1. Buy-Back Programs in the British Columbia Salmon Fishery By R. Quentin Grafton and Harry W. Nelson International Workshop on Fishing Vessel and License Buy-Back Programs Institute of the Americas, University of California, San Diego La Jolla, California March 22, 2004

2. Overview Brief History of the Fishery Introduction of Licensing Buyback Programs (five in all over 30 years) Lessons Learned (including unexpected ones) Did it Work?

3. Brief History Commercial fishery developed in late 1800’s Expansion to open ocean (troll fleet) Northern Region (Skeena) Southern Region (Fraser) Five commercial species –Sockeye, Coho, Chinook, Pink and Chum

4. Brief History (2) Overcrowding and capacity concerns raised at turn of the century Number of fishers increased as early limitations failed Long-standing Aboriginal participation

5. Introduction of Licensing Davis Report called for limitation in size of fleet and area restrictions Limited entry first introduced through Davis Plan in 1969 Permitted multiple gear types and could fish anywhere open to commercial fishing (no area restrictions) Introduced first buyback Gear restrictions and vessel replacement rules subsequently introduced in 1970’s

6. British Columbia Buyback Programs Five distinct programs –1970-1973 –1981 –1993 –1996 –1998-2000 Differ in objectives and operation

7. Early Buyback Programs Purpose was fleet reduction Purchase vessels and licenses Small ($6 million or $25 million in $1992) funded from vessel sales and general revenues 1970-73 retired 361 vessels (6% of then salmon fleet)

8. Early Buyback Programs (2) First lesson learned –Government makes a poor vessel owner and vessel broker Pearse Report in early 1980’s investigates problems in salmon fishery and calls for buyback –Also calls for area restrictions, limited length licenses (put up for bid), and landing royalties 1981 buyback retires only licenses –26 licenses retired (less than 1% of fleet)

9. Buyback Programs in the 1990’s Three different programs Different objectives Differ in scope Similar design

10. The 1993 Buyback Program Pilot program in 1993 –Objective to retire licenses in commercial sector to transfer to aboriginal fishery –Spent $5.95 million to retire 75 licenses (about 2% of the fleet)

11. The 1993 Program (2) Design of Program Restricted to eligible licenses Designed as a reverse auction –Ranked by strict $ bid per potential catching effort per foot –Retired predominantly smaller vessels and few seine vessels –Use committee of industry representatives to evaluate bids

12. The 1996 Program Two major programs in late 1990’s Salmon fishery in as state of crisis Objective to reduce fleet Large program $80 million Introduced in conjunction with the Mifflin Plan

14. The 1996 Program (2) Again reverse auction Two multiple rounds Government announced funds available and target of 20% Attempt to maintain fleet balance (equal across gear types)

15. The 1996 Mifflin Plan The Mifflin Plan introduced major changes to licensing system Area licensing Single gear licensing Stacking (market rationalization) Promised greater certainty through reaching agreement over allocation and improved fishing opportunities Did it all work?

16. Results of 1996 Program

17. The 1998-2000 Buyback Program Same objective Significantly larger at $200 million Again a reverse auction Implemented in three multiple rounds Government target of 50% reduction across all gear types

18. Results of the 1998-2000 Program

19. The 1998-2000 Buybacks (2) Achieve balanced reduction Met through targeting seiners No longer strict $ per foot rankings Retirement of smaller vessels Exit of older fishers

20. Lessons Learned Voluntary buybacks enjoy fishers support Need seen to maintain “equity” Multiple rounds allow adjusting bid values –Rules out “stink” bids Important for government to signal in forming expectations –Funds available and targeted level –Prices paid slightly greater than estimates of “market value”

21. Unexpected Lessons Remaining licenses fished harder (but this was not completely unexpected) More unexpected was that proceeds went back into licenses (to shelter from taxes) Not a lesson but consequence? –license values have increased (up 20% for trollers and gillnetters since last buyback) Perceptions of improved profitability? Further buyback? Government purchases under ATP?

22. Did It Work? Fishers saw the buybacks as meeting a political objective with no meaningful reduction in capacity Localized benefits by area and gear type but not for all If salmon prices improve how much effort could return? Push for IVQ’s and lower numbers may make more politically palatable (as older fishers disproportionately exited industry)