1. FEASIBILITY OF INDIVIDUAL TRADEABLE QUOTAS (ITQ)
TO MANAGE OMANI FISHERIES
(Project # IG/AGR/ECON/05/03)
Hemesiri Kotagama, Slim Zekri, Houcine Boughanmi
Department of Agricultural Economics & Rural Studies,
College of Agricultural and Marine Sciences, Sultan Qaboos University
INTRODUCTION
Global fisheries harvest has declined by about 10% over the past 15 years despite improved harvesting technology and effort. Ironically world fish harvest worth $70 billion had cost $92 billion to catch (FAO 1983).
In Oman fisheries has been a traditional way of life. At present too it is the largest resource based economic sector next to oil. The fisheries sector provides direct employment to 22,000 and indirect employment to about 200,000. In the past 30 years government has invested to modernize the fisheries sector through improving infrastructure and provision of subsidies. At present modern and traditional fisheries sectors co-exists.
Research done in Oman has reported the following:
Evidence of over-fishing (some species) and overcapitalization (in the processing industry).
Problems in achieving required quality of fish for exports.
Inefficiencies in internal fisheries markets.
Young people leaving the fisheries sector.
THE PROBLEM
The transition of the fisheries sector from traditional to modern, coupled with emerging problems of over-fishing and market inefficiencies, requires proactive consideration of fisheries management reforms.
THEORY
Economic theory has widely eluded the cause of over-fishing to the lack of property rights to the fisheries resource and to the arising condition of tragedy of the commons. With lack of property rights, to quote:
“Left to themselves, fishermen will go on fishing until the contents of the net are
worth less than the cost of putting the net in the sea”.
The Economist (March 19-25, 1994)
Fisheries resource has been historically managed by communities and later managed by governments through command and control (Legislations/ Regulations). Up to 1980s most countries adopted regulations to control the harvest, such as provision of license with controls on technology, area, and time of fishing, species, size. Regulations have been ineffective in managing fisheries. The race to catch has continued resulting to over-fishing, over-capitalization, constraining market development, increasing risk of accidents.
The 1982 UN Third Conference of the Law of Sea established national property rights to sea (exclusive economic zone 200 miles of sea) and it has influenced a change in fisheries management from regulations to using property rights and incentives.
Individual Tradable Quotas (ITQ) defines and provides property rights to fish to individuals/ communities/ firms. ITQ provide individuals, tradeable quotas to fish, as proportions of the total allowable catch. ITQ as a strategy of fisheries management is not a radical change but a small incremental change to existing regulatory approach. It will not substitute any of the present scientific and administrative inputs to fisheries management.
The principle of ITQ is providing property rights (as for land) and to quote:
“Only when fishermen believe that they are assured a long-term and exclusive right to a fishery are they likely to manage it in the same far sighted way as good farmers manage their land”.
EXPERIENCE OF COUNTRIES THAT HAVE ADOPTED ITQ
The advantages of adopting ITQs as identified by empirical studies are listed below and summarized in table 1.
Control catch to TAC
Reduce over-capitalization in both fishing and processing.
Incentive for individual fishermen to participate in management and investment (research).
Access and exit (with benefit) to fishery to all through market.
Fish market improvements (quality, certainty of quantum and over time).
Private investments in fisheries improve (ITQ as collateral for loans).
Reduced risk of accidents.
Cost of enforcement: same or less
Table 1. ITQ Empirical Evidence.
Following concerns/disadvantages have also been identified:
Ambiguity on fairness in initial allocation of quotas
Windfall gains to initial quota holders.
Possibility of monopolization.
Alienating the traditional small fisherman.
Difficulty to implement with migratory species (as in Oman).
Difficulty to implement with wide geographical spread of fisheries communities (as in
Oman).
May encourage high grading of fish. Good for the market but may increase unnecessary
kills.
LEGAL FEASIBILITY OF ITQs IN OMAN
The feasibility of ITQ requires that the fisheries act allows for:
. Clear definition of exclusive right to fish to individuals/ communities/ firms in terms of
Total Allowable Catch (TAC) and allocation of proportional rights of TAC.
. Ensuring transferability of right to fish among individuals/ community/ firms.
The Ministerial Decree Number 3/82, The Marine Fishing and Protection of the Living Aquatic Resources Law of Oman, was reviewed. This Act has been drafted solely for regulatory fisheries management through provision of license to fish.
Article 7 specifies the license.
“The said license shall also specify the fishing area, fishing season and the species
and quantities allowed for fishing”.
This license could be transferred to quotas as it defines the quantities, type of fish, where to fish and when fish etc.
Article 4, Item 10: Allows for determining TAC
“Determining the limit of the quantities of the living aquatic resources permitted
for fishing in specified season according to their species.”
Article 8 however prevents transfer of license.
“License must be kept … not be transferred to others”.
Country
Catch
Employ-
ment
Capitali-
zation
Concen-
tration
Quality/
Markets
New Zealand (1986)
Stable
No change -
Improved
Iceland (1979)
Stable/
Increased
Reduced
Canada (1991)
Yes
Chili (1992)
Norway (1973)
USA (1992)
East coast (1990)
Alaska (1995)
Florida (1992)
OBJECTIVES OF THE STUDY
To examine the viability to adopt ITQs to manage Omani fisheries.
The viability is examined in relation to legal, technical, social and economic aspects.
METHODOLOGY
. Review of experiences of countries that have implemented ITQ in fisheries management.
. Review of present fisheries legislation in relation to requirements of ITQ implementation.
. Simulation modeling to examine the benefits and costs of ITQs.
. Social surveys to examine the social acceptance of ITQs.
RESULTS
Experiences of other countries that have adopted ITQs have been reviewed and the adequacy of present fisheries legislation in Oman to implement ITQ has been analyzed.
CONCLUSION
Countries that have adopted ITQs have gained in many aspects of fisheries management; mainly in sustaining the fisheries harvest. If ITQs are to be adopted in fisheries management of Oman, potentially with the modernized sector, the fisheries act need to be amended to allow for transfer of fisheries license/ quotas.
CONTINUATION
The major analytical component of simulation modeling of ITQs to examine benefit and costs of adopting ITQ is being undertaken.