A new study by two Canadian scientists shows surprisingly negative economic impacts of the Individual Transferable Quotas (ITQ) system, at least when those shares are leased.
The study was made on the British Columbia halibut fishery, for many of the system’s advocates an ITQ showcase and great success story.
ITQs have been widely accepted – and spread – in recent years as a means to manage fish stocks, many of them overfished. Theoretically, and to economists, the system would make quotas gravitate to the most “efficient” fishermen or vessels, thereby resulting in the least dissipation of wealth for society in general.
In these analyses, the role of ITQ leasing has been all but overlooked, according to the study by Dr, Evelyn Pinkerton of the Simon Fraser University and Danielle N. Edwards of Ecotrust Canada.
On the contrary, the researchers call the leasing of quotas “the elephant in the room” of the British Columbia halibut fishery, and say that the system creates financial burdens for a large portion of the fleet rather than a positive effect for society. The study further showed that the system did not automatically steer quotas towards those fishermen with the least costs/highest yields, instead the initial allocation of (free) quotas served to keep otherwise unsustainable fisheries on the market.
The conclusion, according to Pinkerton and Edwards, is that there are low incentives for quota-owning vessels to maintain or increase efficiency after the first wave of consolidation. Also, this efficiency is achieved “at the expense of many lessees of quota, at the expense of crew even on owner-operated vessels, at the expense of the financial viability of many current operations, at the expense of future quota holders who have to buy quota from the original grantees vs. inheriting them as grandfathered public goods, and at the expense of those who will continue as lessees”.
“The leasing of halibut quota is the ‘elephant in the room’ because its importance has been missed by analysts, and not incorporated into the overall evaluation of quota programs”, they added.