Creating property rights has helped protect fisheries while making the fishing industry more efficient, according to a nice blog post by Eric Pooley of the Environmental Defense Fund (ht: Dick Thaler). Writing at the Harvard Business Review, Pooley notes the success of the “catch share” approach to fisheries management:
The Gulf of Mexico red snapper fishery, for example, was on the brink of collapse in the early part of the last decade. Fishermen were limited to 52-day seasons that were getting shorter every year. The shortened seasons, an attempt to counter overfishing, hurt fishermen economically and created unsafe “derbies” that often forced them to race into storms like the boats in The Deadliest Catch.
This short window also meant that all of the red snapper were being caught and brought to market at the same time, creating a glut that crashed prices. Many fishermen couldn’t even cover the cost of their trip to sea after selling their fish.
A decade ago, the Environmental Defense Fund began working with a group of commercial red snapper fishermen on a new and better way of doing business. Together, we set out to propose a catch share management system for snapper.
Simply put, fishermen would be allocated shares based on their catch history (the average amount of fish in pounds they landed each year) of the scientifically determined amount of fish allowed for catch each year (the catch limit). Fishermen could then fish within their shares, or quota, all year long, giving them the flexibility they needed to run their businesses.
This meant no more fishing in dangerously bad weather and no more market gluts. For the consumer, it meant fresh red snapper all year long.
After five years of catch share management, the Gulf of Mexico red snapper fishery is growing because fishermen are staying within the scientific limits. Boats that once suffered from ever-shortening seasons have seen a 60% increase in the amount of fish they are allowed to catch. Having a percentage share of the fishery means fishermen have a built-in incentive to husband the resource, so it will continue to grow.
Please read the rest of his piece for additional examples in the United States and around the world. Catch shares don’t deserve all the credit for fishery rebounds (catch limits presumably played a significant role), but they appear to be a much better way to manage limited stocks.
One small quibble: Pooley refers to catch shares as an example of behavioral economics in action. That must be a sign of just how fashionable behavioral economics–the integration of psychology into economics–has become. In this case, though, the story is straight-up economics: incentives and property rights.
For another fun take on property rights and fish, with a very different slant, consider the fight against the invasive lionfish.
5 thoughts on “An Environmental Success: Property Rights to Fisheries”
It seems to a couple of other issue arise:
Effectively you’ve set a quote on catch. Is there a risk of regulatory capture resulting in the limit being set below what the fishery could sustain, in order to boost the price above the marginal cost of capture. In other words can’t these mechanism be a way to enforce price collusion?
Can the fishermen exchange the ‘right’ to catch. That would be more efficient in that fishmen who can capture fish at the lowest cost would buy rights from less efficient fishermen lower the social cost of fish.
Granted that you get “tragedy of commons” if there are no ownership rights. However, this approach seems frankly wrong-headed. Giving a bonanza of property rights to people for historic reasons (or, worse, creating a new breed of absentee landlord fishers who sell rights) is not a necessary part of the solution. The key part is moving from a free fishing (limited by season) to a quota system.
The fishermen will get extra revenue through the change from a boom/bust system (all fishing during a couple of months) to a more spread out fishing season where they can get better prices; this extra revenue could support an auction system for fishing quota rights.
This is very interesting. How are the catch shares allocated, exactly? He says, “based on their catch history.” What about new entrants who have no catch history, yet? Can the catch shares be bought and sold? Can you lease your catch share but still count the lessee’s fish towards your catch history next year? Is there a possibility that this could tend towards monopolization?
For that matter, if you had a monopoly, would you even have an overfishing problem? Could this be an example of the second best theory?
How can you allocate a public resource to private individuals? In 1842 the US Supreme Court ruled that the animals, the birds and the fish (including shellfish, etc) belonged to the people, not private individuals. Although I’m all for creative solutions to issues this doesn’t seem to be the way to go. Here in Montana we always seem to be fighting the privatization of our publicly held fish and wildlife resources.
I just want to ask if it is ok to ask for an email address of your blog. I am just interested in your “fisheries” post. Just so I will have updates!
heren is my email address firstname.lastname@example.org
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