When Rationalization Programs Leave Small Fishery-Dependent Communities Out, Management Structures May Offer a Way Back In Lewis E. Queirolo, Ph.D. Senior Regional Economist Office of the Regional Administrator Alaska Region MARE Conference: People and the Sea VIII Amsterdam, The Netherlands 24 June - 26 June 2015

Social Welfare, Managing the Marine Fisheries Commons The “ills” of open-access fishery management – Expansion of capacity, effort, technology stuffing – All resource rents dissipated – Yields and seasons are compressed – More gear is set than can be fished (ghost fishing) – High-risk incentives lead to loss of life and property – Fish stocks suffer – Product quality, price, and supply inflict consumer losses

Constructs of Welfare Economics and Social Utility Maximization Welfare economics is a ‘normative’ analytic inquiry of individual utility and social policy. It aims to maximize total utility by determining optimal resource allocation. Vilfredo Pareto; “For any initial social state, if a change from that state can be made that results in (at least) one individual being made better off, without making anyone worse off, that change will result in a welfare improvement.” Kaldor-Hicks; “So long as those that ‘gain’ from a redistribution COULD fully compensate losers, making them indifferent to the change, there is a social welfare gain, even though no compensation is ACTUALLY made.

Rationalization A strategy for managing the fisheries commons Necessarily engenders exclusivity; Economic and operational efficiencies cannot be relied upon, and returns to longer- term investment cannot be assured without enforceable entitlement; Initial efforts demonstrated little interest in incorporating compensation for those excluded; Identified ‘impacted economic agents’ narrowly Divide the Economic Pie …

Longline Halibut and Sablefish IFQ ‘One-PIE solution’

American Fisheries Act Bering Sea Pollock ‘Two-PIE solution’ U.S. Department of Commerce | National Oceanic and Atmospheric Administration | NOAA Fisheries

Bering Sea - Aleutian Crab ‘Three-PIE solution’ U.S. Department of Commerce | National Oceanic and Atmospheric Administration | NOAA Fisheries

Bering Sea Red King Crab U.S. Department of Commerce | National Oceanic and Atmospheric Administration | NOAA Fisheries

Communities Awarded ROFR U.S. Department of Commerce | National Oceanic and Atmospheric Administration | NOAA Fisheries Akutan (CDQ) APICDA False Pass (CDQ) APICDA St. George (CDQ) APICDA St. Paul (CDQ) CBSFA Kodiak (non-CDQ) Kodiak Fisheries Development Association King Cove (non-CDQ) City of King Cove and Aleutia Dutch Harbor (non-CDQ) Unalaska Crab, Inc. Port Moller (non-CDQ) Aleutia Communities with a history of crab processing and the associated ECC entity Source:

Dutch Harbor King Cove U.S. Department of Commerce | National Oceanic and Atmospheric Administration | NOAA Fisheries

Akutan U.S. Department of Commerce | National Oceanic and Atmospheric Administration | NOAA Fisheries | Page 11 Cold Bay

Saint Paul U.S. Department of Commerce | National Oceanic and Atmospheric Administration | NOAA Fisheries | Page 12 Saint George

Kodiak U.S. Department of Commerce | National Oceanic and Atmospheric Administration | NOAA Fisheries False Pass Port Moller False Pass Port Moller

Right of First Refusal Legally recognizes a community’s economic interest in perpetuating historical participation in ‘crab’ fisheries, providing authority to intervene in a sale of PQS that originated in that community … ROFR promulgated by private contract and enforceable through civil courts system, removing Agency oversight … Holder of ROFR to perform under terms and conditions of subject PQS sales contract … Legally recognizes a community’s economic interest in perpetuating historical participation in ‘crab’ fisheries, providing authority to intervene in a sale of PQS that originated in that community … ROFR promulgated by private contract and enforceable through civil courts system, removing Agency oversight … Holder of ROFR to perform under terms and conditions of subject PQS sales contract … U.S. Department of Commerce | National Oceanic and Atmospheric Administration | NOAA Fisheries

Right of First Refusal - Revisited Legally recognizes a community’s economic interest in perpetuating historical participation in ‘crab’ fisheries and the authority to intervene in a sale of PQS that originated in that community. But the ROFR should not simply lapse following a ‘time- certain’ nor due to inability or lack of willingness to intervene… ROFR contracts are enforceable through the civil courts system, removing Agency oversight. But reporting data that allows for monitoring and confirmation must be made mandatory… Holder of ROFR shall perform under terms and conditions of subject PQS sales contract … But sale assets will be negotiated, limited, and relevant … and time for ‘notice’ and ‘perform’ will be extended. Legally recognizes a community’s economic interest in perpetuating historical participation in ‘crab’ fisheries and the authority to intervene in a sale of PQS that originated in that community. But the ROFR should not simply lapse following a ‘time- certain’ nor due to inability or lack of willingness to intervene… ROFR contracts are enforceable through the civil courts system, removing Agency oversight. But reporting data that allows for monitoring and confirmation must be made mandatory… Holder of ROFR shall perform under terms and conditions of subject PQS sales contract … But sale assets will be negotiated, limited, and relevant … and time for ‘notice’ and ‘perform’ will be extended. U.S. Department of Commerce | National Oceanic and Atmospheric Administration | NOAA Fisheries

Evolving Right of First Refusal U.S. Department of Commerce | National Oceanic and Atmospheric Administration | NOAA Fisheries Consolidation of PQS may continue Rights holding communities may exit or enter fisheries Crab Stocks may move, grow, contract Regional delivery mandates may require reconsideration Demand, markets, technology may change CLEARLY A WORK IN PROGRESS Consolidation of PQS may continue Rights holding communities may exit or enter fisheries Crab Stocks may move, grow, contract Regional delivery mandates may require reconsideration Demand, markets, technology may change CLEARLY A WORK IN PROGRESS

Thank You… The concepts and opinions expressed are my own, and do not necessarily reflect those of the National Marine Fisheries Service, NOAA, or the U.S. Department of Commerce

Co U.S. Department of Commerce | National Oceanic and Atmospheric Administration | NOAA Fisheries Communities Holding ROFR

BBBBBB U.S. Department of Commerce | National Oceanic and Atmospheric Administration | NOAA Fisheries Nine crab fisheries are managed under the CR Program: Bristol Bay red king crab, Bering Sea Chionocetes opilio, Eastern Bering Sea Chionocetes bairdi, Western Bering Sea Chionocetes bairdi, Pribilof red and blue king crab, St. Matthew Island blue king crab, Western Aleutian Islands red king crab, Eastern Aleutian Islands golden king crab, and Western Aleutian Islands golden king crab