Enclosing the Fishing Commons ? the privatisation of fisheries under the ITQ system
by Susan Wild
College of Business & Economics
University of Canterbury
Under the guise of ecological policy, governments with a neo-liberal economic agenda have been applying market-based policies to transfer publicly-owned commons resources such as fisheries into private ownership. The social impacts of such policies, including human rights implications, are subordinated to economic imperatives.
Individual Transferable Quota Fisheries (ITQ) schemes, variants of which have been implemented in a number of countries including New Zealand, Australia, Canada, Iceland and Norway, provide exemplars of the case where formerly open access common rights in nations’ fish stocks have been transferred by governments into private ownership, typically for substantively less than their market value. This has effected a windfall transfer of asset wealth from public into (selected) private hands, in the name of ecological protection.
The increasingly critical status of global fish stocks is emphasised in recent marine science literature (for example, UNMA, 2005). World-wide, stocks in nearly a third of ocean fisheries collapsed over the twentieth century, with many others reaching exhaustion. Increasing acceleration in the rate of decline of commercial species is occurring in many regions that are subject to over-fishing as others are depleted. Major international reports warn that unless present trends are reversed within the short-term, no viable commercial fisheries world-wide will exist by the middle of the present century.
The drivers of this decline are widespread over-fishing and destructive industrialised fish-harvesting methods, coupled with rapidly increasing global demand for fish products, in addition to pressures on fish stocks from pollution and global climate change (Clover, 2005). Loss of fish stocks is also correlated with a broader loss of marine biodiversity.
Current national and international regulatory measures are failing to control the decline in global fish stocks. However, attempts by fisheries regulators to impose more stringent limits over exploitation of fisheries confront powerful opposition from political and industry lobbies.
The Individual Transferable Quota (ITQ) System
The practice of licensing fishers and issuing quota as a means of regulating the impact of commercial fishing on particular species was established in the US and a number of EU countries from the early decades of last century. Commonly, rights of usufruct (use of another’s property) in specified species were issued on a temporary, non-transferable basis, aimed at limiting vessel numbers and total catch. This practice, however, is substantively different in concept from the Individual Transferable Quota (ITQ) system, under which non-revocable, transferable private property rights in perpetuity are created from the assignment into private ownership of quota in former publicly-owned fisheries assets.
Since the 1980s, a number of countries have implemented variants of the Individual Transferable Quota (ITQ) system over their fisheries. Under the ITQ system, licensed operating entities are allocated fixed quantities or shares of the annual Total Allowable Commercial Catch (TACC) set annually for specified species in specified regions. The initial allocation of species quota is granted on the basis of fishers’ prior annual catch patterns. This favours the larger fishing companies, which are deemed more efficient. Upon allocation, the quota becomes a private property right, and may be freely traded – for lease, exchange or sale – on an open market.
In the mid-1980s, New Zealand’s newly-elected reformist Labour government introduced a package of wide-ranging neo-liberal economic policies, which included the privatisation of many publicly-held assets. New Zealand was the first country to fully implement an ITQ system over its major commercial fisheries. Its intent was to increase investment in the local fishing industry and maximise its export potential. Prior to 1983, the right of local operators to fish commercially in New Zealand waters had been governed largely by a traditional open access system, with the country’s fish stocks retaining their fundamental status as a commons.
Under the 1983 Fisheries Act an initial allocation of quota for the seven major deep-sea commercial species was granted to the nine largest New Zealand-owned fishing entities, initially for a period of ten years, later revised to perpetuity. In 1986, further species were brought under the system. No economic consideration was transferred to the New Zealand government in exchange for the allocation of quota rights to the selected beneficiaries. Minimal resource rentals were imposed for administration of the system. The ITQ system effected the privatisation of the New Zealand fisheries commons, and granted a significant economic windfall gain to the beneficiaries. Currently, within New Zealand waters, 130 species are fished commercially, 94 of which are fully regulated under the quota management system, with others to be included in future.
Deficiencies in the ITQ system – ignoring social impacts
The ITQ scheme has largely excluded smaller artisanal and part-time fishers in New Zealand waters. In 1986, commercial fishing of quota species by those not holding Annual Catch Entitlement (ACE) became illegal.
The new ITQ regime took no account of traditional fishing activity in New Zealand, or the pre-existing rights to their tribal fisheries of the indigenous Maori population, who were heavily represented in the numbers of part-time fishers excluded under the new regulations. These rights had been guaranteed under the 1840 Treaty of Waitangi between Maori tribes and the British Crown. Tribal fisheries, which provided an essential source of food and local trade, were an essential taonga (treasure) to be retained in perpetuity in Maori ownership. In 1989, in response to strong Maori activism to assert their rights under the Treaty, the New Zealand government bought back quota for allocation among specific Maori tribal interests, including rights to future quota allocations. However, many Maori fishers were excluded from this settlement, which has been a cause of ongoing contention.
Since its implementation, the New Zealand system has become increasingly oligopolistic, with smaller quota-holding entities exiting the industry, leading to increasing concentration of quota holdings due to economic efficiencies of scale benefiting larger entities. New Zealand’s four largest companies own 80% of the total quota held under the ITQ system, while the 12 largest hold 90%, with a significant proportion in foreign ownership. There is an increasing incidence of quota leasing, often to foreign owned and controlled vessels. High entry costs of quota form a considerable barrier to entry to the industry. The few remaining small-scale, community-based commercial fishers are largely dependent upon access to quota leases from larger ACE holders.
An increasing proportion of New Zealand fishing quota is now held not by vessel operators but simply as an economic investment — as is the case for the 40% of quota in New Zealand’s deep-sea stocks. This has significant implications for the sustainability of fisheries, as investors prioritise the maximisation of short-term profits on their quota holdings over long-term ecological objectives.
The oligopolistic concentration of fisheries rights into the ownership of increasingly fewer, larger entities consolidating their holdings has been a feature of ITQ systems wherever they have been implemented.
From the mid-eighties, a number of other countries have introduced variants of the ITQ system for particular fish species. In Australia this includes southern bluefin tuna, abalone, the western pearl fishery, and a range of major commercial trawl fishery species. The Canadian government granted Enterprise Allocations (EA) for quota on its east coast Atlantic cod fisheries, following their critical depletion. The Nova Scotian herring fishery was brought under an ITQ system in 1986, with the issue of individual vessel quotas having the aim of limiting total fleet capacity. Similarly in Iceland, quota is issued for the herring fishery with the purpose of regulating capital investment in the industry. Norway’s cod fishery is subject to a limited form of the ITQ system, with quota attaching to specified licensed vessels.
In many coastal OECD countries, fisheries have suffered serious decline over recent decades. Nearly 90% of European commercial fish stocks are now deemed to be overfished, with 30% estimated to have been harvested beyond their biological limits and unlikely to recover. In response, the EU Commission, despite strong resistance from many of the smaller players in the industry, is considering the adoption of the ITQ system instituted in New Zealand, where it is deemed to have achieved generally positive economic and environmental outcomes.
Analysis indicates that ITQ schemes generally are successful in providing short-term economic benefits to the industry. However, their success in regard to ecological outcomes is less certain, with ongoing decline in fish stocks due to the impact of destructive fishing methods such as bottom-trawling, wasteful practices such as dumping, inaccurate reporting, illegal fishing, inadequate monitoring and enforcement of quota maxima, and failure to limit bycatch and damage to marine ecosystems.
As global demand for fish products increases while supply declines, there will be growing pressure for national and regional governments to impose market mechanisms over fisheries management. The conversion of fisheries resources into marketable economic instruments will inevitably result in the promotion of short-term economic returns over long-term ecological concerns. Political and ideological considerations have provided the impetus to privatise fisheries commons. Scant concern has been paid to the social impacts of such policies, regarding the distributional justice and human rights aspects, including indigenous rights, relating to the privatisation and enclosure of these commons.
For many communities globally, fishing for sustenance and trade has provided an essential component of their economic, social and cultural traditions. The human rights impacts of fishing policies are frequently neglected in the cost/benefit analyses that underpin government regulatory actions over environmental resources.
References
- Clover, Charles. (2005). The End of the Line: How Overfishing is Changing the World and What We Eat. London, UK: Ebury Press.
- Crean, David and Kevin Symes, (1995), “Privatization of the Commons: the Introduction of Individual Transferable Quotas in Developed Fisheries”, in Geoforum 26 (2), (1995), 175-185.
- UN Millennium Ecosystem Assessment (UNMA), 2005. Accessed 10 Oct 2009 at http://www.millenniumassessment.org/en/index.aspx
Source: Australian Options, Issue 60, Autumn 2010, pp. 13-15.