This week I’m featuring a guest blog by my colleague, Dr. Martin Smith, Associate Professor of Environmental Economics at the Nicholas School of the Environment, Duke University.
————–
Economists have long understood that the cause of fisheries problems is the inability to exclude users.[1] When no one owns the fish in the sea, fishermen lack incentives to restrain themselves in order to sustain the biological health of the resource and ultimately the long-term economic health of the fishing industry. Each fisherman races to catch the fish before the other guy. Not surprisingly, this race leads to overfishing and economic hardship. [1, 2]
The centerpiece of U.S. fisheries law is the Magnuson-Stevens Fishery Conservation and Management Act.[3] At its core is a mandate to end overfishing by setting catch limits in federally managed fisheries. Historically, this mandate has focused on the symptom of the problem, namely overfishing, without addressing the cause of the problem. [2] By setting catch limits without addressing the exclusion problem, managers began to control biological overfishing but inadvertently worsened the race to fish. Aggregate catch limits can maintain a biologically healthy stock, while fishermen have incentives to build more and bigger vessels to catch fish before their competitors. Managers respond by shortening season lengths, forcing gluts of product onto the market and the need to sell fish frozen rather than fresh. [4] Most notoriously, this economically wasteful derby in the Pacific halibut fishery of Alaska shrunk the season length to less than three days by 1994. [5] In 1995, a solution to address the cause of this problem was introduced: an individually transferable quota program that set the total catch based on biological assessment and divided the catch between resource users into shares that could be traded. Individually transferable quotas were used in only a handful of other U.S. fisheries but appeared to be successful in managing larger numbers of fisheries in Iceland and New Zealand. With the new policy, the Pacific halibut fishery was transformed overnight from a source of tremendous economic waste to one of the great success stories in fisheries management with a season lasting 245 days and a steady flow of fresh high-value product to the market. [2, 5]
The 2007 reauthorization of Magnuson-Stevens provided a means to use new tools like the halibut program in federal fisheries management. [3] These tools are broadly defined as Limited Access Privilege Programs (LAPPs) and include individual fishing quotas (both tradable like in halibut and non-tradable) and territorial use rights in fisheries (TURFs). In policy circles, individual fishing quotas have now been renamed catch shares. LAPPs address the cause of overfishing and not just the symptoms by solving the exclusion problem, thus aligning the incentives of individual fishermen with the objectives of fisheries management.
A new bill in the house (HR 2772) now threatens to undo recent progress in developing LAPPs. [6]The bill’s title is the “Saving Fishing Jobs Act of 2011,” but the bill will effectively make it illegal to develop new LAPPs that generate economic value. Provisions in the bill are likely to lead to unintended consequences that could exacerbate economic hardship in fishing communities rather than prevent hardships. And it could even eliminate fishing jobs rather than save them. Potential vehicles for harm to fisheries in the bill include 1) a problematic definition of eligible fishermen; 2) the way in which “jobs” are implicitly defined; 3) the termination clause for LAPPs; and 4) the language on fee collection for running LAPPs.
The definition of “eligible fishermen” is problematic. HR 2772 defines eligible fishermen as permit holders and requires two thirds of them to approve a new LAPP. In some fisheries I have researched, as much as half of the permitted vessels record minimal or no landings in some years. This means that if one of these fisheries were to transition to a catch share program, non-fishing permit holders would in all likelihood receive no initial allocations of quota. Under HR 2772, the non- fishing permit holders would thus oppose the catch share program. In essence, non-fishing permit holders would easily be able to block the ability of the actual fishery participants to approve a LAPP that would generate economic value for the fishery and the fishing community .
Even in fisheries that experience some consolidation after a LAPP is put in place, the issue of jobs is more complicated than just numbers of fishermen holding permits. Many jobs in fishing are seasonal or part-time in nature. By eliminating the race to fish, catch share programs can convert seasonal jobs into year-around jobs that pay better. Suppose there were 10 fishermen each making $10,000 per year by fishing seasonally before a catch share program for a total of $100,000. After the program, suppose there are 5 fishermen making $40,000 per year fishing year around for a total of $200,000 of income. For both economic growth and supporting secondary industries in coastal communities, the smaller number of fishermen working year around is better. These benefits would need to be weighed against the loss of some part-time jobs. HR 2772 does not have any way to address this issue and would force managers to choose part-time jobs over full-time jobs.
The bill includes a rule that would terminate any new LAPP if the number of permit holders is 15% less the year after the program goes into place. The clause could inadvertently end a program that successfully reduces redundant capacity, generates economic well being, sustains healthy fish stocks, and is popular with fishermen. In my experience working with individual-level data in fisheries, there is considerable natural attrition in permit holders over time due to changing economic circumstances and retirements of fishermen. [7] The language in HR 2772 does not account for such natural attrition and would falsely attribute all attrition to a LAPP.
Finally, the language on fee collection appears to inflate the cost of a LAPP because it includes the costs of observer coverage. By charging fishermen for observer coverage under a LAPP but funding observer coverage otherwise with taxpayer dollars, the LAPP will appear more expensive to fishermen than it really is. Naturally, fishermen would be more likely to oppose a program in spite of its promise to generate economic benefits for the fishing sector and for society at large. Here, we find ourselves legitimately in a bind. Many argue that fishermen should pay for the privilege of harvesting a public trust resource. But a sudden change to full cost recovery could fall victim to political inertia and inadvertently preserve the inefficient status quo.
It took decades for fisheries management to evolve from treating symptoms to addressing the root cause of overfishing. Now in one piece of legislation we risk undoing much of that progress and hindering further improvements.
References
1. Gordon, H.S., Economic theory of a common property resource: the fishery. Journal of Political Economy, 1954. 75: p. 124-142.
2. Wilen, J.E., Why Fisheries Management Fails: Treating Symptoms Rather than Causes. Bulletin of Marine Science, 2006. 78.
3. Magnuson-Stevens Fishery Conservation and Management Reauthorization Act, P.L. 109-479. 2007.
4. Homans, F.R. and J.E. Wilen, A model of regulated open access resource use. Journal of Environmental Economics and Management, 1997. 32(1): p. 1-21.
5. NRC, Sharing the Fish: Toward a National Policy on Individual Fishing Quotas. 1999, National Academy Press: Washington DC.
6. Saving Fishing Jobs Act of 2011, H.R. 2772. 2011.
7. Smith, M.D., Limited-entry licensing: Insights from a duration model. American Journal of Agricultural Economics, 2004. 86(3): p. 605-618.
First, I’d just like to thank Dr. Smith for writing such an in-depth piece that presented government policy side-by-side with scientific knowledge. It amazes me every time to see what a huge gap in logic exists between the two. With the abundance of government agencies associated with natural resources & the environment, namely NOAA & EPA for this situation, who are also supposed to be well-informed scientific figures, I have to wonder: who dropped the ball?
HR2772 is clearly under-researched, both scientifically & socioeconomically. Dr. Smith has presented information from both disciplines that severely fractures the policy’s logic. If fishers don’t want a new regulation to go through that would supposedly benefit them, then I think it’s time to review the policy. And after seeing the amazing transformation of the halibut fishery, what would possess the government to “fix” something that is not only NOT broken but, in fact, extremely successful?
Two words: “election year.” The current federal administration has been unable to help pull our economy out of the depression for the past few years, which is leading to some unhappy, unemployed voters. So what better than to present a new bill with the words “saving jobs” in the name? The fact that it is targeting a somewhat specialized industry that a large number of the nation’s population (specifically those that don’t live near a coastline) is unfamiliar with, only makes it look better because people don’t understand the implications hidden beneath the jargon. Voters will see “saving jobs” and think “that’s great!” without really looking into the details & consequences.
Another problem with the jargon that Dr. Smith also brought up is how “eligible fishermen” is defined. This is not a new problem for the environmental policy world. With the Clean Water Act, the problematic definition of “navigable waters” gave rise to a large number of lawsuits between private property owners; local, state, and federal governments; as well as various environmental protection groups. This lack of clarity in regulations & laws causes a great deal of trouble. Voters don’t understand the bill, applicable parties subject to the bill are confused about how to comply, and court cases are appealed and appealed until a decision is made based not on the facts of the case but on how these questionable phrases are defined. Bills like HR2772 are supposed to be helpful for the greater social welfare, but I’m failing to see how & where it is helping.
In reality, the bill is short-sighted and has a high probability of throwing the fishing industry back into a slump only a few short years from now (conveniently after the election of course). The LAPP system works. It isn’t perfect and there are a lot of problems with our fisheries that have yet to be addressed, but at least we have something that works and is helping. Fishers have jobs and there are incentives in the market to keep them from overexploiting fish stocks. The LAPPs have given us some time to work on better plans and rushing into a plan that reverses that seems pretty counterintuitive.
I found this very fascinating and a topic and one that I wouldn’t have thought much about. I would like to briefly comment on the above comment. I too would like to know how this legislation was put together and if EPA and NOAA were involved, to what degree. I also found Dr. Smith’s piece very convincing but I would like to know the “science” behind the new legislation. I’m curious as to what studies were done to support the formulation of the legislation and what backing it had, if any, from the scientific community. In addition, I am curious as to the responses that this legislation has received from the environmental community. Lastly, Dr. Smith articulated many flaws with HR2772, and points out that overall it fails on a broad sense but I wonder if it would be effective in a specific location.
Allow me to do a quick summary of this unfamiliar but interesting subject before I discuss my views. Under the original Magnuson-Stevens Fishery Conservation and Management Act, absolute quantity restrictions were put in place to limit overfishing, but this caused people to simply play the system, and eventually ended up worsening the problem. Fishermen raced to get bigger boats, and fishery managers responded by shortening fishing seasons, causing gluts to happen in periodic spurts and while fish had to be frozen to be sold for the rest of the year. The problem was solved by introducing tradable catch shares, or LAPPs. The success of this program is threatened by new legislation that could potentially undermine it.
I think the first lesson that I learned from this is the potential for even well-meaning policies to wreak a lot of havoc, as can be seen by the original Magnuson-Stevens. There is a great need for policymakers to consider the blind spots from every policy created; sometimes we aren’t as lucky as in this case to be able to come up with a knee-jerk policy in the form of the LAPP that works well and salvages the situation without any lasting damage. In the case of the HR 2772, it looks as though the fishing industry might not be as fortunate.
I tend to agree with Natalie’s point of view that a possible reason why HR 2772 might be introduced- the drive to create more jobs, or at least to create the impression that we are creating jobs. I think that it is such an unfortunate feature of tunnel-driven policymaking that is focused on one goal and one goal alone- to create jobs in this poor economy, at all costs. If Natalie’s insight is right, this is very troubling indeed. “Ghost” or “skeleton” jobs might be created- jobs that either vanish after a short period of time, or jobs that are part-time and lower quality than the ones they replace. I fear not only for the fishing industry, but for the wider US economy as well.
HR2772 seems to underscore the imprudent solutions that the current congress is presenting to fix the jobs problem. The conservative leadership’s insistence that environmental laws and regulations are inherently “job-killing” is short-sided at best, and in many cases, just plain wrong. Dr. Smith’s analysis highlights how this misguided rhetoric can lead to policies that create a net-drag on the economy.
In this case, the legislation being put forth is especially alarming because its goal seems to be dismantling a policy that has a proven track record in preserving fisheries. While I understand that many environmental regulations do indeed cause jobs to be lost, this is one clear instance where the effect of the regulation preserves jobs over the long term. If LAPPs are terminated as a result of this legislation, fish stocks may end up being decimated, leading to deterioration of jobs over the long-term. Aside from being bad for the environment, HR2772 may end up being the real job-killing legislation
The controversial issues of consolidating fisheries and job security have inevitably arisen as management programs have evolved to address the underlying “race to fish” problem of open access fisheries. Current opposition to Limited Access Privilege Programs (LAPP) contends that LAPPs contravene a fisherman’s basic right to fish by limiting fishing to a specified group, each of which is given a specified amount of fish that may be harvested or a specified amount of effort that may be used. Although catch share programs allow for “both economic growth and supporting secondary industries in coastal communities,” some fisherman fear that the resulting consolidation of some fisheries will allow a few larger industries to thrive, at the expense of smaller, more traditional industries. This has lead me to wonder whether LAPPs account for these transitory costs of regulation. How are harvesting privileges distributed across ports/fleets? Are fisherman compensated for jobs lost?
While I fear the consequences that will result if the “Saving Fishing Jobs Act of 2011,” is passed, I think we cannot discount the issues that are raised by its conception. Clearly, fisherman wish to be involved with the planning and implementation of regulations that they will be subjected to follow. While our ultimate goal is to reducing overfishing, we must do so in such a way that provides incentives for fisherman to participate and that minimizes the effects on individuals that rely on fishing efforts as a source of livelihood.
The economic downturn that has occurred over the last few years has put the environment on the back burner. The rush to “create jobs” is a political ploy to get people re-elected. I hate to say it, but you can’t create jobs if the market doesn’t want them to exist. And if you do “create jobs” how long will those jobs last, and at what expense to the environment and the market? All this push to save or create jobs will have a long lasting negative effect on both the market and the environment. Projects that create jobs in the short term kill real, long term jobs from being created because they create fake needs that are not driven by the market. This is exactly what’s happening in the HR 2772 case. Some lawmakers are trying to put a short term band-aid on the problem of the market downturn by “creating jobs” or saving the jobs of the fishermen within their constituents. This will only hurt long-term recovery by allowing inefficient jobs to keep existing, prolong the causes of overfishing, and continue to let fishermen drive their fisheries into the ground. At some point, the fishermen need to realize that fish are an exhaustible resource and that their jobs may not be efficient in the long term. Some fishermen may have to leave the market in order for the fishery to be sustainable and the market to be profitable. The loss of their jobs in fishing only means that the market is becoming more efficient and more profitable to those allowed to stay in the fishery. In addition, the change to the IFQ system in some fisheries will help the fisheries to rebound, and possibly create more jobs in fishing in the future.
I knew little about fishery, but after reading this article, I learnt a lot. Dr. Smith’s view makes me more aware that a policy should not only address the symptoms of the problem, and solving environmental issues needs more comprehensive solutions. I’m impressed by the successful catch shares solution. It made me think about fisheries in nowadays China. Chinese government put forward the policy aiming at limiting overfishing by forbidding fishing in summer, and eleven major lakes are included in the “closed fishing in summer” system. At the same time, the government has a strict restriction limiting the number of fishing boats and will subsidize fishermen and encourage them to transfer to other industries. It seems that Chinese government still focuses on symptoms of fisheries problems. Thus I’m wondering whether catch share solution is feasible and effective in China, and what the mechanism or science is underlying catch share to make it a better solution.
As for the new legislation, I read Natalie’s comments and I think “election year” may be a possible explanation. And I think the government should not just use one policy tool to achieve two goals: limit overfishing and save jobs. (According to Tinbergen’s Rule, policy tools should not be less than policy targets. ) And if policy tools conflict each other as this article discussed above, then it’s better not to pass the new legislation.
We really shouldn’t be surprised to see legislation like HR 2772 in an election year, especially in the midst of an extended recession — but it doesn’t make bills like HR 2772 any less infuriating. As we touched on briefly in class, some environmental regulations do have the short-term effect of eliminating jobs in industries being regulated, but as Dr. Smith argues, the LAPP language in Magnuson Stevens ultimately creates greater economic opportunity in fishing communities, despite the potential for shedding jobs. Of course any opportunity for our elected officials to claim that they’ve “created jobs” is apparently worth the damage they’d inflict by wiping out the success of the LAPP programs that represent a rare bright spot in realm of fisheries policy (never mind whether or not they voted for the policies of the last 10 years that have eliminated jobs in the first place!).
Not surprisingly, the bill is sponsored by a congressman (Rep. Jon Runyan (NJ-3)) who represents a coastal district and whose constituents include commercial fishers. By the looks of it, the bill is stuck in committee and has no chance of becoming law. Not to be discouraged, Rep. Runyan has recently introduced yet another piece of legislation taking aim at Magnuson Stevens: H.R. 1646, aka “The American Angler Preservation Act” which seeks to protect the fishing community from “bad science, poor statistical data, and overly cautious decision making by fisheries managers.” (The quote above is from Rep. Runyan’s web site:http://runyan.house.gov/content/runyan-introduces-legislation-help-struggling-fishermen)
I’d argue that the fishing industry has been done in not by “bad science” but by the extreme short-sightedness on the part of fishers in over-exploiting the resource that they rely on for their livelihoods… but I guess that wouldn’t win me any votes. I’d be curious to get Dr. Smith’s take on this new piece of legislation. A summary of the honorable Rep. Runyan’s new masterpiece can be checked out here:
http://www.govtrack.us/congress/bill.xpd?bill=h112-1646&tab=summary
fun fact: Our good friend Rep. Runyan (the guy who introduced this legislation) was an offensive lineman in the NFL for 15 years! So he obviously knows more about fisheries policy than those pesky “scientists”. I knew that name rang a bell for me…
http://en.wikipedia.org/wiki/Jon_Runyan
I very much enjoyed Dr. Smith’s essay on the topic of fisheries management, and the recent legislation regarding LAPPs. Like many of the other students, I am angered by the fact that Congress has apparently decided to dismantle what has been a very successful program. It is a common argument that environmental protection policies kill jobs, and with an economic downturn like we’re currently in, I don’t find it surprising that this argument has reared its head in this case. It is of course easy to sit here as a person who doesn’t make a living through fishing, and say that saving a few jobs isn’t worth the risk of damaging fisheries systems. But in this case, it is the truth. We simply cannot continue this race to fish and expect fish stocks to remain stable in the long term. Nor can we expect that jobs that are supposedly “saved” by getting rid of LAPPs will be around for a long period of time. As Dr. Smith said more than once, we need to address the problem, and not the symptoms. LAPPs are one successful tool for doing this. It is true that they may not be perfect in every case, but the legislation that will effectively get rid of LAPPs because they may reduce some jobs is simply a shortsighted and naive “solution” to the jobs problem.
I would say I learned a lot both from this insightful blog and the comments below because my knowledge about fisheries are inappreciable. The situation in the context that Rep. Runyan, who wrote HR 2772, tries hard to use slogan of “saving jobs of fisheries” to attract voters. US people did lose a lot of jobs during the past several years, they even lost Jobs couple days ago, but as the proverb says: hast makes waste, recovery takes time to digest the wastes recession left. In addition, the rising trend of fisheries should not be disturbed unless we have abundant proofs to do that. Without backing up from reliable scientific and statistical explanation, the bill is much like a political trick that serves Rep. Runyan to win the coming election by using “saving jobs” slogan.
The situation is quite the same in China, government and academic institute seldom talk to each other, which leads to decision makers put forward absurd policies and institute publishes useful results that no one is going to adopt. Besides, politicians in China even pursue certain kind of political achievements to favor their people in short time. This myopic behavior always brings about nullification of the new legislation and waste of time and money.
I also can not understand why this bill doesn’t have a clear definition of eligible fisherman. In my eyes, to carry out a new legislation, one needs first polish his words and well organize his/her logic. Unfortunately our dear Runyan failed to do it. I think maybe he didn’t do much research on fisherman at all. Here’s the quotation from Dr.Smith “In some fisheries I have researched, as much as half of the permitted vessels record minimal or no landings in some years. This means that if one of these fisheries were to transition to a catch share program, non-fishing permit holders would in all likelihood receive no initial allocations of quota. ” If only he had any idea about this fact, he would not have had a vague definition of eligible fisherman, because this definition is pretty important.
Due to the economic downtown, some might see the reasoning behind the creation of “Saving Fishing Jobs Act of 2011”, but we cannot ignore the fact that the passing of this bill will be the ultimate termination of fishing jobs. With HR2772’s lack of research, and plausibility, it will truly ruin the dwindling stocks that we have remaining in our oceans. I believe Rep Runyan, might have taken too many hits in his 15 year career and has “lost sight” of the real issue at hand. HR2772 will undo what the Magnuson-Stevens Fishery Conservation and Management Act has tried to fix, albeit not in the best way possible.
Additionally, in response to Dr. Smith’s last paragraph on the language of fee collection in HR2772, I believe that the true burden should be placed on the consumer, not the provider. HR2772’s language on fee collection seems to place the burden of the cost of the LAPP on the fishermen, and many believe that the burden should be placed on the fishermen, but with a drastic increase in population size, and increase in middle class in primary fish consuming countries, the demand for fish consumption has driven the need for fishermen to go out an exploit our fisheries. Increasing prices on fish at the consumer level will deter many from consuming this product. While other regulations will still need to be in play in terms of fishing quota, etc. an increase in fishing price will increase fishermen’s wages. Then they might not be as inclined to overfish our waters. This is completely hypothetical, but as the consumer has the overall choice on what they consume, they should be placed with the burden to consume that good.
HR 2772, in attempt to save fishing jobs, threatens to undo the recent LAPP development. By using market principles, the open access resource problem can be solved by allowing fishermen to trade individual fishing quotas. As long as the transaction costs are negligible, the market would reach an efficient point. Furthermore, these catch shares mean that fishermen would have an incentive to develop low cost technology rather than technology that would allow them to catch the greatest quantity of fish as compared to the competition. Like we see with Coase Theorem, once the property rights are well defined, each fisherman has the incentive to conserve and care for their property rather than race to consume the resource.
It seems that HR 2772 may provide more jobs in the short term but will not support jobs for the long term. By eliminating the race to fish, jobs can be year round rather than seasonal and fish populations will survive into the future. The implementation of LAPPs encourages a market which is more stable and reliable. (Of course, this assumes the government can properly regulate the LAPPs – it would be interesting to know which policy is more feasible in that sense)
LAPPS appears to be an effective program in addressing the cause of overfishing. However, are there also negative repercussions associated with it and if so, what are they? For example, our Environmental Law class discussed how trade of air pollutants can result in hot spots where pollutants are overwhelmingly concentrated. These hot spots are usually in low-income, minority communities and thus disproportionately exposing these populations to health harms associated with the pollutants. Are there similar environmental justice issues that result from a fisheries trade system like LAPPS?
While I agree with the general consensus that HR 2772 is a poorly-constructed bill and the action it proposes does not make sense economically for fishing communities in the long-term, I can’t help but recall conversations I’ve had with staff members at various non-profits on different sides of the catch shares issue. One consistent concern with Limited Access Privelege Programs employing ITQs has been their tendency to result in the consolidation of fisheries to a small number of large industry operators and the elimination or buying-out of the shares allocated to smaller fishing operations. This, in and of itself, is not necessarily a bad thing. However, what if the larger fishing operations, with the biggest boats and largest catches, are not necessarily the ones using the most sustainable fishing practices? What if these operations, because of their methods, have higher bycatch rates and cause greater damage to marine ecosystems than smaller operations did?
Don’t mistake me – I’m generally in favor of market-based solutions like ITQs, when implemented appropriately. But every fishery is different. Having a sustainable fishery is about more than ending overfishing of the target stock. It’s important that we consider not just the economic, but also the ecological consequences of LAPPs.
ITQs and LAPPs while sounding like a plausible solution have the unintended consequence of causing independently owned fisheries to be bought out by larger fishing conglomerates. “ITQs have promoted absentee ownership and quota leasing. Once vessel owners are gifted their initial quota, many subsequently retire or cease to be active fishermen. Instead of fishing, these ‘armchair fishermen’ earn income from the proceeds of quota lease fees.” (ecotrust, 2008)
http://ecotrust.ca/fisheries/cautionarytale
One of the other main reasons that fisheries are able to continue to fish while it is technically unprofitable is also due to the fact of government subsidies that are given to the fishing industry which allow them write off costs that they would normally incur (boat building, equipment repairs, etc. ). These subsidies allow larger companies to buy up larger shares of ITQs than other smaller companies.
http://na.oceana.org/sites/default/files/Bottom-Up_Re-estimation_Sumalia_2010.pdf
Government buy-back programs have been initiated in certain parts of the country to try to reduce the amount of boats that are on the water fishing; however, this method of fishing reduction has been met with opposition due to the large family tradition that runs within the fishing community, and that it encouraged further consolidation.
http://www.oczma.org/detail.php?item=53
The best solution to this problem is not market based but science based. Science-based catch limits are the best way to individually manage fisheries. Allowing the fishermen to also be apart of the observer process encourages transparency. Only when there is sound science within each individual fishery will overfishing be properly addressed.
I am in general consensus with my fish-loving friends here that HR 2772 is an overwhelming negative in the face of some slow but legitimate progress towards managing fisheries through LAPPs. Although it seems like fisheries managers are throwing the kitchen sink at the over-fishing problem in a try-anything approach to control stock depletion, I think the restoration of the Pacific Halibut fishery that Dr. Smith articulated provides solid proof that LAPPs can work in specific instances.
However, what strikes me the most about an issue like this is the lack of self-regulation by the fishing industry. I always assume (and maybe this is naive) that if the true experts in the fishing industry are the people who spend years of their lives out fishing for a living. Yet there seems to be irreconcilable differences in opinion about management strategies between fishermen, scientists, and, of course, NFL stars turned politicians. I think the cause of these differences is the financial stake in the issue that fishermen have, and the desperation they feel about the possibility of keeping their livelihood and income preserved. However, it often seems like the fishing industry’s attempts at maintaining their jobs and income is directly at odds with science. This is unfortunate, because unless both parties can get on the same page, no real progress towards sustaining fisheries stock will be made.
Nora, I enjoyed reading your response in regards to the need for property rights; thinking like an environmental economist. After reading Dr. Smith’s analysis, I thought to myself, “I do not seem to encounter such difficult and complex situations in my classes”. Rather, this is an example of how environmental problems extend beyond the simplified explanations commonly presented in theoretical environmental economic courses.
So, yes the Coase Theorem states that private bargaining in combination with clearly defined property rights will overcome negative externatilies. However, Keohane and Olmstead also mention the assumption of this theory: bargaining is easy and inexpensive, and that deals are easy to enforce. As environmentalists, we all know this is not the case for many environmental conservation sectors. In this case, it is costly for the U.S. Fish and Wildlife Services to keep track of every fishing permit issued, for scientists to determine the validity and efficacy of various fishing programs, and enforcing the actual quotas set by regulation. These barriers only scratch the surface of why we as a society have not come to an “efficient allocation”. I certainly do not have the answer, rather more questions arise after reading this article.
According to economic principles, overfishing definitely occurs if all fishermen are rational economic men, and that’s why government policies are needed to solve this problem. That the open access resource problem can be solved by allowing fishermen to trade individual fishing quotas seems to be proved both in terms of theory and in previous practice. However, HR 2772 threatens the achievements obtained in recent progress in developing LAPPs. Dr. Smith’s analysis of potential problems in HR 2772 reveals the negative influence might be caused to future fisheries, from which I have learned a lot and also have some thoughts about this issue.
I would like to say that its function of saving jobs is non-negligible, especially in current employment situation. In my opinion, smaller number of fishermen working year around may not definitely be better. Although the total income per year increases, parts of fishermen lose their jobs, which could be a social unstable factor. Although Pareto Optimality is almost irrealizable in practice, it does tell us everyone’s benefits should be taken into consideration. Although there may be some political factors, Rep Runyan did do something helpful and positive for the society.
However, I have to admit that there are critical defects in HR 2772 that could almost ruin the progress achieved in fisheries. Take the fee collection as an example, it is obvious irrational for charging fishermen for observer coverage. If the cost of applying LAPP is increased, according to Coase Theorem, the economic efficiency will be affected with high transaction costs, which means LAPP cannot work as well as it did. Fishermen do harvest a public resource for the individual benefits, but we will have no access to fresh fish unless catching fish by ourselves without them. Therefore, they deserve the payment from consumers for their labor. As a result, the benefits of fishermen should be protected during policy making.
Jessie, I completely agree.
In regard to a few large companies taking over smaller operations:
Science has unfortunately built a negative connotation within communities of working people, fishermen for example. Even with the best intentions for the planet, policy is usually unexplained, unwelcome and derogatory. Relatively small groups may work in a more sustainable way, provide for local consumers, and possess decades of knowledge and experience in the environment which they work.
There is no question that regulations need to be enforced. Natural resources have been depleted to a level that will be incredibly difficult to recover from. However, scientists should be working in cooperation with the people on the ground in these situations, to truly understand the context in which the regulations will be applied. If new legislation, like HR 2772, keeps dominating the management scheme, science will only become more and more negative and less and less abided by.
If it was up to me, I’d have no problem putting a stop to all fishing efforts immediately, but the people affected by these policies must be taken into consideration too. Their knowledge of the areas we are trying to protect is invaluable. It can provide insight that the science may have missed. And only with trust, will these communities accept new regulation, which makes everyone better off.
Even with the large share of CEM and EEP concentrators within the MEM program who focus on fisheries management, this was the first I’ve ever read or thought about the topic. I thus appreciate Dr. Smith’s concise description of the evolution of fisheries management policy, especially how the Limited Access Privilege Programs (LAPPs) established in the 2007 update of the Magnuson-Stevens Act. The implementation of LAPPs simultaneously solved the problems of overfishing and non-excludability in fisheries, which had threatened to destroy the long-term viability of the fishing industry. The first version of the Act had only tackled the overfishing problem by setting a limit on the amount of fish that could be extracted each year. This led to problems, however, as fishermen were encouraged to try and extract fish as fast as possible and thus led to a lot of economic waste, as the fast extraction of fish led to increasingly shorter fishing seasons. Once individual quotas were allocated amongst all fishermen under the 2007 update to the Act, this eliminated the problem of non-excludability associated with open-access resources, as one fisherman’s access to fish did not impede that of another.
The aspect I find most interesting about the LAPPs–especially as an Energy and Environment concentrator–is how it sets up a system of individually-allocated and tradable catch shares and how this system has many similarities with market-based pollutant abatement programs such as the SO2 cap-and-trade system set up in the early 1990s in the US and the CO2 cap-and-trade program that was recently implemented in the European Union. For both the catch limitation and emissions reduction programs, there is an annually-determined set total amount of fishing or emissions that is allowed by society. This total is divided up into individual allowances, which are then allocated to and can be traded amongst individual players within the industry based on their given market position, business forecasting, and other factors. There are differences between the two systems however, which are found in two primary areas. First, the end goals of the two systems are different, as catch shares are aimed at preventing the depletion of a resource, while cap-and-trade systems try to mitigate various negative externalities associated with processes that are vital to society. Second, the motivation behind the transfer of allowances between individual industry players is different, as fishermen might sell surplus allowances if they anticipate a weak market, while a power plant would sell surplus allowances if they have met their emissions abatement requirements. Market-based allowance trading in both cases works to minimize the detriment to society; however, only amongst fishermen is the trading of allowances based on market forces and not on one’s ability to minimize negative externalities. That being said, the parallels that exist between these two systems despite their different end goals only reiterates the viability of market-based trading schemes and the effective, equitable way in which they enforce environmental policy.
erratum: “how” in the fourth sentence down should read “in regards to”
(and by sentence, I mean line)
Dr. Smith concluded the four sections of the Bill and analyzed their
impacts on fisheries.The first Section of HR 2772 is “This Act may be cited
as the ‘Saving Fishing Jobs Act of 2011’.”The following three sections
which are ‘APPROVAL OF CERTAIN LIMITED ACCESS PRIVILEGE PROGRAMS’,
‘TERMINATION OF CERTAIN LIMITED ACCESS PRIVILEGE PROGRAMS’ and ‘FEES
RECOVERED FOR CERTAIN LIMITED ACCESS PRIVILEGE PROGRAMS’.This bill aims on
control the approval of certain LAPP.It tighten the prerequisite of
approval and make a bottom line to terminate any new LAPP.The fourth section collect a fee that should be “an amount sufficient to recover all costs of such program,including observer costs”.
However,I am not very clear about the points in Dr. Smith’s entry…
After I read the original bill and Smith’s impacts on the fisheries, I cannot catch the logical connetion between the reason and results.Maybe he assumed that the readers are familiar with this problem.
Here is my question:
1.What is the ecological infuence after enacting this bill?
2.Why blocking approvals or terminating new LAPP would harm the economic value for the fishery and the fishing community?
3.Why would HR 2772 reduce the numbers of year-long job by increasing part-time job?
4.Since the fee covers the observer costs in this bill,why they are funded otherwise with taxpayer dollars?
Could anyone give me a deliberate explaination in how the bill funcions rather than just the results?
I agree with the majority of the comments here that implementing HR 2772 is a large mistake due to its negative effects on LAPPs.This new law will be a large step in the wrong direction. As a rebuttal to Taylor’s argument. I mostly agree with H. Scott Gordon in “The Economic Theory of a Common-Property Resource: The Fishery” when he says we have enough biology, the economics needs to catch up.I say “mostly” agree because I think there can always be more scientific research, but economic understanding should take priority. So even though I come from a Marine Bio background I have to agree with Professor Orbach that we are managing the people not the fish, so our understanding of adjusting people is more important than our understanding of the fish populations.
The reason I think ITQs and other LAPPs are a step in the right direction is that many other regulatory laws are easily undermined. Fishermen know the trade, if you make various normal regulations (boat size, net size, season length, etc) they will find ways around these. When the fishery is in the form of ITQs it is the fishermen who bought the ITQs that will begin to monitor to make sure people are not cheating the system. Why spend public money on something you can have the private sector do on its own. Now admittedly some can take it a little too far like the almost mafia style lobster fishery in Maine, but as with everything it is a balancing act.
Another negative comment about ITQs that was made by a few was how ITQs lead to an accumulation of quotas by a few large corporations. Many various fisheries have solved this problem quite simply by limiting the number of permits any one person or corporation can have. An example of this is the spiny lobster fishery in Florida, no person/corporation can own more than 1.5% of the permits.
I am the first to admit any system does have flaws though, the biggest problem I see with ITQs is the inital allocation. As was talked about in class, if they are auctioned off (the most fair way to allocate in my opinion) it is really just a tax. Sadly other methods tend to lead to a great deal of corruption and favoritism. With the example in class of one senator getting extra pollution permits for his state. The more government has a say in allocation, the more corruption is likely to breed.
The other problem I see is people breaking the limits. It is easier to see in tradeable pollution permits that Marc brought up. Corporations that pollute without a permit there is often very little government monitoring and often the penalty cost is not high enough, so firms simply pay the fine. This leads to an excess amount of polluting beyond the initial amount agreed on. This could apply to a fishery if it was a large enough area and it was not possible for fisherman to easily monitor if others are cheating and overfishing.
After reading through the entire blog, I couldn’t help but wonder where the HR 2772 bill had originated from. For instance, is this truly what the year-round fishermen want? Is this a case of the government dividing full-time jobs into part-time jobs in order to “decrease” the unemployment rate? Regardless, I think a fishery collective action problem should be dealt with on the local level. Meaning the fishermen know the system (river, lake, ocean etc) better than any of the government officials, thus they should create it. From here, the locals should form a local institution that deals with punishing those who overfish. The local institution could be mandated or supported by the government, either way it gives the organization legitimacy. In dealing with the problem of who fishes where and when, punishment, and how to conduct surveillance, the locals would come up unique schemes because the fisheries are unique. There are examples of fisheries out there with low surveillance costs. For example if the fishery is x square miles, divide the area up have the fishermen rotate on a fare schedule. If someone violates and goes to the best fishing spot it would be easy to spot because someone else would be there already.
This is an interesting topic, although I do not know much about fishery. Dr. Smith’s essay gives me some new information in fishery. One point Dr. Smith made in order to contradict HR 2772 is about part-time job and full-time job. It seemed that Dr. Smith thought full-time job was better. However, in my view, part-time job is more flexible. And the labor market is so large that it will not become a big problem for the managers to find some “new” fishmen when they are needed. Meanwhile, what about the other five persons? Isn’t it unfair that half of the people lose their previous jobs as fishmen? In economics, efficiency and justice are the same important.
On the other hand, at the beginning of this blog Dr. Smith mentioned that the quota program was a great success in fisheries management. This makes me think of the carbon trade. It has turned out to be an effective way in fisheries management, maybe it can also be an effective idea in carbon emission management. In my view, it is a relatively better method compared to carbon tax to control the total carbon emission. Tax has many advantages; but it is just an economic constraint that increases firm’s cost. And it may fail to work if the firms find it still profitable after considering the tax cost. However, carbon quota program can be related to political regulation, which means firms may receive much stricter punishment if they emit more carbon than the quota amount. I hope there will be one day when quota is also called “success in carbon emission management.”
The first aspect of this post to catch my attention was the discussion of what it means to be an eligible fisherman. Do non-permit holders deserve an allocation of fishing quotas? It seems to me that the most accurate method to determine who is a fisherman–and thereby who deserves a fishing quota–would be to look at the permit holders who are actively fishing, and the quantity they catch. If there are a finite number of permits, giving permits to non-fishers will leave less for the active fishermen. If these non-permit holders are intermittent fishermen who fish every few years, they may sit on their permits for a long period of time. Although heterogeneity of marginal costs is important for the market to function, it is not useful to have fishermen who are neither using nor selling their quotas. It is better economically if less capable fishermen sell their quotas and exit the business. This viewpoint is particularly defensible if these fishermen have other sources of income, as intermittent fishermen must. On the other hand, if the non-permit fishing holders receive an allocation yet have no intention to fish, it seems they are cheating the system. How is this problem prevented? How do most such permit systems establish their quotas? Furthermore, what right do non-fishing permit holders have to block legislation? I would also be curious as to whether community members are consulted or involved in creating this sort of legislation.
A useful way to assess the current policy mechanism, and if it needs to be changed, might be to look at the value of the fishing quotas over time- it should rise as the fishery health improves. Is there any evidence that the current policy isn’t working, and new legislation–in this case HR 2772–is needed?
To play the devil’s advocate a bit….
ITQs/LAPPs have recently been NOAA’s promoted method as part of a push to use more market-based policy solutions. In some ways this mirrors our discussions about pollution. Cap-and-trade was successful with SO2 and now it’s the policymakers’ go-to for pollution abatement, regardless of whether it will work in the targeted industry (i.e, carbon). In the same way, Dr. Smith highlights the success of a LAPP in a certain fishery, and then NOAA made it the preferred management system for NMFS in most U.S. fisheries. But, LAPPs have some negative aspects, primarily the “privatization of a public good” in the view of many people. These catch shares have led to fewer people in the system and larger operators pushing out smaller fishermen. (I mean, “limited access privilege” is in the name). Even Dr. Smith’s scenario involved only having 5 fishermen in the fishery. Like in Jessie’s comment, to the small fishermen that have been pushed out of the industry, these systems are looked on with suspicion, and this is the catalyst for HR 2772.
If anything, this debate shows the need for a variety of policy tools for managing fisheries. These should include ITQs, aggregate catch limits, no-take zones, moratoriums, shortened fishing seasons, and (importantly in my opinion) limiting capacity and technology.
Honestly, though, when I looked up some other sides on HR 2772, I came across a quote from Sen. Scott Brown (MA) that “This bill is another indication of the growing consensus that the current catch share programs are killing jobs and putting fishermen out of work. We must be looking at all options to hold NOAA accountable for their actions and protect fishing jobs.” This language about protecting fishing jobs reminded me a lot of Europe’s Common Fisheries Policy. The EU has continually designed this policy dominated by political interests in “saving the small fisherman,” and the result has been overcapacity, collapsed fisheries, and a European trawling fleet overfishing in other countries’ territory. The truth is that humans are really good a catching fish. We will have to choose between saving jobs and saving fish.
T
This overfishing problem may shows one kind of market failure that is public good,no one owns the fish in the sea, fishermen lack incentives to restrain themselves in order to sustain the biological health of the resource and ultimately the long-term economic health of the fishing industry.So we need some incentives to encourage fisherman to control their catchment and avoid overfishing,and we need to address the essential problem that is exclusion.If we just set the catching limits,fishermen have incentives to build more and bigger vessels to catch fish before their competitors which does not solve the problem of exclusion ,but the new individually transferable quota program that set the total catch based on biological assessment and divided the catch between resource users into shares that could be traded is proved to be effective.It remind me of the pollution abatement allocation problem in which trade happens between different factories to equate the marginal abatement costs.However,we are sad about the new legislation which threaten such a good way of fishery management.
Following up on Abby’s post, as a former employee of NOAA’s National Marine Fisheries Service (NMFS), I’d like to share a few perspectives I came across while I was working for NMFS as a GIS Analyst in California.
As Abby pointed out, Dr. Lubchenco, the head of NOAA (which oversees NMFS), has promoted catch shares as the go-to tool for managing fisheries. In speaking with my economist colleagues at NMFS, they have pointed out to me numerous times, that viewing catch shares as a cure-all for every fishery is not necessarily sound policy. I can understand Dr. Lubchenco’s desire to keep things simple, however it is worth noting that not all the economists or scientists within NOAA agree 100% with the stated policy surrounding catch shares.
Regarding the comments a few people have made about fishermen and women not caring about depleting the resource that provides their livelihood, I am happy to report that at least in some California fisheries, fishermen and women do recognize the effect their fishing practices have on the environment and therefore their livelihood, and are working together to preserve their way of life. This is from a colleague who routinely goes out on boats as an observer. It is true that I have heard many stories about fishermen being bull-headed, however it seems that the difference in attitudes on the West Coast, at least, stems from the level of depletion of the resource. In California where the ratio of fishermen/women to fish is large (i.e. not as many fish in the ocean per fisherman/woman), people are willing to cooperate to come up with a workable solution. In Alaska where there are many more fish available to fish per person going fishing and the fisheries are not nearly as threatened as in California, the attitudes are much less cooperative. (This, again from the colleague who as worked directly with many fishermen/women).
The take home message for me from these observations is similar to Abby’s and Leland’s: since there are distinct differences between fisheries, a one-size fits all policy solution is not likely to work across all fisheries so a tailored approach for each fishery is likely to be best, and what a successful approach might be will invariably depend on the attitudes of the people involved, be they fishermen or women, NOAA administrators, or politicians.
I found this post really interesting as it poses a similar problem and suggested solution as the cap and trade/ tax argument with pollution we’ve discussed in class.
It makes a lot of sense to put a cap on fishing, or establish quotas, however I echo Abby’s concern and wonder how these permits are allocated. Would smaller scale fishermen be effectively locked out by larger operations? If so, what can be revised in the LAPP programs to remedy this? In addition to the economic argument, ensuring smaller scale fishermen are not negatively affected could provide another counter argument to HR 2772 and the loss of jobs the bill claims.
That being said, LAPP programs seem to be working much more effectively than others. A study conducted in 2008 by Costello et al found that ITQs have helped the collapse of fisheries and aided their restoration. So we should be pushing these studies and those of Dr. Smiths and in turn, holding accountable the 3 politicians who have introduced HR2772 by asking for scientific and economic analyses that supports their bill.
I very much enjoyed Dr. Smith’s essay on discussion fishing problem and am a little impressed by this new legislation project that regulate fisheries problems. It is a new way intended to end the overfishing. Under the original Magnuson-Stevens Fishery Conservation and Management Act, restrictions in absolute quantity were used to limit overfishing which will worsen the situation causing vicious circle. The new information helps me understand the problems and think about it.
From my point of view, based on research data and survey, Dr Smith’s view about HR2772 is not that convincing. The legislation is known to regulate fisheries problems thus proper comparison is necessary that could persuade us to think about the new system. From the article HR2772 is intended to save fishing jobs, while LAPPs are intended to save the environment. It is very important for Dr Smith provide some specific data like how many jobs will be saved once HR2772 is in operation and what will happen to the fishing environment. His point about “Provisions in the bill are likely to lead to unintended consequences that could exacerbate economic hardship in fishing communities rather than prevent hardships. And it could even eliminate fishing jobs rather than save them” is very deep and attractive however it is too abstractive and if it is not for professional audience it is hard to catch up with. In summary for the long run fishing economics will depress and thus fishing jobs may cause big depression. If let me express this point I will add data such as increasing of the total economical profits and decreasing of the jobs or decreasing of the total economical profits and increasing of the jobs, in another word I will add the marginal cost from economics view.
I lived in a big city near the sea in China, which has the similar situation that regulates the fishing problem. Fishermen and local government are always considering how to solve the dilemma that increase fishing jobs sacrificing the environment in some extents or limit the fishing and protect the environment. They came up with a very useful method that could help solve the fishier problem. Chinese government limit fishing during the proliferation and give some bonus to the fishermen help them solve the financial problem. This way help both fishermen and environmental economics and in the long run it would lead to benefit.
Similar to fishing problems farming problems have the same situation and it is very hard to solve these totally. So I think it is better for everyone raise conscious. Reading Dr Smith’s article, it not only helps us think but also lead us stick together to give contribution.
Since fisheries are open-access resources, the resources will be soon used up without government intervention. Even though the government tries to control access with quantity limitation, people would compete with one another for a greater share of the resources stocks as Mr. Smith already mentioned in the blog. Even the government shorten catching season or setup quotas, people use bigger ships and trawls to catch more fishes in shorten time. And the new legislation to figure the previous problems of quantity based restrictions, it seems not fair to control access of fisheries resources because it is complicated to define an eligible fisherman and to terminate existing permit (LAPP). I think that the new regulation would bring inequity because some poor fisherman might not have any benefits from new regulation. They might not have a permit, work as a part-time job and not entitle to have an eligible fisherman.
However I just came up with a question why the government tries to restrict resources by setting quantity limitation or restriction of person who access resources. Why do they think more creative way to use open-access resources? I think new technology to breed more fishes or to promote growth of fishes is one of way to share more resources. Actually it is popular in the area of the agriculture to increase production by technological development. Recently the production of corn, rice, and beans are doubled. I think the investment to promote technology for fisheries management should help to solve problems of limited fisheries resources.
I have to say that Professor Smith’s article is so instructive and provides me with in-depth information about fisheries problems. As fishery is a kind of open access resource, fishermen couldn’t be excluded from the fishing, everyone wants to maximize his profits. As a result, the average revenue is reduced, the total economic benefits for society are cut down, and the fish stock for future is diminished. As Professor Smith said ‘the inability to exclude users’ is the root cause of overfishing. The LAPP seems to make progress in addressing this problem. However, the new HR2772 bill may run a risk of undoing the progress we have. It could be considered as a product came out under the pressure of increasing unemployment, which appears to ‘save jobs’ for fishermen. While solving the exclusion problem, LAPP will lead to lost jobs. But there is never a project that doesn’t leave at least one person worse off. And the loss of jobs is just transitory, and it is the price we need to pay for the changes toward the right direction. Moreover, LAPP is proved to be effective in protecting healthy fish stocks, generating economic benefits for the fishing sector, and improving fishermen’s welfare. For long-term benefits, we should consolidate current progress and bear the transitional costs, rather than undermine its effects.
I found the Dr. Smith’s blog post on the HR 2772 fisheries legislation to be both interesting and rather unnerving. I do not know much about prior fishing legislation, but the summary given in the post along with what we have recently learned about open-access resources serve as an passable foundation for a comment such as this.
It seems to me that the replacement of the aggregate catch system with the Limited Access Privilege Programs (LAPPs) was a good shift that has allowed for a more stable and consistent market and more full-time jobs. Smith makes a good point that, although the HR 2772 legislation may seem as if it is creating more fishing jobs, the jobs are less stable, and so this legislation seems to be a bit too short-term and imprudent in thought. It seems to me that this legislation should not be pushed through, and more emphasis should be placed on LAPP-type laws that provide for healthy, competitive market conditions.