In early November conservation economist Lynne Kiesling posted an excellent analysis of fisheries problems and thoughtful approaches to remediation.

ITQs, or individual tradable quotas, would give fishermen an asset that they could buy and sell, based on the government’s establishment of the total allowable catch (hopefully, as I said above, defined in pounds and not in number of fish). The fishermen could then decide based on their knowledge of their skills and interests, and on the prevailing prices for the ITQs in the market, whether or not it’s worth it for them to stay in the business or not. They make the choice, not the bureaucrats.

In the current policy environment, without tradability, the bureaucrats are deciding who will and will not be in the fishing industry, and that decision is not necessarily based on opportunity cost, comparative advantage, or being a low-cost, productive fisherman, which are the dimensions that would get factored in if the fishermen had a market for their assets. Put another way, the current system is not only inefficient and leading to continued strains on fish populations, it is also extremely unfair to fishermen by not allowing them to capture the full potential value of their quotas as true assets.

ITQs are of course still going to be prone to monitoring costs by having to weigh each catch, but the transferability of the right extends the fishing incentive from a short-run one to a long-run one. If I have an ITQ and I go out and fish the bejeesus out of the population now, there will be fewer fish for me in the future, and that will reduce the value of my ITQ, regardless of whether I use it or sell it. That means that ITQs are going to have more of a self-enforcing tendency than the current quotas do.

This isn't an untested idea. New Zealand has been doing it since 1986 and has seen fish stocks increase, the value of tradeable quotas increase and the value of the catch increase. As Lynne says in summary:

Enabling fishermen to treat their fishing quotas as true assets, complete with alienability, is good for fish, good for efficiency, good for consumers who are going to want to eat fish well into the future, and fair to fishermen.

Another approach to resolving fisheries problems is presented in Harnessing Consumer Power for Ocean Conservation which attempts to use consumer choice to determine what fishes are caught and how they are caught. Various conservation groups attempt to define fishery capacities and present these findings to large consumers such as sympathetic restaurants who then refuse to buy and serve species that are dwindling. They also publish FAQs for consumers which rank fishes according to how much they are in danger in hopes that individuals will shift their preferences.

The rankings consider more than fish stocks in their rankings, they also consider associated species and how they might be affected by fishing methods. For example they consider how a fish's predators are affected. They rank some fishing methods higher than others based on their judgements of propriety. For example they rank tuna caught by pole or troll higher than those caught on long lines.

There seem to be a number of defects in this approach. It's much more complicated. It requires the involvement of many more people and organizations to determine rankings, requires far more detailed intervention in the fishing industry and relies on consumer cooperation for effect. It's more complex, more error prone, more subject to "gaming", more arbitrary in its judgements and less responsive to conditions. It's less likely to preserve fisheries. Just as importantly it is less fair to fishermen and provides no natural mechanisms for industry improvements.

Both approaches seek to use market behaviors to accomplish what command and control methods have failed to do, but Kiesling's approach is far more sophisticated and far more likely to actually preserve fisheries.

Update: Thurs. Jan. 22, 2004

Bill Hutten of fisherieswatch.org left a comment and a link to a library of information about fisheries including 6 articles on ITQs.

Thanks Bill.