The Impacts of Individual Transfer Quotas
In the fishing industry, an Individual Transfer Quota (ITQ) is implemented to restrict the production of a specific good or service. This quota aims to address concerns related to over-fishing and the preservation of fish species' sustainability. Nonetheless, critics argue that numerous ITQ holders lease their rights to others, enabling them to reap the benefits of the quota's value without exerting any effort.
Basics
When it comes to managing the production of a particular good or service, a governing body often imposes an Individual Transfer Quota on individuals or firms. This quota sets a limit on the amount that can be produced. If someone with a quota doesn't reach the maximum allowed production, they have the option to transfer the unused portion to another party.
Examples of Individual Transfer Quota Applications
One common application of ITQs is seen in the regulation of domestic wheat production due to import agreements between countries. Governments may enforce ITQs on individual wheat farmers to restrict the overall output of wheat.
However, ITQs are predominantly utilized in the fishing industry. In this context, an ITQ serves as a permit that specifies the maximum quantity of fish, categorized by species, that can be harvested annually. Fishermen are allocated quotas based on historical catch sizes, ensuring the sustainability of fish populations.
Known Issues Related to Individual Transfer Quota
Unfortunately, in certain instances, the value of these permits has surpassed the actual fishing activity. Fishermen who have not been engaged in the industry for generations are unable to obtain quotas directly and must purchase them from existing holders. This has led to grievances among Canadian fishermen, who claim that quota holders continually raise prices to a point where fishing is no longer profitable.
Ecotrust Canada, a non-profit organization, highlights the consequences of ITQs, stating that they have encouraged absentee ownership and the leasing of quotas. Many initial quota recipients, often vessel owners, retire or cease active fishing once they acquire their quota. Instead of engaging in fishing activities, these "armchair fishermen" generate income through lease fees associated with their quotas.
According to an opinion piece published in The Tyee, ITQs for halibut were leased at prices ranging from $7 to $9 per pound in 2015, while the landed price ranged from $8.25 to $9.50 per pound. This indicates that quota owners claimed over 85% of the total value, leaving fishermen with minimal profit margins to cover crew wages, vessel operations, and monitoring expenses.
The implementation of ITQs in Iceland and New Zealand, which have the longest-established systems, has led to interesting findings. Researchers have observed that lease fees for quotas account for approximately 70% of the catch value in these countries. Furthermore, the costs associated with monitoring have forced small boats to exit the fishery.
Quota Consolidation
ITQs offer various options such as trading, re-granting, re-auctioning, or holding them indefinitely. However, the resulting Quota Consolidation has faced significant criticism. Notably, in New Zealand, it is estimated that eight companies control 80% of the fisheries through quota acquisition. Similarly, four companies dominate 77% of a particular Alaskan crab fishery, and in the case of the US Gulf Red Snapper quota, 7% of shareholders control 60%. Such consolidation has led to negative consequences, including job losses, reduced wages, and limited opportunities for new entrants in the fishery industry. But despite the criticism, it is important to acknowledge that ITQs have played a role in promoting more sustainable fisheries.
Conclusion
Individual Transfer Quotas have been implemented in the fishing industry to address concerns related to overfishing and the preservation of fish species' sustainability. While ITQs have been successful in ensuring the sustainability of fish populations, many critics point out the negative consequences associated with quota consolidation, absentee ownership, and leasing of quotas. It remains important to acknowledge the role of ITQs in promoting more sustainable fisheries and to continue addressing the issues associated with their implementation.