Fishing for Better Policy An analysis of how ‘catch shares’ increase the value of federally-managed fisheries, in turn creating greater value for the public. Ed Puccerella Adjunct Fellow August 16, 2012 Executive Summary Federal fisheries management is stricken with a failure of imagination, with very real consequences. When regulators are chasing after fishermen in an attempt to micromanage their lives and businesses, the problem of overfishing worsens significantly. With the economy currently stagnant at the same time food prices are rising, an inefficiently- managed command and control bureaucracy is a needless burden crying out for reform. A promising solution is an innovative framework known as “catch shares” that could revitalize traditional fisheries management. Catch shares refer to fishermen gaining ownership of actual shares of a season’s catch. While regulators still set the overall tonnage of fish to be caught, fishermen have property rights over a percentage of the total catch. These shares, also called Individual Fishing Quotas, can be sold, bought, or leased. This catch shares framework invests the fishermen in protection and management of the fishing resource. While they have the ability to sell their shares, that fixed percentage is something they own in perpetuity. A 5% quota this year is 5% next year, and the year after that, and the year after that. This means that the fishermen are enlisted in the cause of not overfishing and potentially depleting the stock. Congress has the opportunity to help catch shares along in instructions given to the federal fisheries coordinator, the National Oceanic and Atmospheric Administration, an agency within the Department of Commerce.
Transcript
Fishing for Better Policy An analysis of how ‘catch shares’ increase the value of federally-managed
fisheries, in turn creating greater value for the public.
Ed Puccerella
Adjunct Fellow
August 16, 2012
Executive Summary
Federal fisheries management is stricken with a failure of imagination, with very real
consequences. When regulators are chasing after fishermen in an attempt to micromanage their
lives and businesses, the problem of overfishing worsens significantly.
With the economy currently stagnant at the same time food prices are rising, an inefficiently-
managed command and control bureaucracy is a needless burden crying out for reform.
A promising solution is an innovative framework known as “catch shares” that could revitalize
traditional fisheries management.
Catch shares refer to fishermen gaining ownership of actual shares of a season’s catch. While
regulators still set the overall tonnage of fish to be caught, fishermen have property rights over a
percentage of the total catch. These shares, also called Individual Fishing Quotas, can be sold,
bought, or leased.
This catch shares framework invests the fishermen in protection and management of the fishing
resource. While they have the ability to sell their shares, that fixed percentage is something they
own in perpetuity. A 5% quota this year is 5% next year, and the year after that, and the year
after that. This means that the fishermen are enlisted in the cause of not overfishing and
potentially depleting the stock.
Congress has the opportunity to help catch shares along in instructions given to the federal
fisheries coordinator, the National Oceanic and Atmospheric Administration, an agency within
the Department of Commerce.
“Fishing for Better Policy,” Ed Puccerella, August 16, 2012
2
Introduction
Nobel Prize winning economist Milton Friedman is credited with saying “If you put the federal
government in charge of the Sahara Desert, in 5 years there'd be a shortage of sand.” Considering
the federal government has long had its hand in managing our nation’s fishing industry - and
since 1975 has taken a commanding role in managing our coastal fishing waters - I guess we
should consider ourselves lucky that we can still get a filet-of-fish at McDonald’s without taking
out a long-term bank loan.
Anytime you distort market forces and increase the government’s responsibility to regulate, it’s
only a matter of time before what seemed like a perfectly simple issue becomes a mess that the
taxpayer ends up getting stuck paying for. Let’s hope our national fisheries policies can be
addressed before the taxpayer is left holding the bill for another federal bureaucratic mistake.
I’m going to let you in on a little secret. Members of Congress come in countless flavors, but
they all share a specific trait. Each one wants to be considered a wise and thoughtful voice.
While they may win praise for deft political maneuvering or achievement in other areas, it’s on
public policy that a congressman or senator can most directly seem wise.
Legacy Considerations
An earmark may get you a highway or building named after you, but when a public servant
changes the direction of long-term policy and thinking, they move to a different level, one where
his or her name often
becomes known beyond
their time in the
legislative branch or
sometimes long past
their time on earth. Do
you or do people close
to you have Roth IRAs?
Sen. Bill Roth of
Delaware may have
been defeated for
reelection in 2000 and
passed away in 2003,
but his policy
contribution can still be
felt today, especially if
you happen to be
contributing to a Roth
individual retirement
Figure 1
Every constituent buys food, but this chart suggests which
members should be most concerned with getting this policy right.
“Fishing for Better Policy,” Ed Puccerella, August 16, 2012
3
account and enjoying the tax benefits.
This is logical enough, since effecting policy is the job members of Congress are actually hired
to do by the public. But how do congressmen actually get smart on policy, particularly on the
more abstruse issues?
The purpose of this paper is to provide education applicable in a congressional setting; with any
luck, this will provide some context that can help. The topic is an issue – federal fisheries
management – that is increasing in importance not just for the economies of coastal areas and
other areas directly affected by the fishing industry, but also for the broader economy.
With the explosive growth in seafood consumption in recent decades, coupled with rising food
prices in recent years due to corn ethanol usage and this year’s drought crisis, a potent cocktail is
brewing. The outmoded nature of federal oversight of fisheries is a drag on the economy that
cries out for attention. Current fisheries management is bad for local communities, bad for
fishermen, bad for the US economy, bad for those of us who have the occasional fish-n-chips,
and it’s even bad for the fish.
To highlight the relevance of seafood consumption, we note some data from the federal fisheries
regulator, the National Oceanic and Atmospheric Administration. Even as the U.S. population
rose 37% from 1980 to 2010, per capita annual seafood consumption rose 26% (from 12.5 lbs
annually to 15.8 lbs) – that’s a substantial synergy. This essentially means an increase in total
seafood consumption by 73%, 2.82 billion lbs to 4.87 billion lbs.1
Federal fisheries management, to put it bluntly, is among the most parochial of issues. Elected
officials representing areas where fishing is not a substantial portion of the economy typically
don’t know or care how the industry is regulated. On the other hand, officials where fishing is a
major part of the economy – or simply a major part of that official’s personal background – tend
to be so close to the issue they have difficulty in understanding the shortcomings of the current
regulatory regime.
In other words, fisheries management is an area where a little bit of due diligence can put a
member of Congress substantially ahead of his or her colleagues, since the average level of
understanding of the issue is low. And it could be an issue ready to pop into prominence.
A Rock and a Hard Place
Much of federal fisheries management is caught in a vicious cycle of centralized bureaucratic
tail-chasing. Fishing is essential to local economies and to the food supply, so commercial
fishing must be allowed. However, the arms race between fisheries regulators and fishermen, in
most cases, is actually exacerbating overfishing and declining fish stocks.
One example of an afflicted area is coastal North Carolina. A report from the John Locke
Foundation summarizes:
“Fishing for Better Policy,” Ed Puccerella, August 16, 2012
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The N.C. Division of Marine Fisheries’ 2011 Stock Status Report lists 12 groups of fish
as viable or recovering, 13 groups as stocks for which there are concerns, and seven that
are depleted. Statuses for another seven stocks are unknown. While red drum and
monkfish are considered to be recovering stocks, overfished stocks include southern
flounder, snowy grouper, red porgy, red snapper, red grouper, spotted seatrout, and
several species of shark. Landings of shad, spot, and weakfish were at very low levels.
Harvest of river herring in the Albemarle Sound was prohibited, the bay scallion season
wasn’t opened in 2011, and possession of Atlantic sturgeon was banned.2
Despite the unfolding mess, weakening or abolishing the regulators is not a feasible solution, due
to what ecologist Garret Hardin dubbed the “tragedy of the commons.”3 When a resource, in this
case the fishing grounds, are considered open to all – held in “common” – the result is a mad
dash to grab up as much of the resource as humanly possible. This results in the eventual
exhaustion of the resource – the “tragedy.”
In other words, both regulation and lack of regulation results in overfishing. Does that mean
we’re doomed? No, it does not. We need to unleash the power of the free market and private
property rights. What’s needed is simply a new paradigm.
Light Bulb: Catch Shares
The light bulb here is a concept known as “catch shares.” It changes the frame of fisheries
management in a way that either eliminates or substantially reduces the threat of overfishing.
The core concept is that if fishermen themselves have an ownership stake in the fishing grounds,
they will manage it more judiciously than a government agency working at cross purposes from
a group of individual fishermen racing each other to the fish.
Fishermen under “catch shares” are assigned individual fishing quotas on a one-time basis. In
some jurisdictions, regulators would assess which fishermen had met a certain threshold over
several previous years. From there, fishermen are assigned quotas. These quotas can then be
sold, bought, leased, or borrowed like any other commodity. Fishermen in a given region become
holders of a right to fish a certain amount of that season’s haul, and that amount constitutes a
property right, protected under law. This gives fishermen a stake in the management and
protection of the natural resources. Rather than racing for whatever share they can grab, they
own their own quota, which they’re responsible for harvesting.
A Dangerous Business
Commercial fishing is a dangerous business. According to the CDC:
Commercial fishing is one of the most dangerous occupations in the United States. Many
commercial fishing operations are characterized by hazardous working conditions,
strenuous labor, long work hours and harsh weather. During 2000-2010, an annual
“Fishing for Better Policy,” Ed Puccerella, August 16, 2012
5
average of 46 deaths occurred (124 deaths per 100,000 workers), compared with an
average of 5,466 deaths (4 per 100,000 workers) among all U.S. workers4
Knowing what a dangerous business commercial fishing is under the best circumstances, the
federal government’s current fisheries management policies have often added stress to an already
hazardous situation.
For many fisheries, the current federally-managed system negatively impacts fisherman’s lives,
local communities’ economy and the fish resources. The limited fishing seasons that often cause
fishermen to race against the clock to make enough profit to maintain their livelihoods is a result
of big government command and control, distorting private property rights and market forces.
This literally means that fishermen will disregard hazardous weather or other factors that would
typically counsel delay, if they are in open season. Under catchshares, fishing seasons can be
much broader, giving greater latitude to safe fishing conditions.
However, by making fishermen
shareholders to harness property
rights, fishermen can be motivated
by greater profitability. The value of
the fisheries increases and the public
benefits from both a better-
maintained resource and one that
brings in more revenue to local
communities.
In the “tragedy of the commons,”5
6 no one entity has property right to the resource (fish). Thus,
fishermen act for their own short-term economic interest, which injures the long-term interest of
everyone involved. It’s a similar situation to the way the buffalo hunters of the old west hunted
the buffalo to near-extinction, thus also ending their own livelihoods.
Fishermen under the
current “race to the
fish” system in place
across most of the
United States don’t
have any assurance that
they’ll be allowed
access to the resource
that they rely on for
their livelihood in the
future. They don’t have
any incentive to
manage the resource for
any longer-term gains
and all of their peers
and the government are
“[Catch shares] has been a phenomenal
success for the fish, and when you take
care of the fish, you take care of the
fishermen” – Gulf of Mexico fisherman
David Walkerv
Figure 2
Geographical overlay of NOAA’s current catch
shares programs
“Fishing for Better Policy,” Ed Puccerella, August 16, 2012
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telling them to get what they can get now and do it as soon as possible.
One doesn’t need a PhD in economics to see how this is a bad situation with a system that seems
to be reinforcing bad decisions.
The Current System...and a Little History
In 1966, Congress enacted P.L. 89-454, “The Marine Resources and Engineering Development
Act,” creating the Commission on Marine Science, Engineering and Resources. They were given
a broad charter: "develop, encourage, and maintain a coordinated, comprehensive, and long-
range national program in marine science for the benefit of mankind, to assist in protection of
health and property, enhancement of commerce, transportation, and national security,
rehabilitation of our commercial fisheries, and increased utilization of these and other
resources."7 The commission was chaired by Julius A. Stratton, a former president of MIT.
Three years later, in 1969, the Stratton Commission published Our Nation and the Sea: A Plan
for National Action, suggesting the need for Congress to act and suggesting the creation of the
National Oceanic and Atmospheric Administration (NOAA), which was eventually done under
the aegis of the Department of Commerce. The report led to the passage of the Fishery
Conservation and Management Act of 1976. The law is more commonly known as the
Magnuson-Stevens Act, named for then-Sens. Warren Magnuson (D-WA) and Ted Stevens (R-
AK). The law was designed to protect U.S. waters from foreign fleets and is the basis for much
of the commercial fishery laws we have today.
The Magnuson-Stevens Act was amended in 1996 and reauthorized in 2006. Since 1976, the
coastal fishing management in the U.S. has been a command-and-control affair where targets are
put in place by the NOAA.
It’s irrelevant how well-intentioned Washington bureaucrats may be towards fishermen and local
fishing communities. Central planning simply does not work as effectively as letting those
fishermen and local fishing communities, who spend their lives on the water, take an active role
in the management of their local resources. It’s not much of a stretch to see this kind of
command-and-control method hearken back to the five-year plans of the Soviet Union.
NOAA has set fishing limits by estimating what the given fish population is. Then a fishing free-
for-all takes place until the government decides that the designated limit has been caught. For
some species this has meant the fishing season has been shortened to only a few hours and some
seasons have been suspended entirely.
In addition to limiting the length of the fishing season, NOAA has tried a variety of other
restrictions to prevent overfishing. These include regulating access to fisheries, boat size, fishing
methods, types of fishing gear, how the fish are caught and fish size.
It’s not clear if the fish themselves care if a big boat or a small boat is catching them, or if they
object more strenuously to being caught on a line or a net. The command-and-control method
“Fishing for Better Policy,” Ed Puccerella, August 16, 2012
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used by NOAA uses all these restrictions and more to effect the outcome, in a Rube Goldberg
attempt to fulfill its mandate: control of our fisheries.
NOAA’s own description of its role:
NOAA's National Marine Fisheries Service is the federal agency, a division of the
Department of Commerce, responsible for the stewardship of the nation's living marine
resources and their habitat. NOAA's National Marine Fisheries Service is responsible for
the management, conservation and protection of living marine resources within the
United States' Exclusive Economic Zone (water three to 200 mile offshore).
Using the tools provided by the Magnuson-Stevens Act, NOAA's National Marine
Fisheries Service assesses and predicts the status of fish stocks, ensures compliance with
fisheries regulations and works to reduce wasteful fishing practices. Under the Marine
Mammal Protection Act and the Endangered Species Act, NOAA's National Marine
Fisheries Service recovers protected marine species (i.e. whales, turtles) without
unnecessarily impeding economic and recreational opportunities.
With the help of the six regional offices and eight councils, NOAA's National Marine
Fisheries Service is able to work with communities on fishery management issues.
NOAA's National Marine Fisheries Service works to promote sustainable fisheries and
to prevent lost economic potential associated with overfishing, declining species and
degraded habitats. NOAA's National Marine Fisheries Service strives to balance
competing public needs. [emphasis added]
Note that while NOAA is a division of the Department of Commerce, the emphasis on NOAA’s
mission is conservation and other environmental goals. These ends may be laudable on their
own, but they ought to come secondary to the needs of an industry that supplies a substantial part
of the global food supply.
Catch Shares...Unleashing the Power of the Market and Property Rights
Thankfully NOAA has started to acknowledge the limitations of the command and control
model, thanks in part to the 2006 reauthorization of the Magnuson-Stevens Act. By allowing the
power of market forces into the equation, fishermen are able to use their own judgment to help
manage the resources of the sea in the most beneficial way for society. From NOAA’s Office of
Sustainable Fisheries page on catch shares:
"Catch shares" is a general term used in several fisheries management strategies, which
include Limited Access Privilege Programs (LAPP) and individual fishing quotas, that
dedicate a secure share of fish to individual fishermen, cooperatives or fishing
communities for their exclusive use. The first catch share program in the U.S. was
implemented in 1990 in the Mid-Atlantic Surf Clam and Ocean Quahog Fishery. Catch
“Fishing for Better Policy,” Ed Puccerella, August 16, 2012
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share programs are currently used in 15 fisheries managed by six regional fishery
management councils, with additional programs in development.
In the United States and world-wide, catch shares are helping to eliminate overfishing
and achieve annual catch limits, produce more fish at lower costs, improve
fishermen’s safety and profits, and reduce the negative biological and economic
effects of regulated fisheries that don't use catch share programs...
…Catch share programs are but one management option Councils can choose to meet
their management objectives. Catch shares are not required by the Policy or appropriate
for every fishery. NOAA Fisheries Service will provide technical and administrative
support to Councils and stakeholders wishing to consider, design and/or implement a
catch share program for their fishery.8 [emphasis added]
The middle paragraph makes the most interesting point, which is that catch shares help ease the
pressure on fisheries and even stocks within the same fishery that are still stuck on a central
planning model.
Congressional Action
The annual budget and appropriations cycle, as with so many other issues, is where this battle
will be waged in Congress. Congress has already agreed to a continuing resolution (CR) for the
first half of Fiscal Year 2013, which runs through March 31 of next year. Because of this, there
will be several opportunities in quick succession for members of Congress to wrestle over
fisheries management.
The first will be the resolution of the balance of FY13. That presumably will happen in March or
April of next year, either before the March 31 deadline or in April after a brief extension. The
next issue will be the budget for FY14, which will likely be debated in April, although a
contentious resolution of FY13 spending could push that back by a month or more. Should the
Senate pass a budget next year (it hasn’t since 2009), its consideration could also drag on into
May, and reconciliation between the two houses could go even later.
The annual appropriations process also bears watching. NOAA is funded within the Commerce-
Justice-Science appropriations bill, one of twelve that Congress in theory should agree on
annually to fund the government. In reality, we all know Congress typically waits until the end of
the year and often just decides to roll most or all of the measures into an “omnibus” bill. But
NOAA funding could be seen as a place to either limit or expand the use of catch shares.
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Given the debt crisis we face, the looming sequestration and the every uncertain appropriation
process, I would suggest that those who study catch shares may find themselves with the
proverbial ace in their sleeve when the upcoming negotiations take place. The ability to allow
Americans opportunity and access to increased private property rights and free markets has
always help to increase the size of the pie. So with catch shares increased value of fishing stock,
fishermen and fishing economies also lends itself to increased revenue to the federal government
or as has often been said before a rising tide lifts all boats…even those of the tax man.
And I would be remiss as a former committee staffer on an authorizing committee to not at least
mention the opportunities that the authorizing committees have in encouraging the use of catch
shares. It only takes one member with a good idea to introduce a bill that could help change the
way in which we manage our fisheries.
Cap and Tra – Duh?
Some members of Congress have remained wary of catch shares. In a misguided attachment to
traditional fisheries management, some have criticized catch shares as being a “cap and trade”
scheme of government regulation. These critics are hoping that the floundering effort to impose
an unpopular carbon trading scheme on the U.S. economy will taint the catch shares concept
simply by applying the same label to it.
It’s a silly critique, for two reasons. Not because it’s not a cap – under any scheme, the regulator
does set seasonal targets. But do these critics really mean to argue that there should be no fishing
seasons, no overall catch limits, and all fishermen allowed to fish in the common waters to the
extent they choose? This would seem to guarantee that fisheries would be fished out within a few
seasons – the modern technology available to fishermen would see to that. Or should I just say
remember the wild buffalo, driven almost to extinction by mismanagement.
The second obvious problem with the analogy is the question of value. Seafood is a tangible
product that people are willing to pay money for. Regardless of the economic regime
surrounding consumers and fishermen, people want their fish and chips and will pay money to
get them. Carbon trading credits, meanwhile, are not tangible, and there is no demand for them
that isn’t artificially mandated by the government.
So regardless of how you feel about eating fish - I prefer mine deep fried - please don’t fall for
the idea that any free-market, property-rights-based plan for dealing with our fisheries has
anything to do with the “created markets” that have been set up and suggested under “cap and
trade” schemes.
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Conclusion
Not every public policy issue owns the airwaves on a regular basis like taxes or national security.
Some issues come and go almost without warning. They may benefit one political party
dependably for decades at a time before shifting harshly in reverse.
In the event of federal fisheries management, a spike in prominence would hardly be without
warning. A stagnant economy with food prices on the rise can’t afford to pass up opportunities to
fix the supply chain. In the case of the fisheries, a huge opportunity exists to shore up a major
inefficiency in the regulatory regime. Members of Congress or their aides who take the time to
get spun up on this issue early can reap the benefits when the crisis strikes. These benefits could
be both political and altruistic in nature – a win-win.
