more
important in fisheries conservation and sustainability. The causal link
to ITQs doesn‟t always stack up.. E.g. bad science = bad TAC =
overfishing continues.
• Quota markets still need to be regulated, and designed to
prevent monopolies, corporate concentration and other
market failures.
• Distribution needs to be taken into account.
• ITQs are only one type of input-output control available to
managers.
• Policy makers need to weigh up the costs and benefits of
ITQs, regulate quota markets and ensure that fisheries are
managed to meet social, environmental and economic
objectives.

43. What is happening in the EU
• Currently, neither the European Union (EU) nor its
member states place any conditions on fishermen
to deliver social and environmental benefits to
society, in spite of the public ownership of the
resource.
• Without these, the process of allocating quotas –
essentially giving permission to exploit a
commonly owned resource – is blind to virtually all
of the impacts of fisheries and risks the future
health of marine resources and the fishing
industry.
• New CFP says they will have to…

44. nef‟s view and work
Societal, value-based criteria are necessary components of
EU fisheries management. We need to align fishermen‟s
interests with society‟s objectives.

45. Its ideological…
“The equal right of all men to the use of
land is as clear as their equal right to
breathe the air — it is a right proclaimed
by the fact of their existence. For we
cannot suppose that some men have a
right to be in this world, and others no
right.”
(Henry George)

46. • The debate is fuelled by ideology
• Sounds science and good governance /
institutions are the real pre-requisite (i.e.
inclusive transparent co-management
including Govt, industry and stakeholders
plays the key role)

47. Thank you!
Chris Williams
Marine Socio-economics Coordinator
chris.williams@neweconomics.org
+44 (0)20 7820 6404
Team: Natural Economies

48. Rent
• The issue of resource rent is strongly related to access conditions in the
fishery. The free and open access nature of many fisheries leads to
overexploitation. It raises questions of defining ownership and property and
use rights.
• Ownership issues in turn lead to problems of who is able to „charge' for the
use of the resource, who bears the costs of use and who reaps the benefits.
• Management objectives in a fishery are ultimately of a social and economic
character, and their achievement on a sustainable basis requires the explicit
consideration of resource rent – its generation and distribution.
• The achievement of these objectives is subject to constraints, especially
ecological sustainability. Because of widespread overexploitation, this latter
constraint often features as a policy goal.
• Policy decisions must be made about how the wealth from the fishery is
collected and how that wealth is distributed.
• Access rights for coastal / indigenous people, quotas (TACs) etc…