Economic gains from introducing international ITQs—The case of the mackerel and herring fisheries in the Northeast Atlantic

Abstract

Achieving a balance between fishing capacity and fishing opportunities is one of the major challenges in European fisheries. One way to achieve this is to introduce individual tradable quotas or similar management measures. In several mackerel and herring fisheries in the Northeast Atlantic, such systems have already been introduced on a national basis and the long term economic gains of this have been acknowledged. This paper takes this a step further and investigates the potential economic gains from introducing individual tradable quotas between countries. Overall, the results show that the gross cash flow can be improved by 21% by allowing the mackerel and herring quotas to be traded internationally in the Northeast Atlantic. This rent gain arises mainly from increased productivity by allowing tradability between areas and fleets. The analysis also shows that the Danish pelagic fleet will gain from increasing its share of mackerel and herring quotas, whereas the Irish fleets are incentivised to sell quota, if individual quotas are allowed to be traded among countries. This result is in line with the qualitative analyses that show that Irish fishermen targeting herring in the Celtic Sea are negatively oriented towards international individual tradable quotas, whereas the Danish pelagic fishermen have strong preferences for international individual tradable quotas.

Introduction

One of the main challenges facing the EU Common Fisheries Policy is the overcapacity of European fleets [1], which is generally perceived as a major obstacle to achieving economically efficient fisheries [2]. One theoretically acknowledged method of reducing overcapacity is the implementation of individually tradable quota (ITQ) systems [3], [4], [5]. Impact assessment has also shown that in practice the ITQ system is an efficient way of both reducing overcapacity and of increasing economic performance of fleets [1]. A significant change in fleet structure (mainly a reduction in vessel numbers) is a generally observed response to the transition from more open-access fisheries to ITQ regimes, and is considered the main mechanism of capacity reduction [6]. A reduction in the number of vessels does not necessarily imply a reduction in the catching ability of the fleet, as quota-holders are liable to invest in larger vessels and engines, and in advanced technology [6]. As a consequence, fishing power and thus economic performance of the remaining ITQ-managed fleet is likely to improve [7]. Overcapacity reductions and fleet efficiency increases have been demonstrated following the introduction of national ITQ systems in a number of fisheries [6], [8] and an obvious question is whether similar changes can be expected if the tradability of individual quotas is introduced at the international level. To offer insights to this question, a model-based evaluation of a management scenario that introduces international ITQs for a sub-set of the European pelagic fishing fleets has been conducted.

This paper simulates the possible rent gains from expanding the current mackerel and herring quota management regimes in the Northeast Atlantic, many of them ITQ- or ITQ-like systems, to an international ITQ system, where mackerel and herring quotas can be traded across countries. The model is based on cost and earnings data from relevant pelagic fleets in Denmark, Great Britain, Ireland, Norway and Iceland and evaluates who may be likely to buy and sell quotas, if such a system were introduced. The investigated scenario integrates the North Sea and Northern management areas for mackerel into one large area in order to better reflect that mackerel is a migratory species with Western and North Sea spawning stock populations interconnected by straying mackerel [9]. A central question is how large the economic gains/losses will be by introducing an international ITQ-system for mackerel and herring in the Northeast Atlantic and how the distribution of quotas is expected to change.

Another topic of this analysis is the appraisal of which access and quota allocation systems the fishermen actually prefer and whether these preferences and expectations correspond to the development of landings of mackerel and herring across fleets in the simulated international ITQ system. Therefore, the results of the international ITQ scenario evaluation are contrasted with the outcomes of a choice experiment survey to evaluate fishermen’s preferences for new management measures, where Irish and Danish pelagic fleets have formed the basis of the interview survey [17].

The next Section 2 introduces the current management of herring and mackerel in the Northeast Atlantic. Section 3 describes the ITQ-model, which is used to estimate the economic gains from introducing international ITQs in selected pelagic fisheries in the Northeast Atlantic in addition to the methods used to assess fishermen preferences for fisheries management. Section 4 describes the data used in the bio-economic model, and Section 5 describes the economic gains and distributional changes from introducing international ITQs. These results are compared with the main results of the fishermen’s interviews, giving insight to their preferences for various management measures. Section 6 presents the paper’s conclusions and discussion.