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Proceedings of the Standing Senate Committee on
Fisheries

Issue 8 - Evidence - May 21, 1998 (afternoon sitting)


OTTAWA, Thursday, May 21, 1998

The Standing Senate Committee on Fisheries met this day at 3:10 p.m. to consider the questions of privatization and quota licensing in Canada's fisheries.

Senator Gerald J. Comeau (Chairman) in the Chair.

[English]

The Chairman: Honourable senators, we are very fortunate to have Dr. Parzival Copes, Professor Emeritus at Simon Fraser University, as our witness. Dr. Copes is the founder of the Institute of Fisheries Analysis at Simon Fraser University, and its former head. He has served as the charter head of the Department of Economics and Commerce at Simon Fraser, and he was founding director of the Centre for Canadian Studies.

Dr. Copes has an international reputation as a specialist in fisheries economics and management, and has extensive experience as a consultant to government agencies and international organizations.

More than 20 years ago, Dr. Copes warned that Newfoundland's fishery, as it was being conducted, was not sustainable. As we have seen over the years, Dr. Copes' predictions turned out to be true.

More recently, B.C.'s Minister of Fisheries asked Dr. Copes to look into the coho salmon crisis. Dr. Copes' report was tabled in British Columbia, so we might be able to touch on that subject today.

Welcome, Dr. Copes. Please proceed.

Professor Parzival Copes, Emeritus Professor of Economics, Simon Fraser University: I am pleased to have the opportunity to appear before this committee today. I always like talking about fisheries. I can go on for hours, so you may have to interrupt me at some point, or I may exceed the time limit.

[Translation]

I am very pleased to have this opportunity to speak to you. Unfortunately, my French is not that good and for that reason, my presentation will be in English only.

The Chairman: Your French is excellent, Mr. Copes.

Mr. Copes: My accent is not too bad, but my vocabulary is rather limited.

[English]

Let me first comment on the question of whether or not ITQs can be seen as a form of privatization, as I think many privatization proponents would like them to be seen. My observation is that this is a misperception on two counts. Firstly, the purpose of privatization is to bring private enterprise's efficiency to an undertaking. This is not at all the case with the so-called privatization of the fisheries. For the fishery to be more efficient under privatization, one would have to internalize the external realities that we have with fisheries management.

In the case of the fisheries, the problem is that we are dealing with a common property resource. When dealing with such a resource, everyone is fishing in the same pool, and we take fish away from one another. No one owns the resource, and therefore we do not look after it. ITQs do nothing to solve that problem.

For the efficiency problem to be solved, individuals and companies in the fishing industry would have to be assigned particular fish, and particular production units of fish. This cannot be done, because we are dealing with an enormous, mixed web of different stocks. You cannot separate out the individual fish, as a farmer would do with animals on a farm. The farmer controls all of the elements which bring those animals to market.

Under ITQs, fish that will be looked after by individuals are not identified. ITQs only give individuals a right to a certain amount of fish; they do not require those individuals to look after the fish. In the case of ITQs, individuals with ITQs have an incentive to abuse the fish stocks in various ways. I will provide examples of this later.

In moving to an ITQ system, one finds that fewer individuals have good access to the resource. With the passing out of ITQs, one invariably provides a mechanism for those who have access to financial resources to buy up larger shares of the fish stock access. Therefore, fewer private individuals have access to the fishery. This is not privatization of the fishery; it is "corporatization" of the fishery, with more and more of the access to the resource going to those who have the finances to purchase it.

Let me now talk about three aspects of fisheries management that are very important to the fishery. The first is biological conservation, the second is economic efficiency, and the third is social equity. These are the three main areas of policy involved in the fishery. My observation is that ITQs are regressive in terms of two of these, biological conservation and social equity. On the whole, they make the situation worse, rather than better.

The ITQ was an invention of economists. Therefore, one might expect that on the third count, in terms of economic efficiency, the ITQ would have some advantage. I would say that this is true. For the purposes of short-run improvements in economic efficiency, at least, the ITQ does have an advantage. At the same time, unfortunately, it has a disadvantage in terms of biological conservation. This means that with less good conservation in the long run, the economic efficiency will also suffer, because you are suffering a loss of fish stock through inefficient exploitation. On the third point, there is no plausible argument that the ITQ provides for an improvement in social equity.

Let me list some of the main reasons that the ITQ is not compatible with good biological conservation, and why it essentially violates the precautionary approach. The mechanism of the ITQ requires that ITQs be administered in a particular fashion, and that particular fashion is not compatible with good conservation.

In the first place, an ITQ system needs a total allowable catch which can be divided up into individual quotas. That total allowable catch must be set at the beginning of the fishing season. In that manner, participants in the fishery can be told: "You may take your individual quotes in the most efficient manner possible. You decide when you fish, where you fish, and when you deliver to market. At the beginning of the season, we will tell you the total catch that you are allowed to take, your quota, and you may go ahead and exploit that in the most efficient manner." In order to do that, one must know the total allowable catch at the beginning of the season.

In other fisheries management systems, you may set a predictive total allowable catch at the beginning of the year. Fisheries biologists looking at the stock have an approximate idea of how much fish we can afford to take out of a stock, and they determine the TAC. It is a predictive total, however. If they continue to monitor the stock throughout the year, as they should, and notice that their initial predictions are not coming through -- that the stock is in lower than they had hoped -- they can turn around and close the fishery as a precautionary measure.

That is very difficult to do in an ITQ system, because you have committed yourself in advance to the total allowable catch. If you turn around halfway through the season and close the fishery, those fishers who have not yet taken their quota will be put out, even though they thought that they were doing the right thing in reserving a large part of their catch for later in the season.

The credibility of the system is at stake if the TAC set at the beginning of the year is interfered with. It is very difficult, in an ITQ system, to set a credible total allowable catch and to stick with it.

There are many other disadvantages to the ITQ system. There are instances where the incentives that it gives to fishermen are contrary to the best interests of fishers as a whole. Let me just mention two.

In one of my articles, I list 14 problems which ITQ systems will generate. That was a prediction on my part because I wrote that before ITQs were well installed. I think we have seen all of those problems.

I wish to mention just two of them as illustrations. The first is the enforcement problem. Particularly when you have small boat fisheries, you have large numbers of fishermen. Using the salmon fishery in British Columbia as an example, there are 7,000 fishermen and 4,000 boats. They are small boats which can land their catch and sell over the side in many different places.

Imagine trying to enforce quotas in such a system. Will you look over the shoulder of every one of those 4,000 boats to ensure that no one takes 10 per cent more than they are allowed and disposes of it over the side wherever possible? Enforcement is very difficult except when dealing with narrow marketing channels, larger vessels and fewer numbers of them. Enforcement of quotas is difficult in many fisheries.

If enforcement is not a problem, you then run into what is a major problem in many fisheries, and that is the so-called "high-grading" problem. With a limited quota, you are allowed to take three tonnes of fish in a year. If that is the limit, you want to ensure that, for every kilogram of fish you sell, you get the best price possible. As a fisherman in Nova Scotia told me, you keep the $1 fish and discard the 60-cent fish. There has been an enormous amount of discarding of perfectly good fish just because it is inferior to another fish in some way and earns a slightly lower price. That is not a good reason for discarding that fish. In other fishery systems, you take both the 60-cent fish and the $1 fish to port and dispose of them there.

One of the major problems we have had on the East Coast of Canada in the past several years, before the collapse of the groundfish stocks there, is that an enormous amount of fish was being discarded and, of course, it was not being reported as being discarded. Biologists who are making estimates of stock strength from the landings of fish do not get the information on how much fish has been discarded. Those discarded fish should be included in the mortality of fish numbers, but they are not being reported.

Those are only some of the problems on the biological side. There are many more, but I will not deal with them due to our limited time.

I will now move to the social equity side. There is hardly any dispute that the ITQ tends to concentrate access to the fishery in the hands of those with deep pockets and, therefore, that access to this Crown property resource by fishermen and smaller fishing communities that have been dependent on the resource, sometimes for centuries, is in danger of being concentrated in the hands of corporations which are buying up larger quotas, and concentrating both the fishing base and the processing of their catches in a smaller number of larger places.

This is seen as a threat by smaller communities, and I believe that is indeed the case. Whereas I have in the past talked about there being too many fishing communities and too many fishermen for the health of the resource, with ITQ concentration very often the opposite can happen; that is, if perfectly viable fishing communities retain the access that they have had for centuries to the resource on their doorstep, they can have a good existence into the future. However, if they lose access to the resource because fishermen who are retiring cannot resist the temptation to sell to the highest bidder, the fishery resource can be increasingly alienated from coastal populations that have been dependent on it for a long time.

Many proponents of the ITQ say that it has been a great success, that we have rationalized the fishery and reduced the number of excess vessels in the fishery, which is the one advantage I concede they may achieve. They can deal with excess capacity rather effectively, but there are other ways of doing that.

Let us look at the three countries which have had the greatest impact from ITQs. Iceland and New Zealand have systems which are almost entirely turned over to ITQs. Canada has a policy of using ITQs as the preferred method of fisheries management, and on the East Coast well over half of the fishery is under ITQ.

In Canada, in the early 1990s we had a collapse of our groundfish stocks. That was the first time in history that ever happened. It happened about 10 years after we introduced and gradually increased the use of ITQs in our fisheries on the East Coast. That happened in conjunction with the problem of discarding perfectly good fish. Is it a mere coincidence that we had this disaster with our fisheries precisely at the time when you could expect the impact of several years of ITQs to be felt in the fishery, particularly with the discarding problem we had?

Iceland has had an ITQ system for over a decade. The most important stock in Iceland, cod, is at its lowest level ever. That again is after 10 years of ITQ impacts.

With regard to Scandinavian fisheries overall, a protagonist of ITQs in Norway looked at the performance of four northern countries, only one of which did not have an ITQ system, that being Norway. He came to the conclusion that Norway was the only country that had done a reasonable job of looking after the stock. The stocks of cod were in much better shape in Norway than in Iceland, the Faroe Islands or Newfoundland; three countries where ITQs were being used. Those findings do not indicate that the ITQ has been very successful. Of course, there may be other forces at work which explain why the cod or other groundfish stocks are in bad shape, but it is rather striking that, in the countries which have used ITQs, major problems are being observed in the fisheries.

I will be glad to answer questions.

The Chairman: Thank you, professor. We have allotted quite a lot of time to you, so if you care to expand on any points as we go along, you are welcome to do so.

Senator Stewart: Thank you, professor, for a very clear and convincing statement of your views. In fact, your statement is so clear and convincing that I must ask you: Why do you think the Department of Fisheries and Oceans went ahead with the ITQ approach; and why is it persisting in that approach?

Mr. Copes: That is a good question. Perhaps it questions my credibility indirectly, although I know you are not doing that. I must admit that I am a maverick economist. Most fisheries economists have gone wholeheartedly for the ITQ system. It is a system that is very appealing because, in my view, it is a naive and simplistic economic theory which demonstrates that the ITQ system is ideal from an economic standpoint.

What I am reminded of is the attitude of some of my colleagues in economics who insist that you should be able to prove that anything works for a widget, and if it works for a widget then it will work for anything else. The economy is then simplified into the manufacturing of widgets, and catching fish then also becomes subject to the same rules as the manufacturing of widgets. It is true that, if catching fish were as simple as manufacturing widgets, then we would have an ideal system with the ITQ system.

However, catching fish is enormously more complicated than manufacturing widgets. I am afraid that many of my colleagues in economics are too much impressed with the simplistic theories they have drawn up which show how well the ITQ system works, and they have stuck with that. After years of talking to the Department of Fisheries and Oceans, they finally convinced the department, which faced serious problems with management, that they had the panacea, the answer. Thus, they went for the ITQ system.

Unfortunately, it is difficult to undo the ITQ system. It is difficult to reverse the process. The ITQs have been passed out for free in the first instance. They are now worth millions of dollars. If the government wants to reverse the process and pay off the people who bought these ITQs in good faith, some of which cost several hundred thousand dollars, then it will have to compensate those people who bought them. It is difficult to reverse the situation, so we have been more or less stuck with the system. There are ways of going into reverse, but it is pretty difficult to do. I would have to sit down and think of how I would explain how one might do that. I have, on occasion, sat down to satisfy myself that one can go in reverse. It can be done, but it is not an easy process.

Senator Stewart: You said that the department needed an answer to a serious problem of management. You also said clearly and convincingly that the ITQ approach is not a good one. Assuming that it is necessary and highly desirable that there should be conservation of the fish resource on the one hand and, on the other hand, healthy coastal communities, do you have an alternative to the "widgetry" of some of your economic colleagues?

Mr. Copes: Yes, I have proposals on that score. Before we adopted the ITQ system, we were heading in the right direction. That is to say, we were dealing with a system of limited entry. However, I think we made several mistakes in how the limited entry systems were being implemented. Basically, there could be limited entry systems with a number of supplementary devices, such as buy-back systems to get rid of the surplus capacity in the industry, or time and area closures applied in a sophisticated manner. I think we can fine-tune a limited entry system to serve us reasonably well, certainly better than the ITQ system.

Senator Stewart: I come from a coastal community in Nova Scotia where I have heard about high grading. You have mentioned high grading as one of the disadvantages of the ITQ system. Is there no prospect of high grading with a limited entry system?

Mr. Copes: I would say there is a much smaller prospect. If you have a limited entry system and there is no limit on how much fish you are allowed to bring back, then certainly you will want to bring back your $1 fish. However, why throw away the 60-cent fish if you can have that on top of your $1 fish? There is still some discarding of fish in a limited entry system. That is trash fish that is not worth the cost of transporting back to the plant. That is discarding, not high grading. That is not taking only the very best fish.

Senator Butts: Thank you, Professor Copes. I want to congratulate you on your predictions of the past. I am sure you feel vindicated by them. I am looking for some more for the future.

I understand that you insist that fish is a common resource which no one owns. What we are driven to look for, then, is to find a way to measure the true value, not just in terms of economics but in terms of the social impacts. Is that where you are headed?

Mr. Copes: Yes. I am a great believer in a multi-disciplinary approach to fisheries. As I mentioned, while I was trained as an economist, I always pay attention to the conservation and social equity aspects of the resource.

Senator Butts: I believe you wrote somewhere that we must have a non-dogmatic approach to our choice of management; is that correct?

Mr. Copes: Yes, I believe that is certainly the case. What I often said to my students before I retired nine years ago is that, if you want to be a good fisheries manager, then you must tailor-make your management system for the particular circumstances with which you are dealing, that is, the particular stocks. I said that because, biologically, they all react in different ways. They are exploited in different ways with different kinds of gear. The social circumstances under which they are being exploited will vary enormously. There are so many differences from one fishery to another, I think it is foolish to think that you can have one system that fits all.

I remember a presentation I gave to my graduate students in economics to explain what fisheries economics was all about. One of my young, newly minted Ph.D. colleagues protested by saying that he could prove to me that you could use the same efficient management system for an oak tree and for an oyster. The trouble with too many economists who have involved themselves in fisheries is that they have treated it like "widgetry," and that does not apply to fisheries.

Senator Butts: I am with you. If we say that there should be a variety of management options, would it not follow that the building up of these management systems should start from the lower ranks, the communities themselves?

Mr. Copes: Yes. I have also become convinced that an element of community management through a co-management system is very desirable.

Senator Butts: Is that not especially so since the smaller operators, at least on the East Coast, make up the majority of the fishers?

Mr. Copes: It is the same on the West Coast. The biggest fishery, the salmon fishery, is essentially a small boat fishery.

Senator Butts: How are we now to decide what DFO should do?

Mr. Copes: That is a very good question. I am trying to find a solution to that myself. Recently, the provincial government in British Columbia asked me to give them a hand on that question. Fortunately, in British Columbia, we do have an agreement between the federal and the provincial governments to collaborate in fisheries management matters, and I hope that collaboration can be deepened and that we can have some influence on the way DFO looks at its task to bring some alternative visions as to how we deal with the fishery. I would like to be part of such a process.

Senator Butts: You are not going so far as to turn it over to the provinces?

Mr. Copes: No, I am not.

Senator Butts: We are somewhere in the middle.

Mr. Copes: Certainly not on the East Coast, because I think that would be Balkanizing the fishery, and you would have many problems there with the different provinces jockeying for position and trying to take fish away from one another. I think that would be a retrograde step.

I do believe that co-management is in the cards and that the provinces need to be involved in that. The constitutional responsibility for the federal government for the fisheries is one of management of the resource, and I think they take their task seriously, even though they have moved in the wrong direction in terms of the management devices they are using. For instance, Minister Anderson is genuinely concerned with conservation, and management is largely about conservation of the resource. Therefore, the federal government has a responsibility for the management and conservation of the resource.

However, that may mean less attention is being paid to how people fare under the management regime. Is it entirely focused on the resource, and are we neglecting the human element? In fact, my mandate in doing my recent report for the provincial government was to put a human face on the a management problem. We must not have a sole focus on conservation, important as it is, but we must also deal with how human communities are impacted. In the final analysis, our purpose in running a fishery is to do that to the advantage of our human populations.

Senator Butts: I take it, that when you use the word "co-management," you are thinking of at least three groups, namely, the federal and provincial governments and the communities or the municipalities.

Mr. Copes: Yes. The provincial government has a responsibility for the welfare of communities, and we see that in British Columbia now. They are very concerned about the management devices being used by DFO which are a disadvantage to smaller communities. Many of them are perfectly viable as long as they retain access to the resource on their doorstep. Many of them will lose their viability if it means that, under the systems we use, the rights of access to the fishery will be concentrated in the hands of fewer and fewer people and eventually mostly in the hands of corporations.

Senator Perrault: We are very honoured to have Dr. Copes assisting our committee. He has an unparalleled track record in this area of conserving fisheries resources.

Dr. Copes, many people with whom we have discussed this matter believe that there are other factors operating in the world today which are reducing the amount of food fish available to the populations of the earth. They talk about the ozone layer and the disappearance of plankton that feeds fish. They mention pollution. Over-fishing is certainly part of it. Perhaps there are other reasons, yet to be identified. Do you believe that there are basic changes in the world environment which are leading to the diminution of valuable fisheries in various parts of the world?

Mr. Copes: There always are. We go through different cycles in the ecologies of the oceans. You will find that sometimes particular sets of stocks are very much impacted but that other stocks are at the same time advantaged. The El Ni<#00F1>o effects we are seeing now have had a negative impact on some stocks but quite possibly a positive impact on other stocks.

Senator Perrault: There has been a suggestion that the mackerel, for example, are destroying many of the salmon.

Mr. Copes: That is right, and the mackerel are doing very well thank you, unfortunately. British Columbia should be seriously considering Columbia a mackerel fishery to bring them to heel to some extent, because they are gobbling up our juvenile salmon which are much more valuable to us than the mackerel. The mackerel are a problem. That is directly traceable to El Ni<#00F1>o, which is pushing up warmer water and, with the warmer water, come the mackerel.

Senator Perrault: I was at fisheries meetings with Americans in Nantucket on the weekend, who told us that they have been taking Canadian salmon from the Upper Skena run, but they do not think it is an excessive amount. They say we should think in terms of the total resource and not worry about where they originate. There are all sorts of arguments being advanced by the Americans.

Mr. Copes: Yes.

Senator Perrault: Peter Pearse, who appeared before us the other day, said that the government can make it clear that the old system is no longer an option. It can do this not only by declaration but also by eliminating subsidies and income support programs that have buttressed fisheries in the past and by insisting that fisheries are included in government's general policies of fiscal restraint and increased reliance on markets to manage economic activity.

You agree, I think, with Dr. Pearse that there is something wrong with the way we have been harvesting our fish, but you disagree absolutely with his support for ITQs.

Mr. Copes: That is correct, yes.

Senator Perrault: He said that he finds it difficult to understand how any intelligent observer would favour the old "catch as you can" approach to commercial fishing. He said fisheries around the world managed largely under the traditional system, both within the jurisdiction of coastal states and on the high seas, are an environmental and economic disgrace. That is tough language.

Mr. Copes: Yes.

Senator Perrault: What is the alternative to all of the problems we have at the present time?

Mr. Copes: I think Dr. Pearse is mixing two different systems when he talks about systems of the past. We have had systems of open access, that is, anyone who can get himself a boat can go out and fish. Obviously, with growing populations and more people trying to take advantage of an open access system, the pressure on the stocks will increase continuously. I am talking about another system that we were developing in Canada, the limited entry system which limits the number of vessels.

I am not talking about going back to an open access system, even though that is quite justifiable when dealing with low-value stocks to which not many people are attracted. That means there is at least some marginal exploitation of those stocks. One cannot condemn an open access system wholesale. There are instances where it is the best available system to deal with a particular fish stock.

By and large, yes, a major problem we have faced in the past is the over-exploitation of stocks because they were open access stocks and particularly when they were in international waters. There is no authority there that can discipline people and get them to take less whereas now, with 200-mile limits, the bulk of the world's fish stocks are under the jurisdiction of individual countries. Therefore, they can put in a management system that will prevent over-exploitation.

A good, well operated, limited entry system is superior to an ITQ system for a number of reasons. In some instances, ITQ systems may be the best systems to use. All fisheries are different, so the particular problems to which ITQ is prone may be quite manageable in some fisheries. Therefore, an ITQ system may be desirable there.

In my estimation, a small proportion of the fish stocks in the world would be efficiently exploited by an ITQ system.

Senator Perrault: The ITQ system, you say, presents some real problems in the area of surveillance.

Mr. Copes: Yes.

Senator Perrault: To catch people who are cheating on the guidelines is a very expensive and difficult process. How do we develop a greater sense of responsibility on the part of those in the industry not to high-grade? In this industry I would say it is relatively easy to cheat on the guidelines if one is predisposed to do so.

Mr. Copes: A limited entry system does not give the same incentives because you are not told that you are only allowed to take so many tonnes of fish. You are allowed to take fish when the season is open, so you take what you can at that time. If the pressure becomes too large, the managers can choose to close the fishery. You try to build a fleet and to reduce the fleet to a size where it is about the right size for the stock you are exploiting.

One of the problems with the limited entry system is that it is not being applied strictly enough. You get ridiculous systems like the halibut fishery in Alaska, a fishery that is open almost year-round because the halibut are available year round. In that fishery, the total allowable catch was taken in four or five days due to the number of vessels available to take the catch.

A limited entry system has to be applied strictly. You must have a buy-back system and reduce the number of vessels to bring it in balance with the resource. Having done that, it has considerable advantages over the ITQ system though not in every fishery. In some fisheries I would opt for the ITQ.

Senator Perrault: Thank you very much.

[Translation]

Senator Robichaud: Let me ask you a hypothetical question and hopefully, you will not argue, like politicians do, that you never answer hypothetical questions.

If you were Minister of Fisheries and Oceans for a one-year period, how would you go about establishing a management system that would address the social equity question, while respecting econonmic efficiency and fish stocks.

[English]

Mr. Copes: I do not object to answering hypothetical questions, but I would find it difficult to give you an answer within two hours. That is a big question. I would work at it piecemeal because I would look at each individual fishery separately. As I mentioned before, I believe that each fishery has to have its own finely tuned system for that particular fishery. There are variations within the ITQ and limited entry systems to deal with different fisheries. We are not, in fact, dealing with only two individual systems. We are dealing with two families of systems where you can have some supplementary management devices to address the particular problems of particular stocks.

I would look at it on a fishery-by-fishery basis to the extent that the fisheries deal with separate stocks on a stock-by-stock basis. I would look at crafting a good management system for each fishery, being also aware that you must take into account the people who are already in the fishery if you are going to do social justice to them. Maybe what on paper would be the most efficient way of organizing the fishery is one that is very difficult to put across to the group of fishermen with whom you are dealing.

It is better to have half a loaf than no bread. If we can get them to move in the right direction and to go halfway, that is better than throwing up your hands and accepting that we will never reach an agreement. It will be a long and slow process and, if I had a mandate for only one year, I would want to know that what I was doing would be continued after I left or else it would be a useless exercise.

There should be a future for what you are doing. In a year you can achieve a fair amount, but to reform the Canadian system will take much more than one year.

Senator Robichaud: When you look at the limited entry fishery and you want to attain or to reach a certain level of equity for the communities along the shore, would you consider a certain number of licences proportional to the population? Would you consider catch? How would you bring the two together so that there is some sense of equity? That is a real problem in the communities because one community always believes that the next community has received more than it.

Mr. Copes: That is a political problem we constantly face. Everyone believes that they are the victims and that someone else is being advantaged. I see that as very much the case in the fishery, even when dealing with different gear groups. In our salmon fishery, we have the seiners, the gill netters and trawlers. In each one of those groups we have held opinion polls and each group firmly believes that they are being cheated and the other groups are being advantaged by DFO.

I do not relish the job of a fisheries minister who must deal with this all the time. It is a difficult problem. You will not satisfy everyone. It is a daunting task for a fisheries minister to deal with these problems.

I would look at a number of different models for the fisheries. Most would fall into one category or another. For offshore fisheries, where you are dealing with large vessels that are run by companies -- that is the only efficient way to run big trawler fleets off the coast -- a system of quotas may sometimes work and be desirable where you would divide the quotas between a number of companies.

On the East Coast, there has, essentially, been one set of three companies, another of two companies, and a third which is a combination of companies in the groundfish fishery. Whereas I can see some advantages in that, I can also see some disadvantage in terms of the high-grading problem which was not dealt with particularly well. However, it may be that, with observers on board and so on, we can keep the high-grading problem under control. It may be that in some of the large trawler fisheries, ITQ systems or IQ systems of some kind would be feasible. Limited entry systems would also work there, and you would have to review the particular fishery to determine whether you would have stable enough stocks to set sensible quotas or whether you would opt for a limited entry system.

To some extent the systems overlap. In an IQ system, you have limited entry to the number of company which have quotas. Therefore, it is a question of whether you have a limited entry system with quotas or without quotas, with open fishing during the open season.

It must also be determined whether communities are inclined to manage their fisheries through the community and whether an individualistic fishery would be preferred, so that the Department of Fisheries and Oceans would administer a system of individual licences across a much larger region, a whole province or a whole coast line. Fishermen know about the fish stocks in their area. If we have a co-management system and the responsibilities for fishing are handed down to the community, we might have a limited entry system within the community.

It may well be that you would allocate a block of licences to the community and if the community is agreeable, they would have their own way of distributing those licences within the community.

If you have a wider open system, in small boat fisheries, there is a good way of administering a limited entry system on a long-term basis without resorting to the transferable aspects. One of the social problems we have had with both the limited entry systems and with ITQ systems is that many economists have -- not including myself -- insisted that we should have transferable rights, transferable quotas and transferable licences. This means speculation in licences, with licences or quotas being bought up in large quantities by concentrating them in the hands of fewer people. The social dimensions of that problem exist as long as you have transferable licences.

I have been an advocate of non-transferable licences. There is a credible system in small boat fisheries to do that. There is a limited number of licences, so not everyone can join the fishery. Small boat fisheries will have crews of two, three or four experienced deck hands who can take over the boat and aspire to become independent boat operators. Therefore, there is a seniority list of people who are experienced deck hands and who are quite prepared to take over if a licenced fisherman retires and sells off his boat. There is a credible system of individualizing the succession within a small boat fishery. One might have a system of a community allocation of licences of the block of licences given to that community.

There will be the problem of infighting amongst communities as to how much each community will receive. One tries to solve those problems with historical precedents. That is, a record of catches in various communities will maintain some historical precedent.

The Chairman: In the absence of a public policy on privatization, a number of right-wing groups have been making questionable claims which appear to coincide with DFO privatization policy.

I would refer to an excerpt from a booklet entitled "Fish or Cut Bait!" The excerpt is from one Elizabeth Brubaker of the Environment Probe on the question of transferable quotas. I quote:

Sole ownership would reduce incentives to "highgrade," or to discard smaller fish in favour of larger fish. Since discarded fish are often killed, highgraders would hurt their own future prospects.

Would you care to comment on this excerpt? This economist would appear to be proposing that sole ownership would reduce incentives to high grade.

Mr. Copes: The economist concerned illustrates her lack of knowledge of how fisheries operates. The comments she makes that it is not to your advantage to discard these fish because it is a loss to fish stock is the same argument you can use for an open access fishery. They face the same question. Collectively they benefit from maintaining the stock at an optimal level.

The problem with the ITQ system is that it is not true privatization. You are not saying, "This fish belongs to you, look after it well because the loss is going to be yours." There is still a pool fishery. The same people with an ITQ are all dipping into the same pool. If you want to do the best for yourself in an ITQ fishery, you will not fill your quota with 60-cent fish. You will only bring in $1 fish. You will throw the 60-cent fish back. That is exactly what is happening.

I cannot believe the economist you quoted is a qualified fisheries economist if she does not understand that.

Senator Stewart: As I said at the beginning, you have given us a clear and convincing presentation. At one point, I concluded that what you were pointing toward, although it was not an absolute recommendation, was a co-management system. However, then you say that each fishery must be looked at separately.

Suppose I am a deputy Minister of fisheries and I am being told by a learned professor that each fishery must be looked at differently. Some will be suitable for co-management on a community basis; others may well be suitable for the application of a quota system. I would have a series of different regimes superimposed one upon another and I would have to ask the Prime Minister for more staff. Am I exaggerating the problem?

Mr. Copes: You put your finger on a real problem. That is to say, whatever management system we use, we should try to be cost effective. We have not done so in the past. The expenditures of fisheries departments in the past have been enormous in relation to the value of the resource. We have had that problem all along.

I have always been an advocate of a degree of rationalization of the fishery. Any new fisheries management system that you introduce essentially tries to do that, whether it is a limited entry system or an ITQ system. However, those systems can be very expensive. One of the things I tell my students is that there are some fisheries that should remain open access fisheries because, once you start trying to put in a limited entry system or an ITQ system, the extent of management will increase.

I appreciate very much what you say. It is a problem. One of the qualifications for moving to a co-management system is: Can we put in a co-management system that is cost effective? If it is a question that everyone must be consulted, you will have interminable meetings and the expense of bringing people together every time you must make a decision. It may not be worth doing that.

Yes, we must be cost effective. Some systems lend themselves more to cost effectiveness than others, and some of the compromises that we must make in any system that we introduce involves looking at the cost aspect.

Senator Stewart: In Nova Scotia it is sometimes said that one of the great problems in conservation results from the use of draggers or trawlers and that, despite refinements on the nets and on other devices introduced in the net, the dragger or trawler does not discriminate. Consequently, the skipper who is supposed to be fishing, for example, for haddock, may well be killing off a lot of fish that he is not supposed to bring ashore. One used to hear tails about the sea being red with fish that were being discarded, having been caught in the net.

Do you have any reliable information upon which you would rely concerning this question of the impact of the trawler or the dragger method of fishing on fish conservation?

Mr. Copes: I have not worked on that problem myself. However, I am aware of it and I am aware of some of the literature on it. The problem in some fisheries is very severe; in other fisheries, it is much less severe. It is partly a question of the kind of gear you use and partly a question of how you use that gear. It may well be that, in some fisheries, we should close the fishery unless they move to a much more selective type of gear.

This is a problem that I am facing currently with the salmon fisheries in British Columbia, where stock selectivity of the gear is an important aspect of saving some of the weaker stocks but still exploiting some of the stronger stocks. It is one of the component problems of fisheries management that is very important. Again, the problem appears in a different guise in so many different fisheries that it is difficult to come up with an overall solution.

Senator Stewart: Let us say the Prime Minister is deeply concerned about the fisheries in Canada and he believes that he has put in place in the department top administrators who have had experience across government -- some of them in departments quite far removed from salt water -- and that the department has hired well-trained and well-recommended economists, but the result does not seem to be entirely satisfactory. Whom should we recruit to be the advisors on policy in the department? Where should we look for good, perhaps ideal, personnel? In the navy, I suppose you look to people who have come up through the navy; in the army, you look for people who have army experience. Where would we look -- not for the people who keep the books but the people who advise on policy in DFO?

Mr. Copes: That is a good question. There are few people around who would do. What you need for good policy in fisheries is an interdisciplinary approach. Universities still train us by discipline, so most people have come up through a single discipline and have a bias of that discipline. Most of the people who would be most suitable are self-made interdisciplinary people who have learned something about other disciplines.

A number of university programs concentrate on interdisciplinarity qualifications, including my own, and afford an opportunity for doing a doctorate under special arrangements. For example, a program is put together for an individual as an interdisciplinary program. There are a few people around -- and, I have produced a couple of them myself -- who have interdisciplinary skills in fisheries. Those are the people who are most likely to give you the best policy advice because they look at the fishery from more than one angle.

The Chairman: If the Prime Minister approaches us for advice, we might get back to you for those names.

Senator Perrault: This has been an interesting, in fact, a fascinating session. Professor Copes, you are critical of ITQs. How many ITQ programs are in existence in the world today? Is it quite widespread?

Mr. Copes: In advanced industrialized countries, they are becoming more popular. However, currently two countries that I can think of have them, namely, Iceland and New Zealand. In fact, in Iceland it was done under great protest. A major sector of the small boat fishery has been exempted, and they are trying to turn the whole system around in Iceland.

Senator Perrault: Are they undergoing a reassessment of the situation there?

Mr. Copes: Yes, although it is difficult to reverse an ITQ system.

The other country that has gone whole hog for it is New Zealand. They have had considerable problems with some of their stocks being over-exploited under ITQs. Many people there like them, but they tend to be the ones who hold the ITQs. Some people have lost their place in the industry. There are critics of the ITQs as well.

Senator Perrault: The jury is out.

Mr. Copes: The jury is out, but Canada is in an interesting position because it has been in the forefront of new ideas in fisheries management from the start. We have always been in the forefront.

Senator Perrault: You have been one of the pioneers in the process.

Mr. Copes: Yes, but there are several more and some who got in before I did by a few years.

Canada has been in the forefront of bringing in new systems but very often making what I consider foolish mistakes in the process that have discredited its attempts to introduce these systems. We were the first to bring in a full-blown, limited entry system in the Pacific salmon fishery, the so-called "Davis Plan" years ago.

Senator Perrault: I remember that well.

Mr. Copes: However, we insisted on doing it with transferable licences, and I think that undid the system at the time. It collapsed because it was too expensive to buy out all of the licences at their inflated prices when they became transferable. We have made mistakes along the way.

Many of the early pioneers of proposing the ITQ were, again, prominent Canadian economists. The most prominent critic of ITQs is also a Canadian.

Senator Perrault: That is the Canadian style.

I had a question with respect to the Department of Fisheries and Oceans and whether they have sufficiently addressed the issue of harvesting technology from a scientific standpoint. I think you have answered that question. There certainly has been a contribution from our scientific community, but has it been enough?

Mr. Copes: It is never enough. It is a job that is never fully done. I think we have an opportunity in British Columbia, with the crisis we have now, of convincing the industry that it must move on more selective fishing. It is something I have been pushing for a long time. I see an opening now, and I am talking to lot of people in the industry. I think there is an awareness now that they must become more selective in fishing. That will mean adjustments to gear, using new gear, and fishing in different ways.

Senator Perrault: This may be a controversial question, but do you support the concept of provincial control over the fisheries? This is been asked for by some of the premiers. They want greater control over the fisheries.

Mr. Copes: I am a little more sympathetic to it today than I have been because of recent failures in the federal administration of the fishery. I am still not convinced that going whole hog for provincial control is a good idea. What I see potentially developing in British Columbia may be helpful. That is, if we are moving more towards co-management, there is room for the federal government and the provincial government. Particularly on the East Coast, I would say going to primarily provincial control will balkanize the fishery, which will create many new problems.

Senator Perrault: There could be different answers in different regions of the country.

Mr. Copes: Yes. Generally speaking, one thing the federal government must do is face outwards towards our 200-mile limit where we will always have problems with other countries. We have major problems with the United States. Only the federal government can take care of external affairs.

Senator Perrault: It has been brought to our attention that a four-year moratorium has been placed on new ITQ programs in the United States. In October 1996, President Clinton signed into law legislation to reauthorize the Magnuson Fishery Conservation and Management Act to, among other things, mandate a four-year delay in the approval of new ITQ programs in U.S. federal waters. The delay is in effect until the year 2000, pending results of a two-year study by the National Academy of Sciences and additional congressional action on guidelines for future ITQ plans. Are you aware of this?

Mr. Copes: Yes.

Senator Perrault: What is the significance of this move in the United States? Are they pulling back now from the ITQ concept?

Mr. Copes: Yes. In the United States only a few ITQ programs are in effect. Most of the fisheries are not under ITQ. We are seeing enough problems with ITQs that groups of fishermen are saying that in no way do they want to be involved in this. Therefore, there is a lot of criticism of ITQs, despite the fact that fisheries economists generally still support the idea.

I am still a maverick amongst fisheries economists, but I think most of the fisheries economists are also desk-bound individuals who do not know the intricacies of the fishery. That explains their uncritical acceptance of ITQs in many cases. However, it is a wonderful theoretical device, if you go by theory alone.

The Chairman: Professor, I wish to say in my closing remarks how very fortunate British Columbia is to have you as a native son, and that they continue to see the wisdom of using your vast knowledge and your talents in their future fisheries. I also note that your talents are being used not only on the West Coast and that, in fact, much of what you have written about and have done in the past has been of great value to both the East and the West coasts of Canada. We appreciate the fact that you are showing continued interest in this very important public issue.

I like the phrase "desk-bound economists." However, we do need mavericks, and thank goodness you are out there. Thank you for your contribution to this debate.

Mr. Copes: Thank you for your kind comments.

The committee adjourned.


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