A GLOBAL PERSPECTIVE
A. New Zealand
B. Iceland
C. The United States
THE PURPOSE OF QUOTA LICENCES
A. Conventional Wisdom
B. The Blackcod Fishery
QUESTIONS OF PRIVATIZATION AND QUOTA LICENSING IN CANADA’S FISHERIES
WHAT ARE INDIVIDUAL QUOTA LICENCES?
…[I]t is not my intention or the intention of the government to privatize Canada's fisheries. We believe we have a way to balance the size of the catch with the capacity of the resource. Of the management tools we use to achieve this, individual quotas are an important one. -- The Honourable David Anderson, PC, MP, Minister of Fisheries and Oceans, 26 November 1998
For many fisheries, … efforts to legislate inefficiency to conserve the stocks have been futile. Measures such as limitations on vessel length, gear, fishing time and fishing areas have not been effective in limiting harvesting pressure. The fishers are always one step ahead in the race to improve their harvesting effectiveness. -- Jacque Robichaud, Director General, Resource Management Directorate, Department of Fisheries and Oceans, 20 February 1997
Sometimes ITQs are referred to as simply an allocation right. Sometimes they are referred to as a quasi property right, and sometimes they are treated as property. -- Arthur Bull, Co-Chair, Nova Scotia Coastal Communities Network, 30 April 1998
Individual quotas … add another dimension of property to the rights held by the holders, and that is done by defining, quantitatively, the shares in the total catch. -- Dr. Peter H. Pearse, Professor, University of British Columbia, 5 May 1998
…[Q]uotas and quota systems come in all colours and stripes. -- Dr. Daniel E. Lane, Professor, Faculty of Administration, University of Ottawa, 11 June 1998
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. -- Dr. Parzival Copes, Emeritus Professor of Economics, Simon Fraser University, 21 May 1998
…[I]t is easier for managers to deal with this type of system. There tend to be fewer players because of eventual concentration and accumulation of the ITQs. Probably more important, you are not trying so much to regulate how and when (fishers) do their work, which reduces the need for micro management. -- Philip M. Saunders, Assistant Professor, Dalhousie Law School, 1 October 1998
When harvested as a common quota in a traditional competitive fishery, fish become "private property" only after they are caught and removed from the water. The so-called "tragedy of the commons" theory holds that an unregulated and open-access fishery results in a free-for-all race for limited fish stocks in an effort to maximize immediate personal economic gain. This race leads to excessive capacity through investments in ever bigger and more expensive boats, better gear and more sophisticated equipment. Since all the fishers are behaving in the same way, however, no one is further ahead and the outcome is over-exploitation, stock depletion, and low incomes (the so-called "fishermen’s problem").(1)
Stability is therefore maintained or restored through government imposition of regulatory measures (e.g., licensing, restrictions on fishing gear and vessels, minimum fish sizes, restricted fishing seasons, trip limits, and other so-called "input controls"). In Canada, the decision to restrict access to the "common property" fisheries was made nearly 30 years ago with the introduction of limited-entry licensing in the commercial Pacific salmon fishery in 1969. Active fishers were grandfathered into the fishery and no additional licences were issued. Within 15 years, the former "open access" fisheries in Canada became regulated to the point where a licence was required to fish commercially for all the major species.
Also, Canadian fisheries managers and their counterparts abroad have increasingly implemented "property rights-based fisheries" management schemes in the form of individual quota licences. These licences allocate predetermined shares of the Total Allowable Catch (TAC) to individual fishers or fishing operations. An "individual quota" (IQ) is a specific quantity of fish allocated annually to either a person or fishing vessel. An "individual transferable quota" (ITQ) is a quota that can be transferred (traded, sold or, in some cases, leased) to others in a fishery. ITQs are also known as an "individual vessel quotas" (IVQs) when assigned to a boat.
For the Canadian offshore groundfish fleet on the Atlantic coast, an individual quota program was first introduced in the early 1980s(2); here allocations of fish -- "enterprise allocations" or EAs -- are made to individual enterprises or companies and can be transferred only on a temporary basis.(3) Since then, quota licences have gradually gained a foothold in various other fisheries (e.g., the herring seine fishery, offshore lobster, scallop, clam and northern shrimp fisheries, the snow crab fishery, and in segments of the Atlantic inshore and mid-shore groundfish fisheries). They have also been introduced in certain Pacific fisheries (e.g., for abalone, herring, geoduck, blackcod, halibut, and other species of groundfish) and freshwater fisheries (e.g., in Lake Winnipeg).
Canada’s commercial fishing may now be described as a mix of common property and individual quota-managed fisheries. IQ/ITQ/IVQ/EA programs in Canada operate in over 30 sectors, and represent over 50% of the landed value on both the Atlantic and Pacific coasts combined.(4) The usual pattern of introduction of such quotas in Canada, the Committee learned, involves successive steps: non-transferable quotas are first introduced and over time these become transferable. As such, non-transferable quotas were described as the start of a "slippery slope" on the way to transferability. When managed by private quotas, fishing organizations representing the licence-holders have separate and specific agreements with the federal government reflecting the characteristics of each of the fisheries being managed.
Quota licences control the "outputs" of fishing. In essence, they provide fishers or enterprises with what has been described in the Canadian context as a property or "quasi-property right" to harvest annually a certain quantity of fish, a sort of swimming inventory. This system "privatizes," at least to some extent, the "common property" competitive fishery and thus represents a major departure from the traditional fisheries management approach of seeing the resource as a common good. Generally speaking, the introduction of proprietary rights in a fishery is viewed as a means of deregulation; it shifts managerial responsibility downward from central authorities to those holding the fishing rights.
There are many possible strategies for instituting property rights in fisheries. In some parts of the world, access rights are granted to fishing communities, which, in turn, assign exclusive rights to fish in particular areas to individuals; for example, there are "community development quotas" (CDQs) in Alaska. In Canada, one recent development(5) is a long-term management plan for the Pacific groundfish fishery. Under the program, 80% of the Total Allowable Catch is allocated to trawlers as individual vessel quotas (IVQs); allocation decisions on the remaining 20% of the TAC are made on the advice of a Groundfish Development Authority managed by industry and community representatives to aid in regional development.
In Canada, those in favour of extending the use of private quotas contend that this is not only the ideal way to manage and conserve fish stocks,(6) but also the most effective means to reduce harvesting capacity (i.e., the number of fishers) at the least cost to government and taxpayers. As such, individual quotas dovetail nicely with the federal government’s general policy of fiscal restraint.
Fisheries policy is changing everywhere in the world at the moment in a rather fundamental way. These changes are being driven by technological changes, which have clearly overtaken our policy framework and our traditional institutions of management. We are in a crisis of policy, and crisis means a turning point. -- Dr. Peter H. Pearse, Professor, University of British Columbia, 5 May 1998
Individual quotas, that is, non-transferable harvesting rights, are already quite common. They are used widely in Europe, Russia, southern Africa, America and Japan [and] tend to evolve into individual transferable quotas over time. … This evolution has taken place, for instance, in Iceland, Holland, Greenland and Libya. Individual transferable quotas are probably more common in the world today than most people realize. Slightly more than 5% of the global ocean catch is currently taken under ITQs. Currently at least six important fishing nations [Australia, New Zealand, Greenland, Iceland, Holland and Namibia] are using ITQs as their main fisheries management instrument. -- Dr. Ragnar Arnason, Professor of Fisheries Economics, University of Iceland in Reykjavik, 22 October 1998
The outcome (of rights-based management) depends on the fishery and on the country. Overall, I would suggest that the outcome has been positive. -- Dr. Quentin R. Grafton, Department of Economics, University of Ottawa, 20 March 1997
Fisheries around the world are at a crossroads. Falling catches, dwindling stocks, and over-capitalized fishing fleets have contributed to the widely-held view that radical changes must be made in the way the fisheries are being managed. In many countries, individual quota systems are in place, are being introduced or are gaining acceptance as a management device. The dismantling of common property fisheries and the implementation of quota licensing has very much been the global trend. New Zealand and Iceland, the first two major fishing nations to introduce individual quotas in major ocean fisheries, are considered to be most advanced in developing property rights-based fisheries.
New Zealand is in the process of considering whether they will open up their individual quota system to foreign purchasing… New Zealand is farther along on the property rights regime than Iceland or anyone else. -- Marshall Moffat, Director, Economic Analysis, Economic and Policy Analysis Directorate, Department of Fisheries and Oceans, 19 March 1998
There is no reason why any other country should follow our step in this, but in New Zealand, ITQs are in perpetuity; that is, they are permanent property rights. In effect, they are like a share to a land title or a shareholder’s right. They are significant property rights in the New Zealand context. -- Hamish Rennie, Lecturer, Department of Geography, University of Waikato, New Zealand, 4 June 1998
On the other side of the spectrum is the New Zealand system. Theirs is a property-rights-based system entrenched in their management regime. Transactions are handled in much the same way as are real estate transactions. They can go to bank and take an assignment against a licence, and basically buy it. -- Brian Giroux, Executive Director, Scotia-Fundy Mobile Gear Fishermen’s Association, 21 May 1998
Because of the lack of economic information collected from our industry, we do not have any hard economic analyses. The perception is that all those benefits have accrued to the industry. -- Dr. John H. Annala, Manager Science Policy, New Zealand Ministry of Fisheries, 27 October 1998
If you have a mix of small fishers and big fishers, the small people tend to lose out. … Before we even introduced the quota management system, we kicked out of the industry, by sheer administrative fiat, anyone earning less than $10,000 or 80% of their income from fishing. … That was to save the costs of managing them. -- Catherine Wallace, Senior Lecturer in Public Policy and Economics, School of Business and Public Management, Victoria University of Wellington, 27 October 1998
With the world’s 7th largest coastal fishing zone, New Zealand produces about 0.5% of the total global fish catch. In 1995, the country ranked 30th in terms of its commercial catch by weight, and employed over 10,000 people in the fishery. The industry’s contribution to Gross National Product is less than 2%; about 90% of its total revenue is generated by exports. Most economists point to New Zealand as the model on which Canada should base its future fishery, and Canadians who helped design New Zealand’s ITQ system tend to promote it in an extremely positive light.
In 1978, the year an Exclusive Economic Zone (EEZ) was established by New Zealand, a moratorium was placed on the issuance of new permits to harvest rock lobster and scallops. In 1982, a similar moratorium was placed on finfish licences and a system of enterprise allocations (EAs) for deepwater trawl fisheries (for seven commercially important species) was introduced. Initial allocations of quota to companies were made on the basis of their capital investments in the fishery. In 1983, in an effort to curtail what was perceived to be an overfishing problem in inshore areas, individuals earning less than 80% of their income or NZ$10,000 per year from fishing were excluded from the fishery.(7) According to one witness who appeared before the Committee, this measure affected some 1,500 to 1,800 fishers with seasonal incomes, but reduced the actual catch by less than 5%. Unlike Canada, New Zealand’s commercial fishery is made up of mostly deep-water (offshore) vertically-integrated concerns.
In 1986, the New Zealand Parliament passed the Fisheries Amendment Act, which made individual transferable quotas possible in that country. Prior to this time, there were few management controls on fishing; the system resembled open-access. We were informed that extensive consultations with all the commercial fishers had taken place before the passage of the legislation; this included an industry-government consultative committee to advise the Minister. Allocations of fish to initial ITQ holders were based on catch history, they were awarded free of charge, and they authorized their holders to take specific annual quantities of fish (fixed tonnages) in specified areas. The enterprise allocation scheme, developed four years earlier, was also converted to ITQs.
In 1990, ITQs were redefined as a proportion of Total Allowable Catches. In terms of value, more than 90% of total landings (involving some 30 species) are now managed by the Quota Management System (QMS), and the government intends to move all commercially harvested species into the QMS. Commercial stocks of fish are assessed annually in each of the ten major fishing grounds known as Quota Management Areas (QMAs), in each of which the Minister of Fisheries sets an annual Total Allowable Catch (TAC). Where there are Maori or recreational fisheries, allocations of fish are set aside for them before the Total Allowable Commercial Catch (TACC) is fixed and distributed to ITQ holders. Discussions are reportedly under way on the possibility of instituting tradeable fishing rights in New Zealand’s sizeable recreational fishery.
It is noteworthy that, in New Zealand, private transferable quotas were introduced in all the major commercial fisheries all at once. They can be sold to any person regardless of occupation, and are said to be allocated in "perpetuity." Although considered "property," one spokesperson for the industry told us that, in a legal sense, they are "rights to harvest." They have also resulted in fundamental changes to the Ministry of Fisheries, the government agency responsible for fisheries management, whose role is being reduced to that of providing policy advice, determining standards, and facilitating dispute resolution.(8) Commercial fishers have formed quota-holding associations and companies to represent the interests of particular fisheries, and new legislation on a more "direct co-management approach" with industry is expected before the end of 1998.
New Zealand has no formal system to evaluate the economic or social benefits and costs of its ITQ system. Proponents and critics alike told us that opinions on the QMS are based largely on perceptions rather than on the findings of empirical evaluations.
Iceland had a community-based constraint on their transfer arrangements. It is like Canada -- a large area with a few small urban areas around the edges. -- Leslie Burke, Director, Policy and Economic Analysis (Maritime Region), Department of Fisheries and Oceans, 20 February 1997
In a country like Iceland, which is dependent on fisheries, there is no question that we have to go for the most efficient fisheries management system. That is one of the reasons why we were so quick to embrace the ITQ idea. -- Dr. Ragnar Arnason, Professor of Fisheries Economics, University of Iceland in Reykjavik, 22 October 1998
…[W]e must remember that Iceland is a small island where everybody is a neighbour and the total economy basically is fish. It can be compared to Newfoundland. -- Dr. Chris Newton, Director of Research, Pacific Salmon Alliance, 27 May 1998
In advanced industrialized countries, [individual quotas] are becoming more popular. … [In] Iceland it was done under great protest. A major sector of the small boat fishery has been exempted… -- Dr. Parzival Copes, Emeritus Professor of Economics, Simon Fraser University, 21 May 1998
This system is a brainchild of various specialists, including economists, biologists, lawyers, political scientists and so on. For a decade and a half, these specialists have played with the milk and honey of my nation. … In Iceland, politicians prefer to get advice from super-advisers and in that sense they create them in order to minimize their own trouble of decision-making and responsibility. The advisers fancy to be super-advisers and the power they suddenly have creates another phenomenon. They no longer talk in the power of logical reasoning, but in the power of power itself. --Arthur Bogason, Chair, National Association of Small Boat Owners, 29 October 1998
… [T]here are three kinds of lies in this world: Lies, damn lies and statistics! When you are asked about the superiority of the Icelandic fishing management system, you will definitely be confronted with all three kinds of lies. -- Olafur Hannibalsson, Political Commentator and Deputy MP in Iceland, 29 October 1998
… [T]he debate is more public today than it was in 1984. … It is very much debated whether they have been given too much or if the rights vessel owners have been granted are unjust and if they are paying enough or not. That is one of the largest issues in politics today; and it will be for the next parliamentary elections in 1999. -- Ari Edwald, Special Adviser to Iceland’s Minister of Fisheries, 22 October 1998
The fisheries is Iceland’s economic lifeblood; the industry’s direct contribution to Gross Domestic Product (GDP) is about 17%, but the total contribution (direct and indirect) is estimated to be as high as 45%.(9) Fishery products account for about 75 to 80% of total revenues from commodity exports and 55% of foreign exchange earnings. Because of the industry’s size in relation to the national economy, fisheries policy is a major subject of public and political discourse.
In most parts of the country, fishing is virtually the only basis for economic activity. Beginning in the early 1950s, successive governments have had some platform on regional development and, for the most part, these policies have had the common theme of keeping the whole island populated. Government credit and grants to marginal areas, including capital to fishing companies, are said to have resulted in serious overcapitalization in fish harvesting. For the period between 1945 and 1983, the value of fishing capital employed reportedly increased by over 1,200%, while real catch values increased by only 300%.
Iceland has the longest history of individual quota management in the world. Private quotas were put in place at different times, in different forms in the various fisheries, mostly in response to sudden depletions in stocks. This was the case in the herring fishery, where individual vessel quotas were introduced in 1975 and then made transferable in 1979. For groundfish, individual vessel quotas were implemented in 1984 as a temporary measure to avoid an imminent collapse in stocks. For the period between 1984 and 1990, quotas were applicable to vessels larger than 10 gross tonnes (GMT). To ensure support for the new system, fishers in boats under 10 GMT were offered the option of effort quotas (an allocation of fishing days to each boat) or individual catch quotas. Later, in 1990, comprehensive legislation in the form of the Fisheries Management Act was passed by the Icelandic Parliament, abolishing the effort or quota option for small vessels between 6 GMT and 10 GMT because of their rapidly increasing numbers.
"Uniform Individual Transferable Share Quotas" are now said to be the centrepiece of Iceland’s management system; ITQs are permanent, divisible, transferable, and are said to be uniform across most of the various fisheries (involving some 15 species, about half of which constitute the bulk of the catch). Approximately 1,300 small boats under 10 GMT (or approximately 35 feet in length) annually catch 25% of the cod, the most commercially important species. About 300 vessels in this fleet are managed by ITQs, and about 400 by IQs, while the remaining 600 operate within a system of limited fishing "days-at-sea."
We were told by one witness from Iceland that IQs for groundfish fisheries were first introduced only after extensive consultations had taken place with the national associations of fishers and vessel owners, processors and fish plant workers, and that there had been general (but not unanimous) agreement on the decision to proceed. This contradicted the testimony of a spokesperson for the small-vessel sector who said:
In 1984, we were not consulted. … The number of small boats was 890. These 890 boats were allowed to fish less than 9,000 tonnes of groundfish by the regulations that the minister of fisheries then issued. Last year, the small boat sector of 1,300 boats fished 70,000 tonnes of groundfish. The total allowable catch was lower last year than it was in 1984 when we were only allowed to fish 9,000 tonnes. That was a direct result of founding our small boat organization. -- Arthur Bogason, Chair, National Association of Small Boat Owners, 29 October 1998
We were told by another spokesperson that before comprehensive legislation was enacted in 1990, there had been very extensive consultations with all the stakeholders, from all areas of the industry and the country. Interestingly, the Icelandic ITQ system has been in existence for a decade; yet there is still an ongoing and heated debate about its merits.
… [T]hey have put a moratorium on them in response to pressures from certain fishing and environmental groups that are apprehensive about the scheme. However, they have not abandoned the idea. -- Dr. Peter H. Pearse, Professor, University of British Columbia, 5 May 1998
… [I]n the United States, they have had serious concerns about individual quotas. They have actually put in place a moratorium for several years to explore some of the repercussions of these issues. -- Kathy Scarfo, President, West Coast Trollers Association, 27 May 1997
The notion of having quasi property rights in fish is seen by many Americans as being a communist idea. -- Leslie Burke, Director, Policy and Economic Analysis (Maritime Region), Department of Fisheries and Oceans, 20 February 1997
In the United States only a few ITQ programs are in effect. Most fisheries are not under ITQs. 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. -- Dr. Parzival Copes, Emeritus Professor of Economics, Simon Fraser University, 21 May 1998
Developments in the United States constitute an interesting case. ITQs were first instituted for the Atlantic surf clam and ocean quahog fisheries in the waters of the mid-Atlantic states and New England waters in 1990, in the wreckfish fishery on the southern East Coast in 1992, and, more recently, in March 1995, for halibut and sablefish fishing off Alaska. In October 1996, the U.S. President signed into law legislation to re-authorize the Magnuson Fishery Conservation and Management Act (commonly known as the Magnuson Act) and, among other things, to mandate a four-year delay (in effect until 2000) in the approval of the new ITQ programs favoured by the U.S. National Marine Fisheries Service in federal waters (beyond three miles), pending the results of a two-year study by the National Academy of Sciences and additional Congressional action on guidelines for future ITQ plans.
While not an outright prohibition, the moratorium represents a significant shift in opinion: two years prior to its imposition, both Houses of the US Congress were reportedly poised to authorize the immediate use of ITQs in federal waters.
THE CANADIAN CONTEXT: A FISHERY DIVIDED
I am not sure that sharp, political debates lead to consensus. … Sometimes it is best to have a lower key position rather than sharp, political debates. I believe that a good number of fishers are wary and suspicious, and they are circling the ITQ concept. It will take time for them to see ITQs succeed elsewhere. -- The Honourable David Anderson, PC, MP, Minister of Fisheries and Oceans, 26 November 1998
There has probably not been any public debate, but there have certainly been a great many workshops. -- Leslie Burke, Director, Policy and Economic Analysis (Maritime Region), Department of Fisheries and Oceans, 20 February 1997
… [A]n individual transferable quota is a tool that is voluntary and does not necessarily apply to all fisheries. -- Jacque Robichaud, Director General, Resource Management Directorate, Department of Fisheries and Oceans, 11 December 1997
It seems that the DFO is absolutely committed to pushing for IQs and ITQs. The DFO has a great number of employees, but there are no social scientists on board. Thus, there is no understanding of how a community, as a group, could conserve a resource. -- Dr. Anthony T. Charles, Professor of Management Science, Saint Mary’s University, 30 April 1998
ITQs are the result of a specific and direct public policy. They did not come into existence because of market forces, demographics, or technological change. They are the direct result of a federal government intervention in the fishery. This is not a policy which was brought in by popular demand. -- Arthur Bull, Co-Chair, Nova Scotia Coastal Communities Network, 30 April 1998
In our view, Treasury Board planners not only want to divest themselves of the fishery; they also want to make a profit as they go. -- Michael Belliveau, Executive Secretary, Maritime Fishermen’s Union, 14 May 1998
On both coasts, communities and people dependent on fisheries are fed up with what they see as politically oriented licensing and management theories that have been rejected by people on both coasts repeatedly. -- John Radosevic, President, United Fishermen and Allied Workers Union, 5 May 1998
While [fishery-dependent communities] are floundering, there is one industry that is growing. It is the movement of DFO officials moving to more lucrative positions with private fishing interests, then lobbying their former employers for beneficial treatment. -- Roy Alexander, Advisor to NTC Fishermen, Nuu-chah-nulth Tribal Council, 17 November 1998
There is not one legislative act to back this system that DFO is imposing upon not only our communities, but our fishermen and their families. -- Sarah Huskilson, Chair, Eastern Shelburne Fishermen’s Association, 21 May 1998
It is obvious that no consensus exists on extending individual quotas in Canada.
During its hearings, the Committee was told by DFO officials that if a fleet sector or fishing group voluntarily chooses to adopt an individual quota system, the Department is there to advance the process.(10)
The Fisheries Council of Canada (FCC), which represents fish processors and exporters in the Atlantic and freshwater sectors, strongly promotes the idea of further "privatizing" the fishery and moving toward a system of "secure, tradeable harvesting rights." The Canadian Council of Professional Fish Harvesters (CCPFH), an umbrella group representing the country’s largest fisher organizations, espouses the concepts of common property and competitive fishing (a fishery that "spreads the economic benefits among those who catch the fish and their communities, and avoids the concentration of wealth that follows privatizing the resource"). The CCPFH believes the fishery to be "fundamentally a public resource" and that "the use of ITQs and EAs should be carefully limited."
In 1991, a Commission of Inquiry into Pacific fisheries licensing (the Cruickshank Commission) initiated by a number of industry organizations in British Columbia, noted that "no other debate in the industry raises as much emotional or philosophical intensity." In its final report, in November 1993, the federal Task Force on Incomes and Adjustment in the Atlantic Fishery (known as the Cashin Task Force) found that "no social consensus exists" in support of ITQs. At a Roundtable on the Future of the Atlantic Fishery, organized by the federal Department of Fisheries and Oceans, and held in March 1995 in Montreal, the consensus was that such licences should be used as a management tool, but with conditions attached to their expanded use in additional fisheries.(11)
In 1996, the controversy over individual quotas intensified when the Director of Policy and Economic Analysis of the DFO’s Maritime Region and a fellow DFO economist wrote a provocative article for the Dalhousie Law Journal entitled "Behind the Cod Curtain,"(12) which was later re-printed in a publication of the Atlantic Institute for Market Studies.(13) The article not only promoted ITQs as a way to solve the "common property problem" in the fishery, but also described the Atlantic fishery as a hopelessly over-subsidized and false economy based on fish, and compared the groundfish collapse with that of the Soviet Union.
The DFO’s motives and agenda were frequently questioned during the Committee’s hearings. Small independent owner/operators who fish competitively perceive private quotas, especially ITQs, and the co-management agreements between the DFO and certain fishing groups, as part of a deliberate and continuing plan by the Department to increase the corporate sector’s influence over, control of and access to the fishery. Some even accused the DFO of manipulating the process toward private quotas by dividing fisher groups and sectors.
The belief was stated that the DFO gives individual quota licence-holders preferential access to the resource, thereby gradually forcing non-holders out of the industry. In Nova Scotia, for example, although about 20% of fishing vessels are managed by ITQs, individual quota-managed fleets (largely in the midshore and offshore sectors) reportedly harvest between 50 to 60% of the resource.(14) There were also concerns that the DFO had been abdicating its role as the manager of the fishery, abandoning the infrastructure of traditional common property fisheries, and working instead to broker partnership deals with special economic interests or specialist fleets. One spokesperson from the Pacific fishery put it this way:
There are really two visions as we approach the end of the 1990s. The West Coast can look forward … to see renewal and revitalized industry, which supports fishermen, shore workers and communities into the future, or we can take the corporate view, which seems to be favoured by Ottawa, which sees fewer fishermen, higher volume boats, centralized processing plants in major centres, and a fishery which is managed by the market, with a government role being reduced to that of facilitator in arranging the partnerships with private interests. -- John Radosevic, President, United Fishermen and Allied Workers Union, 5 May 1998
Property rights-based fisheries would appear to be the federal government’s preferred management option; yet there is no national policy (or set of guidelines) on their design or implementation,(15) nor has there ever been a public or parliamentary debate on the matter.
In tidal (marine) waters, many regard individual quotas as an attempt to supplant the so-called common law concept of "the public right to fish." In the common law relating to fisheries (since the Magna Carta in 1215), there is a public right to fish in navigable waters and there are no property rights in fisheries. In Canada, this public right and developments in the interpretation of the Constitution established the principle that, in tidal waters, an exclusive right to fish can be created only by the federal legislature. In other words, the common law "public right to fish" in tidal waters can be abrogated only by the enactment of legislation passed by Parliament.
In recent years, co-management agreements have been negotiated by DFO officials with certain commercial groups. New powers in the Fisheries Act are now being proposed to allow the Minister of Fisheries and Oceans to enter into legally binding, long-term, multi-year "partnership agreements" or "partnering agreements" with certain fisher groups to formalize their role in the decision-making process for the management of their particular fishery and to provide greater security of tenure for licence holders. Suffice it to say that there is much confusion amongst industry participants about the notion of partnerships in fisheries, and whether such partnerships differ from co-management. Equally unclear is whether the amendments to the Fisheries Act proposed in the last Parliament(16) are actually needed to institute such agreements, and whether currents arrangements between certain fisher organizations and the federal government are even legal. It is noteworthy that, in August 1998, inshore fishers belonging to the Canadian Fishermen’s Defence Society launched a suit in the Federal Court of Canada to challenge the federal government’s authority to privatize the fishery. In June, a report released by the Canadian Council of Professional Fish Harvesters on co-management in the Atlantic inshore fishery observed the following:
Co-management is seen by many harvesters as part of a continuing push by DFO for privatization of fish resources and of the management system, particularly through the implementation of individual transferable quota (ITQ) regimes. Most inshore harvesters fear that with comprehensive property-based management regimes, independent owner/operators will lose control over resources and their communities will lose economic viability.(17)
In September, the Minister of Fisheries announced the selection of an independent three-member panel to advise on the appropriate legislative framework for the proposed partnering provisions of the proposed new Fisheries Act. The Panel’s Terms of Reference states that there is "general support for the co-management concept," but also "some concerns about the way partnering arrangements would be implemented."(18)
Over the years, a common and recurring complaint within the fishery has been that the DFO tends to make the big decisions unilaterally, then proposes consultations. On this, one witness, a social scientist who has developed empirical indicators on the nature of the DFO as an organization, described the Department as "coercive," and as having created an us-versus-them mentality, alienating fishers and encouraging them to beat the system.
Its nature is to use force as the means to solve problems. However force is defined, whether through the imposition of laws or regulations on fishers, that is its modus operandi. It is exactly the wrong animal for the job that is required, which is somehow to persuade people to agree with and accept the rules. … My study suggested that it is not ownership of the commons that is required; rather, it is ownership of the means of regulating the commons that is required. If people set the rules, then they become their rules; and, by and large, most people obey their own norms. -- Dr. Thomas Poetschke, 11 June 1998
What the Committee has heard suggests that there has been a lack of information, clarity and transparency in the development and implementation of quota licensing policy in Canada. Consequently, the climate of suspicion and animosity that characterizes the fishery today is quite understandable.
The common property problem is all-pervasive in human society … It is the consensus within the economic community that the recent economic growth in the world -- and the relative affluence of the western world -- are based on the institution of private property. … Limitations on the transferability of property is likely to reduce the overall welfare of the world. -- Dr. Ragnar Arnason, Professor of Fisheries Economics, University of Iceland in Reykjavik, 22 October 1998
The result is a continuing effort on the part of every quota holder to generate the biggest possible return from his share of the catch, by increasing the value of his landings, and reducing his costs, and preferably co-operating with others to increase the pie in total. -- Dr. Peter H. Pearse, Professor, University of British Columbia, 5 May 1998
The fishermen focus their creativeness, their ingenuity, on what they have been allocated. This has led to better product quality, better supply, safer fishing, improved landed prices, more efficient operations, more viable operations, improved TAC management and better communication and cooperation between the DFO and the industry. -- Bruce Turris, Executive Director, Pacific Blackcod Fishermen’s Association, 28 April 1998
As the individual quota system expands throughout Atlantic fisheries, and as the Department of Fisheries and Oceans signs partnership agreements with various fleets, the more stability we will have. One thing is certain: we will be able to plan our activities better and stop managing the fisheries from one crisis to the next. -- Jean Saint-Cyr, Executive Director, Fédération régionale acadienne des pêcheurs professionnels Inc., 7 May 1998
Proponents of property-based fishing rights suggest that people fish more responsibly when they "own" the resource, and that when a renewable resource belongs to all, there is no incentive to preserve the resource. Most individual quota-licensed fishermen view the system as a means of rationalizing the industry by allowing them to operate in a more stable, "business-like" and "market-based" manner. Under such management, the incentive is said to become the maximization of net income from a specific quantity of fish, the annual share allocated to each fisher. In brief, the most often cited economic advantages of a quota licence regime are:
- security of access to the resource;
- the elimination of the derby-style, "race to the fish";
- greater safety in fish harvesting because of increased flexibility in choosing the rate and timing of fishing;
- longer work seasons and more effective co-ordination of supply with market demand;
- the potential for more effective long-term planning in terms of capital investments (e.g., boats, fishing gear) and market development programs; and
- the reduced need for government regulation.
When made transferable, individual quota licences are said to be an effective mechanism for reducing fishing effort and over-capitalization; they reduce the number of commercial fishermen as, over time, some choose or are forced to sell their quota licences to others. Indeed, the record indicates that ITQs can be a very powerful tool in this regard and can dramatically increase the overall economic efficiency of individual fishing operations.
The Pacific blackcod (sablefish) fishery is often used by Canadian proponents of property rights-based fisheries as a good example of how a fishery can be transformed once property rights are put in place.
They are now making extremely large amounts of money. A sablefish licence on the British Columbia coast trades for $2 million. That has nothing to do with the government. That is private people saying that this is a valuable licence, but it would not be a valuable licence if we were allowed free entry. -- The Honourable David Anderson, PC, MP, Minister of Fisheries and Oceans, 26 November 1998
In some rights-based fisheries, such as the British Columbia sablefish fishery, … fishers pay for the full cost of management … and are major participants in decisions made by the fisheries. These fisheries are some of the best managed fisheries in Canada and generate some of the highest returns for fishers as well. -- Dr. Quentin R. Grafton, Department of Economics, University of Ottawa, 20 March 1997
IVQs have turned the sablefish fishery around. It was a classic example of a common property race. It was going in the wrong direction fast. Today, I think many in the department would concede it is one of the best managed fisheries on the west coast of Canada, if not in the world. -- Bruce Turris, Executive Director, Pacific Blackcod Fishermen’s Association, 28 April 1998
Mr. Turris now speaks for the Black Cod Association, but in his former life he introduced the vessel quota system while he was a Department of Fisheries official. Now he works for the people for whom he delivered the plan. … The job loss in that fishery has been well over 60%. Fishermen have lost almost all of their hard-won conditions. Quite frankly, it is a terrible way for Canada to manage its fisheries. -- John Radosevic, President, United Fishermen and Allied Workers Union, 5 May 1998
What follows is based largely on testimony provided by a spokesperson of the Pacific Blackcod Fishermen’s Association (BCFA).
The Committee was told that in an effort to curb fishing pressure in an expanding fishery for Pacific blackcod (also known as sablefish, a type of groundfish), the Department created 48 limited-entry licences in 1981. In the years that followed and despite restrictions on access to the fishery, the fishing capacity of the fleet reportedly expanded more than thirty-fold. Vessel owners fished harder than their predecessors to justify their investment in boats, gear, and fishing licences. In 1989, the fleet caught 4,719 tonnes in 14 days, more blackcod than it had caught in 245 days in 1981. During this period the landed value rose from $5.5 million to $19 million.
Safety was also said to have been compromised as vessels with excessive gear and crew fished around the clock in hazardous weather conditions because the financial costs of not doing so were simply too high. Fishing gear was lost as vessels set too many traps or hooks, or fished in rough seas. Lost gear continued to fish, reducing future available catches. The quality of the catch also fell as fishermen spent less time properly bleeding, dressing, icing, freezing, and storing the catch. When the fishing season ended, catches were landed in a few days, so that fish waited at the dock for days prior to being shipped to the market or placed in cold storage. Catches also exceeded the allowable limit; by 1988, the harvest had exceeded the TAC by 26.4%, and by 1989, by 17.6%. Landings were not being monitored by the Department of Fisheries and Oceans, nor were there enforcement officers specifically assigned to the fishery. Air and sea surveillance was minimal, and the level of compliance was generally unknown.
We were told that in 1989 the Blackcod Fishermen’s Association proposed to the Department of Fisheries and Oceans that individual vessel quotas (IVQs) be used for the 1990 fishing season. The majority (more than 90%) of licence holders agreed to institute such quotas, as well as to have stricter enforcement and cost recovery.(19) Under IVQ management, the TAC was said to have been exceeded only once, in the first year (half of one percent in 1990). In subsequent years, longline and trawl fishermen converted to trap gear, a more operationally flexible, more selective, and less wasteful means of catching fish. Gear loss was reportedly reduced and profitability improved with higher quality fish being landed on a year-round basis. Crew employment declined by about 40% (from 332 to 198), but those remaining in the fishery were said to have more stable incomes.
The number of fishing days, we were told, increased more than five-fold, from 14 days per vessel in 1989 to 74 days per vessel in 1997. Vessels are now using fewer traps under the IVQ program. All fish landed on shore are monitored by independent dockside monitors contracted by the PBFA and certified by DFO. Although the costs associated with managing the fishery rose substantially with IVQs, these costs are all funded by the licence holders. In addition, the DFO has contractually devolved to the PBFA considerable management responsibilities (e.g., drafting the annual and long-term management plan, biological sampling, and stock assessment).
While 48 limited-entry licences (held by 38 legal entities) are issued by the DFO each year, the active fleet, at 24 boats in 1997 was half of its size in 1989. Landings of blackcod in 1996 totalled about 2,800 tonnes (down from 3,900 tonnes in 1995) worth about $22.1 million (down from $29.2 million in 1995). The wholesale value in 1996 was approximately $25 million (down from $34.5 million in 1995).