Conservation and Management of Transnational Tuna Fisheries

Conservation and Management of Transnational Tuna Fisheries

Conservation and Management of Transnational Tuna Fisheries Robin Allen James Joseph Dale Squires

A John Wiley & Sons, Ltd., Publication

Robin Allen is a consultant based in Renwick, New Zealand, and the former Director of Investigations for the Inter-American Tropical Tuna Commission. James Joseph served as Director of the Inter-American Tropical Tuna Commission from 1969 to 1999. He currently works as a private consultant in La Jolla, California, on a variety of fisheries and related issues. Dale Squires is a Senior Scientist with NOAA Fisheries in La Jolla, California, Adjunct Professor of Economics at the University of California, San Diego, Visiting Fellow at Australian National University, and Honorary Professor at the University of Southern Denmark. Edition first published 2010
C 2010 Blackwell Publishing Chapters 1,2,3,4,5,9,11, and 12 remain with the U.S. Government. Chapter 10 copyright remains with Brill Academic Publishing. Blackwell Publishing was acquired by John Wiley & Sons in February 2007. Blackwell’s publishing program has been merged with Wiley’s global Scientific, Technical, and Medical business to form Wiley-Blackwell. Editorial Office 2121 State Avenue, Ames, Iowa 50014-8300, USA For details of our global editorial offices, for customer services, and for information about how to apply for permission to reuse the copyright material in this book, please see our website at www.wiley.com/wiley-blackwell. Authorization to photocopy items for internal or personal use, or the internal or personal use of specific clients, is granted by Blackwell Publishing, provided that the base fee is paid directly to the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923. For those organizations that have been granted a photocopy license by CCC, a separate system of payments has been arranged. The fee codes for users of the Transactional Reporting Service are ISBN-13: 978-0-8138- 0567-2 /2010. Designations used by companies to distinguish their products are often claimed as trademarks. All brand names and product names used in this book are trade names, service marks, trademarks, or registered trademarks of their respective owners. The publisher is not associated with any product or vendor mentioned in this book. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold on the understanding that the publisher is not engaged in rendering professional services. If professional advice or other expert assistance is required, the services of a competent professional should be sought. Library of Congress Cataloging-in-Publication Data Conservation and management of transnational tuna fisheries / [edited by] Robin Allen, James Joseph, Dale Squires. p. cm. Includes bibliographical references and index. ISBN 978-0-8138-0567-2 (hardback: alk. paper) 1. Tuna fisheries–Management. 2. Fishery management, International. 3. Tuna–Conservation–International cooperation. I. Allen, Robin Leslie, 1943- II. Joseph, James, 1930- III. Squires, Dale. SH351.T8C656 2010 338.3’727783–dc22 2009031850 A catalog record for this book is available from the U.S. Library of Congress. R Set in 10/11.5 pt Time New Roman by Aptara
Inc., New Delhi, India Printed in Singapore

1 2010

Contents

Contributors

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Preface Christopher Lischewski

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Part I Introduction to Transnational Fisheries Management 1 Introduction Robin Allen, James Joseph, Dale Squires, and Elizabeth Stryjewski

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2 Addressing the Problem of Excess Fishing Capacity in Tuna Fisheries James Joseph, Dale Squires, William Bayliff, and Theodore Groves

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3 Property and Use Rights in Fisheries Dale Squires

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4 Rights-Based Management in Transnational Tuna Fisheries Robin Allen, William Bayliff, James Joseph, and Dale Squires

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5 The Benefits and Costs of Transformation of Open Access on the High Seas Robin Allen, William Bayliff, James Joseph, and Dale Squires

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Part II Rights-Based Management 6 International Fisheries Law and the Transferability of Quota: Principles and Precedents Andrew Serdy

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7 Can Rights Put It Right? Industry Initiatives to Resolve Overcapacity Issues: Observations from a Boat Deck and a Manager’s Desk Daryl R. Sykes

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8 Rights-Based Management of Tuna Fisheries: Lessons from the Assignment of Property Rights on the Western US Frontier Gary D. Libecap

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Contents

9 The Economics of Allocation in Tuna Regional Fisheries Management Organizations R. Quentin Grafton, R¨ognvaldur Hannesson, Bruce Shallard, Daryl R. Sykes, and Joseph Terry

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10 Allocating Fish Across Jurisdictions Jon M. Van Dyke

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11 Buybacks in Transnational Fisheries Dale Squires, James Joseph, and Theodore Groves

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12 Limited Access in Transnational Tuna Fisheries Brian Hallman, Scott Barrett, Raymond P. Clarke, James Joseph, and Dale Squires

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Part III Bycatch 13 Individual Transferable Quotas for Bycatches: Lessons for the Tuna–Dolphin Issue R¨ognvaldur Hannesson 14 Incentives to Address Bycatch Issues Heidi Gjertsen, Martin Hall, and Dale Squires Part IV Politics, Enforcement, and Compliance 15 Prospects for Use Rights in Tuna Regional Fisheries Management Organizations Frank Alcock 16 Flags of Convenience and Property Rights on the High Seas Elizabeth R. DeSombre 17 Japanese Policies, Ocean Law, and the Tuna Fisheries: Sustainability Goals, the IUU Issue, and Overcapacity Kathryn J. Mengerink, Harry N. Scheiber, and Yann-Huei Song

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18 Quasi-Property Rights and the Effectiveness of Atlantic Tuna Management D. G. Webster

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Index

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Contributors

Professor Frank Alcock Department of Political Science New College of Florida 5800 Bay Shore Road Sarasota, Florida 34243-2109 USA

Professor Elizabeth R. DeSombre Department of Political Science Wellesley College 106 Central Street Wellesley, Massachusetts 02481 USA

Dr. Robin Allen P.O. Box 5159 Springlands, Blenheim 7241. New Zealand

Dr. Heidi Gjertsen Southwest Fisheries Science Center US National Marine Fisheries Service 8604 La Jolla Shores Drive La Jolla, California 92037 USA

Professor Scott Barrett Lenfest Professor of Natural Resource Economics School of International Affairs Columbia University International Affairs Building, Room 1427 New York NY 10027 USA Dr. William Bayliff Inter-American Tropical Tuna Commission 8604 La Jolla Shores Drive La Jolla, California 92037-1508 USA Raymond P. Clarke Pacific Islands Regional Office U.S. National Marine Fisheries Service 1601 Kapiolani Boulevard, Suite 1110 Honolulu, Hawaii 96814 USA

Professor R. Quentin Grafton J.G. Crawford Building (Building 13) Crawford School of Economics and Government The Australian National University Canberra ACT 0200 Australia Professor Theodore Groves Department of Economics University of California, San Diego 9500 Gilman Drive La Jolla, California 92093-0508 USA Dr. Mart´ın Hall Inter-American Tropical Tuna Commission 8604 La Jolla Shores Drive La Jolla, California 92037-1508 USA

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Contributors

Brian Hallman Inter-American Tropical Tuna Commission 8604 La Jolla Shores Drive La Jolla, California 92037-1508 USA Professor R¨ognvaldur Hannesson Department of Economics Norges Handelscøyskole Helleveien 30 NO-5045 Bergen Norway

Professor Andrew Serdy Institute of Maritime Law School of Law University of Southampton Highfield, Southampton S017 1BJ UK Bruce Shallard Bruce Shallard and Associates P.O. Box 27409, Wellington 6141 New Zealand

Dr. James Joseph 2790 Palomino Circle La Jolla, California 92037 USA

Professor Yann-Huie Song Graduate Institute of International Politics National Chung Hsing University Taichung Taiwan

Professor Gary D. Libecap Donald Bren School of Environmental Science and Management University of California, Santa Barbara California 93106-5131 USA

Dr. Dale Squires Southwest Fisheries Science Center US National Marine Fisheries Service 8604 La Jolla Shores Drive La Jolla, California 92037 USA

Christopher Lischewski President and Chief Executive Officer Bumble Bee Seafoods P.O. Box 85362 San Diego, California 92186 USA

Elizabeth Stryjewski Managing Editor, The Journal of Environment and Development Graduate School of International Relations and Pacific Studies University of California, San Diego 9500 Gilman Drive La Jolla, California 92037-0519 USA

Dr. Kathryn J. Mengerink Director, Ocean Program, Environmental Law Institute Scripps Institution of Oceanography University of California, San Diego 9500 Gilman Drive La Jolla, California 92093-0202 USA Professor Harry N. Scheiber 442 Boalt Hall School of Law University of California Berkeley, California 94720-7200 USA

Daryl R. Sykes New Zealand Rock Lobster Industry Council (NZ RLIC) P.O. Box 24-901, Wellington New Zealand Dr. Joseph Terry Office of Science and Technology US National Marine Fisheries Service 8604 La Jolla Shores Drive La Jolla, California 92037 USA

Contributors

Professor Jon M. Van Dyke William S. Richardson School of Law Office 239 University of Hawaii Manoa 2515 Dole Street Honolulu, Hawaii 96822 USA

Professor D.G. Webster Assistant Professor The Environmental Studies Program Dartmouth College 105 Fairchild Hanover, New Hampshire 03755 USA

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Preface

Global population continues to grow at unprecedented rates. Between 1960 and 2008, the global population grew by 123%, from 3.0 billion to 6.7 billion, and current projections call for further growth of 19%, to approximately 8 billion people, by 2025. With this growth has come a significant increase in seafood consumption, from about 38 million metric tons in 1960 to 140 million tons in 2006, an increase of 268%. Today seafood is the primary source of animal protein for more than 1 billion people, and is estimated to provide about 16% of all animal protein consumed globally. The Food and Agriculture Organization (FAO) of the United Nations estimates that global consumption of fish products, assuming no limitations in supply, will increase gradually from the current average of 16 kg per capita to about 18–20 kg per capita by 2025. If correct, this would represent further consumption growth of approximately 75 million tons, more than 50% over current levels. In contrast to the projection of continued increases in seafood demand, FAO has reported that the rate of increase in the world’s marine capture fisheries is slowing while growth in aquaculture will be limited by a number of technical and environmental challenges. In fact, increases in marine capture fisheries are approaching zero and the maximum yield appears to have been reached at about 85–90 million tons. The FAO believes that even this level of production may not be sustainable indefinitely. This concern arises from the fact that the focus on “total” catch masks the shift in species compo-

sition, and hides the increasing occurrence of overfishing on a multitude of different stocks, compensated for by intense exploitation of a dwindling number of previously underfished stocks. The production from most of the high-value species, and from demersal stocks in particular, has plateaued since the mid-1970s, reflecting full or overexploitation. Except for tunas and cephalopods, growth in landings since that time reflects mostly increased landings of lower-value species, a large part of which is reduced to fish meal for animal feed. FAO estimated in 2007 that 52% of marine harvest fisheries were fully exploited, and 28% were overexploited, depleted, or recovering from depletion. Only 20% of the fisheries were considered to be underexploited or moderately exploited. While the demand forecast for increased seafood consumption is bullish, it is quite clear that marine fisheries and aquaculture will have difficulty providing adequate supplies. Unfortunately, with demand exceeding supply, the value of fisheries products is likely to increase, and without strong fisheries management regimes this will provide economic incentives to continue to increase fishing intensity. The past few years have seen a flurry of activity, at international and national levels, aimed at shifting fisheries management to a less self-destructive course. The United Nations Convention on the Law of the Sea (UNCLOS), the FAO Code of Conduct, and the UN Fish Stocks Agreement provide a solid framework upon which to build effective fisheries management regimes. They provide the

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following key conditions critical to the responsible management of fisheries: r States should improve their understanding of the status of fisheries by collecting appropriate data and exchanging information with all relevant groups. r States must apply the precautionary principle in conserving, managing, and exploiting fisheries resources when the scientific evidence does not yield a conclusive result. r Fisheries management measures must ensure the protection of not only target species, but also nontarget, associated, or dependent species. r States must implement appropriate measures to minimize waste, discards, bycatch, and negative impacts of fishing on associated or dependent species. This would include mandating selective fishing gear that will reduce waste, discards, and catch of nontarget species. These are extremely critical issues, as one out of every four fish caught is currently discarded because they are too small, the wrong species, or because the fishing vessel does not have a permit or large enough quota to take them. A recent estimate is that 27 million tons of fish are discarded annually, equivalent to about 30% of the retained catch. r States must cooperate to eliminate ghost or IUU (illegal, unregulated, and unreported) fishing. Industry observers believe that IUU fishing occurs in most fisheries and accounts for up to 30% of total catches in some important fisheries. r States must begin to regulate and reduce fishing capacity and fishing effort to coincide with fishing levels that can support the maximum sustainable yield of the various species. The world’s fishing fleet doubled between 1970 and 1992, and the FAO conservatively estimates that the global fleet is approximately 30% larger than it needs to be to fully harvest the available resources. These estimates have been widely criticized,

as the methodology compares total catch capacity to total catch and assumes that the fishing fleets can easily move between fisheries. The World Wildlife Fund, using a different methodology, estimates global overcapacity at 150%, meaning there is 2.5 times the catching power needed to harvest the maximum sustainable yield in the marine capture fisheries. There is no question that implementing these fisheries management initiatives is immensely complex, involving disputed allocation rights over global resources, issues of national sovereignty, private and public sector interests, economic development, employment, and basic food security. This is further complicated by uncertainties over the amounts and distributions of fish in the sea and the need to address the real issues, not only on a factual and scientific basis, but also on a precautionary basis. The fisheries for tuna, which are the focus of this book, are more challenging than many other fisheries, as they are highly migratory fish that do not respect any country’s territorial waters (or exclusive economic zones). Given the tunas’ highly migratory nature, and the significant size and global nature of the tuna fishery, the following regional fishery management organizations (RFMOs) have been established to manage these fisheries: r Inter-American Tropical Tuna Commission (IATTC) in the eastern Pacific Ocean r Western and Central Pacific Fisheries Commission (WCPFC) in the western and central Pacific Ocean r International Commission for the Conservation of Atlantic Tunas (ICCAT) in the Atlantic Ocean and adjacent seas r Indian Ocean Tuna Commission (IOTC) in the Indian Ocean r Commission for the Conservation of Southern Bluefin Tuna (CCSBT) in all oceans in which southern bluefin tuna occur Membership of the RFMOs is composed of both coastal nations and distant-water fishing nations.

Preface

Each RFMO has an independent scientific committee or scientific staff that is responsible for assessing the condition of the tuna stocks and developing management and conservation recommendations. The tuna RFMOs have several key objectives that are consistent with those proposed by the United Nations Convention on the Law of the Sea (UNCLOS), the FAO Code of Conduct, and the UN Fish Stocks Agreement discussed earlier. These include: r Ensuring the conservation and utilization of stocks and managing the fisheries to ensure that those stocks are maintained at or above levels capable of supporting maximum sustainable yields. r Monitoring the species taken in association with tunas and undertaking studies to evaluate and mitigate the impact of the fishery on them. r Collecting the data that are necessary for decision making. r Conducting stock assessments in order to develop and enact responsible conservation policies. r Facilitating research in support of management responsibilities. r Managing fish vessel monitoring schemes, observer programs, and bycatch monitoring. r Managing fleet capacities and fishing effort. r Reporting fishing infractions to member countries for disciplinary action. While the objectives are clear, the tuna RFMO process is not conducive to the acceptance of science-based recommendations, as the decisionmaking process is generally based on a consensus of the members, and, given the many differing national interests, agreement is extremely difficult. Even when agreements are reached, they tend to be watered-down versions of the recommendations made by the scientists, and subsequent interpretation of the regulations and enforcement by the tuna RFMO members varies considerably. Fortunately, most of the tuna fisheries are in relatively good condition, and there is still time

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to address the deficiencies in the performances of the RFMOs. Of the seven principal market species of tunas, only two, Atlantic bluefin and southern bluefin, are heavily overexploited, with bigeye, yellowfin, albacore, and Pacific bluefin being mostly fully exploited and skipjack only moderately exploited and capable of sustaining greater catches. As indicated earlier, managing fleet capacity and fishing effort is on the agenda of every tuna RFMO, with a primary focus on two methods: longline fishing and purse-seine fishing. It has been difficult to compile data on trends in the size and capacity of the longline fishing fleet, given the large number of small vessels and registration of vessels under “flags of convenience.” However, it is possible to review statistics on the global purseseine fishing fleet, which is responsible for approximately 60% of global tuna catches. Based on data compiled by the tuna RFMOs, the carrying capacity of the global purse-seine fleet grew by approximately 22% between 2000 and 2009 as a result of new vessels entering the fishery and old vessels being reactivated. In addition, it is estimated that over this period, there has been a 21% improvement in efficiency due to better fish-finding technology and expansion of the FAD1 fishery. The combination of vessels entering the fishery and technology enhancement has resulted in a net increase in fishing capacity of the tuna purse-seine fleet of approximately 48% over the last decade, and yet the catches during this period increased by less than 10%. Clearly, overcapacity in the tuna fishing industry is an increasing problem, as evidenced by the reduction in catch per unit of effort and the status of the stocks, most of which are now considered fully exploited. Various methods have been discussed to control fishing capacity, but none has yet proven effective because of a lack of political will, discipline, and enforcement. These include: r A voluntary “freeze” on capacity that was adopted by nations participating in the western Pacific fishery in 2000 that would limit capacity (by flag) to the levels operating in

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1999. Distant-water fishing nations have gotten around this freeze by “partnering” with coastal nations that believe that it is their sovereign right to add new vessels to their fleets or by “buying” fishing licenses or fisheries access by committing to provide economic assistance to the coastal nations. r A “vessel day scheme” (VDS) in the western Pacific for which a fixed number of fishing days is allocated to the Pacific island nations for sale to distant-water fleets. Unfortunately, the VDS is not a transparent conservation system, as no audits are performed and there is no limit on fishing capacity. Some countries continue to exceed their allocated days with impunity, while those that do not believe that they have received sufficient benefits have negotiated bilateral fishing agreements that allow fishing with no restrictions on days. r A “desired capacity” scheme that was first adopted by the IATTC in the eastern Pacific Ocean in 1999. Actual capacity has always been at a level significantly higher than the desired amount, and there is no mechanism in place that will enable the IATTC to reduce the capacity to the desired level. A “rights-based” management scheme holds the greatest promise to effectively manage fishing capacity, but it has not been broadly endorsed, as certain developing island and coastal nations (and some distant-water fishing nations) believe that this would deny them the right to develop their fisheries and might actually “shut them out” of a fishery that they believe is vital to their national interests. Until recently, this group has included the United States. The reality, however, is that a rights-based management system allows access to all, although access would be regulated and controlled by a market-based system whereby supply and demand determine the value, or cost, of access. Under one form of a rights-based system, a fixed number of fishing licenses (corresponding to an amount of capacity that is projected to most efficiently harvest the maximum sustainable yield, or a similar measure of maximum catch) can be “sold” to owners of fishing vessels who would like

to participate in the fishery. Those licenses, and the related fishing capacity, would be freely transferable (or sellable) to new entrants. If an entrant wants to bring new capacity (such as a new vessel) into the fishery, that entrant would need to first purchase an existing license, which would include a condition that he remove an equivalent amount of existing fishing capacity from the fishery. Another form of rights-based management allocates shares of the “total allowable catch” (TAC) for each species of concern to individual vessels, and the sum of the shares for each species is equal to the TAC for that species. Each year a vessel’s share is converted to an exclusive right to harvest the corresponding quantity of that species. Vessels are free to exchange catch shares with one another, and to new entrants. Total capacity then aligns with the amount required to harvest the allotted catch share or individual transferable quota (ITQ). The benefits to a rights-based management system include: r It is relatively easy to implement and enforce. r It ensures restriction on addition of new capacity and provides mechanism for removal of excess capacity. r It allows any individual (or any country) to enter the fishery by acquiring a “right” at a market-based cost. r It optimizes the efficiency of fishing operations and economic returns for fishermen. r While potentially resulting in higher costs for fishery products (assuming that the supply is restricted at or below maximum sustainable yield while demand grows above that level), it can help assure sellers and consumers that the products that they are selling and consuming have been harvested in a sustainable manner. r It provides a mechanism for coastal nations to optimize the value of the catch within their 200-mile exclusive economic zones. Importantly, rights-based management systems have proven to be effective and successful. Two examples are the Alaskan pollock fishery and the US surf clam and quahog fishery.

Preface

Alaskan Pollock Fishery The average annual harvest of the Alaskan pollock fishery is 1.25 million tons, which accounts for almost one-third of all US seafood landings by weight. A TAC, based on scientific surveys conducted by the US National Marine Fisheries Service, is established annually. Until 1999, the TAC was caught under an “Olympic-style” race method, for which each boat tried to catch as large a share of the TAC as possible. In 1999, the pollock fishermen formed fish-harvesting cooperatives, whereby they recommended ITQs corresponding to percentages of the TAC. This allowed them to consolidate the fishing fleet, resolving problems of overcapacity, promoting conservation, enhancing utilization of fishery resources, and improving their financial returns. The ITQ system, with ITQs that are fully transferable based on a market-based cost, has been extremely successful. Today the Alaskan pollock fishery is recognized as one of the best-managed global fisheries. The number of vessels has declined, catches have increased, and the economic condition of the fishery is extremely healthy.

US Surf Clam and Ocean Quahog Fishery In 1978 the Mid-Atlantic Fishery Management Council (MAFMC), one of eight regional councils responsible for managing US fisheries under the Magnuson–Stevens Act, imposed a moratorium, which limited fishing capacity to the existing vessels in the surf clam fishery. (The quahog fishery was not yet developed.) A TAC, based on scientific stock assessments conducted by the MAFMC (under the auspices of the US National Oceanic and Atmospheric Administration), was set annually, and this was divided among the vessels. In 1990, the process was enhanced by the introduction of ITQs to both the surf and quahog clam fisheries, for which the ITQ represents a percentage of the TAC that a vessel is permitted to catch. The ITQs

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allowed consolidation of the fleet (which can easily transfer between the surf and quahog fisheries), and the vessels that remain in the fishery fish more efficiently and provide a more stable supply to processors. The clam ITQs are freely transferable, based on a market-based cost, and, as is the case for the Alaskan pollock fishery, the US surf clam and ocean quahog fishery is considered a model of effective fisheries management. ***** It is difficult to estimate the potential increases in catch, or reduction in waste, that could be achieved through improved management of our global fisheries. However, no one will argue with the statement that stronger management is essential to ensure the long-term sustainability of our aquatic resources. Improving fisheries science, eliminating illegal fishing, and reducing bycatches are all critical. But, as important as any of these objectives is, there is also a need to manage and, in most cases reduce, fishing capacity. Rights-based management is proven in its ability to achieve fishing fleet rationalization and fisheries conservation at the domestic level. Importantly, rights-based management has also proven to be economically viable and attractive. It is now time to expand these experiences into the international arena of tuna fisheries. The book that follows is a compilation of ideas by a number of world-renowned legal scholars, economists, and fisheries scientists, related to the management of tuna fishing capacity through the use of various forms of rights-based systems. I commend them for their work, and hope that those responsible for global fisheries management will adopt their recommendations. It is not too late to ensure the sustainable management of our tuna fisheries—but time is running out. Christopher Lischewski President and Chief Executive Officer Bumble Bee Seafoods San Diego, California

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Endnote 1. FAD stands for “fish-aggregating device” and this form of fishing entails the construction and placement of man-made buoys at sea. Vessels attach sonar buoys to the FADs so they can locate them after some time, and then, upon reacquisition, the vessels set their nets around the fish

that have been attracted to them. FAD fishing, which was adopted broadly by the tuna purseseine fleet about 25 years ago, has significantly increased the productivity of this fleet. The target species is skipjack, but, unfortunately, considerable amounts of juvenile bigeye and yellowfin tuna and of nontarget species are also taken as bycatches.

Part I

Introduction to Transnational Fisheries Management

Chapter 1

Introduction Robin Allen, James Joseph, Dale Squires, and Elizabeth Stryjewski

The world’s tuna fisheries are at a critical juncture, with most tuna stocks fully exploited and some overexploited, and all of them facing growing fishing pressures from overcapacity and the ongoing march of technology. The conservation and management of these tuna stocks are complicated by the transnational nature of these and other highly migratory species, so that the stocks are shared among nations’ exclusive economic zones (EEZs), but also extend to the high seas beyond the EEZs. In fact, about 40% of the world’s tunas are captured on the high seas. Highly mobile fleets of vessels of multiple gear types from many nations harvest these tunas in the Atlantic, Indian, and Pacific Oceans and adjacent seas. The transnational nature of the tunas and fishing fleets creates conservation and management issues of jurisdiction, property rights, international law, and multilateral cooperation. Limited entry into tuna fisheries, and, in general, an even greater strengthening of property rights, coupled with multilateral cooperation, are required to prevent the inevitable outcome of overexploitation of the world’s tuna stocks, further overcapacity, and declining profitability and general socioeconomic benefits. Recognition of the growing biological, legal, and socioeconomic issues in the world’s tuna fish-

eries and the cusp on which conservation and management of these transnational fisheries stands led to this book, Conservation and Management of Transnational Tuna Fisheries edited by Robin Allen, James Joseph, and Dale Squires. The genesis of the book lies in a prescient and seminal analysis of these issues, International Management of Tuna, Porpoise, and Billfish: Biological, Legal, and Political Aspects, by James Joseph and Joseph W. Greenough, published in 1979. As early as that year, all of the issues faced today were clearly seen, and our current book can be viewed as firmly standing on the shoulders of Joseph and Greenough. The general theme of Conservation and Management of Transnational Tuna Fisheries is the need to adopt systems of property rights to provide effective conservation and management of the stocks of tunas and other highly migratory species, to conserve biodiversity, to manage fishing capacity, and to generate sustainable profits and socioeconomic benefits. Such rights-based management is most effective when transferable harvest or use rights are allocated for catch shares of the different species and held at the vessel level, that is, through individual transferable quotas (ITQs), although sector allocations of catch rights to groups 3

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Part I Introduction to Transnational Fisheries Management

of vessels in a form of common property can also be effective. The catch rights as a share of the total allowable catch (TAC) for each species can either first be allocated to individual states, which then allocate them to individual vessels or sectors, or be directly allocated to individual vessels without the intermediary of the individual states. The latter approach would allow the greatest gains in economic efficiency and economic rents by least restricting the potential for gains from trade among owners of individual vessels. Property rights to the fish stocks themselves are common, and “owned” by the individual regional fishery management organizations (RFMOs). A third alternative is a corporation that holds all the rights and allows harvesting on its behalf. Quotas for fishing effort can also be used, but are less effective because of the difficulty in specifying physical measures that directly govern fishing effort. For example, specifying a quota for days fishing can be frustrated by employing larger vessels, limiting vessel size might be overcome by increasing the power of the winch or vessel electronics, and so forth. Nevertheless, there may need to be tradeoffs between the most efficient system and others that are practical for other reasons, including cost. The choice of a particular rightsbased management system should of course be informed by careful analysis of its ability to meet the policy objectives of the participants, including expected costs and benefits of the change. Transferability of rights increases economic efficiency and potential resource rents by allowing quota to rest in the hands of those with lowest costs of harvesting. Transferability also sets the stage for better establishing market prices for the unpriced resources. Duration of the rights can range from a limited period of years to infinite. The longer the duration, the more stable the planning environment for investment. More limited duration allows periodic reallocation of rights for a variety of purposes. Ample precedent for allocations of rights and rights-based management already exists in transnational tuna fisheries through the Agreement on the International Dolphin Conservation

Program (AIDCP) of annual dolphin mortality limits (DMLs) and limited-entry system used by the Inter-American Tropical Tuna Commission (IATTC), which maintains a closed Regional Vessel Register (RVR) and limits overall fish-carrying capacity in the eastern Pacific Ocean. The allocation of quotas directly to individuals, for example, by an RFMO, has not been analyzed legally, but quotas allocated by RFMOs to nations have then been reallocated by those nations to individuals. Examples of the latter include the Australian quota for southern bluefin tuna, bigeye tuna quotas for the longline fleet of Chinese Taipei in the Atlantic Ocean, and Pacific halibut quotas allocated to Canadian and U.S. fishers in ITQ programs. The best example of quota allocation to individuals by an international agreement is the AIDCP DMLs for individuals since 1992. The DML is a relatively weak right because it does not provide full exclusivity (there are national mortality limits, which, when reached, curtail individual rights), have a duration of 1 year, or an even shorter period. Limited transferability is allowed, and their security is subject to the potential for various governments to renounce their DMLs or to reallocate them among the vessels of their fleets. The limited-entry system of the IATTC is also a relatively weak rights-based management system. The system provides exclusive access by a vessel to the fishery (through listing in the RVR), and duration is permanent, but the security and transferability are subject to government decisions. In short, the time is ripe for extending and strengthening rights-based management that aligns the economic incentives of fishers and states to the common overall goal of sustainable fisheries, conservation of biodiversity, reasonable profits, and significant net socioeconomic benefits. As long as property and use rights are nonexistent or weak, the resulting overcapacity and incentives of the “race to fish” will impose pressures on the fisheries, which will severely curtail socioeconomic benefits and lead to overfishing and overfished stocks. Resolution of bycatch and other issues of biodiversity conservation will be even more formidable tasks. The establishment of

1 Introduction

a rights-based management framework with welldefined harvest rights might be preceded by buybacks of existing fishing rights. One advantage of an initial buyback is the sidestepping of the difficult negotiation of allocating shares in a fishery among the states with vessels participating in the fishery. Although the initial allocations of catch shares can be fraught with difficulties, failing such allocations, even greater difficulties lie ahead as the fisheries decline and states are pitted against one another in attempts to maintain otherwise falling harvest levels and overcapitalized fleets in the face of declining, or even negative, profits. The current difficulties of achieving consensus among member states to implement the necessary restrictive measures will surely only worsen. Much of the material for Conservation and Management of Transnational Tuna Fisheries comes from a workshop held in October 2006 at the Institute of the Americas, University of California, San Diego, and initiated and organized by Robin Allen, then Director of the IATTC, James Joseph, former Director of the IATTC, and Dale Squires, Southwest Fisheries Science Center, U.S. National Marine Fisheries Service (NMFS), La Jolla, California. Many of the chapters in this book were first presented at that workshop, which was chaired by Robin Allen. The workshop was held after a motion by William Fox of the NMFS at a meeting of the IATTC Stock Assessment Working Group that the IATTC further address the management of transnational tuna fisheries. Considerable organizational support was provided by the IATTC, Professor Theodore Groves of the Department of Economics at the University of California, San Diego, and Dale Squires. Generous financial support, which was coordinated by Dale Squires, was provided by Rita Curtis of the NMFS’ Office of Science and Technology and Raymond Clarke of the NMFS’ Pacific Island Regional Office. This workshop can also be seen as a fruit of an FAO Technical Advisory Committee project, “Management of Tuna Fishing Capacity: Conservation and Socio-economics,” chaired by Robin Allen, in which Allen, Joseph, Squires, and

5

other participants in the Institute of the Americas workshop participated. The Institute of the America’s meeting led to a follow-up workshop in May 2008 at the Scripps Institution of Oceanography sponsored by the IATTC and the World Bank Global Program on Fisheries (PROFISH) and organized by Michael Arbuckle and Kieran Kelleher of the World Bank, Guillermo Compe´an, Director of the IATTC, and Allen, Joseph, and Squires. Generous funding was provided by the World Bank and again by the NMFS through Rita Curtis and Raymond Clarke, with coordination by Squires. The origin of the IATTC–World Bank workshop was an after-dinner conversation among Kelleher, Joseph, and Squires at the Rockefeller Bellagio Conference Center, when Joseph and Squires first raised the idea of further exploration into rights-based management of transnational tuna fisheries. The outcome of this IATTC–World Bank meeting, which was chaired by Meryl Williams, former Executive Director of the WorldFish Center, and sponsored by Guillermo Compe´an, entered into the results of the Conservation and Management of Transnational Tunas, especially Chapter 4. The balance of the book is organized as follows. Chapter 2 of Conservation and Management of Transnational Tuna Fisheries, “Addressing the Problem of Excess Fishing Capacity in Tuna Fisheries,” by James Joseph, Dale Squires, William Bayliff, and Theodore Groves, provides the reader with a detailed background on the fundamental issues surrounding global tuna fisheries and rights-based management. This discussion includes an introduction to the status of the world’s tuna stocks, an explanation of the basic problem of excess fishing capacity and its effect on tuna stocks, and a review of management options. In addition, the chapter provides an overview of unilateral and multilateral efforts toward sustainable management and descriptions of the RFMOs concerned with tunas and of other relevant international organizations. After this general overview, Chapter 3, “Property and Use Rights in Fisheries,” by Dale Squires, provides a comprehensive reference on types and

6

Part I Introduction to Transnational Fisheries Management

characteristics of property rights as further background information for the subsequent chapters in this volume. Chapter 3 introduces and defines terms from law and economics literature and reviews various forms of property rights that have emerged in the fisheries context, including common property, ITQs, sector allocations, territorial use rights in fisheries, and hybrid rights. Chapter 4, “Rights-Based Management in Transnational Tuna Fisheries,” by Robin Allen, William Bayliff, James Joseph, and Dale Squires, considers property and use rights as a management approach in transnational fisheries for tunas and other highly migratory species. It discusses the types of rights that can be awarded—the right to participate in a fishery, the right to catch a specified quantity of a species of fish, the right to utilize a specified amount of fishing power, and the right to exert a specified amount of fishing effort. It then discusses the allocation of rights—to states or to individuals or groups, and the criteria for allocation of rights. Chapter 5, “The Benefits and Costs of Transformation of Open Access on the High Seas,” by Robin Allen, William Bayliff, James Joseph, and Dale Squires, discusses the economics behind the transformation of property and use rights away from open access, concluding that the future of fisheries management lies in a system of hybrid rights. Under such a system, fisheries are held as international common property by an RFMO established through customary or formal international law. Rights are then allocated to states in a second step, and in some instances subsequently allocated by the states to individuals or groups. This chapter considers the economics of transforming from open access to a system of hybrid rights, and discusses why international common property and allocation of use rights are more likely to emerge than an expansion of strictly state property beyond the current EEZs or the formation of strictly private property on the high seas or within the EEZs. Chapters 6 through 12 delve further into the topic of rights-based management, with each chapter covering a specific aspect of a rights-based

management regime in greater depth. Chapter 6, “International Fisheries Law and the Transferability of Quota: Principles and Precedents,” by Andrew Serdy, considers the practical aspects of initiating a system of tradable quotas on catch or effort within the area of concern to the IATTC. The chapter first examines the international legal context for a trading scheme, demonstrating that all RFMO constitutive treaties confer sufficiently broad authority to develop such a scheme. However, implementing a trading scheme on the high seas could be more problematic than creating one within an EEZ, as it may infringe on the “right to fish” on the high seas, a right that is guaranteed to all countries by the United Nations Law of the Sea. This chapter presents the precedents that have been established to date for quota trading by three RFMOs—the International Commission for the Conservation of Atlantic Tunas (ICCAT), the Northwest Atlantic Fisheries Organization, and the International Baltic Sea Fishery Commission, in addition to the relevant precedents within the IATTC itself, including a system of trading limited carrying capacity through the international transfer of fishing vessels. In its conclusion, the chapter outlines some of the main practical aspects of a future international quota trading system that would remain consistent with the freedom to fish. Chapter 7, “Can Rights Put It Right? Industry Initiatives to Resolve Overcapacity Issues: Observations from a Boat Deck and a Manager’s Desk,” by Daryl R. Sykes, presents the perspective of a New Zealand commercial fisher and head of an industry organization on rights-based management in Australia and in New Zealand, a country that has practiced rights-based management for 20 years. The chapter discusses three examples of fleet and capacity rationalization driven by commercial rights holders in New Zealand and Australia. Two examples are taken from inshore fisheries—southern rock lobster and New Zealand abalone (paua)—and the third is taken from an important distant-water fishery in Australia’s subAntarctic Islands. Each example has a different background, and a different priority associated with the initiatives that were taken. Common to

1 Introduction

all three is that (1) they involve well-specified commercial property rights and (2) the initiatives for action were taken by the rights holders themselves, rather than imposed by the established fishery management agencies. However, those agencies had an equally important role, in that they constructed the incentives for collective action. The chapter highlights the value of communication, information, understanding, response, cooperation, and collaboration at different levels. Despite inherent efficiency gains of a property rights regime, they remain controversial, limiting, or slow in their adoption. Adopting a new regime can be costly, may have distributional implications as some parties that previously used the resource are denied access, and may negatively impact certain groups within the industry as production inputs change. Chapter 8, “Rights-Based Management of Tuna Fisheries: Lessons from the Assignment of Property Rights on the Western U.S. Frontier,” by Gary D. Libecap, examines these issues across a variety of resources and develops generalizations for application of ITQs in fisheries. The chapter examines the assignment of private property rights during the nineteenth and early twentieth centuries to five natural resources: mineral land, timberland, grazing land, farmland, and water on federal government lands in the Far West. The region was richly endowed with natural resources, but assigning property rights to them required adaptation from established, eastern practices, as defined by the federal land laws, and this adaptation provides a laboratory for examining current questions of institutional design in fishery regulation. Chapter 9, “The Economics of Allocation in Tuna Regional Fishery Management Organizations,” by R. Quentin Grafton, R¨ognvaldur Hannesson, Bruce Shallard, Daryl Sykes, and Joseph Terry, reviews existing allocation mechanisms in the five tuna RFMOs, and shows that although they have adopted different approaches, none has been able to prevent overcapacity and, for some stocks, overexploitation. As an alternative, the chapter proposes that each tuna RFMO establish TACs by species and area, and then allocate nontransferable

7

and permanent country shares (as a proportion of the TAC) to member countries. Each country would be free to use or sell the annual allocation of fish determined by the permanent country shares, but sales could be only to fellow member countries. A two-tier allocation of the TAC, first by permanent shares to member countries, and then by annual harvest allocations to vessels of member countries, offers the promise of mitigating, and possibly overcoming, the twin problems of overcapacity and overexploitation of the highly migratory tunas in the high seas fisheries for these species. Chapter 10, “Allocating Fish across Jurisdictions,” by Jon M. Van Dyke, discusses allocation of fish resources that straddle international jurisdictions, and the progress that has been made toward creating an “effective” and “equitable” approach to international allocation and management. This chapter looks at the provisions for interjurisdictional cooperation under the primary international agreements on fisheries management, including the 1982 Law of the Sea Convention, the 1995 Fish Stocks Agreement, and the 2000 Honolulu Convention, which covers the central and western Pacific Ocean region. In particular, the chapter focuses on the ambitious advances made by the Honolulu Convention, including the creation of a regional commission with broad authority to set catch limits and allocate fishing quotas both within and outside of national EEZs. Finally, the author outlines some of the primary considerations in inter-jurisdictional allocation, including the balance between conservation and economic interests, equity concerns, especially for developing and distant-water nations, geographical proximity, and the use of allocation for rewarding or punishing state behavior. Buybacks of fishing vessels, licenses, and gear can also be applied as a strategic management tool to address overfishing and overcapacity in transnational fisheries. Chapter 11, “Buybacks in Transnational Fisheries,” by Dale Squires, James Joseph, and Theodore Groves, explores this policy option. Although a buyback system does not solve the underlying problem of a lack of property

8

Part I Introduction to Transnational Fisheries Management

rights, it can facilitate increased cooperation toward further management measures by reducing the numbers of vessels and fishers and increasing the profits for those that remain. This chapter identifies the major preconditions for and the features of an effective buyback program, such as existing measures for limiting entry and conditions to ensure that fishing capacity is not simply reinvested in the fishery. Such a buyback program can be used to address ecological issues as well, by targeting buybacks toward fishing areas and methods with the greatest ecological impacts. The authors then look at funding, sovereignty, and informational asymmetry issues specific to establishing a buyback program that is international in scope, and also some of the main lessons learned from international experience with buybacks thus far. Chapter 12, “Limited Access in Transnational Tuna Fisheries,” by Brian Hallman, Scott Barrett, Raymond P. Clarke, James Joseph, and Dale Squires, discusses the vexing problem of fishing under open access and especially on the high seas. Unlimited fishing on the high seas, like unlimited fishing in territorial waters, can lead to reduced catches and excessive investment in vessels and gear. Unfortunately, however, it is more difficult to limit fishing on the high seas than it is to limit it in territorial waters. One of the most effective policy responses to overfishing and economic inefficiency in transnational tuna fisheries is to limit access to the fishery through closed RVRs, such as that introduced by the IATTC. In the long run, extending and strengthening rights of access through limited entry is a fundamental first step toward addressing excess fishing capacity in transnational tuna fisheries. Stronger forms of rights, such as ITQs or individual transferable effort, may be preferred, but these mechanisms may be out of reach in the foreseeable future in most transnational tuna fisheries. This chapter discusses the most important issues that must be addressed if limiting access to the important stocks of tunas is to be achieved. Because fishing technologies are not perfectly selective in targeting specific species, the issue of bycatch and biodiversity conservation cannot be excluded from any discussion of fisheries man-

agement. Bycatch of juvenile target fish species, nontarget fish species, marine mammals, seabirds, and sea turtles can have serious ecological consequences, and may even threaten the target resource. Chapters 13 and 14 focus on bycatch management issues and options. Chapter 13, “Individual Transferable Quotas for Bycatches: Lessons for the Tuna-Dolphin Issue,” by R¨ognvaldur Hannesson, looks at bycatch quotas, using a theoretical model to show how individual transferable bycatch quotas can promote efficiency by minimizing the losses imposed by a bycatch limits and maximizing the total catch for any given bycatch limit. The chapter presents two scenarios—one in which bycatch is a totally random process and one in which bycatch is determined by the skill level of fishermen. In both cases individual transferable bycatch quotas can lead to the optimal outcome, though they are not necessarily superior to a common quota when bycatch is random. The chapter concludes by discussing the implication of these results for the tuna fishery of the eastern Pacific Ocean, in which dolphin bycatch quotas are used, but are not currently transferable. Chapter 14, “Incentives to Address Bycatch Issues,” by Heidi Gjertsen, Martin Hall, and Dale Squires, considers bycatches in the purse-seine fisheries of the eastern Pacific Ocean. After restrictions on dolphin mortality from fishing for tunas associated with dolphins, a large portion of the international fleet switched to alternative methods, the most popular being sets on fish associated with floating objects. The increase in floating-object sets during the 1990s brought about an enormous increase in the bycatches of juvenile tunas, and also sharks, billfishes, dorado, wahoo, and sea turtles. Positive and negative economic incentives generated by property rights, taxes and fees, subsidies, voluntary agreements, and trade measures are evaluated for their utility in bycatch reduction. There are four general options for reducing bycatch per unit of effort: (1) technological solutions (gear modifications, alternative gear); (2) operational solutions (deeper sets, no night sets, closures); (3) performance-based

1 Introduction

solutions (selective access for the best fishers); and (4) utilization solutions (use of all bycatches). The chapter concludes that technology standards, including technological and operational solutions, should form the centerpiece of bycatch reduction, that performance standards in the form of bycatch quotas are problematic, and that rights-based regulation may have a role to play. The final section of this volume focuses on issues of politics, enforcement, and compliance. Chapter 15, “Prospects for Use Rights in Tuna Regional Fisheries Management Organizations,” by Frank Alcock, assesses the legal and political challenges of establishing ITQ schemes in RFMOs that manage highly migratory tuna stocks. Four specific challenges are considered: (1) exclusion; (2) initial allocation of quota rights; (3) distributive issues associated with rights transfer; and (4) monitoring and enforcement. This chapter argues that the political challenges for RFMOs and high seas fisheries are much different from those within the EEZs of coastal states. The most significant difference is the lack of an authoritative agent that can impose, coerce, or in some other way forge the distributive bargains that are necessary for such programs to take root. As a consequence, recognition of exclusive access rights, allocation disputes, and monitoring and enforcement issues are more problematic in international waters than in domestic EEZs. Although prospects for ITQ programs remain poor for the near term, the chapter discusses the conditions under which such a program would be possible. Despite the collective management of RFMOs, many fishing vessels are registered in states that intentionally avoid membership in RFMOs so that they are not bound by the international regulatory process. Rather, these vessels have a strong incentive to free-ride on the conservation efforts of others. Chapter 16, “Flags of Convenience and Property Rights on the High Seas,” by Elizabeth R. DeSombre, looks at the incentive structure behind this use of “flags of convenience (FOCs)” to avoid compliance with international agreements. In particular, the chapter examines how four major tuna RFMOs are using new approaches to

9

address the problem of FOCs, namely by changing the regulatory focus from catch to market access, which can be made excludable through landing and trade restrictions. Denying access to lucrative markets provides strong negative economic incentives for evading international regulation. While this approach is not equivalent to a strict property rights regime and cannot completely solve the problem of illegal, unreported, and unregulated (IUU) fishing, it has increased participation in RFMOs and may indirectly address fishing overcapacity by making it less profitable, thereby driving some participants out of the industry. Japanese vessels have fished for tunas all over the world since before World War II. Chapter 17, “Japanese Policies, Ocean Law, and the Tuna Fisheries: Sustainability Goals, the IUU Issue, and Overcapacity,” by Kathryn J. Mengerink, Harry N. Scheiber, and Yann-Huei Song, looks at the worldwide effort to reduce excess fleet capacity and combat IUU fishing. In particular, the chapter focuses on the role of Japan in these efforts, and its relationships with Chinese Taipei, one of its greatest fishing rivals in the Pacific. The authors discuss international efforts to halt IUU fishing and to reduce capacity through RFMOs such as ICCAT and the Western and Central Pacific Fisheries Commission, and the policy matrix in which Japan’s responses to overcapacity and IUU fishing are embedded. The analysis illustrates the complex interplay between IUU fishing and overcapacity, especially regarding ship-flagging practices, and illustrates that “conservation” may be less motivated by preservation and protection of biodiversity than by protection of economic interests for nations wishing to gain access to the resources. The final chapter, Chapter 18, “Quasi-Property Rights and the Effectiveness of Atlantic Tuna Management,” by D.G. Webster, discusses the origins and implications of using quasi-property rights as an international fisheries management tool. Quasi-property rights are national-level quotas that are enforced by tracking trade in the species and applying multilateral sanctions against countries that fish illegally. The chapter traces the origins of quasi-property rights in ICCAT, the

10

Part I Introduction to Transnational Fisheries Management

Convention on International Trade in Endangered Species, and the International Whaling Commission, and details the main aspects of ICCAT’s current quasi-property rights system. Finally, the chapter evaluates the effectiveness of ICCAT’s trade-based regime. While compliance appears to have improved and some species have rebounded, considerable problems remain with smuggling,

misreporting, setting sustainable TACs, and regulating bycatch and other ecosystem imbalances. This chapter finds that, although this kind of single species management may not be ideal, ICCAT’s trade-based measures have at least inhibited fishing effort targeting key commercial species, and may have slowed or reversed the decline of some species.

Chapter 2

Addressing the Problem of Excess Fishing Capacity in Tuna Fisheries James Joseph, Dale Squires, William Bayliff, and Theodore Groves

Introduction Many of the world’s marine fisheries have been poorly managed, or not managed at all. Because of this lack of management, many of the stocks supporting these fisheries have been overfished, causing the catches to decline. These declines have been offset by catches from newly exploited stocks, resulting in stability of the world catches of marine fish at about 85 million metric tons (mt) over the last decade, and masking of the declines due to overfishing. In a recent study, Garcia et al. (2004) reported that about 25% of the stocks of fish supporting the world marine catch have been overexploited and about 50% of those stocks are fully exploited. This trend of overfishing is continuing, and unless effective remedial action is initiated soon, the overall abundance of the living marine resources will continue to decline, as will the catches. One of the major factors contributing to this deplorable state of our world fisheries is the existence and use of more fishing capacity than needed to harvest the available catch (Mace 1997). As fishing fleets outstrip the ability of the resources to sup-

ply them with raw material, fishing mortality increases and abundance and catches decline. As the catches decline, greater and greater pressure to prevent or remove conservation controls mounts. As controls are not applied, or slacken, fishing mortality continues to increase, abundance continues to decline, and the result is severe depletion. This has been a common and abundantly clear pattern in many of our fisheries: Greboval and Munro (1999) estimated that over the past 30 years the world’s fleet of active fishing vessels increased several times faster than the increase in catches. In 1999, the Food and Agriculture Organization (FAO) Committee on Fisheries (COFI), having recognized the impact that excess fishing capacity was having on marine fish stocks, adopted an International Plan of Action for the Management of Fishing Capacity (IPOACAPACITY). The IPOA called for states and regional fisheries organizations to achieve worldwide, efficient, equitable, and transparent management of fishing capacity, preferably by 2003, but not later than 2005. The target date of 2005 has passed, and worldwide management

11

12

Part I Introduction to Transnational Fisheries Management

of fishing capacity has not been established. Nevertheless, some nations, regional fishery management organizations (RFMOs), and industry groups have initiated programs to address the problems associated with excess fishing capacity. In spite of these efforts, however, the world fishing fleets continue to grow, and overfishing continues to exist. The actions taken within FAO and COFI to address excess fishing capacity were not specific to any particular fishery, but applied to all stocks of marine fish being exploited. At the time these initiatives were under way within FAO, the regional tuna bodies were expressing concern over growing fishing capacity in the world’s tuna fleets. In consultation with FAO, actions were undertaken within that body to specifically examine the issue of fishing capacity in the world’s tuna fleets. These initiatives resulted in a series of technical meetings to estimate whether there was excess capacity in tuna fisheries, and, if so, how much. The conclusions of studies generated by these meetings were that excess capacity existed in all oceans, and options for addressing these excesses were needed. Several studies specific to this problem have been conducted at the behest of FAO, and are discussed in this report. This paper focuses primarily on fishing capacity in tuna purse-seine fisheries, but also touches on capacity in longline fisheries. A brief review of the fisheries for tunas and the status of the principal market species is presented, along with initiatives taken to conserve and manage these species. Information on the size of purse-seine and longline fleets, and whether excess capacity exists in the various fisheries, is reviewed. Next, a discussion of rights-based management approaches versus open-access fisheries is presented. Finally, several alternatives based on rights-based management are presented. These are discussed in terms of approaches that do not remove the incentive for overcapacity and approaches that tend to remove the incentive for overcapacity. Much of what is discussed in this report is taken from Joseph et al. (2007).

Background Information Status of the Stocks Supporting World Tuna Fisheries The seven principal market species of tuna (skipjack, Katsuwonus pelamis; yellowfin, Thunnus albacares; bigeye, T. obesus; albacore, T. alalunga; and bluefins, T. thynnus, T. orientalis, and T. maccoyii) make up about 5% of the world’s commercial production of marine species (FAO 2005). Although not a large component of the world catch of fish in terms of tonnage, in terms of value tunas are a much more significant component of the total value of all marine fish caught. For nations like the Maldives, Ecuador, and many of the Pacific Island States, tuna is one of the major components of their economy. After a history of steady increases, the world catch of tunas has fluctuated near 4 million mt per year since 1998 (Miyake 2005a). About 60% of the world catch is taken by purse-seine vessels, with about 15% being accounted for by pole-and-line vessels, 15% by longline vessels, and the remainder by a variety of other gear types. With the exception of skipjack in some oceans, almost all of the principal market species of tunas are either fully exploited or overexploited (IATTC 2003, ICCAT 2003, Langley et al. 2003, Joseph 2004, de Leiva Moreno and Majkowski 2005). The bluefin tunas are the most heavily exploited of the principal market species. Southern bluefin is heavily overexploited, and increased fishing mortality will not result in sustained increases in catch. The situation is similar for the Atlantic bluefin, which are considered to be heavily overexploited, and well below the level corresponding to the average maximum sustainable yield (AMSY). Bluefin in the North Pacific are probably fully exploited, but the catches vary considerably due to natural fluctuations in abundance. The catches of the three species of bluefin have averaged about 60,000 mt in recent years: 15,000 for southern bluefin, 25,000 for Atlantic bluefin, and 20,000 for North Pacific bluefin.

2 Addressing the Problem of Excess Fishing Capacity in Tuna Fisheries

There are six stocks of albacore in the world’s oceans: two in the Pacific, two in the Atlantic, and one each in the Mediterranean Sea and the Indian Ocean. Four of these stocks are fully exploited, one is not fully exploited, and the status of one is unknown. In recent years, the catches have averaged about 225,000 mt: 140,000 of which is from the Pacific, 60,000 from the Atlantic and Mediterranean, and the rest from the Indian Ocean. Prior to 1980, most bigeye was captured by longline gear, which takes mostly large fish near the size that results in maximizing the yield per recruit. With the widespread use of fish-aggregating devices (FADs) by purse-seine vessels after the 1980s, large quantities of small bigeye have been caught. This has reduced the overall yield per recruit, and overfishing of bigeye in the Pacific is occurring. The world catches have averaged about 450,000 mt in recent years: 230,000 from the Pacific, 80,000 from the Atlantic, and 140,000 from the Indian Ocean. All yellowfin stocks are considered to be fully exploited, and increased fishing effort would not be expected to result in sustained increases in catch. The recent world catches of this species have averaged about 1.3 million mt, of which about 800,000 mt are from the Pacific, 400,000 mt from the Indian Ocean, and 125,000 mt from the Atlantic. Skipjack comprise about 50% of the world catch of the principal market species of tuna. In recent years, the average catch has been about 2 million mt per year. Of these 2 million mt, about 1.5 million are from the Pacific, about 450,000 from the Indian Ocean and about 140,000 from the Atlantic. The best scientific information suggests that skipjack in the eastern Atlantic Ocean may be fully exploited, but the stocks in other areas, particularly the western and central Pacific Ocean (WCPO), are probably not yet fully exploited.

First International Efforts to Manage Tunas Tunas are a renewable resource, and the rate at which they are caught affects their abundance and,

13

therefore, their ability to sustain given levels of harvest. It is obvious that with the increasing fishing pressure on the stocks of tuna, it is necessary that conservation controls be initiated in order to keep exploitation at levels that will keep the populations at desired levels of abundance. Tunas are great wanderers and their effective management is complicated by the fact that during their lives they may pass through waters under the jurisdictions of many different nations. This mobility sets the management of tunas apart from that of less nomadic species, and requires that nations cooperate with each other if management is to be effective. Article 64 of the United Nations Convention on the Law of the Sea (LOSC) recognizes the highly migratory nature of the tunas and mandates that states cooperate directly or through appropriate international organizations to ensure the conservation of highly migratory species. More recently, other international instruments have been drafted to ensure that nations comply with the requirements of the LOSC. In 1995, the Agreement for the Implementation of the Provisions of the LOSC of 10 December 1982 relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks (UN Fish Stocks Agreement) was adopted by the United Nations. The objective of the UN Fish Stocks Agreement is to ensure that the relevant provisions of the LOSC are applied with respect to the management of the highly migratory stocks of fish of the world, particularly with respect to cooperation among nations as envisioned in Article 64 of the LOSC. The UN Fish Stocks Agreement includes a number of new concepts, such as biodiversity and ecosystem management, transparency among stakeholders in developing conservation measures, and the application of the precautionary approach, which should be included in any proposed management measures. The FAO Code of Conduct for Responsible Fisheries provides further support for the application of the provisions of the LOSC and the UN Fish Stocks Agreement. These three international instruments have acted as catalysts for the implementation of measures to manage tunas.

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Part I Introduction to Transnational Fisheries Management

Currently, there are five international conventions for the establishment of Article 64-type tuna bodies in the world. Two of these tuna bodies, the Inter-American Tropical Tuna Commission (IATTC) and the International Commission for the Conservation of Atlantic Tunas (ICCAT), were created before Article 64 existed, and were used as case studies in formulating Article 64 and the subsequent instruments. The remaining three bodies, the Commission for the Conservation of Southern Bluefin Tuna (CCSBT), the Indian Ocean Tuna Commission (IOTC), and the Commission for the Conservation and Management of Highly Migratory Fish Stocks in the Central and Western Pacific Ocean (WCPFC) were created more recently. All five of the regional tuna bodies have a similar objective of maintaining the stocks of fish for which they are responsible at or above levels of abundance that can support AMSYs. To achieve this objective, the bodies are empowered to coordinate and/or conduct research on the fish and the fisheries for them, the results of which can be used to make recommendations to the high contracting parties for maintaining the populations at the desired levels of abundance. The degree to which the bodies have been successful in achieving their objectives has varied. The two oldest bodies, the IATTC and ICCAT, were created before there was enough fishing capacity to cause overfishing problems. However, as the fishing capacity increased, controls to prevent overfishing were needed. The two most recently established bodies, the IOTC and WCPFC, were created before overfishing occurred, but the capacity of the fleets in the Indian Ocean and WCPO has recently increased rapidly enough to cause overfishing for some species. The CCSBT was created in response to severe overfishing of southern bluefin tuna, and its fundamental charge was to increase the population to a level of abundance that would support the AMSY. The first international conservation measures for tuna were introduced by the IATTC in the mid-1960s when catch limits were set for yellowfin tuna in the eastern Pacific Ocean (EPO) (Joseph and Greenough 1978). The prevailing policy at that time regarding fisheries for tunas was

that access beyond 3 nautical miles of the coastline was open to the citizens of any nation who wished to fish. The resource was considered to be a common property of mankind, and to belong to whomever could first render it to his use. It was therefore “logical” that the form of conservation implemented by the IATTC was in the form of an output control, which entailed setting an overall quota on the catch. (A more detailed discussion of these programs is presented in section “Defining the Problem.”) Any nation’s vessels could fish under the quota, but once it was filled all would have to halt fishing for that species. This resulted in a race for the fish, and progressively shorter seasons as the fleet capacity grew. These facts caused increasingly greater confrontation among nations with large fleets capable of taking a large share of the catch before closure to unrestricted fishing (the “haves”), most of which were distant-water fishing nations (DWFNs), and nations with small fleets (the “have-nots”), most of which were developing coastal states. The have-not coastal states maintained that a share of the resource should be allocated to them by virtue of the fact that the tunas spent time in waters under their jurisdictions, and that the newly developing Law of the Sea was recognizing an exclusive economic zone (EEZ) to 200 nautical miles seaward of their coastlines. The haves maintained that the tunas were a common resource, and belonged to whomever could catch them. It became progressively more difficult for the states to agree on conservation controls as disagreement increased between the two factions as to how tunas should be managed. Without a limit on the number of vessels that could enter the fishery, the fish-carrying capacity of the purse-seine fleet operating in the EPO increased fivefold between the onset of the controls in 1966 and 1979, while the catch of tunas only doubled. Competition continued to increase, and the catches per vessel decreased. Because of economic pressures on vessels in general, and because the perceived “rights” of the coastal states were not being met to the satisfaction of those states, the concerned states could no longer agree on conservation

2 Addressing the Problem of Excess Fishing Capacity in Tuna Fisheries

controls. This resulted in the large fleet fishing without restriction and overfishing of yellowfin tuna. This was a clear example of failure to resolve the differing views of open-access versus rights-based management approaches, resulting in unrestricted fleet growth and overfishing of that species. A similar situation was developing in the Atlantic Ocean during the 1970s; tuna fleets were growing and fishing effort was increasing. Bluefin tuna in the western Atlantic was considered to be overexploited, and in need of controls on catch and fishing effort. A significant portion of this increase in effort was the result of a “spillover” effect from the closures in the EPO. During the closure to unrestricted fishing in the EPO increasing numbers of vessels transferred their operations to the Atlantic, where some of them concentrated effort off the eastern seaboard of the United States. Much of this effort targeted bluefin tuna, resulting in further overexploitation of the stock. In response to severe overfishing of bluefin, ICCAT set catch quotas and minimum size limits for that species in the western Atlantic. Meanwhile, in the eastern Atlantic and the Mediterranean Sea fishing effort was increasing, and bluefin in that region were being threatened with overexploitation. As fishing effort increased, bluefin was driven to below the AMSY level, and catch quotas were implemented. The increased fishing capacity resulted also in increased fishing mortality on yellowfin tuna in the eastern Atlantic Ocean. Competition for a limited supply of yellowfin resulted in increasingly greater catches of small fish. ICCAT instituted another output control in the form of minimum size limits for yellowfin tuna. This control proved to be ineffective, and the yellowfin stock continued to be subjected to excessive fishing pressure. As they struggled to manage their fisheries using output controls, such as catch quotas and size limits, IATTC and ICCAT came to realize that such measures alone were not effective in preventing overfishing. Using catch limitations alone without limiting the fishing capacity that could partake in the catch limit resulted in increased competition for a limited supply of fish, a classic case of a reg-

15

ulated open-access fishery that was first defined by Homans and Wilen (1997) and reviewed more recently by Greboval and Munro (1999). As competition increased, earnings declined, resulting in pressure from the vessel owners to relax conservation controls. In the face of increasing vessel numbers and efforts by producers to circumvent regulations, the immediate reaction from the management authority would be to introduce additional controls. For example, in the EPO fishery there were limits on the catch of yellowfin and small bigeye tuna, limits on the amount of fishing for tunas “in association with floating objects,” limits on mortalities of dolphins in the fishery for tunas associated with dolphins, restrictions on types of gear and fishing practices, requirements to carry observers, requirements to contribute monetarily to the observer program, and a host of other regulations. In such a situation there can be so many regulations that fishermen can become confused as to which ones apply in every case; the tendency would be to circumvent them. Such micromanagement also raises the costs of harvesting. It was clear to both the IATTC and ICCAT, and also to the more recently created IOTC and WCPFC, that such “micromanagement” of their fisheries would likely result in failure to sustain conservation programs and failure to fulfill the objective of maintaining the stocks at AMSY levels. They recognized that there was too much fishing capacity operating in their fisheries and that for management to be effective some limits would have to be placed on fishing capacity. However, to successfully limit fishing capacity there would have to be some quantitative measure of capacity relative to the productivity of the resource and a move away from open-access/common-property concepts to rights-based management concepts.

Excess Fishing Capacity In 1995, during the twenty-first session of the COFI, it was concluded that the existence of too much fishing capacity was leading to overfishing, and was threatening the sustainability of the world’s marine fish stocks. Governments and

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Part I Introduction to Transnational Fisheries Management

regional fisheries bodies were called upon to review the amount of fishing capacity within their jurisdictions and, where appropriate, to reduce the capacity of those fleets. In an effort to assist the governments and fisheries bodies in carrying out the COFI recommendation, FAO convened a meeting (FAO 1998) to study and recommend how to define, measure, and control fishing capacity. A series of technical documents dealing with these issues resulted from the meeting, but no clear definition of fishing capacity was agreed to by the participants. A second meeting was called by FAO in 1999 (FAO 2000) and charged with developing a simple and practical method for the measurement of fishing capacity. The definition of fishing capacity defined by this second FAO meeting, which is more of a reflection of economic theory than fisheries population dynamics, represents the maximum amount of fish that can be produced by a fully utilized fleet or vessel during a time period, given the size of the stock being fished and the level of fishing technology being employed. The vessel’s fishing capacity represents some maximum level of fishing mortality that it can generate. This FAO technical definition of fishing capacity has caused some confusion among fisheries scientists and representatives of the fishing industry as to how they view fishing capacity. In his discussion of the definition of capacity, Joseph (2005) noted that when fisheries scientists are attempting to define fishing capacity they frequently use some input indicator such as a vessel’s size or its engine power, as they believe them to be related to the ability of a vessel to generate fishing mortality. The fishing industry often uses size as a measure of fishing capacity because it is related to how much fish a vessel can catch in a single trip. Economists mostly prefer some technological–economic approach, using potential output to measure fishing capacity, because such an approach can be used to compute optimal inputs (Morrison 1985). The economists’ approach is widely applied by governments throughout the world (largely administered through surveys of businesses) when measuring the amount of productive capacity that is utilized in different industries and in the economy at large

(Corrado and Mattey 1997), and is the approach taken by the FAO technical meeting. Reid et al. (2005), using the FAO definition of fishing capacity, and applying a linear programming technique, data envelopment analysis (DEA), to estimate the technical efficiency and potential catching capacity of purse-seine fleets operating in different ocean areas, concluded that there was more fishing capacity available in all of the major purse-seine tuna fisheries of the world than was needed to take the current levels of catch. In their analysis of the EPO, Reid et al. (2005) concluded that excess capacity existed for most methods of fishing and size classes of vessels, and that the EPO purse-seine fleet could theoretically be reduced from the current level of about 185,000 to 126,000 mt of carrying capacity without sacrificing catch. (It is interesting to note that the scientific staff of the IATTC had previously advised the Commission that the optimum carrying capacity for the EPO fleet was about 130,000 mt.) For the WCPO, Reid et al. (2005) concluded that excess fishing capacity existed for all major national fleets operating in the area, Japan, Papua New Guinea, the Philippines, the Republic of Korea, Taiwan, and the United States, and for the other fleets as a group. It was estimated that, on average, the purse-seine skipjack fishing capacity was between 14 and 35% greater than needed to take the available catch of skipjack and between 11 and 28% greater than needed to take the available catch of yellowfin and skipjack. For yellowfin and bigeye the capacity was between 11 and 28% greater than necessary. Similar analyses by Reid et al. (2005) showed that excess capacity existed in the purse-seine fleets of the Indian and Atlantic Oceans. The capacity could be reduced by about 23% in the Indian Ocean and by about 13% in the Atlantic Ocean without reducing the catches. However, because individual vessel data were not available, they cautioned that these percentages represented extreme lower-bound estimates of capacity. It appears that if all vessels operated efficiently the carrying capacity of the world’s purse-seine fleet fishing for yellowfin, bigeye, and skipjack

2 Addressing the Problem of Excess Fishing Capacity in Tuna Fisheries

tuna could be reduced significantly without reductions in catch. Similar analyses have not been undertaken for the longline and pole-and-line fleets, each of which harvests about 15% of the world catch of tunas. It follows that if effective management and conservation of tunas is to be achieved, controls on these fleets will also be needed. Estimates of the size of the world’s large-scale tuna longline fleet and the tuna resources available to it are provided by Miyake (2005b). He defines large-scale longliners as vessels of greater than 200 gross registered tons or overall lengths greater than 35 m, equipped with “superfreezers” capable of preserving fish saleable as sashimi-grade tuna. He reports that there are currently about 1,600 large-scale longliners operating on the world’s oceans, and that they harvest about 400,000 mt of tuna annually. This represents about 240 mt of catch per vessel, which Miyake estimates is the economic break-even point for these vessels. He also notes that it is unlikely that all of the largescale longliners are currently fishing at their full capacities, due to economic, social, and management restrictions, and that if all these restrictions were removed, their potential catches would be greater than 240 mt per vessel. In addition to the large-scale longliners, Miyake reports that there is a fleet of approximately 1,400 small-scale longliners (vessels between 24 and 35 m in overall length) that harvest about 195,000 mt of tuna annually. In addition to the large- and small-scale longliners reported on by Miyake, there is a growing number of longline vessels of less than 24 m in overall length. These vessels, in many cases, are capable of fishing on the high seas and are equipped with superfreezers for sashimi-quality product, but, because of their size, are not monitored by some of the regional tuna bodies, so statistics on their numbers and catches are scarce. However, because they are a growing fleet they will have to be included in management programs if the conservation objectives of those programs are to be achieved. Prior to the studies of Reid et al. (2005), providing quantitative evidence of overcapacity in the tuna purse-seine fisheries, and Miyake (2005b), providing empirical evidence of overcapacity in

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the large-scale longline fisheries, the regional tuna bodies recognized that there was more capacity available in the fisheries under their jurisdiction than was needed to take the available harvest, and that this excess capacity was making it difficult to initiate and maintain effective management programs for the tuna fisheries. They all have come to realize that catch quotas, closed areas and seasons, and minimum size limits are inadequate to the long-term needs of effective management and conservation, and that they must be coupled with limitations on fishing capacity. All of these bodies have begun studies of the problem of overcapacity, and some have initiated efforts to correct it. However, as already mentioned, there must be a change in the way nations view their responsibilities respecting the management of the highly migratory tunas before the problem of overcapacity can be resolved, including the rights of nations and individuals to fish on the high seas, the allocation of shares of the catch to nations and/or individuals, and the rights and responsibilities of the haves and have-nots and of the coastal states and DWFNs. The problems of too much fishing capacity can be resolved only if there is a willingness on the part of nations and individuals to make changes in how their rights and responsibilities on the high seas are perceived and exercised.

Defining the Problem A Downward Trend There are numerous reports in the technical literature of the failure of management systems to adequately conserve the stocks of fish that they are charged with protecting. The cause of these failures is attributable mostly to the way that ocean fisheries have developed historically, particularly those exploited beyond the jurisdiction of coastal states. At first the resources of the sea were thought to be inexhaustible, and later they were considered to be a common property of mankind, with every individual having the right to unrestricted access to them. These concepts have led to overfishing. As

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Part I Introduction to Transnational Fisheries Management

long as a fishery is profitable, new vessels enter it, which eventually leads to overfishing and declining catches. However, the decline in catches leads to higher prices, in which case the fishery continues to be profitable and attracts the entry of even more vessels. In addition, some vessel owners, in attempts to secure greater portions of the catch, may increase the efficiency of their current vessels or construct more efficient vessels, which, of course, leads to even greater overfishing. Furthermore, when a fishery becomes unprofitable, government subsidies may be granted to fishermen so that they can continue to participate in what would otherwise be an unprofitable venture. Regretfully, this “tragedy of the commons” (Hardin 1968) has been experienced too often in ocean fisheries. These experiences have led to the realization that the concept of common resource and open access need rethinking. The change that is under way in many fisheries is to move away from these concepts and to assign property rights in one form or another to the participants in a fishery. These rights have taken many forms, ranging from simple participatory rights that limit the number of fishermen or vessels that may participate in a fishery to the allocation and “ownership” of individual quotas (IQs) that can be traded among participants.

Management Based on User or Property Rights If there is to be effective capacity limitation in tuna fisheries, some form of use or property rights must be assigned to the participants. For example, in the simplest schemes, for which the number of vessels in a fishery is limited, but no other restrictions are imposed, the owners of the vessels included in the limit have a participatory right in the fishery, and those not included in that list are excluded from it. There are other schemes for which use or property rights are better defined. These schemes generally consist of setting an overall quota on the allowable catch, and then allocating this quota among the participants in the fishery. In such schemes the incentive to race to catch fish is eliminated because each participant has a limit on the quantity of

fish that he can harvest. In some schemes individual quotas are transferable (ITQ). These schemes would lead to the creation of a market for ITQs, which could, in turn, lead to a reduction in the number of vessels in the fishery: an efficient operator could buy a quota from a less efficient operator; the efficient operator could take the combined quota with the vessels that he already has, in which case the vessels of the inefficient operator would be removed from the fishery. As already mentioned, under a strictly open-access/commonresource philosophy it would not be possible to limit the number of vessels that could operate in a fishery. Any nation or individual would be able to enter the fishery and to participate within whatever conservation guidelines management might set. There have been some successful programs in which property rights have been assigned that resulted in limiting the capacity of fleets to levels required for there to be effective management and conservation. In most cases these successes have been for national fisheries. Clark and Munro (2002) pointed out that the most difficult problem in any rights-based fisheries management system is to determine how fishing rights should be defined and to whom they should be assigned. They noted that because of the controversy surrounding this problem, governments, particularly democratic ones, have been slow to adopt rights-based limited-access systems in fisheries. With the exception of Atlantic and southern bluefin, and perhaps bigeye in some areas, the major stocks of tuna are not overfished, and governments are in a position to take effective management action to prevent severe overfishing. This would require moving away from concepts of open access and common property to the concept of rights-based management. This is difficult to do for tunas, however, due to (1) their wide distributions and highly migratory nature, (2) the fact that many and diverse nations are involved in catching them or controlling access to waters in which they occur, (3) the fact that the different types of fisheries are directed toward fish of different ages, and (4) the fact that most fisheries catch several species of fish.

2 Addressing the Problem of Excess Fishing Capacity in Tuna Fisheries

Some guidance (and some confusion) is given by the 1982 LOSC and the UN Fish Stocks Agreement as to how this move from common property to rights-based management concepts can be considered. Article 64 of the LOSC defines the tunas as highly migratory species, and calls on nations to cooperate in their management and conservation. Articles 56 and 61 recognize the rights of coastal states to control access to the waters under their jurisdictions, and therefore to decide who can fish for tunas in those waters, with the caveat (Article 62) that, if the resource is not fully utilized, access to fish must be provided to the vessels of other states. In the case of tunas, however, nearly all species are fully utilized throughout their range, and therefore one might consider that the coastal states would not be bound by Article 62 to provide access. Confusing the issue is LOSC Article 116, which relates to the rights of states to exploit the resources of the high seas. Although Article 116 is qualified by Articles 117, 118, and 119, which refer to the obligations and responsibilities of states respecting the conservation and management of the resources, it is frequently interpreted to imply that a fishery cannot be closed to new entrants. This creates a fundamental problem in securing the cooperation of all concerned states in initiatives to limit access to tuna resources. The UN Fish Stocks Agreement provides a framework of support for the LOSC regarding tuna. Article 7 of the Agreement states the responsibility of coastal states and other states to cooperate to ensure conservation and optimum utilization of the tuna resources, and Article 24 addresses the issue of developing states and the responsibility of developed states to developing states regarding conservation of tuna stocks and the development of fisheries on them.

The Need for Agreement It is clear that there is more purse-seine fishing capacity available than needed to take current levels of catch and any reasonable increases in potential catch, and that there is no room for additional fishing capacity in tuna fisheries without threatening the resources, except for skipjack, with overex-

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ploitation. Therefore, if fishing capacity is to be limited, the problem is to develop some means of enlisting the cooperation of all concerned nations in programs to limit fishing capacity, that is, fishing nations, nonfishing coastal nations, and both coastal and noncoastal nations wishing to expand their tuna fleets. The problem is difficult to resolve because even the simplest form of restricting fishing capacity partitions the catch in some way. Currently, on a world basis, most of the tuna is taken by DWFNs, while the majority of the catch is taken inside the EEZs of the coastal states. In the Atlantic and Indian Oceans and the EPO nearly half of the catch of tuna is taken inside the EEZs, while in the largest tuna fishery in the world, that of the WCPO, more than 70% of the catch is taken inside the EEZs. Many of the coastal states do not have tuna fleets, or only small ones, but many of them are desirous of developing fleets. Therefore, they are reluctant to enter into any schemes to limit fishing capacity that would curtail their efforts to develop fleets. Before any schemes to limit capacity and allocate catch can become a reality, there must be a consensus reached among the concerned players to do so. They must realize that the process of limiting capacity in itself is the process of assigning property rights, and that as soon as the numbers of vessels in a fishery are limited the available catch is mostly allocated. The problems between the haves and the have-nots must be addressed and resolved before the matter of excess fishing capacity can be resolved and effective management becomes a reality.

Organizations Whose Functions Include Control of Fishing Effort Joseph (2005) described unilateral efforts by Japan to limit the number of longline vessels in its fleet. Five international organizations have been established for the management of the fisheries for tunas or billfishes and other species caught by vessels directing their effort toward tunas or billfishes. The IATTC is described by Allen (2001),

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Part I Introduction to Transnational Fisheries Management

Bayliff (2001), and Joseph (2005); the ICCAT by Ribeiro Lima (2001) and Joseph (2005); the CCSBT by McGregor (2001) and Joseph (2005); the IOTC by Joseph (2005); and the WCPFC by Joseph (2005). These organizations are also described briefly in section “First International Efforts to Manage Tunas.” Two industry organizations, the Organization for the Promotion of Responsible Tuna Fishing and the World Tuna Purseseine Organization, that have been established mostly to control fishing effort are described by Joseph (2005), Miyake (2005b), and Joseph et al. (2007).

Addressing Important Capacity Limitation Issues Governments, regional tuna bodies, and industry agree there is more than enough tuna fishing capacity to harvest the tunas, with the possible exception of skipjack, at the AMSY levels, and more than enough fishing capacity to satisfy the market demand for skipjack. Squires et al. (1998, 2000) have pointed out that excess fishing capacity is wasteful, reduces economic rents, diminishes the economic viability of the industry, and makes it difficult for regulators to reduce the total yields from a resource without imposing bankruptcies and job losses. There is also agreement among governments, regional tuna bodies, and industry that limits should be placed on the numbers of vessels allowed to fish. It is also recognized that these situations of excess fishing capacity and overfishing exist because of the political framework within which tuna fisheries have developed. Specifically, they have been considered a common resource to which there has been open access by the citizens of all nations. In some cases this approach has led to overfishing of some stocks, and, if continued, it will likely lead to overfishing of others. Efforts have been made to mitigate these threats of overfishing by imposing catch limits, minimum size limits, and closed areas and seasons. These at-

tempts have been only moderately successful because of the difficulty of enforcing them and because of the ever-increasing pressures of growing, competitive, and economically distressed fleets. In some cases the pressures have been so great that controls have not been implemented, and subsidies have been granted to vessel owners to mitigate severe economic hardship caused by excess capacity. A solution to this problem would be to limit the total fishing capacity of the vessels that are permitted to fish. Ideally, the limit might be the target fishing capacity, which can be considered as the maximum amount of fish that can be caught over a period of time by a fishing fleet that is fully utilized, while satisfying fishery management objectives designed to ensure sustainable fisheries. All of the major purse-seine fleets are well above this level (Reid et al. 2005) and so are the fleets of medium and large longline vessels (Miyake (2005b). Before effective programs to limit capacity can be implemented there are some issues that must be considered. These have been discussed by Joseph (2005) and Joseph et al. (2007).

A Changing View There is a need for a change in the way that the politics of resource use in the ocean have been viewed historically if tuna resources are to be better managed. So long as the concept of open access to a common resource prevails, overfishing, or the threat of overfishing, will continue. The vesting of some sort of property right to the participants in a fishery makes possible more flexible approaches to conservation of the resource. Fortunately, such changes have been under way during the last several years. These changes have been mostly in fisheries that lie solely within the jurisdictions of single nations, which is reasonable, since resolving ownership problems in such fisheries is much easier than in multinational fisheries. In many of its fisheries, New Zealand has allocated shares of the resource to users, which has allowed the management system to limit fishing capacity and maintain sustainability in the fisheries (Dewees 1989).

2 Addressing the Problem of Excess Fishing Capacity in Tuna Fisheries

Another example is that of the Alaskan groundfish fishery, one of the most important fisheries of the United States. In this fishery, rights to catch fish have been allocated to both groups and individuals, and as a result management has been able to control fishing capacity at levels commensurate with AMSY (Holland 2000). An excellent example of an international fishery for which property rights have been assigned to fishermen, and which has led to the maintenance of both economic viability and keeping the stocks at AMSY levels, is that for Pacific halibut (Hippoglossus stenolepis). Vessels of two nations, Canada and the United States, harvest Pacific halibut. The International Pacific Halibut Commission (IPHC), of which the two nations are members, is responsible for the management of halibut. “The Commission began its management in 1924 with a 3-month winter closure. By 1932, it was evident that further action was needed and the first catch limit was set” (IPHC 1998). Limits were set for each of the several areas that had been established, and Canadian and U.S. vessels could fish in any of these areas. The season was opened to unrestricted fishing on January 1 of each year, and closed in each area when the quota for that area was reached. Under that scheme, competition for the available catch increased, fishing capacity increased, and the length of the open season decreased from a 9-month fishery to one that lasted only a few weeks. Eventually, during the 1970s, Canada and the United States established 200-mile EEZs, so Canadian vessels could fish only in the Canadian EEZ (which contained about 20% of the biomass of fish) and U.S. vessels could fish only in the U.S. EEZ (which contained about 80% of the biomass of fish). Canada limited entry into its halibut fishery in 1979, resulting in a relatively long season for a relatively small number of vessels, which eased transition to an individual vessel quota (IVQ) system in 1991. An open-access system continued for the U.S. vessels, resulting in excess fishing capacity and shorter and shorter seasons. Finally, in 1995, the United States adopted an individual fishing quota (IFQ) system. According to Squires et al. (2000),

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Under open access, and prior to the transferable private production right or ITQ, production under the shortened production period—under the “derby fishery”—required relatively large crew sizes, longer working days, and longer trips to catch as much halibut as possible. After the ITQ was introduced, the rivalrous consumption and competition over the resource stock found under open access was curtailed and the fishery could extend over a longer period. Consequently, both labor requirements and the duration of the working day or fishing trip declined. In short, full utilization of variable inputs under normal operating conditions depends upon the duration and intensity of operations. In turn, these are determined by institutions, customary practices, and social norms, and in the broadest sense, these factors differ according to the type of property right regime.

These examples of the assignment of use or property rights in both national and international fisheries provide clear evidence of their utility in avoiding “the tragedy of the commons” (Hardin 1968) and implementing effective management and conservation measures, including limiting fishing capacity. The question is: Is it likely that such a change in multinational tuna fisheries is possible? In section “The Need for Agreement,” it was pointed out that it would be difficult to reach agreement among the divergent interests in the tuna fisheries of the world to assign property rights and limit the number of vessels that can operate and to achieve consensus as to how this would be done. In any scheme to limit capacity or allocate shares of the available harvest the have-nots will be reluctant to agree to anything that they perceive as limiting their opportunity to enter the fishery or to increase their participation in it. Furthermore, most of the world catches of tunas are taken in the EEZs of the have-nots, which they perceive as a strong reason for allocating greater shares of the catches to them. Therefore, since the tunas (with the exception of skipjack in most areas) are fully exploited, increased participation by the have-nots must come at the expense of the haves. These reductions in fishing capacity of the haves must either be great enough to provide the opportunity

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Part I Introduction to Transnational Fisheries Management

for have-nots to bring vessels into the fishery, or some mechanism for transferring vessels to them will be necessary. Additionally, criteria for determining how capacity would be assigned to the new entrants would have to be developed.

Using Buybacks to Mitigate Problems of Excess Capacity and Have-Nots A simple and quick approach to take with respect to providing for the entry of have-nots into a limited fishery would be to set the initial capacity limitation level in excess of target or current capacity in the fishery and to use this excess to partition, according to certain agreed-to criteria, to have-not entrants. The next step would be to reduce overall capacity to the target level through attrition, or through some mechanism for buying vessels out of the fishery. If the former, the rate of attrition would likely be very low, and excess capacity would remain in the fishery for many years. If the latter, it would most likely be necessary for governments to be involved in financing the buybacks, since in this scheme catches would not have been allocated to individuals, and there would not be much incentive for industry to fund the buybacks. Another approach would be for governments to buy back some vessels immediately after the capacity limits were implemented, and attempt to sell them to new have-not entrants. The rate at which vessels of the haves would be bought back would be determined by the rate at which have-not buyers could be found for them. Considering experiences in other fisheries, the assignment of transferable individual property rights in one form or another might be the most efficient and effective means of handling the problem of new entrants. Under such schemes, a market would develop for shares of the potential harvest, thereby allowing any individual, group, or nation to enter the fishery by buying a catch quota and/or a share of the total fishing capacity. Many of the have-not nations are developing coastal states, and some consideration should be given to mechanisms for assisting them in the purchase of rights

into the fishery in question if their cooperation in instituting effective management is to be assured.

Criteria for Allocating Catch and Fleet Capacity In 1969, in the tuna fishery of the EPO, the IATTC made the first allocations of catch in an international tuna fishery. At that time the fishery was dominated by U.S.-flag vessels (Bayliff 2001). The coastal states had only a few small vessels, and contended that they could not compete with the U.S. fleet during the season of unrestricted fishing. They therefore negotiated for special allocations, based on the fact that the tunas occurred in their coastal waters. At that time, the United States did not recognize coastal states’ jurisdiction over tunas. After extensive debate and negotiation, the criterion agreed upon to determine the allocations was based on “economic need.” Vessels determined to be at an “economic disadvantage” relative to other vessels were provided special allocations that could be taken after the fishery to unrestricted fishing was closed. The allocations were assigned to all states, but specified for the economically disadvantaged vessels within those states. The economically disadvantaged vessels were generally the smaller purse seiners, poleand-line vessels, and vessels fishing under the flags of states with only a few purse-seine vessels. Allocations were progressively increased and applied to vessels of all sizes registered in developing coastal states (Bayliff 2001: Table 4). During the 1970s, many nations extended their jurisdiction over fisheries to 200 nautical miles. On the basis of this extended jurisdiction, the coastal states of the EPO negotiated to allocate the available catch in accordance with this criterion. The negotiations failed, and the fishery was unregulated from 1980 through 1997. Catch quotas were placed on bluefin tuna in the western Atlantic Ocean during the 1970s. The quotas were allocated among the nations most involved in the fishery (Canada, Japan, and the United States); no other criteria were considered. Countries, such as Cuba and Brazil, with very

2 Addressing the Problem of Excess Fishing Capacity in Tuna Fisheries

limited fisheries were exempt from the regulations. Since that time, ICCAT has allocated catches of swordfish (Xiphias gladius), bigeye tuna, and North Atlantic Stock of albacore among participating states. No firm criteria for making these allocations were defined; rather, they were negotiated mostly on the basis of current levels of catches being taken by the nations. However, the member governments have held special meetings to develop criteria upon which allocations could be based, but so far there has been no agreement as to which criteria should be used. Owing to the heavily overfished state of southern bluefin tuna during the 1980s, Australia, Japan, and New Zealand agreed to voluntarily restrict their catches of southern bluefin tuna to near their then current levels of harvest. When the Convention for the Conservation of Southern Bluefin Tuna entered into force these voluntary catch levels were formalized as allocated quotas. The IATTC, more recently, has allocated carrying capacities among the fishing nations. These allocations were made primarily on the basis of current levels of catch, but also considered historical catches taken within the EEZs of coastal states of the EPO, landings of tuna caught in the EPO at ports of each state, and the contributions of the states to the IATTC. Allocations in international tuna fisheries have been mostly the result of intense negotiations among the involved parties, and have most often reflected the historic and current distributions of the catches. Many of the regional tuna bodies have recognized that there is an urgent need to develop a set of criteria that can be used as a basis for making allocations of catch and/or capacity and have established working groups and committees to identify such criteria. A working group of ICCAT has listed a series of criteria that can be considered for making allocations, and Article 10 (3) of the Convention on the UN Fish Stocks Agreement lists ten points to be considered in developing criteria for allocation. Joseph (2003) also provides a list of some of the most important criteria that might be considered in making allocations. Although identifying criteria to be used in allocations will never

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replace negotiations among countries, such criteria will ease the burden of intense negotiations, particularly if a weighting mechanism is developed for the use of the identified criteria.

Dealing with Capacity Growth The effect of the limitations on the ability of the vessels remaining in the fishery to catch fish is another important problem that must be considered in any program to limit fishing capacity. There are many examples that show that when limits, such as closed seasons, restricted areas, and restrictions on the types of gear that can be used are applied, fishermen are still able to increase the fishing mortality that their vessels are able to generate by increasing the efficiency of their operations. Such “capital stuffing” (Wilen 1985, 1989) must be monitored and quantified, and the capacity limits must be adjusted to compensate for increases in fishing operations if management measures are to remain effective in conserving the resource.

The Problems of Managing Multispecies Fisheries1 It is common for two or three tuna species to associate in the same aggregations. Not only do these tunas aggregate together, but many other non-tuna species associate in these aggregations. Most vessels capture more than one species of tuna during a single trip, and they frequently do that during a single deployment of gear. They may also capture a variety of other nontuna, nontarget species. For example, longline vessels frequently catch billfishes and sharks, and purse-seine vessels frequently catch sharks, mahi-mahi (Coryphaena spp.), wahoo (Acanthocybium solandri), and rainbow runners (Elagatis bipinnulatis). The application of management measures may be complicated because a vessel directing its effort at one or two species may catch other species, including some that are fully exploited or overexploited and others that are not fully exploited. In situations for which capacity limitations are being considered for a fishery directed at several species of tuna,

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Part I Introduction to Transnational Fisheries Management

including some that are over- or underexploited, the process of setting the levels of fleet size will be complicated. On one hand, if fishing capacity limits were established with skipjack, which is underfished, in mind, overfishing of fully exploited yellowfin or further overexploitation bigeye could occur. On the other hand, if fishing capacity limits with bigeye, which is overfished, in mind, the catches of skipjack, which is underfished, would probably be reduced. Any schemes to limit fishing capacity must consider these characteristics of tuna fishing, and also the effects on the bycatch species, some of which are the objects of other fisheries. (Fortunately, the results of a study by Harley et al. (2004) indicate that it may be possible for purse seiners to reduce their catches of bigeye without significantly reducing their catches of skipjack.)

Possible Options for Limiting Fishing Capacity Joseph (2005) and Joseph et al. (2007) presented a series of options to be considered for limiting fishing capacity. These options included input controls, such as licensing; limits on the numbers and sizes of vessels, effort restrictions, and buybacks of excess vessels, and also output controls, such as quotas on allowable catches, including country quotas and IQs, which may or may not be transferable. All of the options reflect a move away from open-access systems of management to rights-based systems. The simplest approach, the vessel register, does not provide a specific right to a quantity of fish, but provides a right of access to the resource. At the other end of the spectrum, quotas for specific quantities of fish are assigned to users, and the users can transfer those rights to other entities for some consideration. The options fall into two categories: (1) those that do not remove the incentive to increase capacity through increased efficiency and (2) those that tend to remove that incentive. These are briefly reviewed below. It is assumed in this study that maintaining

the status quo regarding the management of tunas is not a viable option, and that some means of limiting fishing capacity is necessary if the tunas are to be effectively managed.

Options That Do Not Remove the Incentive for Overcapacity This category of measures seeks to limit the overall fishing capacity of vessels that are permitted to participate in a fishery. Because the quantity of fish that each vessel may take is not limited, there remains an incentive on the part of vessel owners to take as large a portion of the total allowable catch (TAC) as possible. Competition among the vessels remains high, and there is a strong incentive for each owner to improve the efficiency of his vessels so that they can take a greater portion of the total available catch. This capacity stuffing makes it more difficult to maintain conservation controls. Vessel Registers The efforts of the various regional tuna bodies to limit fishing capacity through the establishment of vessel registers are described by Joseph et al. (2007). ICCAT and the IOTC maintain “positive lists” of vessels that are authorized to fish in the waters under their responsibility; vessels not on those lists would not be authorized to fish in the Atlantic or Indian Oceans. However, the lists do not limit the numbers of vessels that can be on them. New vessels can be entered on the lists if they meet the qualifications prescribed by the regional tuna bodies. The register of the IATTC limits the vessels that can fish in the EPO, and therefore limits the fishing capacity. The IATTC approach is the only one that addresses directly the problem of overcapacity. Although the IATTC model has several shortcomings, which result in failure to control the expansion of fishing capacity as much as hoped, it nevertheless provides useful experience for the development of more effective capacity limitation.

2 Addressing the Problem of Excess Fishing Capacity in Tuna Fisheries

Regional Registers For every area of the world in which commercial quantities of tuna are harvested, there is an Article 64-type regional tuna body. Each of these bodies has expressed a need to limit and/or reduce the capacities of vessels operating within waters under its jurisdiction. Some have made first-cut attempts at limiting capacity by establishing registers of vessels authorized to fish in their regions of competence. These attempts provide the basis for formulating a simple and straightforward model for limiting capacity—the Regional Vessel Register (RVR). The RVR discussed here would provide mechanisms for reducing excess capacity while allowing for the participation of have-not nations in the fishery. Because the implementation of an RVR would not address fully the overcapacity problem, other controls on the fishery to prevent overexploitation would have to be established concurrently. The first thing that the establishment of an RVR would do would be to place a moratorium on fleet growth. Each state would be required to provide to the regional tuna body a list of vessels that it had authorized to fish under its flag. To prevent a state from “padding” the list with inactive or nonfunctional vessels, or to prevent a flood of vessels from entering the fishery from other areas as soon as the intention to establish the register became public knowledge, only vessels considered to be actively fishing in the area would be eligible for listing on the RVR. An actively fishing vessel might be defined as one that had been fishing in the area for at least 6 of the previous 18 months. To remain on the RVR, a vessel would have to remain active in accordance with the definition. Purse-seine vessels come in all sizes, from small coastal vessels that can carry only a few tons of fish to the largest ocean-going vessels capable of holding more than 3,000 mt of frozen tuna. Most of the world catch of tuna by purse-seine vessels is taken by vessels with carrying capacities greater than 400 mt. The smallest purse seiners fish only seasonally for tunas, spending most of their time fishing for other species, for example, anchovies,

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sardines, and mackerels. Some criteria would have to be established regarding which vessels could be included in RVRs. A useful criterion for listing a vessel on the RVR might be to include any purseseine vessel with a carrying capacity greater than 25 mt for which the annual catch of the principal market species of tuna makes up more than 50% of its annual catch of all species combined. In some fisheries tuna vessels may fish throughout the entire area of a regional organization, while in other areas fleets may be geographically isolated from other fleets. For example, in the western Pacific there are large fleets of vessels that confine their fishing to the area around the Philippines or Indonesia. It may therefore be necessary to consider the establishment of subregional registers to allow for these differences in the distributions of fleets. In such cases, additional control measures, for example, closed areas, would be needed. The RVR, which would be maintained by the appropriate regional tuna body, would include detailed information on the registry and technical characteristics of each vessel. For purposes of adaptability to changing conditions in the fishery, a key feature of any RVR system would be allowance for transfer of vessels among users. This means that the capacity quota assigned to a vessel should remain with the vessel, rather than with the flag state. This has been one of the obstacles confronting the smooth functioning of the IATTC system. Although the intent of the IATTC system is that the capacity quota stays with the vessel, rather than the flag state, some states have removed vessels from the register when those vessels transferred to another flag. In cases when the receiving flag has no unused capacity, the transferred vessel, which would have been removed from the register by the state from which it was transferred, could not be entered on the register, and, if it fished, would be declared to be engaged in “illegal, unregulated and unreported” (IUU) fishing. The reasons why a state might choose to act this way are obvious. States with fleets would not want to lose those fleets to others, so they would keep a “captive” capacity quota to use later.

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If the capacity quota followed the vessel to wherever it transferred to within the region a market for vessel capacity would likely be created. Without the transfer provision the value of a vessel would drop substantially, since it would be bound to a flag state, and that state could impose on the vessel whatever constraints or monetary requirements it chose. The vessel owner would have no options except to subscribe to the requirements, sell the vessel outside the region (although similar RVRs could be in effect in other regions), sell the vessel to someone within the same flag state, most likely at a reduced price, transfer it to some other use, or abandon or scrap it. Maintaining transferability within the RVR system would also provide the opportunity for the have-nots to acquire vessels; they could compete in the marketplace for capacity allocations. Inclusion of measures to allow for vessel replacement would be another important feature that should be considered for an RVR program. As vessels age, they must be replaced with new ones to ensure an economically viable and efficient fishery. However, the carrying capacity of the replacement vessel must not exceed that of the vessel being replaced, and that the replaced vessel must not be allowed to continue to fish for tunas in the area to which the RVR applied. It is likely that the replacement vessel would be more efficient than the one that was replaced; so some means of measuring the change in efficiency would have to be available, and mechanisms would have to be developed within the RVR system to adjust for these changes. In addition to changing efficiency, there is also the need to reduce fleet capacity in all of the fisheries because there is currently more capacity available than is needed to harvest all the species of tunas except skipjack at AMSY levels. At the outset, any RVR list instituted will provide for more capacity than needed for the fishery. An obvious means of achieving these reductions would be to remove vessels from the register, and the most commonly considered approaches would be through attrition or a buyback program. Tuna vessels have a long operational life, so reduction of fleet capacity by attrition is not prac-

tical. This leaves buybacks as the only practical option. Schemes by government and industry to buyback vessels have been used in a number of fisheries to reduce capacity. Many have been successful, but there are several problems. These have been discussed by Holland et al. (1999), Clark et al. (2003), and Curtis and Squires (2007), and reviewed by Joseph (2005) with respect to tuna fisheries. Among the problems are ensuring that bought-back vessels do not reenter the fishery, the lack of motivation for the fishermen to sell back their vessels and replace them with more efficient ones, and ensuring that most of buybacks are not the least-efficient vessels. When first started, there would most likely be more vessels on the RVR than needed to harvest the tunas at the AMSY level. A buyback scheme could be used to reduce the fleet size to levels closer to the optimum. At the outset it is likely that government or international monetary funding would be needed to make the buybacks, due to the large capital expenditures that would have to be made, but once the fleet reached the optimum level the program could be maintained by industry. For example, the current fleet limit for the EPO is for 243 vessels with a total carrying capacity of approximately 185,000 mt. The target carrying capacity for the area is about 135,000 mt. Since the modal vessel capacity is about 1,000 mt, the fleet should be reduced by approximately 50 vessels (or more if there was a disproportionate number of small vessels in the buyback group). At current vessel prices, this represents a buyback valued at approximately 200–300 million U.S. dollars. It would be unrealistic to think that the industry would be willing or able to make such payments at the outset of the program. However, after the removal of 50 vessels through buybacks, the catch per vessel and corresponding profitability per vessel would increase, and the industry would probably be a willing to fund further buybacks to compensate for increases in fishing capacity. Of course, a government program to fund buybacks would be a subsidy to the fishery because it would increase the profitability of the vessels that were

2 Addressing the Problem of Excess Fishing Capacity in Tuna Fisheries

not bought back. However, such a subsidy might be considered acceptable, since it would mitigate problems of overfishing and place the industry in a position to fund its own programs. If each regional tuna body established an RVR along the lines outlined above, there would be a global limit on purse-seine fishing capacity. However, there would have to be some coordination among the regional tuna bodies to prevent problems, such as having the same vessel on more than one register, from arising. A Global Register If an RVR were established by each of the tuna bodies, they could work together to create a global register. Such a list would be useful for several reasons. First, it would provide the governments with a list of vessels that are authorized to fish for tunas in the world’s oceans, and, by default, identify any vessels without such authorization, which would be deemed IUU vessels; second, it would prevent vessels from being carried on more than one register; third, it would facilitate legitimate transfers among regions; and fourth, it would be relatively easy to monitor changes in the capacity or characteristics of the world’s purse-seine fleet. The regional tuna bodies would be the most logical place to assign responsibility for creating and maintaining a global register. Responsibility could be delegated to a single regional tuna body by agreement of the other bodies, or they could be jointly responsible and work through a committee made up of representatives from each of the bodies. Alternatively, responsibility for maintaining the global register could be given to an organization outside of the regional tuna bodies, such as FAO or the World Fish Center. Licensing Holding a license would seem to be the same as being listed in an RVR, but there are things that could be done with a licensing scheme that could not easily be done with RVR schemes in their present form. Licensing schemes have been used in many

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fisheries to limit the numbers of vessels authorized to fish. Like an RVR scheme, licensing vessels to fish, even if the numbers of licenses are limited and other constraints, such as catch quotas, are implemented, does not take away the competition by the license holders to catch fish. The tendency of fishermen to race to catch their shares (or, preferably, more than their shares) of the harvest and to increase the efficiency of their vessels will remain as long as the amount of fish each vessel can take is not fixed. Regardless of this shortcoming, licensing has been used by several states to control entry into their fisheries (Sinclair 1983, Wilen 1988, Townsend 1990), but has not been used by regional tuna bodies to control international tuna fisheries. Tuna fisheries are multinational, and developing a licensing scheme, that is, acceptable to all states involved in a fishery is complicated by issues of sovereignty. If each state in an international tuna fishery undertakes its own licensing scheme it would be difficult to create an effective program for limiting capacity, but, if the authority to license were vested in the regional tuna bodies more versatile and effective systems could be developed. A simple approach to limiting capacity through licensing would be for each state with vessels fishing in the region to license each vessel in its fishery and to issue new licenses only for replacement purposes. If all states did this, it would basically result in prevention of the entry of additional vessels into the fishery of the region. The results would be essentially equivalent to an RVR without a buyback provision. The same problems of excess capacity and making room for have-nots exist for this licensing approach as for the RVR approach. If transferability of licenses was included in the program, have-nots could buy into the fishery; the marketplace would determine the value of a license, and any nation, group, or individual would be able to compete in that marketplace for a license. Townsend (1992), Townsend and Pooley (1995), and Cunningham and Greboval (2001) have discussed fractional licensing, and Joseph

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(2005) has suggested that it be considered for use in fisheries for tunas. Fractional licensing incorporates a reduction in fishing capacity at the outset of the program, and could include transferability of licenses. The fractional licensing, if properly applied, would eliminate the need for buybacks; its success would depend on the transferability of the fractional licenses. The regional tuna body would determine the target size for the fleet, which for all fisheries would be less than the current fleet size. The total number of licenses to be issued would be the fraction that the target fleet size is of the current fleet size. For example, if the current fleet size were 150 vessels, or 150,000 mt of carrying capacity, and the target fleet size were set at 100 vessels, or 100,000 mt of carrying capacity, each vessel would be issued two-thirds of a license. A vessel would not be authorized to fish without a full license, so the owner of one vessel who wishes to fish would have to acquire an additional one-third of a license. Since the licenses originally issued by the regional tuna body would be transferable, a market for fractional licenses would develop. In reality, tuna vessels are not all alike; in general, the larger, newer, better-equipped ones have greater fishing capacities than the others. In the above example, some of the largest vessels might be issued licenses with a “value” of 1 or more than 1, and the smallest ones might be granted licenses with values of less than one half. This raises several problems. First, decisions as to the values of licenses to be granted to each vessel would have to be made. This task would probably be assigned to the regional tuna bodies, which would use the characteristics of the vessels and their catches per day of fishing during the previous few years to make their decisions. The problem of balancing capacities among buyers and sellers would be complicated, so some sort of brokerage house at which fractions of licenses could be bought and sold would probably be needed. Because the conventions establishing the regional tuna bodies do not include provisions for the kinds of monetary transactions contemplated in a rational licensing scheme, they would have to be modified, or institutions would have to be cre-

ated outside the framework of the organizations. If the proper number of licenses were set at the initiation of the program, there would be no need for buybacks at that time. However, fishing capacity would probably increase because of improvements in equipment and fishing methods, so either some provision for buybacks would be needed to compensate for these efficiency changes, or the licenses would have to be for a fixed term, at the end of which their values would be reduced to compensate for increases in efficiency. Since there would be a market for the licenses, have-nots would be able to enter the fishery on the same basis as the haves. One of the advantages of a fractional licensing scheme would be equitability among the participants in a fishery. At the outset the value of each license would be reduced by the same percentage for every vessel, and the cost of bringing a license to unity would be proportionately the same for all vessels. The owner of a vessel with less than a full license for the area in which it has historically fished might wish to transfer that vessel to another area that does not have a fractional licensing scheme. This would not be possible, however, if the regional tuna bodies in the other areas had management schemes that prevent additions to fishing capacity in those areas (which they should have). It has been suggested by Joseph (2005) that auctions be used to sell predetermined numbers of fishing licenses in order to manage tuna fleet capacity, but this approach has not yet been applied. An auction system could reduce fleet capacity and provide an opportunity for have-nots to enter a fishery. If the licenses were issued for a limited term, the number of licenses auctioned at the beginning of the next term could be reduced to compensate for increases in fishing efficiency during the previous term. Under ideal conditions the regional tuna body would recommend a level of licensing less than the current fleet level, which would eliminate the overcapacity problem. Some of the vessels owned by unsuccessful bidders would be sold to successful bidders who did not own vessels and others would

2 Addressing the Problem of Excess Fishing Capacity in Tuna Fisheries

be converted to other uses or scrapped. Revenues from the auction could be used to compensate unsuccessful bidders whose boats were converted to other uses or scrapped. This would, in essence, be an industry-funded buyback program. Have-nots would be able to enter the fishery by successfully bidding for licenses. Owing to the many different sizes of purse-seine vessels, some system of setting the number of licenses by size categories would have to be developed. This could be accomplished by setting the numbers of licenses to be auctioned in proportion to the current size distribution of vessels, that is, the numbers of licenses in each size category would be a constant percentage of the numbers of vessels in each category in the current fleet. An auction could be structured in several ways. One would be for the regional tuna body to determine the numbers of licenses to be auctioned, conduct the auctions, carry out the buybacks, and monitor the overall program. Another would be for the regional tuna body to determine the numbers of licenses, but delegate the conduct of the auctions and buybacks to an independent organization. Still another way would be for the regional tuna body to set the numbers of licenses, but leave the auction and the buyback program to the industry, as is done in the Organization for the Promotion of Responsible Tuna Fishing. Like the other licensing schemes discussed here, this approach would need additional control mechanisms, such as catch quotas to prevent overfishing; also, it would not remove the incentive of fishermen to race to catch their share of the quota and to increase the efficiency of their vessels, but it would eliminate the need for government subsidies to fund buybacks.

Options That Tend to Remove the Incentive for Overcapacity With these options, the management system implements controls that tend to remove the incentive for vessel owners to increase fishing capacity by allocating the allowable catch among users or user groups.

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Allocating the Catch to Users or User Groups The allocation of catch quotas, as shares of the TAC, can result in a self-regulating mechanism to control capacity, particularly when the quotas are assigned to individual operators. In such cases, the incentive to build excess capacity is virtually eliminated because the holder of a quota would have a good estimate of how much fish he could harvest, and would know how much capacity would be needed to take that harvest. (Actually, the holder might elect to have capacity somewhat in excess of the amount needed to harvest his quota, in case the quotas were increased because of increased abundance of fish or in case of permanent or temporary loss of one or more of his vessels.) In contrast, if the quota were assigned to a nation, or to a group of vessels not all belonging to the same owner, there would be little or no incentive to limit fishing capacity, as the vessel owners could increase their shares of the overall catch by increasing the numbers of their vessels or the fishing capacities of the ones that they already have. A persistent problem for humankind has been the sharing of limited resources, that is, who gets what. This has been the cause of major conflict among individuals, bands, tribes, nations, and various other enclaves of people over the history of civilization; in some cases, these differences have led to armed conflict. Disputes over fisheries resources have not escaped such conflicts. Some nations have been able to resolve problems of allocation within their national fisheries, but in multinational tuna fisheries that has been much more difficult to do. If governments are to reach agreement on allocation, each of them must believe that it will be better off as a result of allocation than it was before the allocation. For have-nots, this often means that they must perceive an opportunity to enter the fishery through direct allocation when they are ready, or to enter by buying someone out. There has been a great deal of attention paid in international tuna fisheries to defining criteria that can be used in assigning allocations. These have been discussed by Joseph (2003, 2005). Although long lists of possible criteria have been

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Part I Introduction to Transnational Fisheries Management

developed, most of the limited allocations that have been made in tuna fisheries have been based on short-term historical participation in the fishery in question and how much of the resource is caught or occurs in the EEZs of the nations participating, or wishing to participate, in the fishery. It appears from the limited experience and success so far in allocating tuna resources that a set of well-defined criteria for making allocations will be needed before management controls based on partitioning the catch among fishing interests can be implemented, particularly since many coastal and/or developing states have either entered or expressed interest in entering tuna fisheries. Among the many criteria that are being discussed, in addition to the two mentioned above, is a “genuine and/or legitimate interest” in the fishery in question. This concept has been written into a number of studies of allocation criteria and into international instruments dealing with fisheries, but a clear definition of what constitutes a genuine and/or legitimate interest is lacking. The issue of allocation is complicated by the fact that the tuna fisheries employ several types of gear and several modes of fishing to catch several species of tunas. In the EPO, for example, purseseine vessels fishing for tunas set their nets on tunas associated with floating objects (particularly FADs), on tunas associated with dolphins, and on tunas in unassociated schools. Yellowfin, skipjack, bigeye, and a wide array of nontarget species are often caught in a single set. Fortunately, the less abundant temperate albacore and bluefin tuna are seldom taken in mixed-species sets of purse-seine vessels. Matters are further complicated by the fact that the vessels of some nations tend to employ different types of sets, and may be geographically isolated from other fleets employing other set types. For example, in the EPO fishery, Colombian, Mexican, and Venezuelan vessels fish mostly for tunas associated with dolphins (almost all medium to large yellowfin), while Ecuadorian and Spanish vessels fish mostly on tunas associated with FADs (mostly skipjack, but with significant amounts of small to medium bigeye and yellowfin). Yellowfin and bigeye are fully exploited, and in need of

limits on their catches, while skipjack can support increased fishing effort and catch. Formulation of regulations that would protect bigeye and yellowfin without severely reducing the catches of skipjack would probably require some sort of stratification of catch quotas by area, species, and mode of fishing. Squires et al. (1998) have discussed the problems associated with the management of multispecies fisheries when individually allocated quotas are used, which include complex species interactions, substantial mingling of stocks, and limited ability of fishermen to target specific species. Accordingly, attempts to regulate tuna fisheries have met with limited success. Nevertheless, development of allocation schemes that can lead to resolution of the overcapacity problem in the world’s purse-seine fisheries is possible. The pros and cons of assigning allocations to nations have been discussed often by RFMOs. All nations with genuine and/or legitimate interests in a fishery would be included in the program. Most or all of the principal market species of tuna could be included in the TACs, or separate TACs could be established for each species, except probably for skipjack in most or all areas. In most tropical purse-seine fisheries TACs would be needed for yellowfin and bigeye because these species are fully exploited or overexploited. If there were no TACs for skipjack, vessels would probably continue to fish for skipjack after the TACs for yellowfin and bigeye quotas were filled, and discard the yellowfin and bigeye at sea, which would, of course, result in exceeding the TACs for those two species. A solution to this might be to (1) set the quotas for yellowfin and bigeye at levels somewhat less than those corresponding to the AMSYs and (2) permit fishermen to fish for skipjack after the yellowfin and bigeye quotas were reached. However, they would be obliged to retain all of the yellowfin and skipjack that they caught, and the amounts of yellowfin and skipjack that they retained would have to be less than, say, 5 or 10% of the total landings for each trip of each vessel. Observers on the vessels would report any discards of yellowfin or bigeye. Vessels that exceeded the 5 or 10% limits would be penalized. An alternative

2 Addressing the Problem of Excess Fishing Capacity in Tuna Fisheries

would be to set a TAC for skipjack. If the TAC for skipjack were set on the basis of catch history of the three species in the fishery the discarding problem might be minimized, but would result in lost revenues from potential catches of skipjack, especially during years of above-average abundance of that species. Because of the problems associated with the stratification of the fishery that were mentioned above, the TAC for each of the species would have to be based on the catch histories of the nations participating in the fishery. The result might be a series of allocations to nations that were based on areas of fishing, species taken, and modes of fishing (set types). Using once again the example of the EPO fishery, Ecuador would require greater portions of the skipjack and bigeye TACs, while Mexico would require a greater portion of the yellowfin TAC. If there are no limits placed on the numbers of vessels that would participate in the fishery of a nation that had been allocated a catch quota, there might be a tendency for capacity to increase, through either the addition of more vessels or increases in efficiency. This could be overcome in the nations that limited the fishing capacities of their fleets. However, the objectives of nations might differ; some might choose to maximize profits by limiting the number of vessels authorized to fish to the number that would be needed to take that nation’s quota over the course of the fishing year, but others might choose to increase employment of fishermen and shipyard workers by having more vessels than necessary to harvest that nation’s quota. If there were any nations in the latter category, the problem of overcapacity would not be adequately resolved. Allocation of quotas to individual vessels might resolve that problem. In the assignment of IQs, the management system would be confronted with the problems of a multispecies and multimodes of fishing described above for country allocations. In setting the overall TAC, it would have to be determined whether it would include skipjack, or only fully exploited yellowfin and overexploited bigeye. An overall catch limit including all three species might not work because fishermen might direct their effort mostly to-

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ward yellowfin and bigeye, for which they receive higher prices, which would result in overfishing of those two species. Furthermore, the abundances of the various species of tunas vary due to natural factors, as well as to fishing, so the TACS would nave to be adjusted, probably on an annual basis, to best manage the fishery. One solution to this might be to set the quotas for the three species as percentages of the variable TAC. Once the TAC was selected it might be partitioned by areas and allocated to individual vessels or operators. There are two advantages to partitioning the quotas by area. First, fishing conditions vary from area to area. In the EPO, for example, yellowfin are caught in association with dolphins over a wide area of the EPO, but bigeye and skipjack, particularly the former, are caught mostly between about 5◦ N and 10◦ S. Second, as stated previously, vessels of different nations fish in different areas and employ different modes of purse seining. All of the regional tuna bodies have adequate catch and effort statistics by area, season, and mode of fishing to ensure that the assignment of IQs by areas would result in a total TAC for the region that would equal the overall TAC. The wide range of characteristics of purse-seine vessels operating in the fishery must be considered in setting the IQs. The statistical databases could be used to determine how these assignments would be made. For example, personnel of the regional tuna bodies could determine how many vessels there were in each of several (say, six) categories and the annual average catches per vessel of each of the categories, and this information would be used as the basis for assignment of the allocations. Among the most difficult problems of assigning IQs would be determining the basis for assigning them and the numbers that would be assigned. The simplest and most straightforward approach would be to assign an IQ to each purse-seine vessel in the fishery. As there is already overcapacity in all of the tuna purse-seine fisheries, this would not bring the fishing capacity to optimum levels, but it would at least prevent further increase in fishing capacity. An alternative approach would be for the management body to reduce the number of IQs to

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be allocated to less than the number of vessels in the fleet, increase the amounts of the IQs in proportion to the decrease in vessel numbers, and then auction the IQs to the highest bidders. The fleet size would be reduced to appropriate levels, and the unsuccessful bidders, whose vessels would be converted to other uses or scrapped, would be compensated from the proceeds of the auction. As was the case for some of the other systems discussed previously, have-nots could enter the fishery by bidding successfully for IQs. Finally, if IQs were properly set they would provide a self-regulating mechanism to control fishing capacity, as the vessel owners would have no reason to acquire more fishing capacity than necessary to harvest their quotas.

management or to assist developing coastal states purchase IQs. Several avenues for resolving some difficult issues in the management of tuna fisheries would open if ITQs were introduced: First, states that did not have tuna vessels, but would like to acquire them, would have opportunities to enter the fishery by purchasing ITQs. Second, individuals or groups that are opposed to tuna fishing and would like the catches of tunas reduced, or that would like the bycatches of endangered, threatened, or icon species reduced by reducing the catches of target species, could purchase ITQs and retire them from the fishery. Third, the management agency would be able to purchase ITQs and retire them from the fishery in order to reduce capacity and increase average abundance of the resource.

Transferability of Quotas It has been long advocated by economists that allocated quotas should be a true use right and be transferable if the “tragedy of the commons” (Hardin 1968) and overcapacity are to be avoided (Boyce 1992, Grafton 1996, Squires and Kirkley 1996, Squires et al. 1998, Clark and Munro 2002, Hannesson 2004). They have argued that if the IQs were made transferable (ITQs), the more efficient vessel operators would tend to purchase them from the less efficient ones, and the fleet size would be reduced without a reduction in catch. In essence, the ITQs would be a property right that could be bought, sold, or utilized. Before assigning the ITQs, the governments, working through the regional tuna bodies, would have to define the nature of the rights. Would the rights be held in perpetuity (Batstone and Sharp 1999), or would they expire after a preset period of years? For many tuna vessels that are operated efficiently, the loans for their purchase are paid off within a few years; so the duration of the ITQ might be set to expire when the loan for the vessel was paid off, or at the end of the expected life of the vessel. After that period, the ITQ could revert to the regional tuna body for sale to the same or other potential operators. Funds generated through such transactions could be used to offset the cost of

Final Remarks Throughout this report it has been pointed out that there is excess fishing capacity in the purse-seine and longline fleets that fish for tunas, and that this is placing effective conservation and management measures for these species in jeopardy. The problem has become so severe that not only governments and regional tuna bodies, but the industry itself, are calling for measures to correct the problem. All of the regional tuna bodies have initiated programs to limit fishing capacities in an effort to ameliorate this problem. In 1998, the IATTC began negotiations to limit the number of purse-seine vessels operating in the EPO to the levels at that time, and in each year since then has attempted to strengthen the programs to limit capacity. The RVR, which the IATTC established, is a step in the right direction, but it has yet to resolve the problem. Between 1998 and 2006, the carrying capacity of the purse-seine fleet in the EPO has increased by about 35%. The problem of transferability of individual capacity quotas has not yet been fully resolved, and is limiting the success of the program. The efforts of ICCAT to limit fishing

2 Addressing the Problem of Excess Fishing Capacity in Tuna Fisheries

capacity have been mostly in the form of recommendations to member and participating parties that they not increase their fleet capacities beyond certain designated levels. These designated levels were often chosen as those of the years with the greatest capacities and/or the greatest catches. The methods employed for monitoring changes in capacity have not been effective, and controls on fleet growth have met with limited success. The situation for the IOTC is developing in a manner similar to that of ICCAT. In the WCPO, an initiative to limit fishing effort, but not fleet size, is under way. It is still too early to know whether this program will prevent overfishing, but it is certain that it does not directly address the problem of overcapacity, which represents a waste of capital that could be better directed at other enterprises. The construction of longline vessels less than 24 m in overall length, but capable of fishing on the high seas and superfreezing their catches so as to make them acceptable for the market for sashimi-grade fish (Miyake 2007) is contributing to the overcapacity problem, as these vessels, unlike those more than 24 m in overall length, are not subject to limitations directed at reducing longline fishing capacity. This has resulted in an increase in the construction of smaller longline vessel. Unless addressed, this situation can reduce the effectiveness of attempts to control longline fishing capacity. For most of the tuna fisheries, open or unlimited access to tuna resources has led to too much fishing capacity, resulting in overfishing of some species and waste of capital. To resolve this “tragedy of the commons,” (Hardin 1968) nations must move away from open-access practice and develop systems that assign use or property rights to the participants in international tuna fisheries. The assignment of these rights is a formidable task because of the difficulty in determining what the rights should entail, how they should be assigned and how those with a genuine and/or legitimate interests in the fishery, but who have not been assigned use rights, should be treated. Several approaches to limiting fishing capacity in a fishery in which use rights have been assigned are presented in this

33

report. Some of these approaches include incentives for limiting fishing capacity, and, as such, are self-regulating, while others do not include such incentives. The difference is whether the right provides an opportunity to fish, or whether it provides a limit on the quantity of fish that can be taken. In the former case, there would be a race to take as great a share of the catch as possible before the season ended, resulting in a tendency to increase the fishing capacity. In the latter case, a vessel owner would have no incentive to increase the fishing capacity of his vessel(s) beyond that necessary to harvest his quota. The non-self-regulating approaches include systems that provide authority or licenses to fish through some sort of assignment or through competitive bidding, while the self-regulating approaches allocate shares of the catch to nations, enterprises, or individuals. The key to the success of either of these approaches is the inclusion of ITQs. An ITQ, when coupled with the allocation of catch quotas, would eliminate the incentive to increase capacity and would provide for the entry of have-nots into the fishery by allowing them to purchase ITQs. It would also provide the opportunity for groups that are opposed to fishing to purchase ITQs and set them aside in order to reduce fishery-induced mortality of target, bycatch, and/or icon species. It seems clear to the authors of this paper that the most efficient means of controlling fishing capacity and managing the tuna resources of the world would be to institute a system of ITQs. This would bring the fleet sizes into balance with the ability of the stocks, other than skipjack, to sustain current levels of catch, and into balance with the demand for skipjack. This would ensure that the fisheries were carried out on a sound economic basis, and would ease political tensions among nations operating vessels in the fishery. However, judging from the extended time it has taken for individual nations to develop licensing schemes with buyback provisions and/or ITQ systems of management, it would be optimistic to think that similar systems could be developed quickly for the complicated multinational tuna fisheries. However, we are at a pivotal point in history of tuna fisheries. Most of

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the tuna stocks are in reasonably good health, sustaining high levels of catch. However, the available fishing capacity is far greater than that necessary to harvest the fish at levels corresponding to these. This excess fishing capacity poses a threat to the sustainability of the tuna resource, represents a waste of capital, and decreases the economic returns to the fishery. Unless effective management measures are implemented in the near future, it is likely that the tuna stocks that are currently overfished will become further overfished and that those that are currently maintained at sustainable levels will become overfished. Catch and effort restrictions will be inadequate to conserve these resources. Action is needed now to halt the growth in fleet capacity and to establish measures to reduce that capacity over the longer term. This can be achieved by taking the following actions: 1. All of the regional tuna bodies should agree to moratoria on the building of new purseseine vessels for tuna fishing. The tuna industry itself has called for a moratorium, and governments should take advantage of this opportunity by following up the industry initiative. Implementing moratoria would provide the regional tuna bodies with time to develop more comprehensive programs for capacity limitation and reduction. 2. The development of RVRs within each regional tuna body, as outlined in section “Vessel Registers,” would provide a mechanism for limiting fishing capacity, and, if coupled with a buyback provision, could provide the opportunity for reducing fleet capacity to more optimal levels. It would also set into motion the application of rights-based management, making it easier in the long run to develop more efficient means of controlling capacity. Once the RVRs are developed for the regional tuna bodies, they could work together to develop a global RVR, which would provide a means of monitoring global fishing capacity and preventing spillovers from one fishery to another. The RVRs may not be the most efficient means of managing

fishing capacity, but they may be the most practical means of accomplishing something over the short term, and, once they have been implemented, there will be time to develop more efficient systems, without doing serious damage to the resources until those more efficient systems are established. 3. Once the RVR systems are in place, and capacity is under control, the regional tuna bodies would have time to examine the merits and possibilities for introducing more efficient rights-based systems, particularly ITQs, as outlined in section “Using Buybacks to Mitigate Problems of Excess Capacity and Have-Nots.” A well-designed ITQ system incorporates all of the attributes needed for efficient management: ITQ holders would utilize only enough fishing capacity to take their quotas, there would be no incentive for capacity growth, the fishery would operate on an efficient economic basis, opportunity for have-nots to enter the fishery would be available, and environmental groups could purchase quotas to meet their objectives. However, because of the complexities in developing such systems, this will not happen soon, so it is imperative that the second option above be implemented as soon as possible. 4. A strong enforcement capability will be required to eliminate IUU fishing and ensure compliance with the systems developed. The experience of ICCAT with bluefin tuna provides guidance on how this could be accomplished (Barrett 2003). The regional tuna bodies should work together to develop mechanisms to persuade the owners of IUU vessels and the nations in which they are registered to comply with the conservation programs. Such mechanisms could include the use of “diplomatic persuasion” by the members of the regional tuna bodies on the IUU nations, the use of “bad press” to convince the IUU nations that they should comply with the conservation programs, denial of access to port facilities to IUU vessels,

2 Addressing the Problem of Excess Fishing Capacity in Tuna Fisheries

or the use of trade and economic sanctions against the offending nations. 5. Purse-seine vessels take about 60% of the world catches of tuna. The alternatives discussed above for limiting fishing capacity have been presented in the light of application to purse-seine fleets. If the issues of fishing capacity and effective conservation are to be resolved, controls must be applied to much of the remaining 40% of the world’s tuna fleet. It has already been mentioned that the fishing capacity of the large-scale longline fleet should be reduced by about 20%. The industry has been attempting to address this problem, but its efforts have not been completely successful. Also, as mentioned above, the construction of longline vessels that are less than 24 m in overall length, but capable of fishing on the high seas and superfreezing their catches so as to make them acceptable for the market far sashimi-grade fish is contributing to the overcapacity. Poleand-line vessels account for about 15% of the world catch of tunas. These vessels catch mostly skipjack, which are not overfished, but, in addition, they catch substantial portions of the world’s catches of albacore, and also yellowfin and bluefin. Relatively little research has been done on the pole-and-line fisheries for tunas. Nevertheless, rather than waiting for the results of such studies, the moratorium and RVR approaches suggested for purse-seine vessels should be applied to longline and pole-and-line vessels at the same time. In this way, 90% of the excess capacity problem would be addressed. The remaining 10% of the catch is taken in coastal waters by small vessels, using a variety of gear type (Gillett 2005). It would probably be difficult to apply capacity controls to these small fleets that are similar to those applied to the large fleets. An alternative approach might include special catch quotas that are assigned to these fleets and administered by the flag states. Regardless of how this is handled, it is imperative over the long run that

35

controls be applied to all fleets, as otherwise efforts to control only large fleets would be placed in jeopardy. An excellent opportunity to correct this situation was provided at the meeting of regional tuna bodies held in July 2008 in San Sebastian, Spain and agreed to meet. At that time all of the executives and directors plus key members of the plenary bodies of these organizations met to discuss a variety of issues related to their operation. Since there is worldwide agreement that overcapacity exists in the tuna fisheries and that these excesses, unless corrected, are likely to result in overexploitation or further overexploitation of these valuable resources and in further overcapacity, priority should be given to outlining a plan of action to limit, and ultimately reduce, fishing capacity. Such a plan of action should include, as a first step, an agreement to set a moratorium on the entry of purse-seine and longline vessels into tuna fisheries, with implementation of the moratorium. As a second step, the meeting should agree to implement a global RVR with transferability for purse-seine, longline, and pole-and-line fleets, or an equivalent program, within 2 years of implementation of the moratorium. Buyback programs should be considered as part of this process. A third step would be to agree to undertake studies to examine the possibility of developing an ITQ system for tunas, including a provision for handling small coastal fisheries. This outline of action may appear to be ambitious, but unless states and regional tuna bodies exercise their responsibilities in a timely and effective manner, our tuna fisheries and the resources upon which they are based will be placed in jeopardy.

Endnote 1. Kirkley and Squires (1999) and Squires et al. (1995) discuss ITQS in multispecies fisheries in more detail.

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References Allen RL. 2001. The Inter-American Tropical Tuna Commission. Inter-American Tropical Tuna Commission, Special Report, No. 12, pp. 21–29. Barrett S. 2003. Environment and Statecraft: The Strategy of Environmental Treaty-Making. Oxford: Oxford University Press, 446 pp. Batstone C and BMH Sharp. 1999. New Zealand’s quota management system: the first ten years. Marine Policy, 23(2):177–190. Bayliff WH. 2001. Organization, functions, and achievements of the Inter-American Tropical Tuna Commission. Inter-American Tropical Tuna Commission, Special Report, No. 13, 122 pp. Boyce JR. 1992. Individual transferable quotas and production externalities in a fishery. Natural Resource Modeling, 6(4):385–408. Clark CW, G Munro, and UR Sumaila. 2003. Subsidies, buybacks, and sustainable fisheries. University of British Columbia Fisheries Centre, Research Reports, No. 11/3, pp. 4–18. Clark CW and GR Munro. 2002. The problem of overcapacity. Bulletin of Marine Science, 70(2):473–483. Corrado C and J Mattey. 1997. Capacity utilization. Journal of Economic Perspectives, 11(1):151–167. Cunningham S and D Greboval. 2001. Managing fishing capacity: a review of policy and technical issues. FAO Fisheries Technical Paper, No. 409, 60 pp. Curtis R and D Squires (eds). 2007. Fisheries Buybacks. Ames, IA: Blackwell Publishing, 267 pp. de Leiva Moreno JI and J Majkowski. 2005. Status of the tuna stocks of the world. FAO Fisheries Proceedings, 2:58–114. Dewees C. 1989. Assessment of the implementation of individual transferable quotas in New Zealand’s inshore fishery. North American Journal of Fisheries Management, 9(2):131– 139.

FAO. 1998. Report of the Technical Working Group on the management of fishing capacity. FAO Fisheries Report, No. 586, 57 pp. FAO. 2000. Technical consultation on the measurement of fishing capacity. FAO Fisheries Report, No. 615, 51 pp. FAO. 2005. Yearbook of Fishery Statistics, Vol. 96/1. Rome, Italy: Food and Agriculture Organization of the United Nations, 664 pp. Garcia SM, JI de Leiva Moreno, and R Grainger. 2004. Global trends in the state of marine fisheries resources. FAO Fisheries Technical Paper, No. 457. Gillett RD. 2005. Global study on non-industrial tuna fisheries. FAO Fisheries Proceedings, 2:175–231. Grafton RQ. 1996. Individual transferable quotas: theory and practice. Reviews in Fish Biology and Fisheries, 6(1):5–20. Greboval D and G Munro. 1999. Overcapitalization and excess capacity in world fisheries: underlying economics and methods of control. FAO Fisheries Technical Paper, No. 386, pp. 1–48. Hannesson R. 2004. Privatization of the Oceans. Cambridge: MIT Press. Hardin G. 1968. The tragedy of the commons. Science, 162(3859):1243–1248. Harley SJ, PK Tomlinson, and JM Suter. 2004. Possible utility of catch limits for individual purse-seine vessels to reduce fishing mortality on bigeye tuna in the eastern Pacific Ocean. Background paper presented at the 5th Meeting of the Working Group on Stock Assessment, Inter-American Tropical Tuna Commission, 8 pp. http://www.iattc.org/PDFFiles/SAR5-05%20BET%20A%20Catch%20limit.pdf. Holland D, E Gudnundsson, and J Gates. 1999. Do fishing vessel buyback programs work: a survey of the evidence. Marine Policy, 23(1):47– 69. Holland DS. 2000. Fencing the fisheries common: regulatory barbed wire in the Alaskan groundfish fisheries. Marine Resource Economics, 15(2):141–149.

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Homans F and J Wilen. 1997. A model of regulated open access resource use. Journal of Environmental Economics and Management, 32(1):1–21. IATTC. 1998. Annual Report of the InterAmerican Tropical Tuna Commission, No. 1997, 310 pp. IATTC. 2003. Tunas and billfishes in the eastern Pacific Ocean in 2002. Inter-American Tropical Tuna Commission, Fishery Status Report, No. 1, 96 pp. ICCAT. 2003. Report for the Biennial Period, 2002–03, Part 1 (2002), No. 1, pp. 15–351. IPHC. 1998. The Pacific halibut: biology, fishery, and management. International Pacific Halibut Commission, Technical Report, No. 40, 55 pp. Joseph J. 2003. Managing fishing capacity of the world tuna fleet. FAO Fisheries Circular, No. 982, 67 pp. Joseph J. 2004. Exploitation, management, and conservation of tuna, billfish, dolphins, and other upper-level predators in the eastern Pacific Ocean. La Jolla, CA. Unpublished manuscript. Joseph J. 2005. Past developments and future options for managing tuna fishing capacity, with special emphasis on purse-seine fleets. FAO Fisheries Proceedings, 2:281–323. Joseph J and JW Greenough. 1978. International Management of Tuna, Porpoise, and Billfish—Biological, Legal, and Political Aspects. Seattle and London: University of Washington Press, 253 pp. Joseph J, D Squires, W Bayliff, and T Groves. 2007. Requirements and alternatives for the limitation of fishing capacity in tuna purse-seine fleets. FAO Fisheries Proceedings, 8:153–191. Kirkley J and D Squires. 1999. Measuring capacity and capacity utilization in fisheries. FAO Fisheries Technical Paper, No. 386, pp. 75–116. Langley A, J Hampton, P Williams, and P Lehodey. 2003. The Western and Central Pacific Tuna Fishery 2003: Overview and Status of Tuna Stocks. Noumea: Secretariat of the Pacific Community, Oceanic Fisheries Programme.

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Mace P. 1997. Developing and sustaining world fishery resources: the state of science and management. Paper delivered to the World Fisheries Congress, Brisbane, 1996. Unpublished manuscript. McGregor C. 2001. Commission for the Conservation of Southern Bluefin Tuna. Inter-American Tropical Tuna Commission, Special Report, No. 12, pp. 39–42. Miyake MP. 2007. Factors affecting recent developments in tuna longline fishing capacity and possible options for management of longline capacity. FAO Fisheries Proceedings, 8:107– 116. Miyake PM. 2005a. A brief history of the tuna fisheries of the world. FAO Fisheries Proceedings, 2:23–50. Miyake PM. 2005b. A review of the fishing capacity of the longline fleets of the world. FAO Fisheries Proceedings, 2:157–170. Morrison CJ. 1985. Primal and dual capacity utilization: an application to productivity measurement in the U.S. automobile industry. Journal of Business and Economic Statistics, 3:312– 324. Reid C, J Kirkley, D Squires, and J Ye. 2005. An analysis of the fishing capacity of the global tuna purse-seine fleet. FAO Fisheries Proceedings, 2:117–156. Ribeiro Lima A. 2001. The International Commission for the Conservation of Atlantic Tunas. Inter-American Tropical Tuna Commission, Special Report, No. 12, pp. 43–46. Sinclair P. 1983. Fishermen divided: the impact of limited entry licensing in northwest Newfoundland, Canada. Human Organization, 42(4):307–314. Squires D, H Campbell, S Cunningham, C Dewees, RQ Grafton, SF Herrick, J Kirkley, S Pascoe, K Salvanes, B Shallard, B Turris, and N Vestergaard. 1998. Individual transferable quotas in multispecies fisheries. Marine Policy, 22(2):135–159. Squires D, Y Jeon, RQ Grafton, and J Kirkley. 2000. Capacity and capacity utilization with

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transferable property rights in common-pool resource industries. Unpublished manuscript. Squires D and J Kirkley. 1996. Individual transferable quotas in a multiproduct common property industry. Canadian Journal of Economics, 24(2):318–342. Squires D, J Kirkley, and CA Tisdell. 1995. Individual transferable quotas as a fisheries management tool. Reviews in Fisheries Science, 3(2):141–169. Townsend R. 1990. Entry restrictions in the fishery: a survey of the evidence. Land Economics, 66(4):359–378. Townsend R. 1992. A fractional license program for fisheries. Land Economics, 68(2):185– 190.

Townsend R and S Pooley. 1995. Fractional licenses: an alternative to vessel buy-backs. Land Economics, 71(1):141–143. Wilen JE. 1985. Towards a theory of the regulated fishery. Marine Resource Economics, 1(4):369–388. Wilen JE. 1988. Limited entry licensing: a retrospective assessment. Marine Resource Economics, 5(4):289–311. Wilen JE. 1989. Rent generation in limited entry fisheries. In Neher PA, R Amason, and N Mollett (eds) Rights Based Fishing. Dordrecht, The Netherlands: Kluwer Academic Publishers, pp. 249–262.

Chapter 3

Property and Use Rights in Fisheries Dale Squires

Introduction

Property Rights

Rights-based management is increasingly used to manage fisheries throughout the world. Rights were, until recently, used almost exclusively to manage fisheries within the 200-mile exclusive economic zones (EEZs) of nations. Conservation and management of transnational fisheries for tunas and other highly migratory species is turning to rights-based management as well, but, given the transnational nature of these fisheries, the sovereignty of nations, and the state of international law, the development of property and use rights in these fisheries is proceeding along a different path and within the context of international treaties and customary law. The purpose of this chapter is to provide a general background to property and use rights for the conservation and management of transnational fisheries for tunas and other highly migratory species. Such a background facilitates the discussion and analysis of rights-based management and the emergence of property rights for the conservation and management of transnational fisheries for highly migratory species, particularly tunas.

From a legal perspective, property is a bundle of rights over resources that the owner is free to exercise and that is protected from interference by others (Cooter and Ulen 2004). Property rights are also political institutions that define or delimit the range of privileges granted to individuals or groups to specific assets (Libecap 1989). Property rights, as political institutions, allocate decision-making authority, and thereby determine the economic player in a system and define the distribution of wealth and income, and, more generally, costs and benefits, in a society (Johnson and Libecap 1982, Libecap 1989). Property right institutions range from formal arrangements, such as constitutional provisions, statutes, and judicial rulings, to informal conventions and customs pertaining to the allocation and use of property (Libecap 1989). These rights are not immutable, in that they may change from one generation to another. The major source of externalities, and thereby economically inefficient resource use, can be traced to various impediments that prevent the establishment of property rights (Baumol and Oates 1988). Property rights facilitate the socially

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efficient exploitation of resources, enabling the owner to exclude others from the resource and thereby internalize the externalities that would occur if access were free (De Meza and Gould 1992). The ability to exclude also provides incentives to invest in improving the quality of the resource and exploit it at a socially optimum rate. Coase (1960) emphasized the importance of economic costs and discussed the distribution of property rights. The nature in which property rights are defined and enforced affects an economy’s performance in at least two ways (Libecap 1989). First, because property rights institutions assign ownership to assets and designate the benefits and costs of resource-use decisions, these institutions structure incentives for economic behavior within the society. Second, because these institutions allocate decision-making authority, the prevailing property rights arrangement determines the composition of the players in the economic system. Alternative bundles of rights, as defined by the strengths of different characteristics of the rights, create incentives to use resources in ways with varying degrees of economic efficiency and conservation. Critically, rights have the potential to align the incentives that individuals face with the goals of society.

Types of Property Rights Property rights come in many different forms and can be classified by the extent to which the holder of the right has exclusive use. At one extreme is open access (res nullis) or the absence of rights in that no entity has exclusive use of the resource (Warming 1911, Gordon 1954).1 There is the right to access the fishery along with others. The high seas are open access, because access is free to all, and no user has the legal right under the United Nations Convention on the Law of the Sea (LOS) and the Agreement for the Implementation of the Provisions of the United Nations Convention on the Law of the Sea of 10 December 1982 relating to the Conservation of Straddling Fish Stocks and Highly Migratory Fish Stocks (UNIA) to keep another user out. Un-

der open access, no individual resource user has an economic incentive to conserve the resource and none can conserve the resource by delaying use, since that only makes more of the resource available to other users. This is the “Tragedy of the Commons.” Fishers have a right to the fish that they catch through the rule of first possession, according to which the first party to use an unowned resource acquires a claim to it (Cooter and Ulen 2004).2 This ownership rule, however, creates conditions for competitive open-access exploitation if there are multiple users of the resource. Regulated open access remains open to entrants, but participants are obligated to abide by regulations, which are generally biologically motivated to hold aggregate harvests at sustainable levels, such as a total allowable catch (TAC), or to maintain a prescribed spawning biomass (Homans and Wilen 1997). State rights (res publicae), which are rights held by the state, provide exclusive use by a broadly defined group. Individuals or groups may be allowed to use the resource, but only according to the rules established by the state or its managing agency. Strictly speaking, EEZs are state property, although in practice many EEZs are referred to as open access because, on a de facto, although not de jure, basis, access is open to all. When the state does not regulate, the resource use is akin to open access, even though the state is the legal owner (Baland and Platteau 1996). Property with exclusive use by a usually smaller and better defined group than the state is called common property (res communes) (Baland and Platteau 1996). The members of the group exclude those that are not members. Members of the group have specified rights and duties. Unregulated common property occurs when access rules prevail that define insiders, as opposed to outsiders. Regulated common property occurs when not only is access delimited, but rules of membership and use are also defined. Common property management implies collective regulations regarding both membership and the way to use the resource, and the existence of monitoring and sanctioning procedures so that those rules

3

can be effectively enforced (Baland and Platteau 2005). Wade (1987), Ostrom (1990), Baland and Platteau (1996, 2005), and Seabright (1997) have extensively reviewed the conditions for effectively regulated common property.3 Under common property, the right of exclusion is assigned to a well-defined group, whereas under open access, a right of inclusion is granted to anyone who wants to use the resource (Baland and Platteau 1996). Neither open access nor unregulated common property gives individuals the proper incentives to act in a socially efficient way. Regulated common property has the potential to provide proper incentives to individuals and the group to conserve the resource stocks and ecosystem and maximize the sustainable economic surplus obtained by using the resource, along with aligning the actions of the group with the interests of society (Ostrom 1990, Bromley 1991, Baland and Platteau 1996).4 Common property tends to emerge when the demand on the resource is sufficiently high to allow continued open access, but indivisibilities or other factors preclude dividing up and allocating the resource itself (Ostrom 1990, Baland and Platteau 1996, 2005).5 Scale economies, arising because of the indivisibilities, lie almost always on the side of costs, if the alternative is to divide the resource into several private portions that must be enclosed and protected. The costs of negotiating, defining, and enforcing private property rights are increasing with the physical base of the resource. Such indivisibilities are pervasive for resources that are highly mobile over large expanses of space. Other indivisibilities include the costs of collecting information and scientific assessment of fish stocks. Scale economies may also arise in benefits, either in the resource itself, such as multiple products from the resource because they form part of an overall ecosystem, such as ecosystem services, or in complementary factors. Common property also generates risk pooling by the holders of the resource when there is sufficient variation in its returns across time and space. Common property is less likely when the value of a resource is high and enforcement costs of alternative

Property and Use Rights in Fisheries

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property forms, particularly private property, are moderate. Common property entails considerable transaction costs among the group owners and arrangements for the distribution of shares of the aggregate net benefits among the owners. Fishing rights held by individual fishers or subgroups of fishers may be nested within the common fishing rights, but these are attenuated to a varying extent by group or community rules (Willmann 2000). Common fishing rights are not always as exclusive as private property or use, such as individual transferable quotas (ITQs), either because of the group’s inability to ensure and protect such exclusivity (the cost of doing so might be prohibitive) or because the group willingly allows others to share in the benefits conferred by the common fishing rights. Management systems in which groups or organizations of fishers hold catch quotas in the form of fishing cooperatives are recently established forms of common rights. In most instances, however, common rights are predicated on territorial rights to fishing grounds, fish aggregating devices, natural and artificial reefs, stretches of rivers, or sections of bays and lakes (Willmann 2000). Willmann (2000: 1) observed that, “Within such exclusive territories, use rights and/or utilization rules (e.g., type of gear; time of fishing; etc.) may be further defined for specific fisheries and individual fishers or groups of fishers. Utilization rules may change in accordance with variability in resource availability and abundance.” Private property (res privatae) occurs when an individual, agent, or firm holds the rights. The private owner has the right to use and benefit from the exploitation, conservation, or sale of the resource. Private property can exist only with state sanction and protection, and does not necessarily imply the absence of state control or regulation. Private property, when the owner is absent and careless about the resource, is tantamount to open access because formal or legal ownership rights are not actually exercised (Baland and Platteau 1996). Hybrid property in practice, overlapping combinations, or hybrids of property rights are imposed upon resources. As conditions change, one

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form of right may predominate over another. Because of the prevalence of state property or other forms of property rights embedded within the unit of a state or a regional fishery management organization (RFMO), coupled with the common pool and renewable nature of common resources, some form of comanagement generally accompanies the hybrid rights.6

Use Rights Use rights are distinguishable from property rights. Property rights entail “ownership” of the resource stock itself, but use rights do not. Use rights instead pertain to exclusive utilization or rights of access. States tend to retain ownership of the property, and grant the right of use to individuals or groups. On the high seas, ownership of a resources stock is increasingly held by an RFMO essentially established through custom as international common property for a particular region or species, which, in turn, grants the right of use to states, individuals, or groups. In the oceans, societies are reluctant to turn over ownership of the actual fish stocks to individuals or nonstate groups (Hannesson 2004). Instead, societies in the form of the state retain the property right and instead grant rights of use to some of the flow from the resource stock (i.e., the catches) to individuals, such as with ITQs, or to groups, such as fishing cooperatives.7 Societies also readily grant rights of exclusive access to the resource stock to well-defined groups, as with limited entry programs. In the United States, these use and access rights are now deemed “Dedicated Access Privileges,” emphasizing that they are use rights, rather than property rights, and, in principle, revocable without compensation. The situation in Canada is similar to that in the United States. In contrast, in New Zealand use rights have a status closer to property rights, and they can be held in perpetuity. Use rights face more uncertainty in quality of title or tenure, since the objectives of states can vary

over time as the nature of society changes. Similarly, the divisibility and duration of use rights are typically less stable than those of property rights. Customary use rights are those that have been established by custom, rather than by a more formal process. Customary use rights, for example, are those that have been established over time for the right to fish for different species in specified areas, perhaps at specified times, by native peoples or artisanal fishers in developing or developed countries. In contrast, a formal legal process establishes ITQs. Customary use rights are often in conflict with, and in many instances superseded by, rights established by a more formal process. The Makah Indian tribe of the Olympic Peninsula in the state of Washington, the United States, for example, developed customary use rights to fish for groundfish, salmon, and whales, which were denied by the Euro-Americans for many years, in spite of a treaty, until they were reestablished. A similar example is found with the Maori people of New Zealand. There are many good reasons why societies seldom grant property rights to the stocks of living marine organisms (Squires et al. 1995, Hannesson 2004).8 One is simply that property rights to mobile organisms without static boundaries, with the requisite enforcement costs supporting exclusivity, are simply not practical, although they are with sessile organisms, such as abalones and other shellfish. Similarly, indivisibilities of the resource stock make granting property rights to resource stocks difficult. For example, the habitats of fish stocks overlap, and the same fishing gear sometimes indiscriminately fishes different stocks (Hannesson 2004). The biological interactions among resource stocks and the embedding of fish stocks in an ecosystem with services far beyond the fish that are caught also complicate the establishment of property in fish stocks. Some resource stocks straddle the EEZs of states or the EEZ of a state and the high seas, and still others are highly migratory and span multiple EEZs and the high seas. Area rights, in contrast, pertain to the spatial dimensions of the ocean, rather than to the resource stocks. Private ownership also

3

excludes claims of nonmarket values society may place on the organisms or the ecosystem.

Characteristics of Property and Use Rights Property and use rights may be described as having five characteristics: exclusivity, transferability, duration, quality of title (security), and divisibility (Scott 2000a, Grafton et al. 2004). Property rights with these characteristics create incentives for fishers to identify with the longterm needs for resource conservation and the opportunity to ensure benefits from responsible fishing even if subsequently leaving the fishery (World Bank 2004). Exclusivity (ins excludendi) is the most important characteristic. Exclusive use of the resource by an individual, group, or state, also means excluding others from using or benefiting from the resource. For example, the EEZ provides the state with exclusive use of the resources within 200 miles of its coast, but beyond 200 miles, on the high seas, no individual, group, or state has any exclusive use. Exclusivity may include the right of access and enjoyment (ius utile), the right of withdrawal (ius fruendi or usufructus), and the right to prevent interference (ius excludendi) (Grafton et al. 2004). Scott (2000a: 18) observes, “Exclusivity is valued because it protects the right-holder from interference with the fish stock and with fish catching.” Enforcement and protection of the exclusive use are critical for the right to fully function. Divisibility indicates the ability of the holder of the right to divide up the environmental asset or the flow of benefits from the asset. For example, plots of land can be divided and subdivided into smaller units, or quotas can be divided into smaller units. Transferability (ius disponendi) refers to the ease by which owners may trade, give, or bequeath the right. Transferability plays a key role in increasing economic efficiency, because the stronger

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the transferability of a right, the easier it is to sell the right to those with lowest costs. Fishing licenses may face different degrees of transferability. In some limited entry fisheries, licenses are not transferable, the intent being gradual dissolution of the fishery. The lack of transferability lowers the value of a vessel. Divisibility can enhance transferability, since it is often easier to exchange smaller units of a right than a larger unit; sales of smaller units of property are usually easier than large tracts. Duration is the length of time the right’s powers may be held. Rights might expire every year, as do many fishing licenses, or rights might extend into perpetuity, as do most ownerships of land. Duration facilitates investment and economic efficiency, since rights holders are more likely to invest in or to husband a resource if they can hold the right long enough to enjoy the fruits of their labor. Attenuated duration facilitates new entrants into the industry and flexibility of industry structure, ownership, and concentration of rights, wealth, and assets. Some ITQ systems establish rights in perpetuity, while others expire after a limited amount of time. The effective total duration after automatic renewals is the critical issue. Quality of title (security) (ius possidendi) represents how well the property right is specified, and includes the notion of possession and ownership (de facto and de jure). It refers to the extent that the right is recognized in law, such as a title or certificate of ownership. Scott (2000a: 18) notes, “Quality of title is valued because it saves the right-holder from the costs of protecting and enforcing his rights to be fishing. In most public fisheries, the fisherman’s right is secure; but he may be surprised by new arrangements and regulations that in effect arbitrarily reduce the characteristics of his right.” Sykes (2010) emphasizes the importance of secure property rights, particularly for industry-led solutions to management problems, cooperation among themselves in general, investment, and resource allocation in general. Complete or fully structured property rights are those that have all of these characteristics to the fullest possible extent (Scott 2000a). The more

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complete are property rights, the more the private and social net benefits of resource use coincide, reducing externalities and the associated losses of the common pool. The right of a fisher under open access is said to be incomplete or ill-structured because there is no exclusivity, long but meaningless duration, substantial if inconsequential security, no transferability, and infinite divisibility. Under private property, such as ITQs or effort, the individual right has exclusivity, substantial and consequential security, usually, but not always, considerable transferability, duration that is often, but not always, in perpetuity and usually considerable divisibility. Rights are attenuated when the characteristics of rights are limited in some manner. For example, the Chilean industrial Patagonian toothfish fishery ITQ limits duration to 10 years and the Namibian hake fishery ITQ does not allow transferability (World Bank 2004). Rights are said to be flexible when they readily accommodate or adapt to a changing world, including climate, ecosystems, markets, and economic systems in general. Rights should allow adaptability of user groups for economic and social benefits and sustainable resource use. Excessive rigidity of the right can lower economic efficiency or limit the accommodation of the fishery sector. The characteristics of excludability, duration, and universality are particularly important in this regard. Consider climate change and flexibility. Short-, medium-, and long-term climate change leads to changes in the ecosystem and/or locations of fish stocks. Rights that do not allow sufficient flexibility for resource users to adapt their location, type of fishing (including gear), and species harvested can leave user groups stranded and over- or underexploitation of resource stocks. Northward and southward movements of small pelagic species in eastern boundary currents with climate change can leave communities and fishers stranded. The U.S. fisheries of the northwestern Atlantic provide another example for which climate change, overharvesting, and other factors have led to decreasing abundance of groundfish and increasing abundance of crustaceans, such as

lobsters and crabs. A rigid property rights system can block fishers from switching back and forth as ecosystems change. ITQs can also lock in fishers. Contracting describes efforts by individuals to assign or to modify property rights (Cheung 1970, Libecap 1989). Contracting includes both private bargaining to assign or adjust informal ownership arrangements and lobby efforts to define, administer, and modify more formal property institutions.

Types of Fishing Rights A management system that establishes and allocates rights in the fishery can take many forms, and can be classified according to the basic type of property or use right (e.g., common or private property) and the presence (or absence) and strength of the characteristics of property rights (i.e., exclusivity, transferability, etc.). The term “dedicated access privileges” is sometimes applied (especially in the United States) to limited entry or limited access, cooperatives or voluntary agreements, ITQs, territorial rights, and community development quotas. Because the oceans are not practically divisible and costs of exclusion, monitoring, transactions, and enforcement are higher, these property and use rights are normally less complete than, say, enclosing land for farming, such as through the Enclosure Acts in England or enclosure of the Scottish Highlands. Ideally, these rights would be defined to provide two fundamental incentives: (1) incentives for the industry to conduct its operations efficiently and (2) incentives for preserving the productivity of the fish stocks (Hannesson 2005, Grafton et al. 2006). Eventually, as rights further develop in response to the rising and increasingly apparent economic and ecological costs and benefits of fishing, such rights would encompass ecological functions and services and the maintenance of biodiversity. Importantly, in fisheries a distinction can be made over the resource stock and the flow from this resource stock in the form of catches. Stocks, such as the level of the resource stock, can be added to and subtracted from by flows, such as

3

recruitment and growth or natural and fishing mortality. This stock-flow production process means that one form of property or use right can be established over the resource stock and another form over the resource flow. The spatial dimension to a number of resource stocks and their fisheries also allows the potential for different forms of property or use rights over the resource stocks and catches following different political or jurisdictional delineations, such as straddling stocks that lie in both state EEZs and the high seas or highly migratory species that transverse state EEZs and the high seas. There are few instances in which private or corporate rights have been established over resource stocks; abalones in South Africa are one exception. Several reasons account for this (Hannesson 2004). Countries may be reluctant to give up ownership of what is regarded as the common property of the nation. Many stocks migrate across national boundaries and even the high seas, so management of private stocks and enforcement of the property right can be limiting. Because of movements of fish stocks, the geographical jurisdiction of the right may have to be extensive. Habitats of different species stocks may also overlap, and different stocks are fished indiscriminately by different gear. The more complex the ecosystem and the more varied the different species exploited, the more difficult it is to establish such rights and the more geographically extensive they may be.

Limited Entry or Limited Access A fishing license is a right of access to the fishery, but because this right is only one of access and does not provide exclusive use of the resource stock or the flow from the stock (i.e., catch), vessels then compete with each other to take as large a portion of the fish stock or sustainable target catch as possible during the period allowed for fishing. The license gives its rights holders relatively weak characteristics (Scott 2000b). Limited entry is no longer open access, since some potential users are excluded. Although the rights of those who might fish are far from perfectly ex-

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clusive, there is some degree of exclusivity. The quality of title and security is also stronger than open access. Licenses are usually no longer free. The state generally has to honor the license, and cannot capriciously cancel them, take them back, or reduce their content. The state must also protect the holder’s right to the license. Limited entry programs differ in their transferability. Some programs allow freely transferable rights; others do not allow transferability, the intent being a gradual reduction in licenses through attrition and retirement. The lack of transferability lowers the value of fishing assets, including the license and the vessel. Duration also varies, with some rights held in perpetuity and others that expire with the exit of the holder from the fishery. In transnational fisheries on shared resource stocks, such as tunas and other highly migratory species, a limited entry program creates a form of common property instead of high-seas open access, such as is accomplished by the Northern Fur Seal Treaty (Barrett 2003, 2005). The common property and limited entry program can be created by customary international law through the auspices of an RFMO, such as the closed Regional Vessel Register of the Inter-American Tropical Tuna Commission (IATTC). Nothing in the LOS or the UNIA prevents creation of a limited entry program and common property through a formal and binding international agreement, which may be regional instead of global. The effect of limited entry programs on incentives varies with the numbers of participants allowed by the program (Wilen 1988, Townsend 1990). Many programs are little more than moratoriums on new entry, and are instituted when conditions in the fishery have reached a serious state of losses and declining resource stocks. The most effective programs are those that are the most restrictive, especially in terms of the numbers and qualifying criteria for inclusion. The larger the inclusion, the closer the fishery is to open access, and the more the incentives approach those of open access. Because the race to fish is seldom dampened with the incomplete right of limited entry, fishers often continue to invest, add inputs, and adopt

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new technology, all of which increase fishing capacity and productivity. In contrast, sufficiently small numbers, perhaps coupled with area dimensions to the limited entry, may facilitate cooperative behavior among fishers and greater alignment of conservation and economic incentives to maintain the license value and health of the resource for future use. Asymmetric information is an important issue in all forms of fishery management, but especially under limited access. A moral hazard problem is created between the principal (fishery manager) and the agents (fishers) (Salvanes and Squires 1995).9 This information problem arises because the fishery manager does not have complete information about all variables for regulation (Jensen and Vestergaard 2002, Squires et al. 2003). Hence, the regulator cannot easily and at low cost monitor and enforce the number of vessels, the zones that they fish in, gear conflicts, levels of harvest and species composition, discards and illegal landings, levels and mixes of inputs, and the like. In turn, fishers face economic incentives to shirk through avoiding license registration and payment of license fees and taxes and ignoring gear regulations and other requirements for monitoring, enforcement, and regulation. In short, experience with limited entry has shown that excessive exploitation of the fishery resources and excess fishing capacity often remain. In contrast, when limited entry is instituted in the very early phases of a fishery development in which economic rents are still being generated, limited entry can be successful, as in the Western Australian prawn fisheries; in contrast, limited entry is usually introduced only when there is already overfishing and overcapacity. Most notably, limited entry licenses are imperfect rights that do not directly limit the catch of fish and/or solve the incomplete property rights of open access, leaving the open-access incentives intact (Townsend 1990, Scott 2000b). It is also notoriously difficult to define a unique relationship between a vessel license and the resulting fishing capacity in that a vessel license gives fishers an incentive to increase the use of unregulated eco-

nomic inputs not specified and regulated by the license. When rights are incompletely specified, each individual stands to increase his other share of the catch by expanding fishing capacity through, for example, increasing vessel size when the number of vessels is limited, or, if vessel size is also restricted, by expanding unregulated engine horsepower and gear size or by adding electronic gear. Technical progress cannot be blocked, and it expands fishing capacity and productivity. Nonetheless, when the alternative of an ITQ system is not feasible and when the conditions are right, limited entry may be the second-best solution, and, in most instances, can be viewed as a necessary, if not sufficient, condition for effective conservation and management. License limitation is easier and less costly to enforce, since catches or landings do not have to be monitored—only the number of vessels. Certain fisheries may also be better managed by limits on inputs than on catches.

Voluntary Agreements or Fishing Cooperatives Voluntary agreements or fishing cooperatives are decentralized group management that allocate all or part of the available use right among various fishing and processing entities within a fishery via formal or informal contractual agreements. Some cooperatives are organized around gear, such as the U.S. Cape Cod Hook and Line cooperative or the Inshore Potting Agreement operated by inshore fishers of South Devon, England, while others are spatially organized, such as the nine Baja California (Mexico) cooperatives for lobster and abalone; spatial-based cooperatives may closely resemble territorial use rights for fisheries (see below). The use right is most typically a share of the TAC (sector quota), which is then internally allocated among group members by criteria, such as landings, based over some time period or share of quota holdings. This right can also have a spatial dimension, including an area right and/or management. The scale can be local or regional. These voluntary agreements among vessel owners can

3

reduce fishing costs, improve the market value, confer greater control over decisions affecting livelihoods, and in general provide the advantages of rights-based management. Huppert (2005: 207) notes, “Generally, fishing cooperatives accomplish through contract what the individual fishing quotas do by government regulation. The cooperatives, in effect, create private company shares of the TAC through written agreement.” Cooperatives allow more decentralized management that is more directly tailored to different groups as defined by species, gear, port or area, or other means (Pinto da Silva and Kitts 2006). Cooperatives can range from comprehensive programs that largely replace government management to short-term allocation agreements (Townsend 2005). Fishing cooperatives based on exclusive use of group catch quotas are found in the Netherlands, New Zealand, the Philippines, Senegal, the United Kingdom, New Zealand, Canada, and the United States (Willmann 2000, Kitts and Edwards 2003, Townsend 2005, Pinto da Silva and Kitts 2006). Producer organizations in the Netherlands and the United Kingdom have been given the right to distribute quotas among their members. In New Zealand, Maori have been assigned both territorial and quota-based fishing rights. The Australian Heard Island-McDonald Island (HIMI) toothfish and mackerel icefish fishery is fished cooperatively to allow economies of scale (Sykes 2010). Fisheries cooperatives in the Norwegian Lofoten fishery undertake various regulatory functions, primarily based on input limitations, along with technical management measures such as closed seasons and areas (Jentoft and Kristoffersen 1989). The matjes herring fishery, participated in by vessels of three countries, Denmark, Norway, and Sweden, entails a voluntary agreement among the producers that coordinates the time of harvests to maximize quality and value (Townsend 2005). Some U.S. cooperatives include the Bering Sea pollock cooperative, the Pacific hake cooperative, the Georges Bank Hook Sector allocation, and the New England Red Crab Harvesters Association. Voluntary agreements, from one perspective, provide exclusive use to a well-defined group,

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forming regulated common use rights. Voluntary agreements can also be viewed within the context of comanagement (a process whereby decision making is shared between the regulatory authority and fishery stakeholder groups).10 The group objectives can vary widely from strictly economic to encompass a wide range of goals and objectives that extend beyond merely fishing and economics to include social, cultural, community, and ecological goals (Pinto da Silva and Kitts 2006). Nonetheless, cooperatives are more likely to be linked by commercial, rather than social and cultural, interests (Townsend 2005). Cooperatives can also engage in research organized and financed entirely through their own efforts, as in New Zealand by the New Zealand Orange Roughy Management Company, or cooperatively with the management authority, as with the Cape Cod hook and line cooperative in New England (Pinto da Silva and Kitts 2006, Sykes 2010). Fishing cooperatives are not independent of government action, in that it has occurred among resource users within various rightsbased regimes, including limited entry and ITQs (Townsend 2005). In fact, cooperatives more readily function when government has already implemented limited entry, since limited entry addresses the most difficult problem of private bargaining: which agents must bargain (Townsend 2005). Limited entry thereby provides a stable universe of players and a means of accommodating new ones. Government defines rights that reduce transaction costs among private agents who develop efficient ways to exploit the resource. A critical issue is the durability and certainty of the group allocation of the overall use right and how the group itself handles this uncertainty. Voluntary agreements may be less durable than ITQs, due to the inherent issues involved with cooperative exploitation of a resource by a group, including interfirm formal or informal contracting or cooperation in general, monitoring, and enforcement. Voluntary agreements can be analyzed by the characteristics of property rights. When there are catch rights, as shares of the TAC, these use rights

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can be divisible into very small units. The rights can be transferable within the group through various forms of internal or market allocation processes. Various degrees of divisibility of the right are allowed, depending upon the form of the arrangement. Transferability of harvest use rights from inside and outside of the cooperative or entry of vessels into and outside of the cooperative raises issues pertaining to allocation within the group and cooperative membership.11 Some cooperatives can adopt use right allocation and transfer rules that create de facto ITQs. The cooperative among Pacific whiting catcher-processors is an example. The duration of the right or contract depends on the relationship between the collaborative group and the regulator and the laws and regulatory institutions. The security of title varies according to the laws and regulatory institutions of the nation. In the United States, for example, conditions must be established to ensure that antitrust measures are not implemented (Sullivan 2000). Uncertainty is created when the security of title is unclear, as with the Montauk Tilefish Association in New England (Pinto da Silva and Kitts 2006). Use rights are allocated to groups for joint harvest, rather than to individuals, as with ITQs, raising the issues of group definition, internal organization and management and associated contracting and transactions costs, internal allocation of the use right and responsibilities, monitoring, and enforcement. Cooperative behavior is most likely to succeed when the membership to the group is well defined and limited in size, the members share common interests in improved resource use, effective monitoring systems are in place, and there are effective conflict resolution mechanisms (Ostrom 1990, Baland and Platteau 1996, 2005, Seabright 1997). Decision making varies and includes consensus and voting (Pinto da Silva and Kitts 2006). Townsend (2005) observes that these voluntary agreements perform well with small fleets under corporate ownership, since corporate managers have significant experience with negotiations and contracts, hence lowering transactions costs. New entrants must both acquire shares and enter into membership in the group. The durability

of the group depends on the renewal and termination provisions, along with factors fostering cooperative behavior. Defection from the group can leave it untouched or it can be destabilizing, depending on the group’s organization. A welldefined dissolution mechanism for the group and alternative plans can be important in case the cooperative is unsuccessful (Pinto da Silva and Kitts 2006). Asymmetric information problems arise, both between the fishing cooperative and management authority (a general problem between all vessels and the authority) and between individual members and the cooperative. The economic advantages of voluntary agreements include the potential of lower transaction costs in the management of a fishery compared to centralized management or individual property rights (i.e., savings in information, monitoring and enforcement costs through the use of information held privately by fishers, and the use of social capital embedded in local and professional organizations and institutions) (Willmann 2000). Greater flexibility in fishery management is also possible compared to centralized management by the regulatory authority (Townsend 2005). The greater certainty in a prescribed quantity of fish to catch, that is, exclusivity, creates economic incentives that more closely match individual behavior with socially optimal exploitation; such benefits depend on the security of title, duration of the right, and the nature of the informal and/or formal contract with the management authority and among group members. As with ITQs, voluntary agreements can also lead to improvements in product quality and product forms and new markets, such as from frozen to fresh, more on-board processing and stricter quality standards, and extension of the season length due to coordinated fishing among the members, thereby increasing value added. Transferability in the short term allows matching catches with catch rights and in the long term allows the optimal scale and timing of harvesting (and processing) and the optimal investment in the capital stock. In short, individual firms in the cooperative can focus on maximizing revenues and minimizing short-run

3

and long-run costs, subject to the uncertainty of the durability of the cooperative. Governments often conduct monitoring and enforcement as part of the general process for all fishing vessels, regardless of whether these vessels are part of a cooperative. Cooperatives have an incentive to lower the transaction costs of monitoring (Townsend 2005), and through lower costs and the need for monitoring for the cooperative to properly function, the amount of monitoring can even increase. Penalties or negative economic incentives may be created between the cooperative and the management authority and among members of the cooperative to deter cheating and free riding. Fishing cooperatives, by lowering transactions and information costs, coordinating activities and sharing information, and developing new technologies, might form to voluntarily tackle bycatch. Such voluntary agreements have been adopted in Alaska and in the regional sea turtle program in the eastern Pacific Ocean to address bycatch. Voluntary agreements are applied on land to address pollution due to credible threats from regulators (Segerson and Miceli 1998). Fishing cooperatives do not inherently incorporate public good externalities, such as ecosystems and their services and maintenance of biodiversity.

Territorial Rights Territorial (spatial) use or property rights allocate exclusive use to a specified area of the ocean to a single user, most often a group, but the owner can also be an individual or corporation. The group, in turn, informally or formally allocates use rights to its members. Territorial rights, under certain conditions and when effectively managed, are sometimes seen as an effective alternative to private rights, such as ITQs.12 Territorial rights differ from ocean zoning or area management, which restricts fishing in different areas but does not confer a property or use right. Catch, effort, vessel and gear restrictions, exclusions, and temporary or permanent closures are commonly specified by area (Branch et al. 2006).

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Territorial rights include informal fishing territories, customary marine tenure, and territorial use rights in fisheries (TURFs). TURFs are formally assigned exclusive use rights conferred to an area or group (Christy 1983). Territorial rights create a form of regulated common property to an area, giving informal or formal rights to harvest fish and the right to exclude other fishers. Territorial rights can be interpreted to include area rights, that is, rights to spatially distinct and well-defined areas of the ocean. Territorial rights are also related to spatially delineated ITQs, except that territorial rights usually relate to a property right over an area and to all species and the ecosystem in general, rather than to individual species. Territorial rights are often viewed as a way to implement communitybased fishery management (Hannesson 2004). TURFs can be distinguished from fisher’s cooperatives or associations (Christy 2000). TURFs are based on exclusive rights to a (portion of the) resource with a spatial dimension, whereas the latter are not. Territorial rights are often found in small closeknit communities of inshore or reef fishers for shellfish, lobsters, and some fish, forming a type of marine tenure (Johannes 1978, 1988, Cinner 2005, Cinner and Awani 2007). Christy (1983) points out that less mobile, less migratory species are more suitable for territorial rights. Territorial rights can similarly be applicable to sedentary stocks and fixed gear fisheries. Formal territorial rights are used to manage inshore fisheries in Japan, especially sedentary resources, for which these rights are usually assigned to fishers’ associations or Fishery Cooperative Associations (FCAs), rather than to individuals or firms (Asada et al. 1983, Ruddle and Akimichi 1984, Ruddle 1987, Yamamoto 1995, Baland and Platteau 1996, Cancino et al. 2007). To collectively manage the territorial rights, the FCAs are sometimes subdivided into smaller and more specialized groups that manage single species within the territorial right. The lobster fishery of Maine is a well-known example of an informal territorial right (Acheson 1975). Informal territorial rights are also found in Nova Scotian and Scottish salmon

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fisheries (Ostrom 1990). Formal territorial rights are used in the Italian clam fisheries (Spagnolo and Sabatella 2007). Territorial rights are also used to manage the ocean quahog fishery in Iceland, oysters in the United States, mussels and scallops in New Zealand, the Challenger scallop fishery in New Zealand, lakes and some coastal areas in Sweden, and aquaculture in Mexico (OECD 2006). Territorial rights are also used for some offshore fisheries, including offshore aquaculture of bluefin tunas and salmon in Norway, Chile, and Mexico. Territorial rights are also used to manage inshore fisheries in Chile (Gonzalez 1996, Gonz´alez et al. 2006), especially the gastropod loco (an abalone) for which they have apparently been used with great success (Bernal et al. 1999, Gonz´alez et al. 2006, Cancino et al. 2007). Territorial rights may be one of the few practical ways to manage some artisanal fisheries, especially in tropical countries where marine ecosystems have many species and complex multispecies interactions (Christy 2000). Territorial rights can be expected to grow in importance with aquaculture and mariculture of all types. Informal territorial rights refer to spatially delineated fishing rights that are not enshrined in traditional custom or which are not part of formal law, but instead arise through custom and practice. The “lobster gangs” of Maine exemplify such, where individuals living in communities adjacent to the resource hold the rights (Acheson 1975). The exact boundaries of the right are developed and enforced by custom and social norms, but because they are not formally delineated, such boundaries can be open to constant challenge and redefinement. Active, but informal, processes exist by which exclusive use is enforced, including verbal threats, patrols, and, in some instances, through damage of encroaching gear or even retaliation in other areas. These rights have, to some extent, been recognized by the state of Maine and incorporated into the formal management of lobsters. Customary marine tenure systems are one form of territorial right that is found in the IndoPacific (Ruddle and Akimichi 1984, Aikimich 1984, Johannes 1988, 2002, Aswani 2006, Branch

et al. 2006, Cinner and McClanachan 2006). Cinner (2005: 36) observes that “These marine tenure institutions can range from relatively simple communally-owned marine areas from which outsiders are excluded to the complex and overlapping system of individual and family rights to space, species, gear, and even specific techniques of using gear.” Villages declare marine reserves, exclude others from exploiting resources in their territory, manage the types of gears used, and restrict fishing on certain species. Territorial rights, in some instances, are thought to spatially allocate fishing effort that achieves an economic optimum (Christy 1983, Cancino et al. 2007). In Japan, fishing effort within a TURF can be allocated to mitigate inefficient allocation of effort over space. Because fishing effort is restricted among TURFs, efficient allocation of effort across a spatial dimension larger than a single TURF is not automatically realized, but Branch et al. (2006) observe that fishers generally allocate fishing effort to equalize catch per unit of effort (and, by implication, profitability) over large areas. More generally, territorial rights, as a form of common property, in principle, has an advantage over a centralized regulating agency in achieving economic efficiency through the potential of rights holders for possessing sufficient knowledge about the state of the resource, its flow of use, and the identity and actions of its users to be able to manage it directly in a more economically efficient manner (Baland and Platteau 1996, Cinner 2005). Such rights also are a de facto method of pooling the users’ risks and substitutes for missing insurance markets. Such rights also more directly tackle distributive effects of resource allocation decisions. Territorial rights, in principle, can increase economic efficiency by internalizing spatial externalities (such as larval spillovers from source to sink populations, fish movement among areas, growth, multispecies interactions, and ecosystem considerations) within a single institution, allowing the territorial rights to address these spatial externalities and to lower economic and ecological costs. From the perspective of Coase (1937, 1960) and

3

the boundaries of the market and firms, territorial rights can be viewed as corresponding to the incorporation of market, ecological, and other factors internal to the territorial right, rather than allowing these activities to remain external to the organization (Robert Deacon, personal communication). To internalize spatial externalities, the spatial scale of the territorial rights should correspond to the scales at which the larval dispersal and stock-recruitment processes operate, and at which forage fish even move, thereby generating fishing communities’ incentives to protect local stocks (Hilborn et al. 2005). Without such a correspondence, future recruitment into one territorial right depends not only on its own local stock, but also on neighboring territorial right’s resource stocks, a clear indication of a common resource with a remaining ecological externality. Overfishing in one territorial right might otherwise be subsidized by recruitment from stocks of territorial rights practicing sound management. Other potential asymmetric externalities remain, such as an “upstream” territorial right holder overexploiting a mobile fish before it can reach the “downstream” TURF’s area. These considerations help explain why spatial rights are commonly found on coral reefs and with shellfish and similar benthic resources. Territorial rights do not necessarily and inherently incorporate externalities related to nonmarket economic values flowing from public goods, such as maintenance of biodiversity or ecosystems and their services, which extend beyond the spatial boundaries to the entire population. In other words, although territorial rights under some conditions can potentially provide efficient exploitation of a common resource and public good of the ecosystem and its services, leading to optimizing direct and even indirect use values, territorial rights do not necessarily lead to the efficient provision of any public goods (or avoidance of public bads) related to the ecosystem that may well transcend the spatial boundaries of the territorial right or that do not correspond to the commercial species of concern to the rights holders. Similar consideration

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holds for the maintenance of biodiversity, which is also a public good. Collective use of the territorial rights’ resources may require various types of assignment arrangements among fishers to solve problems of congestion and overexploitation of resources in a patchy environment, to achieve economic efficiency in general, and to maintain group harmony. More generally, this is an issue in the relationship between resources and the user group, that is, obtaining congruence between appropriation, provision rules, and local conditions (Wade 1987, Ostrom 1990, Baland and Platteau 1996). Such resource allocation decisions are potentially contentious because they require agreements on the distribution of wealth, are difficult to implement when a new territorial right is established after open access and resource depletion, and may be one of the major impediments to the establishment of effective management of common property and territorial rights (Libecap 1989, Christy 2000). See, for example, Alexander (1980, 1982) and the rotation of beach seine groups among different fishing grounds in Sri Lankan fishing villages. Similarly, Japanese and Chilean TURFs rotate fishing over areas of different profitability to smooth out differences in profits, incomes, and fishing opportunities (Cancino et al. 2007). These arrangements are similar to those in Sri Lankan fishing villages in which elaborate rotational and distributional mechanisms have evolved. Estuarine salmon fishers in Teelin Bay, Ireland, use a rotation system of access to the most productive fishing spots (Baland and Platteau 1996). Nova Scotian inshore fishers, in some cases, have used lottery systems to allocate the best locations. More broadly, management rules may be required for the resources within the territorial rights’ boundaries; Baland and Platteau (1996) emphasize that common property institutions can give economically efficient resource allocations, but require effective management to do so. Correspondence between the physical boundary of the renewable resource stock and the territorial right leads to the well-known common-pool problem that arises with other such spatially

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distributed resources, notably underground aquifers and oil pools (Libecap 1989). When the physical boundary of a common property resource is not well defined and is unstable, then the conditions for effective conservation and management decline (Wade 1987, Ostrom 1990, Baland and Platteau 1996). Thus, if the renewable resource stock lies wholly within the territorial right, then the territorial right essentially amounts to ownership of the stock. Conversely, with species that move beyond the territorial right or stocks that straddle one or more territorial rights, the common resource problem resulting in the associated externality and overexploitation results. Complications arise when the physical boundary of the territorial right does not always have a stable relationship with the delineation of the resource and ecosystem, as is the case with climate change in which the territorial right may no longer correspond to where the resource has shifted. Territorial rights can, in principle, reformulate to accommodate remaining, or even shifting, externalities. For example, two territorial rights that are too small to accommodate downstream externalities between the two territorial rights can be combined to form a single territorial right, thereby internalizing the externality by enlarging the territorial right. The key element to resolving these externalities is to allow exchange and/or reformulation of the territorial rights. Information and transactions costs can impede such Coasian bargaining between two different territorial rights holders. Coordination occurs among Japanese TURFs, including development of formal coordinating bodies, and there have even been mergers for fish populations that move across boundaries in their yearly cycle (Baland and Platteau 1996, Christy 2000, Cancino et al. 2007). Benefit and cost-sharing rules for the joint exploitation and management of a common resource may have to account for the direct proportion of the relative amounts of the individual territorial right’s net gains. Several other critical issues arise. One of the most important is setting a TAC for fish or other species that span more than one territorial

right area and allocating shares to the individual TURFs. The more mobile or seasonal or otherwise variable the species and its abundance, the greater the number of species and ecosystem complexity, the greater the current depletion, and other related factors, the more complex the undertaking. A contracting and comanagement issue then arises in coordinating the allocated shares of the TAC with the different individual territorial rights. Sustainable catch targets must also be developed for populations entirely contained within a territorial right, such as with a sedentary and sessile populations (e.g., on a coral reef that does not span two or more territorial rights). Such targets can be formal or informal, and if the latter, may be developed over time through community or association knowledge built up over time. Christy (2000: 127) observes, “It is quite likely that there is a high degree of knowledge about the location and seasonality of individual stocks within a community’s fishing area, but it is not necessarily true that this knowledge comprehends the relationship between fishing effort and yield . . . . In this regard, the function of acquiring information on stock yields cannot always be fulfilled solely by the community.” When establishing a new territorial right, a contracting problem arises. In addition to the issue discussed above, allocation within the group and allocation issues outside the group arise. For example, multiple groups of fishers defined by gear or location may exploit the same territory. Both recreational and commercial fishers may exploit the same resource stocks in a territory. Environmentalists may have concerns over ecosystems and maintenance of biodiversity within a territory. Different issues arise between resource exploitation, ecosystems and their services, and maintenance of biodiversity. As with all allocation decisions, different distributions of wealth and net benefits are implied, since property rights involve the assignment of exclusive decision making over valuable resources, and some parties will be harmed by the new definition of wealth and political power (Libecap 1989). Disagreements can occur over the nature of either the aggregate benefits or the shares. Compensating those potentially harmed in

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the proposed definition of rights and increasing the shares of influential parties may produce a political consensus for the proposed institutional change (Libecap 1989). Those parties who have had informal claims or have been unusually productive under the status quota may be made worse off unless their claims or productivity are recognized (Libecap 1989). Prior production or prior possession often forms the basis of formal rights allocation. If influential parties cannot be sufficiently compensated, say through side payments from gainers, new territorial rights may not emerge, even if this institutional change would yield net benefits for society. Informational problems can introduce complications even if such an accord can potentially be reached (Libecap 1989). Well-defined, clear-cut membership and composition of the group is always critical for effective functioning of common property (Wade 1987, Libecap 1989, Ostrom 1990, Baland and Platteau 1996).13 Group size and homogeneity can have significant impacts. In Japan, membership in FCAs is restricted to resident fishers in the jurisdictional area of the FCA who fish for 90– 120 days per year, the precise period defined by each FCA (Ruddle 1987). Even defining the group and its membership and defining a fisher are not always clear-cut, and if territorial rights are newly established or were formerly weak, this problem becomes even more acute, since questions of patterns of distribution in wealth and power arise (Christy 2000). For example, multiple gear types and groups or communities may exploit the same fishing grounds in which a TURF is contemplated. Some fishers may be part-time and others fulltime, with, for example, seasonal participation in fishing depending on seasonal variations in the availability of resource stocks, or some kinds of gear may use casual labor. Questions of entry and exit of the association or community are critical because limits on entry and definitions of exclusive use are fundamental to a well-functioning property or use right. Conditions and rules, either formal or informal, determine membership, and vary in accordance with whether the group is a small-scale fishing com-

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munity or fisher association (Christy 2000). “The traditional rules governing membership in a community and the fishery are likely to be subjected to considerable pressure in communities that receive a territorial use-right” (Christy 2000: 124). Membership issues heighten when fishery management is more successful, and fisheries communities and the population of fishers are far from static. Enforcement of the territorial rights, including or excluding nonowners, when there are mixed industrial and artisanal fisheries, can pose challenges. In Japan, the development of industrial trawling and entry into coastal waters traditionally associated with FCAs and TURFs created such problems (Ruddle 1987). The practical impossibility of enforcing any kind of regulation in a small-scale fishery for which landings take place in remote locations along a long coastline was addressed in Chile by granting secure access rights to fishers’ organizations, providing them incentives to protect their resources themselves (Gonz´alez et al. (2006).

Individual Transferable Quotas ITQs are a form of private use right (Christy 1973). An ITQ provides an individual fisher or fishing firm the right to harvest a defined proportion, either an absolute amount or, more usually, a percentage, of the TAC within a given period, such as a year or season (Squires et al. 1995, Scott 2000a, 2000b, Hannesson 2004, World Bank 2004). The state retains ownership of the resource stock, and the regulatory fishery body continues to define the TAC for the fishery. Property, as fish, passes to the operator only through the rule of first possession, that is, after capture. ITQs are used in Australia, Canada, Chile, Estonia, Iceland, Greenland, Namibia, the Netherlands, New Zealand, and the United States (OECD 2006). No fishery has abandoned an ITQ policy, once it has been implemented. ITQs can be evaluated in terms of the characteristics of property rights (Grafton et al. 2000, Scott 2000b). The exclusive use pertains to a use right over the catch, but not the resource stock or

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the aquatic habitat, that is, ITQs are a usufruct right. The holder’s right is in co-use with other holders. The fish stock’s ownership is retained by the state within the EEZ. The duration of quota shares can be more than one season, but not always into perpetuity. In a few instances, the duration is limited and the right must be periodically renewed. ITQs are transferable and are bought and sold in markets. ITQs, like all assets, acquire present values related to the expected net present value of the catch over time. ITQs are often transferred in the short run to balance underages and overages of quotas, and their value in this instance corresponds to a rental price. In some instances, ITQ transferability is attenuated in the early years of a program to allow rights-holders time to become acquainted with the new system and to protect small communities and small-scale fishers. ITQs are often, but not always, divisible into smaller units to facilitate exchange. The quality of title and security are often similar to licenses, and as a form of right are sometimes similar to that of other kinds of real property, with the legal status of property, and sometimes simply a use right, subject to renewal and regulation. Scott (2000b) observed that in the introduction of the ITQ, especially in offshore fisheries, the fishers were transported from holding the individual powers inherent in an ordinary transferable license, with a little inherent exclusivity, to holding a property right with enforceable characteristics, in positive amounts, of long duration, transferability, exclusivity, and security. ITQs, by more fully strengthening the characteristics of rights, especially exclusivity, greatly strengthen the incentives of fishers to utilize the resource to obtain the greatest possible sustainable benefits and to conserve the resource. In other words, ITQs provide harvesters with longterm and secure rights that are legally enforceable. Transfers of individual harvesting rights can also help reduce overcapacity and restructure industry to more closely align with a profitable fishery. Specifically, transferability in the long run allows the appropriate investment in fishing vessels, gear, and equipment and the choice of an optimal scale and timing of harvesting and processing, if the

catch is processed at sea. ITQs can also help alter the length of a fishing season, since vessels can choose when to fish, given the certainty of harvest right. Sykes (2010) observes, “Therein lies an important characteristic of a credible rights-based management framework—the notion of rights as the currency of restructure and reallocation in situations in which overfishing presents potential risk to stocks and to the communities dependent upon them.” There is also evidence that individual harvesting rights can promote collective action and a custodial attitude among fishers (Scott 1993, 2000a, 2000b). ITQs can lower variable and fixed-harvest costs. ITQs can also lead to an increase in ex-vessel price and revenue through changes in product form to higher-quality and higher-valued products and distribute catches more evenly throughout a potentially lengthened fishing season, as in the British Columbia halibut fishery (Grafton et al. 2000). ITQs, as a form of private use rights over the catch or flow from the resource stock, are suitable for some fisheries, but not all, and their applicability can be based on a case-by-case basis, depending on the conditions at hand (Copes 1986, Squires et al. 1995, 1998, NRC 1999b, Christy 2000, Hannesson 2004, World Bank 2004, Sanchirico et al. 2006). ITQs, for example, are most applicable in fisheries without complex multiple species, comparatively stable fish stocks and TACs, sufficient scientific capability to calculate TACs, the capability for monitoring catches and enforcing compliance (particularly since production is at sea), and laws protecting private property in the society (i.e., strength of title or security). ITQs have almost always been distributed gratis to fishers, based on historical catches rather than through auction, which allows the resource rent to be retained by fishers. ITQs do not fully capture all components of total economic value and address public goods externalities associated with ecosystems and their services and maintenance of biodiversity. ITQs capture primarily commercially derived use values, that is, the value to the commercial fishing industry and consumers. ITQs do not capture

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indirect use values, such as economic values from ecosystem services (which does not entail direct use of the resource stock), and existence value derived from the continued existence of biodiversity. In principle, the public or environmental groups could purchase ITQs, and similar rights can be established over bycatch, habitat, protected species, and some metric of biodiversity. ITQS do not remove all economic inefficiencies that may arise (Scott 1988a, 1988b, 2000b, Christy 2000). For example, “race to fish” incentives can remain when the unit cost of fishing increases within a season or for the most accessible and desirable fishing grounds due to the patchiness of fish distribution. Fishers may face an incentive to harvest in a spatially uneconomical way as they attempt to intercept migratory species before their competitors can. Discards of fish caught in excess of a quota held are possible if the ITQ exceeds the flow from the resource stock, that is, the catch, rather than the stock itself (Scott 1988a, 1988b). Discards create problems in multispecies fisheries managed by ITQs because the quotas for some species are reached before those for other species (Squires et al. 1998, Sanchirico et al. 2006). “High-grading,” that is, the discarding of marketable, but lower-valued, fish may occur if and when higher-valued marketable fish are caught and the quota applies to both species or the carrying capacity of the boat is reached. ITQs do not address the bycatch problem, nor do they cover all relevant elements of the ecosystem and maintenance of biodiversity. Sometimes a distinction is made between an individual vessel quota or individual fishing quota, on the one hand, and ITQs on the other. In the former, transferability is not allowed, and sometimes security of title is more circumscribed and the duration of the right is less. Without transferability, distinguishing the value of the quota from the value of the vessel, that is, the portions of the economic rent capitalized into each asset, becomes difficult. Dolphin mortality limits (DMLs) are related to ITQs and are the only catch right—in this case a bycatch right—allocated to individuals in transna-

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tional tuna fisheries (Allen et al. 2008). DMLs allow a vessel to catch yellowfin tuna associated with dolphins in the eastern Pacific Ocean and the right to a specified amount of dolphin bycatch mortality in the process. DMLs arise out of the Agreement for the International Dolphin Conservation Program (AIDCP) and its predecessor, the “La Jolla Agreement.” These have allocated annual DMLs to individual vessels since 1992. The overall DMLs are divided equally among all vessels that seek individual vessel DMLs. The DML is a relatively weak right because exclusivity is not complete (there are national mortality limits, which, when reached, curtail individual rights), it has a maximum duration of one year, security is attenuated by the individual holder’s government’s ability to reallocate DMLs among vessels of its fleet, and transferability, in that vessels changing flags retain their DMLs and their records of dolphin mortality during the year to date, and that their obligations under the AIDCP are enforced by their new flag. Limited transferability of the DMLs among vessels is allowed, in that limits from vessels that renounce or forfeit their assigned limits are redistributed among other vessels. In practice, the parties to the AIDCP have also allowed ad hoc transfers among vessels.

Individual Transferable Effort Individual transferable effort (ITE) quotas establish a transferable use right in fishing effort, typically denominated in days at sea or number of sets of gear, although other units, for example, units of gear, such as hooks or traps, can be used. ITE programs are conceived as private use rights, although commonly held rights are not out of the question. Ownership of the fish stocks and access is retained by the state or international body established by a binding international treaty. Compliance can come through vessel monitoring systems (VMS; electronic means to track vessel movements) and/or on-board observers. ITE programs are not nearly as widespread as ITQ programs, although there are ITE programs in the New England groundfish fishery, a system of tradable fishing days in the Faeroe

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Islands, the Hawaiian pelagic shallow-set longline fishery for swordfish, the Falkland/Malvinas Islands squid fishery, the Basque trawl fishery, two individual transferable trap programs in Florida, the Forum Fisheries Agency states for harvests of tunas in their EEZs in the western and central Pacific Ocean (denominated in days), fleet capacity in Sweden, and transferable fishing days in Spain.14 Exclusive use is provided for the units of effort held. ITEs can be freely transferable, as in the Hawaiian program. Duration can range from limited periods of time to perpetuity, with a single year’s duration for the Hawaiian program. Divisibility can be finely structured down to a single day or unit of gear. Quality of title and security are similar to those of ITQs. ITEs represent a major step forward from open access and limited entry and are a better structured right than either, due in particular to the stronger exclusive use by individual vessels. Transferability of days at sea can reduce overcapacity and restructure industry to more closely align with a profitable fishery. Nonetheless, no matter how secure the title, exclusive and transferable ITEs suffer in that they are defined in terms of an ill-defined input, fishing effort, rather than catch. Fishing effort is a composite of all economic inputs (in fact, it is simply an intellectual construct), and measurement by a proxy variable, days at sea, gives an incomplete and biased measure. Moreover, there is not a unique relationship between a unit of effort measured as a day and the resulting fishing capacity and catch in that a day at sea gives fishers an incentive to increase the use of economic inputs not specified by the unit of effort. Without care in crafting the program, a day held by a smaller and older vessel can differ markedly from a day held by a larger and newer vessel that embodies more advanced technology. Transshipment is also an issue, since vessels that can transfer their catches at sea to freezer vessels have an advantage over vessels that must travel to a port to unload their catches. Continued productivity growth, including technical progress, also means that each

day of fishing, although denominated in nominal days or units of gear, is more productive each year. Because the relationship between effort and catch is both nonlinear and stochastic, ITEs are subject to random events, such as luck and environmental changes that were not necessarily considered when calculating the overall ITE. ITEs may be useful when input-based management is preferred, as in complex multispecies fisheries for which multiple species greatly complicate ITQ programs, which are necessarily denominated in catches of species or species assemblages (Squires et al. 1995, 1998, Sanchirico et al. 2006). ITEs might also be useful in short-lived fish stocks, such as squid and some small pelagic species, for which the abundance is highly variable and nonlinear and stochastic relationships between effort and catch are par for the course. ITEs may also be useful when the infrastructure necessary to enforce use rights over catches is insufficient or nonexistent. (Establishment of adequate infrastructure is not a trivial matter, as monitoring is often necessary not only at the ports of landing, but also after the fish are landed, when they are transported and traded.) Developments in VMS facilitate the use of ITEs (and in some instances territorial rights). Bycatches may pose less of an issue, since there are no catch limits included in ITEs (although there could be both ITEs and bycatch limits).

Community Quotas Community quotas are a form of common use rights. Exclusive fishing rights are allocated to well-defined communities or groups, rather than to individuals. The right can be defined as a share of a TAC or to a specific geographic area. (In the latter case, they would effectively become a TURF owned by the community.) The community decides how to fish its share. Community quotas can also be viewed as a form of collective action and as a form of common property or use right. Ten percent of the catches of Bering Sea groundfish stocks have been allocated to native Alaskan villages in a program of community development

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quotas allocated as part of ITQ programs (NRC 1999a, Willman 2000). Community quotas are often used to formalize traditional access rights in small-scale fisheries (OECD 2006). Community quotas can provide a high degree of exclusivity, divisibility, and flexibility. Ostrom (1990), Baland and Platteau (1996), and others have shown that common property gives an economically efficient resource allocation if the group management is effective, and an economic optimum comparable to individual private property such as ITQs. To the extent that the common property internalizes spatially related externalities and spatially related ecosystem services and maintenance of biodiversity, then the economic optimum addresses public goods externalities in addition to the common resource stock externality, and can outperform individual private property. These potential gains from incorporating public good and spatial margins of the common resource stock externalities must be tempered by the increases in transactions costs internal to the community associated with common property.

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the RFMO. The latter arrangement corresponds to the IATTC AIDCP or to its closed regional vessel register. States, in turn, could allocate use rights—access, effort, or harvest—of various durations, transferability, exclusiveness, and divisibility to either individuals or groups. States could even trade their use rights among one another. Or, states could simply leave the EEZ in open access, with all that entails.

Hybrid Rights Hybrid rights, or overlapping systems of rights, are those that are composed of more than one type of right and may combine property rights with use rights, such as state property and individual use rights. In fisheries, many rights are of such a form. Other hybrid forms are possible, such as Maine’s lobster fishery, which is a hybrid of state property with unofficial ownership by the community, rather than by individuals (Acheson 1975). The overlap of the de facto, rather than de jure, common property with a spatial delineation also introduces the element of a TURF.

State Property The extension of the EEZs to 200 miles and the territorial seas to 12 miles was the last widespread, major transformation of property rights in the oceans, and was a spatial extension of state property (Hollick 1977, Juda 1996). Further extension of the EEZs to pick up straddling stocks or uncovered areas, such as the “doughnut hole” in the Bering Sea, or even the high seas, is another possibility, but that would undoubtedly require a major United Nations convention (Bjørndal and Munro 2003, Munro et al. 2004). A second potential extension of state rights would be the allocation of TACs (i.e., flows from the resource stocks) for tunas to the coastal states and distant-water fishing nations. Such rights could be property if the right is so defined, comparable to the EEZs, and would likely be tied to allocation and state property in the resource stocks. State rights could alternatively be a use right of some duration, with common property retained by

Concluding Remarks More comprehensive and better-defined property and use rights are steadily emerging to address the economic and ecological inefficiencies found with common ocean resources as the benefits of this institutional change increasingly outweigh the costs. Overcapacity, overfishing, and dissipation of economic rent are the well-known manifestations of these inefficiencies or costs. Rights-based management addressing the common resource externality generally does not fully address the externalities arising from the decline in public goods of maintenance of biodiversity and ecosystems and their services, or conversely the rise of public bads of loss of biodiversity and ecosystem degradation. Due to the problems of clearly defining the nature of the costs and benefits, who pays and who benefits, and investment in

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and provision of these public goods, the contracting problem over this growing issue is unlikely to be resolved in the near future. Various forms of individual and group rights have emerged, and are still forming, for marine common resources and public goods. Many different forms of property right institutions have emerged, which vary in their properties and most notably as forms of individual or group rights and over individual species or space and ecosystems. These different forms of rights emerge in response to the biological nature of the resource and ecosystem and the current technology of the production process, exclusion, and enforcement, but also as rights are determined through the political process, which, in turn, shapes the timing and form of the rights that develop. Time and precedent also play important roles in determining the range of feasible contracting outcomes, that is, a path dependency (Libecap 1989). Individual rights tend to be species specific, and as such tend not to internalize all margins of the common resource stock externality, most notably spatial dimensions, and public good externalities, most notably ecosystems and their services and maintenance of biodiversity. Group rights for fishing rights include a spatial dimension, at least implicitly, in which case some, but not all, of the remaining common resource externality and public goods externality are internalized. Group rights suffer from growing transactions and information costs, and hence contracting costs, as the size and heterogeneity of the group increases and the more complex is the ecosystem. Group rights under certain conditions can provide an outcome as efficient as individual rights, as emphasized by Ostrom (1990) and Baland and Platteau (1996). Rights-based management for transboundary common resources and public goods faces even greater complexity than for those falling solely within the EEZs of individual states. Rights in the transnational setting are only just now beginning to develop, albeit in a somewhat tenuous and often rudimentary form, and address not only the common resource and public good externalities but the transboundary externality. As

both the potential costs and benefits of property and use rights grow in the transnational settings, rights-based management can be expected to grow and strengthen in tandem. Rights in these settings will likely retain some form of state involvement and mediation. Property rights institutions are determined through the political process entailing negotiations among states and among the parties within each state. The political process of defining and enforcing emerging transnational property rights can be divisive because of the distributional implications of different property allocations, both among states and among the parties within each state (Libecap 1989). The aggregate gains of a transformation to stronger property and use rights over transnational common resources and public goods are increasingly self-evident, but the distribution of wealth and political power entailed by the transformation will be a source of considerable controversy and dispute. At the heart of this contracting problem will be devising politically acceptable allocation mechanisms to assign the gains from institutional change while maintaining production advantages and compensating those potentially harmed. Perfectly compensating side payments facilitating agreement may also face formidable problems in reaching a political consensus.15 These bargaining problems over defining and assigning the rights, related side payments, and enforcing property claims determine the nature of the property rights agreements that ultimately emerge (Libecap 1989). Contracting for property rights over transnational common resources and public goods will face considerable challenges in the future.

Endnotes 1. Latin legal names are given in parentheses. These were originally suggested by Chris Stone and initially appeared in Grafton et al. (2000). 2. Libecap (2006: 8) states, “First-possession is the dominant method of establishing property rights. It assigns ownership on a first-come, firstserved basis or first-in-time, first-in-right. . . . But

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the rule-of-capture grants ownership to the flow and not generally to the resource stock, and hence in the presence of open-access conditions, it can exacerbate competitive extraction incentives.” 3. Baland and Platteau (2005) observed that, for example, common property management implies collective regulations regarding both membership and the way to use the resource, and the existence of monitoring and sanctioning procedures so that those rules can be effectively enforced. 4. Baland and Platteau (2005: 9) further observed that “. . . the problem with resources under open access or under community ownership limited to membership rules—what Baland and Platteau (1996) call ‘unregulated common property’—is the fact that externalities are not properly internalised. If there were no transaction costs, ‘regulated common property’ (i.e., collective ownership with both membership rules and rules of use) would be equivalent to private (and state) ownership. Yet, the presence of pervasive transaction costs in real world situations tilts the balance in favour of private ownership: as a matter of fact, being under the control of a single person, private ownership avoids all kinds of negotiation costs necessary to reach a collective agreement as well as all the governance costs that have to be incurred with a view to monitoring and enforcing such agreements.” 5. Libecap (1989) observed that because of the overwhelming advantages of secure property rights, economic agents may adopt or modify property rights to mitigate the losses of common resources as soon as the benefits outweigh the costs. These costs include not only any direct costs associated with the new property rights arrangement, but the costs associated with the next-best alternative, that is, the opportunity cost. A major factor in the emergence of new ownership arrangements is the distributional conflicts and their resolution. 6. Comanagement reshapes “. . . the state interventions so as to institutionalize collaboration between administration and resource users and end those unproductive situations where they are pitted against one another as antagonistic actors in

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the process of resource regulation” (Baland and Platteau 1996: 347). 7. In this regard, ITQs can be seen as resembling grazing rights on public land, as opposed to ownership of the grazing land itself, which, instead, is retained by the state (Libecap 2010). Similarly, under the appropriative rights system, individuals were granted usufructory or possessory rights to water, rather than fee simple title. 8. Libecap (2010) discusses comparable reasons for terrestrial resources. 9. Moral hazard refers to a problem of asymmetric information whereby the actions of one party to a transaction are unobservable. It refers to the possibility that the redistribution of risk (such as that which transfers risk from the insured to the insurer) changes people’s behavior. Moral hazard arises after a contract. For example, holders of insurance premiums without deductions or penalties are more likely to undertake actions that are less careful toward loss than if deductions or penalties are required. This information problem arises because the fishery manager does not have complete information about all variables relevant for regulation. Hence, the regulator cannot easily and at low cost monitor fisher behavior. 10. See Pinkerton (1989), Baland and Platteau (1996), and Jentoft (2003) for extensive discussions. 11. Baland and Platteau (2005) emphasize governance (transactions) costs, the size of the user group, income or wealth inequality, and availability of exit opportunities. 12. Baland and Platteau (1996: 175), when discussing common property, state, “Indeed, if (1) information is perfect, and (2) there are no transaction costs, regulated common property and private property are equivalent from the standpoint of the efficiency of resource use . . . . Both the above property regimes can therefore support a Pareto-optimal equilibrium.” 13. Baland and Platteau (1996: 287–288) observe that several factors are more favorable for success: the smaller the number of users; the more clearly defined the boundaries of the group; the more powerful are those subgroups

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who benefit from retaining the commons and the weaker are those who favor subgroup enclosure or private property; the better developed are existing arrangements among users for discussion of common problems; the extent to which users are bound by mutual obligations and the more concerned people are about their social reputations and punishments against rule-breaking; and the more the users already have joint rules for purposes other than common resource use and the more bite behind the rules. 14. Nontransferable individual effort quotas are rights attached to a quantity of fishing effort that can be deployed over some period of time (OECD 2006). They tend to be used in fisheries for sedentary species, and are characterized by moderate or relatively high levels of exclusive use, duration, and quality of title. They are used in Belgium and Iceland, where they are specified as allowable fishing days, in Australia, Canada, France, the United Kingdom, and the United States for crab and lobster fisheries, where they are specified as limited numbers of pots or traps, and in France for the scallop fishery, where they are specified as limited numbers of hours per fishing day. 15. Libecap (1989) observed that the transfers entailed by side payments can become an assignment of rights in themselves, and that the side payment schemes reached through the political process may be insufficiently complete to resolve the distributional conflicts needed for more than minimal institutional change or may fail to compensate all relevant parties.

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logical Studies, No. 17. Osaka, Japan: National Museum of Ethnology, pp. 89–120. Alexander P. 1980. Sea tenure in southern Sri Lanka. In Spoehr A (ed.) Maritime Adaptations—Essays on Contemporary Fishing Communities. Pittsburgh, PA: University of Pittsburgh Press, pp. 91–111. Alexander P. 1982. Sri Lankan Fishermen—Rural Capitalism and Peasant Society. Monographs on S. Asia, No. 7. Canberra: Australian National University. Allen R, J Joseph, and D Squires. 2008. Paper entitled Workshop on Rights-based Management and Buybacks in International Tuna Fisheries. University of California at San Diego, May 5–9, 2008 (http://www.iattc.org/PDFFiles2/AllenJoseph-and-Squires.pdf). Asada Y, Y Hirasawa, and F Nagasaki. 1983. Fishery management in Japan. FAO Fisheries Technical Paper, No. 238, 26 pp. Aswani S. 2006. Customary sea tenure in Oceania as a case of rights-based management: does it work? Reviews in Fish Biology and Fisheries, 15(3):285–307. Baland J-M and J-P Platteau. 1996. Halting Degradation of Natural Resources: Is There a Role for Rural Communities? Oxford, UK: Oxford University Press, 440 pp. Baland J-M and J-P Platteau. 2005. Economics of common property management regimes. In M¨aler KG and J Vincent (eds) Handbook of Environmental Economics, 1st edn, Vol. 3. Amsterdam, the Netherlands: Elsevier Science. Barrett S. 2003. Environment and Statecraft: The Strategy of Environmental Treaty Making. Oxford, UK: Oxford University Press, 446 pp. Barrett S. 2005. The theory of international environmental agreements. In M¨aler KG and JR Vincent (eds) Handbook of Environmental Economics, 1st edn, Vol. 3. Amsterdam, the Netherlands: Elsevier Science, pp. 1457– 1516. Baumol WJ and WE Oates. 1988. The Theory of Environmental Policy, 2nd edn. New York: Cambridge University Press, 299 pp.

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Bernal PA, D Olivia, B Aliaga, and C Morales. 1999. New regulations in Chilean fisheries and aquaculture: ITQ’s and territorial users rights. Ocean and Coastal Management, 42(2–4):119–142. Bjørndal T and GR Munro. 2003. The management of high seas fisheries resources and the implementation of the UN Fish Stocks Agreement of 1995. In Folmer H and T Tietenberg (eds) The International Yearbook of Environmental and Resource Economics 2003/2004. Cheltenham, UK: Edward Elgar, pp. 1–30. Branch TA, R Hilborn, AC Haynie, G Fay, L Flynn, J Griffiths, KN Marshall, JK Randall, JM Scheuerell, EJ Ward, and M Young. 2006. Fleet dynamics and fishermen behavior: lessons for fisheries managers. Canadian Journal of Fisheries and Aquatic Sciences, 63(7): 1647–1668. Bromley D. 1991. Environment and Economy: Property Rights and Public Policy. Oxford, UK: Blackwell Publishing, 250 pp. Cancino JP, H Uchida, and JE Wilen. 2007. TURFS and ITQs: collective vs. individual decision making. Marine Resource Economics, 22(4):391–406. Cheung SNS. 1970. The structure of a contract and the theory of a non-exclusive resource. Journal of Law and Economics, 13(1):49–70. Christy FT, Jr. 1973. Fisherman Quotas: A Tentative Suggestion for Domestic Management. Kingston, RI: Law of the Sea Institute, University of Rhode Island. Occasional Paper, No. 19. Christy FT, Jr. 1983. Territorial use rights in marine fisheries: definitions and conditions. FAO Fisheries Technical Paper, No. 227, 10 pp. Christy FT, Jr. 2000. Common property rights: an alternative to ITQs. FAO Fisheries Technical Paper, No. 404/1, pp. 118–135. Cinner J. 2005. Socio-economic factors influencing customary marine tenure in the Indo-Pacific. Ecology and Society, 10(1):36–49. Cinner J and S Awani. 2007. Integrating customary management into marine conservation. Biological Conservation, 140(3–4):201–216.

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Cinner J and T McClanachan. 2006. Socioeconomical factors that lead to overfishing in smallscale coral reef fisheries of Papua New Guinea. Environmental Conservation, 33(1):73–80. Coase R. 1937. The nature of the firm. Economica, 4(16):386–405. Coase R. 1960. The problem of social cost. Journal of Law and Economics, 3(1):1–44. Cooter RB and T Ulen. 2004. Law and Economics, 4th edn. New York: Addison-Wesley, 560 pp. Copes P. 1986. A critical review of the individual quota as a device on fisheries management. Land Economics, 62(3):278–291. De Meza D and JR Gould. 1992. The social efficiency of private decisions to enforce property rights. Journal of Political Economy, 100(3):561–580. Gonzalez E. 1996. Territorial use rights in Chilean fisheries. Marine Resource Economics, 11(3):211–218. Gonz´alez J, W Stotz, J Garrido, J Orensanz, A Parma, C Tapia, and A Zuleta. 2006. The Chilean TURF system: how is it performing in the case of the loco fishery? Bulletin of Marine Science, 78(3):499–527. Gordon HS. 1954. The economic theory of a common property resource. Journal of Political Economy, 62(2):124–142. Grafton RQ, W Adamowica, D Dupont, H Nelson, RJ Hill, and S Renzetti. 2004. The Economics of the Environment and Natural Resources. Oxford, UK: Blackwell Publishing, 520 pp. Grafton RQ, R Arnason, T Bjørndal, D Campbell, HF Campbell, CW Clark, R Connor, DP Dupont, R Hannesson, R Hilborn, JE Kirkley, T Kompas, DE Lane, GR Munro, S Pascoe, D Squires, SI Steinshamn, BR Turris, and Q Weninger. 2006. Incentive-based approaches to sustainable fisheries. Canadian Journal of Fisheries and Aquatic Sciences, 63(3):699–710. Grafton RQ, D Squires, and KJ Fox. 2000. Private property and economic efficiency: a study of a common-pool resource. Journal of Law and Economics, 43(2):679–713. Hannesson R. 2004. The Privatization of the Oceans. Cambridge: MIT Press, 212 pp.

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Hannesson R. 2005. The privatization of the oceans. In Leal DR (ed.) Evolving Property Rights in Marine Fisheries. Lanham, MD: Rowman and Littlefield, pp. 25–48. Hilborn R, JM Orensanz, and A Parma. 2005. Institutions, incentives and the future of fisheries. Philosophical Transactions of the Royal Society of London, Series B—Biological Sciences, 360:47–57. Hollick A. 1977. The origins of 200-mile offshore zones. American Journal of International Law, 71(3):494–500. Homans FR and JE Wilen. 1997. A model of regulated open access resource use. Journal of Environmental Economics and Management, 32(1):1–21. Huppert DD. 2005. An overview of fishing rights. Reviews in Fisheries Biology and Fisheries, 15(3):201–215. Jensen F and N Vestergaard. 2002. A principal-agent analysis of fisheries. Journal of Institutional and Theoretical Economics, 158(2):276–285. Jentoft S. 2003. Co-management—the way forward. In Wilson DG, J Raakjaer, and PD Nielson (eds). The Fisheries Co-management Experience: Accomplishments, Challenges and Prospects. Denmark: Kluwer Academic Publishers. Jentoft S and TI Kristoffersen. 1989. Fishermen’s co-management: the case of the Lofoten fishery. Human Organization, 48(4):355–365. Johannes RE. 1978. Traditional marine conservation methods in Oceania and their demise. Annual Review of Ecology and Systematics, 9:349–364. Johannes RE. 1988. The role of marine resource tenure systems (TURFs) in sustainable near shore marine resource development and management in US affiliated tropical Pacific islands. In Smith BD (ed.) Topic Reviews in Insular Resource Development and Management in the Pacific US-Affiliated Islands. University of Guam Marine Laboratory, Technical Report, No. 88, pp. 1–28.

Johannes RE. 2002. The renaissance of community-based marine resource management in Oceania. Annual Review of Ecology and Systematics, 33:317–340. Johnson RN and GD Libecap. 1982. Contracting problems and regulation: the case of the fishery. American Economic Review, 72(5):1005– 1022. Juda L. 1996. International Law and Ocean Use Management: The Evolution of Ocean Governance. London: Routledge, 345 pp. Kitts AW and SF Edwards. 2003. Cooperatives in US fisheries: realizing the potential of the fishermen’s collective marketing act. Marine Policy, 27(5):357–366. Libecap GD. 1989. Contracting for Property Rights. New York: Cambridge University Press, 142 pp. Libecap GD. 2006. Assigning property rights in the common pool: implications of the prevalence of first-possession rules. Paper prepared for Sharing the Fish 06 Conference, February 26–March 2, 2006, Fremantle, Perth, Western Australia. Libecap GD. 2010. Rights-based management of tuna fisheries: lessons from the assignment of property rights on the western U.S. frontier. Chapter 8 of this volume. Munro GR, A Van Houtte, and R Willman. 2004. The conservation and management of shared fish stocks: legal and economic aspects. FAO Fisheries Technical Paper, No. 465, 69 pp. National Research Council. 1999a. The Community Development Quota Program in Alaska. Washington, DC: National Academy Press, 215 pp. National Research Council. 1999b. Sharing the Fish: Toward a National Policy on Individual Fishing Quotas. Washington, DC: National Academy Press, 436 pp. OECD (Organization for Economic Cooperation and Development). 2006. Using Market Mechanisms to Manage Fisheries: Smoothing the Path. Paris: Organization for Economic Cooperation and Development, 327 pp.

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Ostrom E. 1990. Governing the Commons: The Evolution of Institutions for Collective Action. New York: Cambridge University Press, 298 pp. Pinkerton E (ed.) 1989. Co-operative Management of Local Fisheries: New Directions for Improved Management and Community Development. Vancouver: University of British Columbia Press, 299 pp. Pinto da Silva P and A Kitts. 2006. Collaborative fisheries management in the northeast U.S.: emerging initiatives and future directions. Marine Policy, 30(6):832–841. Ruddle K. 1987. Administrative and conflict management in Japanese coastal fisheries. FAO Fisheries Technical Paper, No. 273, 93 pp. Ruddle K and T Akimichi (eds). 1984. Maritime Institutions in the Western Pacific. Senri Ethnological Studies, No. 17. Osaka, Japan: National Museum of Ethnology, 329 pp. Salvanes K and D Squires. 1995. Transferable quotas, enforcement costs and typical firms: an empirical application to the Norwegian trawler fleet. Environmental and Resource Economics, 6(1):1–21. Sanchirico J, D Holland, K Quigley, and M Fina. 2006. Catch-quota balancing in multispecies individual fishing quotas. Marine Policy, 30(6):767–785. Scott A. 1988a. Conceptual origins of rights based fishing. In Neher P, R Arnason, and N Mollett (eds). Rights Based Fishing. Dordrecht, the Netherlands: Kluwer Press, pp. 11–38. Scott A. 1988b. Development of property in the fishery. Marine Resource Economics, 5(4): 289–311. Scott A. 1993. Obstacles to fishery selfgovernment. Marine Resource Economics, 8(3): 187–199. Scott A. 2000a. Introducing property in fishery management. FAO Fisheries Technical Paper, No. 404/1, pp. 1–13. Scott A. 2000b. Moving through the narrows: from open-access to ITQs and self-government. FAO Fisheries Technical Paper, No. 404/1, pp. 105–117.

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Seabright P. 1997. Is co-operation habit forming? In Dasgupta P and K-G M¨aler (eds) The Environment and Emerging Development Issues, Vol. 2. Oxford, UK: Clarendon Press. Segerson K and TJ Miceli. 1998. Voluntary agreements: good or bad news for environmental protection? Journal of Environmental Economics and Management, 36(2):109–130. Spagnolo M and R Sabatella. 2007. Driftnets buyback program: a case of institutional failure. In Curtis R and D Squires (eds) Fisheries Buybacks. Oxford, UK: Blackwell Publishing, pp. 145–156. Squires D, H Campbell, S Cunningham, C DeWees, RQ Grafton, SF Herrick, J Kirkley, S Pascoe, K Salvanes, B Shallard, B Turris, and N Vestergaard. 1998. Individual transferable quotas in multispecies fisheries. Marine Policy, 22(2):135–159. Squires D, O Ishak, Y Jeon, J Kirkley, K Kuperan, and I Susilowati. 2003. Excess capacity and sustainable development in Java Sea fisheries. Environment and Development Economics, 8(1):105–127. Squires D, J Kirkley, and CA Tisdell. 1995. Individual transferable quotas as a fisheries management tool. Reviews in Fisheries Science, 3(2):141–169. Sullivan J. 2000. Harvesting cooperatives and U.S. antitrust law: recent developments and implications. Proceedings of the Tenth Biennial Conference of the International Institute of Fisheries Economics and Trade, Corvallis, OR, July 10–14. Sykes DR. 2010. Can rights put it right? Industry initiatives to resolve overcapacity issues: observations from a boat deck and a manager’s desk. Chapter 7 of this volume. Townsend RE. 1990. Entry restrictions in the fishery: a survey of the evidence. Land Economics, 66(4):359–378. Townsend RE. 2005. Producer organizations and agreements in fisheries: integrating regulation and Coasian bargaining. In Leal DR (ed.) Evolving Property Rights in Marine Fisheries.

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Lanham, MD: Rowman and Littlefield, pp. 195–202. Wade R. 1987. The management of common property resources: finding a cooperative solution. World Bank Research Observer, 2(2):219– 234. Warming J. 1911. Om Grundrente av Fiskegrunde. Nationaløkonomisk Tidsskrift, 49:499– 505. Wilen J. 1988. Limited entry licensing: a retrospective assessment. Marine Resource Economics, 5(4):313–324.

Willmann R. 2000. Group and community-based fishing rights. FAO Fisheries Technical Paper, No. 404/1, pp. 51–57. World Bank. 2004. Saving Fish and Fishers: Towards Sustainable and Equitable Governance of the Global Fishing Sector. Report No. 29090GLB. Washington, DC: Agriculture and Rural Development Department. Yamamoto T. 1995. Development of a community-based fishery management system in Japan. Marine Resource Economics, 10(1):21–34.

Chapter 4

Rights-Based Management in Transnational Tuna Fisheries Robin Allen, William Bayliff, James Joseph, and Dale Squires

Introduction International law affords every nation’s citizens the right to pursue fisheries on the high seas under certain norms, but this law also establishes incentives contributing to overcapacity and overfishing of tuna resources that may already be fully utilized. Similarly, coastal states, which control access to resources within their exclusive economic zones (EEZs), may provide more licenses to tuna vessels than are needed to take the available harvest. The time is past for unlimited entry into tuna fisheries. Failing this, the inevitable outcome will be further investment and continued growth in capacity, overexploitation of the world’s tuna stocks, and erosion of economic benefits.1 Strengthening, and even creating, property rights are required to effectively address this emerging tragedy of the transnational commons. Rights-based management of these transnational fisheries requires an additional element, multilateral cooperation through strong international agreements and institutions. Tunas move from one national jurisdiction to another and back and forth between national jurisdictions and the high seas. Individual tuna vessels operate in dif-

ferent national jurisdictions and on the high seas during short periods of time, and it is not uncommon for individual vessels to operate in different ocean areas. Tuna catches supply interconnected global markets (Jeon et al. 2008). Multiple nations control national waters and fishing fleets that fish in these waters and on the high seas. All of these elements mean that cooperation must be multilateral. Rights-based management can decidedly increase the net economic benefits generated in the fishery and strengthen sustainable fishing (Costello et al. 2008, Heal and Schlenker 2008).2 The gains in net benefits and strengthened sustainable catches accrue to individual states, fishers, processors, and consumers. These potential gains from cooperation are clear increases from the uncooperative behavior in the absence of rights, and ensure that all parties can potentially benefit from participating in a rights-based management regime.3 In addition to having increased raw material to process, the processors gain because rights-based management negates the requirement of seasonal closures and allows the consistent flow of raw material throughout the year. States with important processing industries can potentially gain from stable and sustainable employment 65

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and incomes. Consumers gain through sustainable sources of seafood at lower prices. Rights-based management can restructure the relations among fishers, management authorities, and states, and establish incentives to align private interests to social objectives. Only such a significant shift in institutional structure will realign the economic and geopolitical incentives faced by those harvesting the resources from the race to fish to incentives that favor sustainable target catches and resource stocks and generating a sustainable economic surplus.4,5 Establishing property and use rights clearly defines and allocates rights and responsibilities and costs and benefits. Rights-based management may not be a panacea to all issues facing these fisheries, but it is a necessary and critical condition for meaningful and sustained progress in their conservation and management. Rights-based management and economic incentives were critical in an analogous transboundary resource conservation issue, the northern fur seal industry. An international agreement (the 1911 Convention for the Preservation and Protection of Fur Seals) effectively transformed property rights from open access to international common property established through a self-enforcing international treaty and restructured multilateral relations from noncooperative to cooperative (Barrett 2003). This matter is discussed in section “Allocation of Rights to States or Directly to Individuals or Groups.” Strong and secure property rights established by the treaty created a sustainable economic surplus, dramatically lowered tensions among the parties involved, and established the foundation for a noteworthy rebound in the population from critically low levels. Transformation of the transboundary tuna fisheries from open access or free entry to a form of rights-based management is already under way, through both customary (“soft”) and formal (“hard”) international law, but requires extension and further strengthening. In the eastern Pacific Ocean (EPO) the Inter-American Tropical Tuna Commission (IATTC) instituted the closed Regional Vessel Register (RVR) that established a

form of limited entry and a hybrid of international common property and individual use rights.6 The IATTC’s Agreement on the International Dolphin Conservation Program (AIDCP) established, under a regional and binding international agreement and formal international law, a form of international common property and individual use rights through the Dolphin Mortality Limits (DMLs) for purse-seine vessels to set their nets on dolphins to catch the yellowfin tuna that were associated with them. The overall DML is divided into individual-vessel DMLs allocated to vessels that request them. The International Convention for the Conservation of Atlantic Tunas (ICCAT) allocates total allowable catches (TACs) among members and cooperating parties to manage as they see fit, creating a hybrid right of international common property and state use rights, of limited duration. The Convention for the Conservation of Southern Bluefin Tuna (CCSBT) also established an RVR or form of limited entry. In short, rights-based management is beginning to take shape, creating hybrid rights of international common property and state and individual use rights, often with multistage allocations. The challenge is to further extend and strengthen these forms of rights-based management. Similar transformations are occurring for atmospheric public goods, namely greenhouse gases and ozone-depleting chemicals (Barrett 2003, 2005). Management of these global public goods has been addressed through formal international law in the form of the Kyoto and Montreal protocols, establishing forms of property in emissions through allocations first to states and then to individuals (including companies). Although the Kyoto caps are national-level commitments, in practice most countries devolve their emissions targets to individual industrial entities, such as a power plant or a paper mill, creating hybrid rights of international common property and state and individual use rights. National governments, some that may not have devolved responsibility for meeting the Kyoto obligations to industry and that have a net deficit of allowances, can buy credits for their own accounts.

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Rights-Based Management in Transnational Tuna Fisheries

Models for such a transformation in the property rights of tunas and the ocean commons in general already exist in the form of the Convention for the Preservation and Protection of Fur Seals and the AIDCP as formal treaties, and, on the basis of custom, the IATTC closed RVR and capacity management program (IATTC 2005) and the allocations to states of TACs by ICCAT. The formation of rights in natural resource industries historically often occurs only after these industries have depleted common resources to seriously low levels (Libecap 1989, 2010). The question for transnational tuna fisheries is whether this transformation to rights-based management occurs on a timely basis or instead lags until conditions more closely resemble those for Atlantic and southern bluefin tunas, Atlantic cod, and Atlantic and Indian Ocean swordfish, all of which have been severely depleted by overfishing. This chapter discusses some of the key facets of rights-based management in transnational tuna fisheries. Section “Rights-Based Management” considers use and property rights in transnational tuna fisheries, building off the contributions of Joseph and Greenough (1978), Libecap (1989), Baland and Platteau (1996, 2005), Scott (2000), Clark (2002), Barrett (2003, 2005), and Aqorau (2007), and drawing on the chapters in this book and IATTC and World Bank (2008). The second section gives special attention to the following key questions: (1) characteristics of rights, (2) type of rights adopted, (3) allocations to states or directly to individuals or groups and the form of rights created, and (4) constraints to the emergence of rights-based management. The next section discusses monitoring, control, and surveillance. The section “Buybacks in the Transition to Rights-Based Management” briefly discusses the role of buybacks in the transformation to rights-based management, which is discussed more fully in Curtis and Squires (2007), Allen et al. (2008), and Squires et al. (2010). The last section offers concluding remarks.

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Rights-Based Management Characteristics of Rights with Transboundary Resources Stocks of tunas generally occupy areas that encompass more than one zone of national jurisdiction, and also the high seas, and are exploited by vessels of many nations, and usually by several types of gear. The highly migratory nature of tunas means that the spatially delineated territorial use rights cannot control tuna catches, and make limited entry, quota, and effort management systems the most likely rights-based systems. This chapter considers only these as candidates for rightsbased management of tunas. Squires (2010) provides the basic background to the various types of rights. Property and use rights possess a number of characteristics (Scott 2000), as discussed by Squires (2010) and Alcock (2010). Exclusive use of a right can, in principle, extend for any duration. Rights of sufficiently long duration reduce uncertainty, allow planning, and create rights of sufficient value to allow purchases of rights from sellers. Rights of shorter or intermediate duration allow flexibility and facilitate entry into the fishery by new entrants. Security or quality of title depends on whether the right is established through custom or treaties under formal international law, the workings of the Regional Fisheries Management Organization (RFMO) holding the property to the resource stock and governance of the fishery, and the effectiveness of compliance and enforcement. Enforcement is critical for well-functioning rights-based management, since exclusive use is otherwise hampered or even, in the extreme, rendered infeasible. Enforcement is also critical in international fisheries whose management depends on multilateral cooperation. Enforcement of rights in transnational fisheries faces few effective alternatives, the most useful being trade measures applied in a World Trade Organization-acceptable manner and withholding access to national waters and ports (IATTC and

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World Bank 2008). DeSombre (2010) discusses trade measures in greater detail. Trade restrictions achieve two objectives: They can be used to punish countries that do not cooperate and to correct for losses in competitiveness of the countries that do cooperate (Barrett 2003). A trade restriction, to be effective, must be sufficiently severe (so that, when imposed, behavior will be changed) and credible (meaning that if a country chooses not to participate or not to comply, the cooperating countries are better off for imposing the restrictions). Trade measures can limit landings, imports, and transshipments of fish to those that are caught inside of the regulatory framework. The specific ingredients of trade measures include (1) lists of vessels allowed (or not allowed) to fish in the areas of concern, (2) vessel monitoring, (3) catch or trade documentation, and (4) prohibition of importation of fish caught outside the regulatory framework or of transshipment of fish caught outside that framework. The burden of proof that the fish were caught within the regulatory framework would be on the owners of the fish, rather than on those that must enforce the regulations. Some RFMOs have tried versions of this approach, most fully ICCAT and the CCAMLR (Commission for the Conservation of Antarctic Marine Living Resources), and through the documentation, requirements have decreased fishing outside the regulatory process and encouraged states to join or cooperate with the organization. Potential difficulties with trade measures include comprehensive documentation/monitoring obligations, although these may also be part of the documentation of property and use rights; domestic enforcement of trade measures; the legality of some port state measures, such as the degree of control the port state can exercise over a vessel; falsification of records; difficulties of tracing fish from catch to market, although this should not be a problem if the record-keeping system is properly designed; consistency across RFMOs; the legality of certain applications of trade measures; and the fact that the use of trade measures requires participation by major market and landing states. Rights-based management establishes incentives

for self-compliance and self-enforcement because actions that reduce the resource stock reduce the value of all rights held, including those held by offenders. Le Gallic (2008), IATTC and World Bank (2008), DeSombre (2010), and Hallman et al. (2010) discuss enforcement in greater detail. Transferability of rights among individuals, groups, or states increases economic efficiency and economic returns from the fishery. Transferability also allows decentralized, market-based restructuring of the industry in response to changes in market conditions, resource stocks (including recruitment), environment, and technology. Transferability may have to be structured to take account of differential impacts on species, demographic structure of the populations, the ecosystem, and even biodiversity for different methods of fishing, gear types, or areas, and for asymmetric negative environmental externalities. For example, the capture of juvenile bigeye by purse-seine vessels fishing for skipjack aggregated around fishaggregating devices (FADs) reduces the availability of bigeye for longline vessels, which catch larger fish. Similarly, the capture of juvenile yellowfin by purse-seine vessels fishing for skipjack around FADs in the equatorial region of the EPO reduces the future availability of larger yellowfin caught by purse-seine vessels in unassociated sets and in sets on tunas associated with dolphins. Bycatches of nontuna species also varies by gear type, methods of purse-seine fishing, and area. Transferability of rights among different flag states may also be attenuated, largely to maintain flag state control over the right to fish; to ensure continued sources of fish for consumption, processing, employment, and incomes; and for geostrategic reasons. Serdy (2007) examined the legal issues surrounding transferability of quotas among members of RFMOs. He found that rudimentary systems for quota trading among states are allowed in some RFMOs, and that any such systems depend on decisions of the RFMO concerned, rather than on the development of new international law. Early instances of quota trading (and allocations) include the Convention for the Preservation and Protection of Fur Seals and early pelagic whaling

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on the high seas (Barrett 2003, Serdy 2007). We next examine two examples of rights established in the EPO by the IATTC. The DML is a relatively weak right because it does not provide full exclusivity (there are national mortality limits, which, if reached, would curtail individual rights), their duration is for only 1 year (or a shorter period), and their security is subject to the ability of the various governments to renounce their DMLs or to reallocate them among vessels of their fleets. The agreement provides that a vessel changing flags retains its DML and its record of dolphin mortality during the year to date, and that its obligations under the AIDCP be enforced by its new flag. The AIDCP also provides some limited transferability7 of the limits among vessels, in that limits from vessels that renounce or forfeit their assigned limits are redistributed among other vessels. In practice, however, the parties to the AIDCP have also allowed ad hoc transfers8 among vessels. The limited-entry system of the IATTC, that is, the closed RVR, is also a relatively weak rightsbased system, because, while the system provides exclusivity (the place of a vessel on the RVR9 is not affected by other vessels moving off and on the RVR) and the duration of the right is permanent, the security and transferability is subject to government decisions, as all changes to the RVR are made at the request of the governments under whose jurisdictions the vessels operate.

Types of Rights Adopted The type of property right that is adopted depends on several factors (Libecap 1989, Ostrom 1990, Baland and Platteau 1996, 2005), and is discussed in greater detail by Allen et al. (2010) for transnational fisheries. Which rights emerge depends, in part, on the historical conditions, political constraints, existing laws, type of resource involved, distribution of costs and benefits, costs of exclusion and monitoring, and even extant property rights. The type of right to emerge in a tuna RFMO also depends on the bargaining positions taken by the different member and cooperating nonmember

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states. These positions, in turn, depend on their expected gains from this institutional change. In principle, each party will attempt to shape the nature of the right to give it the greatest share of the aggregate gain (Libecap 1989). Players compare the expected gains to their current returns under the status quo. Delays are possible if new information is anticipated or political conditions are expected to change, but these delays must be balanced with expected losses due to deteriorating conditions on the common tuna stocks or to potential new entrants. Limited Entry Limited entry is usually the first management step taken in establishing a rights-based management system, based on the principle of exclusive access to a fishery for a group of vessels, as discussed in IATTC and World Bank (2008), Joseph et al. (2010), Hallman et al. (2010), and Squires (2010). Limited entry for transnational fisheries entails a mixture of limited access to national jurisdictions and the high seas for vessels of both coastal and distant-water fishing nations. A limited-entry program for a transnational fishery on shared transboundary stocks creates a form of RFMO international common property instead of high seas open access, such as established by the Convention for the Preservation and Protection of Fur Seals (Barrett 2003). The common property and limited-entry program can be created by customary international law through the auspices of an RFMO, such as the closed RVR of the IATTC, or by formal and binding international law such as through the fur seal treaty. Limited entry can also be formed through the auspices of regional states for their EEZs, such as the now defunct Palau Arrangement of the parties to the Forum Fishery Agency. Their access agreements, as discussed by Havice (2007), can also be viewed in this light. Neither the United Nations Convention on the Law of the Sea nor the 1995 Agreement for the Implementation of the Provisions of the United Nations Convention on the Law of the Sea of December 10, 1982, relating to the Conservation and Management of Straddling Fish Stocks and

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Highly Migratory Fish Stocks (henceforth called the UN Fish Stocks Agreement) prohibits creation of a limited-entry program and regional common property through a formal and binding international agreement. Limited entry is a weak form of property right because exclusive right is granted only to access to the resource, rather than to a share of the TAC. As such, limited entry does not fully align private incentives with social objectives. Limited entry in transnational tuna fisheries faces special issues because of the rights for free entry into fisheries under international law, as discussed further by Joseph et al. (2010), Serdy (2010), and Hallman et al. (2010). Global tuna management solutions require a global international vessel register to underpin limited-entry provisions. Limited entry establishes a well-defined group of vessels that can then enter into stronger forms of rights-based management, such as rights over the catch or effort by individuals or groups. Limited entry is also a prerequisite for buyback programs, since it defines the list of eligible fishers and/or vessels, as otherwise vessels will enter the fishery as conditions improve after a buyback (Squires et al. 2010). Even when stronger forms of rights emerge, however, retention of limited entry in multilateral, transnational fisheries remains imperative, because unlimited entry of vessels that obtain small shares of catches or effort leads to a fishery with limited economic viability, which, in turn, leads to pressures to expand the TAC or TAE (total allowable effort), thereby exploiting the uncertainty about the sizes of the estimated TACs or TAEs. Experience in national fisheries shows that stronger forms of rights-based management establish stronger conservation incentives that make limited entry superfluous. However, limited entry remains imperative in transnational–transboundary fisheries, at least until there is greater experience with stronger forms of rights-based management. The existence of subsidies, state incentives to maintain fleets that provide fish to labor-intensive onshore processing

facilities, and geostrategic, noneconomic incentives of states reinforce the need for maintaining limited entry, at least initially. In short, limited entry is a necessary, but not sufficient, condition for stronger rights-based management, and, in a multilateral, transnational context, remains a valuable bulwark against economic, social, political, and geostrategic pressures that erode sustainable targets of fishing effort. Fishing Capacity Limits Limited entry can be taken a step further by providing rights to fishing capacity as is done with the IATTC capacity control via a RVR of purse-seine vessels. In systems to provide rights to capacity the aggregate of the rights should equal a total allowable capacity. Fishing capacity is defined by Food and Agriculture Organization (FAO 1998) as “the ability of a vessel or a fleet of vessels to catch fish,” and can be measured by techniques such as data envelopment analysis (DEA; Reid et al. 2005, Reid and Squires 2007). DEAs require detailed data for individual vessels. Specifically, according to Reid and Squires (2007): Within the context of measuring fishing capacity to allow for DEA to be undertaken, it is necessary, at the very least, to obtain a data set detailing fixed inputs (fixed physical characteristics of individual vessels) to the fishery and the associated outputs (catches) of those vessels.

It is not easy to measure the ability of a vessel or a group of vessels to catch fish, however. Shimada and Schaefer (1956) recognized six “size classes” of tuna baitboats on the basis of their fish-carrying capacities in short tons. They calculated the average catch per days fishing by these vessels, and then assigned them “efficiency factors” relative to standard size classes of vessels (Class 4 for yellowfin and Class 3 for skipjack). The average efficiency factors for 1947–1954 were as given in Table 4.1. Thus, the total annual standardized baitboat effort for yellowfin would be the sum of the number of days fished by Class 1 vessels × 0.42,

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Rights-Based Management in Transnational Tuna Fisheries

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Table 4.1. Average efficiency factors for 1947–1954.

Species Yellowfin Skipjack

Class 1 (up to Class 2 (51– Class 3 (101– Class 4 (201– Class 5 (301– Class 6 (>400 50 tons) 100 tons) 200 tons) 300 tons) 400 tons) tons) 0.42 0.47

0.56 0.63

0.90 1.00

1.00 1.12

1.20

0.97

Source: Table 17 in Shimada and Schaefer (1956).

number of days fished by Class 2 vessels × 056, . . ., and number of days fished by Class 6 vessels × 0.97; and rights could be assigned to different classes of vessels using the efficiency factors for calibration. More recently, the IATTC used the fish storage space or well volume of purse seiners as the unit of capacity for its RVR. In general, limitations on fishing capacity are good because they prevent, or at least reduce, excessive capital investment. However, for two reasons, limitation of fishing capacity alone is unlikely to prevent overfishing. First, most fisheries are directed at more than one species. A limit on fishing capacity might be estimated from data for a period during which approximately equal amounts of efforts were directed toward yellowfin, bigeye, and skipjack tuna. Later, however, more effort might be directed toward yellowfin and/or bigeye, which could result in overfishing of one or both of those species. (Conversely, if more efforts were directed toward skipjack and less toward yellowfin and/or bigeye, one or both of those species might be underfished, which is undesirable.) Second, the abundance of fish fluctuates in response to the effects of natural factors, so fishing effort should be adjusted in response to fluctuations in abundance of the fish, but if the fishing capacity is limited it will be impossible to take advantage of greaterthan-average abundance of fish unless vessels that ordinarily were not permitted to fish in the area in question were given permission to fish in that area for a limited period of time. Management systems involving allocation of capacity rights will need to be recalibrated from time to time to ensure the aggregate of the rights

is an appropriate target. DEAs, or equivalent analyses, must be conducted at frequent intervals, preferably every year, because, with the passage of time, vessels tend to become more efficient due to the adoption of improved technology. Unless the increase in efficiency of the vessels participating in the fishery is counterbalanced by withdrawals of vessels from the fishery, the fishing season must be shortened or catch quotas must be established for species that were fully exploited prior to the adoption of improved fishing technology. Because only one dimension of the multidimensional capital stock is controlled, fishers face incentives under incomplete property rights to expand the use of the uncontrolled dimensions, as described above. Also, fish-carrying capacity regulation may be supplemented by regulating the intensity of use through maximum allowable fishing days, according to the condition of the fish stocks at any time. In technical terms, the flow of capital services and capital utilization, in addition to the capital, is regulated when fishing days are restricted. In sum, fish-carrying capacity limits the capital stock, rather than fishing capacity, and supplementary time limits restrict capital utilization, rather than capacity utilization. Catch Limits Catch quotas directly address the most critical issue, which is limiting the total catch from a stock to the sustainable target catch. Catch quotas can be allocated to individuals, groups, or states, as discussed in greater detail by Squires (2010). They provide the allocated entity the right to harvest a defined proportion, either an absolute amount

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or, more usually, a percentage, of the TAC within a given period of time, such as a year or season (Squires et al. 1995, Scott 2000). Separate catch quotas are set for each stock. Specific quotas for specific gear types may also be necessary, because the catches taken in one fishery may, after some time, affect the catch possibilities in another (downstream externalities). For example, purse-seine vessels fishing on FADs catch juvenile bigeye and yellowfin, some of which would otherwise become available, after some time, to the longline fishery and/or to the purse-seine fishery for larger yellowfin associated with dolphins. It may be necessary to set total catch quotas for several fleets exploiting the same stock, such as purse seining on FADs, purse seining on unassociated schools, purse seining on yellowfin associated with dolphins, and longlining. Costello et al. (2008) and Heal and Schlenker (2008), using data from the world’s fisheries in which catch quotas or individual transferable quotas (ITQs) have been implemented, demonstrate that ITQs provide a basis to manage fisheries that ensures their sustainable use, allowing a stock of fish to return to earlier levels when depleted and provide a secure basis for a healthy and profitable fishery. This approach requires that the cooperating nations limit the total catch to a meaningful level, rather than raising it to a level that accommodates conflicting claims, but exceeds sustainable catch levels (IATTC and World Bank 2008). Catch quotas create economic incentives for fishers to harvest their catch shares at the lowest cost, to increase the value of their landings through better handling and care of the fish, and, in some cases, to change product form, as occurred in the change from frozen to fresh fish in the British Columbia halibut fishery (Squires et al. 1995, Grafton et al. 2006). These effects, coupled with transferability that allows the most efficient fishers to harvest greater shares of the total catch, raise economic efficiency and raise productivity. Transfers of catch quotas can also help reduce overcapacity. Invariably, catch rights are introduced only after overcapacity has built up in the fishery, so that transferability results in

quota holdings in the hands of the more efficient vessels and the exit of the less efficient ones, particularly since there is insufficient quota for all vessels to fish at the most efficient scale of production. Nonetheless, in some instances this reduction must be helped along by vessel buyback programs (Curtis and Squires 2007, Squires et al. 2010). Catch quotas can also induce harvesters to shoulder a greater share of the management costs and, in fact, provide a means by which to allocate these joint costs (Scott 1993). Catch quotas as use rights can also promote collective action in conservation and management of fisheries (Scott 1993, 2000). These rights provide incentives to fishers to protect their investments, including the asset value of their investments in quota and capital stock, through sustainable harvesting and even further, by collectively working together in formal and informal means to enhance the fishery. Higher returns, vested interests in the fishery, and smaller numbers of more committed fishers can lead to fishers shouldering a greater share of the research costs, such as data collection and stock assessments, and monitoring, control, and surveillance (MCS) such as onboard observers. Cost recovery in this manner followed the introduction of individual transferable quotas in New Zealand (Scott 1993, 2000). When establishing catch rights, care must be taken to ensure that they do not create perverse incentives that distort behavior and produce undesirable outcomes (Grafton et al. 2006). The absence of comprehensive catch rights covering the major gear types, vessels, and species establishes incentives to transfer effort to nonquota species. Further, the catch mix of fishers may not match individual quota allocations, which, in turn, may contribute to discarding and misreporting (Squires et al. 1998). A limited ability to target specific species may also contribute to undesirable individual quota underages and overages and lower fishers’ profitability if total harvests of target species are restricted to prevent the overexploitation of vulnerable bycatch species. Bigeye tuna catches in purse-seine fisheries immediately come to mind as an example. The issue of fishing on dolphins, unassociated

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Rights-Based Management in Transnational Tuna Fisheries

schools, and floating objects, especially FADs, further contributes to this issue. All of these unanticipated spillover effects lower the biological and economic efficacy of harvest rights. Effort Limits Rights-based management can also be centered upon establishing property and use rights over fishing effort, typically denominated in days fished or sets of gear, as discussed in general by Squires (2010). The members of the Forum Fisheries Agency have established a system of individual transferable effort (ITE)—the Vessel Day Scheme—denominated in days fished in their waters of the western and central Pacific Ocean. ITE programs are typically designed as private use rights, although rights held in common by groups or states are not out of the question. In fact, transferable effort rights are often first obtained by flag states and then, in a second stage of allocation, distributed to individual vessels. Ownership of the fish stocks and access is retained by the state or by an RFMO established by a binding international treaty. Compliance can be monitored through vessel monitoring systems (VMSs) and/or onboard observers. Effort share programs represent a major step forward from open access and limited entry, and are a better-structured right than either due to the stronger exclusive use rights by individual vessels. Transferability of effort can reduce overcapacity if vessels that sell their effort exit the fishery. Effort shares can restructure industry to more closely align with a profitable fishery as the optimum number and size of vessels and scale of fishing develops. Regardless of how secure the title and how exclusive and transferable the right, effort shares suffer because they are defined in terms of an ill-defined single input, fishing effort, rather than catch, because there is not a direct relationship between effort and catch and because of ongoing technical progress. Nonetheless, although they are generally less preferred than transferable catch quotas (which are directly, rather than indirectly,

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tied to catch), effort shares can be less demanding in terms of monitoring, control, surveillance, and enforcement if all vessels that are entitled to fish have VMSs and it is relatively easy to determine from the information from a VMS whether the vessel is fishing (as opposed to not fishing due to, e.g., bad weather or mechanical problems). This is a major reason for the Forum Fisheries Agency’s choice of the Vessel Day Scheme. Effort shares can also be useful in complex, multispecies fisheries rather than managing individual species by catch shares. As with transferable catch quotas, a limited-entry program provides a valuable bulwark against pressures to expand the TAE cap. Taking Stock of the Type of Property Right Limited entry is a fundamental prerequisite for rights-based management in transnational fisheries. A universe of participants is created and a bulwark established protecting the TAC, TAE, or total fishing capacity limit in these stronger forms of rights-based management. Only after stronger forms of rights-based management have been implemented might limited entry then be eliminated. Fish-carrying capacity shares are stronger than limited entry, but are built on limited entry. Fishcarrying capacity is easy to monitor, but the relationship between fish-carrying capacity and catch is indirect and unstable, and incentives are created to circumvent capacity limits. Fish-carrying capacity regulation may be supplemented by regulating capacity utilization through limiting fishing effort. Catch shares to states, individuals, or groups are the strongest form of rights-based management because exclusive use is given to catches. This directly limits total catches from a stock to what the stock will sustainably support and establishes the strongest incentives to reduce the race to fish. Separate catch quotas must be set for each stock and perhaps by gear type. Monitoring, control, surveillance, and enforcement requirements are the greatest of all forms of rights-based management.

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Effort shares are also an important form of rights-based management, but are a weaker form than catch shares, because there is not a direct relationship between fishing effort and catch, and it is easier to expand effort along many margins. Nonetheless, a compelling case can be made for effort shares in a multilateral and transboundary fishery because the MCS requirements can be substantially less, including the absence of necessity for a vessel observer program and the use of VMSs. Enforcement for all forms of rightsbased management may also require trade and port measures as discussed by IATTC and World Bank (2008) and DeSombre (2010). Catch and effort shares are both delineated in shares of the TAC or TAE, rather than in absolute quantities to account for changes in the TACs or TAEs, as required to achieve the optimum. Delineating catch and effort as shares, rather than absolute amounts, automatically balances the annual catch entitlements with the TAC or TAE and shifts the risk of quota to quota holders, rather than those disbursing the quota and retaining ownership of the resource stock. In all cases, transferability among individual vessels and across states of licenses, vessels, fishcarrying capacity units, catch shares, or effort shares enhances economic efficiency and introduces flexibility, allowing the fishing industries to restructure in a decentralized manner in response to changes in technology, markets, resource condition, and the environment. Use rights tend to end up in the hands of the more economically efficient users.

Allocation of Rights to States or Directly to Individuals or Groups Allocation of rights is typically the most difficult and contentious part of establishing property and use rights and rights-based management.10 Allocation of rights directly affects the distribution of costs and benefits, employment, income, wealth, and power. Different allocations lead to different distributions. Libecap (1989: 21) observes, “this suggests that institutional change frequently will

occur late in the history of the exploitation of a resource after common pool losses have become so large that distributional issues can be settled.” This record of waiting until the benefits are starkly clear is sadly confirmed in many fisheries in which rights-based management has been implemented, although the empirical record also clearly shows that catches subsequently rise (Costello et al. 2008, Heal and Schlenker 2008). This section does not discuss the principles of allocation in relation to the distribution of net benefits, but instead discusses the allocation to states, individuals, or both. Joseph and Greenough (1978), Chand et al. (2003), Hannesson (2004), RamBidesi and Tsamenyi (2004), Lodge and Nandan (2005), McDorman (2005), Munro (2006), Van Dyke (2010), Grafton et al. (2010), Alcock (2010), Libecap (2010), and Serdy (2010) further discuss allocation. Once the choice of right has been settled and international common property established by the RFMO through a treaty or by custom, the key questions become (1) whether to allocate rights to states or to bypass states and allocate rights directly to individuals (including companies) as private use rights or even to groups (such as fishing cooperatives), (2) which states receive allocated rights, and (3) the amount of rights to allocate to each state.11 Rights allocated to states can, in turn, be allocated to individuals or groups in multistage allocations (multistage games). Under rights-based management, several forms of reallocation, that is, of accommodating new entrants and changes in rights holdings by existing participants, are possible. New entrants and existing participants can increase their rights holding through purchase or other forms of transactions from existing rights holders, rather than allocation of new rights. In other words, after the initial allocation, subsequent changes in rights holdings occur through the market. In fact, the opportunity to enter a fishery through the market rather than the politically charged approach of RFMO reallocation of existing rights or unsustainably expanding rights beyond the current TAC or TAE is an important advantage of rights-based management.

4

Rights-Based Management in Transnational Tuna Fisheries

Several national ITQ programs limit duration of the right on a staggered basis among different vessels, which then makes these rights available for allocation by the quota authority by markets (such as auctions) or in other manners. This approach of limited duration and periodic reallocation is another form of readily accommodating new entrants into the fishery. Before examining these issues further, it is instructive to revisit the economic requirements of a self-enforcing international environmental agreement that underlies treaties and allocations (Barrett 2003). Self-enforcing agreements will have to satisfy the following conditions: (1) create an aggregate gain (here through rights-based management), so that each party involved has a reason to participate; (2) distribute these gains equitably and transparently, so that all parties would prefer that the agreement succeed; (3) ensure that each party would lose by not participating, given that all the other parties agreed to participate; (4) provide strong and clear incentives for all the parties to comply; and (5) establish robust deterrents to entry by third or unauthorized parties. Critically, initial allocation must address conditions (2), (3), and (4), so that the expected return for each party exceeds the payoff from not participating. Barrett (2003, 2005) argues that states participating in self-enforcing agreements are likely to comply for this and other reasons. Initial allocations are likely to include explicit or implicit side payments, whereby gainers transfer sufficient net benefits from satisfaction of (1)—here the property right as a claim to future benefits—to ensure that conditions (2), (3), and (4) are satisfied.12 These side payments are likely to include allocation of sufficient quantities of the rights, as, for example, occurred in the initial IATTC allocation of capacity units to coastal states,13 even those without current active fisheries. Side payments were instrumental in the allocations of the Convention for the Preservation and Protection of Fur Seals (Barrett 2003). We discuss these side payments in further detail below.

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Allocation to States Property and use rights on the oceans have been created and allocated largely to coastal states. In fact, large portions of the ocean commons were allocated to coastal states through the extension of the territorial sea to 12 miles and the creation of EEZs extending up to 200 miles from shore. These measures nationalized a large portion of the ocean’s resources. Yet nationalization of the EEZs proved ineffective, as tunas move from one EEZ to another and back and forth between EEZs and the high seas. Certainly, creation of EEZs and territorial seas did not preclude the need for multilateral or bilateral agreements or treaties. Nationalization instead shaped the nature of the agreements that were negotiated and followed. If rights are first allocated to states, any state, in turn, can, in a second stage, allocate use rights to individuals or groups within that state or leave its share under regulated open access (generally subject to TACs for the entire fishery or an allocated share for the state) for vessels registered in that state or license holders from other states. This two-stage allocation of rights is discussed in greater detail by Grafton et al. (2010). This two-stage allocation is used by ICCAT to allocate shares of TACs to states that, in turn, are generally reallocated in a second stage through the requirement of a license (use right of access). Members of the Forum Fisheries Agency similarly established a two-stage allocation of fishing days. Such a form of property and use rights created through a two-stage process establishes a hybrid form of property or use right, with common property over the fish stocks created and held by the RFMO and state rights over the allocation and even use rights if there is further allocation by the states to individuals or groups. The Kyoto Protocol adopted a similar multistage allocation of rights. State use rights can, in principle, be transferable across states, divisible (allowing all or only portions of the state use rights to be transferred), and of varying duration from 1-year allocations to perpetuity. The security or quality of the title would depend on whether the right is established

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through custom or treaties under formal international law, the workings of the RFMO holding the property to the resource stock and governance of the fishery, and the effectiveness of compliance and enforcement. Allocations to Individuals or Groups While RFMOs commonly make allocations of quota or fleet capacity among their member parties, there is little precedent for allocations made either directly or indirectly to individuals. In such cases, states must relinquish some of their sovereignty. However, there are two such examples in the EPO: the allocation of annual DMLs and the limited-entry system used by the IATTC, which maintains a closed RVR to record the rights of individual purse-seine vessels to fish for tunas in the EPO.14 The allocation of quotas directly to individuals, for example, by an RFMO, has not been analyzed legally, although national quotas may be allocated to individuals. Some examples are the Australian quota for southern bluefin tuna, Chinese Taipei’s bigeye tuna quotas, and Pacific halibut quotas allocated to fishers of Canada and the United States. The closest example of allocation of quotas to individuals by an international agreement is provided by the AIDCP DMLs for individual vessels since 1992. Taking Stock of Allocation to States, Individuals, or Groups RFMO allocation of use rights for access, capacity, catch, or effort directly to individuals or groups represents an option. Such allocations require states to yield some of their sovereignty. States, rather than individuals or groups, have the option to remain the central actors in the RFMOs due to the inherent constraint of state sovereignty in the international arena. Rights are initially more likely to be part of a system of overlapping or hybrid rights in the form of regional common property established through the RFMOs, state use rights following an allocation of shares of the TAC, overall fleet capacity, or TAE or access (licenses) by the RFMO to individ-

ual states, and in a second stage, states allocate use rights from the RFMO to individuals or groups. Some states may simply decide to allocate access via a limited-entry program or not even regulate their share of the TAC, TAE, or overall capacity other than an overall catch, capacity, or effort limit. States are likely to receive the initial allocation of rights from the RFMO, but a key practical question is whether states subsequently allow free transfer of these rights from one individual or group to another outside the state’s sovereignty. Direct allocations of use rights by RFMOs to individuals or groups and/or full transferability among rights holders across state sovereignty can be expected to lead to greater economic efficiency and economic rents than allocations to states without transferability beyond flag state vessels. A smaller number of rights holders within a state or a greater similarity of their cost structure reduces the options for gains from trade. Which States Receive Allocations? Several issues arise in the choice of states to receive initial allocations of rights by the RFMO. These include (1) coastal and distant-water states; (2) proportions of the biomass within coastal waters; (3) lengths of time, locations, and amounts of historical fishing and variability of these15,16 ; (4) long-term, new, and potential participation; (5) existing investment, which can even include onshore processing; (6) aspirations to expand economic activities by coastal states, especially lower-income ones; (7) reliance on the resource; (8) asymmetric (downstream) negative externalities between fishing nations due to type and age of species harvested and gear type; (9) equity norms and precedents; (10) conservation; and (11) expansion of harvesting by existing participants.17 All of these issues affect the allocation of wealth and power among and within states, and as such are likely to be highly contentious and ultimately the key issue in the transition to rights-based management. Libecap (1989), Shotten (2001), Clark (2002), Chand et al. (2003), Ram-Bidesi and Tsamenyi (2004), Lodge and Nandan (2005), McDorman

4

Rights-Based Management in Transnational Tuna Fisheries

(2005), Alcock (2010), Grafton et al. (2010), and Van Dyke (2010) all discuss this matter.

Constraints to Rights-Based Management The transition to rights-based management, although conferring net benefits, faces numerous constraints. The resource is transboundary and highly migratory, shared across multiple national jurisdictions and the high seas; there are usually multiple target species; fishing fleets are composed of multiple gear types and vessel sizes; nations are coastal, distant-water, or both; heterogeneous coastal nations have jurisdiction over the EEZs within which tunas occur; many investments are sunk (i.e., they are not recoverable at anything close to the original investment cost); economic, social, and geopolitical national interests are intertwined; management authorities are multilateral and diverse; asymmetric (downstream) negative externalities exist, depending on the species and ages of the fish harvested and the gear types used; and still other factors. Uncertainty arising from multiple sources creates a national resistance and preference for the status quo. The distribution of costs and benefits and winners and losers permeates all of these factors, as discussed elsewhere in this chapter. National aspirations and objectives differ, and can hinder realization of increased benefits from the fishery and establishing rights-based management. Some coastal states, for example, rely heavily on onshore processing for employment and incomes more than from fishing. Other states face few opportunities for processing, or even fishing, and may simply rely on access fees as a source of revenue. Some distant-water fishing nations may wish to maintain fleets as extensions of their geostrategic interests.

Mechanics of Management, MCS for Rights-Based Management Systems Rights-based management requires MCS to ensure compliance and as a fundamental require-

77

ment for the enforcement of property and use rights (Allen et al. 2008, IATTC and World Bank 2008). Rights-based management also enhances MCS by establishing incentives for providing accurate and timely data and for compliance, because actions that degrade the resource reduce the value of all rights, including those of the degrader (Scott 2000). Weak MCS sets the stage for undetected “cheating”—violations of the conditions of the right (Munro 2006). Such violations lower the expected returns from cooperation, which, in turn, creates incentives for noncompliance, or, more broadly, noncooperation.18 This section discusses MCS mechanisms that are required for limited entry and for quota- and effort-based systems. In all cases, the required MCS mechanisms are much more complicated if the rights include transferability than if they do not include transferability.

Limited Entry and Capacity Allocations Limited entry requires a list of all those entitled to fish and, if there are controls on investments that increase fishing capacity, mechanisms to ensure their compliance. For example, the IATTC limited-entry program entails the closed RVR19 of purse-seine vessels that have the right to fish in the EPO. In addition to not allowing new vessels to be introduced except as replacements for vessels leaving the fishery, there is a rule that prohibits increases in well20 volumes of vessels; the only exception is when equal well volumes are removed by other vessels that leave the fishery or reduce their well volumes. (As noted previously, however, fish-carrying capacity is not necessarily proportional to fishing capacity.) This provision envisages the transferability allowed by the Resolution,21 establishing the limited-entry system. Because the fisheries authorities responsible for compliance with the rules of the RFMOs do not always have adequate communication with the maritime authorities responsible for registration and flagging of vessels, states do not always have the mechanisms in place to monitor compliance with vessel changes that may include increased

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capacity. Thus, systems maintained by the IATTC itself, including information collected by at-sea observers and inspections by staff members, have been used to monitor compliance with that aspect of the Resolution. A formal register must be maintained to preserve the integrity of the system. The register must be easily accessible to participating governments and other interested parties. Without transferability across states, each state can establish and maintain its own register in isolation. Once transferability across states is allowed, however, a central register becomes crucial to ensure compliance with any controls on investment that increases capacity and to maintain integrity of the right in general. The IATTC’s limited-entry system accommodates transferability in several ways. First, a vessel that is included in the RVR may change flag from one participating state to that of another without affecting the status of the vessel on the RVR. Vessels may also be replaced on the RVR by other vessels, provided the well volume of the new vessel does not exceed that of the vessel or vessels subject to replacement. The well volume of a vessel may be increased only if an equivalent amount of well volume is removed from the RVR. In 2004, the Commission agreed that when a vessel is removed from the RVR and its well volume is not replaced completely, the state concerned would retain a right to the residual well volume. Thus, in addition to maintaining the list of vessels on the RVR, the staff of the IATTC maintains a record of the residual well volume for each participating state. Between June 30, 2002, and December 31, 2007, there were 317 such transactions recorded. The question of flag changes of vessels on the RVR has been one of the key difficulties in the administration of the RVR. The IATTC considers the flag of a vessel as being the sole determinant of the government with authority over the vessel. It has been troubled by the complex situations of bare-boat charters in which the registration in one country is temporarily suspended and the vessel is allowed to fly another flag during the duration of the charter. Also the resolution does not explicitly

require approval from any government to retain a vessel on the RVR when its flag is changed. A government does, however, have the ability to remove a vessel from the RVR before it changes its flag. Some IATTC member governments would prefer that the rights to places on the RVR belong to the governments, rather than to the vessels, and have sought to achieve this with an explanatory note in the minutes of the 73rd meeting22 of the IATTC or via an instruction to the Director that he remove any of its vessels from the RVR if they change their flags.

Catch and Bycatch Limit Monitoring compliance with quotas requires more complex systems than those discussed above for limited entry. Registers of quotas, sometimes for multiple species and/or areas, and records of catches against those quotas are required. Owners of vessels maintain their own records of catches against quotas, but those records require verification by authorities, requiring a near real-time data recording system that now could rely on reports by at-sea observers or estimates reported electronically from sea, and verification at the time of unloading. Balancing of catches (Squires et al. 1998, Sanchirico et al. 2006) against quotas includes banking quotas from one year to another, use of deemed values for catches in excess of quotas, and, for multispecies fisheries, substitution of a quota for one species for a quota for another. The problems associated with quota balancing are far more serious in multispecies fisheries than in single-species fisheries, because it is common for such fisheries to include stocks whose productivities are different from their representation in normal catches. Such balancing systems add complexity to the system for recording quotas and catches against them, but no alternative exists. As with licenses, each state could maintain its own quota register and record catches against the quotas of its own vessels when there is no transferability across participating states. With transferability across states, a central register of quota

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Rights-Based Management in Transnational Tuna Fisheries

holding and reporting of catch against quota would be required. Transferability includes several possibilities. It might involve sale or leasing for determined periods of quota. It could also be used to address overand undercatching referred to above. The combination of provisions for over- and undercatching and of transferability requires a complex and carefully defined system for recording quotas and for counting catches against them. The basic system for registering individualvessel DMLs under the AIDCP works as follows. There is only one limit for each vessel: the total number of mortalities of dolphins in the EPO allocated to that vessel in a given calendar year. If a vessel kills more than its limit of dolphins in any year, the excess, plus an additional 50% of its limit, is deducted from its DML for the following year. However, in addition to this basic system, there are complex rules that relate the vessel’s performance in achieving a low mortality rate and in compliance that affect the vessel’s DML during the next year. In addition, the DML system operates under, and may be constrained by, a wider quota system that provides global limits for each stock of dolphins involved in the fishery, for both the total number of dolphins that may be killed and the number that may be killed by vessels of any participating state.

Registers For most limited-entry and all quota systems, it is essential that there be a Register of rights that is maintained by an agency that is trusted by all states and participants in the fishery. This might be operated by the RFMO concerned, as is the case for the IATTC limited-entry system, or by an independent agency, such as the FAO. Even in the relatively simple IATTC system the operation of the Register is a sensitive issue that has led to controversies, which, in several cases, are still unresolved.23 Some vessels are recorded on the Register under two flags or two names, indicating a difference of views of governments about the probity of particular flag transfers.

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This highlights the importance of ensuring that rules concerning transfers are unambiguous, so that the administrator of the system is not subject to differing interpretations of participating governments. It is also desirable that those operating the Register be as far removed as practical from the influence of governments or individuals whose interests are recorded in the Register.

Buybacks in the Transition to Rights-Based Management Buybacks can purchase vessels, gear, licenses, or other forms of rights. Buybacks facilitate a transition to a longer term objective of rights-based management, along with objectives for public good, such as conservation of biodiversity or ecosystems management (Curtis and Squires 2007, Allen et al. 2008, Squires et al. 2010). Buybacks are not necessarily required for the transition to rights-based management, because the internal restructuring of an industry after the introduction of rights-based management will usually reduce the numbers of vessels. Buybacks may, however, be an important factor in facilitating a change to rights-based management, since they will facilitate the economic transition by purchasing unnecessary sunk investment in human and technological capacity and ease out disgruntled players. Buybacks can help smooth tensions among nations by helping to settle issues related to allocation of rights. Buybacks that are not followed by a rights-based framework do not change the underlying incentive to add capacity. Multilateral buybacks are required in a transnational tuna fishery. Otherwise, unilateral buybacks by a single nation simply remove fishing capacity from the fleet of that nation, but open up opportunities for free riding by other nations. Buyback programs can purchase the vessel and/or license. If only the license or right is purchased, the vessel is free to fish elsewhere. If the vessel, but not the permit, is purchased, the permit holder can purchase another vessel (unless

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prevented by the program). If both the license and vessel are purchased, the price includes the values of both assets. Many programs must buy out many vessels or rights of access due to latent capacity (low-activity vessels). Purchasing high-activity vessels can be expensive and quickly absorb the entire budget while purchasing only a limited number of vessels. Reverse-bid auctions in which the buyer puts up the price are the most common form of buybacks. Even with such attempts to control price, buybacks can be costly. Additional, but related, concerns include whether to scrap the vessel, convert it to a different use, such as a research vessel, or restrict its use in other fisheries to fisheries on stocks that are not overexploited. It can be argued, of course, that if the buyer wishes to use the vessel in another fishery, it is the responsibility of the organization with jurisdiction over that fishery to decide whether it can enter that fishery. Buybacks and their financing in a transnational fishery may have to be rooted in individual countries, each of which must perceive that the buyback is in its best interests. Buybacks may also be tailored to allow for the expansion of economic activities by coastal states. Compensatory mechanisms can address asymmetries among nations. Buybacks can be aimed at different gear types or for different areas or type of fishing (e.g., floating objects or unassociated sets) for a gear type.

Concluding Remarks Multilateral RFMOs created by legally binding agreements can serve as the basis for management of the global tuna fisheries, but incentives still remain to enter the fisheries, expand fishing capacity, and overfish tuna stocks. The United Nations Convention on the Law of the Sea, the UN Fish Stocks Agreement, the FAO Code of Conduct for Responsible Fisheries, and other agreements require that states cooperate in the management of shared fisheries, but these agreements cannot ensure that cooperation succeeds or that the fisheries are optimally managed.

Only by extending and strengthening the rights to access the fishery and harvest tunas can the problems of overfishing, overcapacity, damage to the ecosystem, and low economic benefits be effectively addressed. Establishing long-term and secure property rights that are legally enforceable creates positive economic incentives that more closely align the private economic interests and incentives of fishers with the interests of society in sustainable harvests and high levels of economic welfare. The positive economic incentives (“carrots”) established by rights-based management, backed by strong international agreements, can be complemented by negative economic incentives (“sticks”), most notably trade and port measures and the market power of processors. The first step on the road to strong and comprehensive fishing rights may be limited entry in the form of an RVR, with transferability for purseseine, longline, and pole-and-line vessels, thereby creating a form of common property in the jurisdictional regions of each RFMO (Allen et al. 2008, Hallman et al. 2010, Joseph et al. 2010). Limited entry is a necessary first step, even if stronger and more complete forms of property rights, such as national allocations of a TAC on a permanent basis or individual transferable quotas. Even with stronger forms of rights, limited entry maintains a bulwark against vessel entry and pressures to expand the TAC or TAE. Serdy (2007) observes that there is no fundamental international legal obstacle to any RFMO either making quota shares permanent or introducing a rule that there must be no fishing by its members unless it has made a positive decision to allow it, but that none is likely to do so for as long as there is no limitation on entry to the fishery. These limited-entry programs can be created through customary international law, but binding international agreements create even more durable, secure, and exclusive rights. Measures will have to be undertaken to deter entry and enhance compliance and to ensure mechanisms whereby entry is secured for new entrants (Hallman et al. 2010). The issue of separating access rights from flag-state sovereignty and the

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desire of states to retain these rights will have to be addressed. Because of the remaining transnational externality due to the mobility of vessels and, to a lesser extent, the highly migratory nature of the tunas, problems associated with bycatches, and also the incomplete jurisdictions of the RFMOs, global coordination across RFMOs is required. International common property over the resource stocks has been formed through the United Nations Law of the Sea and the UN Fish Stocks Agreement under the management of the RFMOs. Still, stronger property and use rights are required, which can be held by states, groups, or individuals. Stronger state rights, in the form of access, share of a TAC or a TAE, and other use rights, are emerging because of the inherent constraint of state sovereignty. RFMOs can allocate use rights, such as shares of TACs with ICCAT, or shares of bycatch or capacity and access, such as with the IATTC, to coastal and distant-water states. RFMOs might even retain rights on the high seas and allocate directly to individuals. State rights could be a perpetual property right, with full properties comparable to an EEZ, after allocation to the states by the RFMOs, or, more likely, they could be a use right, or even a combination of a perpetual use right for a share of the fish in EEZs and a use right for the share on the high seas. In principle, such state use rights can be of varying duration, divisibility, and transferability. Ownership of the resource stock itself is likely to be retained by the RFMO itself as international common property, with only the resource or effort flows, such as TACs or TAEs, allocated to states. The allocated state use rights, such as the shares of TACs allocated by ICCAT, can, in turn, be allocated to groups or individuals in a two-stage process. These rights can range from simply a right of access to harvest or effort rights. Individuals or groups then ideally would be able to trade rights across flag state jurisdictions so that rights end up in the most socially and economically valuable uses. Some forms of bycatch and the ecosystem and its services may be retained as international common property by the RFMO. Some forms of by-

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catch, such as sea turtles and sea birds, and the ecosystem and biodiversity in general, have insufficient commercial value or are sufficiently rare events (for some endangered populations) to make the benefits of creating state or individual property or use rights outweigh the costs. Their nonmarket values, such as indirect use value and existence value, and history of minimal commercial exploitation suggest that they remain as global public goods with “ownership” retained by the RFMO members or even humanity as a whole. The regional sea turtle program of the EPO (IATTC 2008), for example, appears to be creating common property of various duration, exclusivity, and quality of title for the IATTC. In contrast, because of their value as a private good bycatch along with their public good of biodiversity (and relatively large numbers), led to the formation of DMLs, a use right. Such RFMO common property may at some point emerge for some definable contributions of the ecosystem for ecosystems-based management, whereas states may exert greater rights over those aspects of the ecosystem with a more distinct spatial delineation or actual or potential commercial value. Overlapping combinations or hybrids of international common, state, and individual property and use rights imposed upon resources are likely for the species of sufficient commercial value. The formation of international common property in dolphin stocks by the AIDCP, followed by allocation of use rights to states and then to individuals within each state, serves as clear model. As conditions change, one form of right may predominate over another. For example, it is an easy and logical step to extend current allocation of capacity units in the EPO to ITQs based on the same percentage of a TAC as percentage of the overall fish-carrying capacity. History shows that adoption of rights-based institutions tends to come late in resource use when the costs of both open-access and central regulation are high and that the most complete rights will be assigned to resources that are more valuable, less mobile, and more observable (Libecap 2006). Whether the transformation to rights-based

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management backed by strong international treaties will be completed prior to this point remains an open question. Nonetheless, a stronger start has been reached than initially meets the eye through ICCAT’s allocation of TACs by state, the Forum Fisheries Agency’s transferable effort program, and IATTC’s bycatch share program for dolphins, the AIDCP, and IATTC’s limited entry and capacity management program, the closed RVR.

Endnotes 1. With the exception of skipjack tuna, at least in the Pacific Ocean, most stocks of tunas are fully exploited, and two stocks (western Atlantic bluefin and southern bluefin) are clearly “depleted” (Majkowski 2007). Increased fishing effort for most of these stocks will not result in sustained increases in catch, but would probably lead to reduced catches over the long term. Reid et al. (2005) recently demonstrated overcapacity in all the major purse-seine fisheries for tunas in the regions under the jurisdictions of RFMO. High-seas longline fisheries are similarly believed to face such overcapacity (Miyake 2005). About 40% of the world’s tuna are captured on the high seas beyond the EEZs. 2. Costello et al. (2008) conducted thorough statistical analysis of the impact of introducing individual transferable quotas (ITQs) on the status of a fishery, using a database covering 11,135 fisheries between 1950 and 2003, of which 121 had instituted ITQs by 2003. Using the definition of collapse of Worm et al. (2006), Costello et al. (2008) showed that introduction of an ITQ system reduces the probability of collapse by about 14% and that the fraction of ITQ fisheries that collapsed was about half that of the non-ITQ fisheries that collapsed. Heal and Schlenker (2008) observe that because both Costello et al. (2008) and Worm et al. (2006) define a fishery as collapsed when the catch drops to less than 10% of the historic maximum to date, a policy that stabilizes catch by definition reduces the probability of collapse. Heal and Schlenker (2008), using the same data,

showed that sustained higher catches imply that a fishery is less likely to collapse and that the fishers reap the benefits through higher catches. 3. As discussed below, some of these potential gains may require redistribution to ensure that all parties gain. Property rights institutions, by assigning ownership to valuable assets and designating who bears the rewards and costs of resourceuse decisions, structure incentives for economic behavior within the society (Libecap 1989). For transnational resources, these institutions structure incentives for economic behavior on an even broader scale. Moreover, by allocating decisionmaking authority, the property rights arrangement determines who the players are in the economic system (Libecap 1989). 4. There are other advantages including flexibility, cost savings, information generation, and migration to high-valued uses (Libecap 2006). Johnson and Libecap (1982), Hannesson (2004), and Libecap (2006, 2010) provide a comprehensive answer to the advantages of rights-based management over command-and-control forms. 5. This chapter does not discuss the issues of international law and governance that are also important factors, and instead focuses on the economics of property rights. 6. In 2000, the IATTC created a register of vessels authorized to fish for tunas in the EPO, with an allowance for minimal expansion to fulfill the needs of several coastal states (Joseph et al. 2010). In 2002, with its Resolution on the Capacity of the Tuna Fleet Operating in the Eastern Pacific Ocean (Revised) it restricted purse-seine vessels to those already on the registry. Existing vessels can transfer registration to another party, which provides opportunities to states desiring to acquire fleets, but the capacity quotas remain vesselspecific. (New quotas are allocated only when vessels are retired.) Such a register essentially places a moratorium on fleet growth. According to the resolution, “Any purse-seine vessel fishing for tunas in the EPO that is not on the Register would be considered to be undermining IATTC management measures.” The resolution also prohibits “the entry of new vessels,” a prohibition

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that applies to parties and nonparties alike. The resolution concludes with a plea, “To urge all non-Parties to . . . comply with its provisions.” (http://www.iattc.org/PDFFiles/C-0203%20Capacity%20resolution%20Jun%202002 %20REV.pdf). 7. See Agenda item 11 Minutes of the 15th meeting of the Parties to the AIDCP, June 2006 (http://www.iattc.org/PDFFiles2/MOP-15MinutesREV.pdf). 8. Ibid. 9. The IATTC’s RVR is the definitive list of purse-seine vessels authorized by the IATTC to fish in the EPO (http://www.iattc.org/Vessel Register/VesselList.aspx?List=AcPS&Lang= ENG). 10. The allocated rights usually include catch or effort shares, capacity units, or licenses, but can simply be rights to a share of the profits as in the Convention for the Preservation and Protection of Fur Seals (Munro 2006). In this case, two of the four fleets were allocated zero harvest shares. 11. Catch and effort shares are both calculated as explicit proportions of the total sustainable limit or quota, whereas limited entry is typically a number of vessels and fish-carrying capacity is measured in cubic meters or tons of fish. 12. Side payments, or transfers between and among parties, have both distributive and strategic functions (Barrett 2005). Side payments redistribute the additional gain from cooperation and help guarantee that all parties are at least as well off as before cooperation, thereby insuring a Pareto improvement and perhaps a Pareto optimum (and, hence, individual rationality, as noted by Barrett 2003). 13. Resolution on Fleet Capacity adopted at the 37th meeting of the IATTC in October 1998 (http://www.iattc.org/PDFFiles/C-98-11%20 Capacity%20resolution%20Oct%202098.pdf). 14. A vessel that is included on the RVR is entitled to fish for tunas in the EPO, and a vessel with a DML operating in the EPO is entitled to fish for yellowfin tuna associated with dolphins. DMLs are allocated to all qualified vessels that seek them. The original places on the RVR were

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allocated in 2002 to vessels that were fishing (or had recently been fishing) at that time, with some additional space provided for five coastal states that were in the process of developing their tuna industries (Resolution on the Capacity of the Tuna Fleet Operating in the Eastern Pacific Ocean (Revised)) (http://www.iattc.org/PDFFiles/C-0203%20Capacity%20resolution%20Jun%202002 %20REV.pdf). 15. Historical catch affects the public information on past claims and production patterns and also reflects first-possession rules of allocation. 16. Libecap (2006: 34) observes, “There is more than political expediency in the allocation of ITQs based on historical catch. As outlined above, it can be efficient as well. Assigning quotas to those with knowledge and past experience in the fishery likely is consistent with granting rights to the low-cost users. This practice reduces the need for subsequent re-allocation and therefore, economizes on transaction costs.” Libecap (2006: 42) subsequently observes, “. . . transaction costs of exchange appear to be low in most resources. Accordingly, initial rights assignments could be redeployed with comparatively low transaction costs regardless of the allocation rule.” 17. Libecap (2006: 42) states, “Auctions are adopted very infrequently, only for fringe allocations where there are no incumbents and where resource values have been shown to be very high, as in the case of the radio spectrum.” 18. This leads to a violation of the individual rationality requirement discussed by Barrett (2003) as one of the components of a self-enforcing international environmental agreement. 19. http://www.iattc.org/VesselRegister/Vessel List.aspx?List=AcPS&Lang=ENG. 20. Purse-seine vessels store their catches in spaces known as wells. 21. http://www.iattc.org/PDFFiles/C-0203%20Capacity%20resolution%20Jun%202002 %20REV.pdf. 22. Page 8 of the Minutes of the 73rd meeting of the IATTC: “A change of flag by a vessel from one CPC [party, cooperating nonparty, or fishing entity] to another, and the vessel’s status on the RVR,

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shall not be considered effective until the Director has received official notification of the change from both governments involved.” The Commission endorsed this statement, and noted the importance of each government establishing adequate internal procedures to ensure the necessary coordination between the various domestic agencies involved in the process of flag transfers (http://www.iattc.org/PDFFiles2/ IATTC-73Minutes-Jun05-REV.pdf). 23. See IATTC-75 Prop F1 VVen Capacity at www.iattc.org/IATTCandAIDCPMeetingsOct07 ENG.htm.

References Alcock F. 2010. Prospects for use rights in tuna RFMOs. Chapter 15 of this volume. Allen R, J Joseph, and D Squires. 2008. Rightsbased management and buybacks in international tuna fisheries. Paper presented to a Workshop on Rights-Based Management and Buybacks in International Tuna Fisheries sponsored by the Inter-American Tropical Tuna Commission and the World Bank, La Jolla, CA, May 5–9, 2008, 20 pp. Allen R, W Bayliff, J Joseph, and D Squires. 2010. The benefits and costs of transformation of open access on the high seas. Chapter 5 of this volume. Aqorau T. 2007. Moving towards a rights-based fisheries management regime for the tuna fisheries in the western and central Pacific Ocean. International Journal of Marine and Coastal Law, 22:125–142. Baland J-M and J-P Platteau. 1996. Halting Degradation of Natural Resources: Is There a Role for Rural Communities? Oxford: Oxford University Press, 423 pp. Baland J-M and J-P Platteau. 2005. Economics of common property management regimes. In M¨aler KG and JR Vincent (eds) Handbook of Environmental Economics, 1st edn, Vol. 3. Amsterdam: Elsevier, pp. 129–190.

Barrett S. 2003. Environment and Statecraft: The Strategy of Environmental Treaty Making. Oxford: Oxford University Press, 446 pp. Barrett S. 2005. The theory of international environmental agreements. In M¨aler KG and JR Vincent (eds) Handbook of Environmental Economics, 1st edn, Vol. 3. Amsterdam: Elsevier, pp. 1457–1516. Chand S, RQ Grafton, and E Petersen. 2003. Multilateral governance of fisheries: management and cooperation in the western and central Pacific tuna fisheries. Marine Resource Economics, 18:329–344. Clark L. 2002. Transformation and rights-based fisheries management regimes: application to the western and central Pacific Ocean. Working Paper 4, Forum Fisheries Agency Rights-Based Management Workshop, Nadi, Fiji, June 22–24, 2002. Costello C, SD Gaines, and J Lynham. 2008. Can catch shares prevent fisheries collapse? Science, 321(5896):1678–1681. Curtis R and D Squires (eds). 2007. Fisheries Buybacks. Oxford: Blackwell Publishing, 267 pp. DeSombre ER. 2010. Flags of convenience and property rights on the high seas. Chapter 16 of this volume. FAO. 1998. Report of the Technical Working Group on the Management of Fishing Capacity. FAO Fisheries Report, No. 586, 57 pp. Grafton RQ, R Arnason, T Bjørndal, D Campbell, HF Campbell, CW Clark, R Connor, DP Dupont, R Hannesson, R Hilborn, JE Kirkley, T Kompas, DE Lane, GR Munro, S Pascoe, D Squires, SI Steinshamn, BR Turris, and Q Weninger. 2006. Incentive-based approaches to sustainable fisheries. Canadian Journal of Fisheries and Aquatic Sciences, 63(3):699– 710. Grafton RQ, R Hannesson, B Shallard, D Sykes, and J Terry. 2010. The economics of allocation in tuna Regional Fisheries Management Organizations (RFMOs). Chapter 9 of this volume. Hallman B, S Barrett, RP Clarke, J Joseph, and D Squires. 2010. Limited access in transnational tuna fisheries. Chapter 12 of this volume.

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Hannesson R. 2004. The Privatization of the Oceans. Cambridge, MA: The MIT Press, 212 pp. Havice E. 2007. The state of play of access agreements with distant water fishing partners: implications and options for Pacific island countries. Report submitted to the Pacific Islands’ Forum Fisheries Agency, 59 pp. Heal G and W Schlenker. 2008. Sustainable fisheries. Nature, 455(7216):1044–1045. Inter-American Tropical Tuna Commission. 2005. Plan for regional management of fishing capacity. Background paper presented at the Eighth Meeting of the Permanent Working Group on Fleet Capacity, Lanzarote, Spain, June 22– 23. http://www.iattc.org/PDFFiles2/CAP-8-04EPO-Capacity-Plan.pdf. Inter-American Tropical Tuna Commission. 2008. Annual Report of the Inter-American Tropical Tuna Commission, 2006, 113 pp. Inter-American Tropical Tuna Commission and World Bank. 2008. Report of a Workshop on Rights-Based Management and Buybacks in International Tuna Fisheries. Workshop sponsored by IATTC and World Bank, La Jolla, USA, May 5–9, 2008, 30 pp. Jeon Y, C Reid, and D Squires. 2008. Is there a global market for tuna? Policy implications for tropical tuna fisheries. Ocean Development and International Law, 39(1):32–50. Johnson RN and GD Libecap. 1982. Contracting problems and regulation: the case of the fishery. American Economic Review, 72(5):1005–1022. Joseph J and JW Greenough. 1978. International Management of Tuna, Porpoise, and Billfish—Biological, Legal, and Political Aspects. Seattle and London: University of Washington Press, 253 pp. Joseph J, D Squires, W Bayliff, and T Groves. 2010. Addressing the problem of excess fishing capacity in tuna fisheries. Chapter 2 of this volume. Le Gallic B. 2008. The use of trade measures against illicit fishing: economic and legal consideration. Ecological Economics, 64(1):858–866.

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Libecap G. 1989. Contracting for Property Rights. New York: Cambridge University Press. Libecap G. 2006. Assigning property rights in the common pool: implications of the prevalence of first-possession rules. Paper presented at Sharing the Fish ’06 Conference, Fremantle, Perth, Western Australia, February 26–March 2, 2006. Libecap G. 2010. Rights-based management of tuna fisheries: lessons from the assignment of property rights on the Western US frontier. Chapter 8 of this volume. Lodge MW and SN Nandan. 2005. Some suggestions towards better implementation of the United Nations Agreement on Straddling Fish Stocks and Highly Migratory Fish Stocks of 1995. International Journal of Marine and Coastal Law, 20(3–4):345–379. Majkowski J. 2007. Global fishery resources of tuna and tuna-like species. FAO Fisheries Technical Paper, No. 483, 54 pp. McDorman TL. 2005. Implementing existing tools: turning words into actions—decisionmaking processes of regional fisheries management organizations (RFMO). International Journal of Marine and Coastal Law, 20(3–4):423–457. Miyake PM. 2005. A review of the fishing capacity of the longline fleets of the world. FAO Fisheries Proceedings, 2:157–170. Munro G. 2006. International allocation issues and the high seas: an economist’s perspective. Paper presented at the Sharing the Fish Conference, Freemantle, Australia. Ostrom E. 1990. Governing the Commons: The Evolution of Institutions for Collective Action. New York: Cambridge University Press. Petersen EH. 2006. Institutional Economics and Fisheries Management: The Case of Pacific Tuna. Cheltenham, UK: Edward Elgar, 186 pp. Ram-Bidesi V and M Tsamenyi. 2004. Implications of the tuna management regime for domestic industry development in the Pacific island states. Marine Policy, 28(5):383–392. Reid C, J Kirkley, D Squires, and J Ye. 2005. An analysis of the fishing capacity of the global tuna

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purse-seine fleet. FAO Fisheries Proceedings, 2:117–156. Reid C and D Squires. 2007. Measuring fishing capacity in tuna fisheries: data envelopment analysis, industry surveys and data collection. FAO Fisheries Proceedings, 8:87–98. Sanchirico JN, D Holland, K Quigley, and M Fina. 2006. Catch-quota balancing in multispecies individual fishing quotas. Marine Policy, 30(6): 767–785. Scott A. 1993. Obstacles to fishery selfgovernment. Marine Resource Economics, 8(3):187–199. Scott A. 2000. Introducing property in fishery management. FAO Fisheries Technical Paper, No. 404/1, pp. 1–13. Serdy A. 2007. Fishery commission quota trading of under international law. Ocean Yearbook, 21:265–288. Serdy A. 2010. International fisheries law and the transferability of quota: principles and precedents. Chapter 6 of this volume. Shimada BM and MB Schaefer. 1956. A study of changes in fishing effort, abundance, and yield for yellowfin and skipjack tuna in the eastern tropical Pacific Ocean. Inter-American Tropical Tuna Commission, Bulletin, 1(7):351–469.

Shotten R (ed.). 2001. Case studies on the allocation of transferable quota rights in fisheries. FAO Fisheries Technical Paper, No. 411, 373 pp. Squires D. 2010. Property and use rights in fisheries. Chapter 3 of this volume. Squires D, H Campbell, S Cunningham, C DeWees, RQ Grafton, SF Herrick, J Kirkley, S Pascoe, K Salvanes, B Shallard, B Turris, and N Vestergaard. 1998. Individual transferable quotas in multispecies fisheries. Marine Policy, 22(2):135–159. Squires D, J Joseph, and T Groves. 2010. Buybacks in transnational fisheries. Chapter 11 of this volume. Squires D, J Kirkley, and CA Tisdell. 1995. Individual transferable quotas as a fisheries management tool. Reviews in Fisheries Science, 3(2):141–169. Van Dyke, JM (2010). Allocating fish across jurisdictions. Chapter 10 of this volume. Worm B, EB Barbier, N Beaumont, JE Duffy, C Folke, BS Halpern, JBC Jackson, HK Lotze, F Micheli, SR Palumbi, E Sala, KA Selkoe, JJ Stachowicz, and R Watson. 2006. Impacts of biodiversity loss on ocean ecosystem services. Science, 314(5800):787–790.

Chapter 5

The Benefits and Costs of Transformation of Open Access on the High Seas Robin Allen, William Bayliff, James Joseph, and Dale Squires

Introduction The benefits and costs of different forms of property and use rights in highly migratory species are changing. Property and use rights for highly migratory species are gradually transforming from nonproperty on the high seas and unregulated open access within the exclusive economic zones (EEZs) to other forms of property, in large part because the economic and ecological costs of remaining under open access are increasing so rapidly. The actual and potential costs of ecosystem degradation, overfished resource stocks, and losses in sustainable yields, economic rents, and profits have reached the point where they are beginning to exceed any benefits of continued open access, at least for global society and certain states and private sector participants, albeit not for all parties. Nonetheless, whether the transformation from open access occurs in a timely manner before the costs of open access and central regulation by regional fishery management organizations (RFMOs) becomes high remains an open question. The economics of the transformation to hybrid forms of international common, state, or private property and use rights depends, at least in part, on

the extent and distribution of benefits and costs of alternative property rights systems. As the advantages of secure property rights grow and the losses from absent or incomplete rights over common resources mount, the impetus to adopt or modify property rights increases (Demsetz 1967, Libecap 1989). Such was clearly the case with North Pacific fur seals (Barrett 2003), and it is now evident from the international empirical evidence of individual transferable quotas (ITQs) for fish or for the right to try to catch fish (Costello et al. 2008, Heal and Schlenker 2008). These transformation and benefit–cost evaluations are complicated in transnational tuna fisheries by the highly migratory nature of the tunas, which move from one national jurisdiction to another and back and forth between national jurisdictions and the high seas, the ability of the fishing vessels to transfer their operations from one ocean area to another, the sovereignties of multiple and heterogeneous nations, the state of international law, and variations in legal systems and property rights among individual states.1 The benefits of developing secure property and use rights begin to exceed the costs of definition, allocation, and enforcement as (1) resource scarcity increases and the value of resources rise, 87

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(2) realization grows that fishing has an adverse effect on some of the target species (e.g., western Atlantic bluefin and southern bluefin) or nontarget species (e.g., dolphins and sea turtles) that are adversely affected by fishing operations, (3) the economics of overcapacity and ill-structured property rights becomes increasingly evident, (4) resolution of the distributional conflicts inherent in major changes in ownership arrangements occurs (Libecap 1989), (5) as the transactions costs and complexity of current and future cooperation among states based on command-and-control regulation (regulations that set limits and specify the methods with which the participants in an activity are to comply with those limits) grows. (Marketbased transactions usually have far lower transactions costs.) The benefits from the development of property rights in transnational fisheries may have to be even more self-evident than those within individual states. The transaction costs of negotiating for property rights and cooperation among nations are necessarily more complex and higher in the international arena than within individual states. Sovereignty of nations and the requirement for self-enforcing international treaties further raise the costs, as do the numbers and heterogeneity of the participants. Allocation of rights among nations implies different distributions of wealth and power and becomes a major source of contention and dispute. Differences in property rights institutions among individual states facing similar resource endowments and an international market for tuna contribute to different benefits and costs for each state, and hence each state’s incentives to adopt a transformation in this international institution, even though far fewer differences are found among the individual owners of fishing capital themselves. The emergence of new forms of property or modification of existing property arrangements for common resources within an individual state has depended on mitigation of losses as soon as the private benefits of so doing outweigh the private costs (Libecap 1989). The underlying factors behind this

transformation include creation of new markets, changes in relative prices, changes in technology, and new production possibilities to which the old arrangements are poorly attuned (Demsetz 1967), so that market forces erode property rights institutions that are ill-suited for responding to new economic opportunities (Davis and North 1971, Libecap 1989). In the international arena, however, state sovereignty and geostrategic issues complicate the economics of property rights. Rights are also defined for shared, but highly migratory, common resources held by individual states within their EEZs and the high seas (although the highseas resources are steadily forming into international common property under the auspices of RFMOs). Common resources always face more complicated conflicts among claimants over the distribution of the gains achieved by mitigating common-resource losses (Libecap 1989). Free riding (reaping the benefits of regulations without observing them) and illegal, unregulated, and unreported fishing erode the benefits to cooperation and the transformation of property rights to clearer definition and allocation. Free riding reduces the benefits of conservation, and hence lowers incentives, reduces potential catches, and can potentially lower prices. The emergence of property and use rights as the benefits rise relative to costs is complicated by uncertainty (Libecap 2006). Uncertainty arises due to the limited or asymmetric information about the losses under ill-structured rights and the transactions costs and expected benefits from developing and assigning rights. Libecap (2006: 11) observes, “If the benefits are more uncertain than are the costs at any point in time, then a consensus on property rights will be difficult to obtain. Some parties who have adapted well to open-access or regulation may conclude that they are better off under the status quo.” This can hold for individual member states, as well as participants in illegal, unregulated, and unreported fishing and free riders in general. Formal property rights may not emerge until either resource values are very high, losses from open access are very large, or until late

5 The Benefits and Costs of Transformation of Open Access on the High Seas

in the use of a resource when open-access losses have largely been borne and the resource is clearly overexploited. Only then do the benefits of property rights become clear and information about the costs of ill-structured rights and the costs of developing rights is more evenly spread (Libecap 2006).

Distribution of Benefits and Costs Paramount in the transformation to new institutions are the distributional conflicts over changing benefits and costs and the problems inherent in new property-rights arrangements and allocations (Libecap 1989). Property-rights arrangements allocate decision-making authority, and thereby the identity of the agents in the economic system and the distribution of benefits and costs among these agents. In RFMOs, where multilateral cooperation is required and treaties are necessarily self-enforcing, the deciding factor can be even more than simply the benefits outweighing the costs, aggregated across all states, and uncertainty over these benefits and costs. The emergence of rights when multilateral cooperation requires that such emergence creates an aggregate gain and ensures that every party is better off with the program than without it. To succeed, however, the program must also ensure that each party would lose by not participating, because of the consensus decision making in most RFMOs. If the net benefits are negative for a state or coalition of states, this state or coalition can block the emergence of property and use rights, even if the aggregate net benefits are positive. This state or coalition may still block the formation of rights if the net gains are deemed insufficient, even if positive. The asymmetric distribution of benefits and costs—wealth and power—among states when property is created, especially when some states might lose by participating, requires side payments whereby the gainers compensate the losers. Side payments, which can be in the form of money or kind, foster participation and cooperation.

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In practice, devising compensatory side payments that bring agreement among contracting states is fraught with difficulties because the transfers that they involve can become an assignment of rights themselves (Libecap 1989). Consequently, the side-payment arrangements may be insufficiently complete to resolve the distributional conflicts needed for more than minimal institutional change to occur at any one time. These formidable obstacles include questions as to who receives the payments, who pays, and the size, timing, and form of the payments. Legal precedent impacts the transformation of property-rights institutions, with the United Nations Convention on the Law of the Sea and the 1995 Agreement for the Implementation of the Provisions of the United Nations Convention on the Law of the Sea of December 10, 1982, relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks, along with individual RFMO conventions, playing important roles. The widespread requirement of consensus decision making by RFMO members and the provision of opt-out procedures further muddies the waters. Invariably, some states have enjoyed greater benefits under existing arrangements and have vested interests in maintaining the status quo. In transnational fisheries, new or potentially new entrants further complicate the picture (Munro et al. 2004, Alcock 2010).2 The absence of clear information on the potential gains and the impact of different rights distributions is also important, with greater uncertainty leading to greater room for legitimate disagreement. As with the side-payment schemes required for agreement on the Kyoto Protocol and for the fishcarrying capacity program of the Inter-American Tropical Tuna Commission (IATTC),3 the solution can entail, actually aggravating the initial problem by allocating “hot air” or “extra” rights to solve the distributional problem. Allocating additional units of capacity may allow the parties to reach a multilateral agreement, but the industry is then left with substantial excess capacity. Although not all of the capacity is used, it does represent an

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option for the countries holding the rights. Buyback schemes (Squires et al. 2010 may consequently be necessary as a precondition to initiate the institutional change. Side payments are complicated by asymmetric negative externalities among parties, adding another layer of grievance and potential compensation. Rights allocated to a party harvesting juvenile fish by methods such as fishing for tunas associated with floating objects can reduce the amounts of larger fish available to gear harvesting larger fish, such as yellowfin tuna caught by purseseine gear while in association with dolphins or bigeye caught by longline gear. Similarly, juvenile bluefin tuna harvested by hook-and-line and purse-seine gear reduces the amounts of larger fish available for other commercial and recreational fishers. Thus allocation of fish to one party as a right can actually decrease its availability to another party by means other than simply taking a greater share of a static and constant-sized pie. In general, the greatest catches from a stock of fish can be achieved by harvesting them at an intermediate size, but when the fish are available to some parties only as juveniles and to other parties only as intermediate-sized fish, side payments from the second group of parties to the first group of parties would be in order. Side payments can also be complicated by the practice of vessel reflagging. A state’s catch history or investment can change when a vessel leaves one flag and reflags to another. Exactly what a state’s fleet composition at any given time can be is open to question. Underreporting by vessels to flag states further complicates the issue (Ram-Bidesi and Tsamenyi 2004). States are not monolithic. They represent coalitions of different interests, potentially including one or more groups of commercial and artisanal fishing labor and capital using different gear types, processors, support industries, such as shipyards and suppliers of fuel and other provisions, recreational fishers, and environmental groups. A state must balance the sometimes conflicting and varying interests of its different constituents to develop a position based on an assessment of its net

benefits from institutional changes on the magnitude of the emergence of rights. Furthermore, the interests and position of a state can change over time. Different groups can also capture the process of institutional change to suit their own interests, and they may oppose the transformation of property rights if their interests are unduly threatened or not served in the way they prefer, despite potentially large aggregate gains from stronger cooperation and more comprehensive rights or lesser losses from degradation of common resources. The formation of joint ventures among states, such as the Spanish vessels fishing in the EEZ of Ecuador and landing tunas in Ecuadorian ports, or Japanese longline vessels fishing out of Forum Fisheries Agency (FFA) nations, further blurs the definition of individual parties and their interests. An individual state represents not only the interests of actors from that state, but also the interests of actors from other states when the interests intersect. The complication can range further when the European Union represents Spanish interests, and indirectly those of Ecuador, in matters pertaining to the IATTC. The timing and nature of this transformation thus depends on the distribution of these benefits and costs (Libecap 2006), both among potentially conflicting parties within the individual states and among states and coalitions of states.4 Fishing under property rights systems other than open access or centralized command-and-control regulations differs in the composition of inputs and timing. Ecosystem-based management and conservation of protected species, such as dolphins, under property rights also alters the production process. Different groups of labor, input sellers, service organizations, and processors enjoy benefits or incur costs, so that not all parties necessarily benefit from this transformation. As the fishery becomes more valuable and any overfished fish stocks recover, owners of property and use rights enjoy wealth, status, and political influence unavailable to those without such rights. These distributional factors constrain the extent and timing of the assignment of property rights to address the common pool (Libecap 2006).

5 The Benefits and Costs of Transformation of Open Access on the High Seas

Transactions Costs The transactions costs of contracting for property rights to nonexclusive resources increase with the number and heterogeneity of claimants and the skewed distribution of potential gains (Johnson and Libecap 1982, Libecap 1989: Chapter 12, Baland and Platteau 1996, 2005, Barrett 2003). The participation of supranational bodies, such as the European Union, representing the interests of both distant-water and coastal states add yet another layer of heterogeneity and complexity. Further, the more powerful are those groups or states that benefit from the emergence of comprehensive rights relative to those that favor weaker rights, the better the chance of success for comprehensive rights to emerge. However, the need for consensus in decision making within RMFOs, at least in part, counters this. The status of international law, allowing in principle free access, further adds to transactions costs. The transactions costs entailed in negotiating international treaties and ongoing negotiations in the operations of an RFMO raise the overall costs of establishing and enforcing property rights, relative to establishing and enforcing rights within an individual state. Some states also have lower costs of collective action, transaction of agreements, and legal actions in general. Transactions costs rise further when states do not expect to benefit fully from the establishment of property and use rights. In general, transactions costs of developing rights are lowered with a depleted resource and low earnings because there are fewer claimants to involve in the allocation of property rights (Libecap 2006). In the international area, however, the number of claimants may not decrease, even when the resource is clearly overexploited, because states desire to maintain a geostrategic presence in the RFMO, even if their catches are declining relative to those of other participants in the fishery. Vessel construction, costs of fuel, etc., may also be subsidized for states’ internal political reasons, allowing fishing to continue even when it would otherwise be unprofitable. Moreover, new entrants can arise as highly

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mobile vessels shift from one ocean area to another and nations that had not previously participated in a fishery desire entry into it. There is considerable heterogeneity among individual states in regard to their domestic laws and their degrees of orientation toward market economies, private property, and rule by law, which further raises the transactions costs. Legal precedents within individual countries can also impact how different states approach how property rights are changed in response to changing economic conditions. Past domestic property rights decisions color how individual states approach institutional solutions to the economic and ecological problems requiring a transformation of property rights in transnational fisheries; that is, there is a path dependency.

Costs of Measuring, Bounding, and Enforcing Rights The costs of measuring, bounding, and enforcing property and use rights in transnational fisheries with international common property held by the RFMO further impact the extent and timing of the assignment of property rights to address the common resource (Libecap 2006: 3). As rights emerge, the most complete rights will be assigned to resources that are more valuable, less mobile, and more observable (Libecap 2006), such as tunas and dolphins, rather than less valuable or less charismatic species, or the ecosystem and its services. Along similar lines, the smaller and more clearly defined the boundaries of the common resource, the more complete will be the rights that are assigned (Baland and Platteau 1996). In this vein, comprehensive rights will be more difficult to establish over highly mobile, transboundary resources, such as highly migratory species. Building off of preexisting arrangements among the users, such as the Agreement on the International Dolphin Conservation Program (AIDCP) and the closed Regional Vessel Register in the IATTC’s area of jurisdiction, also enhances the chances of success.

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An essential prerequisite for the emergence of comprehensive rights is the fact that resource users correctly perceive the potential benefits for collection action, which, in turn, requires that they be informed about the state of the resource and the possible impact of use behavior on the resource stock (Baland and Platteau 1996). The inherent difficulties in population assessments of highly migratory species and for disparate gear groups from multiple nations in part explains the slower emergence of property rights over the high seas than over national waters. The overexploitation of fish stocks can also be a slow and even unnoticed process, so that the comprehension of the damage that has been done can emerge only slowly, and even late in the process. When the resource is uncongested and boundary maintenance is costly, open access is less costly than common or private property (Cooter and Ulen 2007). As congestion increases through increases in vessel numbers and the technology of boundary maintenance improves (so that costs of exclusion decrease), property rights emerge when the costs of boundary maintenance are less than the foregone benefits from overexploitation of the resource. These direct boundary maintenance costs include those of monitoring, control, and surveillance (MCS5 ), administration, and information and transactions costs in general. The development of electronic vessel monitoring systems (VMSs) undoubtedly played a big part in the emergence of the individual transferable effort (ITE) program of the FFA. As the opportunity costs of overlooking different margins of the resource conservation and management use emerge in importance as components of a more comprehensive property right, and the lower the costs of establishing a more comprehensive right, the more comprehensive the right is likely to become over time. For example, an ITE is a less comprehensive right than an ITQ in terms of exclusive use, but the MCS costs of catch shares is also considerably greater than VMS. Similarly, catch rights can be extended beyond simply a species of tuna to the method of harvest and the size distribution of the fish caught. Over time,

the benefits of catch shares rise above the costs of observers and close tracking of fish, leading to a replacement of ITEs by private or common shares of the catch. Institutions and mechanisms that allow conflict resolution and lower the transactions costs of negotiation favor the emergence of comprehensive rights for highly migratory species and on the high seas. In this vein, the presence of RFMOs and other related institutions all serve to lower the costs of forming comprehensive property rights.

Economics of International Common Property International common property for highly migratory species on a regional basis is forming through the auspices of RFMOs, because enforcement of private property rights is prohibitively costly, indivisibilities are pervasive, and state sovereignty remains fundamental. Tunas are highly migratory over large expanses of territory, become property only after capture by mobile harvesters, and resource stocks and sustainable resource exploitation rates are not easily observed and measured. Collective regulation under a regional common property regime avoids the inefficient management and/or degradation of the resource under open access, avoids extending EEZs throughout the high seas, avoids the difficulties of partitioning rights among individuals, and avoids the necessity of state sovereignty (Baland and Platteau 2005, Libecap 2006). Baland and Platteau (2005: 12) further state, “Thus, Hayami and Kikuchi (1981) point out that, under these conditions, ‘the social structure becomes tighter and more cohesive in response to a greater need to co-ordinate and control the use of resources as they become increasingly more scarce. As scarcity increases and competition is intensified, rules are defined more clearly and enforced more rigorously, whether they serve to define rights and obligations among people on the use of the resource or to settle possible conflicts.’ ” The constraints of international law and

5 The Benefits and Costs of Transformation of Open Access on the High Seas

state sovereignty further favor the formation of international common property, rather than strict private property, consistent with the range of the species. Other factors reinforce the tendency toward international common property and allocations of use rights to states, rather than an expansion of strict state property beyond the current EEZs. Enforcement costs can be sizable for highly migratory species covering extensive territories (split by state jurisdictions and the high seas) harvested by multiple users from multiple states. Violations of individual, collective, or state rights by overfishing, discarding at sea, nonreporting, and other forms of noncompliance are difficult and costly to monitor and enforce. MCS costs in some instances are declining through centralized VMSs and other forms of electronics and technological advances, and there are definite scale economies and consistency through the observer programs of international RFMOs, rather than individual states or private operators. The more rapid and cost saving is technological change in delimiting rights, detecting rule violations, arbitrating disputes, and punishing violators, the stronger will be the gains from applying a more specific assignment of property rights to reduce losses with common resources (Libecap 1989). There are also risk-sharing benefits in keeping the resource domain intact. Scientific assessment of highly migratory species extending beyond the EEZ of any single state is also subject to indivisibilities, where collective assessment and data collection are far more efficient and superior in quality than assessments, if any, by individual states. Free riding is also reduced by collective generation of public goods, thereby increasing the supply of this regional public good. In short, scientific assessment is a regional public good more effectively conducted by a public body than by individual states (if at all). Transactions and coordination costs are lower through RFMOs than when there is strictly private or state property and resources are largely indivisible for individuals or when highly heterogeneous states must conduct multiple one-on-one

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interstate negotiations. Ostrom (1990) and others have shown that small homogeneous groups with frequent interaction can more effectively reach agreement on resource allocation and use. These groups often use community property rules, in this case consistent with international law, to mitigate open-access problems and enforce them through norms and customs that can emerge in each RFMO region. International common property avoids the complex, costly, and controversial allocation of more definite property rights to individuals or states (such as expansion of EEZs), which also directly address the problem of common resource externalities. The migrations of fish and the movements of fishing vessels through the waters of coastal states and the high seas, coupled with the disparate sizes of the EEZs and resource concentrations within these EEZs, further complicates the expansion of state property, rather than the formation of international common property. The resistance by have-not coastal and distant-water fishing states and even other states to an expansion of state property through EEZ expansion is likely to prevent that from happening. International common property through RFMOs also facilitates new entrants with a form of ownership otherwise not enjoyed through state property. Increasingly, due to nonmarket values placed by global citizenry on the ecosystem and species with little or no commercial value as a common heritage, pressures are forming that favor international common property. International common property by itself entails inefficiency because of state sovereignty, free entry, free riding, the heterogeneity among member parties and subsequent transactions costs and inadequate norms complicating agreements on resource use, and the savings in lost resources and rents that could be gained from a stronger set of rights. Hybrid or overlapping forms of property rights, built upon international common property, are emerging. These entail allocations of use rights, with unlimited duration and exclusive use, to states and second-stage allocations of state use rights to individuals or perhaps groups with

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limited duration and exclusive use. The AIDCP serves as a model. The trend toward hybrid rights does not always extend to all resources. Some transboundary resources have little or no commercial value, but provide important public goods that would not be supplied effectively by private or state ownership because of the inability to exclude and to appropriate the returns from production and investment. These resources are also highly mobile and difficult to observe. These international public goods include biodiversity conservation, such as bycatches of sea turtles, dolphins, and sea birds, along with general health of the ecosystem and its services. Such bycatches might be directly managed by RFMOs. In contrast, because dolphin bycatch was part of a necessary joint product for catching yellowfin tunas in parts of the eastern Pacific Ocean, its value was sufficiently high and its importance critical to continued production as to warrant an allocation to states and individuals as part of a binding international agreement, the AIDCP.

Concluding Remarks The centrality and benefits of rights-based management to sustainable fisheries, resource conservation, and sizeable net economic benefits are clear. The costs of defining and enforcing property rights in transnational fisheries are no longer prohibitive. The aggregate net benefits of rights-based management are positive and represent a clear gain for the current arrangement. Less clear are the remaining steps to reach rights-based management. The nature of contracting costs to establish the rights remains the last, but most formidable, step.6 The allocation of rights directly affects the distribution of wealth and power among states, and is the critical issue upon which seemingly everything else hinges. “In bargaining over changes in property rights, disagreements can occur over the nature of either the aggregate benefits or the shares, but the heart of the contracting problem is devising politically acceptable allocation mechanisms

to assign the gains from institutional change while maintaining its production advantages” (Libecap 1989: 5). The formation of property rights and their initial allocation creates gainers and losers in wealth and power, even though the overall net benefits can substantially rise. Compensating those potentially harmed and increasing the shares of influential parties may be necessary to forge the political consensus for this institutional change (Libecap 1989). These transfer and side payments through adjustments in the shares, however, change the nature of the rights and even the size of the potential aggregate gains, but without them the beneficial gains would be lost. Addressing the allocation of rights and the consequent distribution of wealth and power and gainers and losers remains the critical step.

Endnotes 1. Demsetz (1967) developed this general economic approach. Johnson and Libecap (1982), Libecap (1989), and De Meza and Gould (1992), among others, provide further discussion. 2. In contrast to atmospheric cooperation, which is over nonrivalrous (nondepletable) public bads, tuna RFMOs are concerned with rivalrous (depletable) common renewable resource stocks. Hence, new members have a very different impact on atmospheric cooperation than on tuna cooperation, since the former depletes a renewable resource and the latter adds to the flow and subsequent stock of a public bad. 3. Resolution on Fleet Capacity adopted at the 37th meeting of the IATTC in October 1998. http://www.iattc.org/PDFFiles/C-9811%20Capacity%20resolution%20Oct%2098.pdf 4. This entire paragraph closely follows Libecap (2006). 5. Flewwelling (1994) defines monitoring as “the continuous requirement for the measurement of fishing effort characteristics and resource yields,” control as “the regulatory conditions under which the exploitation of the resource may be conducted,” and surveillance as “the degree and

5 The Benefits and Costs of Transformation of Open Access on the High Seas

types of observations required to maintain compliance with the regulatory controls imposed on fishing activities.” 6. Libecap (1989 :14) states, “Whether or not the more complete defining of property rights is socially beneficial depends on the magnitude of the common pool losses, the nature of contracting costs to resolve them, and the costs of defining and enforcing property rights.” Thus two of these three conditions are manageable, but the contracts costs, which, in turn, depend on the distribution of benefits and costs, are the key issue.

References Alcock F. 2010. Prospects for use rights in tuna RFMOs. Chapter 15 of this volume. Baland J-M and J-P Platteau. 1996. Halting Degradation of Natural Resources: Is There a Role for Rural Communities? Oxford: Oxford University Press, 423 pp. Baland J-M and J-P Platteau. 2005. Economics of common property management regimes. In M¨aler KG and JR Vincent (eds) Handbook of Environmental Economics, 1st edn, Vol. 3. Amsterdam: Elsevier. Barrett S. 2003. Environment and Statecraft: The Strategy of Environmental Treaty Making. Oxford: Oxford University Press, 446 pp. Cooter R and T Ulen. 2007. Law and Economics, 5th edn. New York: Addison-Wesley, 592 pp. Costello C, SD Gaines, and J Lynham. 2008. Can catch shares prevent fisheries collapse? Science, 321(5896):1678–1681. Davis LE and DC North. 1971. Institutional Change and American Economic Growth. Cambridge, UK: Cambridge University Press. De Meza D and JR Gould. 1992. The social efficiency of private decisions to enforce property rights. Journal of Political Economy, 100(3):561–580.

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Demsetz H. 1967. Toward a theory of property rights. American Economic Review: Papers and Proceedings, 57(2):347–359. Flewwelling P. 1994. An introduction to monitoring, control and surveillance systems for capture fisheries. FAO Fisheries Technical Paper No. 338, 217 pp. Hayami Y and M Kikuchi. 1981. Asian Villages at the Crossroads, 2nd edn. Tokyo: Tokyo University Press; Baltimore: The Johns Hopkins University Press, 528 pp. Heal G and W Schlenker. 2008. Sustainable fisheries. Nature, 455(7216):1044–1045. Johnson RN and GD Libecap. 1982. Contracting problems and regulation: the case of the fishery. American Economic Review, 72(5):1005–1022. Libecap G. 1989. Contracting for Property Rights. New York: Cambridge University Press. Libecap G. 2006. Assigning property rights in the common pool: implications of the prevalence of first-possession rules. Paper prepared for Sharing the Fish 06 Conference, Fremantle, Perth, Western Australia, February 26–March 2, 2006. Libecap G. 2010. Rights-based management of tuna fisheries: lessons from the assignment of property rights on the western US frontier. Chapter 8 of this volume. Munro GR, A Van Houtte, and R Willman. 2004. The conservation and management of shared fish stocks: legal and economic aspects. FAO Fisheries Technical Paper No. 465, 69 pp. Ostrom E. 1990. Governing the Commons: The Evolution of Institutions for Collective Action. New York: Cambridge University Press. Ram-Bidesi V and M Tsamenyi. 2004. Implications of the tuna management regime for domestic industry development in the Pacific Island states. Marine Policy, 28(5):383– 392. Squires D, J. Joseph, T. Groves. 2010. Buybacks in Transnational fisheries. Chapter 11 of this volume.

Part II

Rights-Based Management

Chapter 6

International Fisheries Law and the Transferability of Quota: Principles and Precedents Andrew Serdy

Introduction The author of this chapter has been asked to investigate the practical aspects of supporting a system of limitation of catch or effort (measured as fishing capacity) under the Inter-American Tropical Tuna Commission (IATTC)1 with a mechanism for the trading of the rights to that capacity among member States of the Commission, much as exists in some States that operate individual transferable quotas (ITQs). Because of space constraints, the reader’s familiarity with the basic legal framework applicable to international tuna fisheries under Articles 64 and 116–119 of the United Nations Convention on the Law of the Sea2 (UNCLOS) is assumed.3 Any such trading mechanism presupposes, however, at least a rudimentary system of property rights, which immediately raises a conceptual obstacle: the lack, in public international law, of any law of property as such. States do buy and sell commodities to each other, extend loans to each other, and so on, but these are essentially commercial transactions that are either embodied in treaties,4 or, particularly where any physical objects are to change hands, the transaction is con-

ducted under the system of domestic law of one of the parties5 or sometimes a third State. The closest that traditional international law comes to a regime of property independent of national legal systems concerns the law on the acquisition of territory. More recently, however, the recognition of the tragedy of the commons (Hardin 1968) on the international plane has produced some tentative steps toward property-like solutions. The most prominent of these is the creation of an emissions trading system envisaged under the Kyoto Protocol to the Framework Convention on Climate Change,6 but this is both very complex and still at an early stage of development, with no transactions having taken place by the end of 2007.7 On the face of it, the freedom of fishing on the high seas seems a more formidable barrier to creation of property rights in fisheries than in the case of harmful emissions, since under Article 116 of UNCLOS fishing is a positive right subject to certain qualifications, whereas there is no such freedom to pollute the atmosphere. Rather, since the Trail Smelter arbitration as long ago as 1941 established the wrongfulness of cross-border air pollution,8 in this instance from a point source, the problem has been one of proving causation in

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the form of relative contributions to damage by multiple polluters or diffuse sources: even if there is scientific consensus that the cause of damage suffered by a low-lying State from, say, rising sea levels is anthropogenic global warming, this will be of no avail to that State. By contrast, in exclusive economic zones (EEZs) and waters landward of them in which the coastal State has jurisdiction over fisheries, property rights can be created, and, where tried, have been shown to avoid depletion of stocks (though at some social cost). Mere establishment of an EEZ does not guarantee that fisheries in it will be well managed, a situation well described by Barnes (2006), but it does deprive coastal States of any excuses for mismanagement of stocks that are not straddling or highly migratory. In many cases they have limited catch, but not entry (capacity), a policy whose insufficiency is amply documented by Joseph et al. (2010). While the unsatisfactory experience with the EEZ is attributable to States’ failure to use the powers of their domestic legal systems to prevent the emergence of new entrants, international law equips them much less well to achieve this end in fisheries prosecuted wholly or partially on the high seas. No matter how strict the restraints the participants may impose on themselves, they will, by customary international law codified as Article 34 of the Vienna Convention on the Law of Treaties,9 bind only those States that are parties to the treaty under which the rules are made and are thus vulnerable to free riding or undermining by new entrants that have not agreed to follow those rules. This chapter considers whether trading in effort measured by fishing capacity could make the required downward adjustments easier in the IATTC and other regional fishery management organizations (RFMOs) and less likely to become mired in the allocative conflicts that hamper their overall conservation efforts. Under a first-principles analysis from an international legal perspective, it is shown that while the standard concept of national allocations within a total allowable effort creates no tradable rights, it would be a relatively simple matter for the IATTC to set up a system

for this in respect of fishing capacity and there would be no need to amend the 2003 Antigua Convention.10 Rather, the main novelty in what would be required is a moderately elaborate administrative machinery to support the trading, including a rigorous system of accounting for catch. Following this, the author’s previous account of the history of quota transfers in other RFMOs is updated and expanded. These findings are next applied to the IATTC’s circumstances, including a description of a capacity quota trading mechanism that appears to have been created almost by inadvertence and would probably be incapable of supporting the weight of a formal trading mechanism. The chapter concludes with an assessment of the prospects of the quota shares represented by national allocations becoming permanent, in effect creating a new species of quasi-property in international law, and some obstacles to this step.

National Allocations under Freedom of Fishing Origin of National Allocations By definition, transfers of quota of catch or effort from one State to another can take place only if the States in a fishery have already allocated the total allowable catch or effort (TAC and TAE, respectively) among themselves either directly or through an RFMO, resulting in what are known as national allocations. This is a relatively recent phenomenon in fisheries, although similar arrangements were known earlier in the regulation of high-seas capture of marine mammals: the 1911 Bering Sea Fur Seals Convention11 divided not the harvesting itself but its product: in return for refraining from pelagic sealing, which by Article I was prohibited for all parties in the Pacific Ocean north of 30◦ N, Canada and Japan were each granted a 15% share, by number and value, of the much larger number of skins of the Pribilof and Commander Islands rookeries, which the United States12 and Russia13 were respectively able, as a

6 International Fisheries Law and the Transferability of Quota: Principles and Precedents

result of their sole stewardship, to harvest sustainably on their island territories, while each of the other three parties would obtain a 10% share of the skins from Japan’s Robben Island rookery,14 with an equivalent obligation on Great Britain if any seal herd were to establish itself on Canadian islands in the Convention area.15 The strong commercial imperative to trade in quota when economic incentives are allowed free rein can be seen in the history of the International Whaling Commission (IWC), where, even though no national allocations were formally possible under its constitutive treaty,16 the States concerned simply came to agreement outside the IWC as to the division among themselves of the global catch limit (Holt 2001: 343ff). There seems to be no reason of international legal principle why the quotas established in this way could not have become binding on the IWC members, and indeed at least one of the agreements in question was of treaty status.17 National allocations for fisheries were first proposed in the late 1960s by Crutchfield (1969: 263) for the cod and haddock stocks of the northwest Atlantic Ocean. Soon after, Kask (1969: 31) called for licenses to be auctioned internationally, which he saw as a way to allow free (but not costless) access to the world’s tuna resources. Notwithstanding the diminished spatial extent of the high seas since the advent of the EEZ, a qualified freedom of fishing is preserved there by UNCLOS Articles 87 and 116 (Joseph et al., 2010). One of the most important qualifications is paragraph (a) of the latter, which envisages that States interested in a fishery will mutually limit their harvests of the stock by binding commitments of treaty status, leaving it open to them to do this either directly or via establishment of an RFMO. Hitherto their willingness to do so has been assumed to be impaired by the knowledge that under the principle pacta tertiis nec nocent nec prosunt (literally “agreements neither harm nor benefit third persons”),18 such limits apply only to the parties to the relevant treaty, so that the fishery remains open to new entrants, which are subject to the general duty of cooperation with

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existing participants in the fishery, but not to any quantified catch or effort limit. Recent developments may, however, yet give heart to advocates of negotiated mutual restraints. Under Article 8, paragraph 4, of the UN Fish Stocks Agreement,19 only those States that are members of the relevant RFMO or participate in an equivalent arrangement, or agree to apply its conservation and management measures, shall have access to the fisheries resources to which those measures apply. It is beginning to be argued that this treaty-based rule has already attained the status of custom, a review of State practice by Rayfuse (2004) having shown that RFMOs all now “demand either membership, cooperation or abstention [from fishing] from non-members,” which, in turn, have in several ways “acquiesced in these assertions of jurisdiction.”20 If so, then the crucial element of exclusivity, one of the mainstays of property rights that makes trading in them worthwhile, is much closer to being present.21 That said, merely creating an RFMO cannot in isolation abolish its members’ freedom of fishing in the relevant areas for the stocks concerned. This would be tantamount to a prohibition on fishing by them in the absence of a positive decision by the RFMO to permit it, but the practice of existing RFMOs does not support such a conclusion22 ; indeed, their history suggests precisely the opposite. Often many years pass between the coming into existence of an RFMO and its establishment of catch or effort limits, the International Commission for the Conservation of Atlantic Tunas (ICCAT)23 and Indian Ocean Tuna Commission (IOTC)24 and latterly the Commission for the Conservation and Management of Highly Migratory Fish Stocks in the Western and Central Pacific Ocean (WCPFC)25 being cases in point. In no such situation has fishing been suspended in the interim. The same is true for cases in which the RFMO succeeds in settling limits, but later developments lead to an inability to renew or amend limits as they expire, which occurred in both the CCSBT (Commission for the Conservation of Southern Bluefin Tuna)26 and ICCAT27 —members all carried on

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harvesting, though some of them announced voluntary catch limits. It is conceivable that the members of an RFMO would agree to pool their respective rights in a fishery, vesting them in the RFMO as the representative of their collective interests, so that for the right to fish they must henceforth come to terms with it, but again nonmembers will not be bound by that. The obligation of States to refrain from fishing for a stock or in an area governed by an RFMO of which they are not members may be in the process of entering the corpus of custom, but would need substantial qualification if it is not to degenerate into an endorsement of closed-shop RFMOs in which the “ins” discriminate against the “outs” by insisting that the only way to cooperate with them is to take zero catch. One could say that nonmembers owe the RFMO a duty of cooperation, in the sense that nonmembers already owe members that duty under the relevant provisions of UNCLOS, and it would seem to be in the members’ power to endow the RFMO with power to receive nonmembers’ cooperation on their behalf, that is, to insist that the duty be discharged by cooperating with the RFMO as their collective delegate, rather than with the member States individually.28 States, however, have long preferred to keep the RFMOs that they create institutionally weak with respect to their members, for reasons identified by Koers (1973).29

National Allocations Analyzed from First Principles Serdy (2007: 271–272) demonstrated by means of a worked example that national allocations of catch are no more than reciprocal obligations to limit catch. Here the demonstration is repeated, but this time for effort in the form of fish-carrying capacity limits as first adopted by IATTC in 1999,30 and with concrete numbers replaced by algebraic symbols to show that the point does not depend on the quantities concerned. In the simplest case, suppose there are three members A, B, and C, whose capacity limits are x, y, and z cubic meters (m3 ), respectively.31 The

rather unrealistic, unspoken assumption when effort of this kind is made transferable is that the fleets of all three States fish in the same area for the same species at the same stage of its life cycle using the same gear, with equal skill, and for the same number of days per year, so that as long as the aggregate of A, B, and C’s effort (fish-carrying capacity) remains below (x + y + z) m3 , there is no effect on the stock from one State’s share of the TAE rising and another’s falling commensurately. In practice, effective effort is likely to rise in any transfer since the vendor is likely to be less efficient than the purchaser. Be that as it may, under this classical type of national allocation, A owes a duty to B and C to limit its effort to x m3 , B owes a duty to A and C to limit its effort to y m3 , and C owes a duty to A and B to limit its effort to z m3 .32 Now imagine that a fishing company formed under the laws of C wishes to purchase a vessel of fishcarrying capacity
m3 and a company registered in B has such a vessel that it is prepared to sell. The possibilities here are less complicated than in the case of TAC or other forms of effort limitation such as vessel days or hooks deployed, the entitlement to which is drawn down over time and may be only partially exhausted at the time when the transfer takes place. Accounting for effort measured by capacity would seem to be possible only on a continuous basis—the member’s capacity at any time is either within or not within its limit, and a member complies with its obligation only if at no time does its capacity exceed its permitted limit. In contrast, an annual census date, whereby compliance is checked only once a year on a date known in advance, would effectively leave effort unconstrained on every other day of the year. In practice, only two situations are possible: before and after the quotas are set for the relevant fishing season. If the following year’s allocation has not been made, B and C could simply let it be known that their wishes for national allocations for the following year were (y −
) m3 and (z +
) m3 , respectively, and if A wishes to continue to use its x m3 of capacity and the condition of the stock has not deteriorated, there should be no problem. Note that there are many conditions attached to

6 International Fisheries Law and the Transferability of Quota: Principles and Precedents

this simple case33 and that it does not necessarily involve trading as such of quota; the allocations of individual members are simply adjusted to match the posttransaction ownership of the vessels, and the timing of the change of flag is manipulated to coincide with the beginning of the next quota season. The position is different if the national allocations have already been made. Suppose that the company in C makes an offer for the vessel in B, which its owner accepts. B and C proceed to use (y −
) m3 and (z +
) m3 of capacity, respectively. In terms of the original analysis, B has complied with its duty to A and C to keep its capacity to y m3 or less. For C, however, the position is less simple. Its duty to A and B was to use no more than z m3 of capacity in the fishery. B may be taken to have waived its correlative right as a necessary consequence of its support for the transaction (evidenced by releasing the vessel from its register), at least to the extent that it cannot complain of any breach of duty by C if the latter’s capacity remains below (z +
) m3 . But A has granted no such waiver to C. C’s duty to A thus remains one of limiting its capacity to z m3 , which it will breach if it permits the vessel’s new owner to use it in the fishery in addition to those it already licenses to do so. The same is true if the buyer of the vessel is a company having the nationality of D, a nonmember of the RFMO, and B purports to transfer all or part of its allocation to D (despite there being nothing in Resolution C-02-03, considered below,34 that allows this). D is in no position to exercise B’s rights under the Resolution, and the transaction is no defense to any case A and C might mount against D independently of the IATTC’s legal texts. While the absence of any dispute settlement clause in the current Convention and the weakness of the Antigua Convention’s noncompulsory dispute settlement provisions35 may shield a member in B’s position from the legal consequences of its breach of its obligations, A and C could be in a reasonably strong position if the rules governing the system are sufficiently robust for them to be able to prevent the vessel from being removed from the Regional Vessel Register. In that event, the sale creates no

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spare capacity for B, which is hence unable to replace the sold vessel on the Register with another, and a net addition to the capacity in the fishery is thereby prevented. Just as for catch limits, trading of effort limits cannot take place as of right, except in the trivial instance of a two-member RFMO. Rather, it would be necessary to obtain a waiver from each other member of the RFMO to which the obligation to adhere to the limit is owed. Alternatively, the RFMO could grant the waiver itself on behalf of all of its members. If this decision can be taken by a (qualified) majority, this has the additional effect of making the waiver more likely to be obtained, since a minority of opponents who would not individually have given waivers can be outvoted. On the other hand, matters of this kind, which are substantive rather than procedural, often require consensus under the constitutive treaty,36 in which case A or any other member can veto the transaction. Whether or not retroactive transfers as a solution to overquota capacity are permitted is an issue just as for overcatch. Let us return to the initial scenario, and suppose that for a period of p days B’s capacity was in fact (y − α) m3 and for a period of q days C’s was (z + β) m3 . If pα ≥ qβ, then the TAE as a whole is not being exceeded, and C could, in theory, purchase quota from B to cover its excess capacity. The matter of whether it should be permitted to do so may be influenced by the presence or absence of a year-to-year accounting mechanism, for example, one in which the next year’s nominal national allocation of effort to C were reduced by qβ/365 to compensate.37 If there were such a mechanism in place, C’s excess capacity from Year 1 would be counted against its Year 2 national allocation, and if that too were z m3 , then its actual capacity limit in that year would be (z – qβ/365) m3 . It would then be up to C to decide whether it preferred to clear its excess capacity by debit against its future capacity limit or purchase additional quota if any is available, or some combination of the two. The relative attraction of the two courses of action would be affected by any penalty applicable to the excess capacity, for example, if a formula applies or a flat

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deduction of β m3 were mandatory, irrespective of how short the time was during which the capacity was in excess of C’s quota,38 that would increase the attraction of purchasing-in quota to cover overcatch. Conversely, if underuse of capacity quota can be carried forward, then B may prefer to do that, rather than sell its unused quota to C; where carryforward is permitted, it is generally on a 1:1 basis up to some specified limit,39 so if B’s underuse is greater than that limit, it will have an incentive to come to terms with C. In the example above, where pα > qβ, B could sell C qβ m3 in order to eliminate the latter’s excess capacity and still have (pα − qβ) m3 left to carry forward into Year 2.40 These being the basic underlying rules and concepts, the next step is to see to what extent they have been applied or modified in the treaties by which RFMOs have been established.

Relevant Provisions of Treaties Constituting RFMOs It is commonly assumed that the freedom of fishing on the high seas embodied in Article 116 of UNCLOS presents an insuperable obstacle to the rights relating to high-seas fisheries acquiring any proprietary character.41 In an earlier work, however, the present author investigated the nature of regulatory measures that RFMOs are empowered to make by their constitutive treaties to see whether they pose any obstacle to the institution of a quota-trading scheme, and found that all either were silent or described the measures the RFMO may adopt with sufficient generality to permit this (Serdy 2007: 275–276). The IATTC’s functions are set out in Article II, paragraph 5 of the 1949 Convention that established it,42 which remains its governing instrument pending the entry into force of the 2003 Antigua Convention.43 By this provision, the IATTC is to: [r]ecommend from time to time, on the basis of scientific investigations, proposals for joint action by the High Contracting Parties designed to keep the populations of fishes covered by this Convention at

those levels of abundance which will permit the maximum sustained catch.

The “fishes covered by this Convention” are defined in paragraph 1 of the same Article as “yellowfin (Neothunnus) and skipjack (Katsuwonus) tuna in the waters of the eastern Pacific Ocean (EPO) fished by the nationals of the High Contracting Parties, and the kinds of fishes commonly used as bait in the tuna fisheries, especially anchovetta, and of other kinds of fish taken by tuna fishing vessels[.]” The “other kinds of fish” may in context have been most likely intended as a reference to fish other than tunas, but has been stretched to a species of tuna, bigeye (Thunnus obesus), for which there now exists a directed fishery in the waters of the EPO. Article VII, paragraph 1, of the Antigua Convention will, on entry into force, give the IATTC the following functions inter alia: (c) adopt measures that are based on the best scientific evidence available to ensure the long-term conservation and sustainable use of the fish stocks covered by this Convention and to maintain or restore the populations of harvested species at levels of abundance which can produce the maximum sustainable yield, inter alia, through the setting of the total allowable catch of such fish stocks as the Commission may decide and/or the total allowable level of fishing capacity and/or level of fishing effort for the Convention Area as a whole; (e) . . ., determine, on the basis of criteria that the Commission may adopt or apply, the extent to which the fishing interests of new members of the Commission might be accommodated, taking into account relevant international standards and practices; (h) adopt appropriate measures to prevent or eliminate overfishing and excess fishing capacity and to ensure that levels of fishing effort do not exceed those commensurate with the sustainable use of the fish stocks covered by this Convention; (l) where necessary, develop criteria for, and make decisions relating to, the allocation of total allowable catch, or total allowable fishing capacity, including carrying capacity, or the level of fishing effort, taking into account all relevant factors;

6 International Fisheries Law and the Transferability of Quota: Principles and Precedents

Accordingly, there is no restriction on the type of management measures that may be taken by the IATTC under either its present treaty or its future one. More recent fisheries treaties. By way of illustration of the point that the Antigua Convention is not unusual, similar provisions occur in the three fisheries treaties that have been concluded or have been under negotiation since then. The 2006 Southern Indian Ocean Fisheries Agreement44 does not create an RFMO, but the powers of the Meeting of the Parties in Article 6 are similar:

ARTICLE 6 – FUNCTIONS OF THE MEETING OF THE PARTIES 1. The Meeting of the Parties shall: ... (d) formulate and adopt conservation and management measures necessary for ensuring the long-term sustainability of the fishery resources, taking into account the need to protect marine biodiversity, based on the best scientific evidence available; ... (h) develop rules and procedures for the monitoring, control and surveillance of fishing activities in order to ensure compliance with conservation and management measures adopted by the Meeting of the Parties including, where appropriate, a system of verification incorporating vessel monitoring and observation, and rules concerning the boarding and inspection of vessels operating in the Area; (i) develop and monitor measures to prevent, deter and eliminate illegal, unreported and unregulated fishing; ... (k) establish the criteria for and rules governing participation in fishing; and (l) carry out any other tasks and functions necessary to achieve the objectives of this Agreement. 2. In determining criteria for participation in fishing, including allocation of total allowable catch or total level of fishing effort, the Contracting Parties shall

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take into account, inter alia, international principles such as those contained in the 1995 Agreement. 3. In applying the provisions of paragraph 2, the Contracting Parties may, inter alia: (a) designate annual quota allocations or fishing effort limitations for Contracting Parties; (b) allocate catch quantities for exploration and scientific research; and (c) set aside fishing opportunities for nonContracting Parties to this Agreement, if necessary.

Similarly, Article 7 of the third revision of the draft Convention on the Conservation and Management of High Seas Fishery Resources in the South Pacific Ocean45 circulated by the Chairman in advance of the fifth meeting to negotiate the founding instrument of a Southern Pacific fisheries commission in Guayaquil, Ecuador, in March 2008 gives that future RFMO the following functions: (a) adopt conservation and management measures to achieve the objective of this Convention; (b) determine the nature and extent of participation in fisheries; ... (f) develop and establish effective monitoring, control, surveillance, compliance and enforcement procedures, including market-related measures and nondiscriminatory trade-related measures; (g) develop processes in accordance with international law to assess Contracting Party, Flag State and Port State performance with respect to the implementation of their obligations under this Convention and adopt proposals if appropriate to ensure implementation of such obligations; (h) adopt proposals for measures to prevent, deter and eliminate IUU [illegal, unregulated, and unreported] fishing; (i) review the effectiveness of the provisions of the Convention and the conservation and management measures adopted by the Commission in meeting the objective of this Convention; ...

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(m) exercise any other function and take any other decisions that may be necessary for achieving the objective of this Convention.

Finally, the Northwest Atlantic Fisheries Organization (NAFO)46 has recently completed an overhaul of its 1978 Convention and, in the finalized text of the amendments adopted at its 2007 meeting, Article VI, paragraph 8, permits the Commission to adopt conservation and management measures that expressly include “total allowable catches and/or levels of fishing effort and [to] determine the nature and extent of participation in fishing.” In addition, paragraph 9 of the same Article specifically provides for adoption by it of supplementary measures aimed at “preventing, deterring and eliminating IUU fishing.”47

Consideration of Quota Trading by RFMOs In an earlier-mentioned work (Serdy 2007), the author observed that precedents for the trading of quota have been established by at least three RFMOs (Serdy 2007: 277–281 and 283–286): ICCAT, NAFO, and IBSFC (International Baltic Sea Fisheries Commission).48 A fourth RFMO, the IATTC itself, could have been added to this list, though the omission may be excusable since—as will seen below—the trading forms an incidental part of the IATTC’s capacity management scheme, the governing resolution of which is not drafted in terms of administering a trading system. Before turning to this, however, it is appropriate to examine what has happened in other RFMOs since that survey. For ICCAT, the ad hoc approach previously described has continued (Serdy 2007: 271–281 and 283–284). There was no need to renew any catch limits at its 2007 meeting, but in 2006 ICCAT set catch limits for the northern and southern stocks of swordfish that divided 12,815 metric tons among the European Community, the United States, Japan, and Canada in fixed proportions for

2007 and 2008, but provided for the annual transfer from the United States to Canada of 25 metric tons without affecting the underlying percentages and of 20 metric tons from the United Kingdom on behalf of its overseas territories in the Atlantic to France on behalf of St. Pierre and Miquelon.49 The individual limits of Morocco, Mexico, Senegal, and Belize are, to some extent, pooled, in that the Commission may transfer amounts to any of them whose limit is exhausted, provided the TAC does not increase (ICCAT 2007: 125 (paragraph 3(c), footnote 3)). The flexibility for Japan to count catch in certain parts of the area against its unused limit for the southern stock is maintained (ICCAT 2007: 125 (paragraph 7)), while the United States may take up to 200 metric tons of its quota from the southern swordfish area (ICCAT 2007: 124–125 (paragraph 3(c), footnote 1)). An innovation is that any party may transfer up to 15% of its quota to any other party with an allocation (of which there are 21), which may not retransfer it to a third such party, but transfers to cover overcatch are not permitted.50 A like provision is made for the western stock of Atlantic bluefin tuna,51 and, in addition, there is provision for transfer of United States undercatch: 75 and 100 metric tons to Mexico in 2007 and 2008 respectively—not further transferable—and 50 metric tons to Canada in each of those years (ICCAT (2007: 145, paragraphs 6(d) (transfers to Mexico) and 6(e) (transfers to Canada)). This is to be contrasted with the recommendation governing the eastern stock of Atlantic bluefin tuna, for which transfer of quotas and catch limits among members and cooperating nonmembers requires Commission permission.52 There is nothing of consequence to report in NAFO in either 2006 or 2007, the footnote in the quota tables referring to the possibility of trading in squid quota simply continuing from year to year.53 By contrast, the situation in the North East Atlantic Fisheries Commission54 (NEAFC) has become appreciably clearer. In 2006, Recommendation I spoke of Denmark (in respect of the Faroe Islands and Greenland), the European

6 International Fisheries Law and the Transferability of Quota: Principles and Precedents

Community, and Norway having agreed to transfer 3,766 metric tons of their joint quota to the Russian Federation, the level to be reduced and phased out by no later than 2010.55 The same formula is repeated in the following year’s Recommendation I, except that the figure for 2008, in line with the reduction mentioned the previous year, had become 3,000 metric tons.56 In 2007 there was also a mysterious reference in Recommendation II to quotas transferred from one party to another,57 reflecting the separate Agreed Record, which leaves the question of quota transfer to bilateral arrangements.58 The unique scheme of the IBSFC (Serdy 2007: 285–286) has come to an end, along with that commission itself, wound up in 2006 after all its remaining members, apart from the European Community and the Russian Federation, joined the former.59 One further RFMO, the Western and Central Pacific Fisheries Commission, has had the issue of quota trading brought to its attention by consultants engaged to provide advice on questions of allocation; their report highlights the useful role that trading can play as a lubricant allowing for adjustment of quota shares in lieu of having to renegotiate the entire allocation of the TAC of a stock each time two members wish to undertake a transaction.60 Nothing appears to have come of this, however, as the larger question of allocation has been consigned for the time being to the toohard basket.61 Finally, the CCSBT is also worth mentioning, as earlier in this decade some of its members and cooperating nonmembers were displaying considerable interest in quota trading, and independent legal advice on the matter was sought in 2004 from a former senior official of the FAO Legal Office, William Edeson.62 The debate at the CCSBT’s 2004 meeting did not proceed very far (Serdy 2007: 282). In 2005 it appeared that only the Republic of Korea was still interested in actively pursuing the matter, given the further deterioration of the stock, with members considering reduction of the TAC. Interest was nonetheless expressed, albeit as a low priority, in the CCSBT developing a more general

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policy covering joint ventures and chartering, as well as buying and leasing of quota, drawing on any ICCAT precedent.63 The Executive Secretary orally summarized the Edeson advice, to the effect that a positive decision by the CCSBT would be needed for a quota-trading system to be introduced, but in the meantime chartering and joint ventures could be undertaken without transfer of quota, with the member concerned remaining responsible for compliance and other related measures; bilateral access to a member’s EEZ also did not require the CCSBT’s approval, but should be reported to it.64 Undeterred, Korea said it would bring a set of principles and guidelines for trading to the 2006 meeting.65 This did not happen, as the CCSBT’s attention has since early 2006 been consumed by the consequences of the crisis caused by revelations of persistent overcatch.66 The lack of enthusiasm from other members appears to be rooted in two concerns about the present state of affairs, but these do not amount to an argument against tradability of quotas. One based on the state of the stock—that is, that quota that a party does not need or propose to fill is best left uncaught for the stock’s sake—assumes that the trading being contemplated is a transfer within a season, and is a valid consideration for any stock in a depleted state, as transfer of quota that would not otherwise have been caught means that the actual catch will increase, since the quota is being used more efficiently.67 Although the corollary of this is that there should be some compensating reduction in the TAC, other members not party to the transaction would surely reject any reduction of their own national allocations for this reason. Yet to require the transacting parties alone to bear the reduction would, in all likelihood, negate any benefit to them that the transfer might bring. For this reason, it would seem advisable to introduce a trading scheme only when a stock is in a healthy state. The other objection stems from lingering resentment of the way in which one new entrant to the CCSBT, having first built up a catch history and thus a position of strength, was able to

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extract a relatively high national allocation from the original members, but then found itself unable to continue catching it profitably.68 Having one or more members in this position thus further complicates the establishment of a quota-trading scheme, since prior agreement on an initial distribution would be needed for any trading system to be established, and the other members could be expected to demand the retirement of any persistently large unused portion of a member’s quota. Whether similar objections come to pose obstacles to the IATTC’s adoption of an effort-trading scheme may therefore depend on the recent history of the relevant fisheries. This is the subject of the next section.

Trading of Capacity Quota under the IATTC: Past and Future The IATTC’s fisheries are facing a crisis, with information presented to the 74th meeting in 2006 revealing that the biomass of bigeye tuna was below the level corresponding to the average maximum sustainable yield, while that of yellowfin tuna would fall below the same benchmark unless additional management measures were applied.69 The States and cooperating nonparties located on the American continent or in its vicinity and Europe fish mostly with purse-seine gear, but those from the other side of the Pacific, with the exception of Vanuatu, catch tuna by longlining. In 2007, limits were placed on the longline catch of bigeye that are akin to a (sub)total allowable catch and its division into national allocations: China (2,639 metric tons), Japan (34,076 metric tons), the Republic of Korea (12,576 metric tons), and Chinese Taipei (7,593 metric tons). Every other member and cooperating nonparty has a limit that is the greater of its 2001 catch and 500 metric tons.70 The limit was not renewed for 2008, but a proposal taken to the 77th meeting in March 2008 notes that fishing mortality would have to decrease by 9% for yellowfin and 21% for bigeye if the target fishing mortality of F MSY were to be attained.71

The control of the purse-seine fleet has proceeded on both catch and effort fronts. In terms of effort, the initial decision by the IATTC to limit the fish-carrying capacity of purse-seine vessels operating in the EPO was taken at its 62nd meeting in October 1998. The 13 States with purse-seine vessels fishing there for tuna were each assigned for the calendar year 1999 the carrying capacity limit shown in Table 6.1, established on the basis of factors such as the national fleet’s catches from 1985 to 1998, catches taken within the EEZ or equivalent zone before its declaration, landed tonnages of tuna, the contribution to the IATTC conservation program, including the reduction of dolphin mortality.72 The “right of several states without vessels currently fishing in the EPO, but with a longstanding and significant interest in the EPO tuna fishery, to develop their own tuna fishing industries” was acknowledged and affirmed, as were the “legitimate rights under international law” of France (by virtue of Clipperton Island and much of French Polynesia) and Guatemala to develop tuna-fishing fleets there (by implication, for the first time).73 Should the total capacity added by new entrants approach 6,000 metric tons, the IATTC would “meet to consider immediate action to adjust capacity or take other action to ensure the sustainability of the fisheries.”74 Joseph (2003: 39–40) has observed that all the country quotas listed in the table were approximately equivalent to the actual fleets operating during 1998, except that of Costa Rica, which was based on its status as a coastal State, its tuna processing facilities, its long involvement in the tuna conservation programs in the EPO, its contributions as a founding member of the IATTC, and its intention to acquire a fleet of tuna vessels. Subsequently, Guatemala declared a carrying capacity quota of about 10,000 metric tons, consisting of vessels that had reflagged from other registries, and several other coastal and noncoastal states lacking tuna fleets began negotiations within the IATTC to have carrying capacity limitation quotas assigned to them, while other member states with small quotas sought increases in them that would permit their fleets to expand.75

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Table 6.1. IATTC fish-carrying capacity limits for national fleets.

Member or cooperating nonparty Belize Bolivia Colombia Costa Rica Ecuador El Salvador Guatemala Honduras§ Mexico Nicaragua Panama Peru Spain United States Vanuatu Venezuela Total

1999 limit (in mt) 1,877 6,608 6,000 32,203 1,700 499 49,500 2,000 3,500 7,885 8,969 12,121 25,975 158,837

Limit since 2002 (in m3 ) 809 6,842 7,259 9,364 [0* ] 56,537† 6,350 [5489* ] 9,340 [7640* ] 1,798 58,636 5,300 [0* ] 11,313† 4,097 [902* ] 12,137 11,389 6,813 30,577 236,561

Fleet capacity as at April 2008 (in m3 )

Change from 2002 to 2008 (in m3 )

Nil 222 12,836 Nil 62,054‡ 7,415 7,337‡ 1,700 58,111 6,023 35,385‡ 1,000 10,116 170 3,609 28,143

−809 −6,620 5,577 −9,364 5,517 1,065 −2,003 −98 −525 723 24,072 −3,097 −2,021 −11,219 −3,204 −2,434

229,198‡

−7,363

Note: The figures in the successive columns have been compiled from the following sources: 1999 – Resolution on Fleet Capacity, October 1998, available at www.intfish.net/docs/1998/iattc/C-98-11 (accessed on March 11, 2008), paragraph 1; 2002 – a copy of the Register as on 28 June supplied by Mr Brian Hallman of the IATTC staff; 2008 – the list of purse-seine vessels on the version of the Register found on the IATTC web site http://www.iattc.org/VesselRegister/VesselList.aspx?List=AcPS&Lang=ENG (accessed on April 4, 2008). While many of the states had a greater capacity in 2008 than they had in June 2002, this does not necessarily indicate a lack of compliance on their part. See Endnote 95 and accompanying text. ∗ For the members listed in paragraph 10 of Resolution C-02-03, the lesser figure in square brackets is the actual capacity at the time, according to the Register. † Includes capacity of vessels listed as sunk (Ecuador: two vessels, totaling 2,132 m3 capacity, sunk in November 2001 and June 2002; Panama: one vessel of 255 m3 capacity sunk in September 1999). ‡ Three vessels appear twice on the list: two vessels totaling 3,762 m3 capacity are listed under both Ecuador and Guatemala, while one vessel of 1,161 m3 capacity is common to the lists of Ecuador and Panama. The total counts these only once. While this state of affairs is less than satisfactory from the point of view of accounting for capacity, the IATTC staff has little choice but to record the capacity against both States when faced with these conflicting claims, since it must act neutrally as between member States. In the longer term, a trading system would need to be supported by a compulsory dispute settlement mechanism, which IATTC currently lacks (see Endnote 35 and accompanying text) so that questions of compliance are not left unresolved indefinitely, ideally one under which the Director himself should also be able to seek definitive guidance in such situations. § The presence of Honduras in the table is anomalous, since it is neither a party to the IATTC Convention nor a formally cooperating nonmember of the IATTC.

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Although the 1998 resolution contemplated that the limits would be reviewed annually,76 they were prolonged only to June 200077 and then lapsed. Instead, the IATTC decided to change the unit of measurement of carrying capacity to well volume.78 With the fleet’s carrying capacity in the EPO growing to around 180,000 metric tons, and more vessels thought to be about to enter the fishery, so that it was unlikely to stop there, the IATTC had a twofold problem: in the short term, to stop the growth in fishing capacity, and, over a longer timeframe, to reduce it (Joseph 2003: 40). As for catch, at the 64th meeting in 1999, the earliest whose report is available on the IATTC Web site, a resolution was passed limiting that year’s catch of bigeye tuna by the purse-seine fleet in the EPO to 40,000 metric tons, not subdivided into national allocations.79 This was provisionally renewed for 2000,80 but not in 2001 for reasons that are not apparent from the meeting report.81 For yellowfin tuna, the directed fishery was to cease when 265,000 metric tons had been caught or on December 2, 1999, whichever was earlier, but limited bycatch of the species thereafter remained possible.82 This was renewed in 2000,83 and in 2001 the figure was changed to 250,000 metric tons, to which the Director was authorized to add up to three increments of 20,000 metric tons each.84 However, there were no numerical limits in 2002.85 In Resolution C-00-10,86 adopted by correspondence in August 2000, the IATTC had accepted the fact that the then level of fishing capacity exceeded the optimal level for efficient harvest of the tuna resources of the EPO and committed itself to develop and implement a long-term capacity management plan to reduce purse-seine fish-carrying capacity to a target of 135,000 metric tons or such other figure as the Commission might decide, to serve as the basis for further measures to reduce and allocate the capacity. At its 69th meeting in 2002, the IATTC adopted Resolution C-02-03.87 This caps purse-seine vessel fish-carrying capacity measured by well volume in a defined area of the EPO bounded in the north by the parallel of latitude 40◦ N, in the

west by the meridian of longitude 150◦ W, in the south by the parallel of latitude 40◦ S, and in the east by the coast of the American continent.88 The members and cooperating non-parties are not permitted to increase the capacity of any vessel under their respective flags operating in the area from those already on the Regional Vessel Register created by Resolution C-00-0689 adopted at the IATTC’s 66th meeting. Among the many details to be recorded for each vessel on the Register is its hold (fish-carrying) capacity.90 After June 28, 2002, no new vessel may be added to the Register, or the capacity of a vessel already on the Register increased, unless one or more purse-seine vessels at least offsetting the change are at the same time removed from the Register.91 This did not apply, however, to the coastal States of Costa Rica, El Salvador, Guatemala, Nicaragua, and Peru, which are given fixed higher limits.92 The active Purse Seine Capacity List on the IATTC Web site93 lists the fish-carrying capacity of each purse seiner currently on the Register, but offers no indication as to which vessels were already on the Register on June 28, 2002. The system created by this resolution is, in essence, a procedure for changing the list of purseseine vessels that may legally fish in the EPO. On the face of it, the resolution appears to create an obligation on IATTC members to freeze their capacities. This would seem to be the necessary implication of the combined effect of paragraphs 7 and 8—if no new vessels may be added or the capacity of existing ones expanded without, at the same time, removing at least equivalent capacity, there is no other way in which a member’s capacity can permissibly increase. This would make the state of the Register as at June 28, 2002, significant—not for the identity of the vessels, but for their combined capacity at the time in respect of each member, since each has a continuing obligation (subject to paragraph 10 if it is mentioned by name there) not to exceed that baseline through subsequent additions of vessels, which must be balanced by removals (including sinkings). As implemented in practice, however,94 the Resolution has been taken not as binding on each

6 International Fisheries Law and the Transferability of Quota: Principles and Precedents

member individually, but instead on all of them collectively, and as implicitly permitting transfers of flag of vessels on the Register from one member to another without the need to seek the Commission’s approval. There may still be a question as to whether the members mentioned in paragraph 10 are to be understood as having individual limits, but that is far from being a necessary consequence, since presumably they too can increase their fleet by transfer of vessels from other members’ flags. In fact, however, as Table 6.1 makes clear, several IATTC members have increased their overall fleet capacities beyond the levels that they had on June 28, 2002, via vessel transfers from other flags. This can happen, for example, if the original flag does not remove the vessel from the Register. The vessel may then physically relocate to another member, thus increasing the latter’s total capacity in effect, as has occurred on numerous occasions.95 If, on the other hand, the original flag State removes the vessel from the Register, it can get back on the Register only if the new flag State has capacity available to it, of which the three possible sources are vessel removals of its own, sunk vessels, or the allocations under paragraph 10. This would seem to amount to a system of implied trading of quotas. In practice, however, the regime has now evolved into one in which very few vessel transfers occur. Almost all of the IATTC members have decided, as a matter of policy, to remove from the register vessels that wish to reflag, thereby retaining for themselves the right to replace the vessel. This has made it impossible for vessels to reflag unless it is to a member that still has spare capacity to add new vessels. The existing IATTC arrangements thus do not amount to trading in the sense in which one would ordinarily think of it or as it has developed in other RFMOs, in that the money changes hands between the purchaser and vendor of the vessel, rather than the flag States, between which the accompanying capacity “quota” transfer is simply an administrative afterthought. Perhaps, paradoxically, this is the reason why member governments do not make more use of the facility—they realize that quota is an asset, but are not themselves get-

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ting any benefit from it when a vessel in respect of which they have it is sold. If so, they may reason, they may as well keep it for future use, even if the asset thereby becomes anything but liquid. This does not, therefore, lend itself to further elaboration of a capacity-trading scheme, since the assets are either valuable but inalienable or liquid but worthless. As foreshadowed in its Resolution on the Capacity of the Tuna Fleet Operating in the Eastern Pacific Ocean, adopted by correspondence in August 2000,96 the IATTC did indeed adopt a Plan for Regional Management of Fishing Capacity at the 73rd Meeting in June 2005,97 but it is quite general in nature, and has not as yet had any practical effect; in particular, the reduction plan contemplated has not yet been discussed. The target is shifted to 158,000 m3 of well volume,98 and the IATTC’s Permanent Working Group on Fleet Capacity is directed by June 30, 2006, “or as soon as possible thereafter, [to] evaluate the necessity and feasibility of a reduction plan to achieve the target level of well volume, with a target date for implementation to be determined by the Commission.”99 The capacity target is to be regularly reviewed “to ensure that it remains in balance with the available fishery resources and management objectives.”100 It is also provided that “[t]he transfer, from the jurisdiction of one [member or cooperating party] participant . . . to that of another, of any vessel that will fish for species covered by the Convention and be included on the Regional Vessel Register, shall be governed by relevant Commission resolutions.”101 (This appears to be a reference to the resolutions already mentioned, as none of relevance has since been adopted.)

Conclusions The argument for moving to permanent or indefinite quota shares is essentially that it provides an economic incentive to conserve the stock.102 How easily might it be done?

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It is apparent from the preceding analysis that while no RFMO has yet established a fully designed quota-trading mechanism, there is no fundamental international legal obstacle to doing so. All that is required, since a national allocation is an obligation of each member vis-`a-vis each other member to restrict its catch or effort to a particular numerically defined limit, which the gaining party in any quota transaction will breach, is either an ad hoc decision to waive the obligation to the extent necessary to accommodate the transaction, as happens in ICCAT and NAFO, or for blanket consent to be given in advance either expressly, as in NEAFC, or implicitly through the establishment of a trading scheme. At a minimum, the latter would need a decision of the RFMO to approve in advance either all transactions or those falling with a particular class or classes of transactions that are notified to the secretariat (or Director, in the case of the IATTC), whereupon they would become binding on the RFMO’s entire membership.103 Something more would almost certainly be required, however, to prevent transactions adding unsustainably to the fishing pressure on the stock, a particular risk when the limit is expressed in terms of fish-carrying capacity. Where, on the other hand, it is catches that are being limited, there needs to be a way for members to account to each other for their removals. It is possible to describe briefly its main features. First, national allocations would need to be expressed as percentage shares of the TAC or TAE, rather than in absolute terms. This may be more problematic for the IATTC’s chosen route of fishcarrying capacity limitation, because a vessel’s fish-carrying capacity comes in discrete quanta that are not infinitely divisible—if the total is reduced by a given percentage, vessel owners may decide to alter their vessel to reduce their well volume by that percentage; but this seems inherently less efficient than one or more vessels whose combined fish-carrying capacity equals or exceeds the required absolute reduction being retired from the fishery and its owner selling the capacity right as an asset.

Second, allocations must also take into account new entrants, perhaps with different rules for coastal States from those for other States. If not all States in whose EEZs the relevant stocks occur are already members, those which are not will have a right to join the RFMO or become a cooperating nonparty, and receive some national allocation,104 but until they do, the existing members are, in effect, using the nonmember coastal States’ shares of the TAC or TAE, and it is thus necessary to have some preagreed mechanism for how the existing members’ national allocations would be reduced to accommodate that of any new coastal State member. As this may prove hard to achieve in practice, the introduction of quota shares not limited in time may have to wait until all eligible coastal States have become members. For the IATTC this may not be unduly long in coming, as it is in the relatively fortunate position of having almost all coastal States with EEZs in its future Convention Area as either members or cooperating nonparties. Running from north to south, the States along the western seaboard of the American continent are Canada, the United States, Mexico, Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica, Panama, Colombia, Ecuador, Peru, and Chile; France also has territory (Clipperton Island and much of French Polynesia) in the EPO. Of these only Canada, Chile, and Honduras are not currently members of the IATTC. El Salvador, France, Mexico, Nicaragua, and Panama, had, by mid-2008, ratified or acceded to the Antigua Convention and Canada, Costa Rica, Ecuador, Guatemala, Peru, and the United States had signed it. In the meantime, therefore, pending the entry into force of the Antigua Convention, only Canada, Chile, and Honduras are not members, and of these, Canada is listed on the Web site as a cooperating nonparty, so that the longerterm question is what allowance to make for the likelihood that Chile and Honduras will eventually become parties to the Antigua Convention. Noncoastal States would be able to accede to the Convention in order to become members of the IATTC (joining China and Japan which had done so by mid-2008), but would have to

6 International Fisheries Law and the Transferability of Quota: Principles and Precedents

purchase capacity quota from an existing member if they wished to fish. While they might object that the requirement to pay for the authority to fish is inconsistent with the freedom of fishing, under UNCLOS Articles 116 and 118, this freedom is subject to the duty of cooperation with all existing participants in the fishery. It is submitted that if the existing participants have set up through an RFMO a scheme outside which none of them is free to increase its catch, they are entitled to insist that any newcomer cooperate with them by participating in the scheme according to its terms. This conclusion is strengthened for parties to UN Fish Stocks Agreement, which cements RFMOs into a central position by requiring in Article 8, paragraph 3, that parties give effect to their duty to cooperate with other States by joining the RFMO or agreeing to apply its conservation measures. In turn the same provision requires the existing RFMO members to accommodate any newcomer prepared to fish on the same footing as the existing members.105 It is clear, however, that quota shares of indefinite duration raise, in a way that time-limited shares do not, the difficult question of initial allocation that is inescapable when ITQs are introduced at the domestic level. It is precisely because this question can be answered only once, with national allocations thereafter merely being the automatic arithmetical consequence of subsequent quota transactions, that the initial allocation of members’ relative shares can be expected to be no less contentious on the international plane.106 While adding the element of permanence to national allocations will not necessarily lead inexorably to their being traded, it is likely to generate pressures to that end, as producers seek to realize gains from differences in their marginal net benefits by reallocating effort among themselves. No such permanence is presupposed in the already existing trading regimes of the within-season type, but these are seldom used, having emerged piecemeal from the various RFMOs grappling with allocation problems. With discussion of the issue happening already in several RFMOs, its progress is less likely to

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encounter the sorts of objections enumerated by the Organisation for Economic Co-operation and Development (OECD 1997: 79), which are not automatically translatable to the international level. First, there is no reason to expect resistance from current members, even those whose fisheries are less profitable than those of potential new entrants, as the choice to retain or sell all or part of their national allocations will remain one for them alone.107 If a member considers that it receives significant nonmonetary benefits from participating in the fishery, it is entitled to resist offers. Second, while the wider concerns about the fairness of reserving an open-access resource for a privileged few with capital investment in the fishery and excluding all others have more substance, these can be met with two arguments: (1) at the international level those wanting to enter the fishery will most likely have made their investments already, and in any event there are few international fisheries in a healthy enough state for new investment in them to be encouraged; (2) their exclusion, if such it is, comes about not as a result of the adoption of trading by the RFMO, but by a parallel development: the putative elaboration of the customary rule of cooperation in international fisheries law into a requirement that nonmembers abide by nondiscriminatory rules of an RFMO if they are to fish. This test should be easily met by an RFMO that is open to new entrants to join, by either becoming a full member of the RFMO or subscribing to any formal cooperation mechanism that it operates, thus becoming eligible to purchase quota from existing members.108 In the longer term, the RFMO may well be able to capture some of the resource rent generated and distribute it among the RFMO members; ideally, nonmembers, even those not interested in fishing at all, should be able to become eligible for a modest share of this surplus by joining the cooperation mechanism, in effect trading any residual highseas freedom of fishing for this revenue stream.109 Beyond that, it is possible to imagine a future legal rule in which monetary or other payments would be a way of compensating States for their compulsory exclusion from a share of the maximum

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sustainable yield,110 though the question as to how to calculate the quantum of compensation is likely to remain vexing for many years and delay the emergence of any such rule. There remain, of course, many problems of high-seas fisheries that quota trading cannot solve. For one, it will not prevent stock collapse if the TAC or TAE is set too high, as the example of the northwest Atlantic cod fisheries shows that unless the TAC or TAE is restrictive of effort, the value of allocations will be too low for them to fulfill their intended function of limiting entry.111 Nor does trading remove the need for policy on bycatch from other fisheries and discarding of fish at sea. Despite its advantages, introduction by the IATTC of a capacity transfer system is far from a foregone conclusion. It would depend on each member accepting the fact that its UNCLOS and customary law right to fish on the high seas for stocks managed by the IATTC could be bargained away, in some cases not by the member itself but, if the quotas are attached to individual vessels, by the owners of the vessels flagged to the member. If concentration of ownership internationally is a problem, as is sometimes said to be the reason at the national level for reluctance to move to ITQs, a similar rebuttal applies: absolute purity of the system is not a prerequisite. It is possible for the rules adopted by an RFMO to place a cap on the share of the catch that a single member may lawfully accumulate; this would reduce the value of the asset somewhat, but not alter its character. Similarly, tradable catch shares would remain subject to other management measures, such as closed seasons and areas. Nor need tradability be an immediate feature of any scheme adopted by RFMOs; there is nothing to stop them from establishing their initial distribution but postponing trading for some time; at national level too, ITQ systems in many fisheries do not allow transfer at first, but subsequently do.112 An intermediate alternative might be to start by permitting trading of small absolute amounts or percentages of an allocation at first, which would rise over time until no quota remained inalienable.

Considering the potential complexity of any accounting mechanisms,113 it would also be sensible to have some subsidiary means for enforcement of limits; for example, IBSFC members were able to refuse landings of quota species from vessels flagged to States whose quota is exhausted.114 A property system created by a multilateral treaty would survive the withdrawal of individual members, provided a sufficient number remains; in terms of its own internal logic, the rights of outsiders are taken into account within the system, so only the status of the departing member changes. At least one element of entry into a system would need to be made irrevocable, however, regardless of any subsequent denunciation of the treaty: a State should not be able to accede to the treaty, liquidate its quota for gain, and then leave the system in order to fish for the species on the high seas again. This could be prevented by a rule that reduction of a quota to zero by trading would extinguish that member’s right at international law to fish in the areas of concern for that species other than by purchasing quota, even if it subsequently ceased to be bound by the treaty (though it should not be prevented from reacceding). If the aim is to overcome the tragedy of the commons besetting high-seas fisheries, overall, it is hard to disagree with the OECD’s conclusion that the available evidence reinforces the need for an institutional setting that accommodates property rights, or with its advocacy of indirect enforcement by holding flag States accountable for the actions of their vessels and nationals, with quota or trade sanctions for noncompliance.115 This would require that the effect of purchasing quota should be that the transferee member’s responsibility for reporting and compliance should be the same as if it had originally been allocated the entire amount by the RFMO. The wider implication of its call—to apply to high-seas fishing a much more far-reaching form of mutual accountability of participants to each other, but also to nonparticipants still holding a potential right to fish, thanks to UNCLOS Article 116—is a logical consequence of the matters raised in this study, but remains beyond its scope.

6 International Fisheries Law and the Transferability of Quota: Principles and Precedents

Endnotes 1. Created by the Convention for the Establishment of an Inter-American Tropical Tuna Commission (Washington, May 31, 1949), 80 United Nations Treaty Series (hereafter UNTS) 3. 2. Montego Bay, December 10, 1982, 1833 UNTS 3. 3. For a very good account of that framework, see Burke (1994: Chapter 5) on highly migratory species. 4. One of the better-known examples is the postwar line of credit of $3.75 billion extended by the United States to the United Kingdom (Financial Agreement between the Governments of the United States of America and the United Kingdom of Great Britain and Northern Ireland, Washington, December 6, 1945, 126 UNTS 13). Although not a loan, the reparations of 132 billion gold marks quantified by the Reparation Commission under Article 233 of the Versailles Treaty (Treaty of Peace with Germany, Versailles, June 28, 1919 (1919) 13 American Journal of International Law (hereafter AJIL) Supp 151) are a good, if fortunately rare, illustration of another way in which a debt from one State to another can be incurred and given recognition in a treaty. 5. For example, in the Norwegian Loans case (Certain Norwegian Loans (France v. Norway), ICJ Reports 1957, p. 9), the bonds issued by Norway and purchased by French investors were governed by Norwegian, not international law. The International Court of Justice (ICJ) found that it had no jurisdiction to decide the case. There is a great deal of practice and case law on compensation for expropriation of property of foreign nationals, but the character of the assets as property is still rooted in the domestic law of the expropriating State. 6. United Nations Framework Convention on Climate Change (New York, May 9, 1992), 1771 UNTS 107, and its Kyoto Protocol (Kyoto, December 11, 1997) (1998) 37 International Legal Materials 22; see Decision 12/CMP.1, Guidance relating to registry systems under Article 7, paragraph 4 of the Kyoto Protocol, and Decision 13/CMP.1, Modalities for the accounting of as-

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signed amounts under Article 7, paragraph 4 of the Kyoto Protocol, in Report of the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol in its first session, held at Montreal from November 28 to December 10, 2005, Addendum Part Two: Action taken by the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol at its first session, UN doc FCCC/KP/CMP/2005/8/Add.2 (March 30, 2006), at 21 and 23 respectively; also Annual report of the administrator of the international transaction log under the Kyoto Protocol (UN doc FCCC/KP/CMP/2007/5, November 22, 2007), all accessed on March 6, 2008. 7. D. Sturt, Programme Officer, United Nations Framework Convention on Climate Change Secretariat, personal communication, April 10, 2008. Paragraphs 27 and 28 of UN doc FCCC/KP/CMP/2007/5, supra n 6, suggest that the only transactions to date have been the initial issue of credits rather than trading in them. 8. Trail Smelter (United States v. Canada) (1941) 3 Reports of International Arbitral Awards 1905, reprinted in (1941) 35 AJIL 684. 9. Vienna, May 23, 1969, 1155 UNTS 331. 10. Convention for the Strengthening of the Inter-American Tropical Tuna Commission Established by the 1949 Convention between the United States of America and the Republic of Costa Rica, Antigua Guatemala, June 27, 2003, not yet in force; the text is available at http://www.iattc.org/ PDFFiles2/Antigua Convention Jun 2003.pdf (accessed on March 17, 2008). 11. Convention between the United Kingdom, the United States, Japan, and Russia respecting measures for the preservation and protection of the fur seals in the North Pacific Ocean, Washington, July 7, 1911, reproduced at (1911) 5 AJIL Supp 267; [United States] Treaty Series No. 564. 12. Ibid., Article X. Article XI qualified this by obliging the United States to deliver a minimum of 1,000 skins annually to Canada and Japan unless it closed its commercial operations, in which case they were each to be compensated by US$10,000 annually unless there were fewer than 100,000 seals frequenting the islands.

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13. Ibid., Article XII, including the qualification that harvesting and the associated sharing obligation could be suspended for as long as there were fewer than 18,000 seals on the islands. 14. Ibid., Article XIII, including the qualification that harvesting and the associated sharing obligation could be suspended for as long as there were fewer than 6,500 seals on the islands. 15. Ibid., Article XIV. 16. International Convention for the Regulation of Whaling, Washington, December 2, 1946, 161 UNTS 72. 17. Arrangements for the Regulation of Antarctic Pelagic Whaling, London, June 6, 1962, 486 UNTS 263. 18. Supra n 9 and accompanying text. 19. Agreement for the Implementation of the Provisions of the United Nations Convention on the Law of the Sea of 10 December 1982, relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks (New York, December 4, 1995), 2167 UNTS 3. 20. Accord the Australian statements to the UN General Assembly in 2005 and 2006; see, e.g., Australia’s statement in the debate on Oceans and the Law of the Sea at the 2005 session of the UN General Assembly (“Statement by Senator Robert Ray[,] Parliamentary Adviser to the Australian Mission to the United Nations,” available at www.australiaun.org/unny/il%5f281105.html (accessed on March 28, 2008)), where it was asserted that “it is Australia’s strong view that States have an obligation to either join relevant RFMOs where entitled to do so, or to otherwise refrain from fishing in the RFMO-regulated area unless they agree to apply all relevant conservation measures.” 21. From an economic point of view, according to Scott (2000: 5–6), the four main characteristics of property are duration, security, exclusivity, and transferability. In legal terms, Hohfeld (1917: 746ff) analyzed property rights as the multiplicity of duties imposed on an indeterminate number of persons not being duties of positive performance but of exclusion; i.e., the right consists of a general protection from interference.

22. Note that for those many RFMOs, such as the Asia-Pacific Fisheries Commission (see FAO Web site), that have only advisory rather than management functions, as they are constitutionally incapable of establishing TACs and national allocations, the issue of the trading of such allocations can never arise. 23. Created by the International Convention for the Conservation of Atlantic Tunas (Rio de Janeiro, May 14, 1966), 673 UNTS 63. 24. Created by the Agreement Establishing the Indian Ocean Tuna Commission (Rome, November 25, 1993), 1927 UNTS 329. 25. Created by the Convention on the Conservation and Management of Highly Migratory Fish Stocks in the Western and Central Pacific Ocean (Honolulu, September 5, 2000), 2275 UNTS 43. 26. Created by the Convention for the Conservation of Southern Bluefin Tuna (Canberra, May 10, 1993), 1819 UNTS 359. 27. As to the tardy setting of TACs in the CCSBT’s early years, see Serdy (2007: 270n). In 1998, Japan implemented unilaterally an experimental fishing program in addition to its commercial catch; since Australia and New Zealand opposed the additional catch, no TAC could be adopted at all for several years, but the members continued to harvest southern bluefin tuna in roughly the same amounts as before, as seen in “Global Catch by Country” (Attachment 4 to Report of the Extended Scientific Committee for the Tenth Meeting of the Scientific Committee, September 5–8, 2005, Taipei (Appendix 2 to Report of the Tenth Meeting of the Scientific Committee, Narita, Japan, September 9, 2005)), available at www.ccsbt.org/docs/pdf/meeting reports/ ccsbt 12/report of sc10.pdf (accessed on March 28, 2008). ICCAT’s failure to make any recommendation on a catch limit for Atlantic bluefin tuna at its 2001 meeting is seen in Proceedings of the 17th Regular Meeting of the International Commission for the Conservation of Atlantic Tunas, Murcia, Spain, November 12–19, 2001, in ICCAT (2002: 55–56, paragraphs 14.4–14.10). For 2002 reported catches totaled around 30,000 metric tons, and if unreported catches are factored in, the

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true total was likely to be around 35,000 metric tons, little different from 2001, when a TAC applied: Reports of the Meeting of Panels 1–4 (Annex 8 to Proceedings of the 18th Regular Meeting of the International Commission for the Conservation of Atlantic Tunas, Dublin, Ireland, November 17–24, 2003), in ICCAT (2004: 182). 28. This is the view taken by the IATTC itself in Resolution C-03-05 (Resolution on Data Provision, Appendix 6 to IATTC, Minutes of the 70th Meeting, Antigua, Guatemala, June 24–27, 2003), available at http://www.iattc.org/PDFFiles2/ IATTC%2070%20Minutes%20Jun%2003%20ENG.pdf (accessed October 16, 2009), at 30, in which the fourth paragraph of the preamble speaks of nonmember States fishing in the region having an obligation under international law to cooperate with IATTC, of which the provision of catch data is an aspect. 29. Koers (1973: 36) writes, “It is a political reality that States are extremely reluctant to give up any of their prerogatives in favour of international law.” At 194–195, he attributes States’ reluctance to give RFMOs binding powers on members to the fact that under freedom of fishing, membership of such RFMOs is voluntary, and binding authority “would expose them to the risk of being forced to accept a certain conservation measure, whereas non-member States would be under no obligation with regard to such a measure.” He adds, at 275–276, “States have demonstrated over and over again that they are willing to yield authority to international institutions only if this becomes unavoidable.” But by the time States are convinced of its necessity, “irreparable harm may have been inflicted upon the resources . . . The history of international fisheries commissions is an unfortunate illustration of this point.” Burke (1994: 92) predicts that high-seas fisheries management will continue to fail if States persist in withholding authority from RFMOs; at 95, he argues that the EEZ was an earlier consequence of this failure. 30. Infra nn 78–85. 31. A two-member commission reduces the matter to triviality, since if the members A and B

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owe their effort-limiting obligations only to each other, they remain free to renegotiate these limits at any time by mutual consent, which is functionally equivalent to quota trading. 32. In addition, it might be possible to speak of A, B, and C each owing the same duty to the RFMO in addition to, or perhaps even to the exclusion of, duties owed to each other: this is the approach taken by the New Zealand opinion on trading of quota in the CCSBT, infra n 62. In Reparation for Injuries Suffered in the Service of the United Nations, ICJ Reports 1949, p. 174, the ICJ in an advisory opinion held (at 181–182) that not only did the United Nations have international legal personality vis-`a-vis its own members—which was not stated in the UN Charter, but held to be a necessary implication—but was owed certain duties by them. This will remain without practical significance, however, unless the RFMO is given some sort of enforcement power over its members—again conceivable in theory, but not, at any rate hitherto, actually encountered in practice. 33. A frequent complication would be the case of nonequivalence of effort by B and C in terms of its effect on the stock. If a vessel in the hands of C has less impact on the stock than the same vessel in the hands of B, then there is no reason to oppose the transaction. But if its effect is greater, then it would be reasonable for A to insist on an adjustment to restore the equivalence. Unlike the case of catch limits considered by Serdy (2007: 271n), it would be difficult to imagine how a member might prove to the satisfaction of other members that its capacity has less actual impact on a unit-for-unit basis than theirs, given that effort efficiency would drive any transactions. 34. Infra n 87 and text following. 35. Article XXV of the Antigua Convention, supra n 10, simply requires parties to cooperate to avoid disputes (paragraph 1); should a dispute nonetheless arise (paragraph 2) that “is not settled through . . . consultation within a reasonable period, the members concerned shall consult among themselves as soon as possible in order to settle the dispute through any peaceful means they may agree upon, in accordance with international law.”

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This may not apply if all disputant States are parties to the UN Fish Stocks Agreement, the effect of whose Article 30(2) is to superimpose the compulsory procedures in Part VIII of the Agreement on any fisheries treaty to which they are party. 36. Note that in practice RFMOs often go to great lengths to secure consensus, even when the treaty does not require this (e.g., in the WCPFC, by Article 20(2) of its Convention, supra n 25, voting can occur only once “all efforts to reach a decision by consensus have been exhausted”), and votes are rarely called. 37. Or qβ/366 in a leap year. 38. See the discussion in Serdy (2007: 273– 275) of penalties in relation to catch limits. 39. See the examples in Serdy (2007: 275n) of carryover limits applied by ICCAT, so that there is no buildup of banked quota. 40. A system designed with conservation in mind would presumably permit quota to be purchased only from underused capacity, especially if there is a penalty for excess capacity. Say there is a penalty of η% for excess capacity above γ m3 , and C’s excess was (γ + ζ ) m3 . In Year 2, C’s actual capacity limit, assuming no change in its national allocation, would be (z − γ − (100 + η)ζ /100) m3 . Although B may have less than ζ m3 spare capacity, if C were to purchase ζ m3 of quota from it, it could have an actual capacity limit in Year 2 of (z − γ ) m3 , the difference of (100 + η)ζ /100 m3 reflecting the η% penalty it would thereby have avoided. B would not be liable to any penalty as long as ζ < γ , because its sale of quota would on the preceding assumption leave it with an overcatch no greater than ζ m3 , since it started from a position of surplus. In order not to undermine the penalty’s deterrent effect, it would be prudent to provide that the vendor should be able to sell no more quota than its surplus and that quota purchased should be permitted to be credited only against excess capacity up to the carryover limit and not against any penalty. 41. See, e.g., Joseph (2003: 62), where he states that “[p]rotocols to [UNCLOS] and changes to the instruments establishing the various regional tuna bodies would have to be made” in order to

“ensur[e] that the proper international legal basis exists for limiting entry into tuna fisheries and assigning property rights to the participants in those fisheries.” 42. While the “eastern Pacific” is not defined in the IATTC’s current convention (supra n 1), the “Tropical” in the Commission’s name does not seem to be a bar to extending the Commission’s management measures well into the temperate zone (40◦ on either side of the equator in Resolution C-02-03, infra n 87). Article 3 of the Antigua Convention defines a Convention Area extending to 50◦ N and 50◦ S, and west to 150◦ W, while the species coverage is expanded by Article I(1) to “stocks of tuna and tuna-like species and other species of fish taken by vessels fishing for tuna and tuna-like species in the Convention Area.” 43. Supra n 10. 44. Southern Indian Ocean Fisheries Agreement, done in Rome, July 7, 2006, not yet in force, text available at http://www.fao.org/legal/treaties/ 035t-e.htm (accessed on March 17, 2008). 45. Available at http://www.southpacificrfmo. org/assets/5th-Meeting-March-2008Guyaquil/SP-05-WP-1-Chairs-draft-Conventiontext-rev-3.DOC (accessed on October 16, 2009). 46. Created by the Convention on Future Multilateral Cooperation in the Northwest Atlantic Fisheries (Ottawa, October 24, 1978), 1135 UNTS 369. 47. NAFO doc GC Doc. 07/4, Amendment to the Convention on Future Multilateral Cooperation in the Northwest Atlantic Fisheries (Annex 17 to NAFO doc GC Doc. 07/5, Report of the General Council, Lisbon, Portugal, September 24–28, 2007), available at http://www.nafo.int/ publications/frames/general.html (accessed on March 20, 2008). 48. Created by the Convention on Fishing and Conservation of the Living Resources in the Baltic Sea and Belts (Gda´nsk, Poland, September 13, 1973), 1090 UNTS 54. 49. Supplemental Recommendation by ICCAT to Amend the Rebuilding Program for North Atlantic Swordfish, in “Recommendations Adopted by ICCAT in 2006” (Annex 5 to

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Proceedings of the 15th Special Meeting of the International Commission for the Conservation of Atlantic Tunas, Dubrovnik, Croatia, November 17–26, 2006), in ICCAT (2007: 124–125 (paragraph 3(c), footnotes 2 (US undercatch) and 4 (UK undercatch))). 50. ICCAT (2007: 127 (paragraph 14)). The rule against retransfer is not much of a discipline, however, since it could be argued that it is not the same share of the quota that is being transferred, or the sale could precede the purchase. 51. Supplemental Recommendation by ICCAT concerning the Western Atlantic Bluefin Tuna Rebuilding Program, in ICCAT (2007: 146, paragraph 9). 52. Recommendation by ICCAT to Establish a Multi-Annual Recovery Plan for Bluefin Tuna in the Eastern Atlantic and Mediterranean, in ICCAT (2007: 132 (paragraph 11)). 53. See Annex I.A (Annual Quota Table) in both Annex 9 to NAFO doc FC Doc. 06/14, Report of the Fisheries Commission, Dartmouth, Nova Scotia, Canada, September 18–22, 2006; and Annex 12 to NAFO doc FC Doc. 07/24, Report of the Fisheries Commission, Lisbon, Portugal, September 24–28, 2007, available on the NAFO Web site at http://nafo.int/publications/frames/general.html (accessed on March 28, 2008). 54. Created by the Convention on Future Multilateral Cooperation in the North-East Atlantic Fisheries (London, November 18, 1980), 1285 UNTS 129. 55. Recommendation by the North East Atlantic Fisheries Commission in accordance with Article 5 of the Convention on Future Multilateral Cooperation in the North-East Atlantic Fisheries at its Annual Meeting in November 2006 to adopt Conservation and Management Measures for Mackerel in the NEAFC Convention Area in 2007 (Annex G to Report of the 25th Annual Meeting of the NorthEast Atlantic Fisheries Commission, November 13–17, 2006, Volume II: Annexes), available at http://archive.neafc.org/reports/annualmeeting/docs/25neafc annual 2006 vol2 annexes. pdf (accessed on October 16, 2009), paragraph 4.

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56. Recommendation by the North East Atlantic Fisheries Commission in accordance with Article 5 of the Convention on Future Multilateral Cooperation in the North-East Atlantic Fisheries at its Annual Meeting in November 2007 to adopt Conservation and Management Measures for Mackerel in the NEAFC Convention Area in 2008 (Annex E to Report of the 26th Annual Meeting of the North-East Atlantic Fisheries Commission, November 12–16, 2007 (hereafter NEAFC26 Report), Volume II: Annexes), available at http://archive.neafc.org/reports/annualmeeting/docs/26neafc annual 2007 vol2 annexes. pdf (accessed on October 16, 2009), paragraph 4. 57. Recommendation by the North East Atlantic Fisheries Commission in accordance with Article 5 of the Convention on Future Multilateral Cooperation in the North-East Atlantic Fisheries at its Annual Meeting in November 2007 to adopt Conservation and Management Measures for Blue Whiting in the NEAFC Convention Area in 2008 (Annex C to NEAFC26 Report, supra n 56), paragraph 6. 58. See Arrangement for the Regulation of the Fisheries of Blue Whiting in 2008 (Annex 1 to Agreed Record of Conclusions of Fisheries Consultations between Iceland, the European Community, the Faroe Islands and Norway on the Management of Blue Whiting in 2008), available at http://www.neafc.org/news/docs/blue whiting 2008 agreedrecord signed.pdf (accessed on March 18, 2008)), paragraph 5. 59. http://ec.europa.eu/fisheries/cfp/external relations/rfos/ibsfc en.htm (accessed on March 18, 2008). 60. Agnew DJ, D Aldous, M Lodge, and G Parkes. Discussion paper: allocation issues for WCPFC tuna resources. Report to the Secretariat (Attachment B to WCPFC doc WCPFC3-2006/15, Discussion Paper on Allocation Issues), available at www.wcpfc.int/wcpfc3/pdf/WCPFC32006-15%20[Allocation].pdf (accessed on March 18, 2008), at 49–51 and thereafter passim to 59. 61. WCPFC, Commission for the Conservation and Management of Highly Migratory Fish Stocks

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in the Western and Central Pacific Ocean, Third Regular Session, Apia, Samoa, December 11–15, 2006, at 16–17 (paragraphs 118–122), available at http://www.wcpfc.int/meetings/2006/3rdregular-session-commission (accessed on October 16, 2009); and WCPFC, Commission for the Conservation and Management of Highly Migratory Fish Stocks in the Western and Central Pacific Ocean, Fourth Regular Session, Tumon, Guam, USA, December 2–7, 2007, at 45 (paragraphs 327–331), available at http://www.wcpfc.int/meetings/2007/4thregular-session-commission (accessed on October 16, 2009). 62. The advice is in “Quota Trading under the Convention for the Conservation of Southern Bluefin Tuna” (Attachment A to CCSBT doc CCSBT-EC/0410/16, on file with author), at 3. Subsequently, the Secretariat provided a discussion paper, “Commission for the Conservation of Southern Bluefin Tuna Quota Trading—Discussion Paper” (Attachment B to CCSBT doc CCSBT-EC/0410/16) and New Zealand its own legal opinion, “Convention for the Conservation of Southern Bluefin Tuna ‘Quota Trading’ ” (CCSBT doc CCSBT-EC/0410/Info01, on file with author). Space constraints preclude a full discussion here. 63. CCSBT, Report of the Extended Commission of the Twelfth Annual Meeting of the Commission, Taipei, October 11–14, 2005 (hereafter CCSBT-EC4 Report; Appendix 3 to CCSBT, Report of the Twelfth Annual Meeting of the Commission, Narita, Japan, October 15, 2005), available at www.ccsbt.org/docs/ pdf/meeting reports/ccsbt 12/report of ccsbt12 .pdf (accessed on March 18, 2008), at paragraphs 107 and 108. 64. Ibid., at paragraph 109. 65. Ibid., at paragraph 111. 66. There was no discernible discussion at all in either 2006 or 2007—see CCSBT, Report of the Extended Commission of the Thirteenth Annual Meeting of the Commission, Miyazaki, Japan, October 10—13, 2006 (hereafter CCSBT-EC5 Report; Appendix 4 to CCSBT, Report of the

Extended Commission of the Thirteenth Annual Meeting of the Commission, Miyazaki, Japan, October 10–13, 2006), available at www.ccsbt. org/docs/pdf/meeting reports/ccsbt 13/report of CCSBT13.pdf (accessed on April 4, 2008); CCSBT, Report of the Extended Commission of the Fourteenth Annual Meeting of the Commission, Canberra, Australia, October 16–19, 2007 (hereafter CCSBT-EC6 Report, Appendix 3 to CCSBT, Report of the Fourteenth Annual Meeting of the Commission, Canberra, Australia, October 16–19, 2007), available at www.ccsbt.org/docs/ pdf/meeting reports/ccsbt 14/report of CCSBT14.pdf (accessed on March 18, 2008). 67. See in this context Arnason’s (1990: 652) proof that under this system all quota will be used. 68. That new entrant, ironically, was Korea, whose preference to treat quota as an asset seems selective: at the same meeting it noted that its share of the budget did not incorporate a discount for the conservation value of leaving its national allocation mostly unused and asked that this be considered at the next meeting: CCSBT, Report of the Extended Commission of the Eleventh Annual Meeting of the Commission, Busan, Republic of Korea, October 19–22, 2004 (hereafter CCSBTEC3 Report; Appendix 3 to CCSBT, Report of the Eleventh Annual Meeting of the Commission, Busan, Republic of Korea, October 19–22, 2004), available at http://www.ccsbt.org/docs/pdf/ meeting reports/ccsbt 11/report of ccsbt11.pdf (accessed on March 18, 2008), at 3 (paragraph 14). But nothing appears to have come of this, and since under the formula in Article 11 of the 1993 Convention Korea could automatically have reduced its contribution by relinquishing part of its allocation, a sympathetic hearing was probably more than it could realistically expect. 69. IATTC Resolution C-06-02 (Resolution for a Program on the Conservation of Tuna in the Eastern Pacific Ocean for 2007), available at http://www.iattc.org/PDFFiles2/C-06-02Conservation-of-tunas-2007.pdf (accessed on October 16, 2009), 4th preambular paragraph.

6 International Fisheries Law and the Transferability of Quota: Principles and Precedents

70. Ibid., paragraph 8. In 2003 Resolution C-03-12 (Resolution on the Conservation of Tuna in the Eastern Pacific Ocean, available at http://www.iattc.org/PDFFiles2/C-0312%20Tuna%20conservation.pdf (accessed on October 16, 2009)), paragraph 7 limited each party’s and cooperating nonparty’s longline bigeye catch for 2004 to its 2001 level. At the 2004 meeting this was extended to 2006, except that China, Japan, Korea, and Chinese Taipei were given separate limits of 2,639, 34,076, 12,576, and 7,593 metric tons, respectively: Resolution C-04-09 (Resolution for a Multi-Annual Program on the Conservation of Tuna in the Eastern Pacific Ocean for 2004, 2005 and 2006, available at http://www.iattc.org/PDFFiles2/C04-09 Tuna conservation 2004-2006.pdf (accessed on October 16, 2009)), paragraph 8. 71. IATTC doc IATTC-77-04 REV (Proposal for Conservation of Yellowfin and Bigeye Tuna in the Eastern Pacific Ocean), available at http://www.iattc.org/PDFFiles2/IATTC-77-04Conservation-proposalREV.pdf (accessed on October 16, 2009), at 2. Under the precautionary approach to fisheries embodied in Annex II to the UN Fish Stocks Agreement, supra n 19, F msy should be replaced by a more conservative target, but that is a separate issue beyond the scope of this chapter. 72. Resolution on Fleet Capacity, October 1998, available at http://www.iattc.org/ PDFFiles/C-98-11%20Capacity%20resolution% 20Oct%2098.pdf (accessed on October 16, 2009), paragraph 1. 73. Ibid., paragraph 3. 74. Ibid., paragraphs 5 and 6. 75. Joseph (2003: 40) notes that the fleet’s carrying capacity at the time was about 138,000 metric tons, so that the total of 158,837 metric tons set by the 1998 resolution included allowance for some increase. 76. Resolution on Fleet Capacity, October 1998, supra n 72, paragraph 6. 77. By Resolution C-00-01 (Resolution on Fleet Capacity (adopted by correspondence in February 2000), available at http://www.iattc.

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org/PDFFiles/C-00-01%20Fleet%20capacity%20 resolution%20Feb%202000.pdf (accessed on October 16, 2009)). 78. Ibid., paragraph 1. The difference between the two measures of capacity is lucidly explained by Joseph (2003: 25), but is not legally significant. 79. Resolution C-99-06 (Resolution on the Conservation and Management of Bigeye Tuna in the Eastern Pacific Ocean July 1999), available at http://www.iattc.org/PDFFiles/C-9906%20BET%20resolution%20Jul%2099.pdf (accessed on October 16, 2009), paragraph 1. 80. Resolution C-99-09 (Resolution on Bigeye Tuna October 1999), available at http://www.iattc.org/PDFFiles/C-99-09%20BET %20resolution%20Oct%2099.pdf (accessed on October 16, 2009), paragraph 1. 81. Resolution C-01-06 (Resolution on Conservation of Bigeye Tuna in the Eastern Pacific Ocean 21 June 2001), available at http://www.iattc.org/ PDFFiles/C-01-06%20BET%20resolution %20Jun%2001.pdf (accessed on October 16, 2009). 82. Resolution C-99-08 (Resolution for Implementing the Catch Limit of Yellowfin Tuna in 1999, 10 October 1999), available at http://www.iattc.org/PDFFiles/C-99-08%20YFT %20resolution%20Oct%2099.pdf (accessed on October 16, 2009), paragraphs 2-6. 83. Resolution C-00-03 (Resolution on Yellowfin Tuna, June 2000), available at http:// www.iattc.org/PDFFiles/C-00-03%20YFT%20 resolution%20Jun%2000.pdf (accessed on October 16, 2009), paragraphs 2-6. 84. Resolution C-01-07 (Resolution on Yellowfin Tuna, June 2001), available at http:// www.iattc.org/PDFFiles/C-01-07%20YFT%20 resolution%20Jun%2001.pdf (accessed on October 16, 2009), first operative paragraph. 85. Resolution C-02-04 (Resolution on Conservation of Yellowfin and Bigeye Tuna in the Eastern Pacific Ocean), available at http:// www.iattc.org/PDFFiles/C-02-04%20BET%20 YFT%20resolution%20Jun%202002.pdf (accessed on October 16, 2009).

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86. Resolution on the Capacity of the Tuna Fleet Operating in the Eastern Pacific Ocean, available at http://www.iattc.org/PDFFiles/C-0010%20Fleet%20capacity%20resolution%20Aug %2000.pdf (accessed on October 16, 2009), paragraphs 6 and 7. 87. Resolution on the Capacity of the Tuna Fleet Operating in the Eastern Pacific Ocean (Revised), available at http://www.iattc.org/ PDFFiles/C-02-03%20Capacity%20resolution% 20Jun%202002%20REV.pdf (accessed on February 7, 2008). 88. Ibid., paragraph 1. Note, however, that the Resolution is expressed in paragraph 13 to be without prejudice to “the rights and obligations of any participant to manage and develop the tuna fisheries under its jurisdiction or in which it maintains a longstanding and significant interest.” The vagueness of “without prejudice” clauses is usually an indication of an unresolved controversy that has been papered over by constructive ambiguity. If the intent of the reference to “national jurisdiction” is to preserve the possibility that the capacity limits are to apply only to the high seas part of the defined area, however, then the purpose and efficacy of the management measure as a whole risk being undermined. 89. Resolution on a Regional Vessel Register, available at http://www.iattc.org/PDFFiles/C00-06%20Vessel%20register%20resolution%20 Jun%2000.pdf (accessed October 16, 2009). 90. Ibid., paragraph 2(h). 91. Resolution C-02-03, supra n 87, paragraphs 5–8. 92. Ibid., paragraph 10. 93. http://www.iattc.org/VesselRegister/Vessel List.aspx?List=AcPS&Lang=ENG (accessed on April 4, 2008). 94. The author is indebted to Mr Brian Hallman of the IATTC staff for supplying this information. 95. Information likewise kindly furnished by Mr Hallman. Note that the difference between the last two columns of Table 6.1 should, in principle, all be accounted for by a combination of new capacity permitted by paragraph 10 of Res-

olution C-02-03 and trading; only anything beyond this would bespeak a State’s noncompliance with its obligation under that Resolution to limit capacity. 96. IATTC Resolution C-00-10, supra n 86, paragraph 7. 97. http://www.iattc.org/PDFFiles2/IATTC73-EPO-Capacity-Plan.pdf (accessed on February 7, 2008). 98. Ibid., paragraph 16. 99. Ibid., paragraph 22. 100. Ibid., paragraph 29. 101. Ibid., paragraph 30(a). 102. Arnason (1990: 648) has demonstrated that if quotas are not permanent, uncertainty leads to excessive discounting of future profits, diminishing the incentive to conserve the stock. 103. The question of the price, if any, for which quota changes hands, is not strictly one for the commission. Even so, because both parties to the transactions, being States, are public bodies, they may well have to make the amount public in their usual domestic accountability mechanisms such as annual reports to a legislature. Thus, in the interest of transparency, there are strong arguments for the commission to insist on disclosure of the consideration as a condition of registering the transaction. 104. UN Fish Stocks Agreement, supra n 19, Articles 8(3) and 11. 105. At least one well-regarded commentator believes that this implicit bargain has now achieved the status of customary international law; supra n 20. 106. Pearse (1992: 78) notes that in New Zealand 80% of quota rights changed hands at least once within 5 years of their introduction—a level of churning unlikely to be replicated at the international level. 107. This is not to say that such resistance if it occurs would be surprising; one reason for it might be that, to the extent that the initial allocation is made on the basis of past declared catch, it would effectively penalize underreporting: Falloon and Berthold (1993: 46).

6 International Fisheries Law and the Transferability of Quota: Principles and Precedents

108. In reality, to avoid wasting time and money in joining a commission without any guarantee of quota, would-be new entrants would be likely to offer to buy quota first. The existing member, if minded to accept, would ensure, on the commission’s behalf, that the transaction was not consummated until the eligibility criteria were met, on pain of remaining responsible to its fellow members for the purchaser’s catch if it proceeded before this had occurred, as the secretariat would not then register the transfer. 109. Such a solution, namely, the creation of a series of regional ocean organizations that become beneficial owners of the high-seas resources and transform the high-seas freedom to fish of the States that are their members into a right to a share of the profits, impliedly bypassing the step of national allocations, has recently been proposed by Crothers and Nelson (2006). A similar idea of allocations direct to operators was considered by Koers (1973: 253–258), but he concluded that because it “would be required to function within an extra-legal context which would be largely unforeseeable at the time of its creation and . . . would have a virtual monopoly, the price of the organization’s failure could be disaster. This also explains why States will be extremely reluctant to create such an organization.” This made it “at best a blueprint for a remote future, although not necessarily . . . for utopia.” Crothers and Nelson do not clearly state what under their scheme would become of existing RFMOs whose mandates extend to the high seas. It is suggested, however, that an overt creation of property rights would be more likely to provoke opposition than the gradual development of them by the existing RFMOs themselves through trading, in the way that Moli`ere’s Monsieur Jourdain resisted the idea of employing prose, only to discover that this was what he had been doing all his life: “Par ma foi! il y a plus de quarante ans que je dis de la prose sans que j’en susse rien, et je vous suis le plus oblig´e du monde de m’avoir appris cela” (Moli`ere, Le Bourgeois Gentilhomme, Act II, Scene 4). 110. Having rejected the idea in the previous endnote, Koers (1973: 301–303) instead proposed

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transferable rights of access to fully exploited stocks and levies for fishing them (as agent of the world community), which would be set at a level that made it equally attractive to fish or simply collect revenue, but adjusting this for the risks of fishing, so that the average fishing return should be somewhat higher. This revenue Koers would have distributed under a formula basing a State’s share on a “reverse” relationship with its share in total world catch and per capita national income. Nonetheless, it was “crucial” that any limitation of entry be effected at the global level, because “it should not be left to fishing nations alone to decide to what extent non-fishing States would have access to the wealth of the sea’s living resources.” 111. OECD (1997: 80–82). 112. OECD (1997: 83). 113. Despite addition, subtraction, multiplication, and division being the only mathematical operations used, the opacity of the tables in ICCAT reports makes it difficult to see how catch limits worked out in this way are derived; see, e.g., “Compliance tables: compliance with catch limits and quotas in 2004” (Appendix 3 to Report of the Meeting of the Conservation and Management Measures Compliance Committee (Annex 9 to Proceedings of the 19th Regular Meeting of the International Commission for the Conservation of Atlantic Tunas, Seville, Spain, November 14–20, 2005)), in ICCAT (2006: 220–229). The problems that might arise under an excessively complicated accounting system are illustrated by Canada’s erroneous interpretation of an earlier measure (Annex 5-2 to 16th Regular Meeting of the Commission, Rio de Janeiro, Brazil, November 15–22, 1999, in ICCAT (2000: 70), taking paragraph 3(c) to mean that Canada could carry over only 10%, rather than all of its unused dead discard quota (the reference to 10% was, in fact, Canada’s share of the TAC). Canada did not subsequently reclaim the inadvertently forgone 90%. In Calcutt et al. (2004: 11), there are useful worked examples in prose for Atlantic bluefin tuna and swordfish of how overage and unused discard quotas carried forward to subsequent years work. 114. OECD (1997: 154).

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115. OECD (1997: 158). In Kaitala and Munro (1993: 325), it is noted that, without some mechanism of this kind, even a successful stockrebuilding program will remain vulnerable to a breakdown in cooperation caused by the shift of bargaining power in high-cost harvesters’ favor as the health of a stock is restored. Because of its objection procedure, this description is not met by NAFO (and presumably every other RFMO with a similar procedure): at 326.

References Arnason R. 1990. Minimum information management in fisheries. Canadian Journal of Economics, 23(3):630–653. Barnes R. 2006. The convention on the law of the sea: an effective framework for domestic fisheries conservation? In Freestone D, R Barnes, and D Ong (eds) The Law of the Sea: Progress and Prospects. Oxford: Oxford University Press, pp. 233–260. Burke WT. 1994. The New International Law of Fisheries: UNCLOS 19 and Beyond. Oxford: Clarendon Press, 416 pp. Calcutt M, S Paul, J Neilson, and D Murphy. 2004. National Report of Canada. ICCAT. Report for the Biennial Period 2002–03, Part II (2003), Vol. 3, pp. 11–19. Crothers GT and L Nelson. 2006. High seas fisheries governance: a framework for the future? Marine Resource Economics, 21:341– 353. Crutchfield JA. 1969. National quotas for North Atlantic fisheries: an exercise in second best. In Alexander LM (ed.) The Law of the Sea: International Rules and Organization for the Seas. Kingston, RI: University of Rhode Island, Law of the Sea Institute. Proceedings of the Third Annual Conference of the Law of the Sea, June 24–27, 1968, pp. 263–283. Falloon R (with the assistance of TM Berthold). 1993. Individual transferable quotas: the New

Zealand case. In The Use of Individual Quotas in Fisheries Management. Paris: Organisation for Economic Co-operation and Development, pp. 43–62. Hardin G. 1968. The tragedy of the commons. Science, 162(3859):1243–1248. Hohfeld WN. 1917. Fundamental legal conceptions as applied in judicial reasoning. Yale Law Journal, 26:710–770. Holt SJ. 2001. Sharing the catches of whales in the Southern Hemisphere. FAO Fisheries Technical Paper No. 411, pp. 322–373. ICCAT. 2000. Report for the Biennial Period, 1998–99, Part II (1999), Vol. 1, 311 pp. ICCAT. 2002. Report for the Biennial Period, 2000–01, Part II (2001), Vol. 1, 566 pp. ICCAT. 2004. Report for the Biennial Period, 2002–03, Part II (2003), Vol. 1, 309 pp. ICCAT. 2006. Report for the Biennial Period, 2004–05, Part II (2005), Vol. 1, 290 pp. ICCAT. 2007. Report for the Biennial Period, 2006–07, Part I (2006), Vol. 1, 288 pp. Joseph J. 2003. Managing fishing capacity of the world tuna fleet. FAO Fisheries Circular No. 982, 67 pp. Joseph J, Squires D, Bayliff W, and Groves T. 2010. Addressing the problem of excess fishing capacity in tuna fisheries. Chapter 2 of this volume. Kaitala V and GR Munro. 1993. The management of high seas fisheries. Marine Resource Economics, 8(4):313–329. Kask JL. 1969. Tuna—a world resource. Occasional Paper No. 2. Kingston, RI: University of Rhode Island, Law of the Sea Institute, 35 pp. Koers AW. 1973. International Regulation of Marine Fisheries: A Study of Regional Fisheries Organizations. London: Fishing News (Books) Ltd, 368 pp. Organisation for Economic Co-operation and Development. 1997. Towards Sustainable Fisheries: Economic Aspects of the Management of Living Resources. Paris: OECD. Pearse PH. 1992. From open access to private property: recent innovations in fishing rights

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as increments of fisheries policy. Ocean Development and International Law, 23: 71– 83. Rayfuse RG. 2004. Non-Flag State Enforcement in High Sea Fisheries. Leiden: Martinus Nijhoff, 444 pp.

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Scott A. 2000. Introducing property in fishery management. FAO Fisheries Technical Paper No. 404/1, pp. 1–13. Serdy A. 2007. Fishery commission quota trading under international law. Ocean Yearbook, 21: 265–288.

Chapter 7

Can Rights Put It Right? Industry Initiatives to Resolve Overcapacity Issues: Observations from a Boat Deck and a Manager’s Desk Daryl R. Sykes

Introduction I should first explain my place in the scheme of things. I am neither a scientist nor an academic, certainly not in terms of any formal qualifications. I am a former inshore commercial fisherman of 21 seasons’ experience who made a transition to a further 15-year career as a fishing industry representative, advocate, and bureaucrat. I live and work in Wellington, New Zealand, where I manage a commercial stakeholder organization servicing the New Zealand rock lobster fisheries, and I also undertake numerous consultancy and advisory projects for fishermen, fishing companies, fishing organizations, and governmental and other agencies in New Zealand, Australia, and elsewhere. I was a successful inshore commercial fisherman—at least in terms of my own (and my bank manager’s) expectations—and made several important administrative transitions during my 21 seasons on the water. I commenced as a crewman, working in an open-access regime with a low level of supervision and policing. Then, as an owner-operatorskipper I went to a limited-entry regime that had no stock conservation outcomes because

fishery managers chose to restrict the wrong measure of effort; and finally I made the transition to the rights-based regime that is the New Zealand Quota Management System, henceforth referred to as the QMS. Given that history of participation as a working fisherman, I understand the many consequences of those regime implementation decisions—probably better than those who made the decisions at the time. As a fishing industry representative and advocate, I am marginally less interested in policy than I am in the application of policy. I am less interested in the mechanics of stock assessment models than I am in the assumptions that go into them and the decisions that are formed by them. I lean toward an affinity for the catching sector more than I do for processors and marketers, but I understand the codependence of all industry players and the way in which the market can and will influence fishing behavior. I look for solutions to problems, rather than someone to blame for them, and I know from my own extensive experience that well-informed industry participants who have a measure of security and certainty in respect of their fishing businesses are capable of timely, pragmatic, 127

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effective, and cost-effective responses to management challenges. I also know that regulatory measures are more effective and enduring than voluntary measures, but that there are more ways to regulate than to legislate. And, for the purposes of this presentation, I also highlight my abiding commitment to, and confidence in, credible rights-based frameworks to underpin the sustainable utilization of marine resources.

How Much Is Enough? Overcapacity, as measured by fishing vessels, gear deployed, days fished, or catches taken, may or may not be a problem for fishery managers, depending on the circumstances. In situations for which landings of target stock and/or associated species mortalities are within sustainable limits, despite an apparent overcapacity in regard to vessel numbers or gear deployments, then the bureaucratic pursuit of economic efficiency may need to be tempered by the fishing communities’ preference for their own perceived and preferred levels of socioeconomic comfort. However, in circumstances for which openaccess fishery regimes have contributed to stock declines and economic and/or social catastrophes, overcapacity must be addressed in a timely and effective manner. So, a basic proposition in my presentation is that any discussion about capacity or overcapacity in the fishing industry must commence with clearly agreed definitions and objectives. And, as you might expect from a New Zealand presenter, my commentary is anchored in the utility and application of property-rights regimes—and it is coincidental that in October 2006, New Zealand marked the 20th anniversary of the implementation of a rights-based fisheries management regime generally referred to as the QMS. I am reporting on just three examples of fleet and capacity rationalization driven by commercial rights holders in New Zealand and Australia.

There are numerous other examples of collective action by rights holders, but these three relate principally to capacity issues. I have selected two examples from inshore fisheries, southern rock lobster, and New Zealand abalone (paua). The third is an important distant-water fishery in Australia’s sub-Antarctic islands. The examples are chosen because each has a different background and a different priority associated with the initiatives that were taken. In fact, two were deliberate industry initiatives, and one was favorably coincidental to the implementation of a rights-based management regime. Common to all three is that: 1. they involve well-specified commercial property rights; and 2. the initiatives for action were taken by the rights holders themselves, rather than imposed by the established fishery management agencies. However those agencies had an equally important role, in that they constructed the incentives for collective action. My presentation is intended to highlight the value of communication, information, understanding, response, cooperation, and collaboration at different levels. I also briefly speculate on what might have happened had the initiatives not been taken and implemented in the manner that they were.

The Nature of Rights In each example, the reductions in vessel numbers and fishing capacity have not been solely the consequence of the allocation of commercial property rights, but those rights have provided a framework within which the commercial operators could act collectively and decisively to adapt to changed environmental, biological, and political circumstances. There are many variations on property rights in sea fisheries—individual transferable catch quotas being but one. In my experience, what matters in regard to the expected outcomes of any fisheries

7

property-right regime is the quality of the right, rather than the type of right. For example, if the quality (or perhaps I should more correctly describe it as being the integrity) of commercial property rights is not consistently observed by politicians and bureaucrats in their decision making, then the rights will not generate the custodial attitude and long-term responsible behavior expected and intended of them. It has been my experience in New Zealand and Australia that where rights-based regimes are deemed to be performing poorly and/or where rights holders are deemed to be behaving badly, it is because their rights are observed in the breach as matter of bureaucratic and political expediency. For example, it seems to me to be a reasonable expectation that within a rights-based regime there will be an application of market-based transactions to resolve competing interests—say between commercial fishing and amateur fishing—or as a response to changing social and political priorities—such as in the case of the inevitable tension between fishing and marine protection by way of no-take marine reserves. Unfortunately the New Zealand QMS is now weak in this regard. Market mechanisms are not routinely pursued as resolutions to competing interests and changing preferences in regard to the marine environment. After 20 years, the rightsbased framework remains incomplete, and, as a consequence, the QMS is too often regarded as no more than a resource allocation mechanism to allow the trade and exchange of fishing opportunity within the commercial sector. To me and to the more than 600 constituents to whom I am accountable, the QMS was intended and expected to be more than that—much more. Until some significant policy and operational changes occur within the New Zealand government bureaucracy, the full potential of our rightsbased fishery management regime—be it biological, economic, cultural, or social—cannot be met. Developers and managers of similar rights-based regimes elsewhere, and prospective rights holders, should learn from our experience.

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In many respects the “tragedy of the commons” is being overtaken by a tragedy of a different sort—one of declining institutional memory and lost opportunity—and I am fearful of the outcome for my industry constituents if the erosion of our individual and collective commercial rights is not soon halted.

Dealing with Capacity Issues—Southern Oceans So to my examples of capacity issues. Two very different fisheries distant from each other had a common problem in that the “footprint” of the two fleets had potential to cause some very significant and adverse environmental damage in very unique ecosystems.

The Heard Island–McDonald Island Toothfish and Mackerel Icefish Fishery My first example is the Heard Island–McDonald Island toothfish and mackerel icefish fishery. In brief, this fishery is managed by the Commonwealth of Australia through the Australian Fisheries Management Authority (AFMA) under the auspices of the Commission for the Conservation of Antarctic Marine Living Resources. The fishery, which is located adjacent to a cluster of subAntarctic islands far to the southwest of Western Australia (Figure 7.1), is a sustainable and economically valuable commercial operation. Heard Island and McDonald Island are the only unmodified example of a sub-Antarctic island ecosystem in the world. They provide valuable breeding and feeding areas for many species of marine mammals and birds, while supporting a vast array of endemic invertebrates. They are included on the register of the National Estate and the World Heritage List. The Heard Island–McDonald Island commercial fishery is now operated under a system of

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72°20'

72°40'

73°0'

73°20'

73°40'

74°0'

52°20'

52°20

Southern Ocean

Australia

41

37

km

Heard and McDonald Is.

52°40'

52°40

Heard Island 53°0'

53°0'

McDonald Island

53°20'

53°20' 72°20'

72°40'

73°0'

73°20'

73°40'

74°0'

Figure 7.1. Heard Island–McDonald Island fisheries zones.

legislated statutory fishing rights, which are conditioned by very prescriptive environmental protection standards. Those standards apply not only to the impacts of fishing on the benthos, but also to the potential impacts of fishing vessels and their crews on the extensive and unique seabird population resident on those islands. The greater the numbers of vessels and people actively engaged in the fishing for toothfish and icefish, the greater the potential for adverse impacts on the ecosystem of the islands. The quantum of toothfish and mackerel icefish that could be sustainably removed from the fishery

was not just a function of fish stock abundance; it was also a function of potential impacts on seabird populations and the ecology of the sub-Antarctic islands. Even a small fleet of four or five fishing vessels could have a combined impact that would demand a reduction in total allowable catches of the target species, not to sustain fish stocks but to constrain impacts of fishing on the environment. Limited access to the fishery was previously enabled by a tender process for a fixed number of vessel permits. The conditions imposed on vessel permit owners were both prescriptive and potentially restrictive on the catches that might otherwise be

7

taken. Not all successful applicants for permits managed to fish, but those who did were successful enough to warrant ongoing Australian government support for commercial fishing to continue in this unique and ecologically important area. A government decision to “close the commons” for the fishery left the AFMA with the challenge as to how the incumbent rights holders might make the transition from a limited entry to a tradable rights-based regime. Toward the conclusion of an independent allocation advisory process—to which I was one of three principal consultants—the advisory panel and AFMA managers were presented with an allocation methodology developed by and agreed between the incumbent rights holders, thereby relieving AFMA of any possible legal challenge by disaffected parties had statutory fishing rights been allocated by some other formula. The vessel permit owners also agreed that they should pool their access rights—which were now to be specified as a proportional share of a scientifically assessed total allowable catch (TAC) for each of the target stocks—and share both the investment in and the returns from a single specialized fishing vessel that had the capacity to operate efficiently and cost-effectively in sub-Antarctic waters, thereby reducing the footprint of a target fishing fleet within the ecologically important area around the islands. There are several critical elements that contributed to this cooperation, but in my view the most important was the certainty accorded to the commercial participants in the form of their initial and their subsequent property rights. Those rights created a platform from which they could evaluate their individual positions, their future opportunities, and their strategic options. Secure property rights were a catalyst for a successful industry-led solution to two normally vexing fishery management tasks—allocation of access rights and avoiding, remedying, or mitigating the effects of fishing on the environment. The participants in this sub-Antarctic fishery also have a special relationship with the Australian government in policing illegal unreported fishing of the

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toothfish stocks in waters under Australian jurisdiction. Any other management approach—for example, a continuation of temporary periods of limited-entry, aggregate catch limits rather than individual vessel limits, and the overly prescriptive environmental standards—would have been discouraging in terms of maximizing the economic value that could be sustainably derived from these fisheries resources.

Southern Rock Lobster—CRA 8 My second example of a beneficial capacity reduction is one that was unexpected, although theoretically predictable in a situation where output controls (individual and aggregate catch limits) were implemented for what had previously been an input control fishery. The fishery is defined as CRA 8—CRA being the QMS species code for the southern rock lobster. The CRA 8 fishery is one of nine rock lobster fishery management areas in New Zealand. It is the second-largest geographically, and currently the largest in terms of TAC. The first TAC for this fishery was set in April 1990, when New Zealand rock lobster fisheries were brought into the QMS. That TAC was set significantly lower than the most recent catches taken from the stock, with the intention that excess capacity would be removed as a consequence. In the fishing season prior to April 1990 there were 210 vessels reporting lobster catches from the southern stock. Furthemore, TAC reductions in 1991, and again in 1993, had a significant impact on fleet size and the amount of effort deployed in the fishery. By April 2001 there were less than 80 vessels reporting catch, and by April 2006 there were less than 70 (Figure 7.2). The southern lobster example is interesting for a number of reasons. What is immediately obvious is that fleet restructuring was not a direct consequence of the transition to a rights-based regime; it was driven by the imposition of the reduced TACs. However, the catch reductions, in concert

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4,000,000

350 Catch

3,500,000

Vessels

300 250

2,500,000 200 2,000,000

Vessels

Catch (kg)

3,000,000

150 1,500,000 100

1,000,000

50

500,000 0 1945

0 1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

Year Figure 7.2. Catch and effort data for southern rock lobster.

with the implementation of tradable property rights, provided for a far more orderly and socially (and politically) acceptable capacity reduction than would otherwise have occurred if a TAC had been enforced under the previous limited-entry regime. Therein lies an important characteristic of a credible rights-based management framework— the notion of rights as the currency of restructure and reallocation in situations in which overfishing presents potential risk to stocks and to the communities dependent on them. Although not obvious at the time during which the CRA 8 fleet restructure was occurring, the subsequent reduction in the size of the industry footprint allowed the industry itself to guide and facilitate the implementation of a management plan to protect and to enhance the marine environment immediately adjacent to the Fiordland World Heritage Area. The fleet restructure and progressive aggregation of rights ownership into a reduced number of increasingly more secure and professional business units has also fostered a number of cooperative ventures, including operational codes of prac-

tice, fishery data collection programs, and the establishment of an operational management procedure to guide annual catch decisions. Stock abundance in this fishery has increased significantly under the auspices of the management procedure, and the mindset of the commercial rights holders has shifted from one of maximizing volume to one of maximizing value. The notions of custodial attitude, collective action, sustainable utilization, and economic efficiency are being consistently expressed in this rights-based fishery regime.

Abalone—PAU 7 My third example is a small, but valuable, fishery on the north and east coast of the South Island of New Zealand. The fishery is defined as PAU 7—PAU being the QMS species code for paua (New Zealand abalone). Paua, like southern rock lobster, are high-value, low-volume fisheries with significant noncommercial participation and with cultural values unique to New Zealand. Paua fisheries were progressively introduced to the QMS, beginning in October 1986. Paua are

7

sessile shellfish, and the fishery is prosecuted within a narrow littoral zone to depths of 15 fathoms (27 m) around most of the New Zealand coastline. Historically, PAU 7 had been a productive commercial fishery, but the effects of the pre-QMS open-access regime did not become apparent until formal stock assessments commenced during the early 1990s. The overcapacity issues for the PAU 7 fishery were a stock in decline, uncoordinated commercial exploitation, resulting in high fishing-related mortalities,1 serial and localized depletion, and an increasing level of unreported illegal removals—fish thieving. Commercial rights holders acknowledged the stock decline, but successfully argued that TAC reductions alone would not bring about a rebuilding of the PAU 7 fishery. They implemented an industry-led harvest strategy, which included voluntary catch reductions, effort spreading, capacity reduction, and quality in harvest and handling. As increases in stock abundance became evident, the commercial rights holders established a system whereby only properly accredited divers (independently trained and audited and accredited to industry-agreed standards) are allowed to commercially harvest the stock. In essence, the accreditation program provides an assurance to the commercial rights holders (and to government and the wider community) that only “fit and proper” (qualified) persons are allowed to harvest paua commercially. The implied duty of care associated with the allocation and ownership of commercial property rights is therefore manifested in a strong and effective way. By accepting the voluntary commercial catch reduction as an alternative to a legislated quota reduction, the then Minister of Fisheries created the incentive for commercial rights holders to work cooperatively to rebuild a depleted fishery. The way in which the catch reduction was made provided an absolute guarantee that future increases in stock abundance would accrue directly or indirectly to those who made the greatest sacrifices to rebuild the fishery. That has subsequently proven

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to be a strong incentive for the collective of PAU 7 commercial rights holders, which has developed into one of the best-resourced and most proactive commercial stakeholder organizations in New Zealand. PAU 7 has pioneered industry-funded research and development work into reseeding the wild paua fishery with juvenile stock raised in captivity, and has demonstrated wild stock enhancement to be a both biologically and economically robust management option. In the theoretical construct of an individual tradable-rights regime, there should have been no reason for the PAU 7 rights holders to seek an alternative to a legislated TAC reduction—the theory says that a proportional reduction in commercial rights to bring about an increase in abundance should eventually be matched by a proportional increase when the stocks had been rebuilt. I regard that notion of effort and reward as being another cornerstone characteristic of a credible rights-based regime. However the theory takes no account of the political nature of policy advice and ministerial decision making in regard to fish stocks in which there is a strong noncommercial interest. There are many such stocks in New Zealand, a country in which the wider community has a strong affinity with and easy access to the sea. We routinely refer to “shared fisheries.” Many of the operational policy and fisheries management decisions made in regard to shared fisheries highlight the inconsistent application or neglect of rights-based and/or market mechanisms in response to contemporary community expectations and priorities. However, despite my misgivings about the lost opportunities within the New Zealand QMS, sufficient incentives do exist in some fisheries (invariably the high-value/low-volume stocks, or those that are principally commercial) for commercial rights holders to give expression to the roles and responsibilities anticipated by the theorists and academic observers and political commentators. Just as in the southern rock lobster fishery, the PAU 7 fishery has successfully adjusted its capacity in response to changing stock abundance and fishing opportunities, and well-defined

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commercial property rights have provided the framework for them to do so.

What Constitutes “Good” Rights and How Might They Go Wrong? I have placed emphasis on what I call the quality or integrity of property rights in sea fisheries—and the integrity of the legislative and regulatory framework that underpins the regime. But an effective rights regime—effective in the sense that anticipated outcomes are met within an efficient and cost-effective administrative framework and reasonable time frames—requires more than just competency in system design. Implementation and maintenance procedures will define the success or otherwise of the chosen system. I have noted the lost opportunities in New Zealand as a consequence of an incomplete rights framework and the failure to invoke market mechanisms to address changing priorities for access and use of marine resources, and I have touched on the value of cooperation and collaboration between industry and management agencies from the outset.

With Rights Come Responsibilities There are numerous other factors that can impede or confound anticipated resource management outcomes. One in particular that may be relevant to offshore pelagic fisheries is the administrative separation of ownership rights from harvesting rights and the consequent inability of the owners of fishing rights to effectively supervise and audit their use to ensure compliance with environmental standards. There are many situations in the New Zealand QMS where owners of property rights need to follow the PAU 7 initiative and institute contractual arrangements to ensure that contracted harvesters are “fit and proper persons” to work in selected fisheries. One recent example is the Auckland Islands squid fishery, to the southeast of New Zealand, where a mixed New Zealand-owned or chartered

contract trawl fleet has aggravated conservationists and various government ministers on account of numerous interactions with and mortalities of seabirds and sea lions. The owners of the squid quota—invariably shore-based investors and fishing companies—gave an assurance to a previous Minister of Fisheries that all vessels would voluntarily deploy tori lines as a seabird mitigation measure. The minister decided to accompany an aerial reconnaissance of the fishery, and was angered to observe that few vessels were using the mitigation devices. His second response was an attempt to immediately shut down the commercial fishery—something that the legislation would not allow in the manner he proposed—but you get the picture. The rights owners were initially slow to institute and invoke compliance standards in civil contracts with the owners and skippers of the chartered fishing vessels, but the prospect of having the fishery closed was a strong incentive to do so. More recently we have seen evidence that chartered foreign trawlers fishing on behalf of domestic quota owners are discarding and failing to report small and damaged hoki (a species of fish occurring the offshore waters of New Zealand), contrary to their obligations under the QMS. Once again it falls to the owners of the hoki quota to ensure compliance with reporting regulations—ultimately it will be the quantum or the value of their commercial property rights that will be compromised well before any sustainability damage is done to hoki stocks. A fishing industry is engaged in the business of food production. The fact that we are in business provides strong incentives for both management agencies and industry participants to make sensible decisions. Commercial rights holders must properly understand the nature of their rights and make fundamental adjustments to the way in which they do business if they wish to preserve the utility and value of their investment in sea fisheries. In order to do so they must be provided with sufficient information on which to make well-informed business decisions and properly understand the new

7

roles and responsibilities vested in them as rights holders. And the established management agencies must be willing to progressively surrender some or all of the command-and-control mentality that is invariably a hallmark of historical administrative management regimes. Property rights in sea fisheries will invoke custodial attitudes and responsible fishing behavior in situations in which the incumbent participants contribute to and are involved in the design and implementation of the rights-based regime. The reasons for change must be credible—for many fishermen the status quo is at least a comfort zone, despite not being a particularly profitable one—and the system design that is offered as the incentive for industry to support a transition to output controls and tradable rights must be implemented as it was negotiated and agreed between the parties, not watered down by a failure of translation in regulatory and legislative drafting, or by last-minute back room operational policy changes within management agencies. I consider fisheries management to be a partnership and collaboration between government agencies and extractive users. Worldwide, I see no real evidence of managing wild fisheries stocks—what

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I see are attempts to manage fishing, some far more successful than others. In order to manage fishing, it is necessary to understand and respect those who fish, especially those engaged in the business of fishing on whatever scale, and it is equally necessary for them to understand and respect those who seek to manage their fishing behavior. Information, communication, cooperation, and collaboration within a credible and secure rights-based framework will produce benefits— environmental, biological, economic, social, and cultural. Reliance on the more traditional command-and-control relationship with the fishing industry will devalue, rather than add value to, those outcomes.

Endnote 1. The range of wounds inflicted on undersized paua discarded by untrained harvesters reduces the ability of paua to right themselves and clamp securely on the reef, and attracts predators. Deep wounds caused significant mortality—40% over 70 days.

Chapter 8

Rights-Based Management of Tuna Fisheries: Lessons from the Assignment of Property Rights on the Western US Frontier Gary D. Libecap

Introduction Rights-based arrangements increasingly are under consideration for adoption in fisheries to mitigate the losses of the “tragedy of the commons” or open access.1 Grafton et al. (2000) demonstrate the gains from individual transferable quotas (ITQs) in the halibut fishery of the northwestern Pacific Ocean. Hannesson (2004) describes a general pattern of moving from uncontrolled entry to centralized governmental regulation (command and control) to adoption of property rights of some type. Arnason (2002) summarizes international experiences with ITQs. These institutional innovations have taken place as fisheries have become more valuable, as they have faced greater depletion threats, and as dissatisfaction has increased with existing regulatory policies.2 The advantages of property rights arrangements include better alignment of incentives for investment in the resource, provision of collateral for accessing capital for investment, more flexible exchange, generation of more information, and improved cost savings in meeting conservation or environmental objectives.3 The more complete are property rights, the more the private and social net benefits of resource use coincide, reducing exter-

nalities and the associated losses of the common pool (Dahlman 1979, Libecap 1989). By contrast, centralized (command and control) regulation, which typically relies upon uniform standards, arbitrary controls on access, constraints on timing of use, and/or limits on technology or production capital, suffers from a variety of wellknown problems, including high cost, inflexibility, ineffectiveness, and industry capture. Further, regulatory decisions take place in the absence of information about alternative uses that market trades generate. Finally, centralized rules may or may not align with the incentives of actual users of the resource. Generally, no party involved, including direct participants, regulators, or politicians, is a residual claimant to the economic gains from investment or trade (Johnson and Libecap 1994: 156–171). Accordingly, extraction, production, investment, and allocation decisions are based on other factors that are apt not to be consistent with maximizing the economic value of the resource or of conserving it. Despite the attractions of property rights, they remain controversial, limiting or slowing their adoption. They often are adopted only late, after conditions have deteriorated for many regulated resources. By that time, political conflict over the 137

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assignment of the costs and benefits of a new property regime is swamped by the overall costs of not taking action. Unfortunately, many of the resource rents have been dissipated. Moreover, as shown below, there are path dependencies from past regulations or inappropriate property assignments that raise the costs of adopting new rights regimes. The allocation of property rights is most controversial because of the distributional implications involved in moving from open-access or central regulation to a property regime. In many cases, at least some constituencies, including regulators, who benefited from the previous regulatory arrangement, will be disadvantaged under a new rights system. Hence, these parties will resist the arrangement until there are few options. Any property right that has meaning involves exclusion, so that some parties that previously used the resource will be denied access. Production under a property rights regime has a different composition of inputs and timing than what occurs under open-access or regulation, with negative impacts on certain groups of labor, input sellers, service organizations, and processors. These production changes are inherent in the efficiency gains of privatization, but not all parties directly benefit from them. Further, as the resource rebounds and becomes more valuable, new owners have wealth, status, and political influence not available to those without access privileges. These distributional factors, along with the costs of bounding, measurement, and enforcement, constrain the extent, timing, and effectiveness of the assignment of property rights to address the common pool (Libecap 1989: 10–28). As emphasized by Coase (1960), allocation rules are always important for distribution, and they affect production opportunities in the presence of transaction costs. For example, disputes over the types and distribution of ITQs to be granted in US fisheries resulted in a four-year moratorium on their expansion in 1996.4 Five US marine fisheries operate under ITQ regimes (as compared to more than 40 in Canada): the mid-Atlantic surf clam and ocean

quahog fishery, the Alaskan halibut fishery, the Alaska sablefish fishery, the South Atlantic wreckfish fishery, and the Alaska crab fisheries. These ITQs are more limited and are a weaker property right than found in many other major fishing countries (Arnason 2002: 12, 52–57, Leal 2005). Some US ITQs are reserved for community development quotas, and there are limits on quota size held by any party and on transferability. In the Alaska halibut fishery, for example, transfers only from larger to smaller vessel classes are permitted, and no individual is allowed to own more than 0.5% of the total quota. There are other controls on share consolidation to limit holdings and to maintain a targeted number of vessels in the halibut fleet (Doyle et al. 2005). As described below, these restrictions are understandable from a shortterm distributional viewpoint, but they are likely to have long-term negative consequences for fisheries and the ability of ITQs to protect resource rents and the welfare of the fishers who depend on them. In this chapter, I examine these issues across a variety of resources and develop generalizations for application of ITQs in fisheries. I examine the assignment of private property rights during the nineteenth and early twentieth centuries to five natural resources: mineral land, timberland, grazing land, farmland, and water on federal government lands in the Far West. The region was richly endowed with natural resources, but assigning property rights to them required adaptation from established, eastern practices as defined by the federal land laws, and this adaptation provides a laboratory for examining current questions of institutional design in fishery regulation. As we will see, western property institutions encountered many of the same information, political, and design problems that are encountered today. Some were successful, whereas others were not. Property rights allocations based on local conditions and unconstrained by outside government mandates were most effective both in addressing the immediate threat of open-access and in providing a longer-term basis for production, investment, and trade. Western mineral rights stand out

8

in this regard. In contrast, federal government limits on farmland allotment size, use, and exchange through the Homestead Act uniform distribution in 160-acre (64.75 hectare) plots had long-term negative consequences. Indeed, a major lesson is how hard it is to repair initial faulty property allocations. Whereas Coase (1960) emphasized transaction costs in private negotiations, political transaction costs are especially important in the assignment and subsequent modification of property rights.5 Once an allocation rule is established, it becomes very difficult politically to modify. Many constituencies develop a stake in the status quo, and the distributional implications of any change in it can be both large and uncertain. These factors complicate the development of bargaining positions in negotiations for institutional change. Moreover, these same problems raise the transaction costs of private efforts to make property rights structures more efficient.6

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Allocation Rules There are several ways to assign property rights, as outlined in Table 8.1.

First-Possession First-possession assigns ownership on a firstcome, first-served basis or first-in-time, first-inright. First-possession rules are attractive because they recognize incumbent parties, who have experience in exploiting the resource, and hence may be the low-cost, high-valued users.7 Incumbents also have a direct stake in access to the resource and will be important constituents in a property rights distribution. These parties are concerned about any past investments in specific, nondeployable assets. By recognizing such investments, firstpossession rules encourage future outlays. Allocations that do not consider the position of incumbents will face opposition, raising the costs

Table 8.1. Summary of allocation rules.

Allocation rule

Allocation scheme

Benefits

Costs

First-possession

First-come, first-served basis. Grandfather claims. Market determines size and nature of property right rather than exogenous political and bureaucratic constraints Equal distribution. Equal access (lottery)

Recognizes incumbents and specific, nondeployable investments. Rewards first movers, innovators, risk takers. Economizes on transaction costs

Fairness concerns. Dissipation from rush

Minimizes equity concerns. Works best when no incumbents

Competitive bidding places asset with highest-valued users

Revenue to state. Reduces equity concerns. Generates information about resource value. Works best when no incumbents

Nonoptimal allocations. High transaction costs of subsequent trade Design and administration costs

Uniform allocation

Auction

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of rights assignment and enforcement. Grandfathering in initial allocation often has been a necessary ingredient in building the political support for property rights allocations.8 There are other reasons why first-possession rules can be efficient. They recognize first-movers, innovators, and entrepreneurs who initially experiment with and use a resource. Society benefits from innovative, risk-taking activities. Further, under first-possession the market can determine optimal claim size, whereas under other allocation arrangements bureaucratic or political objectives may define the assignments. If these are not consistent with optimal production size, then further trade is required, and if transaction costs are high, such exchange might be limited. Hence, firstpossession can economize on transaction costs. First-possession has been criticized on fairness grounds because it discriminates against new entrants, and existing holdings may be large. There are wide-standing views that “people should get what they deserve and deserve what they get.” If first-possession ownership is viewed as rewarding those who by luck and connections got early access, then it may be opposed politically (Alesina and Angeletos 2005). The rule-of-capture that applies in fishing, oil, and groundwater extraction is a type of firstpossession rule. Ownership is granted to the party that invests in extraction. However, the rule-ofcapture grants ownership to the flow and not generally to the resource stock, and hence in the presence of open-access conditions, it can exacerbate competitive extraction incentives.9 If the competing parties are homogeneous and ownership is short-term, then full dissipation is possible as parties rush to “capture” the asset. If, on the other hand, the parties are heterogeneous and use rights are long-term, then first-possession assignments to a flow mitigates rent dissipation, as is the case with fishery ITQs.10 The same criticism of first-possession rules and rent dissipation applies if homogeneous claimants race to establish property rights to the stock.11 But as before, if the parties are heterogeneous and the resulting rights are secure and permanent,

then full dissipation will not occur. Moreover, the “winners” of such a race may be the most efficient producers. There also are costs of measuring and verifying past use claims, and other potential rent-seeking actions to secure the most favorable baseline period and criteria for allocating property rights. There are, however, costs with any rights allocation rule, and there is no reason to believe that first-possession is more costly than other assignments. Generally, if the transaction costs of subsequent exchange are high, then it makes sense to assign rights to low-cost users with histories of past involvement in the resource.

Uniform Allocation Uniform sharing rules meet egalitarian goals by providing equal-sized allotments or equal opportunities. If there are no restrictions on subsequent exchange of property rights and transaction costs are low, there are few efficiency implications. The resource still migrates to high-valued users and to optimal production sizes. But if exchange costs are high, then inefficiently small (or large) distributions can persist. Uniform allocations, however, avoid the measurement costs of verifying claims of past production or of documenting precedence claims that are part of first-possession assignments. They also can circumvent the costly pursuit of or rush for property rights when first-possession is known to be the allocation rule. They work best when there are no incumbent users whose informal claims may not be consistent with more equal distributions.

Auction A third allocation mechanism is auction, and there are various types.12 It can directly place the asset into the hands of those who have the highest value for the asset. It thereby avoids the transaction costs of reallocation. Auctions also transfer rents to the state (as the seller). Also, auctions generate information about the value of the resource. As with uniform allocations, auctions work best for unallocated resources for which there are no existing

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claimants and for which resource values are high. By granting more of the rents to the state, auctions reduce the distributional implications of firstpossession. The amounts and distribution of rents, however, depend on auction design, which can be complex. There are other costs to auctions. The state must be able to measure and enforce resource boundaries and the individual allocations that are auctioned off. The terms of the auction may also be influenced by competing claimants who lobby for rules that provide them with specific advantages.13 It is often argued that auctions can transfer rents to the state without important distortions or incentive effects for resource users, but caution is in order. The effect depends on meeting restrictive conditions in auction design that may not be feasible. In a similar setting, Johnson (1995) has shown that the imposition of taxes on quota rents in ITQ fisheries could lead to reduced incentives of fishers to conserve (invest in) the fish stock. For these reasons, auctions are not used as often as economists have predicted.14

Mineral Land Western mineral rights developed abruptly with the discovery of gold in 1848 at Sutter’s Mill in California (Morris et al. 2004: 748). The prospectors had no official sanction to claim mineral land because minerals were not addressed in federal land law, which was directed solely at agriculture. Further, there was no civilian government to provide a legal framework for assigning property rights. As a result, miners devised local, private property arrangements within mining camp rules. Since private mineral rights were based on local negotiations with virtually no outside constraint, the market determined the allotment mechanism, individual claim size, and conditions for exchange, maintenance, and enforcement of property rights. For this reason, western mineral rights provide a baseline for comparison with the other property rights arrangements described below.

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A first-possession grant to a single, specific location of mineral land was the allocation rule (Umbeck 1977: 436, Morriss 1998: 601, Zerbe and Anderson 2001: 133). The first prospector to arrive at a location thought to have deposits of valuable ore was granted private claiming rights. Each party had, at least in principle, an equal chance at first choice of a spot. Accordingly, first-possession encouraged socially valuable search and exploration. Those who discovered a new district typically were granted two mineral claims, whereas all others were allowed a single claim. Each mining claim had to be marked and worked according to local mining camp rules. Abandoned claims could be occupied by others. In the meantime, others were prohibited from entry until the claim was deemed to be abandoned. Claim sizes were determined by local factors, not outside government requirements. Smaller claims were allowed in potentially richer streambeds where gold was thought to concentrate and water for extraction was nearby, whereas larger claims were allowed on drier hillsides that offered lower prospects. Enforcement costs were likely higher for the more valuable stream claims, necessitating smaller individual holdings than for the less attractive hillside claims. Mining camp rules were flexible, so that as ore played out, claim sizes were extended. In general, there were no restrictions on the private sale of mineral claims. Sales were routine, first to allow entry to those without any land in the district and then to consolidate claims for more capital-intensive production. Some claims sold for a great deal, and mining companies incorporated and sold shares on the San Francisco Stock Exchange and other western financial markets to raise capital (Morriss 1998: 602). Camp rules initially were informal, but gradually were given more structure as mining values rose, the number of claimants and congestion increased, and as the technology of mining and the nature of the ore and extraction changed (Libecap 1978, Morriss 1998: 604). They were incorporated into territorial, state, and federal law, and the Mining Law of 1872 remains the basis for

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obtaining title to mineral lands on federal property today. The legal rights structure has been successful in promoting the development of the industry. Mining involves high risks and costs in finding and developing ore deposits. Most sites turn out either to have no ore or to be unprofitable. Moreover, there are significant fixed-capital investments with long lead times for extraction, transport, and refining that are vulnerable to unanticipated changes in prices and costs and to expropriation through high tax rates or government seizure. The American hard rock mining law that developed out of the mining camps, however, provided secure ownership. The structure has been flexible, and there has been no history of high taxation, significant payments for receipt of title, or threatened nationalization. The accompanying security of property rights encouraged exploration and production. Overall, US industry became more mineral intensive in production than the country’s physical resource endowments would have otherwise suggested.

Rangeland Another group that settled the West early, faced new conditions, and had to institutionally innovate was ranchers. In the 1870s and 1880s, cattle herds were driven onto the western Great Plains by ranchers to take advantage of rich pasture lands. There was no specific provision in federal land policy for formal ranch claims. Accordingly, to avoid the losses of competitive overgrazing and to reduce conflict over land, ranchers, as with miners, divided the land on the basis of first-possession. The size and nature of rancher allocations were determined by the market through collective action within livestock associations. Because of the broken terrain and limited precipitation, livestockcarrying capacities of the western range were low. With 25 acres (about 10 hectares) or more required to sustain a single cow for a year, upward of 10,000 acres (about 4,050 hectares) were commonly required to support enough animals to

achieve economies-of-scale in grazing. These allotments certainly were beyond anything possible formally under the Homestead Act. Initially, the lack of ability to obtain formal fee simple title to federal rangeland did not matter. Individual ranches were made up of a combination of fee simple holdings obtained under the land laws, land purchases from railroads and state school land sections, and much larger informal claims (Libecap 1994: 270). Local grazing rights included occupancy or beneficial use requirements. There were no restrictions on transfer. Patented ranch properties could be bought and sold, and these included memberships in livestock associations (Dennen 1976: 433–434). The open range in the 1870s had few other recognized claimants, and it was far from established government.15 By the late 1880s, however, with the entry of homesteaders, ranchers began facing new competitors who wanted to place the land into crops. Conflicts over land began. There were opportunities to change the land laws to allow for larger allocations more in keeping with the requirements for successful ranching operations in the Far West, but nothing came of them because they were politically unattractive. Federal politicians were reluctant to make major modifications in the land laws.16 Their position was hardened after 1890s when the US Census declared the frontier closed, indicating that there was less and less land available for new claimants. Larger land allocations would only exacerbate the problem. Libecap and Hansen (2002) point out that there was no clear scientific understanding of the area’s climate or of the type of agriculture that would be effective there. The belief persisted that small Midwestern farms could take hold and that ranchers were blocking this process. A strong current of antimonopoly bias in the distribution of property and a desire to maintain the homestead allotment at 160 acres prevailed. The quasi-legal practices of ranchers were attacked and their fences removed by the General Land Office. As the ability of the livestock associations to control entry declined, the incentives of members to violate internal rules increased, and

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the groups, along with their informal land allocations, began to break down.17 In the absence of fencing, the only way that ranchers could maintain their informal claims to land was to reduce the incentive to enter it by overgrazing, but overgrazing to mark and protect rangeland claims was costly. It made cattle herds more vulnerable to drought since grass stands were driven to low levels with little reserve when precipitation was scanty. The costs of overgrazing to define and enforce land claims against other potential users were reflected in lower calf crops, higher death losses, smaller cattle weights, and diminished animal values (Libecap, 1981: 23–28). Because ranchers could not obtain title to semiarid rangelands and because these lands ultimately also were inhospitable to homesteaders, approximately 80 million acres (about 32 million hectares) in western states (excluding Alaska) were retained under permanent federal ownership with enactment of the Taylor Grazing Act of 1934.18 Most of the lands were placed in grazing districts, and grazing permits or leases were distributed and managed by the Bureau of Land Management (BLM). Currently, the BLM administers some 177,053,843 acres (about 72 million hectares) of rangeland in the continental United States, almost a quarter of the acreage in 11 western states, including nearly 70% of Nevada, over 40% of Utah, and over 20% of Wyoming, Oregon, and Idaho (Libecap 1981: 2).19 Political constituencies, ranging from ranchers to mining companies to conservation and recreation groups, compete to influence agency policy over access and use of the public domain. Private grazing leases that had been transferable with ranch properties have become more insecure as limits were placed on them and as lands were dedicated to other uses. The resulting tenure uncertainty affects grazing practices, investments, and rangeland values (Libecap 1981: 65–102). There is no attempt here to measure the losses of bureaucratic management, but they may be substantial. The vast majority of BLM lands have no important amenity values or other critical externalities associated with their use that would justify government ownership and oversight.20 They

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remain as a legacy of a federal land policy that held private distributions inappropriately small, limiting fee simple titling and the establishment of viable ranches based on it.

Farmland Unlike miners and ranchers, homesteaders could claim federal land, using existing land policy. Individual ownership of a single plot of farmland was allocated under the Homestead Act and similar land laws through a combination of firstpossession and uniform allocation. One hundred sixty-acre distributions that had worked well in the Midwest and were applied in the West. The Great Plains and Far West were semiarid, with annual rainfall of 20 in. (50 cm) or (much) less and erratic distribution. By contrast, the Midwest was characterized by less variable precipitation of 30 in. (75 cm) or more. Nevertheless, migrants brought with them the cultivation practices, crops, and farm sizes that were familiar and successful in their areas of origin and, so long as there was no drought, these actions worked well. Because homesteaders did not understand the climate and the eventual need for larger farms, they typically did not seek larger allocations, nor did they lobby for major changes in the land laws. Folk theories, such as “rain follows the plow,” where precipitation was believed to increase with cultivation, and pseudoscientific farming prescriptions, such as “dryfarming doctrine,” where proper tillage was believed to overcome drought, were thought to make small farms viable despite the region’s dry climate (Libecap and Hansen, 2002). One consequence of these small-farm allocations was extensive farm failure.21 The region west of the 98th meridian became known for periodic “homestead busts” when drought caused the yields of wheat (the most common crop) to collapse along with farm incomes. Homesteads did not have enough wheat in cultivation to offset the drop in yields and maintain a minimum family income. Small farms also typically did not have

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3,000 2,700 y = 5.9732x – 9352.4

NSW

2,400 2,100 y = 19.854x – 37654

Acres

1,800

GP

1,500 1,200 900 600 y = 3.2538x – 6112.3 MW

300 0 1920

1930

1940

1950

1960

1970

1980

1990

2000

Year Figure 8.1. Average farm size adjustment paths. NSW, New South Wales; GP, Great Plains; MW, Midwest. (Source: Hansen and Libecap, 2004a: 126.)

cropland in fallow, a practice that could mitigate the effect of drought by collecting moisture and nutrients while the land was left idle. Hansen and Libecap (2004a: 115–117) analyze the effect of drought on small homestead farms in three eastern Montana counties, Cascade, Carbon, and Fergus, using county directories dating from 1916 through 1930. Over 7,000 farms are in the data set. The analysis reveals that by the end of the period, the number of farms had fallen by 43% and farm size had doubled as properties were abandoned and consolidated. In Cascade and Fergus counties, an average-sized farm in 1916 had a two-third probability of failure during the drought years and chances were four out of five that they would not survive from 1916 through 1930. By contrast, larger farms tended to endure drought more successfully. The adjustment process toward larger farm sizes, however, took over 60 years because of a lack of alternative economic options for small farm owners. Hansen and Libecap (2004a) compared

farm size change in the American Great Plains, the Midwest, and New South Wales, Australia, which is a major wheat-producing area and has a climate similar to that found in the Great Plains. The paths are illustrated in Figure 8.1. As illustrated, in the Midwest, farm sizes changed only gradually. Between 1920 and 1987, mean farm size approximately doubled from 175 to 371 acres (70–150 hectares), with the estimated annual adjustment of 3.3 acres (1.3 hectares). However, the experience of the Great Plains was quite different. Mean farm size in 1920 was 557 acres (225 hectares), and it tripled to 1,648 acres (967 hectares) by 1987, with the estimated annual increase of 19.9 acres (8.1 hectares) in farm size. For New South Wales, farm size was 2,010 acres (813 hectares) in 1920 and rose to 2,862 acres (1,158 hectares) by 1978, the last year for which we have data. The per-census period farm size growth rate is 9.2% in the Great Plains, but 6.3 and 1.2% in the Midwest and New South Wales, respectively. The 160-acre limit of the Homestead

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Act was not a problem in the Midwest. As late as 1920, a 160-acre farm was close to optimal in the region. From that time forward, only moderate farm-size adjustments took place in response to changes in the relative factor prices. Similarly, in New South Wales, wheat farms started out large in 1920 and only gradually grew. The homestead limit, however, was binding in the Great Plains, and the figure illustrates the property rights adjustment necessitated by starting with farms that were too small in the Great Plains. Meanwhile, there was dramatic out-migration unmatched elsewhere in the country. The population of many of the 363 Great Plains counties peaked in 1910, and two-thirds had their greatest populations in 1930 or earlier (Hansen and Libecap 2004a: 125–128). A second consequence of small farm allocations was overcultivation and lack of investment in erosion control that had serious environmental effects with the Dust Bowl of the 1930s. Small homestead farmers cultivated more of their land to meet income targets, leaving it exposed to damaging wind erosion. They were less likely to adopt strip-fallowing practices that could slow the flow of wind. Their farms were too small to internalize the benefits of downwind erosion control, and they bore high opportunity costs because strip fallow required between a third and a half of a farm to be left idle, a cost that they could not bear. The optimal size of holding to address wind erosion externalities was 50,000 acres (20,000 hectares) or more, meaning that coordination was necessary to address the problem, but the large number of homesteaders also raised the costs of collective action. Hansen and Libecap (2004b: 679–682) analyzed the relationship between farm size and fallowing, using census data for 285 Great Plains counties between 1930 and 1964. They found that over the 35-year period mean farm size grew by 74% and the fallow share of cropland rose by almost a factor of 4. Later droughts in the 1950s and 1970s were not accompanied by the severe wind erosion that occurred in the 1930s. The larger farmers that predominated by those years could internalize more of the returns from investing in

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erosion control through strip-fallow investments, and they did so. Counties with less fallowing (higher cultivation shares of total farmland) had more serious erosion, controlling for other natural factors. If the cultivation share had fallen by one standard deviation below the mean share (fallow had increased), the predicted probabilities of “no” or “light” wind erosion would have risen by 33%. Alternatively, if the cultivation share were raised to 100% (no fallowing), as was the case with many small homesteads, the predicted probability of “severe” wind erosion jumped by 123% and the predicted probability of “no” wind erosion practically disappeared.

Timberland Those who claimed timberland in the West also had to innovate around the formal land laws. They did so by making first-possession “farm” entries to multiple 160-acre plots under the Homestead Act, Pre-emption Act, or the 1878 Timber and Stone Act. Lumbering involved fixed capital investments in sawmills and spur railroad lines and other forms of transportation to move the logs to mills and lumber to markets. These investments needed a ready and continuous supply of saw timber. There were also economies-of-scale in cruising timber for the best stands and in harvest. To assemble enough forestland, lumber company officials negotiated with land agents who hired entrymen to occupy and “farm” the land until title could be obtained from the General Land Office. Once title was received, it was transferred to the land agent, who, in turn, sold the property to the timber company for a prenegotiated price, usually $6–7 per acre. Libecap and Johnson (1979: 136–138) analyze the costs of having to circumvent the land laws through fraud. They conjecture that fraud may have increased land acquisition costs by an additional $17 million in the Pacific Northwest, and thereby delayed titling by up to 6 years. During that time, the land would have been vulnerable to open entry and the illegal harvest of

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concern to early conservationists such as Gifford Pinchot, who became the first Chief Forester of the US Forest Service in 1905. Technically “unclaimed” federal timberlands were placed under permanent federal management by the General Revision Act (Forest Reserve Act) of March 3, 1891, which created the National Forest Reserves.22 By 1900, over 46 million acres (18 million hectares) were placed in the new reserves, and today, the National Forests and grasslands encompass 193 million acres (78 million hectares), about the size of Texas.23 As with BLM lands, the management of the National Forests by the Forest Service has been criticized for being excessively costly and dominated by constituent group politics.24 Also, as with BLM lands, most National Forests have neither important amenity values nor significant externalities from land use that would merit government ownership. They too were retained by the government because of an inflexible land allocation policy. The extent of federal lands in the continental United States is shown in Figure 8.2. Some are sensitive ecological areas, national parks and monuments, and Indian Reservations. Most are none of these. They instead represent the long-run results of a uniform land allocation system that turned out to be unsuitable, but could not be easily modified. The figure illustrates again the path dependencies that can occur from a faulty property rights distribution policy.

Surface Water In the Far West, surface water is allocated through first-possession under the appropriative rights system. This arrangement allows individuals to claim, move, and use water on the basis of priority of claim (Burness and Quirk 1979).25 Those with the earliest water claims have the highest priority, and those with subsequent claims have lower priority or junior claims. No two parties on a waterway have the same priority, so that there is a ladder of rights, ranging from lowest to highest in ranking.

Water is not tied to the land, and therefore can be sold or leased separately from it. Under the appropriative rights system, individuals were granted usufructory or possessory rights to water, rather than fee simple title (Getches 1997: 83). The sizes of their claims were based on the market. There were no outside restrictions on individual claims, except that each party could own only what could be placed into beneficial use. Because beneficial uses were difficult to measure, the basic test of meeting the requirement has been physical diversion. There are no restraints on transfer so long as no harm is inflicted on other diverters, who sequentially use some of the same water. An upstream farmer who diverts water for irrigation consumes only part of it, with the remainder percolating through the ground back to aquifers, streams, or ditches for repeated access by other downstream parties. Small water exchanges among miners or farmers within a watershed are therefore unlikely to have much impact on others. But larger trades that involve changes in the location, timing, or nature of use are likely to have some external effects on others. Removal of significant amounts of water out of a watershed can reduce downstream flows, and therefore decrease the water available for lower-priority claimants. As a result, all western states have regulated such transfers. To mitigate adverse third-party effects, state water agencies typically allow changes in diversion and location for only historical consumptive uses.26 The appropriative rights system is quite different from the one that exists in the eastern United States, where surface water rights are based on riparian land ownership.27 These rights are appurtenant to the land and are transferable only with it. The arrangement works well where precipitation and streams are plentiful and more-or-less uniformly spread. In the semiarid Far West, however, where there is a general absence of water and what exists is irregularly located, there was a need for institutional innovation that would allow water to be claimed and transferred to settlement locations, often out of the watershed. Appropriative property rights were developed through local contracting

147

Alaska (no data)

Approximately 402 million acres or 21% of the total land area is federally owned (excluding Alaska).

Puerto Rico / US Virgin Islands

Figure 8.2. Percentages of land in the United States (excluding Alaska) in federal ownership in 1997. Approximately 402 million acres, or 21%, of the total land area was in federal ownership. (Source: http://www.nrcs.usda.gov/technical/NRI/maps/meta/ m5554.html, US Department of Agriculture.)

American Samoa

Guam

Northern Marianas

Pacific Basin (No Data)

Hawaii

Percent 95 or more 11.9% of change 2.3% of watersheds 50–95 52.7% of change 13.9% of watersheds 5–50 32.6% of change 27.9% of watersheds Less than 5 2.8% of change 55.9% of watersheds

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unencumbered by outside constraints, in much the same way as western mineral rights or livestock associations were formed (Getches 1997: 74–189, Glennon 2002: 14–21).28 Appropriative water rights were often incorporated into mining claims and codes and into mutual ditch companies or irrigation districts organized by irrigators to bring water to their properties. These local rules were recognized subsequently by the states. Appropriative water rights have supported the development of mining and agriculture in the semiarid West. They provided security for investment in mining and agricultural water infrastructure, including elaborate irrigation networks provided by mutual ditch companies, irrigation districts, and the Reclamation Service (later, the Bureau of Reclamation) to promote the region’s flourishing agriculture. The prior appropriation system also forms the basis for trading water as values change. Between 1987 and 2005, there were at least 3,267 trades for 31,417,629 acre feet (38,753 million cubic meters) of water among farmers, urban areas, and environmental uses (Brewer et al. 2006). This is a substantial amount of water, since an acre foot supplies the consumptive demands of between four and six people annually.29

Conclusions The experience of different allocation rules for western resources is summarized in Table 8.2. Overall, the development of property rights to natural resources in the western United States in the nineteenth century provides a number of conclusions about the design and allocation of property rights for consideration in fishery ITQs. One is that first-possession or recognition of existing resource use practices and allowing local conditions to determine property size is likely to be the most effective allocative mechanism in established fisheries. Its empirical regularity on the frontier suggests that first-possession has had important efficiency attributes beyond political expediency.

The most successful allocations, mineral rights, membership in livestock associations, and appropriative water rights were all determined locally. Outside government constraints on who could obtain property rights and mandates for uniform (small) allocations to meet distributional objectives had negative results for timber, range, and farmland. Small homesteads failed, stranding farm investments and necessitating out-migration. In their desperation to earn an income on farms that were too small, homesteaders overcultivated and underinvested in erosion control with serious environmental effects. Ranchers and timber companies could not obtain title to sufficient range and timberland. By default, much of the current federal holdings of 391,340,229 acres (about 158 million hectares) in the continental United States (21% of the total area) were left to long-term political and bureaucratic management as the “public lands.” Allocations and uses of those lands have shifted as the political influence of various interest groups has waxed and waned.30 Agency capture has encouraged subsidies and inefficient use, and uncertainty of control has reduced resource values and incentives to invest in the resource stock. A second conclusion drawn from the Far Western frontier is how long property rights allocations endure, even in the face of accumulating evidence that some are ex post inappropriate. The private transaction costs of adjustment to new arrangements and the political transaction costs of changing property assignment rules can be very high. Hence, there is opposition to change and pressure to maintain the status quo, resulting in pathdependencies in property distribution patterns and use. A related, third conclusion is that substantial resource rent dissipation is tolerated because of the distributional implications of changing property rights allocations. Only late in resource use, after many of the rents have been lost are institutional changes typically enacted, and even then, they will be incrementally and incompletely adopted to mitigate political opposition. Finally, the experience of property rights on the Far Western frontier reveals their critical

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149

Table 8.2. Summary of allocation mechanisms and strength of property right for five natural resources.

Allocation rule

Nature of the property right

Current property rights

Mineral lands

Firstpossession

Full, legal property right

Recognized in state and federal law

Rangelands

Firstpossession. Rejected

Informal use rights

Uncertain grazing permits. Constituent group politics and bureaucratic objectives determine access and use

Farmlands

Firstpossession and uniform allocation

Full, legal property right

Title Failed farmlands often reverted to federal ownership and management

Resource

Timberlands

Water rights

Uniform, “farm” allocations. Fraud Firstpossession

Full, legal property right if “farm claims” successful. Trespass otherwise Use rights. Tradable separate from land

importance in directing resource use, trade, and investment. These benefits were recognized by the region’s early settlers, who had to devise their own arrangements to meet new conditions and to avoid the potential losses of open access. In the most successful cases, they were free to do so and in the

Timber harvest permits

Recognized in state law

Long-term results Basis for exploration and development of US hard rock mining industry Informal claims not recognized by US land laws Overgrazing Rangeland reserved as “public domain” under BLM management Uniform allocations too small. Farm failure. Stranded investment. Out-migration Excessive cultivation. Wind erosion (dust bowl) Consolidation to more optimally-sized farms took 60 years. Timberlands placed under federal management (US Forest Service) Basis for development of mining and irrigated agriculture Water markets

other cases they were constrained by formal land policy with less positive long-term results. In terms of implications for future ITQs in fisheries, first-possession or historical catch is likely to govern in cases for which there are incumbent fishers. Uniform allocations could be granted in

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new fisheries if the transaction costs of subsequent exchange are low. This is important because uniform allocations are unlikely to be of optimal size. Auctions could be used in new fisheries for which there are high-valued species and limited information about the value of the fishery. Preferential assignments to certain groups of fishers (small, community) and accompanying restrictions on exchange lower the value of the property rights and the value of the fishery. They may be important for political support of the rights arrangement, but they come at a cost. Finally, the stronger the right, the better the arrangement will protect the longterm value of the fishery and the well-being of fishers who are part of it.

Endnotes 1. This chapter draws from Libecap (2006a, 2006b). Open-access losses are described by Hardin (1968). See Stavins (2003) for discussion of the movement toward market-based instruments. Among fisheries, wild ocean and straddling stocks seem especially vulnerable. For straddling stocks, see Stokke (2000). 2. More generally, see Stavins (1998). 3. For example, consider success under the Clean Air Act Amendments of 1990 in designing air pollution emission permits for lowering the cost of meeting air quality targets (Stavins 1998: 6–13, 2003: 4, Tietenberg 2003, 12). Alston et al. (1996) describe the importance of title for land use and long-term investment on the Amazon frontier. 4. Sustainable Fisheries Act, 16 USC 1801. 5. I am not referring to the exchange of property, but changes in the property allocation rule: who can own, in what amounts, and what can be done with the property. 6. For spillover between private and political transaction costs as revealed in efforts to regulate oil production in US states, see Libecap and Wiggins (1984, 1985). 7. See discussion of first possession in Epstein (1979), Rose (1985), and Lueck (1995, 1998). Alston et al. (1995) find that the original settlers

on the more remote Amazon frontier in Brazil had lower opportunity costs than those who came later and who often purchased land from the initial claimants after roads were built and transportation costs to market had declined. The early settlers were younger and had less wealth and education. 8. On the American frontier, “squatters” moved ahead of the federal land survey. When the land was subsequently surveyed and opened for claiming, “claims clubs” formed to prevent outsiders from encroaching on preexisting holdings. See Gates (1979: 152). 9. The property right is granted to the flow, rather than to the stock, because stock ownership may be too costly to define and enforce due to the nature of the resource or to political constraints. For discussion of reasons to limit alienation in these cases, see Johnson and Libecap (1982) and Epstein (1979). 10. Johnson and Libecap (1982) show that heterogeneity among fishers limits rent dissipation even under open-access and the rule of capture. 11. Anderson and Hill (1990). Stavins (1995) refers to grandfathering as a give away. See also Haddock (1986) for criticism of rent dissipation when the parties are homogeneous. 12. For summary of auction issues, complications, and applications, see McAfee and McMillan (1987), Milgrom (1989), and Klemperer (2002). 13. See discussion by McMillan (1994) regarding the experimentation and costs of designing auctions for the spectrum. 14. Tietenberg (2003: 10) notes that auctions were used extensively in just one ITQ in Chile. Historical catch was the dominant allocation mechanism. Lueck (1998: 136) points to the costs of auctions. 15. Native Indian tribes, of course, competed with ranchers for the land that was grazed by bison and other wildlife, but their claims generally were not recognized. For discussion of the effects on bison herds as the commons emerged with the decline in Indian enforcement, see Lueck (2002). 16. Peffer (1951: 8–62, 135–168) describes the political controversy over homestead farm size,

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the claims of ranchers, and efforts to adjust the federal land laws. 17. Osgood (1929: 186) discusses the breakdown of local groups as outside competition for land rose, Libecap (1981: 31–37) describes the actions of the General Land Office to counter the large claims of ranchers and to remove their fences, and Morriss (1998: 666–675) discusses the Johnson County War in Wyoming as ranchers attempted to police their land claims and cattle ownership against intruders. 18. June 28, 1934, 48 Stat. 1269. 19. Libecap (1981: 2). See also Public Lands Statistics, fiscal year 1998 for range land totals in the United States and Alaska, and fiscal year 1996, Table 1–3 for more detailed breakdowns of federal land ownership by state, including that administered by the USDA Forest Service, and Department of Interior, National Park Service, http://www.blm.gov/natacq/pls98/98PL1-4. PDF. 20. Rangelands of valuable heritage and character are another matter and have been placed in National Parks and Monuments. 21. In general, early farm settlement was more successful in the Midwest. See Ferrie (1994) and Stewart (2006) for discussion of the benefits of the capital gains in land values as a source of wealth accumulation. 22. 26 Stat. 1096–97. Gates (1979: 399–400), Libecap (1994: 272). The Forest Reserves were transferred from the Department of the Interior to the Department of Agriculture in 1906. 23. Gates (1979: 580) and US Forest Service, http://www.fs.fed.us/aboutus/. 24. See, for example, Sedjo (2000). 25. See also, Kanazawa (1998) and Morriss (2001: 865, 867–91). 26. Anderson and Johnson (1986) and Johnson et al. (1981) describe how specifying a property right in water in terms of consumptive use with options for third-party grievances can be an effective method for promoting transfers. 27. Rose (1990) discusses the evolution of property rights and experimentation with riparian rights.

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28. Anderson and Snyder (1997: 37–44) provide a summary of irrigation institutions that developed to transport and allocate water for agriculture. 29. An acre foot is 326,000 gallons (1.234 million liters) of water. http://www.cabq.gov/ progress/pdf/per-capita-water.pdf reveals that an acre foot of water will supply between four and six people annually with water in the Southwest. See also http://www.santacruzsentinel.com/ extra/newcentury/10/index.html for discussion of urban water use. 30. Fiscal Year 1996 Public Lands Statistics, http://www.blm.gov/natacq/pls98/98PL1-3.PDF, continental states only.

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Affairs. CEMARE, University of Portsmouth, UK. Brewer J, RJ Glennon, A Ker, and GD Libecap. 2006. Transferring Water in the American West, 1987–2005. Santa Barbara, CA: Bren School of Environmental Science and Management, University of California. Burness HS and JP Quirk. 1979. Appropriative water rights and the efficient allocation of resources. American Economic Review, 69:25–37. Coase R. 1960. The problem of social cost. Journal of Law and Economics, 3:1–44. Dahlman C. 1979. The problem of externality. The Journal of Law and Economics, 22:141– 162. Dennen RT. 1976. Cattlemen’s associations and property rights in land in the American West. Explorations in Economic History, 13:423– 436. Doyle M, R Singh, and Q Weninger. 2005. Fisheries Management with Stock Growth Uncertainty and Costly Capital Adjustment: Extended Appendix. Department of Economics Working Paper, Iowa State University. Epstein R. 1979. Possession as the root of title. Georgia Law Review, 13:1221–1244. Ferrie JP. 1994. The wealth accumulation of antebellum European immigrants to the U.S., 1840–60. Journal of Economic History, 54(1):1–33. Gates PW. 1979. History of Public Land Law Development, Washington Public Land Law Review Commission, 1968 reprint, New York: Arno Press. Getches DH. 1997. Water Law in a Nut Shell. St. Paul, MN: West Publishing Co., 456 pp. Glennon RJ. 2002. Water Follies: Groundwater Pumping and the Fate of America’s Fresh Waters. Washington, DC: Island Press. Grafton RQ, D Squires, and KJ Fox. 2000. Private property and economic efficiency: a study of a common-pool resource. Journal of Law and Economics, 43(2):679–713. Haddock D. 1986. First possession versus optimal timing: limiting the dissipation of economic

value. Washington University Law Quarterly, 64:775–792. Hannesson R. 2004. The Privatization of the Oceans. Cambridge, MA: MIT Press, 212 pp. Hansen ZK and GD Libecap. 2004a. The allocation of property rights to land: U.S. land policy and farm failure in the northern Great Plains. Explorations in Economic History, 41:103–129. Hansen ZK and GD Libecap. 2004b. Small farms, externalities, and the dust bowl of the 1930s. Journal of Political Economy, 112(3):665–693. Hardin G. 1968. The tragedy of the commons. Science, 162(3859):1243–1248. Johnson RN. (1995). Implications of taxing quota value in an individual transferable quota fishery. Marine Resource Economics, 10(4):327– 340. Johnson RN, M Gisser, and M Werner. 1981. The definition of a surface water right and transferability. Journal of Law and Economics, 24(2):273–288. Johnson RN and GD Libecap. 1982. Contracting problems and regulation: the case of the fishery. American Economic Review, 72(5):1005–1022. Johnson RN and GD Libecap. 1994. The Federal Civil Service System and the Problem of Bureaucracy: The Economics and Politics of Institutional Change. Chicago: The University of Chicago Press. Kanazawa MT. 1998. Efficiency in western water law: the development of the California doctrine, 1850–1911. Journal of Legal Studies, 27(1):159–185. Klemperer P. 2002. What really matters in auction design. Journal of Economic Perspectives, 16(1):169–189. Leal DR. 2005. Evolving Property Rights in Marine Fisheries. Lanham, MD: Rowman and Littlefield, 278 pp. Libecap GD. 1978. Economic variables and the development of the law: the case of western mineral rights. Journal of Economic History, 38(2):338–362. Libecap GD. 1981. Locking Up the Range: Federal Land Controls and Grazing. Cambridge, MA: Ballinger Publishing, 109 pp.

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Libecap GD. 1989. Contracting for Property Rights. New York: Cambridge University Press, 142 pp. Libecap GD. 1994. The political economy of institutional change: property rights and the general revision act of 1891. In James J and M Thomas (eds) Capitalism in Context: Essays on Economic Development and Cultural Change in Honor of R.M. Hartwell. Chicago, IL: University of Chicago Press, pp. 265–278. Libecap GD. 2006a. The assignment of property rights on the western frontier: lessons for contemporary environmental and resource policy. Presidential Address, Economic History Association Meetings, Pittsburgh, PA, September 12–14, 2006. Libecap GD. 2006b. Assigning property rights in the common pool: implications of the prevalence of first-possession rules for fisheries. Icelandic Workshop on Advances in Property Rights-based Fisheries Management, Reykjavik, Iceland, August 27–30, 2006. Libecap GD and ZK Hansen. 2002. “Rain follows the plow” and dryfarming doctrine: the climate information problem and homestead failure in the upper great plains, 1890–1925. Journal of Economic History, 62(1):86–120. Libecap GD and RN Johnson. 1979. Property rights, nineteenth-century timber policy and the conservation movement. Journal of Economic History, 39(1):129–142. Libecap GD and SN Wiggins. 1984. Contractual responses to the common pool: prorationing of crude oil production. American Economic Review, 74:87–98. Libecap GD and SN Wiggins. 1985. The influence of private contractual failure on regulation: the case of oil field unitization. Journal of Political Economy, 93:690–714. Lueck D. 1995. The rule of first possession and the design of the law. Journal of Law and Economics, 38:393–436. Lueck D. 1998. First possession. In Newman P (ed.) The New Palgrave Dictionary of Economics and the Law, Vol. 2. London: Macmillan Press, pp. 132–144.

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Lueck D. 2002. The extermination and conservation of the American bison. Journal of Legal Studies, 31(2, pt 2):609–652. McAfee RP and J McMillan. 1987. Auctions and bidding. Journal of Economic Literature, 25(2):699–738. McMillan J. 1994. Selling spectrum rights. Journal of Economic Perspectives, 8(3):145– 162. Milgrom P. 1989. Auctions and bidding: a primer. Journal of Economic Perspectives, 3(3):3– 22. Morriss A. 1998. Miners, vigilantes and cattlemen: overcoming free rider problems in the private provision of law. Land and Water Law Review, 33(2):581–696. Morriss A, R Meiners, and A Dorchak. 2004. Homesteading rock: a defense of free access under the general mining law of 1872. Environmental Law, 34:745–807. Osgood ES. 1929. The Day of the Cattleman. Minneapolis, MN: University of Minnesota Press, 312 pp. Peffer EL. 1951. The Closing of the Public Domain: Disposal and Reservation Policies, 1900–1950. Palo Alto, CA: Stanford University Press. Rose CM. 1985. Possession as the origin of property. University of Chicago Law Review, 52:73–87. Rose CM. 1990. Energy and efficiency in the realignment of common-law water rights. Journal of Legal Studies, 19(2):261–296. Sedjo RA. 2000. A Vision for the U.S. Forest Service: Goals for its Next Century. Washington, DC, Resources for the Future, 288 pp. Stavins RN. 1995. Transaction costs and tradable permits. Journal of Environmental Economics and Management, 29:133–148. Stavins RN. 1998. Economic incentives for environmental regulation. In P Newman (ed.) The New Palgrave Dictionary of Economics and the Law, Vol. 2. London: Macmillan Press, pp. 6–13. Stavins RN. 2003. Market-based environmental policies: what can we learn from U.S.

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experience (and related research)? Workshop, August 23–24, Donald Bren School of Environmental Science and Management, University of California, Santa Barbara, CA. Stewart JI. 2006. Migration to the agricultural frontier and wealth accumulation, 1860– 1870. Explorations in Economic History, 43(4):547–577. Stokke OS. 2000. Managing straddling stocks: the interplay of global and regional regimes. Ocean and Coastal Management. 43:205– 234.

Tietenberg T. 2003. Tradable permits in principle and practice. Workshop, August 23–24, Donald Bren School of Environmental Science and Management, University of California, Santa Barbara, CA. Umbeck J. 1977. A theory of contract choice and the California gold rush. Journal of Law and Economics, 20(2):421–437. Zerbe RO and CL Anderson. 2001. Culture and fairness in the development of institutions in the California gold fields. Journal of Economic History, 61(1):114–143.

Chapter 9

The Economics of Allocation in Tuna Regional Fisheries Management Organizations R. Quentin Grafton, R¨ognvaldur Hannesson, Bruce Shallard, Daryl Sykes, and Joseph Terry

Abstract

Introduction

This chapter reviews existing allocation mechanisms in the five tuna regional fisheries management organizations and shows that although they have adopted different approaches, all have failed to prevent overcapacity and, for some stocks, overexploitation. As an alternative, it is proposed that each tuna regional fishing management organization establish total allowable catches by species and area, and then allocate nontransferable and permanent country shares (as a proportion of the total harvest) to member countries. Each country would be free to use or sell its annual allocation of fish, which would be determined by the permanent country shares, but the sales could be only to fellow member countries. A two-tier allocation to countries of permanent shares of a total allowable catch, and then annual harvest allocations to vessels of member countries, offers the promise of mitigating, and possibly overcoming, the twin problems of overcapacity and overexploitation in the highly migratory and high-seas tuna fisheries.

Highly migratory fish stocks, such as tuna, are perhaps the last great frontier in terms of capture fisheries in which neither the countries nor the fishers involved have sufficient incentives to invest in their conservation and management. These fish roam between the exclusive economic zones (EEZs) of coastal states and the high seas, and are thus vulnerable to overexploitation in the absence of effective cooperation. Recognizing the need for a legal framework to support the sustainable management of tunas and other highly migratory species, many countries worked together to develop the United Nations Fish Stocks Agreement (UNFSA), which entered into force in 2001. The UNFSA, which builds on the earlier UN Convention on the Law of the Sea (UNCLOS), confirms the need for all countries to work with regional fishery management organizations (RFMOs) to manage highly migratory fish stocks. Indeed, it obliges both RFMO members and nonmembers that are parties to the UNFSA to abide by the

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conservation and management measures adopted by the relevant RFMOs in order to have access to the fisheries.1 As a means of supporting sustainable management, we examine a possible allocation mechanism that is of relevance to all five tuna and billfish RFMOs: the Inter-American Tropical Tuna Commission (IATTC), the International Commission for the Conservation of Atlantic Tunas (ICCAT), the Commission for the Conservation of Southern Bluefin Tuna (CCSBT), the Western and Central Pacific Fisheries Commission (WCPFC), and the Indian Ocean Tuna Commission (IOTC). An alternative to the existing approaches to allocation and management in these RFMOs is required, given that the FAO estimates that 30% of the stocks of highly migratory tunas and tuna-like species are overexploited or depleted (Maguire et al. 2006). In particular, stocks of bigeye and yellowfin tuna appear to be overexploited in the western and central Pacific Ocean in the sense that in order to maintain the stocks at levels capable of producing the maximum sustainable yields (MSYs) current fishing effort must be reduced (Langley and Hampton 2006). Moreover, if these stocks were managed to achieve the maximum economic yield (MEY)—the stock level that maximizes the discounted net returns from harvesting—the current exploitation would be considered even more excessive (Kompas and Che 2006). In the next section, we briefly review some of the existing allocation mechanisms and challenges in existing tuna RFMOs. In section “Economics of Fishing and Tuna RFMOs,” we describe the key economic issues and failures of allocation methods used to date. In section “Allocations and Multilateral Governance,” we present a framework for allocating fishing rights among members of the RFMOs to mitigate overexploitation and overcapacity. In the last section, we present our concluding remarks.

Past and Current Allocation Practices of Tuna RFMOs Allocation is the process of providing temporary or permanent access, use, or presumptive rights to fish. The allocation can be implicit or explicit, such as in the form of limits on the numbers of vessels, vessel days, overall capacity, or as a share of a total allowable catch (TAC). Many possible criteria can be, and have been, used for allocation. The two most commonly used criteria are historical catches and consideration for coastal states access. Article 11 of the UNFSA lists several other possible criteria for consideration when determining how allocations might be provided to new members, including the status of the stocks and the current level of fishing effort. Our interpretation of this article is that it gives RFMOs the right to prevent the allocation of fish to new entrants, but only if the stocks are fully exploited. The five tuna RFMOs have adopted different allocation practices. The oldest RFMO, the IATTC, has established maximum national carrying capacities for the purse-seine fleets of the participants in the fishery, based on the criteria of catches of tunas in the eastern Pacific Ocean by the fleets of the various nations during 1985–1998, amounts of catches taken within the EEZs of the various nations, landings of tuna in the various nations, and other factors. However, these national capacity limits were in effect only in 1999, and were followed, beginning in 2002, by a closed Regional Vessel Register for the purse-seine fleet and a limited purse-seine fishing season. Despite the intention to keep the total carrying capacity of the purse-seine fleet at no more than 158,000 metric tons (mt), it had reached nearly 180,000 mt in 2002. The IATTC has implemented country allocations for bigeye tuna caught by longliners for 2004–2006. The two tuna RFMOs that have been most proactive in terms of country allocations of fish have been the ICCAT and the CCSBT. In both cases, establishing the initial allocations and

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accommodating new entrants has been acrimonious. The 1983–1991 ICCAT allocations were ostensibly made according to the stock status, historical catches, proximity to coastal states, the need to provide data for stock assessment, and considerations for small and developing fisheries. Of all these factors, historical catch has been the major determinant in past national allocations. Unsurprisingly, coastal states and parties to the ICCAT without historically large catches argued for a change in the allocation formula—revisions that were instituted in 2001 following a series of allocation disputes during the 1990s. The CCSBT established country allocations for southern bluefin tuna for its three original members (Australia, Japan, and New Zealand) when the convention came into force in 1994. Shortly thereafter, following disputes over the size of the stock and access, there were no uniformly agreed-to country quotas until 2003, when allocations were given to the original parties, plus the Republic of Korea and Chinese Taipei, with a small amount set aside for noncooperating parties to encourage countries outside of the convention to become cooperating parties. The discovery in 2006 that Japan had greatly exceeded its agreed-to national allocation over a period of several years has made it clear that an appropriate and independent system of monitoring catches is required to ensure the integrity of country allocations. If an independent system of monitoring catches required to ensure the integrity of country allocations is not feasible, country allocations will be ineffective and could lead to substantial underreporting of catches and related sustainability problems. The WCPFC is the newest tuna RFMO, but it has important antecedents in the form of agreements undertaken by members of the Forum Fisheries Agency (FFA).2 In recognition of the importance of allocation, it has established a commission to determine each TAC or total allowable effort within the convention area, and how to allocate it (Parris and Grafton 2006). Among the ten criteria for allocation are the status of the stocks, historical catches, the needs and aspirations of

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small-island developing states in the Convention area, the needs of dependent coastal communities, and compliance. To address concerns in terms of overexploitation, the WCPFC has agreed to establish a vessel day scheme by the end of 2007, which is designed to limit total allowable effort in the purse-seine fisheries (Miyake 2006). Despite different approaches and practices, the tuna RFMOs have all been less than successful at limiting fishing effort (Joseph et al. 2010). Moreover, it appears that some stocks (e.g., southern bluefin tuna, yellowfin tuna, and bigeye tuna in the western and central Pacific Ocean) are currently overexploited in the sense that current harvests exceed what is required to ensure that the stocks are at levels capable of supporting MSYs. Problems of overcapacity in all tuna RFMOs have also prompted proposals for vessel buybacks and fishing gear or vessel permits in order to decrease capacity and improve the net returns from fishing (Squires et al. 2006). Notwithstanding the difficulties in reaching unanimity or consensus among RFMO members, we present the key considerations for allocation mechanisms that are incentivecompatible with sustainable fisheries management for both the countries and fishers involved in the tuna fisheries.

Economics of Fishing and Tuna RFMOs The history of exploitation in domestic fisheries shows that in the absence of appropriate incentives at either an individual or community level, sustainable fisheries outcomes will not be forthcoming. Input-controlled fisheries with limits on the fishing seasons, vessels, and/or gear, even with fixed TACs, often fail to prevent effort creep (Townsend 1990). This frequently results in substitution of unregulated inputs (Squires 1987), which contributes to overcapacity and inefficiency (Kompas et al. 2004).

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The key insight for transnational fisheries is that capacity limits, vessel day limits, and even restricted vessel registries at best provide “stop gap” measures to the “race to fish.” This “race” arises from the motivation of fishers to develop and use unregulated fishing inputs when the regulated inputs provide a binding constraint on their ability to harvest fish. Thus, if RFMOs control the number of vessels allowed to fish, the average size of vessels will creep upward, and if the number and hull size of vessels are capped then fishers will increase the use of other inputs to compete for the limited harvest. Input substitution generates at least three undesirable effects: (1) fishing effort creeps upward with the use of faster, larger, and more technically sophisticated fishing vessels and gear, thereby increasing harvesting pressure on fish stocks, which is why several tuna stocks are overexploited; (2) fisheries regulations over time become overly complicated and difficult to enforce as more rules are promulgated to prevent further increases in fishing effort; and (3) a switch to unregulated inputs often reduces technical efficiency, which, in turn, lowers overall net returns. In an attempt to stop one “tragedy of the commons,” regulators will, with the best of intentions, fail to stop an inexorable slide to an unsustainable and unprofitable tuna fishing industry. Fishers are always “one step ahead” of the regulators in finding ways to overcome the rules attempting to curb increased fishing effort. As a result, for many tuna fisheries there is a large excess capacity relative to that required to harvest the average MSY (Reid et al. 2005). If the capacity were calculated relative to the MEY level, the excess capacity would be much greater, especially for longer-lived species such as bigeye (Kompas and Che 2006). To resolve the tragedy of “too few fish and too many boats,” tuna RFMOs must change the incentives faced by fishers and the member countries. An approach that tries to change the incentives of individual fishers is to create durable and enforceable property rights to harvest a share of the TAC that is set at a level to ensure sustainable utilization. Individual harvesting shares have been

variously called individual fishing quotas (IFQs), and also individual transferable quotas (ITQs), to emphasize the fact that fishers are able to sell or lease their rights to others. Transferability confers an economic advantage, as fishers with greater net returns per unit of harvested fish are able to purchase rights from those with lesser net returns, thereby increasing overall profitability (Grafton 1996). Such transfers provide an incentive for fishers to voluntarily exit from the industry, and also an autonomous adjustment process that helps to reduce the amount of excess vessels and gear employed in a fishery. An important aspect of individual harvesting rights is that, provided that the TAC is a binding constraint such that fishers would catch more fish if the TAC were at a higher level, IFQs command a positive price. This price provides a conservation signal in the sense that holders of the rights can benefit from more sustainable fishing practices because greater future returns from fishing will be incorporated into the value of their asset holdings of IFQs. Harvesting rights that effectively control the overall catch of fishers also change what fishers must do if they wish to catch more fish. Under input controls, a higher individual harvest requires greater fishing effort by an individual to out-compete other fishers. In contrast, with enforceable and binding IFQs, fishers are obliged to buy or lease quotas to increase their harvests. This changes the dynamic from catching as many fish as possible in a limited period of time under input controls to one of maximizing the net returns from a valuable property right by landing highervalued fish in a more valuable form (e.g., fresh versus frozen fish) and/or minimizing harvesting costs per unit of fish landed (Grafton et al. 2000, Hannesson 2004). In addition, with the “race to fish” reduced, quota holders can choose when to catch their harvest in ways that suit market demand, thus enhancing their returns. The overall experience of IFQs in different parts of the world has been positive, but not without problems. Successful IFQ management requires that TACs be set at sustainable levels, that disincentives be established for dumping of fish at

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sea and for catching species incidental to the fishery (such as dolphins, sea turtles, or seabirds), and that there is adequate monitoring and enforcement so that those without IFQs are prevented from fishing and that those with the rights respect the rules. Where this has been successfully accomplished, IFQs have resulted in more sustainable and profitable fisheries (Grafton et al. 2006). The experience in countries using IFQs, such as New Zealand, is also that “self-policing” by fishers becomes an important factor in enforcement strategies as fishers seek to protect their assets by reporting illegal fishing activities.

Country Allocations and Multilateral Governance The relative success of IFQs suggests that if they were properly applied in the context of highly migratory and high-seas fisheries they would offer a means to resolve overcapacity, promote more sustainable fishing practices, and prevent biological and economic overexploitation. Although IFQs are applied for some tunas, such as in Australia’s domestic management of its harvests as part of the CCSBT, they have not yet been applied in an international context. The principal stumbling block to their introduction is the initial allocation of quotas. To be consistent with national laws of some countries, and also the UNFSA, any initial allocation of harvesting rights would necessarily have to be to the sovereign members of RFMOs. Such allocations would be based on a number of criteria, such as past harvest levels, the rights of coastal states, and the needs of artisanal fishers and their communities. The precise formula or method of allocation, however, would have to be negotiated by RFMO members and would, no doubt, be subject to much debate. The allocation of fish quotas as shares of an annual TAC to member countries already exists in both the CCSBT and the ICCAT. Transfers have also been made between member countries, with

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the ICCAT approving between-country transfers of annual quotas. Although not yet implemented in tuna RFMOs, there appears to be no legal reason why any tuna RFMO cannot establish permanent country shares of its area-specific TACs. In fact, the UNFSA states that “in fulfilling their obligation to cooperate through subregional or regional fisheries management organizations or arrangements, States shall: . . . (b) agree, as appropriate, on participatory rights such as allocations of allowable catch or levels of fishing effort.” However, it would require that the stock being fished be at a level such that there is no “surplus” fish beyond that allocated by the RFMO to its members. In cases in which a surplus was available, set-asides would be required for both existing members and potential new entrants. A key benefit of permanent country shares would be avoidance of conflicts over allocation. Moreover, it would encourage countries to become better custodians of tuna resources, as they would be the principal beneficiaries of improved fisheries management. Given that the country shares would be permanent, the country allocations as a share of the TAC would not be traded. However, the annual allocation that the permanent country share would generate could be traded among countries. There appears to be no legal barrier to the trade of annual allocations, provided the relevant RFMO provided a waiver on behalf of all its members (Serdy 2007). Annual allocations (based on permanent country shares) could also help overcome difficulties in negotiating the initial allocation of permanent country shares because they could act as “side payments” (Munro et al. 2004) to entice acceptance of the initial allocation agreement by all RFMO members. For example, a distant-water fishing nation may be prepared to accept a lesser permanent share if it were agreed that it would have the option to lease a set amount of an annual quota for, say, the next ten years. Such an approach, at a national level, has been allowed in New Zealand’s fisheries for which, since 2000, a separation between the IFQ and the Annual Catch Entitlement (ACE) permits the ACE to be traded separately from the IFQ. The use of seasonal allocations that sum to an

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RFMO-determined TAC also allows for flexibility in terms of management and the possibility of small underages and overages in terms of seasonal allocations. Such flexibility has proven successful with IFQs in national jurisdictions, and accounts for seasonal and location-specific variations that might affect the catches. As noted above, the creation of durable and enforceable property rights for individual fishers to harvest shares of the TAC that is set at a level to ensure sustainable harvesting changes the incentives of individual fishers in a way that promotes sustainable fisheries. The creation of such property rights for the individual members of an RFMO has a similarly positive effect on the incentives of the individual member countries. Specifically, it increases their incentives to invest in the conservation and management of the fishery resources. Each individual member of a tuna RFMO would have the right to manage its annual allocations (based on its permanent country shares) in the way that best addresses its own fishery-specific characteristics and objectives, provided it conforms to the harvesting and data reporting practices established by the RFMO. This would, for instance, allow some countries to introduce IFQs for their flagged vessels to increase the economic payoffs from fishing. Other countries could adopt different management or regulations, provided that the annual tuna catches were constrained to the amount of annual allocations that they were allocated net of trades plus allocations that they purchased and less allocations that they sold. Allowing for different approaches to management, but within overall controls of annual catches and codes of practice, would encourage the diffusion of successful management and best practices among the members of tuna RFMOs, and it would also eliminate the formidable challenge of developing a uniform management program that would be acceptable for all of the members of an RFMO. Kaitala and Munro (1997) proposed the establishment of charter members of RFMOs so that new members would not be allowed to harvest fish unless a charter member relinquished a proportion of its share of a TAC, presumably with

suitable financial compensation. A detailed explanation of how a system of country quotas could be developed is provided by Chand et al. (2003) for the tuna fisheries of the western and central Pacific Ocean. They propose a two-tier allocation: first, fixed country shares of a TAC by area or zone, and second, countries then choose to use or trade their annual allocations among the fleets of fellow RFMO members. They recommend that a tuna RFMO commission would assist in monitoring and enforcement, arbitrate disputes, promote cooperation, and determine the TACs for the relevant species by zone. Such a commission could be funded out of sales or trades of annual allocations, an auction of a small proportion of the TAC, or by a levy on total catch. Penalties for deliberately exceeding an annual allocation could include loss of annual allocations and, in extreme cases, reductions in permanent country shares. A different, but related, allocation approach has been proposed by Trondsen et al. (2006) for blue whiting. They argue for an auction of annual allocations of fish from all member countries to industry stakeholders. Part of the revenue from such an auction would be used to finance a multinational resource cooperative similar to the commission proposed by Chand et al. (2003). This cooperative would also be responsible for returning the remainder of the revenue to member countries, based on where the fish were caught and the country allocations. The key insight of Chand et al. (2003) is that a two-tiered allocation of fish (to countries and then to individual vessels and fleets) would help prevent overexploitation. Moreover, if it were to promote the use of IFQs by some member countries, it offers the real prospect of increasing returns from harvesting tuna and promoting more sustainable fisheries management.

Concluding Remarks The world’s tuna RFMOs face an unenviable task of preventing overexploitation for highly

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migratory species, balancing the diverse and competing interests of distant-water fishing nations and coastal states and their fleets, and also reducing the problems of bycatch. The five tuna RFMOs have adopted different approaches to similar problems, but all have failed to prevent overcapacity and, for some stocks, overexploitation. To overcome ongoing concerns over sustainability, especially in terms of long-lived species such as bigeye, it is proposed that each tuna RFMO establish TACs by species and area, and then allocate nontransferable and permanent country shares (as a proportion of the total harvest) to member countries. Each country would be free to use or sell its annual allocation of fish that would be determined by the permanent country shares, but the sales could be only to fellow member countries. In this sense, fish in the form of annual country allocations could act as “side payments” to entice all members to accept an allocation of permanent country shares. A small levy on the fish caught, or an auction of a small percentage of the TACs, would permit the RFMO to help monitor and enforce the allocations at a country level, and also ensure that individual vessels meet the required codes of practice. Countries would be free to choose their own management regimes for their annual allocations, provided they conform to the rules of the RFMO. This would allow, for example, some or all countries to introduce country-specific individual harvesting rights programs specifically designed to address the fishery characteristics and objectives of individual member countries. Overall, a twotier allocation to countries of permanent shares of a TAC, and then annual harvest allocations to vessels of member countries, offers the promise of mitigating, and possibly overcoming, the twin problems of overcapacity and overexploitation in the highly migratory and high-seas tuna fisheries. The approach offers the real possibility of benefiting the countries and fishers involved in the tuna fisheries, those who consume tuna, and those who wish to ensure sustainable fisheries and ecosystems.

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Endnotes 1. Article 116 of the UNCLOS states that “all States have the right for their nationals to engage in fishing on the high seas subject to: (a) their treaty obligations; (b) the rights and duties as well as the interests of coastal States provided for, inter alia, in article 63, paragraph 2, and articles 64 to 67; and (c) the provisions of this section.” Members of an RFMO and parties to the UNFSA are obliged to comply with the conservation and management measures adopted by an RFMO. However, because the compliance requirements for other states is less clear, the authority of an RFMO to prevent other states from fishing for tunas on the high seas without an allocation may need to be clarified and strengthened in order to ensure that the tuna RFMOs can enforce their conservation and management measures on all fishers and states that participate in the tuna fisheries on the high seas. 2. These agreements include the Palau Agreement, which entered into force in 1995 and was designed to limit the number of purse-seine vessels of distant-water fishing nations in the EEZs of signatory countries and the adjacent high seas to a total of 205. The Federated States of Micronesia (FSM) arrangement for regional access, which is related to the Palau Agreement, is designed to promote “domestication” of the of purse-seine fleets to increase the economic benefits to the parties. It imposes criteria for regional access to the parties’ EEZs to encourage greater employment, technology transfer, and training for the coastal states (Ram-Bidesi 2002).

References Chand S, RQ Grafton, and E Petersen. 2003. Multilateral governance of fisheries: management and cooperation in the western and central Pacific tuna fisheries. Marine Resource Economics, 18:329–344.

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Grafton RQ. 1996. Individual transferable quotas: theory and practice. Reviews in Fish Biology and Fisheries, 6(1):5–20. Grafton RQ, R Arnason, T Bjørndal, D Campbell, HF Campbell, CW Clark, R Connor, DP Dupont, R Hannesson, R Hilborn, JE Kirkley, T Kompas, DE Lane, GR Munro, S Pascoe, D Squires, SI Steinshamn, BR Turris, and Q Weninger. 2006. Incentive-based approaches to sustainable fisheries. Canadian Journal of Fisheries and Aquatic Sciences, 63(3):699–710. Grafton RQ, D Squires, and KJ Fox. 2000. Private property and economic efficiency: a study of a common-pool resource. Journal of Law and Economics, 43(2):679–713. Hannesson R. 2004. The Privatization of the Oceans. Cambridge, MA: The MIT Press, 212 pp. Joseph J, D Squires, W Bayliff, and T Groves. 2010. Addressing the problem of excess fishing capacity in tuna fisheries. Chapter 2 of this volume. Kaitala V and GR Munro. 1997. The conservation and management of high sea fishery resources under the new law of the sea. Natural Resource Modeling, 10:87–108. Kompas T and TN Che. 2006. Economic profit and optimal effort in the Western and Central Pacific tuna fisheries. Pacific Economic Bulletin, 21(3):45–62. Kompas T, TN Che, and RQ Grafton. 2004. Technical efficiency effects of input controls: evidence from Australia’s banana prawn fishery. Applied Economics, 36:1631–1641. Langley A and J Hampton. 2006. Management options for yellowfin and bigeye tuna in the WCPO fishery. Pacific Economic Bulletin, 21(3):24–45. Maguire J, M Sissenwine, J Csirke, R Grainger, and S Garcia. 2006. The state of world highly migratory, straddling and other high seas fishery resources and associated species. FAO Fisheries Technical Paper No. 495, 84 pp.

Miyake PM. 2006. Capacity management in the western and central Pacific Ocean. Paper presented at a workshop sponsored by the InterAmerican Tropical Tuna Commission, La Jolla, CA, October 10–12, 2006. Munro G, A Van Houtte, and R Hillmann. 2004. The conservation and management of shared fish stocks: legal and economic aspects. FAO Fisheries Technical Paper No. 465, 69 pp. Parris H and RQ Grafton. 2006. Can tuna promote sustainable development in the Pacific? The Journal of Environment and Development, 15(3):269–296. Ram-Bidesi V. 2002. Regional arrangements for management and development of tuna in the Pacific Islands: the case study of Palau Arrangement and the Federated States of Micronesia Arrangement. Paper presented at the International Institute of Fisheries Economics and Trade Conference, Wellington, New Zealand, August 19–22, 2002. Reid C, J Kirkley, D Squires, and J Ye. 2005. An analysis of the fishing capacity of the global tuna purse-seine fleet. FAO Fisheries Proceedings, 2:117–156. Serdy A. 2007. Fishery commission quota trading under international law. Ocean Yearbook, 21:265–288. Squires D. 1987. Public regulation and the structure of production in multiproduct industries: an application to the New England trawl industry. Rand Journal of Economics, 18:232– 247. Squires D, J Joseph, and T Groves. 2006. Buybacks in transnational fisheries. Pacific Economic Bulletin, 21(3):63–74. Townsend RE. 1990. Entry restrictions in the fishery: a survey of the evidence. Land Economics, 66:359–378. Trondsen T, T Matthiasson, and JA Young. 2006. Towards a market-oriented management model for straddling fish stocks. Marine Policy, 30(3):199–206.

Chapter 10

Allocating Fish Across Jurisdictions* Jon M. Van Dyke

Abstract Tunas are distributed over wide areas of the world’s oceans, within the coastal waters of many nations and on the high seas, and they are fished by vessels of many nations. Three stocks of tunas, eastern Atlantic bluefin, western Atlantic bluefin, and southern bluefin, are severely overfished, and others are fully exploited or somewhat overfished. Also, there are more than enough vessels to meet the world’s demand for tuna, and the excess of fishing vessels exacerbates the problem of overfishing. In response to this situation, the world community adopted the 1995 Straddling and Migratory Fish Stocks Agreement, and since then several regions have adopted innovative regional fishery agreements. The most ambitious of these new agreements is the Convention on the Conservation and Management of Highly

* Similar to an article first published in Law of the Sea, Environmental Law and Settlements of Dispute—Liber Amicorum Judge Thomas A. Mensah, edited by Tafsir Malick Ndiaye & R¨udiger Wolfrum, published in 2007 by Martinus Nijhoff Publishers, Leiden/Boston. Reprinted with permission.

Migratory Fish Stocks in the Central and Western Pacific Ocean, which was adopted in 2000. This treaty, like the 1995 Agreement, adopts the precautionary principle as its main guideline. It requires countries to engage in data collection and data exchanges to promote transparency. It creates a Commission to allocate fish stocks. The Commission must make some decisions by consensus, but for others will utilize a chambered voting system whereby the distant-water fishing countries and the island countries must each agree by an enhanced majority before a decision can be adopted. To provide further protection for each country, the Convention authorizes countries to seek judicial review of any Commission decision if the decision is thought to violate the Convention, the 1995 Agreement, or the 1982 Law of the Sea Convention. This Convention is now in force, and its operations will be monitored closely to see if its ambitious and important goals can be met. One of the central missions of this Convention and other regional fishery management organizations is to allocate fish among its contracting parties. This chapter discusses the criteria that should be considered when making such allocation decisions.

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The 1982 United Nations Law of the Sea Convention The acceptance by the negotiators at the United Nations Convention on the Law of the Sea1 of the simple, direct, and elegant language of Article 192 marked a turning point in the human stewardship of the oceans: “States have the obligation to protect and preserve the marine environment” (Van Dyke 1993, 2000). Each word has importance and power. The operative word “obligation” makes it clear that countries have positive duties and responsibilities, and must take action. The verbs “protect” and “preserve” reinforce each other, to emphasize that countries must respect the natural processes of the ocean and must act in a manner that understands these processes and ensures that they continue for future generations. The “marine environment” is a purposively comprehensive concept covering all aspects of the ocean world—the water itself, its resources, the air above, and the seabed below—and it covers all jurisdictional zones—internal waters, territorial seas, contiguous zones, exclusive economic zones (EEZs), continental shelves, archipelagic waters, and the high seas. Article 192 thus recognizes the profound responsibility that all countries have to govern the oceans in a manner that respects the plants and animals that inhabit them. The marine environment must thus be preserved for the benefit of those who will come later to exploit its resources, to study its mysteries, and to enjoy the many pleasures that the oceans offer us. The provisions of the 1982 United Nations Law of the Sea Convention regarding fisheries are general in nature, but nonetheless clearly articulate an overarching duty to cooperate in all situations involving shared fisheries. Article 56 recognizes coastal state sovereignty over the living resources in the 200-nautical mile EEZs, but Articles 61, 62, 69, and 70 require a coastal state (a) to cooperate with international organizations to ensure that species are not endangered by overexploitation, (b) to manage species in a manner that pro-

tects “associated or dependent species” from overexploitation, (c) to exchange data with international organizations and other nations that fish in its EEZ, and (d) to allow other states (particularly developing, land-locked, and geographically disadvantaged states) to harvest the surplus stocks in its EEZ. Article 63 addresses stocks (or stocks of associated species) that “straddle” adjacent EEZs, or an EEZ and an adjacent high-seas area, and requires the states concerned to agree (either directly or through an organization) on the measures necessary to ensure the conservation of such stocks. Article 64 requires coastal states and distant-water fishing nations (DWFNs) that harvest highly migratory stocks such as tunas to cooperate (either directly or through an organization) to ensure the conservation and optimum utilization of such stocks. Article 65 contains strong language requiring nations to “work through the appropriate international organization” for the “conservation, management, and study” of marine mammals. Article 66 gives the states of origin primary responsibility for anadromous stocks (e.g., salmon and sturgeon), but requires the states of origin to cooperate with other states whose nationals have traditionally harvested such stocks and states through whose waters these fish migrate. On the high seas, Articles 118 and 119 require states to cooperate with other states whose nationals exploit identical or associated species. Article 118 is mandatory in stating that nations “shall enter into negotiations with a view to taking the measures necessary for the conservation of the living resources concerned” (emphasis added), and suggests creating regional fisheries organizations, as appropriate. Article 120 states that the provisions of Article 65 on marine mammals also apply on the high seas. These provisions thus reinforce the duty to cooperate that has always existed in customary international law. Because they are not specific enough to resolve conflicts that have arisen as species have been fully exploited or overexploited, the 1995 Straddling and Highly Migratory Stocks Agreement was negotiated.

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The 1995 Straddling and Highly Migratory Fish Stocks Agreement2 On December 4, 1995, the nations of the world settled on the text of an important document with the cumbersome title of “Agreement for the Implementation of the Provisions of the United Nations Convention on the Law of the Sea of 10 December 1982 Relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks.”3 It builds on existing provisions in the 1982 United Nations Law of the Sea Convention described above, but it also introduces several new strategies and obligations that have been requiring fishers to alter their operations in a number of significant ways. In addition to strengthening the role of regional organizations, as explained below, it also promotes peaceful dispute resolution by applying the dispute–resolution procedures of the Law of the Sea Convention to disputes involving straddling and highly migratory stocks. Ratifications of the 1995 Agreement have been steady, but many important countries have not become contracting parties. As of September 2008, 72 countries had ratified the Agreement, including most European countries, the USA, India, and Liberia, but key fishing countries like the People’s Republic of China, most of the Latin American and African countries, and many of the countries providing flags of convenience had not yet ratified the Agreement.4 Rayfuse (2005: 509, 525) has recently suggested that “even in the absence of . . . wider ratification, it is arguable that certain principles embodied in the [Straddling and Highly Migratory Fish Stocks Agreement] and the [FAO] Compliance Agreement may not be binding on all states as a matter of customary international law.” Her primary example of a provision that has become obligatory through state practice is “the obligation to co-operate in respect of high seas fisheries through the medium of RFMOs [regional fishery management organizations] or other co-operative arrangements” (Rayfuse 2005).

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The Duty to Cooperate The guiding principle that governs the 1995 Agreement is the duty to cooperate. This core concept is given specific new meaning, and the coastal nations and DWFNs of each region are now required to share data and manage the straddling fisheries together. Article 7(2) requires that “[c]onservation and management measures established for the high seas and those adopted for areas under national jurisdiction shall be compatible in order to ensure conservation and management of the straddling fish stocks and highly migratory fish stocks in their entirety” (emphasis added). This duty gives the coastal state a leadership role in determining the allowable catch to be taken from a stock that is found both within and outside its EEZ, as evidenced by the requirement in Article 7(2)(a) that contracting parties “take into account” the conservation measures established by the coastal state under Article 61 of the Law of the Sea Convention for its EEZ “and ensure that measures established in respect of such stocks for the high seas do not undermine the effectiveness of such measures.” This polite diplomatic language indicates clearly that catch rates outside a 200nautical mile EEZ cannot differ significantly from those within the EEZ.

The Duty to Work through an Existing or New Fisheries Organization The 1995 Agreement requires coastal and island nations to cooperate with DWFNs in an organization or arrangement to manage shared fisheries. Article 8(3) addresses this issue, and it is quoted in full here because its somewhat ambiguous language requires close examination: Where a subregional or regional fisheries management organization or arrangement has the competence to establish conservation and management measures for particular straddling fish stocks or highly migratory fish stocks, States fishing for the stocks on the high seas and relevant coastal States

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shall give effect to their duty to cooperate by becoming a member of such an organization or a participant in such an arrangement, or by agreeing to apply the conservation and management measures established by such an organization or arrangement. States having a real interest in the fisheries concerned may become members of such organizations or participants in such arrangement. The terms of participation of such organizations or arrangements shall not preclude such States from membership or participation; nor shall they be applied in a manner which discriminates against any State or group of States having a real interest in the fisheries concerned. (emphasis added)

It is hard to read this language without concluding that the coastal and island nations must cooperate with the DWFNs fishing in adjacent high-seas areas, either by allowing them to join an existing regional fishery management organization (RFMO) or by creating a new one that all can join. All states “having a real interest” in the shared fishery stock must be allowed into the organization. Only those states that join an RFMO or agree to observe its management regulations can fish in a regional fishery (Article 8(4); and see Article 17(1)). Article 13 requires existing RFMOs to “improve their effectiveness in establishing and implementing conservation and management measures. . ..” Article 11 addresses the difficult question as to whether new DWFNs must be allowed into such an organization once established. Do the nations that have established fishing activities in the region have to allow new entrants? The language of Article 11 does not give a clear answer to this question, but it seems to indicate that some new entrants could be excluded if the current fishing nations have developed a dependency on the shared fish stock in question. Furthermore, developing nations from the region would appear to have a greater right to enter the fishery than would developed nations from outside the region. “Article 25(1)(b), implies some degree of preference for developing countries that are new members by requiring states to “facilitate access [to highseas fisheries] . . . subject to articles 5 and 11”

(Lodge and Nandan 2005: 345, 374). The 1995 Agreement emphasizes the need to cooperate, and it requires the coastal and island nations to cooperate with the DWFNs operating in the adjacent high-seas areas to the same extent that the DWFNs must cooperate with the coastal and island nations.

The Precautionary Principle The “precautionary principle” has gained almost universal acceptance during the past decade as the basic rule that should govern activities that affect the ocean environment (Van Dyke 2004). This principle requires users of the ocean to exercise caution by undertaking relevant research, developing nonpolluting technologies, and avoiding activities that present uncertain risks to the marine ecosystem. It requires policy makers to be alert to risks of environmental damage, and the “greater the possible harm, the more rigorous the requirements of alertness, precaution and effort” (Freestone 1991: 21, 36). It rejects the notion that the oceans have an infinite, or even a measurable, ability to assimilate wastes or support living resources, and it instead recognizes that our knowledge about the oceans’ ecosystems may remain incomplete, in which case policy makers must err on the side of protecting the environment. It certainly means, at a minimum, that a thorough evaluation of environmental impacts must precede actions that may affect the marine environment. All agree that it requires a vigorous pursuit of a research agenda in order to minimize the uncertainties that exist. Some commentators have explained the precautionary principle by emphasizing that it shifts the burden of proof: “[W]hen scientific information is in doubt, the party that wishes to develop a new project or change the existing system has the burden of demonstrating that the proposed changes will not produce unacceptable adverse impacts on existing resources and species” (Van Dyke 1993: 477). Others have suggested that the principle has an even more dynamic element, namely that it

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requires all users of the ocean commons to develop alternative nonpolluting or nonburdensome technologies. The precautionary principle is given center stage as the primary basis for decision making in the Straddling and Highly Migratory Stocks Agreement. Article 5(c) of that agreement lists the “precautionary approach” among the principles that govern conservation and management of shared fish stocks, and Article 6 elaborates on this requirement in some detail, focusing on data collection and monitoring. States are required to improve their data collection, and to share their information widely with others. When “information is uncertain, unreliable or inadequate,” states must be “more cautious” (Article 6 (2)), and they must take “uncertainties” into account when establishing management goals (Article 6(3)(c)). Species thought to be under stress shall be subjected to “enhanced monitoring in order to review their status and the efficacy of conservation and management measures” (Article 6(5)). If “new or exploratory fisheries” are opened, precautionary conservation measures must be established “as soon as possible” (Article 6(6)). Then, in Annex II, the Agreement identifies a specific procedure that must be used to control exploitation and monitor the effects of the management plan. For each harvested species, a “conservation” or “limit” reference point and a “management” or “target” reference must be determined. If the abundance of a stock goes below the agreed-upon conservation/limit reference point, then “conservation and management action should be initiated to facilitate stock recovery” (Annex II(5)). Overfished stocks must be managed to ensure that they can recover to the level at which they can produce the maximum sustainable yield (Annex II(7)). The continued use of the maximum-sustainable-yield approach indicates that the Agreement has not broken free from the approaches that have led to the rapid declines in some of the world’s fisheries,5 but the hope is that the conservation/limit reference points will lead to early warnings of trouble that will be taken more seriously.

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The Duty to Assess and to Collect and Share Data Article 5(d) reaffirms the duty to “assess the impacts of fishing, other human activities and environmental factors” on stocks, and Articles 14 and 18(3)(e) explain the data collection requirements necessary to facilitate such assessments. Article 14 requires contracting parties to require fishing vessels flying their flags to collect data “in sufficient detail to facilitate effective stock assessment” (Article 14(1)(b)). Annex I then explains the specific information that must be collected, which includes the amount of fish caught by species, the amount of fish discarded by species, the fishing methods used, and the locations of the fishing vessels (Annex I, Art. 3(1)). In order to permit stock assessment, each nation must also provide to the RFMO data on the size, weight, length, age, and spatiotemporal distribution of its catch, plus “other relevant research, including surveys of abundance, biomass surveys, hydroacoustic surveys, research on environmental factors affecting stock abundance, and oceanographic and ecological studies” (Annex I, Art. 3(2)). These requirements, if taken seriously, will revolutionize the fishing industry, for which the competitive nature of the quest for fish has encouraged each nation to hide its activities from others to the extent possible. The data collected “must be shared with other flag States and relevant coastal States through appropriate subregional or regional fisheries management organizations or arrangements” in a “timely manner,” although the “confidentiality of nonaggregated data” should be maintained (Annex I, Art. 7). Decision making at RFMOs must now be “transparent” under Article 12, and international and nongovernmental organizations must be allowed to participate in meetings and to observe the basis for decisions.

The Methods of Enforcement Article 18 further requires contracting parties to establish “national inspection schemes,” “national observer programmes,” and “vessel monitoring

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systems, including, as appropriate, satellite transmitter systems” to manage their flag fishing vessels with some rigor. Article 21(1) gives these requirements teeth by authorizing the ships of a nation that is party to an RFMO to board and inspect on the high seas any ship flying the flag of any other nation that is a party to the same agreement.6 If the boarded vessel is found to have committed a “serious violation,” it can be brought into the “nearest appropriate port” for further inspection (Article 21(8)). The term “serious violation” is defined in Article 21(11) to include using prohibited fishing gear, having improper markings or identification, fishing without a license or in violation of an established quota, and failing to maintain accurate records or tampering with evidence needed for an investigation.

Dispute–Resolution Part VIII of the Agreement requires contracting parties to settle their disputes peacefully, and extends the dispute–resolution mechanisms of the Law of the Sea Convention to disputes arising under this new Agreement. These procedures are complicated and somewhat untested, but should provide flexible and sophisticated mechanisms to allow nations to resolve their differences in an orderly fashion.

Recognition of the Special Needs of Developing Nations The 1995 Agreement recognizes in Articles 24–26 that the burden of conservation may affect the coastal fisheries that many communities rely upon for subsistence. These articles state that developing states should not be required to shoulder a “disproportionate burden of the conservation action” (Art. 24(2)(c)), and they call for increased technical and financial aid to developing countries to allow them to meet their duties of data collection and dissemination.

The 2000 Honolulu Convention The Pacific Island nations and the DWFNs with an interest in the Pacific Ocean met every 6 months for several years in Honolulu during the late 1990s to draft an important new treaty governing the highly migratory fish stocks of the Pacific Ocean. Formally called “The Convention on the Conservation and Management of Highly Migratory Fish Stocks in the Western and Central Pacific Ocean”7 and signed in Honolulu on September 5, 2000, this treaty creates the RFMO anticipated by Article 64 of the 1982 Law of the Sea Convention8 and by the 1995 Straddling and Highly Migratory Stocks Agreement.9 The 2000 Honolulu Convention is breathtakingly innovative in a number of significant respects. It is huge in its geographical scope, covering much of the vast Pacific Ocean and governing territorial seas and EEZs, as well as high-seas areas. It creates a Commission with authority to set catch limits and allocate catch quotas to fishing nations both within and outside the EEZs of coastal and island nations. The Commission can also regulate vessel types, fish size, and gear, and can establish area and time limitations. Decision making is by consensus for the central issues—such as allocation of fish to contracting parties—and by chambered voting on others, requiring a majority of support from the two chambers—one consisting of the 10 DWFNs and the other consisting of the 16 island nations—thus carefully protecting both groups. Decisions of the Commission can be reviewed by an arbitral review panel to ensure consistency and protect against discrimination. This new treaty requires that fishing of highly migratory species on the high seas be compatible with the regulations that apply within adjacent EEZs. It relies on the precautionary approach as its basic foundation throughout. It reinforces the importance of the duty to cooperate. It allows Taiwan to participate in decision making (as “Chinese Taipei”), it allows non-self-governing territories to participate (pursuant to rules to be adopted), and nongovernmental organizations can

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also participate in appropriate ways. Compliance will be through flag-state and port-state enforcement, boarding and inspection rights, obligatory transponders on all high-seas fisheries, and regional observers on the vessels. The final negotiating session was held in Honolulu on August 30 to September 5, 2000, and a treaty was signed by most of the negotiating parties, but China, France, and Tonga abstained10 and Japan and the Republic of Korea refused to sign the agreement.11 The members of the Forum Fisheries Agency (FFA; http://www.ffa.int/) worked hard during the 3-year negotiating period to ensure that the convention area was as large as possible, that decisions could be made without unanimous agreement, that developing countries would receive financial assistance to carry out their obligations under the treaty, that the treaty could come into force even if the DWFNs did not ratify it, and that a vessel monitoring system (VMS) would become mandatory for all vessels. Although not all the FFA positions were achieved to extent desired,12 the final version of the treaty was signed by all the FFA members except Tonga. Since then, the Republic of Korea, Japan, the USA and the Peoples Republic of China have ratified the Honolulu Convention, along with all other countries involved in the negotiations, except Indonesia,13 and the contracting parties have been meeting regularly to establish the institutions created by the Convention and to start making the difficult decisions required to implement it.

Allocation Options Everyone who has ventured an opinion about the challenge of allocating fish agrees that such allocations should be both “equitable” and “efficient,” but giving meaning to those terms remains elusive. One typical well-meaning, but vague, pronouncement on this topic provides the following language:

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Equity in the allocation of both rights and obligations. Regimes that balance the competing interests of all participants are likely to be perceived as the most legitimate, which should in turn promote higher levels of compliance with agreed fishing rules. Among the many balances to be found are: those that have historically participated vs. new entrants; coastal States vs. distant water fishing States; developed States vs. developing States. (Balton and Zbicz 2004: 247, 257)

Conservation Is Paramount Lodge and Nandan (2005: 374) have made the important point that “allocation rights, both in the EEZ and on the high seas, are subordinate to the obligation to conserve.” At present, they note, “neither UNFSA [United Nations Fish Stocks Agreement], nor the decision rules of many existing RFMOs, provide mechanisms for allocation that balance conservation interests with the economic and social interests of states. In fact, within many RFMOs, negotiated criteria for catch allocations are often based on the notion of historical catch, which is a powerful incentive to indulge in a race to fish” (Lodge and Nandan 2005). And, they add, the problem of overfishing may be exacerbated by “adding developing state fishing capacity to existing overcapacity, especially where this operates simply as a mechanism to support reflagging and transfer of effort by distant water fishing nations (DWFNs)” (Lodge and Nandan 2005). McDorman (2005: 423, 425) has noted that “the setting of the total allowable catch (TAC)” and “quota allocation decisions . . . are inevitably the most controversial” for RFMOs. He suggests looking to the considerations listed in Article 11 of the Straddling and Highly Migratory Fish Stocks Agreement governing the participation of new members of fishery organizations for guidance regarding allocation rights within the fishery—“the status of the stocks and existing fishing efforts; existing fishing patterns (historic fishing activity); economic need and coastal state dependence; and contribution to conservation” (McDorman 2005:

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438). He stresses that consensus is important to ensure support for the allocation decisions, and suggests that to promote consensus “in years, and for stocks where consensus cannot be reached, that the quotas for each member decline by a pre-set amount (e.g., 20%) for each year non-consensus prevails” (McDorman 2005: 440). He noted that the quota reductions “can be justified on the basis of precaution” and that this procedure would provide “an important incentive to agree on allocations.” “Equity” is a complicated and multifaceted concept, with different applications in different contexts. It certainly includes the concept of being “fair,” but just as certainly it does not inevitably mean that everyone should receive an equal amount. In the maritime boundary context, Articles 74 and 83 of the Law of the Sea Convention require opposite and adjacent states to reach an “equitable solution,” language was chosen instead of phrasing that would have stated that boundaries should be drawn along the “median” or “equidistance” line separating the land areas of the countries. The concept of an “equitable solution” in the boundary context has generated a series of specific rules, as discussed below,14 including, for instance, that the boundary that would exist if the equidistance line were utilized should be adjusted in light of the length of the coastlines of the competing countries, because the coastlines provide some rough indication of the relationship between the country and the adjacent waters (Van Dyke 1996a: 398–401).

Common, but Differentiated, Rights and Responsibilities Both the Law of the Sea Convention and the Straddling and Highly Migratory Fish Stocks Agreement contain provisions recognizing that countries have common, but differentiated, responsibilities and rights. These treaties recognize that the formal equality of states does not inevitably mean that all states are similarly situated, because some have better means to protect the global environment and to assist other states, and some have

stronger claims to shared resources than others. This idea was identified in Principle 23 of the 1972 Stockholm Declaration,15 which explained that “it will be essential in all cases to consider . . . the extent of applicability of standards which are valid for the most advanced countries but which may be inappropriate and of unwarranted social cost for developing countries.” Principle 7 of the 1992 Rio Declaration16 went on to say more directly that “In view of the different contributions to global environmental degradation, States have common but differentiated responsibilities.” This principle of “common but differentiated responsibility” has two prominent elements: asymmetry of obligations and financial support for developing countries. The Law of the Sea Convention recognizes these different responsibilities in several articles, including, for instance, Article 207 on land-based pollution, which refers to the economic capabilities of developing states when articulating the responsibility to deal with this problem.17 Other provisions in the Law of the Sea Convention providing special preferences for developing and otherwise disadvantaged countries include: r Article 62(2) and 69(3): granting developing countries preferential rights to the surplus stocks in the EEZs of other coastal states in their region. r Articles 69 and 70: giving developing landlocked and geographically disadvantaged states preferential rights to the surplus stocks in EEZs of coastal states in their region. r Article 82: exempting developing states from making payments from continental shelf resources beyond 200 nautical miles and giving them preferential rights to payments made by other states. r Article 119: apparently giving developing countries some preferential rights to the living resources of the high seas. r Article 194(1): stating that states must prevent, reduce, and control pollution of the marine environment “using for this purpose the best practicable means at their disposal and

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in accordance with their capabilities” (emphasis added). Article 199: requiring states to develop contingency plans for responding to pollution incidents “in accordance with their capabilities” (emphasis added). Articles 202 and 203: stating that developing states are entitled to training, equipment, and financial assistance from developed states and international organizations with regard to the prevention, reduction, and control of marine pollution. Article 206: explaining that the duty to assess environmental impacts of planned activities extends “as far as practicable” (emphasis added). Articles 266–269: stating that developing countries are entitled to receive “marine science and marine technology on fair and reasonable terms and conditions.”

The 1995 Straddling and Highly Migratory Fish Stocks Agreement18 also contains a number of provisions recognizing the special rights of developing countries: r The Preamble recognizes “the need for specific assistance, including financial, scientific and technological assistance, in order that developing States can participate effectively in the conservation, management and sustainable use of straddling fish stocks and highly migratory fish stocks . . . .” r Article 3(3) says that “States shall give due consideration to the respective capacities of developing States to apply articles 5, 6 and 7 within areas under national jurisdiction and their need for assistance as provided for in this Agreement” (emphasis added). r Article 11(f) gives a developing state a preference to enter into a fishery and into a fishery organization as a new member. r Article 24 addresses the financial needs of developing countries: 1. States shall give full recognition to the special requirements of developing States in relation to conservation and manage-

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ment of straddling fish stocks and highly migratory fish stocks and development of fisheries for such stocks. To this end, States shall, either directly or through the United Nations Development Programme, the Food and Agriculture Organization of the United Nations and other specialized agencies, the Global Environment Facility, the Commission on Sustainable Development and other appropriate international and regional organizations and bodies, provide assistance to developing States . . . (emphasis added). r Article 25 provides some more specific language regarding these obligations: 1. States shall cooperate, either directly or through subregional, regional, or global organizations: (a) to enhance the ability of developing States, in particular the leastdeveloped among them and small island developing States, to conserve and manage straddling fish stocks and highly migratory fish stocks and to develop their own fisheries for such stocks; (b) to assist developing States, in particular the least-developed among them and small island developing States, to enable them to participate in high seas fisheries for such stocks, including facilitating access to such fisheries subject to articles 5 and 11; and (c) to facilitate the participation of developing States in subregional and regional fisheries management organizations and arrangements . . . (emphasis added). r Funding is addressed in Article 26: 1. States shall cooperate to establish special funds to assist developing States in the implementation of this Agreement, including assisting developing States to meet the costs involved in any proceedings for the settlement of disputes to which they may be parties.

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2. States and international organizations should assist developing States in establishing new subregional or regional fisheries management organizations or arrangements, or in strengthening existing organizations or arrangements, for the conservation and management of straddling fish stocks and highly migratory fish stocks. (emphasis added) From these many provisions, it should be clear that one element of any “equitable” approach to allocation is that developing countries must receive shares linked to their greater needs and must also receive financial assistance so that they can take proper advantage of the fishery resources in their regions.

Should Allocation Be Based on Population? Or on a State’s “Dependence” on Fish for Food Security? If the focus remains on “equity,” then obviously some attention to the numbers of mouths that must be fed is relevant to any allocation decision. Some may argue that a fish-per-capita allocation system, perhaps with some modifications for unique “equitable” considerations, makes sense and offers some elegant simplicity. Others may point out that some communities “depend” on fish or enjoy eating fish more than do others, and would argue that historical fishing practices should be recognized as the baseline from which allocations should be made. Still others (Lodge and Nandan 2005) might suggest that utilizing historical fishing practices will inevitably reward the more developed countries, which have been able to finance large fishing operations, and this criterion would once again be disadvantageous to developing countries. Basing allocations on historical fishing activities will tend to reward those countries that have overcapitalized and subsidized their fishing fleets, thus giving benefits for activities that have distorted the market and that would through be punished in other economic sectors.

The Importance of “Contiguity” or Geographical Proximity A system focused on population would allow the heavily populated nations to come into all regions with priorities to harvest the fish, and would ignore the link between the residents of the area and the nearby fish. Any equitable system of allocation will have to recognize the importance of geographical proximity, or contiguity, to the allocation choices that must be made. Especially, since RFMOs frequently have responsibilities over fish within EEZs and on the high seas, the allocation decisions made by the organizations must recognize the “sovereign rights” that states have to the fish in their EEZs, which gives them a substantial priority in any allocation scheme. In the Pacific Ocean, the Pacific Island communities must have a priority to the fish in their regions because of their geographical proximity and because they are developing nations that are entitled to assistance and priorities under both the Law of the Sea Convention and the Straddling and Highly Migratory Fish Stocks Agreement.

What Other “Equitable” Criteria Are Relevant? Other ideas for equitable criteria to apply to allocation decisions can be gleaned from the criteria developed in maritime boundary delimitation adjudications, from criteria relevant to disputes over sovereignty of remote areas, and from the Rio Principles. In maritime boundary disputes, members of decision-making tribunals usually start with an equidistance or median line, but then adjust it to correspond to “special circumstances” and equitable considerations (Van Dyke 1996a: 398–401). The factor that has been used most consistently to adjust this line has been the proportionality of the length of the coastlines of the disputing states.19 This criterion has been preferred over candidates such as coastal population and economic activity in the coastal waters because it is a stable factor that is unlikely to change over time. Another element of these boundary decisions that has been

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relatively consistent during the past four decades has been that the decisions tend to reject an “allor-nothing” approach and to allocate each state at least some maritime space, and thus to find a solution that is acceptable to each country. Decision makers tend to recognize that even geographically disadvantaged countries have rights to maritime resources, and as sovereign states have the right “to participate in international arrangements as an equal” (Charney 1994: 249). Maritime delimitations thus tend to recognize the vital security interests of each nation, and to craft a solution that protects these interests.20 Food security is certainly a crucial element of any state’s national security interests, and access to food sources is important to every community. The case for which this interest was recognized most directly is the Jan Mayen Case, where Norway (which had sovereignty over Jan Mayen Island) was allocated a maritime zone sufficient to give it equitable access to the important capelin fishery between Jan Mayen Island and Greenland.21 If we look at the criteria that have been applied to resolve sovereignty disputes over remote land territory, we find tribunals focusing on links between the claimants and the territory expressed through “discovery” and “effective occupation,” focusing in particular on recent displays of sovereignty. “Contiguity” is sometimes discounted, but it has played a role in other situations. The judicial and arbitral decisions regarding sovereignty disputes over islands since World War II have focused more on which country has exercised actual governmental control over the feature during the previous century than on earlier historical records (Valencia et al. 1997: 17–19). The first major decision by the International Court of Justice regarding ownership of an isolated uninhabited island feature was the decision in the Minquiers and Ecrehos Case,22 for which the Court explained that “What is of decisive importance, in the opinion of the Court, is not indirect presumptions deduced from events in the Middle Ages, but the evidence which relates directly to the possession of the Ecrehos and Minquiers groups.”23 This view was followed in the Gulf of Fonseca

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Case,24 for which the court focused on evidence of actual recent occupation and acquiescence by other countries to determine title to disputed islets, and in the decision in the Eritrea–Yemen Arbitration,25 where the tribunal relied explicitly on the Minquiers and Ecrehos judgment for the proposition that it is the relatively recent history of use and possession of the islets that is most instructive in determining sovereignty and that the historical-title claims offered by each side were not ultimately helpful in resolving the dispute: “The modern international law of acquisition (or attribution) of territory generally requires that there be: an intentional display of power and authority over the territory, by the exercise of jurisdiction and state functions, on a continuous and peaceful basis.”26 This same approach was utilized by the Court in its recent decision resolving a dispute between Malaysia and Indonesia over two tiny islets: Ligitan and Sipadan.27 The larger of the islets (Sipadan) is 0.13 km2 in size.28 Neither has been inhabited historically, but both have lighthouses on them, and Sipadan has recently been “developed into a tourist resort for scuba diving.”29 The Court first addressed arguments on the basis of earlier treaties, maps, and succession, but found that they did not establish any clear sovereignty.30 It then looked at the “effectivites”—or actual examples of exercises of sovereignty over the islets, and explained that it would look at exercises of sovereignty even if they did “not co-exist with any legal title.”31 Indonesia claimed title on the basis of various naval exercises in the area conducted by itself and previously by its colonial power (the Netherlands), but Malaysia prevailed on the basis of the governmental actions of its colonial power (the UK) exercising control over turtle egg collection and construction of lighthouses on both islets.32 Contiguity, or geographical proximity, has not always played a decisive role in adjudications, but it sometimes has been a significant factor. Arbitrator Max Huber rejected contiguity as a basis for a claim of title in the Palmas Arbitration,33 and several countries include land areas quite

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distant from other parts of the country. Nonetheless a land area closely linked to another land area, and utilized by residents of the adjacent area, may “belong” to that adjacent area as a matter of logic, common sense, and historical practice. Some islets are viewed as “dependent” on other islands, and some groups of islands have historically been viewed as units; in these cases, it would not be logical to divide such islands between two different sovereigns. Even Arbitrator Huber acknowledged that “[a]s regards groups of islands, it is possible that a group may under certain circumstances be regarded as in law a unit, and that the fate of the principal part may involve the rest.”34 The International Court of Justice viewed, for instance, the Minquiers group as a “dependency” of the Channel Islands (Jersey and Guernsey), and thus ruled that they should be subject to the same sovereign authority.35 In the Gulf of Fonseca Case, the International Court of Justice chamber concluded that Meanguerita was an “appendage” to or “dependency” of Meanguera, and thus should be awarded to El Salvador, along with its larger neighbor.36 The recent development of the regimes of the continental shelf and the EEZ, and also the extension of the territorial sea from 3 to 12 nautical miles in the 1982 Law of the Sea Convention, are all, to some extent, based on a recognition of the importance of “contiguity” (Lauterpacht 1950: 428). Another clear example of a tribunal’s reliance upon concepts of contiguity can be found in the 1998–1999 Eritrea–Yemen Arbitration.37 The tribunal awarded to Yemen the lone island of Jabal al-Tayr and the al-Zubayr group because Yemen’s activities on these barren islands were greater and because they are located on the Yemen side of the median line between their uncontested land territories.38 The tribunal recognized the relevance of geographical proximity or contiguity, utilizing the “presumption that any islands off one of the coasts may be thought to belong, by appurtenance, to that coast unless the State on the opposite coast has been able to demonstrate a clearly better title.”39 The Mohabbakahs and the Haycock islands were thus awarded to Eritrea because

they were mostly within 12 nautical miles of the Eritrean coast. The Rio Principles (Van Dyke 1996b: 31) are another important source for ideas regarding relevant equitable principles governing the allocation challenge. Perhaps the most relevant is Principle 4, which says that “In order to achieve sustainable development, environmental protection shall constitute an integral part of the development process and cannot be considered in isolation from it.” This confirms the point made recently by Lodge and Nandan (2005: 31–33) that conservation values must remain paramount in any allocation regime. The oceans and their resources are the common heritage of humankind, and public trust values must be applied to any system dividing these resources (Van Dyke 1993: 19).

How Should States Be Rewarded for Good Behavior? Careful management of fish stocks is expensive and challenging, and countries that make financial sacrifices to monitor and maintain threatened fish stocks should receive some reward for their actions. This principle forms the basis of Article 66 of the Law of the Sea Convention, which says that “[s]tates in whose rivers anadromous stocks originate shall have the primary interest in and responsibility for such stocks.” Because the spawning habitat of salmon and other anadromous species must be maintained carefully to enable them to reproduce successfully and for their offspring to survive through their early stages, it has been recognized that the countries that maintain their river systems to permit successful spawning and survival of the young should be able to reap the bounty of the salmon harvest. This principle means that even when the salmon are in the high seas, they cannot be caught without explicit permission of the country of origin. If we extrapolate from this principle, we should find ways of rewarding countries that invest in the monitoring and maintenance of fish stocks by giving them allocation bonuses.

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Should States Be Punished for Misbehaving? Selfish and Destructive Fishing Practices Another aspect of “equity” is that countries must be held accountable for taking more than their share and engaging in destructive fishing practices. The highly destructive high-seas bottom trawling, for instance, is an unsustainable practice that does “major damage” to biodiversity and destroys “resources that should be available to all states” (Kimball 2004). Other examples of selfish and unacceptable activities include providing flags to vessels that engage in improper fishing activities and distorting the market by subsidizing fishing vessels.

Controlling IUU Fishing Obviously, any solution to the overfishing of highseas fisheries must involve true cooperation and transparency, which must include bringing the practice of “illegal, unregulated, and unreported” (IUU) fishing under control. This effort will require revisions to the flag-of-convenience system that allows many fishing vessels to operate with limited regulation. It will also require use of modern satellite-based VMS technology, onboard independent observers, and detailed boarding and inspection programs to increase monitoring and thus permit active enforcement of regulations (Balton and Zbicz 2004: 249–250).

Flags of Convenience The problem of IUU fishing is directly related to the extensive use of flags of convenience: [T]here has to be a collective effort to deal with the related and urgent problems of IUU fishing and free riders. The problem is that, despite the advances made by the 1995 Agreement and the various measures adopted through the FAO, not all flag states are able or willing to exercise effectively their responsibilities for fishing vessels flying their flags on the high seas. Urgent action is needed to address this

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problem. It is a matter of great concern that seven out of the 11 cases before the International Tribunal for the Law of the Sea are related to the activities of fishing vessels flying so-called flags of convenience, or flags or non-compliance. (Lodge 2004: 299, 307)

Numerous strategies have been proposed to deal with the flag-of-convenience conundrum, such as “co-ordinating global and regional high seas vessel registers, VMSs, port state measures, the use of trade measures and so on,” but the essential answer is that states must “take full responsibility for the activities of their nationals, regardless of the flag of the fishing vessel concerned” (Lodge 2004: 308).

Evolving into a Rights-Based System The allocation decisions that will be made by RFMOs in the next few years are extremely important, because it is almost inevitable that the allocation schemes will evolve into something akin to a “rights-based” system, and that countries will view their allocation quotas as a vested property right that they are entitled to maintain in future years. McDorman (2005: 440) seemed to recognize this problem when he proposed that countries’ quotas for the previous year be automatically cut 20% for the current year if they cannot reach a consensus on the allocation for the current year. In other words, he appeared to accept the idea that the previous year’s quota would be the starting point for any discussion about allocation for the current year and coming years. Each allocation would thus have importance not just for the current year, because it would set a baseline for future years, and states would seek to maintain and increase their allocations. States would make investments in reliance on the allocations given to them, and they would insist that they are entitled to continue fishing at the rate that they had fished in previous years.

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Summary and Conclusions The decisions made by the RFMOs allocating fish must be “equitable” and “efficient.” Translating such vague terms into actionable criteria is a major challenge. The analysis presented above suggests that these criteria must include the following elements: r Conservation values must be paramount, and the precautionary approach must be utilized to ensure that fish stocks remain bountiful for future generations. Countries must share data regarding their fishing activities and must support scientific research to acquire knowledge on the biology of each species, its relationships with the other species in its ecosystem, and the effects of oceanographic factors upon it. r Developing countries must be given priorities in the allocation of stocks, and must be given assistance so that they can utilize their allocations effectively. r Geographical proximity to the fish stocks must be recognized as an important element of any allocation scheme. When the stocks straddle EEZs of states, those states have a particularly strong claim to a substantial share of the allocation, but even for stocks outside the EEZs, the countries in the region should have a priority over those outside the region. r Countries that make expenditures to monitor and maintain the fish stocks should be rewarded with enhanced allocations. r Countries that misbehave by abusing the flagof-convenience system, by permitting IUU fishing, by allowing their vessels to engage in destructive fishing practices, and by subsidizing their fishing industries should be punished by having their allocations reduced. r The population of a country, its historical dependence on the fisheries in question, and its historical consumption of sea food and need for it as “food security” are also relevant con-

siderations, although of less importance than those listed previously. r Decisions must, of course, be made through a transparent process, and by consensus whenever possible. The process of allocation will be one of trial and error in the early years, and, because we still know so little about many species and many ocean areas, caution must always be a factor in making the allocations.

Endnotes 1. United Nations Convention on the Law of the Sea, December 10, 1982, UN Doc. A/CONF.62/122, reprinted in 21 I.L.M. 1261 (1982) and The Law of the Sea: Official Text of the United Nations Convention on the Law of the Sea with Annexes and Index, UN Sales No. E.83.V.5 (1983). As of the fall of 2008, 157 countries had ratified the Law of the Sea Convention. 2. Some of the material in this section is adapted and updated from Van Dyke (1996c). 3. Agreement for the Implementation of the Provisions of the United Nations Convention on the Law of the Sea of December 10, 1982, Relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks, UN Doc. A/CONF.164/37, September 8, 1995, 34 I.L.M. 1542 (1995). See generally Kedziora (1996–1997), Hayashi, (1996a, 1996b), Balton (1996), Mack (1996), and Christopherson (1996). 4. Website of the United Nations Law of the Sea Convention (visited February 19, 2006). 5. Fishing to attain the maximum sustainable yield inevitably means reducing the abundance of a stock, sometimes by one-half or two-thirds. This reduction can threaten the stock in unforeseeable ways and also will affect other species in the ecosystem. 6. Nations already have the power to board, inspect, and arrest vessels violating laws established to “control and manage the living resources in the exclusive economic zone.” Law of the Sea Convention, supra n 1, art. 73(1).

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7. The Convention on the Conservation and Management of Highly Migratory Fish Stocks in the Western and Central Pacific Ocean, Honolulu, September 4, 2000, available at website of Western and Central Pacific Fisheries Commission; see generally Botet (2001). 8. Law of the Sea Convention, supra n 1, art. 64; see generally Van Dyke and Heftel (1981). 9. 1995 Straddling and Migratory Stocks Agreement, supra n 3. 10. The People’s Republic of China abstained because of its concern about Chinese Taipei’s classification as a “fishing entity,” with some rights to participate separately in decision making, and France abstained because it wanted the French islands in the Pacific to have separate status in the Commission that is to be established. 11. Japan and the Republic of Korea originally stated that they viewed the treaty as too restrictive of their historic fishing practices in the high seas, but have participated in the negotiations and now are contracting parties. 12. Among the many compromises, for instance, was the decision-making provision, which established “chambers” consisting of the FFA and the non-FFA members of the Commission, and provided that each chamber would need to support a decision by a three-fourths majority, with the proviso that no proposal could be defeated by fewer than three votes in either chamber. 13. Status of the Convention on the Conservation and Management of Highly Migratory “Fish Stocks in the Western and Central Pacific Ocean, WCPFC/Comm.2/07 Rev. 1, available at http://www.spc.int/OceanFish/Html/WCPFC (accessed on December 15, 2008). 14. See infra text at notes 19–21. 15. Stockholm Declaration of the Human Environment, Report of the UN Conference on the Human Environment, UN Document A/CONF/ 48/14/Rev. 1 (1972). 16. Rio Declaration on Environment and Development, UN Document A/CONF.151/5/Rev.1 (1992). 17. Law of the Sea Convention, supra n 1, art. 207(4): States, acting especially through

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competent international organizations or diplomatic conference, shall endeavor to establish global and regional rules, standards and recommended practices and procedures to prevent, reduce and control pollution of the marine environment from land-based sources, taking into account characteristic regional features, the economic capacity of developing States and their need for economic development. . . (emphasis added). 18. Straddling and Highly Migratory Fish Stocks Agreement, supra n 3. 19. This approach has been used particularly in the Case Concerning Delimitation of the Maritime Boundary in the Gulf of Maine Area (Canada v. United States), 1984 I.C.J. 246, Case Concerning the Continental Shelf (Libya v. Malta), 1985 I.C.J. 13, paras. 66 and 75, Case Concerning Maritime Delimitation in the Area Between Greenland and Jan Mayen (Denmark v. Norway), 1993 I.C.J. 38 [hereafter cited as Jan Mayen Case], and the Delimitation of the Maritime Areas Between Canada and France (St. Pierre and Miquelon), 31 I.L.M. 1149 (1992). See generally Charney (1994: 242–243). 20. This principle was also recognized in the Jan Mayen Case, supra n 19, where the Court refused to allow the maritime boundary to be too close to Jan Mayen island, and it can be found in the background of all the recent decisions. The refusal of tribunals to adopt an “all-or-nothing” solution in any of these cases illustrates their sensitivity to the need to protect the vital security interests of each nation. 21. Jan Mayen Case, supra n 19. 22. Minquiers and Ecrehos Case (France/ United Kingdom), 1953 International Court Of Justice: 47. 23. Ibid at 57 (emphasis added). 24. Land, Island and Maritime Frontier Dispute (El Salvador/Honduras; Nicaragua intervening), 1992 I.C.J. 351 [hereafter cited as Gulf of Fonseca Case]. 25. Eritrea–Yemen Arbitration, available at http://www.pca-cpa.org (1998–99). 26. Ibid, 1998 Award, para. 239.

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27. Sovereignty over Pulau Ligitan and Pulau Sipadan, 2002 I.C.J. (December 17, 2002). 28. Ibid para. 14. 29. Ibid 30. Ibid paras. 58, 72, 80, 92, 94, 96, 114, and 124. 31. Ibid para. 126 (citing Frontier Dispute (Burkina Faso/Republic of Mali), 1986 I.C.J. 587 para. 63; Territorial Dispute (Libyan Arab Jamahiriya/Chad), 1994 I.C.J. 38 paras. 75–76; Land and Maritime Boundary Between Cameroon and Nigeria (Cameroon v. Nigeria; Equatorial Guinea intervening), 2002 I.C.J., para. 68). 32. Ibid para. 132. 33. The Arbitral Award Rendered in Conformity with the Special Agreement Concluded on January 23, 1925, Between the United States of America and the Netherlands Relating to the Arbitration of Differences Respecting Sovereignty over the Island of Palmas (or Miangas), 2 R.I.A.A. 829 (April 4, 1928), reprinted in 22 American Journal Of International Law 867:893–94 (1928) [hereafter cited as Palmas Arbitration]. Palmas is an isolated island, but when one looks at a map it seems to be closer to the Philippines than Indonesia because it is 48 miles from the large Philippine island of Mindanao and the Indonesian islands it is near (it is 51 miles from Nanusa) are small and seem isolated themselves. Arbitrator Huber wrote that “Although states have in certain circumstances maintained that islands relatively close to their shores belonged to them in virtue of their geographical situation, it is impossible to show the existence of a rule of positive international law to the effect that islands situated outside territorial waters should belong to a state from the mere fact that its territory forms the terra firma (nearest continent or island of considerable size).” Ibid at 893. Any such rule, he explained, would be “wholly lacking in precision and would in its application lead to arbitrary results.” Ibid 34. Ibid, 22 American Journal of International Law at 894; 2 UNRIAA at 855. 35. Minquiers and Ecrehos Case (France/ United Kingdom), 1953 I.C.J. 47, 71.

36. Gulf of Fonseca Case, supra n 24, 1992 I.C.J. 351, 579, para. 368. 37. Eritrea–Yemen Arbitration, available at http://www.pca-cpa.org (1998–99). 38. Ibid, 1998 Award, paras. 509–524. 39. Ibid, para. 458

References Balton DA. 1996. Strengthening the law of the sea: the new agreement on straddling fish stocks and highly migratory fish stocks. Ocean Development and International Law, 27(1–2):125– 151. Balton DA and DC Zbicz. 2004. Managing deepsea fisheries: some threshold questions. International Journal of Marine and Coastal Law, 19(3):247–258. Botet V. 2001. Filling in one of the last pieces of the ocean: regulating tuna in the western and central Pacific Ocean. Virginia Journal of International Law, 41:787–813. Charney JI. 1994. Progress in international maritime boundary delimitation law. American Journal of International Law, 88(1):227–256. Christopherson M. 1996. Toward a rational harvest: the United Nations agreement on straddling fish stocks and highly migratory species. Minnesota Journal of Global Trade, 5(2):357–379. Colburn JE. 1997. Turbot wars: straddling stocks, regime theory, and a new U.N. agreement. Journal of Transnational Law and Policy, 6:323–366. Freestone D. 1991. The precautionary principle. In Churchill R and D Freestone (eds) International Law and Global Climate Change. London: Springer, pp. 21–40. Gjerde KM and D Freestone. 2004. Unfinished business: deep-sea fisheries and the conservation of marine biodiversity beyond national jurisdiction. International Journal of Marine and Coastal Law, 19(3):209–222.

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Hayashi M. 1996a. The 1995 Agreement on the Conservation and Management of Straddling and Highly Migratory Fish Stocks: significance for the Law of the Sea Convention. Ocean and Coastal Management, 29(1–3):51–69. Hayashi M. 1996b. Enforcement by non-flag states on the high seas under the 1995 Agreement on Straddling and Highly Migratory Fish Stocks. Georgetown International Environmental Law Review, 9(1):1–36. Kedziora DM. 1996–1997. Gunboat diplomacy in the northwest Atlantic: the 1995 Canada–EU fishing dispute and the United Nations Agreement on Straddling and Migratory Fish Stocks. Northwestern Journal of International Law and Business, 17:1132–1162. Kimball L. 2004. Deep-sea fisheries of the high seas: the management impasse. International Journal of Marine and Coastal Law, 19(3):259–287. Lauterpacht H. 1950. Sovereignty over submarine areas. British Year Book of International Law, 27:376–433. Lodge MW. 2004. Improving international governance in the deep sea. International Journal of Marine and Coastal Law, 19(3):299– 316. Lodge MW and SN Nandan. 2005. Some suggestions towards better implementation of the United Nations Agreement on Straddling Fish Stocks and Highly Migratory Fish Stocks of 1995. International Journal of Marine and Coastal Law, 20(3–4):345–379. Mack JR. 1996. International fisheries management: how the U.S. Conference on Straddling and Highly Migratory Fish Stocks changes the law of fishing on the high seas. California Western International Law Journal, 26:313– 333. McDorman TL. 2005. Implementing existing tools: turning words into actions—decisionmaking processes of regional fisheries management organizations (RFMO). International Journal of Marine and Coastal Law, 20(3–4):423–457.

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Rayfuse R. 2005. To our children’s children: from promoting to achieving compliance in high seas fisheries. International Journal of Marine and Coastal Law, 20(3–4):509–532. Valencia MJ, JM Van Dyke, and NA Ludwig. 1997. Sharing the Resources of the South China Sea. Honolulu: University of Hawaii Press, 278 pp. Van Dyke JM. 1993. International governance and stewardship of the high seas and its resources. In Van Dyke JM, D Zaelke, and G Hewison (eds), Freedom for the Seas in the 21st Century. Washington, DC: Island Press, pp. 13–22. Van Dyke JM. 1996a. The Aegean Sea dispute: options and avenues. Marine Policy, 20(5):397–404. Van Dyke JM. 1996b. The Rio principles and our responsibilities of ocean stewardship. Ocean and Coastal Management, 31(1):1–23. Van Dyke JM. 1996c. The Straddling and Migratory Stocks Agreement and the Pacific. International Journal of Marine and Coastal Law, 11(3):406–415. Van Dyke JM. 2000. Sharing ocean resources in a time of scarcity and selfishness. In Scheiber H (ed.) The Law of the Sea: The Common Heritage and Emerging Challenges. Publications on Ocean Development, Vol. 34. The Hague/London/Boston: Brill Academic Publishers, pp. 3–36. Van Dyke JM. 2004. The evolution and international acceptance of the precautionary principle. In Caron DD and HN Scheiber (eds) Bringing New Law to Ocean Waters. Publications on Ocean Development, Vol. 47. Leiden/Boston: Martinus Nijhoff Publishers, pp. 357–379. Van Dyke JM and S Heftel. 1981. Tuna management in the Pacific: an analysis of the South Pacific Forum Fisheries Agency. University of Hawaii Law Review, 3(1):11–17. Van Dyke JM, D Zaelke, and G Hewison (eds). 1993. Freedom for the Seas in the 21st Century: Ocean Governance and Environmental Harmony. Washington, DC: Island Press, 524 pp.

Chapter 11

Buybacks in Transnational Fisheries Dale Squires, James Joseph, and Theodore Groves

Abstract Buybacks of fishing vessels, licenses or access and other use rights, and gear can be key management tools to address overcapacity, overexploitation of fish stocks, and distributional issues. Buybacks can also contribute to a transition from an open-access fishery to a more rationalized one. As a strategic policy tool, buybacks can help restructure relations among participants in a fishery, creating positive incentives that reinforce conservation and management objectives. Buybacks, by reducing vessel numbers, increasing profitability, strengthening positive incentives, improving attitudes, and lowering exploitation pressures on fish stocks, can also help in the establishment of self-enforcing voluntary agreements among industry participants. Selectively targeted buybacks can also help conserve ecological public goods, such as the incidental bycatch of species other than tunas when sets are made on dolphins or floating objects.

Introduction1 Buybacks of fishing vessels, licenses, access and other rights, and gear can be key management tools to address overcapacity, overexploitation of

fish stocks, and distributional issues. Buybacks can also contribute to a transition from an openaccess fishery to a more rationalized one built on rights-based management. The customary right of any state to fish on the high seas, national sovereignty, rudimentary or no property rights, and jurisdictional issues may well preclude immediate adoption of individual user rights protected by a strong international agreement. In their absence, vessels face incentives to expand fishing capacity and the race to fish, creating the well-known “tragedy of the commons.” Under these circumstances, buybacks may play a special role in transnational tuna and other highly migratory species fisheries as one of the few ways to reduce fishing capacity and improve economic conditions—but only if entry into the fishery is deterred through a limited entry program. Otherwise, potential free-riders will enjoy the benefits of reduced capacity by subsequently entering the fishery, or even by fishing outside of the agreement. In the absence of individual user rights protected by a strong international agreement, and because buybacks do not change the underlying property or use rights, buybacks in and of themselves do not address the long-run incentives to overinvest in an open- or limited-access fishery. 181

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In fact, buybacks, ironically, can even aggravate this problem over the long run by strengthening investment incentives through growing profits. Nevertheless, an ongoing buyback program coupled with limits on individual vessel capacity and limited entry is one of the few policy tools available to reduce fishing capacity in transnational fisheries. Critically, buybacks may form part of a transitional strategy to a more rationalized fishery based on individual user rights backed by a strong international agreement that fends off potential free-riders. As a strategic policy tool, buybacks can help restructure relations among participants in a fishery, creating positive incentives that reinforce conservation and management objectives. Buybacks, by reducing vessel numbers, increasing profitability, strengthening positive incentives, improving attitudes, and lowering exploitation pressures on fish stocks, can also help in the establishment of self-enforcing voluntary agreements among industry participants. Selectively targeted buybacks can also help conserve ecological public goods, such as the incidental bycatch of species other than tunas when sets are made on fish associated with dolphins or floating objects. Buybacks of vessels and licenses are widely applied in domestic fisheries, but have been applied only twice in transnational fisheries: the Italian Mediterranean drift gillnet swordfish fishery and the high-seas longline tuna fisheries conducted by Japan and the Organization for the Promotion of Responsible Tuna Fishing (OPRT) (Curtis and Squires 2007). The unilateral Italian buyback simply allowed expansion by other states. The multilateral longline buyback was more successful, and would have benefited even more if there had been broader participation.

Buybacks to Address Overcapacity and Overfishing By directly reducing fishing capacity through removing vessels and relieving pressures on

resource stocks, vessel profits and resource rents can potentially rebound, fish stocks recover, and income and wealth distribution change through redistribution of access and compensation and transfer payments. The objectives of most buyback programs often include a mixture of all goals, and simultaneous pursuit of these objectives is possible. A successful buyback can raise profits in the short run. Fewer vessels mean that rent is shared among these fewer vessels. Lower fishing capacity can lead to greater catch rates for the remaining vessels, possibly allow gains in economies of scale and scope for the remaining vessels, and reduce overall industry costs (especially capital) and vessel costs.2 To the extent that the volume or timing of landings is not substantially altered, fish processors are likely to be unaffected in the short run and to gain in the long run through more sustainable supply. Buybacks do not, by themselves, necessarily sustain profits to vessels and rents to the fisheries over the long run. Long-term rent gains depend on the ability to limit replacing or even expanding fishing capital. Economic welfare can fall with additional investment in the postbuyback fishery if the use right conditions underlying the “tragedy of the commons” are not eliminated, so that further investments are redundant from the perspective of society. In the absence of property rights or taxes, increased resource rent can reinforce the very investment incentives that lead to the initial overcapacity.

Buybacks As a Transitional Strategy Buybacks may form part of a transitional strategy to a more rationalized fishery. As long as management is based on input controls or total allowable catches (TACs) and without strengthened property rights, buybacks may not be the long-term answer, since vessels can expand fishing capacity by increasing investments and use of uncontrolled

11 Buybacks in Transnational Fisheries

inputs (Wilen 1979, 1988, Townsend 1990) and technical progress (Squires 1992). Moreover, when fisheries are mired in debt and an absence of vessel profits and resource rent, cooperation is difficult to achieve among fishers. As a transitional strategy, buybacks can help counter these adverse forces. After a successful buyback, when a fishery resumes profitability, increased cooperation can follow. The smaller number of fishers also contributes to increased cooperation, and the remaining fishers tend to be those most committed to the long-term economic viability of the fishery. Autonomous adjustment following a management change may be relatively slow. A key factor influencing the rate of change is the alternative uses for retired capital. If there is not another fishery in which a vessel can be used, it may be rational for an operator to delay exiting the fishery until the vessel is at or near the end of its economic life.

Features of Buyback Programs This section examines some of the most important features of buyback programs based on the global experience. Papers in Curtis and Squires (2007) more extensively discuss these and additional facets of buyback programs.

Critical Preconditions There are several critical preconditions for a buyback of licenses or vessels. One of the first steps starts with proper registration of license and vessels to create a well-defined group of eligible owners and to provide well-defined boundaries to the fishery and program. Because of the prevalence of eligibility requirements and different buyback pricing formulae, the registration typically includes some combination of measures of the heterogeneous capital stock, such as vessel size (gross registered tonnage [GRT], gross tonnage [GT], length, well capacity) and/or engine power, plus catch history, revenue, home port, gear type,

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methods of fishing, vessel age, crew size, and area fished. In some instances, a time series of some of these measures, such as catch history, is required for each vessel, such as when a window of multiple years is used to establish eligibility. A second critical precondition of buybacks is in situ measures to prevent new boats from entering the fishery in place of the ones that have been removed. Without a preexisting program of limited entry, individual transferable quotas (ITQs), or some form of common or private property or use rights that strengthen exclusive use, funds from purchased vessels or licenses can be used to purchase an upgraded or new vessel for the fishery, or new participants may enter the fishery as it becomes profitable. A related issue is funds received from the buyback used to finance further investment in existing vessels held by the same owner, or to reenter the fishery by selling a vessel or license and using the proceeds to purchase an existing vessel or license. If there are permit holders that are not actively fishing but eligible to enter the fishery, one of these permits could be purchased for far less than the funds received to exit the fishery, in which case fishing effort could expand. Public funding of buybacks can exacerbate this problem of fishing capacity expansions through investment and technical progress for the remaining vessels, since additional funds from outside of the sector are now potentially available for owners of exiting vessels, permits, or gear.

Who Pays for Buybacks? Buyback schemes are most often funded by governments. The World Bank (2004) observes that public funding may be appropriate initially in terms of correcting past policy error, and that buyback schemes are effectively government subsidies for the improved performance of the fishery. Mixtures of funding have been used. Commercial and recreational fishing interests may finance all or part of the buyback, usually in conjunction with public funds. Financing includes government

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grants, annual payments from license fees, and commercial or government loans. A commercial fishery-financed buyback finances the program from the proceeds that are expected to arise following the expected recovery. Such a buyback can be initially funded by a public loan, which is paid back by the commercial fishery on the basis of landings fees. In this case, the public bears a substantial portion of the risk of the loan. Nongovernmental organizations (NGOs) can finance through purchases of licenses or vessels. The World Bank, Asian Development Bank, InterAmerican Development Bank, and other such institutions may have an important role providing initial funding for industry-financed buybacks in transnational fisheries. When a buyback is financed by commercial or recreational fishers, the buyback’s debt obligation becomes collective, rather than individual. Collective borrowing, rather than borrowing by individuals, also spreads the risk among remaining fishers.

Purchase Vessels or Licenses (Permits)? Should the buyback program purchase the vessel, license, or both? Purchasing only the license tends to be cheaper than purchasing the vessel, which, in turn, is generally cheaper than purchasing both the vessel and license. License prices may be set at the market rate (although expectation of increased revenues after capacity reduction may cause license prices to rise sharply) or at the value required to encourage the chosen proportion of fishermen to surrender their licenses (Read and Buck 1997). Many vessels hold licenses for more than one fishery. If the program buys back only the license, the vessel remains free to fish elsewhere, and, in doing so, shifts fishing capacity to another fishery. If the program buys back the vessel, but not the license, the license, if allowed to be transferable to another vessel, can be used with another vessel in the fishery. In this instance, pressures on the fish stocks and economic rents may not be abated, and may even increase if the license is used with a vessel that is more productive than the vessel that was removed.

Purchasing only the license frequently removes vessels from the fishery that are inactive or with low levels of fishing, but which could potentially increase their fishing as the profitability of the fishery improves. Inactive or low-activity vessels may have their primary focus of fishing in other fisheries, and be holding licenses more as options to fish, and the license price may fundamentally reflect option value. Purchasing the lowest priced licenses tends to remove the least active vessels, such as vessels fishing part-time or in multiple fisheries, or which are the most marginal in some other sense. Purchasing inactive licenses affects the longerterm effectiveness of the buyback. The long-term effectiveness of a buyback program can depend on whether previously inactive vessels or buyback beneficiaries return to the fishery (US Government Accounting Office [GAO] 1999). The license can be attached and locked to the vessel, so that a separate market for licenses does not emerge. The buyback would make no distinction between the vessel and license, and the buyback price would include the values of two assets. Fishing capacity would not be allowed to shift to another fishery. If a bought-out vessel also held licenses for other fisheries, and these licenses were also attached to the vessel, the buyback price could include the license values from the other fisheries and reflect the expected profitability of the other fisheries. Other considerations arise when deciding whether to buy back vessels or licenses. There is a trade-off with affordability, since it is less expensive to buy permits. Another factor is whether there could be strong spillovers onto other fisheries. Also, if the permit is removed from the vessel through the buyback, can the vessel still participate in other fisheries? Part of the answer relates to the scope of the program.

Voluntary versus Mandatory Participation Virtually all license and vessel buyback programs have been designed on the basis of voluntary participation. One of the few buyback programs with

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mandatory participation was the Northern Australian prawn fishery, which was extensively discussed by Holland et al. (1999). In this fishery, fractional licensing (Townsend and Pooley 1995) was used, in which vessels were required to purchase 30% of their vessel units from other vessels to remain in the fishery. The Japanese longline buyback made provisions for mandatory participation should a sufficient number of voluntary participants fail to materialize, but this provision was never required (Kuronuma 1997).

Conditions on Reuse of Vessel, Gear, or License Buyback programs may place conditions on the reuse of the purchased vessel, gear, or license. One of the most important conditions for vessel buybacks is whether it is required that the purchased vessel be scrapped. If a purchased vessel is not scrapped or sold quickly, then the government incurs maintenance cost, as well as losses from vessels either sinking or depreciating in value. Vessels that are not scrapped (and not committed to a nonfishery use) may be used in another fishery, which itself may face overcapacity and overfishing, thereby simply transferring the problems from one fishery to another while providing windfall gains to vessel owners whose vessels were purchased and subsequently transferred. Even if a vessel is not transferred, funds from the buyout might be used to purchase vessels in other fisheries. Some buyback programs allow construction of new vessels if the previous vessel is scrapped. There may also be a requirement that the scrapped vessel be no larger in terms of GRT, length, or some other measure of vessel size than the newly constructed vessel and may even require removing a greater amount of tonnage or engine power than that of the newly constructed vessel in an attempt to limit the growth in fishing capacity. Some buyback programs restrict the use of the vessel or license in another fishery in that country. Under the conditions of some buyback programs, vessels can convert to another activity or gear. Some

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buyback programs allow the vessel to be exported to another country. If purchased vessels are sold abroad, then there may be simply an export of the overfishing and overcapacity problems if the vessel is used in a fishery with the same problems. Vessels might be sold to help finance the buyback program, as in the British Columbia salmon troller buyback. The question remains as to the alternative use of the vessels that were sold. A program that does not require scrapping may have an impact on the price of the vessel that is to be bought out and the prices of secondhand vessels may fall. A buyback program that purchases only the license does not have to explicitly deal with a bought-back vessel; instead, the decision is retained by the vessel owner.

Conditions on Reinvestment Conditions might be placed on reinvestment of funds received by vessel or permit owners, with an eye on limiting expansions in the capital stock and adoption of new technology that is either embodied in the capital stock or disembodied, such as new ways of fishing. The British Columbia salmon troller buyback required that a vessel owner replacing an existing vessel with a larger one be required to purchase another licensed vessel such that the GT of the two existing vessels was greater than or equal to that of the replacement vessel.

Buyback Price Formation Process An important program design issue is the price formation process for the vessels, licenses, fishing rights, or gear to be purchased. There are many different ways to design this process, but in all instances a cost-effective process more efficiently removes fishing capacity. Some of the key issues include the program seeking bids or making offers, single price or reverse auctions, single or multiple rounds of bidding, sealed or open bidding, irrevocable bids, whether bids are responsive or nonresponsive to the criteria and conditions established, the length of the bidding process and buyback program, and how much bids must be beaten by. The

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program designers have to decide which approach mobilizes support for the program, is more costeffective, and fits the budget. There are several different price formation processes. Consider first reverse auctions, in which operators submit confidential bids to the scheme, the lowest bid wins, and that operator is paid that lowest bid. Additional information may be required to help discriminate between the bids and achieve the greatest impact for least cost, such as different metrics as discussed below. Second, the buyback program may establish an offer price, which vessel, license, or gear owners are free to accept or reject. Third, in sealed-bid auctions, the bidder with the highest sealed bid wins and pays that bid. Vickrey auctions have a second price, sealed bid format. The bidder making the highest bid wins and pays the next-highest bid. A reverse auction is the most widely used process to form prices. This process is called a reverse auction because a standard auction features a single seller receiving bids from would-be buyers. Bids are usually sealed. The buyback program may calculate and offer single-round prices, which asset owners are free to accept or reject. The program’s offered buyback price may not equilibrate supply and demand, and the number of applicants can exceed or fall short of the funds available. Price and distribution can be affected by eligibility requirements, bid-ranking systems, and direct allocation of funds among groups. The scoring or ranking of bids affects who stays and who exits, that is, the composition of the remaining fleet, and the amount of capacity that is reduced. A problem with most bid systems involving the sale of a vessel is that everyone offers a different product—there is not a homogeneous metric. However, the use of units of meters, tonnage, well capacity, revenue, or fishing capacity militates this problem. If licenses are for a given category, then the licenses are closer in equivalence than simply vessels, and hence easier to judge and require less information. Buybacks can occur all in one round—the “big bang” option—or in multiple rounds. There are advantages and disadvantages to multiple and single-

round buybacks, and, in practice, the availability and timing of funding often determines which approach is adopted.

Vessel Buybacks in Transnational Fisheries3 Introduction Unilateral buybacks in fisheries exploiting transnational resources simply remove fishing capacity from one country, thereby reduce pressures on profits and resource stocks, which in turn allows free-riding through growth in another country’s fishing capacity. The Italian buyback of fishing capacity in the drift gillnet fishery for swordfish simply allowed expansions of fishing capacity by other nations fishing for swordfish in the Mediterranean Sea (Spagnolo and Sabatella 2007). The OPRT buyback of high-seas tuna longline vessels in the Pacific Ocean is a second example of a buyback in a transnational fishery. Nonetheless, there was some free-riding through expansion of longline vessels by noncooperating parties in this fishery, which, in turn, mitigated against some of the gains from the buyback.4 A key factor contributing to potential success is that Japan is the primary market for sashimi-grade fish, and if that market was denied to a longline vessel, that vessel would face difficulty in turning a profit (Joseph et al. 2007). Gains to international cooperation through gains from participation and compliance and deterring entry and expansion by nonparties are perhaps the greatest challenges to a buyback on shared resource stocks such as tunas. Gains to multilateral cooperation from reducing fishing capacity due to a buyback come from saving on losses due to overcapacity and excessive exploitation of common resources, that is, from lowering the losses due to the “tragedy of the commons.” Success requires that a buyback ensures that every party is better off with the program than without it, but to succeed the program also must ensure

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that each party would lose by not participating. In other words, free-riding through nonparticipation must be addressed by some credible means, such as an effective trade restriction, as noted above. A positive incentive for participation comes to the remaining vessels through the aggregate gain from participating, in the form of increased profits, and to sellers of vessels and/or rights through compensation in the form of the buyback payment.

National Sovereignty: Individual Vessels or Flag States? National sovereignty complicates buybacks in transnational fisheries. Buybacks and the critical preconditions of limited access and vessel registry can be defined in terms of either the individual vessel or the flag state. In other words, what is the basic unit in the program, flag states or vessels and their associated measures of fishing capacity (potential output, GRT, well capacity, length, etc.)? Can vessels and their associated measure of capacity freely transfer among flag states, or are vessels and their associated capacity directly tied to the flag state? The Inter-American Tropical Tuna Commission developed its Regional Vessel Registry, incorporating the concept of transferability, but there has been reluctance on the part of some states to recognize this provision of the program. Strictly on the grounds of economic efficiency, a limited access and vessel buyback program defined solely in terms of vessels, rather than flag states, can be expected to lead to greater economic rents and overall healthier profits in the fishery, since there can be greater gains from trade (arbitrage efficiency) as capacity and the right to fish shift to lower-cost vessels.

Coastal and Distant-Water States An additional issue that arises is the distribution of vessels and fishing capacity among coastal and distant-water states, and, more generally, the unique nature of the required multilateral cooperation to manage fishing capacity when there is asymmetry among states. This issue is not unique

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to fisheries. Major international environmental agreements, such as the Montreal and Kyoto Protocols, addressed similar asymmetries between developed and developing nations with global atmospheric public goods. Coastal states control entry into their exclusive economic zones (EEZs), and special privileges are enshrined in international law. Potentially, viable limited entry and buybacks must allow for the expansion of vessels and fishing capacity by coastal states. Fractional licensing is an alternative to vessel buybacks. Vessels are allocated only some fraction (not the entire amount) of the access right required for the fishery, and must purchase the remaining amount from other, existing vessels (Townsend and Pooley 1995, Joseph 2005). Illegal, unregulated, and unreported (IUU) fishing can also undermine the effectiveness of any buyback program established under the auspices of regional fishery management organizations. Cooperating parties may be deterred when noncooperative nations reap the external benefits flowing from the sacrifices of cooperating parties, that is, there is free-riding.

Limited Access: A Critical Precondition for Buybacks The ability to legally deter free entry into the fishery by new vessels under existing international law is a critical precondition for a buyback. Evolving customary law may be reshaping conditions to deter free entry through the formation of regional vessel registries in the Inter-American Tropical Tuna Commission, Indian Ocean Tuna Commission (IOTC), International Commission for the Conservation of Atlantic Tunas (ICCAT), and Commission for the Conservation of Southern Bluefin Tuna (CCSBT). Hallman et al. (2010) provide further discussion on limited entry in transnational tuna fisheries.

Financing the Buyback Buybacks within regional vessel registries that limit entry can be financed, in part, by industry

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participants, perhaps seeded by an initial lowinterest loan by a development bank or consortium of governments. In fact, the World Bank observes that in view of the high level of funding required, and the policy nature of those schemes, the World Bank and other major international financial institutions could support buybacks of surplus vessels through broad-sector instruments, such as SectorWide Approach programs (SWAPs) or Poverty Reduction Support Credits (PRSCs), or perhaps even the Global Environmental Facility (GEF) (World Bank 2004). Buybacks aimed at protecting ecosystem health can, in principle, be legitimately financed by governments and international public institutions to the extent that these funds reflect the public’s willingness to pay for the “existence value” of the ecosystem’s health. In principle, buybacks financed by governments solely for capacity reduction without loan repayment constitutes a subsidy, but since government subsidies contributed to the overcapacity problem, government subsidies may be called for, in part, to correct this problem. As the fleet was reduced toward the target size, the average catch per vessel would increase and profits rise, so that the industry can better fund the buyback. Thus the initial loan and ongoing payments for buybacks could be funded by an assessment on each vessel; a landings tax would raise funds proportional to the amount of fishing. Increased profitability with success of the buyback would provide the fundamental pool of funds. Alternatively, as Joseph (2005) notes, all or part of the tax or assessment could be applied to the processed product, since the processors would reap the benefits of a well-managed fishery. Ultimately, the relative price elasticities of producers, processors, and consumers would determine the incidence of the tax among these groups. The assessments and development of a pool of buyback funds would be region- and gear-specific. Recreational fishers can also be expected to contribute to financing the buyback, thereby reflecting their share of the resource’s exploitation. Such co-financing of a buyback occurred in the Texas shrimp fishery (Riechers et al. 2007).

Buybacks to Address Ecological Issues Reductions in the total level of fishing capacity through general buybacks can directly reduce catches of nontarget species (as well as the targeted tunas) and thereby help strengthen ecosystem health, but the amount of reduced overall fishing capacity may be insufficient to fully address this ecological issue. Buybacks of vessels and/or use rights—the carrot approach—can instead specifically target vessels harvesting in ways or with gear that have the most detrimental ecological impacts in sectors of the fishery facing the greatest ecological issues. Historically, economic incentives to address ecological issues, such as incidental takes of dolphins or sea turtles taken when shrimp trawling, have generally relied upon negative economic incentives through trade measures and boycotts (cf. Joseph 1994). Further discussion on the use of buybacks to address bycatch and other ecological issues is provided by Gjertsen et al. (2010).

Issues from an Industry Perspective Whatever program is put together must make sense to participants. This is a particularly important issue if the buyback program is industry initiated and financed. Participants must buy in and understand that a buyback program must take place. Industry support is critical for success. Industry support requires finding a champion, because leadership is required to bring a buyback program to fruition, particularly if the program is industry financed. Such a focal person helps to ensure that the necessary steps occur throughout the process. Dealing with nonsupporters throughout the process is an important leadership element in any buyback program, since not everyone will buy into the buyback need and program. Some nonsupporters will become deterrents. Nonsupporters can come

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from the fishery in question or from people outside of the industry who sincerely do not want such an approach. Flexibility is required throughout the process, since the unexpected arises. This flexibility may even require retracing steps or even starting over. Fishers and governments must support the buyback, to realize that change has to occur and that the process is not arbitrary.

What Are the Main Lessons to Be Learned from the International Experience? First, and one of the most important lessons, is that it is much easier and less expensive to ex ante prevent overcapacity, overfishing, and ecosystem degradation than an ex post reduction. Second, buybacks are a strategic choice that affects incentives, and thereby can play a strategic role in a transition to a more rationalized fishery on the basis of user rights and restructure incentives and relations among participants through improving the economic conditions during a window of opportunity following a buyback. If buybacks sufficiently reduce the number of participants and profits sufficiently rebound, the remaining participants are likely to be the most committed and to enjoy growing cooperation and more favorable attitudes toward more complete individual or common rights. Ultimately, because buybacks do not change the underlying property or use rights, the longrun incentives remain to overinvest in an openor limited-access fishery. In fact, buybacks with ill-structured rights even aggravate this problem over the long run by strengthening investment incentives through growing profits, which eventually overwhelm the positive, but temporary, economic incentives created by the buyback. In a nutshell, buybacks create a window of opportunity to rationalize a fishery that erodes over time. Buybacks viewed as a strategic opportunity have a number of different ways to induce changes

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in behavior through the choices that are made for the design of the buyback program. Every substantive choice can affect incentives and thereby behavior of the remaining participants, and even the decision of who chooses to stay and who chooses to leave the fishery through participation in the buyback. Linkages of program design features can also be a strategic choice. For example, requiring purchased vessels to also be scrapped or preventing owners of purchased vessels from using the proceeds to reinvest in the fishery not only affects the level and growth of fishing capacity, but can also affect who elects to participate, the purchase prices, and fishing capacity and profits. A buyback can be linked with requirements for conservation of biodiversity and ecosystem health or with time–area restrictions on fishing. Third, all other things being equal, buybacks are more likely to be effective at reducing fishing capacity when fleets are smaller in numbers and when there are fewer vessels and fewer permits that are largely inactive or active at low levels. Similarly, all other being things equal, larger budgets allow greater reductions in any given number of vessels and licenses. Buybacks can become expensive, and there is risk that their cost can exceed the benefits gained. Fourth, buybacks can vary in their extent of inclusiveness, or equivalently, their focus on groups of vessels. The focus of buybacks can vary, depending on the gear, methods of fishing with a gear, species fished, the amount of time fished (“active” versus “inactive” vessels), and recreational or commercial fishing. In this regard, the buyback can be broad but shallow, with all vessels and fishers eligible to participate, or narrower, but deeper, focusing on a particular group or segment of the fishery. Every one of these choices is a strategic choice that affects incentives, and hence behavior, and which shapes the type and structure of the postbuyback fishery. Fifth, the design of the buyback program has distributional implications. Different designs and program features, such as bidding metrics, create different sets of gainers and even losers.

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Moreover, crew members seldom gain directly from a buyback, although supplementary programs, such as job retraining or educational grants, can address this issue. Sixth, several preconditions are critical for buyback programs to be effective. Proper registration of licenses and vessels creates a well-defined group of eligible owners, and provides welldefined boundaries to the fishery and program. Establishing broad participation is critical in transnational fisheries. Limited access is another critical precondition in both domestic and transnational fisheries. Without limited entry, vessels enter the fishery as profits rebound following the capacity reduction induced by buybacks, and fishing capacity increases; the conditions for free-riding are established. Seventh, buybacks work best through comanagement, that is, through cooperation among the public and private sectors and other interested parties. Comanagement can affect the strategic choice of the buyback program design and the incentives for industry participants. Strong industry participation in all phases of the program strengthens the chances for success. Consultations and workshops with user groups help design better programs, prepare the user groups for the buyback, and help build and enlist support from user groups. Eighth, moral hazard issues may arise. The purchased vessels are frequently older and less productive than the remaining vessels. The buyback may merely accelerate the departure of vessels marginal to the fishery that would have departed in any case, but the buyback facilitates and accelerates their exit and at a higher vessel purchase price than would otherwise occur. Purchased vessels or licenses may also be among the least active, so that buybacks may have little effect in improving economic performance and helping resource stocks to recover. By absorbing risk and establishing a vessel or license price floor, buybacks may also strengthen investment incentives for the remaining vessels. Ninth, there is often no single, best answer to many program design issues. Nonetheless, clear objectives and a clearly defined scope of the pro-

gram are critical. A pilot program can also be helpful. One or more champions, whether individuals, organizations, or public agencies, can become an important galvanizing force. Tenth, decisions must be made to first purchase active or inactive vessels or permits or both. Purchasing inactive vessels and/or permits has the advantage in that it is cheaper and it can allow ready expansion of fishing capacity as profits rebound and fish stocks bounce back. In most instances, vessels and their permits are purchased together, rather than simply the permits, since removing the vessel eliminates capacity plus any spillover effects on other fisheries. Eleventh, beneficiaries of a buyback program can contribute to the funding of the program all or in part. Commercial fishers can enjoy increased profits, recreational anglers can benefit from greater catch rates and, possibly, larger fish, and the general public and NGOs gain strengthened ecosystem health. The initial funding for a buyback, especially when the fishery is unprofitable, may have to be a loan from a national or state (regional or provincial) government or, in the case of transnational fisheries, from an international organization. To some extent, public funding can be viewed as compensation for past policy errors. Public loans to user groups mean that the public bears the risk of the loan. Public or industry financing creates a debt that is a collective, rather than individual responsibility. Public or private outlays can be recovered through user fees, such as licenses or entrance fees to marine parks, and landings taxes, so that those enjoying the most revenue and revenue increases bear the most financial responsibility. Public funding without repayment from rent increases is ultimately a transfer payment, which can be capitalized into license or vessel values and raises prices and the cost of the buyback. Twelfth, the net economic benefits of a buyback, particularly a public-funded program, depend on the benefits that could be generated by these funds in their next-best use elsewhere in the economy and the size of the overall benefits from the buyback in comparison to the program expenditures.

11 Buybacks in Transnational Fisheries

Thirteenth, partial or completely privatefinanced buybacks may be preferred to full publicfinanced buybacks because the tax for a privatefunded buyback is a double dividend tax that helps to correct the resource stock externality, both as a tax and through funding the buyback. The tax compels firms to confront some of the external costs for the resource stock and the ecosystem due to poorly structured property rights. Depending on the incidence of the tax among fishing firms, processors, and consumers, there may be incentives to curtail fish consumption, since consumers do not bear the full costs of fish consumption. Privately financed buybacks also force industry, rather than the public, to bear any potential moral hazard, that is, risk and costs from expectations of future bailouts. Fourteenth, the administration of payments and the bidding process are critical program design issues. Should buybacks proceed on the basis of bids by vessel or permit owners or offer prices determined by the program? Capacity is usually purchased through vessel, license, or gear bids and reverse auctions and often on the basis of some metric of fishing capacity, such as dollar bid offered per GRT, horsepower, revenue, catch, cubic meters of well capacity, and meters of length. Bids can be in a single round or multiple rounds. Multiple rounds of buybacks increase administrative costs, but may also reduce strategic behavior in offers. Multiple rounds also allow adjusting payments to target particular groups of fishers by adjusting the criteria for bid acceptance and allowing fishers to reformulate their bids. Pilot programs can help. Bids are typically sealed. Irrevocable bids prevent “stink bids,” in which speculators bind up a large proportion of the available funds. The program administrator can help owners form price expectations and markets to form by working to lower transaction costs and providing market information through releasing average price per unit of capacity, total available funds, etc. Fifteenth, selective buybacks can help achieve social objectives other than efficiency and resource conservation goals, including accommodation of new entrants or coastal states, and shifting capac-

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ity regionally, by gear type or set type. Buybacks compensate those in the industry who would otherwise lose out from rebuilding fish stocks and restructuring the industry. Buybacks have a differential impact on gear types or regions, but maintaining an equitable allocation of harvests among gear types or regions helps ensure political support. Sixteenth, buybacks have largely focused on overcapacity, overfishing, raising profitability, and disaster relief, and have seldom been intended to address goals of ecosystem management and conservation. General buybacks are a blunt instrument, but to the extent they can target selective areas or times fished, gear types, or modes of fishing, buybacks can provide a tool toward restoring ecosystem health. Buybacks targeted at methods of fishing, such as sets on fish associated with floating objects, can reduce bycatch. Seventeenth, buybacks for transnational fisheries exploiting shared resource stocks are unlikely to be effective without a multilateral program among those countries contributing the bulk of the fishing capacity on the common resource stock. Simply put, unilateral, rather than multilateral, buybacks face failure. The participation issue must be addressed. Buybacks in transnational fisheries must also be predicated upon deterrence of new entrants (other than through purchase of licenses), which requires changes in, at a minimum, customary international law. Negative economic incentives, such as credible trade measures, may be necessary to deter entry and to ensure compliance by participating parties. Allowing capacity to transfer among individual owners, rather than restricting to flag states, allows more efficient capacity reduction. Coastal states, when resource stocks span both EEZs and high seas, are typically afforded special accommodation for growth, which can represent a side payment. Eighteenth, buybacks alone are not the longterm solution to the overcapacity and overfishing problem in an open-access or limited-access fishery, although they may be the best option available in the foreseeable future for transnational fisheries,

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given the limitations of international law pertaining to individual user rights protected by a strong international treaty. Nineteenth, buybacks, essentially an input control, primarily address the capital stock, but only indirectly the relationship between inputs and catches. Under command-and-control input controls, uncontrolled inputs can be substituted for controlled inputs, such as investment in additional capital in the remaining vessels, the capital stock of the remaining vessels may be more fully utilized and fishing capacity increased by fishing longer, or technology, such as the addition of vessel electronics, may progress. Vessel buybacks unaccompanied by a comprehensive use right thus have the same shortcomings as limited entry in that the underlying ill-structured property rights continue to generate incentives for continued investment, and incentives spawning overcapacity and overfishing remain. Twentieth, the long-run success of a buyback program in reducing fishing capacity and fishing mortality without a strengthening of the use or property rights requires controlling future growth in fishing capacity through restrictions on investment and increased fishing time, ideally through positive incentives. Additional rounds of buybacks may be necessary. Twenty-first, buyback programs must be evaluated to identify lessons learned that might help improve future programs.5 Planning for such evaluations, including developing measures to evaluate program results, should be an important part of the design of future programs. In addition, develop performance measures for buybacks that relate to program goals and broader legislative goals, such as the need to better manage fishing capacity and sustain fish stocks, should be developed.

Concluding Remarks Buybacks of vessels, licenses, access and other use rights, or gear have been demonstrated to be a useful policy tool under a certain set of condi-

tions and for a limited period of time before the benefits erode. Buybacks alone are not a panacea or a long-term answer to overcapacity, overfishing, and ecosystem degradation, but they may be the only feasible option for a transnational fishery to reduce fishing capacity. Buybacks can accelerate the transition to a rationalized fishery and enhanced ecosystem health when coupled with limited entry, scrapping of bought-out vessels or conversion of them to other uses, limits on reentry into the fishery through purchases of formerly inactive licenses by owners who have just sold active licenses, and comanagement through partnership with the industry. Financing the buyback may be a mixture of public and industry financing with initial loans or grants by an international organization. Buybacks in a transnational fishery are not a replacement for a system involving individual user rights that is protected by a strong international agreement. Nonetheless, an ongoing multilateral buyback of vessels, licenses, other use rights, or gear, coupled with vessel capacity limits and limited entry, may be the only tractable approach to reduce capacity until a system of individual user rights protected by a strong international treaty is instituted.

Endnotes 1. This chapter draws heavily from the papers in Curtis and Squires (2007), especially those of Groves and Squires (2007) and Hannesson (2007). The chapter also draws from Barrett et al. (2004), FAO (1998, 2000), GAO (1999, 2000), Holland et al. (1999), Joseph and Greenough (1978), Joseph (2003, 2005), Weninger and McConnell 2000, and World Bank (2004). 2. Economies of scale are reductions in unit harvesting costs when costs, especially fixed costs, are spread out among higher levels of output or catch. Economies of scope are cost savings from joint production of multiple outputs or species. 3. This section largely draws from Barrett (2003, 2005), Curtis and Squires (2007), Joseph

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and Greenough (1978), Joseph (2003, 2005), Barrett et al. (2004), Joseph et al. (2010), Groves and Squires (2007), and Hannesson (2007). 4. Joseph et al. (2007) observed that Japan has targeted 130 vessels for removal from its fleet, and Chinese Taipei has agreed to limit its fleet to 600 vessels. Chinese Taipei will require that vesselsowned citizens or residents of Chinese Taipei under flags of convenience be transferred to its registry. Some of the recalled vessels will be bought back and scrapped, along with the 130 Japanese vessels. Moreover, funds were loaned to the industry groups by the Japanese government on a 20-year payback schedule. This buyback was partly in response to the reduction of fishing areas when national waters were extended into what had been international fishing grounds (Holland et al. 1999). 5. This recommendation draws almost verbatim from GAO (2001: 5–6). Kitts and Thunberg (nd) and Kitts et al. (1998, 2001) are extremely useful for practical design and evaluation.

References Barrett S. 2003. Environment and Statecraft: The Strategy of Environmental Treaty Making. Oxford: Oxford University Press, xii, 437 pp. Barrett S. 2005. The theory of international environmental agreements. In M¨aler KG and JR Vincent (eds) Handbook of Environmental Economics, 1st edn, Vol. 3. Amsterdam: Elsevier, Chapter 28, pp. 1457–1516. Barrett S, J Joseph, T Groves, and D Squires. 2004. Design of an effective and implementable plan to limit overfishing. Paper Presented to the American Economic Association Winter Meetings, Philadelphia, PA. Curtis R and D Squires (eds). 2007. Fisheries Buybacks. Oxford: Blackwell Publishing, xiv, 267 pp. FAO. 1998. Report of the Technical Working Group on the Management of Fishing Capacity. FAO Fish. Rep. No. 586. La Jolla, USA, April 15–18, 1998, 57 pp.

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FAO. 2000. The International Plan of Action for the Management of Fishing Capacity. (http://www.fao.org/fishery/ipoa-capacity/en). GAO. 1999. Federally Funded Buyback Programs for Commercial Fisheries. Briefing for the House Committee on Resources, GAO Resources, Community, and Economic Development Division, GAO/RCED-00-8R, September 23. Washington, DC. GAO. 2000. Commercial Fisheries: Entry of Fishermen Limits Benefits of Buyback Programs. GAO Report to House Committee on Resources. GAO/RCED-00-120, June 2000. Washington, DC. GAO. 2001. Commercial Fisheries: The Effectiveness of Fishing Buyback Program Cans Be Improved. Testimony before the Subcommittee on Fisheries Conservation, Wildlife, and Oceans, Committee on Resources, House of Representatives, May 10, 2001 (http://www.gao.gov/ new.items/d01699t.pdf). Gjertsen H, M Hall, and D Squires. 2010. Incentives to address bycatch issues. Chapter 14 of this volume. Groves T and D Squires. 2007. Lessons from fisheries buybacks. In Curtis R and D Squires (eds) Fisheries Buybacks. Oxford: Blackwell Publishing, pp. 15–53. Hallman B, S Barrett, R Clarke, J Joseph, and D Squires. 2010. Limited accesses in transnational tuna fisheries. Chapter 12 of this volume. Hannesson R. 2007. Do buyback programs make sense? In Curtis R and D Squires (eds) Fisheries Buybacks. Oxford: Blackwell Publishing, pp. 55–63. Holland D, E Gudmundsson, and J Gates. 1999. Do fishing vessel buyback programs work: a survey of the evidence. Marine Policy, 23:47–69. Joseph J. 1994. The tuna-dolphin controversy in the eastern Pacific Ocean: biological, economic, and political impacts. Ocean Development and International Law, 25:1–30. Joseph J. 2003. Managing fishing capacity of the world tuna fleet. FAO Fisheries Circular, 982:67, xii.

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Joseph J. 2005. Past developments and future options for managing tuna fishing capacity, with special emphasis on purse-seine fleets. FAO Fisheries Proceedings, 2:281–323. Joseph J and JW Greenough. 1978. International Management of Tuna, Porpoise, and Billfish—Biological, Legal, and Political Aspects. Seattle and London: University of Washington Press, xv, 253 pp. Joseph J, D Squires, W Bayliff, and T Groves. 2007. Requirements and alternatives for the limitation of fishing capacity in tuna purse-seine fleets. FAO Fisheries Proceedings, 8:153–191. Joseph J, D Squires, W Bayliff, and T Groves. 2010. Addressing the problem of excess fishing capacity in tuna fisheries. Chapter 2 of this volume. Kitts A and E Thunberg. no date. Economic considerations in the design of northeast U.S. fishing vessel buyout programs. Unpublished paper. Woods Hole: Northeast Fisheries Science Center. Kitts A, E Thunberg, and J Robertson. 1998. Modeling participation and bids in the northeast U.S. groundfish fishing vessel buyout programs. In Eide A and T Vassdal (eds) Proceedings of the Ninth Biennial Conference of the International Institute of Fisheries Economics and Trade. Tromoso, Norway, July 8–11, 1998. Kitts A, E Thunberg, and J Robertson. 2001. Willingness to participate and bids in a fishing vessel buyout program: a case study of New England groundfish. Marine Resource Economics, 15:221–232. Kuronuma Y. 1997. Japan: Part II-2. An economic theory behind the Japanese coastal fisheries management policy on fishing rights in relation to the license system for off-shore and distant-water fisheries. In Towards Sustainable Fisheries: Issue Papers. Paris: Organisation for Economic Cooperation and Development. (http://www.olis.oecd.org/olis/1997doc.nsf/ LinkTo/ocde-gd(97)54).

Read AG and EH Buck. 1997. Commercial Fishing: Economic Aid and Capacity Reduction. CRS Report for Congress. Washington, DC: Congressional Research Service. (http:// www.cnie.org/NLE/CRSreports/Marine/mar24.cfm). Riechers R, W Griffin, and R Woodward. 2007, The Texas inshore bay and bait license buyback program. In R Curtis and D Squires (eds) Fisheries Buybacks. Oxford: Blackwell Publishing, pp. 215–226. Spagnolo M and R Sabatella. 2007. Driftnets buyback program: a case of institutional failure. In R Curtis and D Squires (eds) Fisheries Buybacks. Oxford: Blackwell Publishing, pp. 145–156. Squires D. 1992. Productivity measurement in common property resource industries: an application to the Pacific Coast trawl fishery. RAND Journal of Economics, 23:221–236. Townsend R. 1990. Entry restrictions in the fishery: a survey of the evidence. Land Economics, 66:359–378. Townsend RE and SG Pooley. 1995. Fractional licenses—an alternative to license buy-backs. Land Economics, 71:141–143. Weninger Q and KE McConnell. 2000. Buyback programs in commercial fisheries: efficiency versus transfers. Canadian Journal of Economics, 33:394–412. Wilen J. 1979. Fisherman behavior and the design of efficient fisheries regulation programs. Journal of the Fisheries Research Board of Canada, 5:313–324. Wilen J. 1988. Limited entry licensing: a retrospective assessment. Marine Resource Economics, 5(4):313–324. World Bank. 2004. Saving Fish and Fisheries: Towards Sustainable and Equitable Governance of the Global Fishing Sector. Report No. 29090-GLB. Agriculture and Rural Development Department. Washington, DC: World Bank.

Chapter 12

Limited Access in Transnational Tuna Fisheries Brian Hallman, Scott Barrett, Raymond P. Clarke, James Joseph, and Dale Squires

Introduction Overcapacity, overfishing, and economic inefficiency in transnational tuna fisheries spring from the customary right of any state to fish on the high seas. International law, specifically Article 116 of the Law of the Sea, qualified by Articles 117, 118, and 119, allows free entry to fish on the high seas (i.e., on the ocean beyond the exclusive economic zones [EEZs]). Article 64 of the Law of the Sea mandates international cooperation among nations, but even with such cooperation, the effects of the absence of well-defined and fully structured property rights, national sovereignty, and jurisdictional issues are paramount, so that the dominant strategy for many vessels and flag states remains the race to fish and expand fishing capacity. Despite the fact that virtually all of the world’s tuna fisheries are subject to international management by multilateral commissions created by legally binding treaties, incentives still remain, including incentives for vessels of member nations of the commissions, to enter the global tuna fishery, steadily invest in fishing capacity and productivity, adopt technological advances, and in general not to identify with the long-term needs of resource conservation. Command-and-control

regulations, such as by total allowable catches (TACs) and seasonal closures, in themselves do not remove the negative incentives to race for fish, and, in fact, can create such incentives. One of the most effective policy responses to the overcapacity, overfishing, and economic inefficiency in transnational tuna fisheries is rightsbased management (Barrett et al. 2004, RamBidesi and Tsamenyi 2004, Bayliff et al. 2005, Joseph 2005, Bayliff and Majkowski 2007, Joseph et al. 2009). Perhaps the most tractable and immediate way to strengthen the rights in many of the tuna regional fisheries management organizations (RFMOs) is to limit access to the fishery through closed regional vessel registers (RVRs), such as that introduced by the Inter-American Tropical Tuna Commission (IATTC).1 Although stronger forms of rights, such as individual transferable quotas (ITQs) or individual transferable effort (ITE), may be preferred in many domestic fisheries, these mechanisms may be out of reach in the near future in most transnational tuna fisheries (Joseph et al. 2009).2 It has been well documented that limited entry is seldom the long-term answer to the ill-structured property rights that underlie most instances of “the tragedy of the commons” (Hardin 1968) unless 195

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implemented early in the fishery (Sinclair 1961, Wilen 1988, 1989, Townsend 1990, 1992, OECD 1997). Nonetheless, limited entry, or some form of access limitation, is often a critical precondition to other, and more effective, conservation and management measures, such as more comprehensive property rights, including ITQs or group catch rights.3 Limited access is only an incomplete right, since exclusive use is not granted to an individual party or a well-defined group, and it does not directly limit the catch of fish.4 The incomplete right of limited access can generate short-term economic benefits, but over the long term these economic benefits erode through expansions in input usage not specified by the license on already active vessels, increased fishing by relatively inactive vessels, investment in the vessel and gear, and technical progress. Critically, limited entry in any fishery, as an imperfect right, does not fully solve the underlying incentives of fishermen trying to catch as many fish as quickly as possible. Nonetheless, limited entry represents a major advance in the management of fishing capacity, use rights, and customary international law in the transnational setting, and limited entry provides the most promising and tractable next step forward toward more comprehensive rights-based management in many RFMO tuna fisheries. Because limited entry typically builds off some listing or registry of historic participants, and in some instances is, in effect, a closed RVR as in the eastern Pacific Ocean, the area of concern to the IATTC. RVRs can form the basis for limited-entry regimes that are functionally the most immediate form of rights-based management in most of the global tuna RFMOs. This chapter discusses the possibilities for limited-entry regimes in transnational tuna fisheries. Because the two key underlying requirements for a transnational limited-access program are to deter entry into the fishery and garner participation by those already in the fishery, considerable attention is paid to deterring entry and ensuring legitimate participation. Additional discussion focuses on the formation of regional common property by a well-defined group of participants under

evolving customary international law through the creation of a limited-access program.5 Transnational tuna fisheries, although unique, present sustainability and management challenges common to many transnational or shared stocks. The chapter is organized as follows. Some of the essential issues are briefly discussed in section “Essential Issues,” and entry and its deterrence in the transnational tuna fisheries are discussed in section “Entry and Its Deterrence.” Qualification and entry criteria are discussed in section “Qualification and Entry.” Some of the particular issues that arise, including defining the program at the vessel or flag state level, coastal and states and distant-water fishing nations (DFWNs), management of capacity units, differentiation by sector of the fishery, and RVRs and global vessels are considered in section “Additional Issues.” Concluding remarks are provided in section “Concluding Remarks.”

Essential Issues The biggest challenge to limit entry on shared tuna stocks is establishing the conditions for international cooperation through gains from participation and compliance and deterring entry by nonparties and unauthorized vessels. Gains to multilateral cooperation from reducing fishing capacity due to limited entry come from (1) prevention of financial losses due to excessive capital investment and (2) increased catches and catch rates of fish due to exploitation of common resources at appropriate levels. Specifically, vessels could fish all year round, which would be beneficial to both vessel owners and fishermen. Processors and workers at processing facilities would also gain through a greater and more stable sustainable supply of fish, which would enable the processing facilities to operate throughout the year at about the same level. Finally, governments would benefit from (1) elimination of subsidies for vessels and (2) decreased need for expenditures on enforcement of regulations.

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Success requires that limited entry in a transnational fishery creates an aggregate gain and ensures that every party is better off with the program than without it, but to succeed the program also must ensure that each party would lose by not participating.6 In other words, free-riding through nonparticipation must be addressed by some credible means, such as an effective nondiscriminatory trade measure, as discussed below.7 In addition to a negative incentive or “stick,” a positive incentive or “carrot” for participation would come to the remaining vessels through the aggregate gain from participating, in the form of increased profits, and to sellers of vessels and/or rights through financial compensation. In short, the two key challenges for the successful implementation of transnational limited-entry programs are to deter entry into the fishery and to elicit participation by the parties already in the fishery. Failure to invoke robust measures to deter entry and to secure participation of all RFMO member countries will lead to the failure of limited entry as a management tool or even prevent limited entry from being considered in the first place.8 As discussed below, the third, and most immediate, issue then becomes using limited entry to restructure incentives, to change behavior, and, ultimately, to favor greater conservation and profitability. The fourth fundamental issue is addressing the ever-continuing growth in fishing capacity that erodes the benefits from limited entry. In most instances, the implementation of additional measures, such as an ongoing buyback program, or additional restrictions on vessels and fishing days, or other supplementary measures, may be needed, with the strengthening of rights-based management being the preferred option. In summary, a transnational limited-entry program must (1) create an aggregate gain, so that all parties involved would have a reason to participate; (2) distribute these gains equitably and transparently, so that all parties would prefer that the agreement succeed; (3) ensure that each party would lose by not participating, given that all the other parties had agreed to participate; (4) provide strong and clear incentives for all the parties to

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comply with the limited-access program; and (5) create robust deterrents to entry by unauthorized parties.

Entry and Its Deterrence Entry into a Transnational Fishery A critical issue under existing international law is deterring nonparties to an RFMO from entering the fishery. Entry by new parties dilutes the gains from cooperation by existing parties, which, in turn, lowers the incentives for existing parties to cooperate and reduces the aggregate gains that could be achieved if entry into the fishery were closed.9 Entrants to the fishery are most importantly new members with an interest in gaining membership in the RFMO and sharing the advantages and responsibilities on an ongoing basis.10 In many instances, potential new entrants have lower fishing costs, sometimes through subsidies of various types, than existing participants. In other instances, the newcomer can be a coastal state that controls access to a significant share of the resource and has development aspirations, in which case it must be accommodated. If the resource is fully utilized, the newcomer would have more difficulty receiving a share of the TAC than if the resource is underutilized. Munro (2000) and Bjørndal and Munro (2003) distinguish between the new member and the “interloper” that has only a sporadic interest in a particular fishery, and that is not interested in the ongoing benefits and responsibilities of an RFMO. The interloper wants to take advantage of temporary, but possibly recurrent, advantages of entering the fishery for a short period, possibly under a flag of convenience or through illegal, unregulated, and unreported (IUU) fishing, and then to leave again when conditions deteriorate, conditions are more favorable elsewhere, or as part of a long-term strategy of fishing in multiple regions.11 The United Nations Stradling Stocks Agreement, also called the UN Implementing

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Agreement (UNIA), Article 8(3), provides that states having a “real interest” in the fisheries regulated by an RFMO may become members of that organization. The UNIA does not further define the term “real interest” (Pl´e 2000). New membership in most RFMOs does not necessarily guarantee immediate fishing opportunities, especially when the relevant target fish stocks are overexploited.12 The UNIA lists criteria to determine the nature and participatory rights for new members, including the status of the stocks and the existing level of fishing effort in the fishery; the respective interests, fishing patterns, and fishing practices of new and existing members; the contributions of new and existing members to conservation and management, data collection, and scientific research; the needs of fisheries-dependent coastal fishing communities; and the needs of coastal states whose economies are dependent on the exploitation of marine resources. Given that the fishing opportunities for even existing RFMO members are often limited, and there is typically little, if any, additional fish to allocate to new members, if prospective new members are not given the opportunity to fish, they may not have an incentive to join. Entry may occur into the high-seas portion of the fishery by a state not a party to the existing cooperative agreement or that does not agree to abide by the conservation and management measures of the RFMO or other such body, as required by Article 8 of the 1995 UNIA (see also Articles 20 and 21).13 However, if fish are taken from the high seas in contravention of the relevant RFMO’s conservation and management measures, such fishing may be deemed IUU fishing. The number of nations and vessels, the composition of vessels from coastal states and DWFNs, and the alternative available fisheries all affect the ability of member parties to an RFMO to cooperate in deterring entry. Coastal and DWFNs are not homogenous; these nations vary among themselves and often compete with one another and can form alliances or subcoalitions with one another, such as the Parties to the Nauru Agreement in relation to the parties to the Palau Arrangement. Side

payments, or transfers between and among participants, broaden the scope of bargaining and add to the flexibility and resilience of the cooperation that is required of member parties to deter entry.

Deterring Entry into a Transnational Fishery Access to the fishery by nonparties can be denied only if the existing parties are willing and able to enforce provisions related to exclusive use of the resource. International law does recognize that, along with the right to fish on the high seas, comes the obligation not to undermine fishery conservation efforts by RFMOs. But, to have any material effect, this latter obligation must be enforced. Enforcement is a classical collective-action problem, which is more effective when perceived as legitimate by all states, rather than just those that are parties to the agreement. Any state can enter a high-seas fishery under the existing rules of international law. To deter entry requires negative incentives (“sticks”). Practically, sticks help enforce provisions for member parties and deter entry by nonparties. At least four sticks are available, the first addressing member parties and the last three addressing nonparties: (1) domestic laws forbidding reflagging vessels and enforcing the agreement for member parties, that is, domestic compliance, (2) deterring entry by nonparties through trade measures and changes in custom, (3) preventing IUU vessels from fishing in the EEZs of member parties, and (4) unilateral actions by member parties, including seizure of noncomplying vessels or products of nonparties. Domestic Compliance: One stick to deter entry is for the parties to the regional agreements to pass domestic laws forbidding their own vessels from reflagging with states that are nonparties to fishery agreements (Barrett et al. 2004). The North Pacific Fur Seal Treaty required such domestic legislation prohibiting pelagic sealing on the high seas (Barrett 2003). Similarly, domestic laws obligating each of the parties to the regional agreements to enact and enforce such legislation as may be

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necessary to limit entry of that nation’s own vessels into the fishery beyond what is allowed by the regional agreement are required. In other words, member parties must deter noncompliance by their own vessels. But the principle that flag states control the conduct of their own fishing vessels can be problematic because flag states may have little or no incentive to vigorously enforce catch limits, control fishing capacity, or enforce other conservation and management measures against their own nationals (Bederman 2000). Regulatory laxness is sometimes justified on the ground that other members’ fishing fleets are not complying in full, so that one state voluntarily restraining its nationals from exploiting a common resource when other member parties do not is difficult to overcome. The other three sticks relate to deterring entry to the fishery by nonparties (Barrett 2003). This can work only if the existing parties are willing and able to enforce this provision. Again, the North Pacific Fur Seal Treaty accomplished this. The costs here may be higher, but entry deterrence still remains necessary. Trade Measures: Trade measures, acting as a credible threat, are one of the few sticks available to deter entry by nonparties into a transnational fishery. The two trade measures are to prohibit imports from nonmember fishing vessels observed fishing in an RFMO regulatory area and to prohibit landing, other port use, and transshipments from nonparties. (Transshipments from nonmember fishing vessels to member fishing vessels, for example, allow circumvention of requirements for port inspections) (Pl´e 2000, Barrett 2003, DeSombre 2005, Riddle 2006).14 Trade restrictions in the form of prohibited imports and processing of fur seal skins in the only processing center of note, London, allowed the North Pacific Fur Seal Treaty to create common property through limited access.15 This treaty deterred entry into the high-seas pelagic sealing industry, effectively transforming open access into common property, improved on unilateralism, and made every party better off by creating an aggregate gain and distributed this gain such that all countries would

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prefer that the agreement succeed. This is also the approach Japan has taken with regard to the Organization for the Promotion of Responsible Tuna Fisheries (OPRT) and longline capacity reduction. Almost all farmed bluefin and most of the wildcaught bluefin enters the Japanese sashimi market, providing Japan leverage if it wants to apply trade restrictions. Most tuna RFMOs allow for trade measures, which can be applied to both members and nonmembers. The IOTC, for example, requested that nations participating in the record of authorized vessels of greater than 24 m in overall length close ports to and prohibit imports from vessels involved in IUU fishing and not grant the use of their flag to vessels that had been involved in IUU fishing unless the ownership of the vessel had changed (Joseph et al. 2009). ICCAT’s use of multilateral trade restrictions on nonmembers represents the first time that such measures have been recommended by an RFMO to ensure cooperation with agreed conservation and management measures by these nonmembers (Pl´e 2000, Barrett 2003, DeSombre 2005, Riddle 2006). Credible trade measures may be especially effective for stable commodities such as canned tuna. Approximately one-third of all canned tuna is consumed in the European Union, which is currently or will be a member in all of the major tuna RFMOs. Approximately one-third of all canned tuna is consumed in the United States, which is also a member of all of the tuna RFMOs except the IOTC and the CCSBT. If the European Union and United States could apply trade sanctions that were jointly recommended by members of the tuna RFMOs, the lion’s share of the canned tuna markets would be covered. Custom (Customary Law): Trade restrictions may not always sufficiently deter entry by nonparties into transnational fisheries for highly migratory species (Barrett et al. 2004).16 Barrett et al. (2004) observe that in these instances, “. . . access has to be limited by another means. The treaty system approach won’t work, ultimately, because states need not be parties. What is really needed is a change in customary law. But custom

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can’t be written in the way that a treaty can be. Custom reflects actual behavior.” Evolving customary law is reshaping conditions to deter free entry by nonparties through the formation of RVRs in the tuna RFMOs, particularly closed RVRs. Joseph et al. (2009) observe that “. . . ICCAT and IOTC maintain ‘positive lists’ of vessels that are authorized to fish in the waters under their responsibility; vessels not on those lists would not be authorized to fish in the Atlantic or Indian Oceans. However, the lists do not limit the numbers of vessels that can be on them. New vessels can be entered on the lists if they meet the qualifications prescribed by the regional tuna bodies.” However, some registers take a further step, such as in the case of the IATTC register, which restricts fleet growth through sizes of vessels, although expansion by some coastal states is allowed in the IATTC program. The IATTC register has begun the transformation of open access on the high seas into nascent common property, by evolving global customary international law and formal international law on a more regional basis through the formal agreement of the states involved in the eastern Pacific fishery. In effect, implicit recognition is growing that extending and strengthening rights of access through a form of limited entry is critical. These rights are created by resolution within the treaty body. The treaties establishing the RFMOs provide the mechanism by which limited entry program can be developed. The limited entry program would not normally be established by treaty, but would be created by resolution within the treaty body. Use rights in the form of rights of access for a well-defined group and magnitudes of fishing capacity are emerging. Dolphin mortality limits are another form of use right that also developed in the eastern Pacific Ocean under the IATTC through a strengthening of the Agreement on the International Dolphin Conservation Program (AIDCP). Originally, the dolphin conservation program was instituted as an ad hoc agreement among governments through a resolution of the IATTC. This led to the creation of a binding treaty, the AIDCP, that now governs the program. Nonetheless, most

of the action taken by governments under treaties establishing the RFMOs should be strengthened; while the treaties provide the necessary powers for limited entry, strengthening of governmental action is required. Relations among participants are restructured in the process of extending and strengthening rights of access through limited entry. These programs represent necessary de facto, if not de jure, attenuation of national sovereignty within EEZs and especially on the high seas, for coastal states and DWFNs alike, beginning a functional evolution from open access to common property. In short, a transformation is occurring, through custom, from free entry to the resource to exclusive use of the resource by a well-defined group of participants, thereby creating a form of rights-based management in the form of common property. Custom is beginning to address the key problems of participation, entry deterrence, and strategic restructuring of incentives. In a domestic setting, the government assigns property rights, or there may be traditional rights. In an international setting, however, custom must do so. A closed RVR in an RFMO, as a form of access or use right also forming a common property under customary international law, must be recognized by other nations. Custom evolves for many reasons, but with the closed RVR, custom is evolving for purposes of both conservation and economics. Open access is evolving into limited access due to scarcity, compounded by increasing numbers of vessels that are often more efficient. Preventing Fishing in Member Parties’ EEZs: Besides domestic laws deterring noncompliance by participants, trade measures and changing custom, a third stick might also help deter entry by nonparties into transnational fisheries. Precluding vessels that have engaged in high-seas fishing in contravention of the relevant regional fishing agreement from fishing in the EEZs of member states might sufficiently reduce profitability of fishing to deter entry (Hannesson 2005).17 Such an approach is potentially feasible in the western and central Pacific Ocean (WCPO), where about 70% of the tuna stocks are found within the

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EEZs of the nations of the Pacific Islands Forum and where, as a consequence, access agreements to member EEZs are required for profitable purseseine fishing. In other regions of the globe, a higher proportion of the tunas are found on the high seas, and such an approach may help deter entry in conjunction with other measures, but may not be sufficient to stand on its own. A difficult, unanswered question is how to address a coastal state that may be fishing in its own waters in contravention to an international agreement. However, if the coastal state is party to the agreement, then it is bound to restrict fishing by its own vessels pursuant to the agreement, even when they are fishing in its own waters. Unilateral Actions by Member Parties: A fourth stick that may deter entry by nonparties is something akin to Canada’s 1995 seizure of the Estai on the high seas, Latin American seizures of US tuna purse-seine vessels prior to the expansion of EEZs to 200 miles, US seizure of Canadian schooners conducting pelagic sealing on the high seas during 1886–1889, Russia’s 1892 seizure of schooners involved in pelagic sealing on the high seas, or the seizures today of vessels in the Pacific fishing with drift nets (Barrett 2003, Barrett et al. 2004).18 The North Pacific Fur Seal Treaty allowed signatory countries to seize a violating ship from another signatory country and deliver it to the violating ship’s authorities, which were bound by their own domestic laws to tackle the issue. Several other existing treaties, most notably the UNIA and the agreement for the Western and Central Pacific Fishery Management Commission allow the vessels of one member party to board and inspect vessels of another party to the treaty. Some agreements go even further, and allow the seizure (and return) of vessels and crews of parties that have committed a violation by another member party’s vessels (Bederman 2000).19 Seizure of vessels of nonsignatory nations goes a step farther. Barrett et al. (2004) observed that custom may never become established without states doing this. Direct enforcement of nonparties to fishery conventions on the high seas is not unprecedented in international law (Bederman

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2000). The UNIA is an attempt to establish global guidelines for enforcing international and regional fishing regimes, irrespective of whether the violator is a party to the agreement establishing the rule.20 Actions, such as seizure of vessels, must be perceived by others as legal. This, in turn, requires that the agreement must be seen to be legitimate. The rights of coastal states must be recognized, not least because these states can potentially undermine cooperation. It could be argued that the rights of other states must also be recognized, because through ordinary entry into the fishery, they can also undermine cooperation. Plainly, however, the situations of these countries are different.

Qualification and Entry Imposing strong limits on resource use raises the question of which community of users is initially defined as having use rights and which is excluded from access (Ostrom et al. 1999). Joseph (2005) observed that to qualify for entry on a number of RFMO’s RVRs a vessel would have to be considered to be actively fishing, and this term requires definition. In addition, to remain on a register, a vessel would have to continue to be active, according to the same or a similar definition. Another facet of the eligibility issue is the allocation of licenses, units of fishing capacity, or shares of the catch in a way that satisfies all parties. The very process of devising methods of exclusion has substantial distributional consequences (Libecap 1989). The allocation of use rights is governed by widely held beliefs about how rights are to be allocated—beliefs that are enshrined in custom (Barrett 2003). In most fisheries of the world, such rights are assigned to those who have exercised a consistent pattern of use over time (Ostrom et al. 1999). The IATTC RVR “grandfathered in” the existing participants in the fishery on the basis of the current fish-carrying capacities of the vessels, measured in cubic meters. Such an inclusive moratorium invariably codifies an existing condition of overcapacity and economic inefficiency,

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but nonetheless can provide the basis on which to initiate capacity reduction measure. The reliance upon historical patterns of use may be changing in the post-UNIA world, where, for example, the Western and Central Pacific Fisheries Commission convention established ten criteria, with no guidance on weighting (see Article 10.3) Those who later desire to use a resource that has become commonly held after rights have been assigned and who have been excluded entirely may have to pay an entry cost (Ostrom et al. 1999). The growth of market mechanisms, whereby new entrants and existing fishermen purchase the right to fish—licenses and capacity units—from existing participants, can provide a decentralized mechanism to facilitate new entry or expansion by current participants. Such market mechanisms are standard in national limited-entry programs. Such market mechanisms are most efficient when licenses and capacity units are not tied to flags. If this feature of transferability was not retained, the effectiveness of the system would be weaker, and there would be less economic efficiency than would otherwise be realized. The result would be a limit on fleet size that was fixed among nations and could be not changed without difficult and time-consuming negotiations, and the tendency would develop for capacity to grow over time (Joseph et al. 2009). Licenses can be allocated to nations, which, in turn, allocate to vessels, or directly to vessels. If allocated directly to vessels, the licenses may or may not still be tied to the flag state. When not associated with the flag state, the license can be directly under the auspices of the RFMO. When tied to states, either directly or indirectly through ties to the flag state, a hybrid form of access right is created, combining state and private rights. If licenses are tied to nations, rather than to vessels, then when one country enters, an existing country must withdraw some fishing capacity to maintain an existing capacity limit and not to contravene a buyback program. Matching the units of capacity is also more difficult with a thinner national market to draw on, and incentives are created to sell the vessel outside of the region and thereby

exacerbate the problem of overcapacity elsewhere. The value of a vessel would also drop substantially if it was bound to a flag state, and that state could impose on the vessel whatever constraints or monetary requirements it chose (Joseph 2005). Maintaining transferability within the RVR system would also provide the opportunity for the havenots to acquire vessels; they could compete in the marketplace for capacity allocations. While new entrants may have to buy out the incumbents, this may not necessarily be seen as legitimate in a transnational setting (Barrett et al. 2004). Why should the incumbent have such an advantage? This would only perpetuate perceived inequalities over time. At the same time, inducing incumbents to give up their existing right of entry voluntarily would also be difficult without some type of compensation. The units of a limited-access program pose another issue: is entry limited simply to vessels of any size, or is there an additional qualification of limiting entry to vessels according to units of capacity? The IATTC, for example, limits the overall capacity, measured in cubic meters of fishcarrying capacity, of member states, rather than simply imposing a cap on the number of vessels (of any size or greater than a specified size) that can have access to the fishery. In contrast, the Palau Arrangement in the WCPO had traditionally simply limited the number of purse-seine vessels to 205 of any size, although this program has now been scrapped for the transferable effort program, the Vessel Day Scheme, in which the standard metric is the vessel day.

Additional Issues Coastal States and DWFNs The distribution of vessels and fishing capacity among coastal states and DWFNs is an important issue (Joseph and Greenough 1978). More generally, the unique nature of the required multilateral cooperation to manage fishing capacity when there is asymmetry among states, that is, when there are important differences among the states, is a critical

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concern. This issue is not unique to fisheries. Major international environmental agreements, such as the Montreal and Kyoto Protocols, addressed similar asymmetries between developed and developing nations with the global atmospheric public goods of ozone-depleting chemicals and greenhouse gasses. Coastal states control entry into their EEZs, and special privileges are enshrined in international law.21 Potentially viable limited-entry programs must provide for the expansion of fishing capacity by coastal states, a measure allowed by the IATTC, for example, in its RVR and capacity limitation program. This provision represents “side payments” (transfers of benefits from one party to another) and a strategic choice in response to the asymmetries between coastal states and DWFNs.22,23 It also reflects an implicit agreement about use and property rights, beginning a transformation from open access to common property or use rights. This provision can be seen as a form of side payment, and helps ensure that the countries gain by participating, given that the others have agreed to participate. Without the side payments, these countries would otherwise lose by participating. Such a provision is thus a strategic choice, and can redefine the cooperation problem, making participation in the interests of coastal states. Beside the provision for room to expand for coastal states, several other forms of side payment are possible, including decommissioning greater capacity from DWFN fleets, assessing DWFN fleets at a different rate than coastal fleets in industry-financed buyback programs, and fractional licensing in which coastal states receive a fraction of a license greater than one and DWFNs receive a fraction of a license less than one (or some other variation with differential impacts on coastal states and DWFNs). As with the Montreal and Kyoto Protocols, side payments can be made for technology transfer or multilateral funds to finance fleet expansions by, in this case, coastal states. Limited allocation of unused capacity to coastal states creates a reserve held by these states, and is a form of side payment; such an approach was adopted by the IATTC with vessel capacity

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(Joseph et al. 2009). New entrants can purchase or lease this capacity, with the proceeds accruing to the coastal states. Alternatively, a limited percentage of license or capacity units, with limited duration of the right, could expire on a periodic basis, requiring repurchase for continued use or purchase by new entrants. Similar features appear in Chile’s ITQ program, where this use right has a staggered and limited duration. New entrants might also be required to purchase additional units of capacity and retire some portion of the excess. Similar restrictions might apply to reinvestment, such as “stretching” of an existing vessel. Such features are common to many limited entry programs. Reflagging can complicate the definition of a coastal state and a DWFN. Coastal states with unused capacity, or perhaps more accurately the right of access measured in units of fishing capacity (fish-carrying capacity) allowed by an RFMO, can invite vessels from DWFNs to fish under coastal state flags.

Management of Capacity Units The traditional response in limited fisheries has been changes in vessel design and increases in other dimensions of the multidimensional capital stock (e.g., expanding gross registered tonnage and engine power when length is limited and more efficient use of vessel time, i.e., spending less time in port) and accelerated adoption of technical advances. Nonetheless, if limited access is the best that can be expected in the foreseeable future due to the limitations of international law and custom, limits on growth of the physical measures of fishing capacity may be the preferred, albeit imperfect, management option. Replacement of existing vessels with new vessels might be restricted to vessels of the same size (within some tolerance, as in the IATTC RVR). Replacement with a larger vessel may also require purchase of the license for a second vessel to provide the necessary magnitude of capacity units (sometimes called “staiking”). To counter the inevitable creep in vessel productivity or fishing power due to innovations, replacement

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of a vessel with one of the same size could even require purchase of additional capacity units through purchase of another license.

Differentiation by Sector or Area Limited-entry programs can be differentiated by sector or methods of fishing. Transnational fisheries may be composed of different methods of fishing, for example, between surface fisheries (e.g., purse seining and pole-and-line fishing) or subsurface fisheries (e.g., swordfish gear and deepset longline gear) or within a fishery, such as sets on unassociated schools, dolphins, or floating objects. For example, one sector, such as the fishery for unassociated schools in the WCPO, may not be subject to overcapacity relative to yellowfin, bigeye, or skipjack tunas, but another sector, such as the floating-object fishery may be subject to overcapacity relative to bigeye and yellowfin tunas. Similarly, swordfish are caught by both drift nets and pelagic longlines. Under this approach, limiting the total numbers of participants through a traditional license limitation program is a first step that eliminates the threat of further entry (Wilen 1989). Once in place, the fishery may be further subdivided into individual fisheries, each containing a fraction of the individual fleet and total quota. A complicating factor is the differing participation in different sectors by vessels of different nations. Along similar lines, access rights can be attenuated to a specific and naturally definable geographic area, creating a well-defined group right with exclusive access, thereby creating an area licensing scheme (Wilen 1989). When the area of access is sufficiently restricted, the number of fishermen in each area is reduced, and a welldefined group of fishermen is created, cooperative behavior by the individual players should be boosted. Wilen (1989: 261) observes, “At some point, as numbers are reduced, it becomes obvious to each group that controlled harvesting is superior to a frenzied race to maximize share of the (area) quota. . . . There is much anecdotal evidence in traditional limited entry fisheries that fishermen revert to cooperative behavior

when numbers are small enough and the gains are clearly evident.” This has been found to improve the conservation and management for other types of common resources (Ostrom 1990, Baland and Platteau 1996).24 Capacity is reduced in each area. Multiple-area licenses can be held by a single vessel owner/operator.

Fractional Licensing Fractional licensing at one fell stroke reduces fishing capacity, in contrast to limited-entry programs, which tend to “grandfather in” the entire fleet in a moratorium (Townsend 1992, Townsend and Pooley 1995, Joseph 2005). The management authority first establishes a target number of licenses (N). Once the number of qualifying fishermen, vessels, or standard units of gear (Q) is determined, the fractional value of the license is determined by dividing the target number of license by the number of qualifiers: N/Q. For example, if 200 vessels qualified for a target of 100 licenses, each qualifier would receive 50% of a license. Freely transferable licenses allow consolidation of the fractional licenses into a whole license required to fish. Licenses can be further defined by different fractions for different vessel sizes or methods of fishing. While only N vessels are allowed to fish, the economic rents are shared among all Q fractional license shareholders since fractions of licenses were sold on markets to assemble a full license. We are unaware of any instance or the application of this scheme to the tuna realm, although it does present an interesting possibility.

Regional Vessel Registers and Global Vessels The establishment of RFMOs for tunas in the different ocean areas did not fully eliminate the transnational externality, which has implications for limited entry. In the Pacific, the IATTC and the Western and Central Pacific Fisheries Commission manage tunas in the eastern and western parts of the Pacific, respectively, yet uncertainty remains as to the extent of mixing of the fish in the

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different jurisdictions. Coordination is therefore required between the two regional fishery management organizations, as called for in Article 22 of the Western and Central Pacific Fisheries Convention. More critically, vessels harvesting highly migratory species are highly mobile, and readily traverse from one part of the globe to another. Control of fishing capacity by one organization may simply create spillovers to other regions and RFMOs as vessels fish in other areas and/or reflag. The potential also exists for vessels to engage in IUU fishing. In short, limited entry in a transnational tuna fishery remains unilateral in a broad sense. Tunas transverse large areas of the ocean basins, and purse-seine, longline, pole-and-line, and driftnet vessels harvesting these species can go a step further by spanning the globe. The transnational tuna fisheries are ultimately global, and global coordination of management, including limited entry, will be required to fully address the transnational externality.

Concluding Remarks Extending and strengthening rights of access through limited entry is a fundamental first step for addressing excess fishing capacity in transnational tuna fisheries. Separate programs can be established for each of the major gear types, including purse seines, longlines, and pole-and-line gear. The most basic form of limited entry is a vessel moratorium, which precludes further entry into the fishery, but incorporates existing vessels. More restrictive forms of limited entry do not encompass all existing vessels, especially those that are nonfunctional, inactive, only marginally active, or simply planned, and require continued fishing at some level to maintain a vessel’s license. The more restrictive the limited entry program, the greater are the chances of success. Even when stronger forms of rights-based management have been implemented, such as transferable effort or vessels days or ITQs, limited entry can serve a valuable

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function by limiting fleet size, which in turn limits pressures to increase the total allowable effort or catch to accommodate larger fleets. The development of RVRs within each regional tuna body provides the basis for establishing a program of limited entry. The RVRs and the incomplete property right of limited access may not be the most efficient means of managing fishing capacity, or even the final long-term goal, but they represent the most practical step over the short term. Once RVRs in the form of limited entry have been established, more comprehensive rightsbased management systems to address excess capacity can be developed, all of which fundamentally build upon limited entry in any case. After RVRs are developed for the RFMOs, they can establish a global RVR to monitor global fishing capacity and to address the incomplete jurisdictions of the regional bodies and mobility of vessels that lead to spillover effects from one region to another. The biggest challenge to limit entry is establishing the conditions for transnational cooperation through gains from participation and compliance and deterring entry by nonparties and unauthorized participants. Enforcing provisions for member parties and deterring entry by nonparties requires negative incentives, which can potentially include (1) domestic laws forbidding reflagging vessels and enforcing the agreement for member parties, that is, domestic compliance, (2) deterring entry by nonparties through trade and customs measures, including prohibition of imports from nonmember fishing vessels observed fishing in an RFMO regulatory area and prohibition of landing, other port use, and transshipments from nonparties, (3) preventing IUU vessels from fishing in the EEZs of member parties, and (4) perhaps even creating new customary law through seizure of noncomplying vessels or products of nonparties. Transferable licenses, especially if tied to the vessel, allow adjustments to the fleet and facilitate economic efficiency. Perhaps most critically, a market for transferable licenses provides a decentralized mechanism whereby existing participants can readily leave the fishery or expand existing

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operations and new participants can enter. Accommodation can be made for developing coastal states to allow expansion of their industries. Additional measures to limit increases in fishing capacity from expansion of unregulated inputs and technical progress may be necessary. Limitedentry programs often restrict maximum boat size permissible in the fishery, such as well capacity by the IATTC, in order to constrain fishing capacity. Combining licenses may be required in order to increase boat size. Limited entry also must be accompanied by other management measures that ensure conservation of tuna stocks and the ecosystem, such as TACs, bycatch provisions, gear provisions, and other such measures. Limited-entry programs in transnational tuna fisheries requires de facto, if not de jure, attenuation of national sovereignty within EEZs, and especially on the high seas, for coastal states and DWFNs alike, beginning a transformation from open access to common property. Fortunately, while the LOS and UNIA do not address limited entry, there is nothing in them that makes limited entry difficult to achieve in a regional setting. Such a transformation is occurring, through custom, from free entry to the resource to exclusive use of the resource by a well-defined group of participants, thereby creating a form of rights-based management in the form of common property. More critically, regional formal binding agreements limiting entry and creating closed RVRs are required.

Endnotes 1. The parties to the Nauru Agreement introduced an individual transferable effort (ITE) program for the right to fish with purse-seine gear in their EEZs, but this program is in part possible because these nations control a large proportion of the fishing area through their EEZs. This matter is beyond the scope of this chapter. Nonetheless, limited access may be an important, if critically overlooked, accompanying feature to preclude pressures to expand the total allowable effort.

2. When TACs are allocated among nations (forming a state use right), as with the International Commission for the Conservation of Atlantic Tunas, it is one more step for each nation to allocate its own share of the TAC among its own vessels, thereby providing an exclusive catch right in the spirit of an ITQ. Such rights can extend for any duration, from 1 year to perpetuity, can be divisible into small units of weight, and transferable. When such catch rights are not fully transferable and of sufficient duration of use, limited access remains an important accompanying management tool, or otherwise there could well continue to be pressures to expand the TAC and country allocations (Joseph et al. 2009). Dolphin mortality limits established by the International Dolphin Conservation Program under the IATTC represent such a step. 3. Comprehensive property or use rights, which address such characteristics as exclusive use, divisibility of the right, duration, security, and transferability, are, in many instances, effective forms of management tools (Scott 2000). Comprehensive property or use rights in ocean fisheries can directly address the lack of exclusive use by individuals or groups, which is a major contributor to the commons problem in fisheries. 4. Rights-based management entails not only use and property rights for individuals, such as ITQs or ITEs, but also use and property rights held by well-defined groups, giving common use and property rights (Baland and Platteau 1996). Baland and Platteau make it clear that commonly held resources with effective management can lead to fully efficient resource exploitation. In some fisheries, voluntary agreements or cooperative management by a well-defined group of vessels, contracting with the regulator to self-manage an allocated share of the TAC, is leading to such an outcome (Pinto da Silva and Kitts 2006). 5. Open access is a form of property right (res nullis), but in which no individual, group, or state has exclusive use, so that entry to the resource is open. Common property (res communes) is a form of property right in which exclusive use of the resource is vested in a well-defined group, i.e.,

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is commonly held. In this case, the group is the signatories and cooperating parties in the IATTC. The common “ownership” is due more to custom than to binding international law, so that exclusive use is through the IATTC, and exclusive use by this group does not provide for full deterrence of entry (and where any trade measures, acting as a credible threat, apply only to group members and not to nonmembers). The key question is the conditions under which common property or use rights can be created, particularly with transnational fisheries. 6. The second condition is that of Pareto optimality, in which at least one of the parties involved has been made better off and none worse off and no more improvements are possible without one or more parties being made worse off. 7. Free-riding is the situation in which nonparticipants in a cooperative resource management program enjoy the benefits of cooperation without sharing in the costs, which are borne entirely by the participants. Barrett (2003, 2005) argues that free-riding by nonparticipants is the binding constraint upon international cooperation. He further states that when international cooperation is concerned with a (rivalrous or depletable) common resource, such as fish stocks, Antarctica, or polar bears, rather than a (nonrivalrous or nondepletable) public good, such as the atmosphere, that entry into the exploiting harvest sector is an additional key binding constraint. 8. Ostrom et al. (1999: 279) observe, “Managing common property resources involves two distinct elements: restricting access and creating incentives (usually by assigning individual rights to, or shares of, the resource for users to invest in the resource instead of overexploiting it. . . . Limiting access alone can fail if the resource users compete for shares, and the resource can become depleted unless incentives or regulations prevent overexploitation.” The individual rights can be extended to common or group rights. Participation is an additional issue in transnational common resources (with their rivalry or depletion or subtractability). 9. Article 11(a) of the 1995 UN Straddling Stock Agreement, also sometimes called the UNIA, requires existing members of an RFMO,

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when preparing to accommodate new entrants, to take into account the status of the relevant stocks and existing fishing effort. For further discussion, see Ørebech et al. (1998), who state that new entrants to an RFMO must be offered a just and reasonable share of the available TAC; Kaitala and Munro (1997) demonstrate that this share can constitute a form of free-riding and a threat to the stability of a cooperative agreement (since the payoffs to full cooperation could fall below the Threat Point payoffs of the charter members). 10. Under Articles 8, 10, and 11 of the 1995 UNIA, new entrants must be accommodated by an RFMO. Article 8 indicates that only states that are members of an RFMO, or that agree to abide by the conservation and management of the RFMO, shall have access to the fish stocks of concern. States that ignore Article 8 and fish on the highseas portions of the fish stocks managed by the RFMO, and in a way that is incompatible with the RFMO management, are engaged in unregulated, as opposed to illegal, fishing (Munro et al. 2004). 11. A newcomer can be a coastal state that controls access to a large share of the resource, in which case unless that newcomer is accommodated it could disrupt the program. In the case where the resource is not fully utilized, there would be no problem, as there would be room for the newcomer coastal state, but if the resource was fully utilized the newcomer would have a harder time being assigned a share of the TAC. This case is discussed in greater detail below. 12. The convention of the WCPFC has taken up both the concept and the language of the UNIA. 13. The UNIA does not permit the original members of an RFMO to bar would-be new members outright. Some commentators interpret Articles 8, 10, and 11 as permitting charter members of an RFMO to exclude would-be new members only on the basis of noncooperation, in which new members refuse to abide by the terms of the RFMO management regime (Ørebech et al. 1998, Bjørndal and Munro 2003). Van Dyke (2000) argues that the language of Article 11 does not give a clear answer as to whether new DWFNs must be allowed into an RFMO once established. Van

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Dyke further reasons that Article 11 seems to indicate that some new entrants could be excluded if the current fishing nations have developed a dependency on the shared fish stock in question, and that developing nations from the region would appear to have a greater right to enter the fishery than would developed nations from outside the region. Other commentators have restrictively interpreted Article 11 as conduct of actual and significant fishing operations in the region. Article 17(2) addresses nonmember states that decline to cooperate with the RFMO not to authorize their vessels to operate in the area managed by the RFMO. Article 17(4) maintains that members “shall take measures consistent with this Agreement and international law to deter activities of such vessels which undermine the effectiveness of sub-regional or regional conservation and management measure.” 14. The Northwest Atlantic Fisheries Organization (NAFO) provides that vessels of nonmember nations that have been sighted engaging in fishing in the NAFO regulatory area are presumed to be undermining this agreement and shall not be permitted to land or transship any fish in a NAFO member port until it has been inspected. “In cases where such inspection exposes species regulated by NAFO, landings and transshipment will be prohibited unless the vessel can prove that the taking of this fish has not contravened NAFO rules” (Stokke 2000: 221). In addition, Articles 18 and 21 of the UNIA establish the legal conditions. 15. A credible trade measure, built on a nearmonopoly for processing, was one of the key factors contributing to the success of the North Pacific Fur Seal Treaty (Juda 1996, Barrett 2003). Virtually all processing of Pacific fur seal skins was carried out in London, giving a credible threat to restrict trade. Article III of the North Pacific Fur Seal Treaty banned imports of nonauthenticated skins (the skins of seals killed by nonparties to the treaty). The trade restriction deterred entry by nonparties into the pelagic sealing industry because the entire pelagic harvest of sealskins was processed and sold in London. The treaty went a step farther. “Implicit in the original treaty is also

a kind of ‘Grim’ strategy calling for complete dissolution of the agreement and, by implication, a reversion to the disastrous open-access outcome, should any of the parties withdraw at a later date.” (Barrett 2003: 36). Juda (1996: 35) observes, “Articles II and III of the treaty forbade party states to allow the use of their ports, harbors, or territories or any purpose connected with such pelagic sealing as well as the importation into their territory of seal skins taken without the authority of the statecontrolling breeding grounds. Each of the party states agreed to enact and enforce necessary legislation to these ends and to cooperate with each other to prevent pelagic sealing.” 16. Four recent papers, Bederman (2000), Pl´e (2000), DeSombre (2005), and Riddle (2006), discuss trade sanctions against countries that are not members of an RFMO. They discuss CCLMR, ICCAT, and NAFO, which restricted market access for products and bans on transshipments and use of ports. In addition, multilaterally agreed trade measures consistent with the World Trade Organization could include the adoption of multilateral catch documentation and certification requirements and import and export controls or prohibitions. Such measures would be adopted in a fair, transparent, and nondiscriminatory manner. 17. In 1994, Norway introduced legislation prohibiting landings of catches taken on the high seas in defiance of international fisheries regulations. Stokke (2000: 220) observes that “A more indirect way of using economic sanctions to coerce compliance with high-seas management measures, and one which does not depend upon voluntary port calls, is expressed in the Norwegian practice of blacklisting vessels engaged in unregulated highseas harvesting from subsequent access to the Norwegian EEZ—even if the vessel has changed ownership in the meantime. This has served to reduce the second-hand value of vessels . . . .” Similarly, from 1993 until 1995, Russia prohibited the allotment of catch quotas in the Russian zone to foreign vessels that had been engaged in harvesting in the Peanut Hole (Stokke 2000). 18. For example, in 1886 US Treasury Secretary French instructed a US Revenue cutter to seize

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several British (Canadian) vessels beyond the 3-mile limit (Juda 1996). 19. Bederman (2000) lists the following treaties that allow some or all such practices: International Convention for the High Seas Fisheries of the North Pacific Ocean, the Niue Treaty on Cooperation in Fisheries Surveillance and Law Enforcement in the South Pacific Region, Certain Pacific Island States—United States: Treaty on Fisheries, Convention on the Conservation and Management of Pollock Resources in the Central Bering Sea, Canada–European Community: Agreement on the Conservation and Management of Fish Stocks. In addition, the 1993 FAO Compliance Agreement specifies the duty of parties to exercise effective jurisdiction over high-seas fishing operations by vessels flying their flags, including taking measures to ensure that such vessels do not undermine the effectiveness of international conservation and management measures. 20. Bederman (2000) cites Article 21, paragraph 1 and Joyner (1998). In addition, Article 64 calls for international cooperation with highly migratory species, but there still can be problems with coastal states fishing within their own EEZs in contravention to international agreements. Not all problems will be restricted to the high seas. 21. Joseph et al. (2009) state, “Articles 56 and 61 of the Law of the Sea recognize the rights of coastal states to control access to the waters under their jurisdictions, and therefore to decide who can fish for tunas in those waters, with the caveat (Article 62) that, if the resource is not fully utilized, access to fish must be provided to the vessels of other states.” 22. Side payments are essentially transfers from one participant to another. The transfers can be in the form of money or in some other form. Side payments help broaden participation and make agreements fair, and hence legitimate. Side payments, by which gainers of a policy can compensate those who bear the burdens, help ensure that nations that would otherwise lose by participating instead gain (Barrett 2005). 23. Similar issues arose between coastal states and DWFNs with the North Pacific Fur Seal

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Treaty, in which some nations, notably the United States and Russia, controlled the islands where the fur seal rookeries were found, and other nations, notably Canada (Britain) and Japan, conducted pelagic sealing as DWFNs (Juda 1996, Barrett 2003). Eventually, side payments in the form of compensation were made from the coastal states to the DWFNs to cease pelagic sealing. Because harvesting fur seals on rookeries is substantially lower cost and more productive than pelagic sealing, the DWFNs received a share of the profits from land-based harvesting. 24. When area use rights are actually assigned, thereby creating a more well-specified property right than limited access, such a program is called territorial use rights for fisheries or TURFs (Christy 1983).

References Baland J-M and P-P Platteau. 1996. Halting Degradation of Natural Resources: Is There a Role for Rural Communities? Oxford: Oxford University Press, 440 pp. Barrett S. 2003. Environment and Statecraft: the Strategy of Environmental Treaty Making. Oxford: Oxford University Press, 446 pp. Barrett S. 2005. The theory of international environmental agreements. In M¨aler KG and JR Vincent (eds) Handbook of Environmental Economics, 1st edn, Vol. 3. Amsterdam: Elsevier, pp. 1457–1516. Barrett S., J Joseph, T Groves, and D Squires. 2004. Design of an effective and implementable plan to limit overfishing. Paper Presented to the American Economic Association Winter Meetings, Philadelphia, PA. Bayliff WH, JI de Leiva Moreno, and J Majkowski (eds). 2005. Second Meeting of the Technical Advisory Committee of the FAO Project Management of Tuna Fishing Capacity: Conservation and Socio-economics. FAO Fisheries Proceedings, 2:336. Bayliff WH and J Majkowski (eds). 2007. Third Meeting of the Technical Advisory Committee

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of the FAO Project Management of Tuna Fishing Capacity: Conservation and Socio-economics. FAO Fisheries Proceedings, 8:218. Bederman DJ. 2000. CCLMR in crisis: a case study of marine management in the Southern Ocean. In Scheiber HN (ed.) Law of the Sea: the Common Heritage and Emerging Challenges. The Hague: Martinus Nijhoff, pp. 169– 196. Bjørndal T and GR Munro. 2003. The management of high seas fisheries resources and the implementation of the UN Fish Stocks Agreement of 1995. In Folmer H and T Tietenberg (eds) The International Yearbook of Environmental and Resource Economics 2003/2004. Cheltenham, UK: Edward Elgar, pp. 1–30. Christy FT, Jr. 1983. Territorial use rights in marine fisheries: definitions and conditions. FAO Fisheries Technical Paper, 227:10. DeSombre E. 2005. Fishing under flags of convenience: using market power to increase participation in international regulation. Global Environmental Politics, 5(4):73–92. Hannesson R. 2005. The problem of high seas fishing: is there a role for ITQs? Paper Prepared for the OECD, Revised January 2005, Bergen, Norway: The Norwegian School of Economics and Business Administration. Hardin G. 1968. The tragedy of the commons. Science, 162(3859):1243–1248. Joseph J. 2003. Managing fishing capacity of the world tuna fleet. FAO Fisheries Circular, 982:67. Joseph J. 2005. Past developments and future options for managing tuna fishing capacity, with special emphasis on purse-seine fleets. FAO Fisheries Proceedings, 2:281–323. Joseph J and JW Greenough. 1978. International Management of Tuna, Porpoise, and Billfish—Biological, Legal, and Political Aspects. Seattle and London: University of Washington Press, 253 pp. Joseph J, D Squires, W Bayliff, and T Groves. 2007. Requirements and alternatives for the limitation of fishing capacity in tuna purse-seine fleets. FAO Fisheries Proceedings, 8:153–191.

Joseph J, D Squires, W Bayliff, and T Groves. 2009. Addressing the problem of excess fishing capacity in tuna fisheries. In Allen R, J Joseph, and D Squires (eds) Conservation and Management of Transnational Tuna Fisheries. Blackwell Publishing. Joyner C. 1998. Compliance and enforcement in new international fisheries law. Temple Journal of International and Comparative Law, 12(2):271–300. Juda L. 1996. International Law and Ocean Use Management: The Evolution of Ocean Governance. London: Routledge, 345 pp. Kaitala V and G Munro. 1997. The conservation and management of high seas fishery resources under the new law of the sea. Natural Resource Modeling, 10:87–108. Libecap G. 1989. Distributional issues in contracting for property rights. Journal of Institutional and Theoretical Economics, 145(1):6–24. Munro GR. 2000. The United Nations Fish Stocks Agreement of 1995: history and problems of implementation. Marine Resource Economics, 15(4):265–280. Munro GR, A Van Houtte, and R Willman. 2004. The conservation and management of shared fish stocks: legal and economic aspects. FAO Fisheries Technical Paper, 465:69. Ørebech P, K Sigurjonsson, and T McDorman. 1998. The 1995 United Nations straddling and highly migratory fish stocks agreement: management, enforcement and dispute settlement. The International Journal of Marine and Coastal Law, 13(2):119–141. Organisation for Economic Cooperation and Development (OECD). 1997. Towards Sustainable Fisheries: Economic Aspects of the Management of Living Marine Resources. Paris. Ostrom E. 1990. Governing the Commons: The Evolution of Institutions for Collective Action. New York: Cambridge University Press. Ostrom E, J Burger, C Field, R Norgaard, and D Policansky. 1999. Revisiting the commons: local lessons, global challenges. Science, 284(5412):278–282.

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Pinto da Silva P and A Kitts. 2006. Collaborative fisheries management in the northeast US: emerging initiatives and future directions. Marine Policy, 30(6):832–841. Pl´e J-P. 2000. Responding to non-member fishing in the Atlantic: the ICCAT and NAFO experiences. In Scheiber H (ed.) Law of the Sea: The Common Heritage and Emerging Challenges. The Hague: Martinus Nijhoff, pp. 197–208. Ram-Bidesi V and M Tsamenyi. 2004. Implications of the tuna management regime for domestic industry development in the Pacific Island states. Marine Policy, 28(5):383–392. Riddle K. 2006. Illegal, unreported, and unregulated fishing: is international cooperation contagious? Ocean Development and International Law, 37(3–4):265–297. Scott A. 2000. Introducing property in fishery management. FAO Fisheries Technical Paper, 404(1):1–13. Sinclair S. 1961. License Limitation: A Method of Economic Fisheries Management. Ottawa: Canada Department of Fisheries. Stokke, OS. 2000. Managing straddling stocks: the interplay of global and regional regimes.

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Ocean and Coastal Management, 43(2):205– 234. Townsend R. 1990. Entry restrictions in the fishery: a survey of the evidence. Land Economics, 66(4):359–378. Townsend R. 1992. A fractional licensing program for fisheries. Land Economics, 68(2):185– 190. Townsend RE and SG Pooley. 1995. Fractional licenses—an alternative to license buy-backs. Land Economics, 71(1):141–143. Van Dyke J. 2000. Trends in ocean law and policy: an overview. In Scheiber, H (ed.) Law of the Sea: The Common Heritage and Emerging Challenges. The Hague: Martinus Nijhoff, pp. 3–36. Wilen J. 1988. Limited entry licensing: a retrospective assessment. Marine Resource Economics, 5(4):313–324. Wilen J. 1989. Rent generation in limited entry fisheries. In Neher P, R Arnasor, and N Mollett (eds) Rights Based Fishing Series E: Applied Sciences, Vol. 169. Dordrecht: Kluwer Academic Publishers, pp. 249– 262.

Part III

Bycatch

Chapter 13

Individual Transferable Quotas for Bycatches: Lessons for the Tuna–Dolphin Issue R¨ognvaldur Hannesson

Introduction Bycatch is a term used for catches of fish species that are not targeted. Bycatches occur because fish cannot be caught selectively, except perhaps at a cost. In the latter case, the problem becomes one of comparing the cost of disposing of bycatch once it occurs and the cost of avoiding it. There are different kinds of bycatches, or different reasons why a particular kind of fish (or other animal) is a bycatch. In fisheries for which more than one species of fish are caught indiscriminately (or selectively only at a cost), fishermen naturally direct their effort toward the type of fish that gives them the greatest revenue for their effort. In fisheries in which many valuable species are caught simultaneously, it can be a tricky question to define what is a bycatch and what is not; rare catches of highly valuable fish would not be unwelcome, but once fishermen are up against storage or on-board processing constraints it can make good economic sense to discard marketable fish to make space for more valuable fish. This is usually referred to as “highgrading” rather than bycatch. In this chapter I use the term “bycatch” for species of fish (and marine mammals) that are not desired and would therefore ordinarily be dis-

carded. There are different reasons why capturing a certain type of fish would be undesirable. First, even marketable fish may not be desired because it would require too much effort to prepare or preserve them for the market. This is often the case for shrimp trawlers, which typically catch a variety of fish, in addition to shrimp, but are equipped only for handling and preserving shrimp. Second, certain groups of fishing boats are authorized to take certain kinds of fish but not others, even if the latter are marketable. Vessels trawling for Alaska pollock get some salmon and halibut in their trawls, but are prohibited from marketing them because these fish are reserved for other types of boats. In cases like this, bycatch is caused by regulations, which would seem to be the problem rather than the fish catches, but it could also be the case that the pollock trawlers are not equipped for handling these catches and so they are unwanted anyway. Third, there are fish (or marine mammals) that have no commercial value and are hence discarded. When discarding requires some effort, the bycatch is a nuisance that fishermen have some incentive to avoid if they can. This chapter deals with the last type of bycatch. It is inspired by the tuna–dolphin problem (Hedley 2001, Haraden et al. 2004), arising from 215

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the fact that in the eastern Pacific Ocean (but not to a significant extent elsewhere) dolphins and yellowfin tuna often school together, and dolphins are caught in purse-seine sets on such schools. This case is a bit more complicated, however. Dolphins do not have any market value for tuna fishermen, but help in locating schools of tuna. Fishermen can tell whether there are adequate amounts of tuna associated with herds of dolphins, and they set their nets on herds of dolphins when the amounts of tuna accompanying the herds are large enough to justify making a set. Since dolphins have no market value, fishermen might be indifferent to the killing of dolphins in this process, except that (1) it is easier to release the living dolphins from their nets early in the fishing process than to remove dead dolphins that become entangled in their nets later in that process, (2) the fishermen do not want to decrease the abundance of dolphins, as this would likely decrease their catches of yellowfin tuna, and (3) at least some of the fishermen would like to minimize the mortality of dolphins for ethical reasons. The problem arises because killing of dolphins is deemed undesirable and prescribed to be kept under control by the provisions of the Agreement on the International Dolphin Conservation Program.1 Different methods have been used in controlling the bycatch in different fisheries. Some fisheries are closed for the remainder of the season if and when the bycatch exceeds a certain share of the total catch (e.g., juvenile cod in Norwegian shrimp fisheries), certain areas are closed for fishing at certain times (e.g., New England gillnet fisheries, to avoid catches of harbor porpoises), and in some fisheries certain gear designs are prescribed (e.g., turtle exclusion devices attached to shrimp trawls). Large purse-seine vessels that fish for tunas in the eastern Pacific Ocean must have certain equipment aboard and must follow certain procedures so as to minimize the mortality of dolphins, and there are observers on board the vessels who, in addition to their other duties, report lack of the necessary equipment or failure to follow the required procedures. Common to all of these is the fact that they seek to keep the bycatches below certain lev-

els, but accept the fact that bycatches cannot be eliminated altogether. Given that a certain maximum level of bycatch is deemed acceptable, it would be possible to frame bycatch regulations as a maximum total quota on bycatches, much as the total catch of targeted fish species is regulated by a total quota. Since gains in efficiency can be attained by dividing such quotas into units and making them transferable, a similar arrangement would seem to be desirable also for bycatch quotas. Bycatch quotas are, however, of a nature somewhat different from what has come to be known as individual transferable quotas (ITQs). ITQs promote economic efficiency through incentives to maximize the value of a given catch and minimize the cost of taking it, including investment in fishing boats. Many empirical studies (e.g., Fox et al. 2003, Dupont et al. 2004) have documented such gains in efficiency. Bycatch quotas, on the other hand, have nothing to do with incentives to maximize the value of the catch or minimize the cost of taking it. Instead, bycatch quotas are more akin to quotas intended to limit the emission of harmful substances such as sulfur dioxide or carbon dioxide. An overall quota limits the overall volume of emissions. Allocating the overall quota to firms responsible for the emissions helps implementation and determines how the losses from reducing the emissions are shared among the firms. Making the quotas transferable minimizes the economic losses resulting from any given cutbacks in emissions. An overall bycatch quota would limit the total bycatch, and allocating it among firms would facilitate implementation and determine how the disturbances suffered by the fishing industry are shared among the firms. Making these quotas transferable would, just as with emission quotas, minimize the losses from limiting the bycatch. In this chapter I look at how ITQs for bycatches could promote efficiency. I assume that such quotas are set at a correct or, at least, an acceptable level of bycatch, but do not deal with how this level should be determined. The basis for the argument is that there will be some distribution of individual quotas

13

Individual Transferable Quotas for Bycatches: Lessons for the Tuna–Dolphin Issue

among the fishing boats that would minimize the economic loss that limitation of the bycatch will cause, but the fisheries managers typically have no way of knowing what that distribution is. Unrestricted buying and selling would, on the other hand, provide incentives to achieve such a distribution, as those who can attain the greatest catch value with a given bycatch quota are the ones who are able to pay the highest price for it. There are two settings in which transferability would achieve efficiency gains. First, even if bycatches are a totally random process, in-season transferability could be helpful in realizing efficiency gains. Second, and more obviously, if fishermen are not equally skilled in avoiding bycatches, transferability would direct the quotas to those who are better at doing this than others, so catches would be maximized for any given total bycatch. Before discussing these cases, I briefly review the literature on bycatch quotas. Then, in sections “Random Bycatches” and “Differences in Skills at Avoiding Bycatches,” the case of random bycatch and the case with different skills at avoiding bycatch are discussed. Finally, the last section concludes with a discussion of how this might apply to the tuna–dolphin issue.

A Review of the Literature There are few studies of ITQs for bycatches in the economic literature. One undoubtedly important reason is that such quotas have not been tried. There are not many examples of bycatch quotas either, the only one I know of being the bycatch quotas for dolphins in the tuna fishery of the eastern Pacific Ocean. These are not transferable. The first and, to my knowledge, only theoretical paper on this issue is that of Boyce (1996). In his model, one species is a bycatch in a particular fishery, but could be a targeted catch in another fishery and thus commercially valuable. He shows that ITQs for both species could achieve withinseason optimality. (His model is not dynamic, but intertemporal optimality can be thought of as be-

217

ing achieved by an adequate total catch quota for each season.) He points out that this would not be true if the bycatch species has existence value, that is, value as such, even if it has no commercial value. This is not necessarily a relevant argument; one can think of existence value being taken into account in the setting of the total bycatch quota. He also points out that the optimality properties are not unique to an ITQ system; the same thing could be achieved by taxes. The background for Boyce’s paper is the arrangement by which a group of vessels is authorized to catch one or more fish species but not other species of commercial value, which are being reserved for other vessel groups. An example is the North Pacific pollock fishery, which inadvertently captures other valuable species, such as salmon and halibut, which are reserved for other fisheries. In two related papers, Larson et al. (1996, 1998) showed how the marginal value of bycatch quotas could be calculated and an optimal bycatch quota established, but stopped short of considering a set of fully transferable quotas a` la Boyce. Herrera (2005) discusses various types of bycatch regulations. A bycatch quota is not one of these, but he discusses a catch value quota that includes the value of the bycatch. This is consistent with the bycatch being of a kind similar to what occurs in the Alaska pollock fishery and others where it has a commercial value and is marketed, but is for some reason not supposed to be taken. It is also possible to interpret his paper as dealing with the case in which no particular species is targeted a priori, but some fish are discarded to maximize the value of the catch under given time or capacity constraints. A recent and empirically oriented paper is that of Bisack and Sutinen (2006). In response to the US Marine Mammal Protection Act of 1972, the New England gillnet fishery has been regulated by time and area closures in order to limit the bycatch of harbor porpoises. Bisack and Sutinen compare this to regulation by ITQs for porpoise bycatches. They use an optimization model grounded in microeconomic theory; fishermen are treated as profit maximizers under the relevant constraint,

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time/area closures versus bycatch ITQs. The parameters of the model were estimated from available data and its predictions compared with the observed landings. The model was run both with area and time closures to satisfy given bycatch constraints and with porpoise ITQs for the same overall bycatch constraints. The results showed that ITQs generated higher profits, but also lower total catches, which is surprising; one would have expected the benefits of bycatch ITQs to consist in a greater catch for any given bycatch constraint, which is what happens in a simple theoretical model used for illustration below. The ITQ regime also results in fewer closures of areas and time periods.

Random Bycatches Assume a fishing season of length T. Let fishing be a discrete event, with one trip per unit of time. Bycatch occurs with a probability p for each trip. There is a bycatch quota of K units per vessel, and if bycatch occurs one unit of quota is exhausted. There are N boats, each with an equal bycatch quota, and the boats continue fishing either until the quota has been exhausted or the fishing season has ended. The minimum length of the fishing season (number of trips) is K, which would require that the first K trips have resulted in a bycatch, so the probability of this is Prob(S = K ) = p

and, in general, Prob(S = K + s) (S − 1)! = (K − 1)!(S − 1 − (K − 1))! × p K (1 − p) S−K , s ≥ 0 Prob(S = K + s) (S − 1)! = (K − 1)! (S − 1 − (K − 1))! × p K (1 − p) S−K , s ≥ 0 where s is a nonnegative integer. The expected number of fishing trips (ES) will be the minimum K plus the sequence of the remaining time units up to T, each term multiplied by the probability that the fishing has not yet been halted:   T L−K

−1 ES = K + 1− (Prob (K + s)) L=K +1

For simplicity, I assume that the value of the catch from each trip is unity. Now consider some period S * (K < S * < T) in the fishing season. One boatowner has been unlucky and exhausted his quota, while the others have some of their quotas left. The expected value from transferring one quota unit to the unlucky boatowner is: X1 = 1 +

Prob(S = K + 1) = p K −1 (1 − p) p + · · · + (1 − p) p K −1 p K! (1 − p) p K = (K − 1)!(K − (K − 1))!

T
−S ∗

 1−

L=2

K

where S is the actual length of the fishing season (number of trips). During the last trip, bycatch must necessarily occur. The probability that the fishing must be halted after K + 1 periods is

s=0

L−2


 (Prob(1 + s))

s=0

while the expected value of removing that unit from somebody who has K * (1 < K * ≤ K) units left is: X2 = K ∗ − 1  L−K ∗  T
−S ∗
∗ 1− (Prob(K − 1 + s)) − K ∗ + L=K ∗

−

T
−S ∗ L=K ∗ +1



s=0

1−

∗ L−K
−1

s=0

 ∗

(Prob(K + s))

13

Individual Transferable Quotas for Bycatches: Lessons for the Tuna–Dolphin Issue

Numerical calculations show that the sum X 1 + X 2 is positive, but approaches zero as the time horizon is extended. Hence a mutually beneficial trade in quotas is possible, but the scope for mutually beneficial trade lies in the time constraint on the fishing season. There is the risk that somebody will have an unused quota at the end of the season, and so it would have been beneficial to transfer this to someone else who exhausted his quota early in the season. Without any time constraint on the fishing season, a boatowner would always be able to use a quota allocation, and in the absence of discounting there would be no room for mutually beneficial trade. From this, it follows that a quota transfer will be beneficial to the extent that it helps extend the fishing season for all boats, preventing some of them from being barred from fishing because they were unlucky enough to have exhausted their quotas before the season was over. These points can be illustrated by a simple simulation model. The model compares two situations, one in which quotas are not transferable among

219

boats, and each boat must cease fishing as soon as its bycatch quota has been exhausted, and another in which the bycatch quota is common and the fishery is not halted until the total bycatch quota has been exhausted. The latter solution can be envisaged as resulting from transferability, since it will always be beneficial, in terms of expected values, to transfer a unit of quota from a boat that has some quota left to a boat that has none. A solution in which p = 0.1, with N = 20, K = 3, and T = 20, is shown in Figure 13.1. A common quota would make it possible for all boats to fish throughout the fishing season, which allows for 400 trips (T × N). There are 100 simulations, represented along the x-axis. In all cases, some boats would have to stop fishing before the fishing is over, and in some cases the number of trips is just above 330, slightly more than 80% of the maximum. If we increase the probability of incurring bycatch during a trip to p = 0.3, the advantage of a common quota virtually disappears (Figure 13.2).

400 Common Individual

390

Trips

380 370 360 350 340 330 0

20

40

60

80

100

Simulation

Figure 13.1. Number of fishing trips with individual, nontransferable bycatch quotas and a common quota. p = 0.1, with N = 20, K = 3, and T = 20.

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110 Common

105

Individual 100

Trips

95 90 85 80 75 0

20

40

60

80

100

Simulation

Figure 13.2. Number of fishing trips with individual, nontransferable bycatch quotas and a common quota. p = 0.3, with N = 20, K = 3, and T = 20.

The number of trips is almost the same with and without a common quota (87.3 and 87.4, respectively, on average). In this case, the common quota is not very helpful in allowing the boats to fully utilize the entire fishing season. Similarly, if we extend the fishing season, the advantage of the common quota disappears. This is illustrated in Figure 13.3, for which the number of trips is, on average, virtually the same in both cases (595.0 and 594.5). In fact, individual nontransferable quotas sometimes result in a greater number of trips, which is due to some boats being more lucky than others. It would be desirable to let the lucky boats continue fishing, but the problem is that we have no way of knowing ahead of time which boats will turn out to be lucky. The example also illustrates the fact that in this setting of a purely random bycatch, individual quotas would not be necessary; all that would be needed is a common quota and monitoring of the fishery so that it will be shut down once the common bycatch quota has been exhausted. Nevertheless, if for some reason individual quotas are

applied, it would make sense to allow transferability in order to realize a solution similar to that obtained with a common quota.

Differences in Skills at Avoiding Bycatches The case for transferable quotas when there are efficiency differences among the boats is a variant of a more general case that has been made many times; transferability will allow more efficient producers to buy pollution permits (here, bycatch permits) from less efficient producers, so a greater (or more valuable) production will be accomplished for a given amount of pollution. The total amount of pollution is assumed to be set at an optimal or at some acceptable level. Given that level, it obviously makes sense to minimize the cost, that is, production value foregone. This section purports to no more than illustrate this general point once again.

13

Individual Transferable Quotas for Bycatches: Lessons for the Tuna–Dolphin Issue

800

221

Common Individual

Trips

700

600

500

400 0

20

40

60

80

100

Simulation

Figure 13.3. Number of fishing trips with individual, nontransferable bycatch quotas and a common quota. p = 0.1, with N = 20, K = 3, and T = 100.

Assume that catches of targeted fish (y) necessarily result in some bycatch (q). The boat captains and crews differ, however, in that some are better able than others to avoid bycatches. For boat i we have: qi = ai yi ,

0 < a1 < a2 < · · · < a N

Assume that the length of the fishing season constrains the amount of fish that can be caught and that this is the same for all ( y¯ ). This determines the amount of bycatch:
i

qi = y¯




ai

i

Now assume that the bycatch is reduced to Q¯ <  i qi , and that this is accomplished by allocating ¯ to each boat a bycatch quota q¯ = NQ . This will constrain the catch to:
q¯ < N y¯ ai i

with those that had the greatest bycatches suffering most of the reduction in catch. An even allocation of the bycatch quota may thus be regarded as unjust and a proportional reduction in all bycatches as more acceptable, as in the latter case all would share the cost in equal proportion. Making the quotas tradable would allow gains in efficiency, irrespective of how the bycatch quotas are allocated, as long as the boats with the greatest bycatches in the absence of quotas get some. In case the quotas are allocated equally to all, this would compensate the latter, whose production would be most severely reduced by the quota. The value of an additional bycatch quota is 1/ai and thus greatest for the boats with captains and crews most skilled at avoiding bycatches. They would therefore be able to buy quotas from others at prices the latter find acceptable, and the result would be a situation in which only those who are most able to avoid bycatches would fish, and the others would sell their quotas. Since those who are best able to avoid bycatches catch more fish for each unit of bycatch quota than the others, the production of fish would increase.

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0.8 0.7 0.6

Y

0.5 0.4 0.3 0.2 0.1 0.0 1

2

3

4

5

6

7

8

9

10

11

Boat number

Figure 13.4. Catches of individual boats with equal bycatch quotas.

These points are illustrated by the following simple example. Assume that there are 11 boats, each producing one unit of fish. The ai coefficients are as follows:

buy or sell. The total production would be 7, with the seven most efficient boats producing at full capacity and the others not at all. Hence, for a given bycatch quota, total fish production would increase.

ai = 1 + 0.1(i − 1), i = 1, . . . , 11 In the initial situation, y = 11 (each boat produces one unit of fish), which results in a bycatch of 16.5 units. It is now decided that this should be reduced by one half, to 8.25 units. Allocating each boat the same share of this would reduce the total catch by almost one half, or to 5.8. The reduction would be greatest for the least efficient boats, as shown in Figure 13.4. The value of an additional quota for the boats is shown in Figure 13.5. Since this is constant for each boat in this particular case, the most efficient boats would buy quotas up to the limit set by the maximum catch they can take in the season (y = 1). The first boat would buy a1 − 8.25/11 = 0.25, the second a2 − 8.25/11 = 0.35, etc. The least efficient boats would sell their entire quotas, 8.25/11 = 0.75 each. From this we find that the six most efficient boats would buy a total of 3 quota units, which is exactly what boats 8–11 would sell. The equilibrium price would be the marginal quota value for the seventh boat, which is 0.625, making the boatowner indifferent as to whether he would

Conclusion What conclusions can we draw for the tuna–dolphin issue? It is highly likely that transferable quotas of dolphin bycatch would be helpful in minimizing the losses caused by the limitation of dolphin mortality. Presumably this limit is set on the basis of what is an acceptable mortality, and with that as a given it makes sense to minimize the loss to the industry imposed by this limit. ITQs are particularly relevant when there are skill differences among boat captains and crew in avoiding killing dolphins. Such differences do exist and appear to be of considerable magnitude (Hall 1998, Hall et al. 2003). It is likely that captains better skilled at avoiding dolphin mortalities would be willing to buy dolphin quotas from less skilled captains at a price the latter would find acceptable. This would result in greater catches of tunas for given levels of dolphin mortality. If the killing of dolphins is a purely random process (which, however, appears not be the case),

13

Individual Transferable Quotas for Bycatches: Lessons for the Tuna–Dolphin Issue

223

1.2 1.0

1/a

0.8 0.6 0.4 0.2 0.0 1

2

3

4

5

6

7

8

9

10

11

Boat number Figure 13.5. Marginal value (1/a) of a bycatch quota.

there is little or no need for individual quotas. In section “A Review of the Literature,” it was shown that a common quota would probably be superior to individual nontransferable quotas. Transferability is, however, likely to result in the same solution as the common quota, but is not necessary unless the total quota is allocated to the individual boats. Returning to the case of differences among boats, how would a dolphin quota system work over time? Dolphin quotas would most likely have to be changed over time, in response to the changes in the dolphin stocks affected. An increased dolphin stock could sustain a higher mortality, but there are ethical reasons why it may be desired to keep this mortality as low as possible. Over time, dolphin quotas would provide incentives for development in technology and skills to avoid killing dolphins. Transferability is not required for this; the loss from having to cease fishing because the dolphin quota has been exhausted seems powerful enough. In fact, a very impressive development in technology and skills to avoid killing dolphins seems to have taken place purely because of the pressure generated by denying market access to dolphin-unsafe products (Hall 1998, Hall et al. 2003). It may be noted that, with dolphin quotas, the incentives for improvements in skill and technology to avoid killing dolphins would disappear when everyone has reached a level at which the

mortality of dolphins caused by fishing at full capacity matches the dolphin quotas of the boats. Then no one would need to buy quotas to extend the fishing, and no one would benefit from improving performance in order to have some unused quota to sell, as there would be no market for quotas. To ensure continued development in skills and technology, the dolphin mortality quotas would have to be progressively reduced. There appears, however, to be little need for this, at least for preserving the dolphin stocks. The mortality of dolphins has for many years been less than the required maximum of 5,000 per year, while the total abundance of the stocks affected by the fishery is estimated to be more than 8 million animals (Anonymous 2007: Table 3). Nevertheless, the Agreement on International Dolphin Conservation Program, which entered into force in 1999, stipulates that the dolphin mortality caused by purse seining should be progressively reduced to a level approaching zero. Two additional issues about a dolphin ITQ program must be recognized. First, how long should the dolphin quotas be valid? If selling a dolphin quota for one season implies forfeiture for all future seasons, such sales would not take place unless the boat in question were to be withdrawn permanently from the fishery anyway. Hence, dolphin quotas (or shares in an overall quota) would have

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to be valid for a long time, although not necessarily in perpetuity. If, however, the quota allocation of a particular boat had been sold repeatedly over a period of many years, and then the boat was withdrawn from the fishery, questions about the legitimacy of that boat’s entitlement would inevitably be raised. The second issue arose during the 1970s due to the international character of this fishery. A dolphin quota regime for the entire fishery would have been voluntary, since there was no international authority that could force such a regime on all participating states without their consent. That issue has been resolved in this case, however, through the International Dolphin Conservation Program, in which all countries involved in the purse-seine fishery for tunas in the eastern Pacific Ocean participate.

Endnote 1. Information on the International Dolphin Conservation Program is available on the website of the Inter-American Tropical Tuna Commission.

References Anonymous. 2007. Annual Report of the InterAmerican Tropical Tuna Commission, 2005, 100 pp. Bisack KD and JG Sutinen. 2006. Harbor porpoise bycatch: ITQs or time/area closures in the New England gillnet fishery. Land Economics, 82:85–102. Boyce JR. 1996. An economic analysis of the fisheries bycatch problem. Journal of Environmental Economics and Management, 31:314–336.

Dupont DP, KJ Fox, DV Gordon, and RQ Grafton. 2004. Profit and price effects of multi-species individual transferable quotas. Journal of Agricultural Economics, 56:31–57. Fox KJ, RQ Grafton, J Kirkley, and D Squires. 2003. Property rights in a fishery: regulatory change and firm performance. Journal of Environmental Economics and Management, 46:156–177. Hall MA. 1998. An ecological view of the tuna–dolphin problem: impacts and trade-offs. Reviews in Fish Biology and Fisheries, 8:1–24. Hall MA, M Campa, and M Gomez. 2003. Solving the tuna-dolphin problem in the eastern Pacific purse-seine fishery. Ocean Yearbook, 17:60–92. Haraden J, SF Herrick, D Squires, and C Tisdell. 2004. Economic benefits of dolphins in the United States eastern tropical Pacific purseseine tuna industry. Environmental and Resource Economics, 28:451–468. Hedley C. 2001. The 1998 Agreement on the International Dolphin Conservation Program: recent developments in the tuna-dolphin controversy in the eastern Pacific Ocean. Ocean Development and International Law, 32:71–92. Herrera GE. 2005. Stochastic bycatch, informational asymmetry, and discarding. Journal of Environmental Economics and Management, 49:463–483. Larson DM, BW House and JM Terry. 1996. Toward efficient bycatch management in multispecies fisheries: a nonparametric approach. Marine Resource Economics, 11:181–202. Larson DM, BW House and JM Terry. 1998. Bycatch control in multispecies fisheries: a quasi-rent share approach to the Bering Sea/Aleutian Islands midwater trawl pollock fishery. American Journal of Agricultural Economics, 80:778–792.

Chapter 14

Incentives to Address Bycatch Issues Heidi Gjertsen, Martin Hall, and Dale Squires

The Bycatch Issue Bycatch has become one of the most pressing fishery management issues of our time. Bycatch, which is defined as the part of the capture that is discarded dead (Hall 1996), occurs because most fishing technologies cannot be perfectly selective in targeting the desired species. Bycatch affects nontarget fish species, juvenile target fish species, and other nonfish species (Alverson and Hughes 1996). Discarding occurs for a number of reasons: economic (low price, no market, lack of storage space, quality, high-grading), quotas are reached, or regulations prohibit the particular species, age, size, gear, or season.1 Besides the issue of waste inherent in bycatch, particular concerns arise when the bycatch is a long-lived species with low reproductive rates, particularly if the species is threatened or endangered. Bycatch of marine mammals, seabirds, and sea turtles is currently one of the significant drivers of fisheries management in several cases (Hall et al. 2000). Bycatch of particular species may have impacts on the ecosystem and biodiversity, such as removal of top-level predators or of prey. Bycatch has negative impacts on fishers as well.

It can be a source of conflict, creates a bad image with consumers, leads to restrictive regulations, and can decrease profit because of the time that must be spent separating the bycatch from the fish to be retained. In addition, if bycatch is mainly juveniles of the target species, it can lead to a decline in the resource of interest. Objectives of bycatch management, therefore, can be diverse: avoiding severe depletion of a species, retaining the basic structure and functioning of ecosystems, reducing waste in fisheries, reducing interactions between fisheries, keeping fisheries open, and rebuilding depleted populations.

Bycatch in the Purse-Seine Fisheries of the Eastern Pacific Ocean Purse-seine fisheries for tunas in the eastern Pacific Ocean (EPO) use three broad techniques: sets on fish associated with dolphins, sets on unassociated schools of fish, and sets on floating objects (e.g., flotsam or fish-aggregating devices [FADs]).

225

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Bycatch

Table 14.1. Average annual bycatches, in numbers of individuals, for the three types of purse-seine sets in the eastern Pacific Ocean during 1993–2008.

Type of set

Billfishes Large Fishes Dorado Wahoo Rainbow runner Yellowtail Other large fish Sharks and rays Silky shark Whitetip shark Hammerhead shark Unidentified/other sharks Manta ray Sting ray Sea turtles Dolphins

Dolphin sets

Unassociated sets

1,060

1,105

2,005

4,170

430 311 20 394 35

10,994 952 1,219 25,335 16,188

461,148 234,831 94,652 37,053 8,324

472,573 236,093 95,891 62,782 24,547

3,144 158 138 884

4,500 236 417 973

27,392 2,878 1,004 3,596

35,036 3,273 1,558 5,453

1,231 324 11 1,992

2,899 948 22 7

118 119 56 2

4,248 1,391 89 2,002

Data on the average annual bycatches, in numbers of individuals, for the three types of purse-seine sets in the EPO during 1993–2008 are shown in Table 14.1, while data on the bycatches, in numbers of individuals per 1,000 metric tons of yellowfin, skipjack, and bigeye tuna captured during the same period are shown in Table 14.2. Bycatch data are collected by observers aboard mainly class-6 purse-seine vessels (fish-carrying capacity > 425 m3 ). Sets on unassociated schools have moderately low bycatches (in descending order of magnitude) of yellowtail, mahimahi, sharks, rays, billfishes, and other species. Other than dolphins, the bycatches of dolphin sets consist of a few sharks and, occasionally, yellowtail, billfishes, rays, and a few other species. Because tunas and dolphins swim at high speeds, and prior to setting there is a chase at even higher speeds, almost no small or slowmoving species of fishes or other animals are encir-

Floating object sets

Total

cled when the net encircles the tunas and dolphins. The billfishes may have been traveling with the tuna–dolphin aggregation, but others were probably, by chance, in the water that was encircled. Dolphin sets are by far the “cleanest” in this respect. The reduction in the use of dolphin sets due to concerns about dolphin mortality led to a search for new methods, and a large portion of the international fleet switched to alternative methods, the most popular being floating-object sets, particularly man-made FADs. This increase in floatingobject sets during the 1990s brought about an enormous increase in the bycatches of juvenile tunas, and also of mahimahi, wahoo, rainbow runners, yellowtail, and sharks. FAD fishing generates the greatest amount of bycatch, by both number and weight of animals discarded (Archer 2005). Fish of all sizes and body configurations, slow or fast moving, can aggregate under the drifting flotsam and FADs. The tunas that associate with floating

14

Incentives to Address Bycatch Issues

227

Table 14.2. Bycatches, in numbers of individuals per 1,000 metric tons of yellowfin, skipjack, and bigeye tuna captured during 1993–2008.

Type of set

Billfishes Large Fishes Dorado Wahoo Rainbow runner Yellowtail Other large fish Sharks and rays Silky shark Whitetip shark Hammerhead shark Unidentified/other sharks Manta ray Sting ray Sea turtles Dolphins

Dolphin sets

Unassociated sets

6.30

12.45

10.61

29.36

2.96 2.01 0.12 1.85 0.21

127.16 9.80 17.54 286.45 109.50

2,436.79 1,275.31 525.65 160.44 46.08

2,566.91 1,287.12 543.31 448.74 155.79

13.13 0.70 0.79 5.26

49.58 2.55 4.40 11.14

131.64 15.37 5.36 17.55

194.35 18.62 10.55 33.95

4.80 1.30 0.07 11.93

32.17 6.68 0.28 0.10

0.57 0.63 0.31 0.01

37.54 8.61 0.66 12.04

objects are usually smaller than those caught by other methods, and many (e.g., 15–25% during 1993–1995) are below the marketable size (Hall and Williams 2000). Most of the floating-object bycatch is mahimahi and wahoo, although a number of other species, including some that are protected, are caught. Sea turtles, small bigeye tuna, and silky sharks are believed to be the most nonsustainable bycatches (Archer 2005).

Bycatch Examples from the Experience of the Inter-American Tropical Tuna Commission Dolphins During the late 1950s and early 1960s most of the baitboats that were fishing for tunas in the

Floating object sets

Total

EPO were converted to purse seiners, and construction of new purse seiners began during the mid-1960s. Yellowfin tuna frequently associate with dolphins, mostly spotted dolphins, Stenella attenuata, spinner dolphins, Stenella longirostris, and common dolphins, Delphinus delphis, and the fishers found that yellowfin could be caught by encircling herds of dolphins that had yellowfin associated with them. During the early years of the purse-seine fishery, large numbers of dolphins were killed by fishermen who were using this method to catch yellowfin. The public first became aware of that fact during the late 1960s. Shortly thereafter, in 1972, the United States enacted its Marine Mammal Protection Act (MMPA), and within a few years most of the other nations involved in the fishery for tunas associated with dolphins had passed similar laws. Subsequently the provisions of the MMPA became more restrictive as additional

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laws were passed and additional regulations were promulgated. Shortly after adoption of the MMPA, the US National Marine Fisheries Service (NMFS) began an extensive program to study the biology of dolphins and to seek ways to reduce their incidental mortality caused by US-flag vessels. The responsibilities of the Inter-American Tropical Tuna Commission (IATTC) were broadened in 1976 to address the problems arising from the incidental mortality caused by vessels of all nations. The commissioners agreed that the IATTC “should strive to maintain a high level of tuna production and also to maintain [dolphin] stocks at or above levels that assure their survival in perpetuity, with every reasonable effort being made to avoid needless or careless killing of [dolphins].”2 The principal responsibilities of the IATTC’s Tuna–Dolphin Program are (1) to monitor the abundance of dolphins and their mortality incidental to fishing through the collection of data aboard tuna purse seiners fishing in the EPO, (2) to analyze these data and make appropriate recommendations for the conservation of dolphins, (3) to study the causes of mortality of dolphins during fishing operations, make these results known to the fishers, and encourage them to adopt fishing techniques that minimize the mortalities of dolphins, and (4) to study the effects of different modes of fishing on the various fish and other animals of the pelagic ecosystem. The mortalities of dolphins due to fishing have been reduced from more than 100,000 per year during the early years of the fishery to around 1,000 per year. The principal innovations that led to mortality reduction—“backing down,” to remove most of the dolphins from the net, and the Medina panel, which prevented dolphins from getting their snouts entangled in the net—were devised by fishers. Observers were placed on vessels, first by the NMFS, then by the IATTC, and then by observer programs of other nations. The coverage of trips by vessels with fish-carrying capacities of more than 363 metric tons has been at virtually 100% since the mid-1990s. The fishery for tunas associated with dolphins, its effect on the environment, and the work that has been done to minimize the mortality of dolphins

are discussed by Joseph and Greenough (1979), Joseph (1994), Hall (1996, 1998), Gosliner (1999), Hall and Williams (2000), Hall et al. (2000, 2003), and others.

Sea Turtles Five species of sea turtles, olive ridley (Lepidochelys olivacea), green (Chelonia mydas), loggerhead (Caretta caretta), hawksbill (Eretmochelys imbricata), and leatherback (Dermochelys coriacea) occur in the EPO. They are caught incidentally by longlines, gillnets, and other types of fishing gear, and also some individuals become entangled in the longline gear. In addition, their eggs are sometimes consumed by humans and by wild and domestic animals, and their nesting habitats are threatened by coastal development and other factors. Sea turtle populations appear especially vulnerable to climate changes, particularly increasing ocean temperatures, changes in ocean current systems, and rising sea levels. The populations of loggerhead, hawksbill, and leatherback turtles have been at low levels during recent years. The Food and Agriculture Organization (FAO) of the United Nations and other organizations have urged the development of programs to reduce the mortality of sea turtles due to fishing. The Asociaci´on de Exportadores de Pesca Blanca del Ecuador, the Subsecretar´ıa de Recursos Pesqueros of Ecuador, and fish worker’s organizations from that country decided to search for a solution that would reduce the mortalities of sea turtles, but allow the continuation of the fishing activities, specifically the longline fisheries for tunas, billfishes, and sharks and for dorado, critical to thousands of families. Some member countries of the IATTC suggested that the IATTC help develop such a program. In response to this, the IATTC adopted a resolution on a Three-Year Program to Mitigate the Impact of Tuna Fishing on Sea Turtles (Resolution C-04-07) at its 72nd meeting in June 2004. It then began a program, supported by the World Wildlife Fund (WWF), the US Western Pacific Regional Fisheries Management Council, the US National Oceanic and Atmospheric Administration (NOAA), the US State

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Department, the Overseas Fishery Cooperation Foundation (OFCF) of Japan, The Ocean Conservancy (TOC), Defenders of Wildlife (Mexico), and several national conservation, industry, and fishworkers’ organizations of the coastal countries of the EPO, to seek ways to reduce this mortality by (1) reducing the catches of sea turtles and (2) reducing the mortalities of sea turtles that are caught. The program was begun in Ecuador in 2003, and has since expanded to other countries bordering the EPO. By the end of 2008, the program was (1) active in Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Mexico, Panama, and Peru and (2) under development in Nicaragua, with workshops taking place in many ports. It appears that (1) “circle” hooks catch fewer turtles than do the more-commonly used “J” hooks, (2) when a turtle is caught on a circle hook, its injuries are less likely to be fatal than if it were caught on a J hook, and (3) the catches of many of the target species (e.g., tunas, billfishes, and sharks), at least, are not reduced by substitution of circle hooks for J hooks. In response to this, some fishers have already exchanged their J hooks for circle hooks. Experiments have shown statistically significant decreases in hooking rates of sea turtles in these fisheries, and significant changes in the location of the hooks in the turtles. The location of hooks is important because it facilitates the removal of the hook, and if it not lodged deeply, it may increase the survival of hooked turtles. In addition, “dehookers,” which facilitate the removal of hooks from the turtles, are being distributed to the fishers. These, together with improved training of the fishers on their use, and on the handling of sea turtles, are expected to reduce posthooking mortality among sea turtles.

Economic Incentives for Bycatch Reduction Market-based approaches are regulations that encourage behavior through market signals rather than through explicit directives regarding by-

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catch levels or methods (Stavins 2003). Marketbased approaches to environmental protection are premised on the idea that it is possible to give firms, consumers, and government the same kinds of incentives that they face in markets (Heal 2000). The rationale for market-based approaches is to put the forces of markets and market-based policy instruments to work in service of the environment. Economic incentives guide fishers, consumers, and others to address all costs and benefits from consumption and production, even if not presently captured by market values, so that private pursuit of gain aligns with the public interest. Market-based approaches potentially replace the perverse incentives currently facing fisheries with positive incentives—carrots that foster conservation, sustainable harvests, and profits, or negative incentives—sticks that penalize adverse behavior. Regulations operate by telling people and institutions what they must and must not do (Heal 2000). Approaches that are market based and rely on economic incentives potentially raise compliance and reduce regulatory costs, and in fact in principle allow achieving the regulatory goal at the lowest overall cost to society by providing incentives for the greatest reductions in bycatch by those vessels that can achieve these reductions most cheaply. The costs of achieving any given bycatch reduction are seldom constant across all situations—vessels, time, area, etc. Market-based instruments take advantage of this difference by concentrating efforts where the costs are lower, thereby increasing economic efficiency (Baumol and Oates 1988). That is, rather than equalizing bycatch levels among vessels (such as through uniform bycatch performance standards), marketbased instruments equalize the increment that vessels spend to reduce bycatch, what is called their marginal cost, giving cost-effectiveness. Similarly, the benefits of fisheries management can vary from case to case, and market-based instruments seek out and concentrate on the higher-benefit cases. Incentives for conservation depend on the ability of the owners or users of a system to appropriate as rewards some of the benefits that they convey to others.

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In contrast, more conventional approaches are often called “command-and-control” regulations, since they allow relatively little flexibility in the means of achieving goals (Stavins 2003). Command-and-control regulations require vessels to take on similar shares of the bycatch burden, regardless of cost, by setting uniform bycatch standards for vessels, the most prevalent of which are technology- and performance-based standards. Technology-based standards specify the method, sometimes the actual equipment and operations such as the backdown procedure and Medina panel, that vessels must use to comply with regulations, whereas performance standards set uniform control targets, such as bycatch quotas, for vessels, while allowing some latitude in the means by which the target is satisfied. Requiring all vessels to meet the same target can be expensive, since some vessels are better able to meet the target and at lower costs, than other vessels; this variability in performance and costs may vary greatly among vessels and skippers. Nonetheless, as discussed below, sound reasons exist for making technology standards the centerpiece of any bycatch reduction program, to which other approaches are added.

Property and Use Rights Rights to set on floating objects—use or access rights in the form of permits—can, in principle, limit the amount of effort on floating objects, and hence bycatch. Such an approach worked with dolphin sets through dolphin mortality limits (DMLs) (Hall 1998). DMLs were established through a formal, binding international environmental agreement, the Agreement on the International Dolphin Conservation Program (AIDCP). If a vessel kills more than its limit of dolphins in any year, the excess plus an additional 50% of its limit is deducted from its DML for the following year. The DML is a relatively weak right because it does not provide full exclusive use, since there are national mortality limits, which, if reached, would curtail individual rights. More limiting, however, is the DMLs’ duration of a single year, and their security is subject to the ability of the various governments to

renounce their DMLs or to reallocate them among vessels of their own fleets. DMLs’ transferability among vessels is attenuated in that limits from vessels that renounce or forfeit their assigned limits are redistributed among other vessels. In practice, the parties to the AIDCP have allowed ad hoc transfers among vessels. The economic efficiency of DMLs could be enhanced by allowing more extensive and systematic trade among different vessels and different flag states, including allowing the development of formal markets, with longer periods of duration to allow more planning and investments. Agreements to establish and limit rights can be voluntary or through a Regional Fisheries Management Organization (RFMO), but in either case must be self-enforcing in the sense that there is no third party to enforce the limited access other than voluntary cooperation among multiple parties and states through the RFMO. Entry into such a limited-access program must also be deterred or an overall cap on bycatch must be established, perhaps by species groups, such as were instituted with DMLs. Moreover, limited access, as an imperfect right, does not fully resolve the underlying incentives of open access to catch as many fish as soon as possible, and, as such, is not expected to fully reduce bycatches. As a variation, a possibility adopted from the British Columbia Mifflin Plan is possible (cf. Grafton and Nelson 2007). The EPO fishing area could be divided into areas for the different types of tuna fishing, for example, an area for dolphin fishing and another area for floating-object fishing or an even finer classification. A vessel license holder would then be required to select one area, with the license being good for that area only. The scheme would permit license holders to purchase licenses from other holders. In so doing, the purchaser would be permitted to fish in additional areas, or with other modes of fishing. This provision, popularly known as “stacking,” would work as follows: the owner of a purse-seine vessel, initially required to choose between one of the areas, could opt for the area with dolphin fishing, and then purchase a license from the owner of a purse-seine

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vessel in the area(s) in which setting on floating objects is permitted. The purchaser can then harvest in both areas. Capacity is reduced because the seller’s purse-seine vessel is removed from the fleet, with the “stacking” of the two licenses onto one vessel. Dividing the fishery into smaller areas and gear groups helps limited the number of players, thereby contributing to more cooperative behavior. The IATTC passed a resolution to limit the number of auxiliary boats in the FAD fishery, which effectively limits effort. Another step toward limiting access could be requiring that all FADs be identified and numbered and vessels may fish only on fish associated with a numbered FAD. Limiting the number of FADs would then help cap incidental mortality and bycatch associated with sets on floating FADs. Monitoring and enforcement of the number of FADs could be facilitated by requiring standardized radio signals on all FADs, which are monitored by a state or RFMO. Enforcement of individual property rights over individual FADs would be facilitated by requiring matching signals from individual vessels before harvesting off the FADs.

Taxes and Fees Taxes can close the gap between the private and environmental costs of an activity. Without taxes, only private costs of catching tunas are borne by the vessel owners, but the ecological or external costs of the unpriced bycatch are borne by society. A tax on the amount of tuna or bycatch caught, or on fishing boats (a license fee), raises the private cost of using the common resource, making fishing less profitable and thus reducing effort (i.e., internalizes the external cost). This would help bring the private costs in line with the environmental costs.3 While the cost of regulation is known in advance with a tax, what is not known is the impact the tax would have on the level of bycatch: only by trial and error would the regulator come to know whether a given tax level would lead to the desired reduction in bycatch (Heal 2000). Taxes on bycatch would also require some form

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of monitoring, such as on-board observers. Such Pigovian taxes are ideally set at the margin on bycatch rates, but in practice would be set on landings (assuming a relatively constant relationship between target catch and bycatch). Moreover, because of the many bycatch species in the floating object fishery, in principle multiple taxes would have to be set for each bycatch species of concern, one for each of these major bycatch species or species assemblages. This multiple species issue does not go away when a tax is levied on a group of species as a group, since bycatch rates vary among species within the group. The randomness of bycatch rates further complicate the setting of Pigovian taxes at the margin, although expected values from observer or other data can be used (Segerson 2010a). A lump sum tax, such as a license fee to set on FADs or annual tax on each FAD deployed, is not a tax set at the margin, that is, on bycatch rates, but is easier to implement and facilitates monitoring. As such, a lump sum tax does not alter the behavior of vessels at the margin, shifting their harvest rates in direction of the socially optimal bycatch rate and mix, and instead reduces the overall level of effort and thereby reduces bycatch, but along with the catch of the target species. As discussed below, a lump sum tax might be more useful as a means to finance public good conservation investments that reduce bycatch elsewhere or protect nesting and breeding sites or biological hotspots. Additional complications arise as discussed in Segerson (2010a). Imposing higher taxes on high-bycatch gears, or reducing or removing taxes on low-bycatch gears could be a simpler action that an individual country could take. Taxes or fees levied on tunas or bycatch and/or on consumers of these catches can potentially yield several dividends, leading to “double-dividend taxes.” The first dividend is the reduced bycatch. The second dividend is the tax receipt used to finance conservation investments or activities and gear that reduce bycatch or otherwise increase populations, such as protection of nesting sites for sea turtles and sea birds, pupping areas for sharks or marine mammals, or help protect biological

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hotspots. Comparable double dividend charges are used in Europe and Japan to address water and, to a lesser extent, air pollution (Tietenberg 1990). From the standpoint of economic efficiency, taxes and fees have been found superior to trip-based quotas (either biomass retention or value limits) (Herrera 2005).4 A tax could be levied on small bigeye landed, which might help reduce the bycatch of bigeye by the floating-object fishery. Such a tax might induce the fishers who fish for tunas associated with floating objects to concentrate their operations in area-time strata in which bigeye are less abundant or to set their nets at the times of day when skipjack and bigeye are most spatially separated. It is often more difficult to reach agreement about taxes than about catch quotas or technology standards and technological solutions. Bycatch is stochastic, further complicating the difficulty of setting the correct level of a tax. The multispecies nature of the bycatch associated with floating objects further complicates the difficulty associated with setting the correct level of a tax, and in this case, multiple taxes for multiple species. Nonetheless, a lump sum tax or license fee levied on use of gear or for setting on floating objects can provide a source of funds for conservation investments elsewhere that either reduce bycatch or increase populations such as enhancing nesting sites; such taxes are more likely to be accepted to fishing industries if their use is clearly understood and directly tied to the population levels of the bycatch species of concern. We discuss such an approach below.

Subsidies One carrot that society can offer to induce people to make choices that favor conservation and ecological health is to simply pay them to make the right choices (Heal 2000). Society becomes the buyer of the public goods provided by environmentally conservative choices, and overcomes the free-rider problem that can bedevil many conservation approaches. Public goods, such as biodiversity and the ecosystem and its services, are invariably undersupplied or overexploited and receive

insufficient investment in anthropogenic activities that protect or enhance. A direct subsidy or tax break to tuna fishers can also lower bycatch by subsidizing adoption of a technology standard, time–area closures, or other such conservation policies. Such a subsidy can be effective in developing and later adopting new technology or altering fishing practices. A payment can even be made to fishers not to set on fish associated with floating objects in periods or areas in which bycatch is significant, in which case the fishery would be shut down through vessel or permit buybacks or by switching to another set type. These latter types of payments are called direct conservation payments or payments for environmental services (Wunder et al. 2008). Such an approach might be most effective in a transnational context in which larger scale fleets with higher returns provide payments to smaller scale fleets from developing countries. Another approach (Segerson 2010a) is based on the bycatch performance of individual vessels rather than the fishery as a whole. Vessel-level bycatch targets could be established, and incentive payments could be used to achieve compliance with targets. Incentive payments could take the form of a fixed payment for bycatch at or below a target. To get around the issue of finding sources of funds, a combined approach is possible, in which firms receive incentive payments when bycatch is below target levels and pay fines when above. Monitoring and compliance may require on-board observers. A subsidy from the public sector to producers for bycatch reduction raises the issue of whether the “polluter” or the damaged party pays. It does not matter in principle, in that either alternative reduces bycatch and generates economic efficiency, but, in practice, establishing the property right can be critical.5 Another potential problem with payments to adopt a technology standard is that they can unintentionally counter reductions in bycatch or perhaps even increase mortality by lowering the costs of fishing, creating a “moral hazard” problem.6 When society pays the cost of conservation, it has to raise revenue, but this can be raised

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by environmental groups, taxes on the consumption of target species reflecting some of the ecological costs of consumption, or through some other means. Taxes or tariffs could be eliminated for the import of bycatch reduction devices (sorting grids, circle hooks, dehookers, etc.). Such import relief reduces the cost of bycatch reduction, and can be viewed as contributing to the provision of public goods, which are normally undersupplied.

Conservation and Management Approaches Since bycatch can be expressed as the total fishing effort multiplied by the bycatch per unit of effort, there are two basic paths to reducing bycatch: decreasing total fishing effort and decreasing bycatch per unit of effort. Other options are releasing the unwanted species unharmed or developing methods to utilize them. Some animals, such as sea turtles and sharks, are relatively hardy, and releasing them is a viable option. Indeed, preliminary data (http://www.wpcouncil.org/protected/ Documents/Largacha%20et%20al 2005 Ecuador %20first%20year%20results.pdf and other reports in same web site) indicate that the use of circle hooks and “dehookers” in the artisanal longline fisheries of the Pacific coast of Central and South America reduces the catches of sea turtles and the mortalities of the ones that are hooked. Developing methods to utilize unwanted species may be difficult, as fishers prefer to utilize all the storage space aboard their vessels for the more-valuable target species, but it may lead to changes in marketing or in vessel construction, to allow for a more complete utilization of the individuals that have already been captured, and that could not survive if returned to the ocean. As discussed above, a system of positive and negative incentives would be in place that reward fishing that lowers bycatch and penalize fishing that increases bycatch. Often, the costs of conser-

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vation are localized, but the benefits are spread across the entire society and may be nonmarket as well. Thus, bycatch reduction represents a localized cost to an individual fisher and benefits society at large. Bycatch reduction programs that lower this cost to individual fishers or raise the benefits to fishers are most likely to be successful. In general, reducing bycatch will require systems of regulation, monitoring, and enforcement and an experimental program. Very infrequent events are the most difficult to affect, while controlling bycatch is much easier where and when the timing and location of bycatch is predictable or if the bycatch is aggregated in space or time (Segerson 2010a).

Voluntary Agreements Because protective measures can be costly, fishers may not undertake these measures unilaterally or voluntarily, particularly under conditions of open access. However, a growing literature in the field of environmental economics suggests that voluntary approaches to environmental protection can be effective under certain conditions, even when protective measures are costly, most notably when there is a credible threat of some sort (Segerson and Miceli 1998).7 Incentives for voluntary protection can exist, for example, when governments threaten to impose more costly command-andcontrol regulatory actions or protective measures if voluntary approaches are not successful in meeting protection targets. Threats of embargoes and trade measures can also be effective, as with the tuna–dolphin and shrimp–sea turtle issues (Joyner and Tyler 2000). These incentives can be created either at the level of an individual vessel, such as occurred when vessels reduced dolphin and sea turtle mortalities through technological and other innovations, or for a group of firms or the entire fishery, such as when the environmental performance of a subset of vessels affects all vessels in the group or industry. When there are group incentives, free riding can arise, and needs to be addressed.

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The literature on voluntary agreements suggests three key conditions influencing the likely success of a voluntary approach (Segerson 2010b): (1) sufficiently strong participation incentives, (2) clearly identified standards for behavior or performance, and (3) sufficient monitoring to determine voluntary compliance with those standards. Free riding with group voluntary agreements reduces the efficiency of the policy. Potential applications include bycatch reduction efforts supported by a fleet communication, although success requires preventing free riding. In the international setting and with transboundary resources, voluntary agreements must necessarily be self-enforcing (Barrett 2003, 2005). That is, voluntary agreements require multilateral cooperation or coordination without the coercive influence of an overarching world or regional government and with the effect of state sovereignty strong. Because each party must gain from the voluntary agreement, transfers or side payments from gainers to losers from the voluntary agreement are required, assuming that there is an aggregate gain. The voluntary “La Jolla Agreement” establishing the AIDCP helped conserve dolphins and established use rights in the form of DMLs (Joseph 1994, Hedley 2001).8 Voluntary agreements, which are currently employed by several user groups, give a user-managed resource system. For example, a group of New England longline cod fishers contracts with the regulatory body to self-manage their share of the total allowable catch and have signed binding contracts with each other for compliance (Pinto da Silva and Kitts 2006). The fishing cooperatives authorized by the American Fisheries Act are another example, such as the Bering Sea pollock factory trawlers. Similar arrangements could be made to manage incidental takes of nontarget species for vessels setting on fish associated with floating objects, in which contracting parties agree to reduce bycatches. Vessel owners, for example, can voluntarily enact time–area closures for sets on floating objects when bycatches are deemed highest and institute skipper-training programs.9 Vessels can voluntarily provide real-time information about

bycatch rates and “hotspots” that all vessels can use. Compensation for some or all reductions in revenues might be arranged by a collective assessment on the entire fishery and/or buybacks of vessels, or simply their use rights, for that method of fishing.10

Conservation Investments and Mitigation Conservation investments to mitigate at-sea mortality of protected species and bycatch can in some instances contribute to maintaining healthy populations of these species. For example, the Federation of Seafood Harvesters (FISH), the industry association of the California drift gillnet fishery for swordfish, initiated payments initiated in the Fall of 2004 to the Asociaci´on Sudcaliforniana de Protecci´on al Medio Ambiente y la Tortuga Marina (ASUPMATOMA), a Mexican conservation group, to aid their Pacific leatherback turtle (Dermochelys coriacea) recovery efforts (Janisse et al. 2010). Conservation investments for sea turtles and sea birds can entail protection of nesting sites, but also can help mitigate at-sea mortality by other fishing fleets, such as helping to disseminate the circle hook technology to swordfish longline vessels in Latin America that lowers sea turtle interactions and posthooking mortality. At-sea measures of seabird protection for coastal and smaller scale longline vessels, such as Tori lines or dyed bait, can also be financed by larger scale tuna vessels, processors, environmental groups, and governments. Conservation investments can include a parcel of private property that is conserved and managed in perpetuity under a conservation easement for the benefit of rare species, such as sea bird rookeries or sea turtle nesting sites. This can include the oceans, under-ocean zoning, in which defined areas of the ocean have specified uses (including no takes), or spatial rights, such as marine protected areas. Such payments and technology transfers by producers and consumers of environmental amenities in higher-income states to those of lower-income states or regions constitute “side payments.” These side payments are often critical because of the

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localized costs borne by fishing communities in developing countries and consumers when undertaking conservation investments, through opportunity costs of foregone incomes associated with conservation investments and mitigation (such as reduced consumption of sea turtle eggs), and direct costs of gear modifications to reduce incidental takes of sea turtles. In contrast, the benefits are largely consumption of the sea turtle biodiversity public good, which provides nonmarket public benefits, such as enjoyment of existence value, that are largely concentrated among developed countries and higher-income biodiversity consumers in lower-income countries. In short, local groups bear real costs and are disconnected from those enjoying benefits that are both direct use value and market, through increased harvesting and consumption, and nonmarket through continued existence and enhanced biodiversity and ecosystem services. Mitigation measures and conservation investments are well established in the international arena and allow continued commercial activities through compensating mitigation. The Kyoto Protocol provides allowances for “sinks”—credits for the absorption of carbon dioxide by forests, cropland management, and revegetation (Barrett 2003). The Montreal Protocol established the Multilateral Fund for mitigation. The US Endangered Species Act provides for mitigation to counter environmental degradation. Mitigation has also been applied for fish habitat (Harper and Quigley 2006). Such an approach has also been endorsed by the Convention on Biological Diversity (Slootweg et al. 2006). Nonetheless, such approaches can face complexity when the ecology is complex, and controversy still surrounds the approach, despite its widespread application (Burgin 2008). Conservation investments are a public good that benefits all of humanity but particularly those fisheries that inflict mortality on the species of concern. Like all public goods, there is underinvestment in conservation due to the external benefits conferred on those who do not contribute to its financing, that is, to the free-rider problem. A strong case can be made for mandatory contribu-

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tions or lump sum fees to finance the conservation investments because of this public good nature. Potentially, the conservation investments could extend to conservation banking, in which a party that holds a conservation easement receives credits granted by a regulatory body (Heal 2000). Such an owner may use, sell, or otherwise transfer the credits within a predesignated service area to address mitigation required by the regulator. An adverse selection problem, which is a manifestation of the free-rider problem in international environmental agreements (Barrett 2003), arises in that care must be taken that the country or group investing in mitigation projects in other countries is not investing in measures that would have been taken anyway. Not only do recipient countries have incentives to offer projects that they would have undertaken in any case, but investing countries and groups also have incentives to select these projects. Another issue that arises is the extent to which mitigated environmental assets are fungible (Salzman and Ruhl 2000). In other words, are the objects of the conservation investment sufficiently similar in ways important to the goals of environmental protection? Are the exchanges of equivalent value and function between the species reduced in abundance and the item of investment? For example, is a sea turtle of one species that is killed equivalent to the number of eggs, presumably of the same species, that are protected on a nesting site? Complex life histories, multiple sources of mortality, mitigation, and multiple jurisdictions only serve to complicate the uncertainty.

Approaches That Reduce Effort Most reductions in fishing capacity and effort will lead to lesser bycatches. For example, effort limitations or quotas on bycatch species will reduce effort or bycatches or both. Gear replacements can reduce “problem” effort, while time–area closures can reduce effort in areas of high bycatches. Finally, bans, embargoes, and moratoria may reduce or eliminate effort, but they will come at very high social and economic costs if no alternatives are developed. They are likely to have little or no

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long-term impact for migratory species with multiple sources of mortality from multiple nations. These effort-reducing approaches are discussed below. Time–area Closures Time–area closures reduce bycatches by simple avoidance. Where bycatch rates for different species vary by time of year and location in the ocean, limiting or even completely closing a fishery in times of the year and locations of the highest bycatch can reduce overall bycatch. Time–area closures are most likely to be accepted in cases in which bycatch is highly aggregated either spatially or temporally, as this will require a smaller or shorter closure. The benefits of such closures must be balanced with the costs from reductions in catches of target species, which also vary with time and space, and with the benefits and costs from any alternative activities of the vessels that are prohibited from fishing that can spill over onto other fisheries and bycatch (Watson et al. in press). For example, time–area closures in the floating-object fishery could induce purse-seine vessels to set on fish associated with dolphins, thereby increasing the bycatches of dolphins and could have lower or higher direct costs of harvest. Revenues could also be impacted by the species mix and size of fish. Restrictions on time-of-day to set the net, such as the prohibition on “sundown sets” in the dolphin fishery, are included in time–area closures. Not only the short-term ecological effects and tradeoffs induced by time–area closures should be included in the ecological–economic cost equation, but the long-term effects as well. It is noteworthy that, according to Hoyle and Maunder (2007: 4), “theoretically at least, catches [of yellowfin tuna] could be greatly increased if the fishing effort were directed toward longlining and purse-seine sets on yellowfin associated with dolphins.” Embargoes and Sanctions Historically, economic incentives to address ecological issues, such as incidental takes of dol-

phins in purse seines or sea turtles in shrimp trawls, have generally relied upon negative economic incentives—the stick approach—through trade measures and boycotts (cf. Joseph 1994, Joyner and Tyler 2000, Hedley 2001). International trade restrictions do two things (Barrett 2003): they can both punish countries that do not cooperate and correct for a loss in the economic competitiveness of the countries that do cooperate. A trade restriction, to be effective, needs to be sufficiently severe so that, when imposed, behavior will be changed and credible, meaning that given that a country chooses not to participate, or not to comply, the cooperating countries are better off for imposing the restrictions (Barrett 2003). This approach can be used effectively only by countries with economic leverage. Trade measures, acting as a credible threat, include measures to prohibit imports and to prohibit landing, port use, and transshipments. ICCAT, IATTC, WCPFC, IOTC, and CCSBT allow for trade measures, in some instances against nonmembers, rather than just members (LeGallic 2008). Import restrictions must necessarily be consistent with World Trade Organization rules, but are allowed for marine harvests (such as shrimp) that are harvested in ecologically damaging ways. Such trade measures cannot be unilaterally imposed, but instead are implemented in consultation with multilateral trade partners. Trade measures are subject to production and trade leakages (also called transfer effects). Production and trade leakages exacerbate free riding and circumvention of bycatch regulations. Regional regulation to control externalities in one market leads to increased market production and environmental damages in another market. Production leakages occur when regulated production, such as harvesting subject to bycatch limits, relocates to another country or flag state vessels or vessel reflag to circumvent the bycatch regulation. If a production leakage is severe enough, unilateral conservation may only redistribute production and has no long-term effect on mortality. Such a production leakage occurred with limits on sea turtle bycatch in the Hawaiian shallow set pelagic

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longline fishery for swordfish (Rausser et al. 2009). Trade leakages occur when vessels from nations facing a bycatch regulation and a trade restriction divert international trade of fish from the country imposing the trade measure to another country without such a measure, to its domestic market, or launders the fish through a third party. Buybacks Buybacks of vessels or permits to reduce the total level of fishing capacity and effort can directly reduce the catches of nontarget species (and also the targeted tunas, especially bigeye), and thereby help strengthen ecosystem health (Curtis and Squires 2007). Buybacks of gear are also possible, and might be substituted for by less destructive gear. Buybacks of vessels and gear are currently used to contribute to conservation of vaquita in the upper reaches of the Gulf of California (Barlow et al. 2010). Effective buybacks require effective limited entry and restrictions on purchased vessels or gear from reentering the fishery. The amount of reduced overall fishing capacity and effort may be insufficient to fully address this ecological issue. Buybacks of vessels and/or use or access rights—the carrot approach—can, instead, specifically target vessels harvesting in ways or with gear that have the most detrimental ecological impacts in sectors of the fishery facing the greatest ecological issues. Vessels might accept payments not to fish—their historical use rights are bought back for different lengths of time, ranging from one season or year to longer time periods—or even to leave the fishery entirely. Compensation and funding the buyback might be arranged by a collective assessment on the entire fishery, or only those actually participating in it. The incidence of levies on landings is shared between consumers, processors, and fishers, depending on the relative price elasticities of demand. Partial funding by governments or international organizations would legitimately reflect the public’s valuation for the “existence value” of ecosystem health and recognition of the “indirect use value” provided by ecosystem services. In this

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manner, buybacks of vessels and/or use rights provide positive economic incentives and reflect payments for public goods with nonmarket external public benefits. As with all public goods, there is under-supply and under-investment. Buybacks of vessels and/or use rights might also indirectly help address ecological issues through strengthening economic incentives and fostering cooperative self-organization to tackle the ecological issues. By improving the economic returns in the fishery, helping to dampen the race to fish, and providing a means of compensation, buybacks can help to foster cooperation among fishers to voluntarily address bycatch and other ecological issues (as well as general overcapacity).11 Buybacks of ecologically damaging gear, and their replacement by more ecologically favorable gear, are another potential use of buybacks that provide positive economic incentives. The replacement of J hooks by circle hooks for longline fishing to reduce hooking rates and posthooking mortality of sea turtles (Anonymous 2007), for example, could be implemented through gear buybacks. Fishers would have their gear replaced at no cost or, if the buyback gave a positive net return to the fishers, the buyback would essentially pay the fishers to adopt an ecologically enhancing innovation. The buyback program in the Australian northern prawn fishery helped reduce environmental damage through reduced bycatch and protection of sensitive sea grass beds (World Bank 2004). Similar terrestrial programs include the Conservation Reserve Program of the US Department of Agriculture, Wetland Reserves, Nature Conservancy reserves, and New York City’s purchase of watershed in the Catskill Mountains (Heal 2000). While property rights are often required on land, a limited access program with spatial and/or temporal dimensions restricting use rights could serve a similar role. Marine reserves by themselves created to protect ecosystems and conserve biodiversity in an existing fishery fail to address the overcapacity, overfishing, and ecological damage in the remaining areas. In fact, these problems are even

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aggravated, as the existing fishery capacity is concentrated in the remaining areas. Buybacks are one possible tool to address this issue.

Limits on Effort The regulator could seek to limit bycatch by limiting the number of sets (or some other measure of effort, such as number of trips or length of a trip) each vessel is allowed, or equivalently, issuing each firm a fixed number of permits for sets, where the aggregate number of permits is set by the regulator to reflect the desired reduction in bycatch. Note, however, that because bycatch is stochastic, limiting the number of sets per firm cannot ensure that actual bycatch is below the desired limit. In contrast to a tax on harvest or bycatch, and without direct control of avoidance, a limit on the number of sets per vessel cannot induce economically efficient avoidance and activity levels (Segerson 2010a). Limiting sets does not generate any revenue that can be used for conservation purposes, such as conservation investments that help reduce bycatches. Thus, from a social perspective, a tax on harvest or bycatch has a number of advantages over a limit on sets, or more broadly, effort. From the vessel’s perspective, the tax policy entails higher direct costs that require the vessel to internalize or bear the external ecological cost. A command-and-control policy such as a limit on effort allowed also induces inefficiency because it does not account for the differences among vessels in costs and ability to avoid bycatch. In other words, it violates the equimarginal principle in that vessels with lower marginal costs and ability to avoid bycatch are implicitly penalized in comparison to other vessels.

Approaches That Reduce Bycatch per Unit of Effort There are four general options for reducing bycatch per unit effort (Hall 1996): 1. Technological solutions (gear modifications, alternative gear)

2. Operational solutions (deeper sets, no night sets, closures) 3. Performance-based solutions (standards) 4. Utilization solutions (use all bycatch) These options and the manners in which incentives can be created to promote them are discussed below. Economic Incentives for Technological and Operational Change There is a vast literature on technology adoption by farmers, but the issue has not been studied as extensively in fisheries (Hall and Mainprize 2005). However, the results from agriculture may be applicable to fisheries bycatch.12 It has been generally found that the population is composed of innovators, early adopters, an early and late majority, laggards, and nonadopters (Ekberg and Seidel 1982). The rate of diffusion is initially slow (by innovators and early adopters), but accelerates rapidly once a critical mass of firms has adopted (by the early and late majority). Some small number of producers may wait long periods of time or never adopt the changes (laggards and nonadopters). Heterogeneity in producers causes them to adopt changes at different times. Producers may face different costs of adoption and different expected benefits, which depends on the size of the producer and its information and beliefs about the profitability of the technology. In addition, earlier adopters tend to be larger producers and individuals with higher levels of education (Fuglie and Kascak 2001). Generally, technology transfer programs attempt to reach the early adopters, with the assumption that the rest will follow as they learn from the experience of the early adopters. The research required to develop a new technology or a technology standard that lowers bycatch can be considered a public good (a good or service that can be consumed by all without depleting or diminishing the good or service) with benefits external to the firm or entity conducting the research, and, in principle, can be financed, at least in part,

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by the public sector since the benefits accrue to all. Without subsidies for research or finance by the public sector, there are often insufficient incentives for individuals to conduct this research, since the investors do not capture the full benefits of their investment, and there are substantial incentives for free riding. Public finance or subsidy of research for a new technology standard that reduces bycatch is also a way to funnel the intangible benefits that the public enjoys from the existence of the bycatch species, which otherwise do not have a means of expression through markets. In order to stimulate research and innovation for fishing gear designs that reduce bycatch, that is, regulatory-induced technological change, the WWF launched the International Smart Gear Competition in 2004. This program awards a grand prize of $25,000 and two $5,000 prizes, to be used for prototype development, testing, and initial manufacture. Winning designs have included magnetic shark deterrents for longlines, trawl net sorting grids, and a deep-setting technique for reducing longline bycatches of sea turtles. Incentives can also be created that encourage fishers to test newly invented innovations. For example, subsidies can be offered for experimentation. The new gear can be subsidized or provided free with trade-in of the old gear. The WWF, NOAA (USA), the IATTC, the OFCF (Japan), the Ocean Conservancy, and other organizations have been providing circle hooks (in exchange for J hooks), and donated dehookers to artisanal fishers in the EPO to test in their lines to reduce sea turtle bycatches. Governments or nongovernmental organizations may be able to obtain these gears at lower cost through bulk purchases, yielding scale economies. Other subsidies for fishing expenditures, such as fuel, could be offered to vessels that agree to test the gear, and experimenters can be compensated for any losses (e.g., lower catches) that they incur from using the new gear. Fishers can be paid to conduct at-sea trials, while retaining the catch. Once the alternative gears have been demonstrated to lower bycatch, the goal is to encourage fishers to adopt them. While in many cases

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new technologies are mandated through technology standards (e.g., circle hooks in the Hawaiian longline fishery for swordfish), in some cases this is not possible, particularly when dealing with international fleets. There are generally four potential sources of resistance on the part of fishers to new gears: (1) the financial outlay required to obtain the gear, (2) the time and psychological costs of trying something new, (3) operational issues with the gear itself, and (4) the possibility of lower catches of fish with the new gear. Inherent uncertainty associated with new technology means that, in general, every individual is better off waiting for others to adopt the new gear first, and learn from their experiences. Another problem, in the case of bycatch, is the divergence between private and social values of technologies, which creates a wedge between private incentives and social goals. To reduce this resistance and create positive incentives for fishers to adopt the gear, efforts can be made to reduce these costs or offset them by increased benefits. These efforts reflect the external benefits of public goods enjoyed by society, but are costly for individuals to supply voluntarily. The goal is to generate an economic benefit for responsible or innovative fishing that reduces bycatch. This can involve such actions as reducing taxes for imports or sales (opening markets), import preferences, fee waivers for boats using the new gear, subsidizing the gear directly, compensating for lost catch, preferential labels, and buyers’ preference of suppliers with low bycatches. Other benefits could be provided to fishers who reduce their bycatches, such as fisher training to improve quality or development grants for processing and storage. Preferential labels for sustainable fisheries (such as the Marine Stewardship Council label) have generated a great deal of interest in recent years. However, for this to create the proper incentives for fishers, it is necessary that the label translate not only into a higher product price, but also that at least part of that economic surplus accrue to the fishers themselves (Teisl et al. 2002, Hicks and Schnier 2008, Roheim 2008).

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Another type of incentive that can be created is a negative incentive for using the old gear, which makes the cost of using the old gear higher for the fishers. This can involve taxes on the old gear, direct penalties for using the old gear, or import bans or embargoes on fish caught using the old gear. Technology standards refer to mandatory design and equipment requirements, and include operating standards and skipper and crew education and training. Technology standards have been instrumental in reducing the bycatch and mortality of dolphins, through, for example, the Medina panel and the backdown procedure for purse seiners, sea turtles through turtle excluder devices for shrimp trawlers and circle hooks and mackerel-type bait for pelagic longliners, and seabirds through dyed bait and changes in operating procedures for pelagic longliners. It is important that there exist alternatives that are less detrimental than what is banned, and that the “solution” does not simply pass on the problem to other areas or species through spillover effects. Many such standards have been applied in other international environmental agreements, including the conservation of dolphins in the EPO, polar bears in the Arctic, fur seals in the North Pacific, and seals in the Antarctic (Squires et al. 2010). Relevant standards have also been adopted as measures to address ozone depletion in the atmosphere, global warming from emissions of greenhouse gases, acid rain pollution from emissions of sulfur and nitrous dioxides, and ocean pollution from ships. Technology standards aimed at reducing bycatch in the floating-object tuna fishery include gear and FAD modification, handling, and release of bycatch species. The results will vary by the method of fishing and species. Modifications in FAD design can reduce the amounts of bycatch species that aggregate under the FADs. For example, developments in acoustic and optical technologies, such as sonar or lidar, could help vessels detect the numbers and types of potential bycatch and avoid deploying their gear under situations of high potential bycatch (Lennert-Cody et al. 2008).

The authors conclude, however, that “given the complexity of configuring a purse seine, and the difficulties associated with monitoring compliance with gear regulations, fishery-wide gear restrictions would be problematic.” Proposals for testing a number of gear modifications have been submitted. Some examples include electrical or chemical shark deterrents or repellents, bait to lure undesirable species away from FADs, sorting grids to release small fish, gears to remove large fish from purse seines, release by towing FADS or using a modified backdown procedure, and modifications such as ropes, hanging streamers, or “kites,” instead of webbing, hanging in the water column below FADs to reduce turtle entanglement (Archer 2005). Economic Incentives for Performance-Based Solutions Performance standards directly address bycatch through catch limits, such as bycatch quotas (Squires et al. 2010). Performance standards set a uniform control target for vessels, while allowing some latitude in how this target is satisfied (Stavins 2003). If fishers have some control over bycatch, then performance standards can be a workable solution. For example, a system of DMLs was established to deal with dolphin bycatch in the EPO. In this case, it was recognized that certain vessels were responsible for much of the dolphin bycatch and that more capable skippers and well-trained crews had much lower mortality rates (Hall 1998). A total DML was set for the fishery, and an equal share of this limit assigned to each vessel. Vessels that exceed the limit must stop fishing on fish associated with dolphins, and a continuing decrease in the limit plus a decreasing limit per vessel when new vessels enter the fishery forces continual improvements. An observer program is a necessary component of this system for compliance and for collection of scientific data. The results of this program could be achieved at even lower economic cost if the vessel limits were tradable, allowing permits to rest in the hands of vessels and skippers with lower costs and greater rates of compliance.

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A comparable bycatch quota for sets on floating objects faces considerably more complexity due to the large species diversity of the bycatch. Individual bycatch quotas may be possible for some of the key species, but other species would have to be aggregated into assemblages of species (e.g., all billfishes and all sharks), or total numbers caught, or some species would not be covered by limits. Performance-based permits are a related policy option, that is, giving permits only to those who meet bycatch standards. Lennert-Cody et al. (2008) discuss the effects of purse-seine gear and FAD characteristics on the presence of bigeye tuna in the catches of tunas in sets made on fish associated with floating objects. These rights can be held privately by individuals or collectively by groups or states. Such use rights or permits operate by closing the gap between the private and environmental costs of harvesting, and thereby help align private activities with the public good. In contrast to a tax, such use rights provide an assurance about the level at which the allowed activity will be carried out, but at an unknown cost. Bycatch quotas can be allocated first to nations or to individual vessels, can be transferable or not, and can be annually renewed and allocated or extend for shorter or longer periods of time. Bycatches are always discarded at sea unless there are regulations that require that they be retained and there are observers on every trip of every boat. If the overall bycatch limit for a particular species were 10,000 individuals and the fleet consisted of 50 vessels, the individual-vessel limit for that species would be 200 individuals. The regulations might require that fishing cease for the entire fleet for the rest of the year when the overall limit of 10,000 individuals was reached, or they might require that any vessel that reached its 200individual limit cease fishing for the rest of the year. That species might be infrequently caught in Area 1, but frequently caught in Area 2. If that were the case, the owner of a vessel that fished only in Area 1 might transfer 90% of his 200individual limit to the owner of a vessel that fished only in Area 2. Thus, the limit for the first vessel would be decreased from 200 to 20 individuals and

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that for the second vessel would be increased from 200 to 380 individuals. No matter how many such transfers were made, the 10,000-individual overall limit could not be exceeded unless one or more vessels exceeded their limits (Squires et al. 1998). Such an approach is the basis for the individual vessel DMLs, and it is widely used for land-based pollution and even global warming. However, others believe that individual vessel limits that are not transferable have a “Darwinian” effect on the fleet, helping identify the usually small proportion of operators that cause the majority of the problem, and putting most of the pressure on them. Since they cannot be bailed out, they have to withdraw from the fishery. This approach, together with the risk-adverse behavior of many operators, who try to stay well below the limit (so that an accident or a malfunction does not push them over the edge), results in more rapid reductions in mortality levels. Of course, in either case, transferable or not, the overall quota could be gradually ratcheted down, to reduce the bycatches to ever-lower levels, if that is the goal. Performance standards with transboundary issues tend to require more formalized cooperation among nations through multilateral agreements, since catch and mortality limits must be formally reached and agreed upon and generally enacted simultaneously.13 Technology standards, in contrast, tend to require coordinated activities, rather than the more demanding formal cooperation among nations, and can be enacted by different nations in no set order or simultaneously. With technology standards, a limited group of likeminded nations can initiate coordination, and then expand from this initial grouping. Technology standards are thus often easier to implement and obtain compliance with than performance standards, especially in a multilateral international context. For example, the Medina panel, a technology standard, was developed prior to the AIDCP. Vessels could simply adopt the Medina panel and coordinate their technical designs, in effect, working side-by-side in parallel. Compliance is far easier to verify, since the technology standard can be often checked on a routine

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basis in the port, whereas performance standards require continuous monitoring, perhaps by at-sea observers. Monitoring and enforcement of compliance can be more complicated, although they are often left to the individual states. Economic Incentives for Bycatch Utilization Incentives for greater utilization of bycatch could include subsidizing the testing and adoption of utilization alternatives (storage or processing of bycatch), initially subsidizing the marketing of bycatch species, or forms of compensation under regulations of full retention. Full Retention Although much of the attention to bycatch has focused on charismatic or endangered or threatened species, an overwhelming majority of the bycatch from FAD fishing is wahoo and dorado. In this case, discards are generally for economic reasons, such as lack of adequate storage space and high-grading (discarding fish previously caught to make space for more recently caught fish that are of greater value). However, these are species that could be used to feed people and which have markets; thus, it becomes important to look at incentives for bycatch utilization. Furthermore, most fish species when discarded are already dead or in such a moribund state that they will not survive, which may contribute to population declines of impacted species (Clucas 1997, Suuronen 2005). The Magnuson–Stevens Fishery Conservation and Management Act, in its bycatch reduction program, includes a program to “assess whether it is practical to utilize bycatch which is unavoidable.” One option for decreasing bycatch in the form of discards is to impose standards for full retention, that is, vessels must not discard any catch and must bring it ashore. This imposes a cost on fishers, as there are storage constraints on vessels and keeping lower-value species on board means less space for the higher-value targeted species.14 If there is a ban on discards, one must consider how to structure incentives for compliance. A balance is required between overcompensation that may

discourage conservation and undercompensation that encourages discards (Clucas 1997). Thus, a complementary program might create viable markets for incidental catch. However, by increasing the value of the bycatch, one does not want to create incentives for increased bycatch or overharvest of the nontarget species (i.e., a moral hazard problem). The question is: will utilization of the fish create a market for the fish and thus encourage, rather than discourage, further capture of similar fish? Norway instituted a legal prohibition on discarding some commercial species of fish in 1990. The initiative in Norway has been coupled with a comprehensive monitoring and surveillance program and a system that opens and closes areas based on bycatch rates (Clucas 1997). Since fishers must bring all their catch to shore, the program appears to have stimulated the further development and acceptance by the fishing industry of selective fishing gears and avoidance of areas and times with high bycatch (i.e., regulatory-induced technological change) (Clucas 1997). Furthermore, “illegal” fish that is landed is sold through the fisher’s sales organizations, but the revenue remains in the sales organization, rather than accruing to the individual fishers, thus acting as a disincentive to capture (Clucas 1997). Another possibility is payment to fishers for bycatch or “illegal” fish of the estimated marginal cost of production, called “deemed value” in Australia (Sanchirico et al. 2006). These rates are set to discourage discarding at sea but also do not create incentives for targeting (i.e., moral hazard). Other possibilities include banking, whereby fishers can carry unused quota forward or borrowing from future allowances, or permitting fishers to surrender catch they cannot match with quota. In the United States, a voluntary program facilitates the retention of bycatches of salmon taken by the Bering Sea–Aleutian Island trawl fishery for food banks (Clucas 1997). Nonprofit organizations access these fish for distribution to needy Americans through national food bank networks. The producers do not get paid for the fish, but the food banks benefit. Similarly, salmon taken as

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bycatch in the whiting trawl fishery off the Oregon coast is frozen for collection by the local food bank (Clucas 1997). No payment is made to either the fishers or processors. Another possible incentive for utilization may be alleviating the storage constraint of vessels. For example, it has been suggested that bycatches of fishing vessels be transferred at sea to storage vessels that will, of course, purchase them. An area for economic research is how to make full retention economically viable. What are the economic losses from full retention and can these losses be offset by programs to relieve storage constraints or develop markets for bycatch or find techniques that prevent quality loss of retained fish?

Industry-Level Policies15 Instead of the vessel-level policies, it is also possible to design policies that are applied to the conduct or performance of the industry as a whole rather than the individual vessels within it (Segerson 2010a). For example, a bycatch limit could be imposed on the industry as a whole without specifying individual vessel limits. This is the approach currently used for the Hawaiian longline fishing industry. Industry-based policy approaches can have several advantages, particularly in the presence of uncertainty. Alternatively, analogous to the policies considered above, an aggregate bycatch quota could be coupled with fines or reward to all vessels in the industry if industry-wide bycatch exceeds or falls below the aggregate limit. Policies of this type treat the vessels within the industry as a single group, and impose limits, sanctions, or rewards on the basis of the performance of the group as a whole. Industry-based policy approaches can have several advantages, particularly in the presence of uncertainty. They can solve the “small numbers” problem that can arise with rare events such as endangered species. If the aggregate bycatch target for a given season and species, such as with some “rare events” like some species of sea turtles, is less than the number of vessels, then allocation of aggregate bycatch to individual vessels is not pos-

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sible since there would be fewer permits than vessels. This approach allows for possible risk sharing or risk pooling, which will be beneficial to vessels if they are unable to diversify risk and hence are risk averse. Whether vessels face more or less risk under an industry-wide limit will depend on the specific policy. Industry-wide limits can also increase incentives for vessels to work collectively to ensure that the target is met through, for example, sharing information about bycatch density in specific areas; such is the logic behind the seascape real-time bycatch information sharing in Alaska. Finally, when avoidance costs vary across vessels but those costs are not known to the regulator, there is the potential to meet the aggregate target at lower cost by granting greater flexibility in how avoidance is distributed across vessels. Industry-based policies are subject to several disadvantages (Segerson 2010a), including the potential for classic free-riding behavior by individual vessels on the bycatch-reducing activities of other vessels. Incentives can also be established that induce the “race to fish” to harvest more quickly than optimal to exploit some of the aggregate allocation before other vessels. The extent to which industry-based policies exhibit the advantages and disadvantages noted above will depend on the specific policy design. One policy with potential for efficiency is a bycatch quota with a proportional penalty/fine for all vessels (but not closure) if the quota is exceeded and a proportional reward or subsidy for all vessels if industry bycatch is below the quota. Segerson (2010a) provides further details.

Concluding Remarks Reduction of bycatch is likely to be enacted through a combination of measures, since no single measure is likely to reduce bycatch to the amount desired or at a reasonable cost. Bycatch reduction is likely to focus on fish caught in association with floating objects, particularly FADs, and on impacts on endangered species (e.g., sea turtles and seabirds).

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Technology standards—gear, handling, and operations—are likely to form the centerpiece of any suite of measures adopted, much as they did for dolphin conservation or shallow sets of pelagic longlines for swordfish. Technology standards can be particularly useful in transnational fisheries requiring multilateral actions, since more informal coordinated activities among nations can be implemented far more easily and quickly than more formal cooperative agreements, such as treaties such as the AIDCP. Compliance is also easier to obtain and to verify. Performance standards—quotas of various types on individual species or assemblages of species—are more difficult to apply in fisheries with complex multispecies bycatch, can generate important at-sea discarding and compliance issues, require on-board observers for compliance, and can impose important economic costs. In many circumstances, such quotas fail to quell the problem, but instead merely slow it down. Time–area closures during times of the year when bycatch species of concern particularly vulnerable, and especially when lost opportunities in target catches are not prohibitive, might also have a role to play, and compliance is not difficult to obtain. Use rights for sets on floating objects, much like DMLs, establish economic incentives that more closely align individual behavior with society’s environmental goals. Because of the complex multispecies bycatch for sets on floating objects, such use rights might be denominated for sets, rather than individual species or assemblages of species. The establishment of use rights also sets the stage for buybacks of these rights. Conservation investments can help mitigate bycatch mortality for some species, notably sea turtles and sea birds, by protecting nesting beaches and rookeries and thereby increasing their populations. Conservation investments also include financing gear that is more effective at reducing bycatch in other fisheries or other segments of a fleet or financing research on reducing bycatch or technology transfers from other fisheries. Conservation investments include consumer education or other programs addressing social norms, skipper

training, and other formal and informal training programs that invest in human capital and address social norms. Such conservation investments would ideally be financed by a double-dividend tax on bycatch itself, but are instead likely to be financed by a lump sum tax or fee on vessels. Such conservation investments and mitigation measures can be viewed as complements, not substitutes, to other measures.

Endnotes 1. The economics of discarding is discussed by Anderson (1994), Arnason (1994), Boyce (1996), Vestergaard (1996), Pascoe (1997), Herrera (2005), and Bisack and Sutinen (2006). 2. Thirty-third meeting of the IATTC (October 11–14, 1976), minutes: page 9 3. In principle, it is worthwhile for the vessel to reduce bycatch to the level at which its marginal cost of abatement equals the tax rate. 4. The presence of fixed costs amplifies the efficiency benefits conveyed by price instruments, which do not elicit trip truncation (Herrera 2005). Moreover, Herrera (2005: 481) observes, “The efficiency of both trip and value limits are adversely affected by variance in the bycatch process. When the bycatch level is uncertain, it is never possible to impose the optimal constraint on every trip. Social costs arise under trip and value limits due either to strategic or policy-induced discarding or high-grading, or to premature trip truncation.” 5. This is the Coase theorem in economics. 6. A moral hazard arises when the reward to one party of an agreement depends on the performance of another party, and that performance cannot be monitored. It represents a situation in which there is a difference in information after trading but before the terms have been fulfilled affecting the level of performance. 7. Voluntary agreements encourage a proactive cooperative approach from industry, greater flexibility and freedom to find cost-effective solutions that are tailored to specific conditions, and the ability to meet environmental targets more quickly

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due to decreased negotiation and implementation lags. Voluntary agreements can be classified as either those that induce participation by providing positive incentives, such as cost-sharing or other subsidies (the carrot approach) and those that induce participation by threatening a harsher outcome (such as regulations) if a voluntary agreement is not reached (the stick approach). Voluntary agreements are also widely used to reduce agricultural pollution and induce conservation (Segerson and Miceli 1998). Voluntary agreements in transboundary fisheries must be what Barrett (2003) calls self-enforcing. In contrast to domestic contractual agreements, there is not a third party to enforce the agreement, in spite of dispute settlement provisions, RFMOs, or the International Court of Justice. 8. DMLs are use rights allocated to nations, and subsequently to vessels. These use rights are not transferable, provide exclusive use by a vessel for 1 year, and are not divisible beyond a single dolphin. In addition, the voluntary program became binding formal international law with the AIDCP, which entered into force in February 1999. 9. For example, Hall (1998: 27–28) states, “However, in the eastern Atlantic, where FADs have been used intensively, the majority of the tuna vessel owners operating there have implemented a voluntary ban on the practice in a timearea stratum (A. Fonteneau, personal communication), which suggests that they perceive the negative effects of the practice to be quite significant. Experiments are needed to answer this question.” 10. In the context of global warming and the Kyoto Protocol, consideration is currently being given to payments for not harvesting, and thereby preserving, tropical rainforests in order to maintain carbon sequesterization. 11. GAO (2001: 6) observes, “The Bering Sea pollock buyback addressed the race to fish that had previously existed among factory trawlers by facilitating the creation of a fishing cooperative by the owners of the remaining trawlers. This cooperative was designed to eliminate the race to fish by assigning a specific amount of fish, or an allocation, to the cooperative, which divides the allocation

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among its members. Because of this allocation, members of the cooperative have no incentive to expand fishing capacity to catch the available fish before someone else does, as they have in another fishery. Members are able to catch their individual fish allocations at their own pace, at lower capital and operating costs, while increasing product quality. These changes resulted in higher profits and longer fishing seasons for the remaining factory trawlers.” 12. The major difference is that most technologies studied in agriculture are ones that would increase agricultural productivity, and thus are expected to be beneficial for the farmer. In this case, we are considering technologies that are not likely to increase fisher’s profitability and may in fact decrease it. In this case, the benefit is mainly a public one, in terms of maintaining nontarget populations. 13. See Barrett (2003, 2005) for a discussion in the context of international environmental agreements other than those related to the oceans. 14. In the technical language of economics, it imposes an opportunity cost. 15. This section directly follows Segerson (2010a).

References Alverson DL and SE Hughes. 1996. Bycatch: from emotion to effective natural resource management. Reviews in Fish Biology and Fisheries, 6(4):443–462. Anderson LG. 1994. An economic analysis of highgrading in ITQ fisheries regulation programs. Marine Resource Economics, 9(3):209–226. Anonymous. 2007. Annual report of the InterAmerican Tropical Tuna Commission 2005, 100 pp. Archer F. 2005. Report of the ETP purse-seine bycatch reduction workshop. National Marine Fisheries Service Administrative Report, LJ-0507, 29 pp.

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Arnason R. 1994. On catch discarding in fisheries. Marine Resource Economics, 9(3):189–207. Barlow J, L Rojas-Brancho, C Mu˜noz Pi˜na, and S Mesnick. 2010. Conservation of the vaquita in the northern Gulf of California, Mexico. In Grafton RQ, R Hilborn, D Squires, M Tait, and MJ Williams (eds) Handbook of Marine Fisheries Conservation and Management Oxford: Oxford University Press, pp. 205–214. Barrett S. 2003. Environment and Statecraft: the Strategy of Environmental Treaty Making. Oxford: Oxford University Press. Barrett S. 2005. The theory of international environmental agreements. In M¨aler K-G and J Vincent (eds) Handbook of Environmental Economics, 1st edn, Vol. 3. Amsterdam: Elsevier, pp. 1457–1516. Baumol W and WE Oates. 1988. The Theory of Environmental Policy, 2nd edn. Cambridge: Cambridge University Press. Bisack KD and JG Sutinen. 2006. Harbor porpoise bycatch: ITQ or time/area closures in the New England gillnet fishery. Land Economics, 82(1):85–102. Boyce JR. 1996. An economic analysis of the fisheries bycatch problem. Journal of Environmental Economics and Management, 31(3):314–336. Burgin S. 2008. BioBanking: an environmental scientist’s view of the role of biodiversity banking offsets in conservation. Biodiversity and Conservation, 17(4):807–816. Clucas I. 1997. A study of the options for utilization of bycatch and discards from marine capture fisheries. FAO Fisheries Circular, 928: 59. Curtis R and D Squires. 2007. Fisheries Buybacks. Ames, IA: Blackwell Publishing. Ekberg D and W Seidel. 1982. Technology transfer to the fishing industry. Oceans, 14:759–760. Fuglie KO and CA Kascak. 2001. Adoption and diffusion of natural-resource-conserving agricultural technology. Review of Agricultural Economics, 23(2):386–403. GAO (US Government Accounting Office). 2001. “Commercial Fisheries: Effectiveness of Fish-

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Teisl MF, B Roe, and RL Hicks. 2002. Can eco-labels tune a market? Evidence from dolphin-safe labeling. Journal of Environmental Economics and Management, 43(3):339– 359. Tietenberg T. 1990. Economic instruments for environmental regulation. Oxford Review of Economic Policy, 6(1):17–33. Vestergaard N. 1996. Highgrading and regulation: the case of the Greenland shrimp fishery. Marine Resource Economics, 11(4):247– 266. Watson JT, TE Essington, C Lennert-Cody, and MA Hall. 2009. Trade-offs in the design of fishery closures: management of silky shark bycatch in the eastern Pacific Ocean tuna fishery. Conservation Biology, 23(3):513– 784. World Bank. 2004. Saving Fish and Fisheries: Towards Sustainable and Equitable Governance of the Global Fishing Sector. Report No. 29090GLB. Washington, DC: Agriculture and Rural Development Department. Wunder S, S Engel, and S Pagiola. 2008. Taking stock: a comparative analysis of payments for environmental services programs in developed and developing countries. Ecological Economics, 65:834–852.

Part IV

Politics, Enforcement, and Compliance

Chapter 15

Prospects for Use Rights in Tuna Regional Fisheries Management Organizations Frank Alcock

Abstract

Overview

This chapter assesses the legal and political challenges of establishing individual transferable quota (ITQ) schemes in regional fisheries management organizations (RFMOs) that manage highly migratory tuna stocks. Four specific challenges are considered: (1) exclusion, (2) the initial allocation of quota rights, (3) the distributive issues associated with rights transfer, and (4) monitoring and enforcement. The chapter argues that the political challenges for RFMOs and high-seas fisheries are much different from those within the exclusive economic zones (EEZs) of coastal states. The recognition of exclusive access rights, allocation disputes, and monitoring and enforcement issues are all more problematic in international waters. The most significant difference is the lack of an authoritative agent that can impose, coerce, or in some other way forge the distributive bargains that are necessary for such programs to take root. Although prospects for ITQ programs remain poor for the near term, this chapter discusses the conditions under which they could happen.

The right of all nations to fish on the high seas has been a durable principle of international law that has persisted for centuries. Hugo Grotius, regarded by many as one of the founding fathers of international law, famously argued in his Mare Liberum that the seas cannot constitute property because they cannot be occupied in the sense in which land can be occupied. Accordingly, they should be free to all nations and subject to none. Grotius suggested that the territorial claims of a nation should not extend beyond three nautical miles from its coastline, or the approximate distance a cannon ball could reach when fired from shore (Potter 1924). The 3-mile limit of the territorial sea remained largely uncontested by the international community until the twentieth century. After World War II, a number of coastal states began asserting extended jurisdictional claims. The most serious challenges came from coastal states with significant economic resources near their coastlines or on their continental shelves. Driven largely by

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concerns over energy resources, the United States was the first to advance a robust jurisdictional claim in the form of the Truman Proclamation of 1945. Other coastal states concerned with fisheries resources soon followed. Challenges to the freedom of the seas paradigm resulted in the first United Nations Conference on the Law of the Sea in 1958 (UNCLOS-I). A second conference (UNCLOS-II) was held in 1960, but the jurisdictional disputes regarding fisheries remained unresolved. The increasing number and intensity of international disputes associated with competing jurisdictional claims in the oceans led the United Nations to begin the third Law of the Sea Conference in 1973. A coalition of coastal states supporting extended coastal jurisdictions soon prevailed. UNCLOS-III was not codified until 1982, but many states unilaterally extended their exclusive economic zones (EEZs) during the 1970s, and most states accepted the principle of 200-mile EEZs by the end of the decade (Orrego Vincu˜na 1999). Two-hundred-mile EEZs constituted a rather dramatic change to oceanic property rights at the international level. They sharply curtailed the jurisdictional space in which the freedom of the seas applied and greatly enlarged the space in which coastal state governments could experiment with alternative fisheries management policies. One approach to fisheries management that has since proliferated at the domestic level involves exclusive quota rights that are assigned to individual actors operating a given fishery. These rights are typically referred to as individual transferable quotas (ITQs) when fisheries managers allow for the rights to be traded. They are viewed as a form of property right by many, although they usually entail usufruct, as opposed to ownership rights. ITQs remain controversial in many settings for a variety of reasons, but they attract a robust cohort of adherents who tout their potential to advance management and conservation objectives (Leal 2004). Rapid advances in fishing technologies led to increased fishing pressure on virtually all fish stocks during the latter part of the twentieth cen-

tury. For highly migratory stocks on the high seas, this pressure was exacerbated by the displacement of the vessels of distant-water fishing nations (DWFNs) from coastal state EEZs. UNCLOS obligated states to cooperate with one another in the conservation and management of highly migratory stocks, but it offered little in the way of guidance for doing so. Frustration with this situation led to pressure for reforms that resulted in a collection of international agreements during the 1990s, as discussed in section “Exclusive Rights on the High Seas.” These agreements elevated the roles of the regional fishery management organizations (RFMOs), clarified the obligations of states that operate in high-seas fisheries, and strengthened some of the monitoring and enforcement mechanisms for ensuring compliance with RFMO rules and international law more generally. It is against that backdrop that some fisheries academics and practitioners have begun considering the possibility of constructing use-rights schemes for international fisheries (Joseph 2005, Grafton et al. 2006, Trondsen et al. 2006). This chapter reflects upon some of the questions being asked with respect to the prospects for ITQ programs administered through RFMOs. Is it legally possible to implement ITQs in international fisheries? Is it politically feasible? What conditions would be most conducive for this to happen, and where would it be most likely to occur? The chapter is organized around four characteristics of property rights that are often considered crucial to a viable ITQ program: exclusivity, allocation, transferability, and enforcement. These characteristics are framed as dilemmas in light of the problematic nature of building them into property-rights arrangements at the international level. For each dilemma, relevant lessons from domestic level ITQ programs are considered before the situation at the international level is addressed. The final section of the chapter reflects upon the most serious obstacles to establishing use rights within any given RFMO before offering prognoses for the tuna RFMOs more specifically.

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The Exclusion Dilemma Lessons from Domestic ITQ Programs Exclusion is a fundamental characteristic of a viable ITQ program. It is, in fact, a core component to the very concept of a use right. Open-access conditions result from the legal and/or practical inability to exclude actors from utilizing a resource. In domestic fisheries, limited-entry rules, or exclusive-access rights, usually serve as precursors to ITQ programs. Instances of quota rights that are less than fully exclusive are possible, however, and there are some empirical precedents for them. In coastal states with heterogeneous fishing industries, there are cases in which one segment of the industry is regulated by fixed-quota allocations, while another is left unregulated or is regulated by effort, gear, or capacity restrictions (Alcock 2002). The most salient differentiation is often industrial versus small-scale fleet segments, and it sometimes coincides with spatial designations (the industrial fleet fishes offshore, while the small-scale fleet fishes inshore). The quota rights that are held by actors cannot be considered fully exclusive under these circumstances. To the extent that the segments regulated by effort, gear, or capacity restrictions comprise a significant portion of the total harvest or are able to substantially increase their share of it, the lack of exclusivity can become a problem. Where this has happened, domestic fisheries managers have typically responded to the problem by closing loopholes in a manner that enhances the exclusivity of quota rights.

Exclusive Rights on the High Seas The freedom-of-the-seas principle would seem to preclude the notion of exclusive-access rights in high-seas fisheries. Since 1994, however, the freedom to fish on the high seas should not have been considered as unconditional. Article 87 of UNCLOS declares that states’ freedom to fish is contingent upon fulfilling the duty to cooperate with other states on the conservation and man-

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agement of fish stocks. But the lack of precision with respect to what actions would be considered compliant versus noncompliant made this duty problematic. As noted in the overview, the deteriorating conditions of transboundary fish stocks gave rise to a series of international agreements that were codified in the mid-1990s. This series included the Agreement to Promote Compliance with International Conservation and Management Measures by Fishing Vessels on the High Seas (the 1993 FAO Compliance Agreement), the Agreement for the Implementation of the Provisions of the United Nations Convention of the Law of the Sea of December10, 1982 relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks (the 1995 UN Fish Stocks Agreement or UNFSA), and a nonbinding 1995 FAO Code of Conduct for Responsible Fisheries (the 1995 FAO Code of Conduct). Of the three, UNFSA was most notable in its push toward further limiting the freedom-of-the-seas principle by more precisely specifying the obligations that states have with respect to cooperation on conservation and management measures. UNFSA parties are called upon to fulfill their duty to cooperate by joining and/or abiding by the conservation and management measures of relevant RFMOs. UNFSA reiterates that access to high-seas fisheries is conditional upon fulfilling this duty. UNFSA thus obligates its parties to join and/or cooperate with RFMOs in order to access the fish stocks that are under RFMO jurisdictions. This would seem to constitute exclusive access rights for the members of RFMOs. Two problems remain, however. The first problem concerns nonparties to the UNFSA. The principle of pacta tertiis, one of the most basic rules of international law, holds that a treaty binds only those states that consent to it. It implies that fishing vessels flying under flags of convenience or under the flags of DWFNs that fail to ratify or accede to the UNFSA can legally continue to harvest straddling stocks and highly migratory species outside of EEZs. The second problem concerns the obligation of RFMOs to accept new members with

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“real interests” in the fisheries under their respective jurisdictions. Article 8 of UNFSA stipulates that states with real interests in the fisheries under the jurisdiction of RFMOs must be allowed to join. RFMOs cannot ban new members from joining RFMOs unless the new members refuse to abide by the terms of the RFMO management regime. Furthermore, some have interpreted Articles 8 and 11 of the UNFSA as requiring RFMOs to offer new members “just and reasonable shares” of the total allowable catch (TAC) available under an RFMO management plan (Ørebech et al. 1998). The legal basis for recognizing exclusive access rights on the high seas may thus be said to exist within UNFSA.1 At the same time, two important aspects of UNFSA and of international law more generally will likely impede the development of such rights. First, if RFMO convention members are obliged to accept new members and provide them with access, then what incentive do charter members have to assign harvesting rights that will likely be eroded when additional states claiming a real interest in the fishery seek RFMO membership? Second, if nonparties to the agreement can retain access to high-seas fisheries outside of RFMO membership, then what incentive do they have to sign and ratify the UNFSA and constrain their harvesting activities by complying with RFMO rules? The answers to these questions will be considered in turn. First, the problematic nature of the “new member” issues has received attention from economists and international legal scholars. Kaitala and Munro (1997) argue that the ability of new members to demand “just and reasonable shares” of a TAC upon entry to an RFMO can preclude effective cooperation among RFMO members. Using game theory, these authors demonstrate that even when cooperation is initiated, access demands from new members can lead to widespread defection from agreed-upon TAC shares. However, Bjørndal and Munro (2003) suggest that the interpretation of “just and reasonable” is debatable, and they cite the opinion of some specialists in international law who maintain that charter members may well have the right

to impose charges on new members (Bjørndal et al. 2000). A closer examination of the UNFSA text lends credence to this viewpoint. Ørebech et al. (1998) interpret Articles 8 and 11 as requiring existing RFMO members to offer new members “just and reasonable shares,” but that interpretation is debatable. The relevant section in Article 8(3) states: Where a subregional or regional fisheries management organization or arrangement has the competence to establish conservation and management measures for particular straddling fish stocks or highly migratory fish stocks, States fishing for the relevant stocks on the high seas and relevant coastal states shall give effect to their duty to cooperate by becoming members of such organization or participants in such arrangement, or by agreeing to apply the conservation and management measures established by such organization or arrangement. States having a real interest in the fisheries concerned may become members of such organization or participants in such arrangement. The terms of participation in such organization or arrangement shall not preclude such States from membership or participation; nor shall they be applied in a manner which discriminates against any State or group of States having a real interest in the fisheries concerned. (italics added)

Article 8 fails to explicitly address the issue of TAC shares. Ørebech et al. (1998) actually cite Article 11 in their just and reasonable shares interpretation. Article 11 provides a set of factors that RFMOs are required to take into account when determining the “nature and extent of participatory rights for new members,” which are as follows: 1. The status of stocks and existing level of fishing effort 2. The respective interests, fishing patterns and practices of new and existing RFMO members 3. The respective contributions of new and existing members to conservation and management of stocks, data collection, and scientific research 4. The needs of coastal fishing communities dependent upon relevant stocks

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5. The needs of coastal State economies dependent upon exploitation of living marine resources 6. The interests of developing states from the region in whose areas of national jurisdiction the stocks occur There is no explicit mention of a just or reasonable TAC share in either Article 8 or Article 11, and UNFSA offers little guidance with respect to the prioritization or operationalization of the factors listed under Article 11. If stock status was recognized as a criterion that takes precedence over the others, then RFMO members could argue that new members are not entitled to TAC shares in fisheries that are fully exploited, especially if the TAC shares are awarded gratis. Consider, then, a hypothetical scenario in which the charter members of an existing RFMO call attention to evidence of overexploitation of one or more highly migratory tuna stocks under their jurisdiction and serve notice of their intent to negotiate multi-year TAC shares. If the RFMO members were able to successfully reach an agreement on the allocation of those shares, what obligation would they have with respect to awarding specific shares to future members or to states that remained outside of the RFMO? If new members were given an opportunity to purchase quotas from existing members or acquire them via auction, would this be considered a participatory right or does a participatory right equate to a TAC share? Would the requirement to purchase TAC shares be considered discriminatory if new members were not offered an initial allocation of a TAC share comparable to those awarded to charter members? If the RFMOs provided a reasonable time period for nonmember states with perceived real interests in the affected fisheries to join the RFMO before initiating or concluding TAC share negotiations, could the failure to join the RFMO and/or participate in the TAC share negotiations disqualify future claims of discrimination with respect to initial allocations? Article 8(2) requires all states with real interests in to “enter into consultations in good faith and without delay,” and Article 8(4) makes it clear

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that access to high-seas fisheries is conditional upon RFMO membership and agreement with its conservation and management measures. Given this scenario, it would appear that an RFMO could plausibly argue that by providing new members with opportunities to purchase TAC shares they are granting them participatory rights, and that in doing so they are not discriminating against them vis-`a-vis charter members. The latter claim would be strengthened if initial allocation procedures were not considered endowments (if an auction mechanism were used at the outset, for example) or if the new members in question were seen as forfeiting an opportunity to acquire an initial allocation by refusing to join an RFMO or failing to negotiate with it in good faith. Such an interpretation may very well be disputed by RFMO latecomers, but a legal interpretation supporting the RFMO position is certainly possible. The second question concerns the ability of RFMOs to entice nonparties to the UNFSA to ratify or accede to the treaty. Although some have interpreted Articles 17 and 33 as attempts to create obligations for nonparties to UNFSA, the basic principles of international law (pacta tertiis) are clear in that state consent to an agreement is a necessary precondition for the state to be obligated by it (Ørebech et al. 1998). RFMOs thus lack the legal authority to exclude nonparties to UNFSA from accessing fisheries on the high seas. Given that Article 8 of UNFSA provides a legal basis for excluding UNFSA parties that fail to join or cooperate with RFMOs from accessing high-seas fisheries, nonparties to both RFMOs and UNFSA may place their legal access to high-seas fisheries in jeopardy by ratifying or acceding to UNFSA. It would seem that RFMOs have little leverage here. The problem is as daunting as it seems, but the possibility remains for creating stronger disincentives for nonparties. These could include linking preferential or restricted market access or port services to UNFSA ratification (DeSombre 2006, 2010) and other forms of diplomatic pressure that link nonfisheries issues to UNFSA. If RFMO TAC shares are viewed as valuable use rights, then the portrayal of negotiations over initial allocations

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as a one-time window of opportunity for an endowment could conceivably entice some states into specific RFMOs and UNFSA more generally. These scenarios have as much to do with politics and bargaining than they do with law, however. Recognizing the exclusive authority of RFMOs to allocate access rights does not require changes to UNCLOS or UNFSA as much as it requires creating incentives for all states to ratify or accede to UNFSA.

The Allocation Dilemma Lessons from Domestic ITQ Programs The initial allocation of TAC shares, or quotas, is often one of the most contentious issues during the development of ITQ programs within domestic fisheries (National Research Council 1999). The principles and procedures used to allocate initial TAC shares can have enormous distributive implications. For some actors, the initial allocation can make the difference between a boon and a bankruptcy. Consensus is difficult to achieve, given the heterogeneity that often exists among different actors in domestic fisheries sectors. Most of the allocation principles considered will tend to benefit some actors at the expense of others. A failure to reach a consensus will sometimes hamper or delay the development of domestic ITQ programs, but it rarely derails them because states have the authority to impose allocation decisions within their respective jurisdictions even if some of the actors are unhappy with them. Such authority is lacking at the international level, where most RFMOs either require a consensus for decision making or allow their members to opt out of allocation decisions by objecting to them and declaring their own TACs (Swan 2004). The consensus requirement transforms what is often a contentious issue in the development of use rights regimes in domestic fisheries into what is arguably an intractable dilemma in developing use-rights regimes at the international level.

For newly introduced ITQ programs in domestic fisheries, four principles are commonly used independently or in combination: an auction principle, an equal allotment principle, a catch history principle, and an investment principle. Using an auction mechanism to allocate initial shares of fishing quota is attractive from an efficiency perspective. Quotas are allocated to those willing to pay the most for them, and those willing to pay the most should be those that can extract the most value from them. Auctions also allow society to recover some of the rents associated with awarding exclusive rights to public resources. Rent recovery in the form of auction prices is also the primary reason for industry resistance. Paying for the right to continue doing something that has historically been free is politically unpopular. Auctions also favor those with access to capital over those with poor financing ability. Larger industrial actors are far more likely to obtain the bulk of allocated quota when auctions are used as an initial allocation mechanism. This is less of a concern in offshore industrial fisheries, but it remains a problem for many nearshore and/or coastal fisheries with smaller-scale actors. The combination of intraindustry distributive concerns and resistance to the idea of paying for something that used to be free render auction mechanisms politically difficult to implement at the domestic level. This may be less the case at the international level. A second, relatively straightforward principle is an equal allotment principle. Using this principle, ITQ shares for a given fishery are divided equally among all eligible participants. While seemingly egalitarian, the equal allotment principle is viewed as inherently biased against those who traditionally catch the most fish, and in many fisheries a small portion of actors account for a large portion of the catch. For them, an equal allocation rule is viewed as both unfair and detrimental to their interests. The equal-allocation principle may make sense in fisheries with existing catch distributions that are relatively equal. In practice, however, actors with strong historical catch records have tended to wield the most political influence in fisheries management institutions.

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The most commonly used principle for ITQ allocation is a catch history principle. In contrast to an equal allotment principle, a catch history principle aims to match the initial allocation of ITQ shares to the historical distribution of actual catches. The rationale for using catch history is to explicitly limit redistribution. It is popular among fishers because it is widely perceived as fair. However, it is not immune from controversy. A battle is often waged over which years of history to use in determining historical shares. There may be several recent entrants to a fishery that have invested heavily in fishing capital but have yet to build up a significant catch history. If a long period is used as the basis for determining catch history, then recent entrants will be at a significant disadvantage. There is also a problem with using catch histories during periods of attempted cooperation through voluntary restraints. Catch history can reward those actors that persisted in overfishing while penalizing those who exercised restraint. This is a particularly troublesome consideration for using catch history to allocate quotas in international fisheries. In response to some of these concerns, fishers are often allowed to choose a subset of years within a specified historical window to serve as their baseline. This tends to flatten out some of the asymmetries that result from inconsistent participation in a given fishery, along with the inherent stochasticity of fishing. A final principle that is often used to allocate initial shares in domestic fisheries is an investment principle. An investment principle aims to award shares in a manner commensurate with a given fisher’s investment in fishing capital, with vessel size and/or capacity serving as a proxy for investment. As an alternative to catch history, an investment principle would be viewed as fairer to recent entrants that have made significant capital investments. Resistance to an investment principle usually comes from the smaller-scale, less capitalintensive segment of the fishing industry that view it as privileging fishing capital at the expense of fishing labor. The investment principle has also been viewed less favorably in light of contem-

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porary concerns with overcapacity in worldwide fishing fleets (Bayliff et al. 2005). Importantly, the principles used for the initial allocation of harvesting rights are not mutually exclusive. In practice, they are often combined into hybrid formulas that allow for compromises among competing interests.

Allocation within RFMOs With respect to recognizing national allocations of access rights for extended durations (beyond 1 year), there does not appear to be any prohibition within UNCLOS or UNFSA. Some RFMO convention documents that require allocation processes be followed on an annual basis may need to be amended in order for permanent, indefinite, or long-term allocations to be awarded. Hoel and Kvalvik (2006) identify four norms that have been used to allocate TACs and/or access: traditional fishing patterns and practices (comparable to a catch history principle), preferential treatment of coastal states, geographic distribution of fisheries (sometimes referred to as zonal attachment), and fisheries dependency. Article 11 in UNFSA would seem to provide two additional considerations with respect to contributions to conservation and management and the interests of developing states. Parris and Grafton (2006) suggest that as many as ten criteria have been considered by the allocation committee of the Western and Central Pacific Fisheries Commission (WCPFC). There is clearly no shortage of principles to consider for allocating TACs in international fisheries, but there is little legal guidance for weighing them against one another, and some are subjective and difficult to quantify. In addition to the principles articulated in various international agreements and RFMO conventions, some scholars have contemplated the use of an auction mechanism to allocate fishing rights at the international level. Quota shares could conceivably be allocated through states or directly to firms. Trondsen et al. (2006) discuss the merits of establishing a multinational resource cooperative (MRC) within an RFMO that would serve

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as a nonprofit management enterprise. Revenues collected through auction prices and management fees could then be redistributed to RFMO members, who act as shareholders in the enterprise. The states and their associated fishing fleets that forfeit access through this process could be compensated through such a mechanism. Trondsen et al. (2006) argue that this type of arrangement could embody many attractive features. First, it could encourage greater efficiency through its market-orientation, so that total benefits for RFMO members increase. Second, auctions could be opened to firms or other entities that are not RFMO members in an attempt to discourage unregulated fishing, even though the auction revenues and/or management fees would not be shared with nonmember flag states. Finally, some transferability restrictions could be inserted to accommodate concerns about lost revenues associated with multiplier effects in specific countries. Although it certainly warrants consideration on efficiency grounds, Trondsen et al.’s (2006) proposal sidesteps the distribution problem by separating rights allocation from benefits allocation. Auction mechanisms hold the potential for increasing the collective gains derived from high-seas fisheries, but they offer little help in determining how those gains will be divided among relevant RFMO members. Ultimately, agreements on the distribution of quota rights or the benefits derived from those rights will need to result from strategic bargains. Insights from game theory paint a bleak picture of the prospects for reaching agreement on an initial allocation of multi-year TACs for highly migratory tuna stocks (Munro 2000, Munro et al. 2004). Factors that pose a particular concern include large numbers of actors within RFMO arrangements, the presence of free-riders that access tuna stocks outside of RFMO membership, and considerable heterogeneity among RFMO members with respect to industry profiles, fisheries dependency, and associated time horizons. A general proposition that is widely accepted in game theory literature is that larger numbers of actors make cooperation harder. Lindroos (2002)

has argued that with the weak legal regime present in international fisheries, stable cooperative management arrangements involving more than two states are exceedingly difficult (Lindroos 2002). All of the RFMOs that deal with highly migratory tuna stocks deal with more than two states, and most involve more than 20. Such large numbers suggest that reaching an agreement on the initial allocation of multi-year TAC shares would not be easy. A second problem emphasized by Munro et al. (2004) concerns the threat of free riding by nonparticipants. If RFMO members determine that the benefits of new cooperative arrangements are likely to be dissipated by nonparties to the arrangements, then the arrangement is likely to be “stillborn.” Caporaso (1992) and other scholars of international cooperation have noted that cooperation is still possible when subgroups of actors (or k-groups) stand to gain from cooperation in spite of free riding from others. But the economics of fisheries imply that these conditions would occur only when free riders have limited capacity to exploit the stocks being conserved by the k-group (Grafton et al. 2006). With respect to bargaining over initial TAC shares, Munro et al. (2004) further demonstrate that the specter of quota entitlements for future RFMO members could also undermine the incentives for an agreement. Unfortunately, efforts to eliminate the free-rider problem by bringing more states into RFMOs before developing use rights can exacerbate bargaining problems by increasing the number of actors seeking TAC shares. Conversely, limiting membership will likely exacerbate the free-rider problem. The heterogeneity of state interests also presents a difficult bargaining problem. The structure of a given state’s fishing industry, the relative importance of a given fishery for that industry, the relative importance of the fishing industry in a given state’s economy, and time horizons with respect to short-term profits versus long-term sustainability can all vary among states that are active in tuna fisheries. The greater the variation, the less likely it is that all of the relevant states will view any given allocation arrangement as mutually

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beneficial. Furthermore, game theorists, e.g., Barkin (2004), have shown that the actors with the shortest time horizons and/or highest discount rates tend to have the greatest bargaining power in multilateral negotiations. This implies that the actors with the least concern for conservation objectives may require the greatest concessions to entice them to participate in cooperative management arrangements. With a variety of competing principles that could very well justify almost any distribution of TAC allocations, negotiations over multi-year TACs within RFMOs become especially difficult. Fearon (1998) provided a bargaining model that might be instructive for such situations. Fearon modeled the strategic interaction between the two actors as a two-phase game. The initial phase is a war of attrition in which each actor’s decision to enter into an agreement will depend in part on the expected costs of delay vis-`a-vis the expected marginal benefit of holding out for their preferred terms of cooperation. The second phase remains a prisoners’ dilemma situation in which the incentive to defect exists and the resulting monitoring and enforcement problems remain. Several interesting implications emerge from Fearon’s model. First, factors that increase the expected benefits associated with holding out for preferred terms of cooperation can make bargaining problematic. Conversely, factors that limit the expected benefits associated with holding out for preferred terms can have a salutary impact. One way in which to accomplish the latter is to shorten the contract period for which a given bargain applies (e.g., multi-year TACs with renegotiation windows or sunset clauses). Second, factors that increase the costs of holding out can increase the incentives to strike a deal. Credible threats of penalties (e.g., temporary fishing moratoriums) for failing to agree within a specified time period can serve this purpose. Also, the hypothetical “window of opportunity” for joining RFMOs that was discussed in section “Exclusive Rights on the High Seas” may, in fact, prove beneficial to negotiation conditions. Finally, as alluded to earlier, clear distributive focal points that are broadly perceived as fair can be

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extremely helpful for reaching agreements. Unfortunately, the multiplicity of principles to consider under existing international law does not help on this account.

The Transferability Dilemma Lessons from Domestic ITQ Programs ITQ proponents see transferability as an essential component of an efficient use rights regime. Assuming that different actors operate with varying levels of efficiency, it follows that ITQs will be more valuable to the more efficient ones. Theoretically, if the more efficient actors offer enough money to the less efficient ones, then the latter will exit the industry and the overall efficiency of the industry will improve. Temporary transfers are also important for program efficiency in that they provide the short-term flexibility to reallocate quota from those least willing to those with most willing to fish in the short term and to cover quota overages. There is considerable controversy within domestic fisheries, however, over the seemingly beneficial feature of quota transferability. Most of the concern can be connected to issues of distribution. Regardless of how fishing rights are initially allocated, many actors fear that with transferability the wealthiest actors and/or the large-scale segment of the industry will end up in control of the fishery. This is no small point. Control over access to fisheries has long been a focal point of contention between harvesting and processing subsectors of the fishing industry that dates back to fisher–merchant relationships and associated class conflicts from centuries ago (Alcock 2003). A strong undertone inherent in much of the discourse that pervades small-scale fisheries involves fears of corporate control of the entire production process in the fisheries sector, including control over access to the fishery and access to seafood markets. In addition to concerns over certain actors in the commodity chain benefiting at the expense

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of others, additional concerns exist regarding the geographic distribution of benefits from a fishery. Fishing activity can have several multiplier effects in port communities that support active fleets with labor and auxiliary businesses. Accordingly, many fear the repercussions of having quota rights sold and/or transferred out of the community. In order to alleviate some of the concerns associated with quota-transferability program, designers have devised what might best be understood as “distributive safeguards” for ITQ programs. These safeguards are, in fact, a variety of restrictions as to who can own a quota, how much someone can own, and what the owner can do with it. Their function is to limit potentially adverse distributive impacts that are associated with quota transfers, but they do so at the expense of programmatic efficiency. Some of these restrictions target program eligibility, or the types of actors that are eligible to buy quotas or otherwise participate in the program. Some ITQ programs restrict eligibility to owner-operators who operate the vessels that they own. The rationale is to prevent corporateor processor-owned vessels from acquiring quotas and to protect against “sharecropping” scenarios. Given that distributive concerns are most acute in situations with high levels of actor heterogeneity, transferability restrictions are most common in fisheries with heterogeneous industry structures. Restrictions on transfers among different industry segments are common. Another form of restriction is a concentration limit or a cap on the percentage of the total quota any one actor can own. Geographic restrictions on transfers are also used. Each of these restrictions, and some others, serve to limit the redistribution of fishing rights and associated rents from the fishery. Finally, distinctions can be made with respects to permanent versus temporary transfers. Temporary transfers are sometimes allowed, while permanent transfers are prohibited. This usually reflects a desire for short flexibility and associated efficiency with minimum impacts on distribution over the long term. There is also precedent for allowing permanent transfers while restricting temporary transfers. This usually reflects a desire for consolidation and long-term efficiency coupled

with conservation concerns in the short term. Arnason (1990) demonstrated that with freely transferable quotas all quotas will be used, although this may not be the case when temporary transfers are restricted. Limiting transfers may therefore be one means of reducing harvests below the overall TAC. This is especially important in multispecies fisheries (Squires et al. 1998, Sanchirico et al. 2006).

Quota Transfers within RFMOs With respect to the transfer of participatory rights in the form of ITQ shares, there would appear to be nothing in UNCLOS or the UNFSA that would prohibit this practice within RFMOs, and there is already precedent for doing that (Grafton et al. 2006, Lodge et al. 2007, Serdy 2007, 2010). Serdy argues that RFMO member states cannot be recognized as having a general right to trade quotas, and that those that are not involved in quota transfers could make a legal claim against transfer recipients for exceeding their original quotas even if the amount of the transfer were offset by reduced catches from the states that transferred the rights. He suggests that such claims could be avoided by a specific or generalized waiver. The need for such a waiver would be contingent upon the constitutive rules of the relevant RFMO. Serdy believes that the constituent treaties of several existing RFMOs, including the International Convention to Conserve Atlantic Tunas (ICCAT), the Indian Ocean Tuna Commission (IOTC), the WCPFC, and the “Antigua Convention” of the Inter-American Tropical Tuna Commission (IATTC)2 “are written with sufficient generality to allow for the institution of trading.” He claims that the only clear prohibition on national allocations contained (and by extension the trading of allocations) in the charter documents of existing RFMOs is found in Article V of the International Whaling Commission’s (IWC’s) constitutive convention (Serdy 2007). ICCAT prohibits trading or selling of member quotas, but it allows for the commission to authorize “temporary transfers” on an ad hoc basis. Direct compensation for transfers is not allowed, but indirect quid pro quo considerations appear commonplace. Some RFMOs, such

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as the International Baltic Sea Fisheries Commission (IBSFC), the North Atlantic Fisheries Organization (NAFO), and the Northeast Atlantic Fisheries Commission (NEAFC) have expressly recognized or permitted national quota transfers, in some cases for direct compensation. Others, like the Commission for the Conservation of Southern Bluefin Tuna (CCSBT) and the WCPFC, are currently contemplating the issue (Grafton et al. 2006, Serdy 2007, 2010). Serdy’s (2007, 2010) analyses of RFMO meeting reports that explicitly address the transferability issue identify a range of opinions held by RFMO members. Some appear to embrace transferability, as well as the broader concept of use rights. Others appear to resist quota trading because it provides de facto legitimacy to the concept of RFMO quota rights as use rights. Finally, several more nuanced views would appear to exist in which RFMO members appear willing to consider quota trading as a flexibility-enhancing management tool, so long as it does not undermine conservation objectives or enable members to derive benefits from trading an unused quota in a matter analogous to a property right. Trondsen et al.’s (2006) discussion of management resource cooperatives also raises the possibility of removing state governments from quota transactions involving firms or other fishing entities from different nations. If established, quota management enterprises should easily be able to manage quota trades, in addition to allocating quotas through auctions. In practice, the removal of state governments from transferability mechanisms remains problematic on account of the reluctance of flag states to waive or transfer rights that are held by vessels flying under their flags. The IATTC provides a good example of this with respect to capacity transfers.

programs. Factors that determine the effectiveness of monitoring and enforcement arrangements in ITQ fisheries include regulatory authority, regulatory capacity, industry structure, and the disposition of the industry toward the rules. Regulatory authority is rarely an issue for domestic ITQ programs, as coastal states retain exclusive authority to govern behavior within their respective EEZs. Regulatory authority is sometimes shared within federal government structures, but the ability of coastal states to monitor and enforce ITQ programs is rarely compromised by legal disputes over regulatory authority. The relationship between regulatory capacity and industry structure is perhaps the most important determinant of monitoring and enforcement effectiveness within EEZs. Large numbers of small-scale fishers landing their catches in a diverse range of port communities can make it nearly impossible to verify that harvests conform to quota allotments. This is one of the reasons that ITQ programs are rare in the inshore fisheries of developing coastal states. Even when the industry structure lends itself to easier oversight, coastal states must have the physical, technical, and administrative capacity to monitor behavior and enforce rules. Regulatory capacity varies from coastal state to coastal state. Finally, the disposition of the industry with respect to ITQ programs can matter. Monitoring and enforcement are often made more difficult when actors question the legitimacy of a new rule system or resist it for one reason or another (Copes 1996, Alcock 2003). Under such conditions, actors may be more willing to cheat and/or to condone the cheating of others. Conversely, when an industry strongly supports an ITQ program, the actors are typically less willing to cheat and more likely to assist in monitoring efforts by policing one another.

The Enforcement Dilemma

Monitoring and Enforcement on the High Seas

Lessons from Domestic ITQ Programs Monitoring of behavior and enforcement of rules are critical components of well-functioning ITQ

There is a sharp distinction between domestic and international fisheries when it comes to monitoring and enforcement authority. Coastal states have

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exclusive authority to monitor activity and enforce domestic laws (including fisheries regulations) within their respective 200-mile EEZs. On the high seas (outside of EEZs), the authority to monitor behavior and enforce international law is not spatially demarcated, which is to say that there is no international agent that claims authority over fisheries actors on the basis of the location of their behavior. Instead, the state under which a given fishing vessel is registered (the flag state) is recognized as having monitoring and enforcement authority over that vessel while it is on the high seas. With many open registries that allow ship owners to register or flag their vessels in countries without requiring that the ship owners, captains, or crew be citizens of that country, more than half of the world’s commercial ships are currently flagged in such states and are said to fly flags of convenience (FOCs). With no genuine linkage between FOC ships and their respective flag states, the incentives for effective monitoring and enforcement remain weak (DeSombre 2006, 2010). The 1995 UNFSA, in combination with the 1993 Compliance Agreement and the 1995 FAO Code of Conduct for Responsible Fisheries and its subsequent International Plan of Action to Prevent, Deter and Eliminate Illegal, Unreported and Unregulated Fishing (IPOA-IUU), has collectively attempted to address the problematic nature of monitoring and enforcement on the high seas. These attempts have included several innovations that directly or indirectly affect legal authority. First, in addition to strengthening the link between the freedom to fish on the high seas and the duty to join and/or comply with the management and conservation measures of RFMOs, the agreements mentioned help to strengthen and clarify the obligations member states have with respect to enforcement measures against noncompliant behavior committed by their flag states. Second, although RFMOs are not themselves granted the authority to monitor behavior and enforce sanctions within their respective spatial jurisdictions (as administrative agents), Articles 21 and 22 of UNFSA grant RFMO members the legal authority to inspect the vessels of other RFMO members

while establishing a set of guidelines by which flag states must act upon when violations are reported. Enforcement authority is retained by the flag state, but monitoring authority is dispersed to a broader variety of actors. Third, and perhaps most importantly, the agreements strengthen the authority of port states to restrict access to ports, port services, and markets (DeSombre 2006, Lodge et al. 2007). The authority of port states to act is further enhanced by evolving RFMO rules regarding vessel registries (and associated white and black lists), vessel monitoring systems (VMSs), and catch documentation schemes (CDSs). The authority to control market access is especially important because it could conceivably be exercised with respect to non-RFMO members and nonparties to UNFSA that use flags of convenience. In addition to the issue of regulatory authority, factors that were identified as important in determining the effectiveness of monitoring and enforcement of ITQ programs in domestic fisheries included regulatory capacity, industry structure, and the disposition of the industry toward the rules. The relationship between regulatory capacity and industry structure in high-seas tuna fisheries may, in fact, prove more amenable to monitoring and enforcement than in many domestic situations. Unlike many smaller-scale fisheries with heterogeneous fleet structures, high-seas tuna fisheries tend to be prosecuted by vertically integrated firms with large vessels. There are relatively fewer actors, so VMS coverage for all vessels is both economically and logistically feasible. The tuna industry also utilizes a more limited number of ports than other fisheries, with access to a select few import markets in the United States, the European Union, and Japan being essential. Given the authority granted to inspector and port states by the legal agreements discussed earlier, the relationship between the regulatory capacity of concerned RFMO members and the structure of the tuna industry can be considered relatively favorable with respect to monitoring and enforcement prospects. The disposition of the industry toward an emerging use rights regime in high-seas tuna fisheries would appear to have both positive and

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negative dimensions to it. On the plus side, there may be significant portions of the industry that not only support such reforms but are also in a position to enhance monitoring efforts and create pressures for compliance. On the negative side, strong resistance from at least one major market state, such as Japan, could undermine the efficacy of enforcement.

Outlook General Prognosis The above analysis highlights some of the distinct differences between domestic and international fisheries and the challenges associated with introducing use-rights schemes under the auspices of RFMOs. The most significant challenges stem from the absence of an authoritative agent in international waters. The lack of an authoritative agent impinges upon three of the dimensions of effective use rights discussed in this chapter: exclusivity, initial allocations, and enforcement. In contrast to domestic fisheries regulators, RFMOs lack the clearly recognized authority to exclude actors from fisheries outside of EEZs. UNCLOS stipulates that the freedom to fish on the high seas is contingent upon fulfilling the duty that all parties have to cooperate in the conservation and management of high-seas fisheries. UNFSA further clarifies this obligation in declaring that access to highly migratory fisheries is contingent upon either membership within a relevant RFMO or compliance with its management procedures. This reflects an effort by the international community to recognize the exclusive access of RFMOs. But the rights and obligations of nonparties to UNFSA remain unclear, and the principles of international law dictate that states cannot be bound by the terms of an agreement to which they do not consent. The current situation might be characterized as more of a political dilemma than a legal one, in that modifications to UNCLOS and/or UNFSA are not prerequisites for empower-

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ing RFMOs with the authority to award exclusive access rights to its members. The existing legal framework is sufficient. Nonparties must now be persuaded to ratify or accede to UNFSA in order to expand the range of relevant states that are bound by its obligations. The decision to ratify or accede to UNFSA will likely be determined by the expected costs and benefits of such a decision. RFMOs are also hampered by their limited authority to impose allocation decisions upon their members. Domestic fisheries managers often go through great pains to garner support for ITQ programs and to forge agreements on initial allocation procedures. Universal consensus is a rarity, however, and most ITQ programs are enacted in spite of some level of resistance from one or more user groups (or industry segments) in a given fishery. Domestic fisheries managers retain the authority to impose allocation decisions at their discretion. RFMOs, as administrative agents, lack such authority. Decision-making procedures vary from RFMO to RFMO, but most require a consensus for allocation decisions by rule or in practice by virtue of opt-out procedures. These conditions pose a severe obstacle to agreements on initial allocations for multi-year quotas defined in terms of fixed percentages of a sustainable TAC.3 In theory, it may be possible to modify the charters of RFMOs to eliminate consensus requirements and opt-out clauses in favor of binding majoritarian voting arrangements. Still, most RFMO convention modifications will require consensus among their members, and some members will likely be reluctant to cede their veto power over allocation decisions in the absence of assurances that in doing so they will not be putting themselves at risk of significant distributive losses. The allocation dilemma is made even more problematic by the specter of obligations to new members and/or free riding on the part of nonmembers and nonparties to UNFSA. Given that the decision to ratify or accede to UNFSA and to join RFMOs will likely hinge on expected costs and benefits, initial allocation decisions for multi-year quotas will likely need to accommodate a broader range of actors than existing RFMO members in order to resolve

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the exclusion dilemma. And failure to resolve the exclusion dilemma will undermine the perceived benefits of accepting and complying with RFMO allocations and make agreements more difficult to realize. The exclusion and allocation dilemmas adversely impact one another, and it is possible that both will need to be resolved in concert in order for a viable use-rights regime to emerge in any given RFMO. The lack of an administrative agent with broad enforcement authority on the high seas poses an additional challenge to the prospect of use-rights arrangements under RFMOs. In addition to excluding actors from domestic fisheries and making executive decisions with respect to initial allocations, domestic fisheries managers possess the authority to enforce regulations and impose sanctions on those actors who fail to comply with them. Outside of EEZs, however, flag states retain enforcement authority. This is problematic not only for use rights arrangements, but for any form of international fisheries regulation. The Compliance Agreement, UNFSA, and more recent international initiatives, including the IPOA-IUU, mark a growing push on the part of the international community to better address the monitoring and enforcement dilemma. It will likely take some time to learn whether the combination of enhanced monitoring capacity through vessel registries, VMSs, and CDSs, increased monitoring authority for RFMO members, more precise enforcement obligations for flag states, and the emerging ability and authority of RFMO members and cooperating port states to control market access will have a significant impact on IUU fishing. Industry structure and disposition can play an important role in the effectiveness of these reforms. In contrast to some domestic fisheries, the international commodity chains for tuna fisheries may lend themselves to an effective monitoring and enforcement regime. This will likely depend upon the integrity of a CDS and the costs that leading RFMO members and supporting port states can impose on noncompliant actors. The one dilemma associated with the creation of efficient use-rights arrangements, for which the

international realm may prove advantageous relative to the domestic realm, is the transferability dilemma. While some RFMO conventions currently restrict quota transfers, others do not, and there is already some precedent for quota transfers among RFMO members. Resistance to and restrictions upon transfers typically stem from distributive concerns, and in domestic fisheries these concerns are often exacerbated by heterogeneous industry structures with significant and/or politically active small-scale segments. High-seas tuna fleets are characterized by industrial-scale vessels and vertically integrated commodity chains that are likely to be less sensitive to the structural implications of quota transfers and more concerned with their potential efficiency gains. If a given RFMO is able to overcome the exclusion, allocation, and enforcement dilemmas, it seems unlikely that the transferability dilemma will derail its progress toward an ITQ program. Transferability restrictions that stem from distributive concerns among coastal states and DWFNs are certainly possible, but it is doubtful that such restrictions would be more onerous than some of those found in domestic fisheries. Of the four dilemmas discussed in this chapter, the coupled nature of the exclusion and allocation dilemmas would appear to present the greatest challenges. Considered in isolation, this challenge may prove intractable for most RFMOs. In order to overcome this challenge, considerable progress needs to be made in resolving the enforcement dilemma so that a significant deterrent to IUU fishing is created. This development, in combination with other forms of diplomatic pressure (perhaps resulting from linkage to other issues), could conceivably entice key DWFNs and relevant coastal states to reach agreement over multi-year quota allocations.

Tuna RFMOs A brief review of the membership, regulatory histories, and decision-making procedures of the five major tuna RFMOs does not reveal any strong candidates for an emerging ITQ regime over the short

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term. The RFMO with the best prospects might be the CCSBT, even though ICCAT has had some experience with ad hoc quota trading and IATTC has implemented programs that could be considered weak forms of tradable rights. The CCSBT has the fewest members of any RFMO with five members and four cooperating nonmembers. Its focus is limited to a single species, which is heavily overfished (Mengerink 2010).4 The existing management approach already uses national TAC allocations, and there is some precedent for quota transfers. The coastal states (Australia and New Zealand) within this RFMO also have significant experience with use rights arrangements within their domestic fisheries. It has also commissioned a legal analysis and commented on the viability of developing tradable quota schemes within the past few years (Serdy 2010). In order to advance toward an ITQ scheme, the existing parties would need to reach an agreement on specific multi-year shares of an overall TAC. Although Japan and Korea would likely adopt tough bargaining stances with respect to their distributive shares (especially Japan), a strong desire on the part of Australia and New Zealand to strike a deal could allow for an agreement. ICCAT, like CCSBT, has some precedent for and experience with national TAC allocations that have been transferred among members. As noted by Serdy (2007, 2010), however, current members have voiced opposition to formal exchanges of quotas for monetary compensation and/or any other programmatic members that would appear to recognize and/or confer legitimacy on the idea of quota allocations as property rights. ICCAT is also characterized by the largest and most heterogeneous membership group (36 countries) making distributive bargains especially difficult to achieve. The WCPFC is another interesting case, on account of its short history, its efforts to harmonize its charter documents with the UNFSA, and its attentiveness to allocation principles. Members of the Forum Fisheries Agency (FFA), a subset of WCPFC members composed of Australia, New Zealand, and several Pacific Island nations, are experimenting with a tradable days-at-sea pro-

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gram. And, like the CCSBT, the WCPFC has also explored the topic of tradable quota programs (Agnew et al. 2006). The WCPFC has over 20 members, but with a more diverse range of interests (DWFNs, Australia, New Zealand, and a number of Pacific Island states), and it is responsible for a greater number of tuna species. Its attentiveness to the allocation issue has also produced more in the way of criteria to be considered, rather than a clear set of focal points for TAC allocations (Parris and Grafton 2006). While agreement upon multiyear, transferable TAC shares is not impossible for the WCPFC, it should be easier for a subset of its members (the CCSBT members) to agree upon the parameters of an ITQ scheme for a single species than it would for the same group, plus several additional actors, to agree upon a scheme that would include or have implications for numerous species. The IATTC, with 16 members, has some features that can be considered weak forms of use rights. The first is the Agreement for the International Dolphin Conservation Program (AIDCP). The AIDCP specifies limits on dolphin mortality that constrain the right of IATTC members to participate in the tuna fisheries under their jurisdiction. The AIDCP allocates annual dolphin mortality limits (DMLs) to all boats that are authorized to fish on tunas associated with dolphins and express the intention to do so. The IATTC staff divides the DML among its member countries in proportion to the numbers of boats that expressed that intention. Each country divides its national DML as it sees fit, but not necessarily equally among vessels. Vessel owners may change their minds about fishing for tunas associated with dolphins, in which case the individual-vessel DMLs can be transferred. Accordingly, the AIDCP provides for limited transferability of DMLs among vessels.5 DMLs can be considered a weak property right in various respects, not the least of which are their indirect relationship to the target species. DMLs constrain access to tuna by placing limits on a harvesting externality, or bycatch species. A second feature is a closed regional vessel register (RVR) and accompanying capacity limits that apply to the purse-seine fishery. The RVR and its

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capacity limits confer access rights that are limited in their security and transferability (Allen et al. 2008). DMLs and the IATTC’s RVR do not confer rights to specific quantities of tuna, but rather access rights that are defined in terms of inputs and externalities associated with tuna fishing. A third feature of the IATTC is its assignment of specific national quotas in the longline fishery for the 2007 season. The IATTC did not adopt the quotas recommended by the IATTC staff for 2008, but, surprisingly, nearly all of the nations participating in the fishery unilaterally imposed restrictions on their fleets similar to those in place during 2007. With 20 members, the IOTC, which was established in 1993, is a relatively young RFMO. Like ICCAT, it has considerable heterogeneity among its members, and few have experience with ITQ programs at the domestic level. With none of the stocks under its purview as depleted as two of those (eastern and western Atlantic bluefin) under the purview of the ICCAT, there does not appear to be strong pressure for dramatic institutional reforms. While this factor may render the IOTC, the least likely RFMO candidate to implement a program of long-term, tradable tuna quota rights, it also leaves the organization with relatively more wiggle room to entice its members with side payments in the form of “hot air” quota allocations or quotas that exceed its current harvest levels.

Conclusion Prospects for ITQ regimes within the existing tuna RFMOs are less than auspicious for the immediate future. The greatest obstacle to implementing ITQ programs in high-seas tuna fisheries is the lack of an authoritative agent that can impose, coerce, or, in some way, forge the distributive bargains that are necessary for such programs to take root. If one or more RFMOs move forward with ITQ programs, it’ll result from a bargain that all relevant parties are willing to accept. In the absence of side payments or coercion, collective action theory would suggest that this is most likely to hap-

pen when the number of relevant states is small, heterogeneity among them is modest, and a distributive focal point (or allocation formula) exists that is perceived as both fair and mutually beneficial. Given its small size, single-species focus, and recent feasibility assessments, the CCSBT may seem to be the most likely candidate by implication. However, all five tuna RFMOs have programmatic experiences and/or structural features that may continue to pique the interest of ITQ advocates. ICCAT makes extensive use of national quotas, and has experience with trading them on an ad hoc basis. IATTC also has experience with programs that confer weak forms of access rights. The WCPFC has focused considerable attention on this issue, and is currently experimenting with a tradable days-at-sea program. And stock conditions within the jurisdiction of the IOTC could allow for side payments in the form of quota rights that are infeasible for the other tuna RFMOs. As Serdy (2007) suggests, the most plausible future scenario may be a sequence of modest institutional reforms in multiple RFMOs that gradually move toward ITQs, as opposed to a more dramatic userights experiment in a single tuna RFMO.

Endnotes 1. See also Serdy (2007, 2010). 2. The “Antigua Convention” of the IATTC will enter into force 15 months after seven nations that were members of the IATTC on the date that it was open for signature (November 14, 2003) have ratified or acceded to it. As of February 3, 2009, six such nations had done that. 3. Precedents exist for consensus agreements within RFMOs for short-term (annual) quotas measured in terms of landings tonnage or hold (fish-carrying) capacity (as opposed to fixed percentages of a variable TAC). Few, if any, of these agreements appear to be sustainable with respect to their TACs (World Wildlife Fund 2007). 4. Libecap (1989) argues that bargains over property rights in fisheries are most likely to occur

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when fisheries become significantly depleted. The level of resource exploitation that most lends itself to agreement on the establishment of property rights is also explored by Wyman (2005). 5. See Annex IV.III of the AIDCP—“Use of forfeited or unutilized DMLs.”

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Paper No. 38. Bergen: Centre for Fisheries Economics. Norwegian School for Economics and Business Administration. Bjørndal T and GR Munro. 2003. The management of high seas fisheries resources and the implementation of the UN Fish Stocks Agreement of 1995. In Folmer H and T Tietenberg (eds) The International Yearbook of Environmental and Resource Economics 2003/2004. Cheltenham, UK: Edward Elgar, pp. 1–30. Caporaso JA. 1992. International relations theory and multilateralism: the search for foundations. International Organization, 46(3):599– 632. Copes P. 1996. Adverse impacts of individual quota systems on conservation and fish harvest productivity. Institute of Fisheries Analysis Discussion Paper 96: 1. Burnaby: Simon Fraser University. DeSombre E. 2006. Flagging Standards: Globalization and Environmental, Safety and Labor Regulations at Sea. Cambridge: MIT Press, 280 pp. DeSombre E. 2010. Flags of convenience and property rights on the high seas. Chapter 16 of this volume. Fearon JD. 1998. Bargaining, enforcement and international cooperation. International Organization, 52(2):269–305. Grafton RQ, R Hannesson, B Shallard, D Sykes, and J Terry. 2006. The Economics of Allocation in Regional Fisheries Management Organizations (RFMOs). Australia National University Economics and Environment Network Working Paper EEN0612 (http://een.anu. edu.au/download files/een0612.pdf). Accessed September 15, 2007. Hoel AH and I Kvalvik. 2006. The allocation of scarce natural resources: the case of fisheries. Marine Policy, 30(4):347–356. Joseph J. 2005. Past developments and future options for managing tuna fishing capacity, with special emphasis on purse-seine fleets. FAO Fisheries Proceedings, 2:281–323. Kaitala V and GR Munro. 1997. The conservation and management of high seas fishery resources

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under the new law of the sea. Natural Resource Modeling, 10:87–108. Leal, DR (ed). 2004. Evolving Property Rights in Marine Fisheries. Lanham: Rowman and Littlefield. Libecap G. 1989. Contracting for Property Rights. Cambridge: Cambridge University Press. Lindroos M. 2002. Coalitions in Fisheries. Paper Presented to the XIVth Annual Conference of the European Association of Fisheries Economists, Faro, Portugal. Lodge MW, D Anderson, T Lobach, G Munro, K Sainsbury, and A Willock. 2007. Recommended Best Practices for Regional Fisheries Management Organizations. Report of an independent panel to develop a model for improved governance by Regional Fisheries Management Organizations. London: The Royal Institute of International Affairs. Chatham House. Mengerink KJ. 2010. Japanese policies, ocean law, and the tuna fisheries: sustainability goals, the IUU issue, and overcapacity. Chapter 17 of this volume. Munro GR. 2000. On the economic management of “shared fishery resources.” In Hatcher A and D Tingley (eds) International Relations and the Common Fisheries Policy. Centre for the Economics and Management of Aquatic Resources, University of Portsmouth, UK, pp. 149–167. Munro GR, A Van Houtte, and R Willman. 2004. The conservation and management of shared fish stocks: legal and economic aspects. FAO Fisheries Technical Paper, 465:69. National Research Council. 1999. Sharing the Fish: toward a National Policy on Individual Fishing Quotas. Washington, DC: National Academy Press, 436 pp. Ørebech P, K Sigurjonsson, and T McDorman. 1998. The 1995 United Nations straddling and highly migratory fish stocks agreement: management, enforcement and dispute settlement. The International Journal of Marine and Coastal Law, 13(2):119–141.

Orrego Vincu˜na F. 1999. The Changing International Law of High Seas Fisheries. Cambridge, UK: Cambridge University Press. Parris H and RQ Grafton. 2006. Can tuna promote sustainable development in the Pacific? The Journal of Environment and Development, 15(3):269–296. Potter PB. 1924. Freedom of the Seas in History, Law, and Politics. New York: Longmans, Green and Company, 299 pp. Sanchirico JN, D Holland, K Quigley, and M Fina. 2006. Catch-quota balancing in multispecies individual fishing quotas. Marine Policy, 30(6):767–785. Serdy A. 2007. Fishery commission quota trading under international law. Ocean Yearbook, 21:265–288. Serdy A. 2010. International fisheries law and the transferability of quota: principles and precedents. Chapter 6 of this volume. Squires D, H Campbell, S Cunningham, C DeWees, RQ Grafton, SF Herrick, J Kirkley, S Pascoe, K Salvanes, B Shallard, B Turris, and N Vestergaard. 1998. Individual transferable quotas in multispecies fisheries. Marine Policy, 22(2):135–159. Swan J. 2004. Decision-making in regional fisheries bodies or arrangements: the evolving role of RFBs and international agreement on decision-making processes. FAO Fisheries Circular, 995:82. Trondsen T, T Matthiasson, and JA Young. 2006. Towards a market-oriented management model for straddling fish stocks. Marine Policy, 30(3):199–206. World Wildlife Fund. 2007. Tuna in Trouble (http://assets.panda.org/downloads/wwftunarfmobriefingfinal.pdf). Accessed March 15, 2008. Wyman K. 2005. From fur to fish: reconsidering the evolution of private property. New York University Law Review, 80(1):117– 140.

Chapter 16

Flags of Convenience and Property Rights on the High Seas Elizabeth R. DeSombre

International fishery rules require the participation of all fishing vessels in order to be successful. The incentive to free ride is clear; ships registered in states that are not members of the relevant regional fishery management organizations (RFMOs) are not practically or, for the most part, legally prohibited from catching fish outside the regulatory process; at the same time, they benefit from conservation efforts by those who do participate in collective management. Fishing vessels frequently register in states that intentionally remain outside of the international regulatory process, so that these vessels are not legally bound to uphold specific conservation measures and are not subject to strong oversight of their behavior. Such registrations are referred to, often derisively, as “flags of convenience” (FOC). These incentives and regulatory loopholes have combined to pose major problems for international cooperation to sustainably manage fisheries. But recent efforts by some RFMOs to prohibit trade and transshipment of fish products from vessels operating outside the regulatory process change the incentive structure for individual ship owners and for ship registries. Fishing vessels that fish in an area in which they are not legally bound by the

rules are cut off from markets for the fish they have caught. Conceptually, these measures operate by changing the structure of the international issue that is being regulated, from a common pool resource (CPR) to a club good. A major difficulty of achieving successful international fisheries management on the high seas is that a fishery is a CPR—it is both excludable (no one can be kept from accessing it) and rival (the use of the resource diminishes its use for others). The restrictions explained below change the aspect of the good being regulated. Access to markets becomes a club good, which is excludable (fishers can be prohibited from selling or transshipping fish products in a state) and is not rival (except at the margins, the involvement by fishers in selling their fish products does not diminish the ability of others to do so). Because access to a market is something that those who catch fish commercially seek, they can be persuaded to take on conservation measures as a prerequisite. Although some nontuna RFMOs (most prominently the Commission for the Conservation of Antarctic Living Marine Resources [CCAMLR]) have undertaken such measures, the most prominent practitioners of this approach have been the

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various tuna RFMOs, with the International Commission for the Conservation of Atlantic Tunas (ICCAT) taking the lead. These measures do not quite rise to the level of creation of strict property rights within the fishery, but they share some important elements with approaches that do, and they may be useful as tools on the path toward creation of property rights in a fishery. They use economic incentives to create a reason for owners of fishing vessels to register their ships in states that participate in international fishery management, and for individual FOC registries to join RFMOs, necessary preconditions for a true allocation of property rights in a fishery. They also constitute a method of restriction of access to the fishery (or, at least, to the markets in which fish caught in the fishery could be sold), and thus, in a way, impact property rights. While it may be too soon to determine the full effect of these trade restrictive measures, initial experience suggests that they are having effects on both vessel registry and adherence to international rules.

Flags of Convenience and Registry of Fishing Vessels All ships on the oceans are required by international law to be registered in a state. The registration indicates which state is responsible for that ship (Colombis 1967), with ships seen almost as floating pieces of sovereignty (Balton 1999). Ships are, in turn, obligated to follow all the domestic and international rules adopted by their registry states. Over the course of most of shipping history, the nationality of a ship was the same as that of the owner or captain. But beginning in the early twentieth century, and with increasing prominence after World War II, and especially after the 1960s, some developing states began to offer “open registries,” in which ship owners were not required to have ties to the state of registry (Boczek 1962). Ship registrations were seen as revenue earners

for these states, and new registry states therefore made registration as attractive to ship owners as possible. They intentionally kept their registration fees and taxes low, and refrained from passing major domestic rules, or adopting existing international rules, to regulate ship behavior (Carlisle 1981). The number of FOC registrations has climbed dramatically since the mid-twentieth century. The largest ship registries are open: since 1993 there have been more ships registered in Panama than in any other state, as measured both by number of ships and by tonnage; second in both categories is Liberia (Lloyd’s Register Fairplay 2007). Approximately 64% of the world’s merchant fleet tonnage is registered in open registries (Institute of Shipping Economics and Logistics 2004). Fishing fleets for a long time were registered almost exclusively in traditional registries, but increasing numbers of fishing vessels are now registered in open registries. Swan (2002) suggested that just under 10% of the world’s fishing vessels flew FOC at that time, but of the new fishing vessels built between 2000 and 2003, 14% registered in FOCs (Gianni and Simpson 2004). Other estimates put the overall number of FOC fishing vessels at 21.5% (ICTFU et al. 2002), and it is likely that fishing vessels whose registry is listed as “unknown” in international records are registered in FOCs, further increasing the numbers. Even these higher percentages likely undercount the phenomenon: the fishing vessels registered in FOCs are likely to be larger and more likely to be fishing on the open ocean, than the average vessel. The most prominent recent open registries that have registered fishing vessels have been Belize, Panama, Honduras, and St. Vincent and the Grenadines. Other FOC fisheries registries gaining prominence include Georgia, Cambodia, Vanuatu, and landlocked Bolivia (Gianni and Simpson 2004, Institute of Shipping Economics and Logistics 2004). Some of these FOC states have been members of some RFMOs historically—Panama, for instance, is a long-time member of the Inter-American Tropical Tuna Commission (IATTC)—but others

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have resisted joining or cooperating with certain RFMOs until they were pressured to do so by the mechanisms described here. Some have continued to remain outside the regulatory system. FOC registration for fishing vessels is driven to an even greater extent than for other types of ships by a desire to avoid international regulation. Crew costs, which account for up to 30% of total catch value in most major high-seas fisheries for nationally registered vessels (OECD 2004), are considerably lower on ships in open registries (Agnew and Barnes 2004). Taxes are also lower, and many states that operate as FOCs operate as tax havens as well, decreasing even further the tax burden from vessel ownership. Most important, however, is the opportunity to fish without having to abide by national or international limits. Because ships are bound by the international rules that their flag states have adopted, ships registered in states that do not participate in fishery regulations are not bound by the rules. FOC registration of fishing vessels is also more problematic for international regulation than is the case for FOC registration for some other issues, because of the CPR nature of a fishery: nonparticipation in regulatory agreements by states that flag vessels fishing in a given area has the potential to undermine the cooperative efforts of those who do restrict their fishing behavior, because of the rival (i.e., depletable) nature of a fishery. In addition, unregulated fishing drives down the price for legally caught fish, thus restricting the earnings of legitimate fishers and even decreasing their ability to invest in costly monitoring activities (Fallon and Kriwoken 2004). The increasing prominence of FOC-registered vessels fishing in the regulatory areas of the major RFMOs has had a major impact on the ability of these organizations to manage the stocks that they are charged with sustaining. The phenomenon of illegal, unregulated, and unreported (IUU) fishing is primarily a problem of FOC fishing vessels, as indicated by the states whose ships are listed on the IUU lists created by RFMOs. In some ways, the term IUU conflates a number of

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different reasons, or methods, by which fishing vessels undermine international fishery management efforts, and it can be useful to separate these methods. While they all manage to weaken fishery conservation, they have different implications for how they should best be addressed. This FOC fishing is not in most aspects illegal, which can make it even more difficult to address internationally than strictly illegal activity would be. Under the United Nations Convention on the Law of the Sea (UNCLOS) and its associated Agreement for the Implementation of the Provisions of the United Nations Convention on the Law of the Sea Relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks (Straddling Stocks Agreement) states are required to cooperate in the management of fisheries in which their vessels operate (Straddling Stocks Agreement 1995: Article 8(3)). Even more directly, the agreement requires that a state that is not a party to an RFMO not “authorize vessels flying its flag to engage in fishing operations for” fish under the regulatory purview of these organizations (Straddling Stocks Agreement: Article 17(2)). But international law is binding only on those states that have adopted it, and a number of the most prominent FOC fishing states have failed to ratify the Straddling Stocks Agreement. Although some provisions of UNCLOS and its affiliate agreements are considered to have become customary international law and are therefore binding even on states that have not ratified them, it is not clear that the provisions about membership in RFMOs are among them. Additional international agreements, such as the Food and Agriculture Organization (FAO)’s Compliance Agreement (FAO 1993) and other nonbinding FAO agreements also do not have the participation of major open-registry states. In recent years, fishing by vessels (primarily those registered in FOCs) outside the regulatory process has had a major impact on tuna RFMOs. The estimates of the effects of unregulated fishing in the various tuna commissions vary: the ICCAT suggests that approximately 10% of

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the fish caught in its regulatory areas are caught by unregulated fishers (OECD 2004) and the Indian Ocean Tuna Commission (IOTC) estimates about the same amount (OECD 2004). The Commission for the Conservation of Southern Bluefin Tuna (CCSBT) estimates between 15 and 30% (OECD 2004, Swan 2002). The IATTC has also faced issues with fishing from ships flagged in nonmember states in the convention area (IATTC 2006).

RFMOs and Trading Clubs RFMOs assign property rights in the most general sense of the term to the process of fishing, by regulating who can catch what, in what manner, in a given area. The problem is that, because the oceans are a global commons, these organizations do so imperfectly; they have neither the complete legal authority nor the practical ability to limit fishing by all vessels whose behavior could impact the sustainability of the fishery, despite the efforts by some to limit entry of vessels not authorized by the RFMO. They also do not deal with other aspects that contribute to the problem on the domestic level, such as the incentive to develop overcapacity; in some ways, depending on the type of regulations put forth, they may even add to the incentive for domestic overcapacity, by helping create a race to catch fish. Recent acknowledgement by RFMOs of the problems of FOCs and other unregulated fishing in their regulatory areas has required innovative strategies beyond simply undertaking collective regulation. The tuna RFMOs (and other RFMOs) have attempted to address fishing by ships flagged to nonmember states in a variety of ways. Generally, the first step has been to attempt to persuade states whose vessels fish in the regulatory area to join the RFMO, or at least abide by its regulations, but these entreaties have seldom been successful on their own, since FOC states are frequently absent from RFMO membership intentionally.

The RFMOs have tried to improve on their claim to control the ability of ships to fish in the area by the creation of “blacklists”—lists of ships (or flag states) not authorized to fish in the regulatory area or regional vessel registers—those specifically authorized to fish there. On their own, these lists are likely to have little effect if they are not accompanied by consequences to those states or ships. More importantly, though, these organizations have taken the next step of requiring that ships that are fishing within the regulatory process document their adherence to the rules, and that such information accompany each shipment of fish as it is unloaded, transshipped, and eventually sold. This information, in turn, makes possible the discrimination between fish caught within the regulatory process and fish caught outside of the process, and it is this discrimination that has had important effects on FOC fishing behavior. The final step—and one that only ICCAT, of the existing tuna commissions has been so far willing to take—is to single out recalcitrant flag states for trade restrictions. The experience of four major tuna commissions with this approach is discussed here. Of these, ICCAT has gone furthest in actual restrictions of trade and is the easiest to evaluate, but all have set up the same basic initial approach that denies access to the markets in member states of fish caught outside the regulatory process. (A fifth major tuna commission, the Western and Central Pacific Fisheries Commission, has recently been established, but it would be premature to comment on its experience with FOC fishing.)

International Commission for the Conservation of Atlantic Tunas ICCAT was among the first RFMOs to address unregulated fishing directly, and it has done so in the most systematic way. In 1992, ICCAT created the Bluefin Tuna Statistical Document program. Any

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bluefin tuna imported by ICCAT member states must be accompanied by a document explaining where, when, and how it was caught; this document must be validated by an official of the flag state whose vessel caught the tuna. Any equivalent documentation program can be followed, provided that states indicate in advance that they will be using an alternative (ICCAT 1992). ICCAT members are prohibited from permitting landings (or reexport) of tuna without a Bluefin Tuna Statistical Document or the equivalent for Atlantic bluefin tuna caught outside the ICCAT regime. In 2002, this process was extended to cover bigeye tuna and swordfish (ICCAT 2001b). This information is used to ensure that member states can refuse entry to improperly caught (or undocumented) fish, and also that statistical information can be compiled on catches and trade. ICCAT decided to go further than simply requiring documentation to ensure that member states would penalize states operating outside the regulatory framework. In 1996, the organization began passing recommendations (legally binding on its member states), calling for the restriction on imports of regulated species from nonmember states whose vessels fished regularly for these species in the convention area. The following flag states have been targeted by these recommendations: Panama: Beginning in 1996, ICCAT member states prohibited bluefin tuna imports from Panama (ICCAT 1996b). Panama became an ICCAT member in 1998, and also took measures to reduce the activities of its fishing vessels, and ICCAT lifted restrictions on imports by a 1999 recommendation (ICCAT 1999b). Honduras: Honduran bluefin imports were also prohibited for ICCAT members beginning in 1996 (ICCAT 1996a), and in 1999 Honduras was also targeted by recommendations prohibiting imports of Atlantic swordfish. Honduras joined ICCAT effective in 2001, and these measures were removed (ICCAT 2001a). It was nevertheless targeted in 2002 with import prohibitions on Atlantic bigeye

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tuna because it had not sufficiently addressed the problems of Honduran-flagged ships fishing for bigeye tuna in the convention area. The Honduran government communicated to the ICCAT secretariat the specific measures it had taken, including removing 228 of 269 registered fishing vessels from its registry, and suspending the remaining 41, and these trade restrictions were removed. Honduras claimed that it would close its registry to fishing vessels until it could be sure of ICCAT compliance (Swan 2002). Belize: Belize was also subject to the initial 1996 prohibition on bluefun tuna (ICCAT 1996a), and recommendations in 1999 and 2000 added prohibitions on the import of Atlantic swordfish (ICCAT 1999a) and bigeye tuna (ICCAT 2000a) to the existing prohibitions. The restrictions on imports were lifted in 2004 after Belize began attending ICCAT meetings and undertook “a broad program of reform to achieve full compliance with ICCAT measures” (despite not joining the organization), including removing a large number of fishing vessels from its registry (ICCAT 2002a). St. Vincent and the Grenadines: St. Vincent and the Grenadines was identified in 1999 as a state that diminished the effectiveness of ICCAT measures by unregulated tuna fishing in the area. A recommendation in 2000 restricted imports of St. Vincent-caught Atlantic bigeye tuna. This prohibition was slated to be lifted as of 2003 by a recommendation passed in 2001, when St. Vincent indicated that it had undertaken efforts to reform its registry and to curtail effort by fishing vessels in the area (ICCAT 2001a). ICCAT member states, however, expressed concerns that the state had not fully outlined the oversight of fishing vessels under its flag, and postponed the removal of the sanctions until the beginning of 2004 (ICCAT 2002d). Equatorial Guinea: In 1999 (ICCAT 1999b) and 2000 (ICCAT 2000b), Equatorial Guinea was targeted for sanctions on the range of species

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regulated by ICCAT. These were lifted in 2004 when the state was able to demonstrate that the vessels that had been fishing in an unregulated way in the convention area were no longer in its registry (ICCAT 2004a). There are two vessels on the most current IUU lists that appear to be registered in Equatorial Guinea (ICCAT 2007), but this possibility has not been sufficient to lead to a reimposition of trade restrictions. Cambodia: Bigeye tuna from Cambodia was targeted in 2000 (ICCAT 2000a), but trade restrictions were removed effective in 2005 when Cambodia deregistered the vessels that had been fishing in the regulatory area. Cambodia also changed the company that ran its registry, and promised not to authorize its vessels to fish in the ICCAT regulatory area (ICCAT 2004c). Sierra Leone: ICCAT members were instructed not to allow imports of any species of regulated tuna or swordfish from Sierra Leone as of 2002 (ICCAT 2002c). These restrictions were lifted in 2004 after Sierra Leone deregistered a vessel fishing outside of the regulations but within the regulatory area, began to report data to ICCAT, and developed a plan for monitoring and control (ICCAT 2004b). Bolivia and Georgia: Bolivia was targeted beginning in 2002 (ICCAT 2002b), with trade restrictions on bigeye tuna, as was Georgia in 2003 (ICCAT 2003). These trade restrictions remain in force, as of the beginning of 2008. ICCAT also created blacklists, as well as regional vessel registers (of those that are allowed to fish in the area), for individual vessels. These lists were formalized in 2002 (to take effect in mid2003) with the requirement that member states prevent landings or transshipment of regulated species by ships not on the positive list, and in particular refuse to do anything that would help ships on the negative list to fish for regulated species (ICCAT 2002e, 2002f). The blacklist of vessels, however, has had mixed success so far. The Japanese representatives to the International

Conference on Illegal, Unreported and Unregulated Fishing in 2002 indicated that forged documents have made enforcing these measures difficult. Interestingly, most of the vessels on the list have unknown registries. There is some evidence that these measures are having an effect. ICCAT estimated that unregulated catch (primarily by FOC vessels) declined by about two-thirds between 1998 and 2001. Many vessels have been deregistered by the FOCs in which they had been previously registered. A study by Japan indicated, however, that unregulated tuna fishing still accounts for 25,000 tons of tuna annually, a figure close to the 1998 ICCAT estimate (Agnew and Barnes, 2004). More problematically, some fishing vessels that left ICCATtargeting flag states during the time when sanctions were imposed (because they would not be able to sell their tuna to their primary markets), returned once the restrictions were lifted, and in some cases resumed engagement in unregulated fishing (ICTFU et al. 2002). Many of the vessels listed on the current IUU blacklist have been deregistered by their previous flag states, and are now fishing with unknown flags. There have clearly been some changes by targeted states: Panama and Honduras joined ICCAT, and Belize and St. Vincent and the Grenadines took measures to reduce their fishing fleets and to make sure that their ships were not fishing against ICCAT regulations. Other states deregistered specifically problematic vessels. Honduras also requires that, before they can be registered, fishing vessels sign an affidavit that they will not fish for tuna (Swan 2002). But the flag states still targeted for sanctions, Bolivia and Georgia, are among those open registries with the greatest increase in fishing vessels. It seems clear that those ships that did not want to meet the stricter standards that their previous registries took on have instead changed their registrations to other states. ICCAT has limited their access to the most lucrative markets, however, and in doing so has removed at least some of their incentive to fish outside the regulatory scheme.

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Indian Ocean Tuna Commission

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The IOTC has addressed the problem of unregulated FOC fishing almost since its founding in 1996. In a 2001 resolution, the IOTC required that member states (and those states cooperating with the organization) inspect any ships from nonmember states in their ports before they can land or transship fish. If the ship in question has any species regulated by IOTC, it must demonstrate that they were caught outside of the IOTC regulatory area in order to be allowed to land or transship the fish (IOTC 2001a). In the following year, the organization created a list of ships flying the flags of noncooperating states and required that member states refuse to import, land, or transship tuna from these ships (IOTC 2002). Ships from Equatorial Guinea and Georgia have been blacklisted (IOTC 2007). In a related move, the IOTC created the Bigeye Tuna Statistical Document. This document must be authorized by an official of the flag state that caught tuna in the regulatory area, must include information on the ship that caught or is transshipping the tuna and the area and method of catch. IOTC member states are permitted to accept only shipments of tuna accompanied by such a document indicating that the tuna were caught within IOTC rules (IOTC 2001b). In 2003, this program was expanded to allow the IOTC as a whole to require states to prohibit the import or transshipment of tuna from states whose ships have been deemed to be fishing outside the IOTC regulatory process (IOTC 2003). As of early 2008, such state-level measures have not been taken.

details on when, where, and how tuna was caught, attested to by a state authority, must accompany member state imports of southern bluefin tuna (CCSBT 2006). Member states must refuse to import tuna caught outside the regulatory system or without proper documentation. The documentation requirement does not, however, apply to fish caught by and landed in the same member state (Rayfuse 2004), which decreases its comprehensiveness. It seems to have had an effect on incentives for nonmember states, however. Trade with nonparty states has decreased significantly since the program was introduced (Swan 2002). Since Japan, a member state, is by far the largest market for southern bluefin tuna, this mechanism is likely to be reasonably successful at discouraging fishing in the area by nonmember states. The CCSBT also created, in 2004, a regional vessel register, listing ships allowed to fish in the regulatory area, and required that members (and cooperating nonmember states, such as the United States and the Philippines) refuse to import tuna caught by any vessel not on the list. The Commission has identified specific FOC states whose ships have been fishing in the convention area, with the potential that they would be targeted for broader trade restrictions, but some Commission members have been reluctant to act. Nevertheless, measures were drawn up that could be imposed on Belize, Cambodia, Equatorial Guinea, and Honduras if they attempted to export Southern Bluefin Tuna to Japan (CCSBT 2001a, 2001b, Rayfuse 2004). In addition, the Philippines agreed to drop from its registry a vessel that was fishing in the regulatory area (Rayfuse 2004).

Commission for the Conservation of Southern Bluefin Tuna

Inter-American Tropical Tuna Commission

The CCSBT has also used trade-related measures to address unregulated fishing. The organization created a Trade Information Scheme (TIS) in 2000. A CCSBT statistical document providing

Overexploitation has been less of a problem in the regulatory area of the IATTC than in those of the other tuna RFMOs, and therefore there has been less focus on fishing by vessels registered in

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FOCs. Although the organization imposed catch limits on yellowfin tuna between 1966 and 1979, it did not do so again until 1998. Since 2002 regulation has been accomplished through seasonal closures, and in that context FOC vessels have continued to fish in regulated areas during these closures. The organization has also implemented a regional vessel register, to limit entry into the fishery. During this time as well, the organization has had an important role in restricting methods of catching tuna for the purpose of protecting dolphins, under the Agreement on the International Dolphin Conservation Program (AIDCP). This endeavor is accomplished primarily through individual vessel mortality limits, coupled with gear restrictions (and the requirement of on-board observers on all trips of vessels with fish-carrying capacities exceeding 363 metric tons) (Rayfuse 2004). Because this program of avoiding dolphin mortality involves a regional vessel register, it limits entry to the fishery and can thus be considered a form of property rights. In efforts to persuade nonparty flag states to uphold regulatory measures for tuna conservation, the organization followed the standard model of first attempting to persuade nonparty flag states whose vessels were fishing in the regulatory area to join the organization, or at least to abide by its regulations, with the predictable response. It then moved on to create a trade-based system. The IATTC has explicitly modeled its nascent catch documentation scheme after the ICCAT system, requiring catch documentation for bigeye tuna. The IATTC also operates a tracking system for the purpose of separating tuna deemed “dolphinsafe” from that which is not; this system likewise applies to all tuna shipments to and from member states. While this system does not require that trade be refused in nondolphin safe tuna, it does allow for such catches to be tracked and separated; vessels and flag-states that do not participate in this process will likely earn less for their catches (and some states will not import them) because they cannot be labeled dolphinsafe.

Cooperation among Tuna RFMOs More recently, the various RFMOs managing tuna stocks have begun to cooperate in discussing their trade-related efforts to deter fishing by vessels flagged in nonmember states. A meeting in July 2007 brought together officials from four of the five tuna RFMOs (although IOTC representatives were not able to attend, information from that organization was presented) and their member states to address these (and other) issues. Although they discussed the possibility of creating crossinstitutional catch documentation schemes, there was no agreement on a timeline for doing so or the details of which species, beyond bluefin tuna, should be included. Other concerns about these programs as implemented by individual RFMOs included the problems of falsified documentation, the difficulties of tracing fish from catch to market (Joint Tuna RFMO Working Group on Trade and Catch Documentation Schemes 2007).

Other RFMOs Although these processes are particularly well developed within the tuna management organizations, other RFMOs have also addressed fishing by vessels flagged in nonmember states through catch documentation and trade restrictions. The best developed of these is the Catch Documentation Scheme undertaken by the CCAMLR. In this program, there is evidence that fish sold within the documentation scheme fetch a far higher price than those sold outside it, suggesting (along with increased cooperation by nonmember-states with CCAMLR) that the scheme is having a beneficial effect (DeSombre 2006).

But Is It Legal? One of the inevitable concerns about the trade restrictions described here is that they contravene

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international trade law. The World Trade Organization (WTO), and its underlying General Agreement on Tariffs and Trade, exist in part to prevent the use of nontariff barriers to trade and to ensure that restrictions on trade are not undertaken for non–trade-related purposes. Activist groups (such as those who dressed in sea turtle costumes at the WTO ministerial meetings in Seattle in 1999 to protest the WTO’s Dispute Settlement Mechanism (DSM) ruling against US trade sanctions on shrimp caught in ways that harmed sea turtles) feared the power of the WTO to prevent environmentally beneficial trade actions by states (DeSombre and Barkin 2002). The most notable of the WTO actions against trade restrictions taken within fisheries for conservation concerns are the findings against the United States in 1991 and 1994 for its unilateral restrictions on imports of tuna not caught in ways that protected dolphins (General Agreement on Tariffs and Trade 1991, 1994), and in 1998 and 2001 for its restrictions of imports of shrimp caught in ways that harmed sea turtles (World Trade Organization 1998a, 1998b, 2001a, 2001b). But within its findings against these particular trade measures, the dispute settlement process elaborated an increasing acceptance of environmental protection as a legitimate reason for restricting trade, as long as restrictions on trade are applied in a nondiscriminatory way, are designed specifically for environmental protection, and are accompanied by multilateral attempts to address the environmental issue (DeSombre and Barkin 2002). The best argument to be made against the legality of the type of measures discussed here is that they are intentionally implemented specifically against states that have not—because they are not members of the relevant RFMOs—consented to them. Where it might be acceptable under international law to impose trade restrictions as a penalty for nonperformance of required obligations by states that have agreed to those obligations (and, implicitly, agreed to whatever penalties the organization might impose if they do not live up to the obligations), in these cases the target

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states have not accepted either the obligations or the penalties (McDorman 1999). There are signs, however, that the WTO, which has the legal authority to weigh in on fishery conservation trade restrictions, is not following that logic. It is also true that no WTO cases have been brought against environmental agreements (such as the Convention on International Trade in Endangered Species of Wild Fauna and Flora or the Montreal Protocol on Substances that Deplete the Ozone Layer) that use trade restrictions as an explicit means of regulating nonmember states. The lack of protest of these measures internationally suggests that they are generally accepted as legitimate. In part due to previous WTO rulings, the sanctions described here against fish caught by vessels flagged in FOCs have been more carefully crafted. They pertain to multilateral agreements, and are imposed through international decisionmaking processes. They are also designed to allow individual vessels that can prove that they meet standards to export fish to the states that otherwise would exclude fishery imports from a given state, since the measures do not discriminate against individual vessels that meet standards even when their flag states have not taken them on. The WTO Secretariat has indicated that the ICCAT trade restrictions “provide examples of appropriate and WTO-consistent (i.e., nondiscriminatory) use of trade measures in multilateral environmental agreements” (World Trade Organization 2000).

Effects of Trade Restrictions The measures examined here constitute rightsbased management of a kind different from those usually discussed. The rights in question are not rights to fish, but rather rights of access to markets for fish. Rather than thinking of trade restrictions as “sanctions,” it can be useful to evaluate them as being about access to markets. Ships that do not follow and implement fishery rules in these examples are not on their own subject to punishment

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per se; they simply do not have the rights of access to the major markets for tuna. What happens when registry states, faced with the possibility of losing access to markets, adopt regulations to which ships will be held? Some of the ships meet the new standard, and in the case of trade restrictions some ships do so precisely because their owners want access to markets. But other ship owners prefer to continue to avoid regulation by simply flagging their vessels elsewhere. In the cases examined here, however, some registry states—Belize as the most extreme example—manage to increase fishing standards by removing fishing vessels from their registries. Panama, Malta, Mauritius, and Honduras also removed fishing vessels from their registries (International Transport Workers Federation 2003) when faced with pressure from RFMOs. It is unlikely that the fishing vessels that either were deregistered by their flag states or chose on their own to leave the registry simply cease fishing. They almost certainly find somewhere else to register, and continue to fish without restriction under different flags. The list of states targeted under ICCAT provides an excellent example of this process. The most recently targeted flags are the low-standard newcomers to ship registration: Cambodia, Equatorial Guinea, Bolivia, and Sierra Leone, suggesting that new low-standard registries come into being as a demand for them is created. There is even evidence that if these ships cannot find suitable flags, they will avoid registration altogether. This is a strategy most likely followed by those operating the furthest outside the bounds of law; not only are ships required by international law to be registered, but “stateless vessels” have few rights. Fishing vessels flying “unknown flags” increased from 14 in 1994 to 1602 in 2003, and the vast majority of ships on the ICCAT IUU list are given this designation. These observations give reason for caution. Clearly, restrictions on access to markets by ships or flag states that remain outside of the international regulatory process will not completely solve the problem of unregulated fishing. There is also evidence of “tuna laundering”—transfer across

vessels of tuna caught outside the regulatory system in a way to hide its origins (Hanafusa and Yagi 2004). While a robust system of documentation requirements and vessel tracking should be able to minimize this kind of undocumented trade, it would be costly to eliminate it altogether. On the other hand, these measures do change the incentive structures faced by fishing vessel owners and flag states in a way that has led to a greater number of ships and states participating in, or at least not contravening, the regulatory process. When vessels owners manage to do so, it requires action that is more obviously illegal than was previously the case, or requires collusion with states and vessels participating in the regulatory system, all of which have an incentive to try to diminish illegal trade. The kinds of trade restrictions undertaken by these organizations are among the few types of enforcement measures used in an international situation in which enforcement is rare (Barrett 2003). It is also important that these measures serve as an incentive for states to join the relevant RFMOs and participate in their regulatory processes. If true property rights are to be assigned in a fishery, it is absolutely essential that all vessels that might be catching fish take part. To the extent that restricting access to markets can lure vessels and states to subject themselves to an organization’s regulatory process, this mechanism can play an important precursor rule to assignment of actual property rights. Given the focus in this volume on overcapacity in fisheries, it is also important to examine what effects these kinds of trade restrictive measures may have on capacity. Their effects may be modest and indirect. On the one hand, these measures do nothing directly to affect overcapacity. Vessel owners who prefer not to meet the standards of tuna RFMOs can, if their flag states agree to abide by them, reregister in different FOCs, and new registries are constantly being created to fit into the low-standards niche. Nevertheless, the profitability of a fishing vessel will decline if it is unable to sell its fish to the major consuming states; the prices it fetches

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for them elsewhere will be lower. That suggests that the gains to fishing outside of the regulatory process may, at some point, not be worthwhile. At the margins, that will drive some vessels, and fishers, out of the industry and onto other pursuits, which is surely advantageous for fishery management overall.

References Agnew DJ and CT Barnes. 2004. Economic aspects and drivers of IUU fishing: building a framework. OECD, Fisheries Committee, Directorate for Food, Agriculture and Fisheries. AGR/FI/IUU(2004)(2) (March). Barrett S. 2003. Environment and Statecraft: The Strategy of Environmental Treaty-Making. Oxford: Oxford University Press, 446 pp. Boczek BA. 1962. Flags of Convenience: An International Legal Study. Cambridge: Harvard University Press, 323 pp. Carlisle RP. 1981. Sovereignty for Sale: The Origins and Evolution of the Panamanian and Liberian Flags of Convenience. Annapolis: Naval Institute Press. CCSBT. 2001a. Decision regarding Belize pursuant to the 2000 Action Plan. Report of the Eighth Annual Meeting of the CCSBT, Canberra, Australia, October 2001. CCSBT. 2001b. Decision regarding Cambodia, Honduras, and Equatorial Guinea pursuant to the 2000 Action Plan. Adopted at the Seventh Annual Meeting of the CCSBT, Canberra, Australia, April 2001. CCSBT. 2006. CCSBT Statistical Document Program, in Joint Tuna RFMO Working Group on Trade and Catch Documentation Schemes. 2007. Minutes. (http://www.tunaorg.org/Documents/TUNA%20RFMO%20REP USA ENG.PDF). Accessed September 21, 2009. Colombis CJ. 1967. The International Law of the Sea, 6th revised edn. New York: David McKay Company.

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Balton D. 1999. The compliance agreement. In Hey E (ed.) Developments in International Fisheries Law. The Hague: Kluwer. DeSombre ER. 2006. Flagging Standards: Globalization and Environmental, Safety, and Labor Regulation at Sea. Cambridge: MIT Press, 280 pp. DeSombre ER and JS Barkin. 2002. Turtles and trade: The WTO’s acceptance of environmental trade restrictions. Global Environmental Politics, 2 (1):12–18. Fallon LD and L Kriwoken. 2004. International influence of an Australian nongovernmental organization in the protection of Patagonian toothfish. Ocean Development and International Law, 33:221–266. FAO. 1993. FAO Compliance Agreement [Agreement to Promote Compliance with International Conservation and Management Measures by Fishing Vessels on the High Seas], Rome, Italy. General Agreement on Tariffs and Trade. 1991. Dispute settlement report on United States restriction on imports of tuna. International Legal Materials, 30:1594–1623. General Agreement on Tariffs and Trade. 1994. Dispute settlement panel report on United States restrictions on imports of tuna. International Legal Materials, 33:839–903. Gianni M and W Simpson. 2004. Flags of convenience, transshipment, re-supply and atsea infrastructure in relation to IUU fishing. OECD, Fisheries Committee, Directorate for Food, Agriculture and Fisheries. AGR/FI/IUU(2004)22(April). Hanafusa K and N Yagi. 2004. Effort of elimination of IUU large-scale tuna longline vessels. OECD, Fisheries Committee, Directorate for Food, Agriculture and Fisheries. AGR/FI/IUU(2004)17(14 April). IATTC. 2006. Resolution C-06-05. Adoption of Trade Measures to Promote Compliance (June 2006). ICCAT. 1992. Recommendation 92-1. Recommendation by ICCAT Concerning the ICCAT Bluefin Tuna Statistical Document Program.

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ICCAT. 1996a. Recommendation 96-11. Recommendation by ICCAT Regarding Belize and Honduras Pursuant to the 1994 Bluefin Tuna Action Plan Resolution. ICCAT. 1996b. Recommendation 96-12. Recommendation by ICCAT Regarding Panama Pursuant to the 1994 ICCAT Bluefin Tuna Action Plan Resolution. ICCAT. 1999a. Recommendation 99-08. Recommendation by ICCAT Regarding Belize and Honduras Pursuant to the 1995 Swordfish Action Plan. ICCAT. 1999b. Recommendation 99-10. Equatorial Guinea Pursuant to 1996 Compliance Recommendation—BFT and N SWO Fisheries. ICCAT. 2000a. Recommendation 00–15. Belize, Cambodia, Honduras, St. Vincent and the Grenadines Pursuant to 1998 IUU Resolution. ICCAT. 2000b. Recommendation 00-16. Equatorial Guinea Pursuant to 1998 IUU Resolution. ICCAT. 2001a. Recommendation 01-14. Recommendation by ICCAT Concerning the Importation of Bigeye Tuna and Bigeye Tuna Products from St. Vincent and the Grenadines. ICCAT. 2001b. Recommendation 01-21. Recommendation Establishing BET Statistical Program. ICCAT. 2002a. Recommendation 02-16. Recommendation by ICCAT Concerning the Importation of Atlantic Bluefin Tuna, Atlantic Swordfish, and Atlantic Bigeye Tuna and their Products from Belize. ICCAT. 2002b. Recommendation 02-17. Recommendation by ICCAT Regarding Bolivia Pursuant to the 1998 Resolution Concerning the Unreported and Unregulated Catches of Tuna by Large-Scale Longline Vessels in the Convention Area. ICCAT. 2002c. Recommendation 02-19. Recommendation by ICCAT for Trade Restrictive Measures on Sierra Leone. ICCAT. 2002d. Recommendation 02-20. Recommendation by ICCAT Concerning the Trade Sanctions against St. Vincent and the Grenadines.

ICCAT. 2002e. Recommendation 02-22. Recommendation by ICCAT Concerning the Establishment of an ICCAT Record of Vessels Over 24 Meters Authorized to Operate in the Convention Area. ICCAT. 2002f. Recommendation 02-23. Recommendation by ICCAT to Establish a List of Vessels Presumed to Have Carried Out Illegal, Unreported and Unregulated Fishing Activities in the ICCAT Convention Area. ICCAT. 2003. Recommendation 03-18. Recommendation by ICCAT for Bigeye Tuna Trade Restrictive Measures on Georgia. ICCAT. 2004a. Recommendation 04-13. Recommendation by ICCAT Concerning the Lifting of Trade Sanctions against Equatorial Guinea. ICCAT. 2004b. Recommendation 04-14. Recommendation by ICCAT Concerning the Lifting of Bigeye Tuna, Bluefin Tuna, and Swordfish Trade Restrictive Measures against Sierra Leone. ICCAT. 2004c. Recommendation 04-15. Recommendation by ICCAT Concerning the Lifting of Bigeye Tuna Trade Restrictive Measures against Cambodia. ICCAT. 2007. List of Vessels Presumed to Have Carried Out IUU Fishing Activities in the ICCAT Convention Area (http://www.iccat.es/IUU.htm). Last updated November 27, 2007. ICTFU, Trade Union Advisory Committee to the OECD, ITC, and Greenpeace International. 2002. More Troubled Waters: Fishing Pollutions and FOCs. Major Group Submission for the 2002 World Summit on Sustainable Development, Johannesburg. Institute of Shipping Economics and Logistics. 2004. ISL Shipping Statistics Yearbook 2004. Bremen: ISL. International Transport Workers Federation. 2003. Steering the Right Course. London: ITF, June 2003. IOTC. 2001a. Resolution 01/03 Establishing a Scheme to Promote Compliance by NonContracting Party Vessels with Resolutions Established by IOTC. (http://www.iotc.org/

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English/resolutions/reso detail.php?reso=14). Accessed September 21, 2009. IOTC. 2001b. Resolution 01/06 Concerning the IOTC Bigeye Tuna Statistical Document Programme. (http://www.iotc.org/English/resoluAccessed tions/reso detail.php?reso=22). September 21, 2009. IOTC. 2002. Resolution 02/04 on Establishing a List of Vessels Presumed to Have Carried Out Illegal, Unregulated, and Unreported Fishing in the IOTC area. (http://www.iotc.org/files/ proceedings/misc/ComReportsTexts/resolutions E.pdf). Accessed September 21, 2009. IOTC. 2003. Resolution 03/05 Concerning Trade Measures. (http://www.iotc.org/ English/resolutions/reso detail.php?reso=32). Accessed September 21, 2009. IOTC. 2007. IOTC IUU Vessels List (revised November 2007). (http://www.iotc.org/ files/proceedings/2007/iuu/IOTC iuu list 2007 %5BE%5D.pdf). Accessed November 27, 2007. Joint Tuna RFMO Working Group on Trade and Catch Documentation Schemes. 2007. Report. (http://www.tuna-org.org/Documents/ TUNA%20RFMO%20REP USA ENG.PDF). Accessed September 21, 2009. Lloyd’s Register Fairplay. 2007. World Fleet Statistics 2006. London: Lloyd’s Register. McDorman TL. 1999. Fisheries conservation and international trade law. In Hey E (ed.) Developments in International Fisheries Law. The Hague: Kluwer, pp. 501–531. OECD. 2004. Draft Chapter 2—Framework for Measures against IUU Fisheries Activities. OECD, Fisheries Committee, Directorate for Food, Agriculture and Fisheries. AGR/FI/IUU(2004)5/PROV (March 23).

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Rayfuse RG. 2004. Non-Flag State Enforcement in High-Seas Fisheries. Leiden: Matinius Nijhoff Publishers, 444 pp. Straddling Stocks Agreement. 1995. Agreement for the Implementation of the Provisions of the United Nations Convention on the Law of the Sea Relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks. Swan J. 2002. Fishing vessels operating under open registers and the exercise of flag state responsibilities—information and options. FAO Fisheries Circular, 980:65. World Trade Organization. 1998a. United States—Import Prohibition of Certain Shrimp and Shrimp Products: Report of the Panel. WT/DS58/R (May 15). World Trade Organization. 1998b. United States—Import Prohibition of Certain Shrimp and Shrimp Products: Report of the Appellate Body. WT/DS58/AB/R (October 12). World Trade Organization. 2000. The Environmental Benefits of Removing Trade Restrictions and Distortions: the Fisheries Sector. Note by the Secretariat. WT/CTE/W/167. Geneva: WTO (16 October). World Trade Organization. 2001a. United States—Import Prohibition of Certain Shrimp and Shrimp Products: Recourse to article 21.5 by Malaysia: Report of the Panel. WT/DS58/RW (June 15). World Trade Organization. 2001b. United States—Import Prohibition of Certain Shrimp and Shrimp Products: Recourse to Article 21.5 of the DSU by Malaysia. WT/DS58/AB/RW (October 22).

Chapter 17

Japanese Policies, Ocean Law, and the Tuna Fisheries: Sustainability Goals, the IUU Issue, and Overcapacity Kathryn J. Mengerink, Harry N. Scheiber, and Yann-Huei Song

Introduction The impact that fishing has had on the world’s oceanic ecosystems and marine biodiversity is widely recognized today as being of critical proportions: human fishing pressure has reduced, and in some cases depleted, targeted fish stocks or nontarget species, and it has demonstrably altered marine food webs1 (Pauly et al. 1998, 2002, Scheiber 2001b, Myers and Worm 2003). (However, Sibert et al. (2006) found that while fisheries impact on top-level predators, such as tunas, in the Pacific Ocean are substantial, it has not been catastrophic for most species examined [see also Hampton et al. 2005, Maunder et al. 2006, Polacheck 2006].) Increased fishing pressure, resulting from increased technological efficiency and intense effort, in response to continuing demand for fish products from an exponentially increasing world population, makes urgent the question of how best to achieve sustainability of our ocean fisheries resources. Tuna stocks, which as recently as the midtwentieth century were in no serious danger of decline, include many that today are either overexploited or at risk because of overcapacity and

excessive fishing effort throughout the world’s oceans (Bayliff et al. 2005, Majkowski 2007). Most tuna stocks have not yet declined to the point of commercial collapse, as has happened in other fisheries, such as that for Northwest Atlantic cod. Nonetheless, tuna stocks are at risk, as evidenced by altered age-structure, diminishing catches per unit of effort, and other measures of abundance; and, according to a recent study by the United Nations Food and Agriculture Organization (FAO) (Maguire et al. 2006), some 30% of high-seas tuna and tuna-like species are deemed to be already overexploited or depleted. Of particular concern is the decline of the southern bluefin tuna, for which the annual allowable catch today is only about one-eighth the annual average catch at the height of the fishery during the 1960s. In the bluefin fishery, Japanese overfishing far beyond quotas set by the regional management organization, the Commission for the Conservation of Southern Bluefin Tuna (CCSBT), and far beyond Japan’s reports of harvest tonnage, have decimated the stock (FAO 2004).2 Distant-water fishing fleets (DWFs), those fishing on the high seas and within the boundaries of other nations’ exclusive economic zones (EEZs),

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have long been engaged in intense competition for tuna, leading to a succession of high-stakes, often protracted, diplomatic confrontations and negotiations to allocate and manage high-seas fisheries (Burke 1994, Carr 2004). Increasingly, DWFs face political pressure to accept the formal regimes of international law, including the United Nations Convention on the Law of the Sea (UNCLOS), the so-called “constitution for the oceans,” and related international and regional fisheries agreements (Scott 1999, Hey 2005, Vidas and Østreng 1999). UNCLOS has failed to provide an adequate regulatory structure upon which to manage many areas of ocean activities, including an effective legal structure for protection of highly migratory species and straddling stocks, of which tunas are the major commercial species of concern. New multilateral agreements concerning highly migratory species, straddling stocks, and sustainable management have been developed to fill these gaps. These include agreements that develop de novo regional fishery management organizations (RFMOs) and agreements to restructure and strengthen existing RFMOs in order to make more effective the framework of regulation of fisheries directed at highly migratory and straddling stocks (Stokke 2001). RFMOs display considerable variation in terms of agreements, scope of powers, participation by fishing states, and efficacy of research and management regimes, and their abilities to sustainably manage fisheries have been mixed, at best (Hayashi 2004). Recognizing the increasing exploitation of world fish stocks and particular management challenges, the FAO adopted the 1995 Code of Conduct for Responsible Fisheries (“Code” or “Code of Conduct”) and subsequently developed international plans of action (IPOAs)—all voluntary agreements that encourage states, RFMOs, and individuals to take appropriate actions to manage stocks sustainably.3 The IPOAs address particularly problematic impacts, including seabird bycatches and shark depletion, and two interconnected management challenges—fishing overcapacity and illegal, unreported, and unregulated (IUU) fishing.4

Individual states and regional bodies are targeting the longline tuna fishing sector for reduction of fishing capacity and elimination of IUU fishing under these plans and in accordance with several RFMO resolutions (Hanafusa and Yagi 2004). States and regional bodies have exerted pressure on Japan, a leading DWF nation, to reduce its fishing capacity; and Japan had responded by 2004 with a reduction of its large-scale tuna longline vessel (LSTLV) fleet by 132 vessels (approximately 20% of its fleet).5 In addition to taking action to reduce its own fleet, Japan has pursued objectives to prevent overcapacity and IUU fishing through RFMOs that govern tuna fishing in the Atlantic, Indian, and Pacific Oceans.6 Taiwan is another major DWF nation that faces increasing international pressure, especially from Japan, to reduce its fishing capacity and eliminate IUU practices. Despite a pledge from Taiwan to reduce its fishing capacity, there has been an increase in the number of longline and purseseine vessels owned and operated by Taiwanese interests. This chapter focuses upon the role of Japan in the worldwide effort to reduce excess fishing capacity and combat IUU fishing, especially as these efforts relate to Taiwan, Japan’s greatest rival in Pacific waters. This chapter furthermore considers the policy matrix in which Japan’s response to overcapacity and IUU fishing is embedded. It considers international efforts to halt IUU fishing and reduce fishing capacity through RFMOs, such as the International Commission for the Conservation of Atlantic Tunas (ICCAT) and the Western and Central Pacific Fisheries Commission (WCPFC). Our analysis illustrates the complex interplay between IUU fishing and overcapacity, especially ship-flagging practices, and explores the competing objectives of those nations seeking to gain access to a larger part of the international resource with those seeking to protect historical allocations. We conclude that a coordinated international effort will be required to effectively reduce fishing capacity. While commendable and necessary, a single state’s effort to reduce fishing capacity,

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such as that undertaken by Japan, will not assure sustainability of the stocks, since rival states may continue or expand their fleets unabated. We also conclude that multilateral approaches to reduce fishing capacity, which can restore a stock of fish to the level supporting the optimum sustainable yield (OSY) of fish, can all too readily also serve as protectionist mechanisms designed to retain historical allocation and prevent recent competitors from accessing the fishery resources. Our analysis seeks to make clear that, no matter how commendable a state’s fleet reduction efforts may be, these actions must be considered within the broader context of the state’s approach to conservation and sustainable management of ocean resources. Taken in that light, we balance Japan’s reduction in fishing capacity and IUU efforts against its other ocean policy approaches, including its opposition to the whaling moratorium promulgated by the International Whaling Commission (IWC), its IUU fishing activities in the southern bluefin tuna fishery regulated by the CCSBT, and its staunch opposition to proposals that would use the Convention on International Trade and Endangered Species (CITES) as a mechanism to curb IUU fishing operations.

Japan, Overcapacity, and IUU Fishing The Role of Japan in International Tuna Fisheries Japan has been a major player in Pacific tuna fishing since the 1930s. Indeed, its fleets operated in the island regions of the Western and South Pacific long before the DWFs of other nations began to exploit that region’s tuna during the 1950s. At the end of World War II, the Occupation authority made the restoration of Japan’s fishing industry a top priority of economic policy during the 1945–1951 period. By 1949, the tonnage of the Japanese fishing fleets and their annual harvests were successfully restored to above prewar levels,

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and Japan became once again the leading marine fishing nation in the world (Scheiber 1986, 2001a). After the Occupation ended in 1952, the Japanese government continued to give full governmental support to expansion of its fleets and allied enterprises in the fisheries industries. A main feature of the official policy was the encouragement of DWF for tunas in the Pacific Ocean. Within a few years, however, as Japan’s fleet grew, it proved especially dedicated to expansion of the distant-water sector of its fishing fleets, a major target initially being Pacific tunas. Within a few years, Japan’s tuna vessels were also fishing in the Indian Ocean and off the Atlantic coast of Africa. From 1951 to 1954, the tonnages of Japanese DWF vessels thus increased by more than 150%, and the number of vessels rose from 272 to 436. Japan emerged in the 1950s as a formidable competitor to the US tuna fleet, which also had expanded rapidly after the World War II, before leveling off during the early 1950s. The US tuna vessels were then operating largely in the eastern Pacific region, leaving the western and central Pacific to the Japanese fleets (Scheiber and Carr 1992). Meanwhile, Japan also became a major exporter of tuna products to a rapidly expanding American consumer market (Scheiber 2001a).7 Hence the maximization of export earnings from tuna products became an important element in Japanese commercial and diplomatic strategies during those years. The profits from Japan’s tuna export trade fueled a continuous expansion of the country’s DWF operations in the Pacific Ocean. This development, as noted earlier, had initially been given impetus by the Allied occupation policies. Throughout the postwar decade, other factors further reinforced Japan’s policy of support for the tuna DWF expansion (Haward and Bergin 2001). First, depletion of fish stocks in the China Sea forced a curtailment of Japan’s trawler fishing there; it was accomplished by a policy of buying out boat owners and encouraging a shift in fishing labor to the DWF and coastal fishing sectors. Second, the Soviet Union’s refusal to permit Japan to use shore stations or to fish for salmon in its coastal waters north of

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Hokkaido forced a curtailment of fishing effort in that area. Third, the International North Pacific Fisheries Convention, a tripartite agreement among Japan, the United States, and Canada, was adopted in 1952. Under its terms, Japan accepted a provision calling for its “abstention” from fishing for salmon and several other marine species in the Northeast Pacific Ocean, hundreds of miles offshore of Alaska, British Columbia, Washington, Oregon, and California. The agreement thus effectively served to protect existing Canadian and US interests in the rich salmon grounds and other fisheries of that area, with crabs in the Bering Sea being the only significant exception initially (Haward and Bergin 2001, Scheiber 2001a). With these factors, all constraining and channeling policy, Japan’s fishing investment, entrepreneurial effort, and governmental support all focused on growth of the DWF tuna industry. The government adopted various licensing strategies to protect both fishing and export profits, and it continued a program of subsidies for construction of longline tuna vessels (Haward and Bergin 2001). Progressive fleet modernization, especially the introduction of onboard freezing and refrigerated storage, during the early 1960s expedited expansion of DWF tuna fishing. Consequently, by the late 1960s, Japanese longline tuna vessels had expanded the outer eastward limits of their operations well into the central Pacific. By then, they had already begun exploratory fishing in the waters of the Pacific Ocean off Latin America, which had been largely exploited by the U.S.-flag vessels.8 During the mid1950s, Japanese tuna fishing operations moved into the Hebrides, South Pacific, the Indian Ocean, and even the Atlantic Ocean (Anonymous 1957, 1959a).9 Progressive modernization of the Japanese fleet and the introduction of onboard freezing and refrigerated storage on its vessels during the early 1960s gave the tuna fleets greater range, expediting the tuna sector’s expansion. As wages and incomes rose during the 1960s and 1970s, with the new prosperity in Japan, domestic demand for sashimi (high-quality raw tuna) gave a further

boost to the industry, sustaining the new investment in vessels (Haward and Bergin 2001). These developments helped Japan to maintain its competitive position vis-`a-vis the American tuna fleet, which had meanwhile enhanced its productivity by conversion of most of its baitboats to purse seiners (Broadhead and Orange 1959, McNeely 1961) and construction of larger, more efficient vessels (Orbach 1977). Within the Japanese industry, there were growing problems that exerted downward pressure on profitability. The Japanese government made an important decision in 1959 to authorize expanded tuna fishing in order to accommodate reemployment of the Hokkaido salmon industry’s laborers, who were displaced by an agreement with the Soviet Union, reducing on a more long-term basis the allowable scope of Japanese fishing in the northern salmon grounds (Anonymous 1959b). These stresses within the Japanese tuna fishing, processing, and export industries—strong competition from low-wage fleets flying the Taiwanese and South Korean flags, rising wages for Japanese labor, loss of access to salmon grounds in both the northeastern and northwestern Pacific—converged with an even more ominous threat on a global scale during the 1970s; this was the “ocean enclosure” movement, as one coastal nation after another declared extended jurisdiction for fishing offshore of their coasts, in some instances to as much as 200 nautical miles. This movement culminated in 1982 with the signing of the UNCLOS—a major turning point in the history of ocean law and in the legal status of ocean fishing.10 As a leading DWF nation, although also a nation with a large coastal fishing industry, Japan consistently condemned the ocean enclosures and the adoption in UNCLOS of the 200-mile EEZ concept. Japan’s entire oceans diplomacy strategy, which proved to have failed completely, was a campaign to head off the acceptance of extended EEZ offshore boundaries of any distance beyond the long-traditional limits (usually three nautical miles), let alone what was finally agreed as the 200-mile limit. Its failure in

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this campaign of resistance confronted Japan with exclusion from extensive fishing grounds in the Pacific Ocean, including the rich tuna waters of the tropical Pacific.11 Japanese fishing operators and the government of Japan were forced to accept costly licensing arrangements in the western Pacific in order to maintain Japan’s existing tuna fishery operations. This resulted in further inroads on profits, and Japan now faced the key of “how to maintain a Japanese presence in a fishery which they by and large [had] created” (Haward and Bergin 2001). Urging his government to provide even greater financial and diplomatic support to the country’s tuna-fishing industry, one Japanese scientist referred to the industry as “the last jewel in a disintegrating crown” (Haward and Bergin 2001). Japan’s tuna production from high-seas operations peaked during the mid-1980s, having risen from 636,439 metric tons in 1975 to 863,510 metric tons in 1984, and then moving to levels ranging from 420,702 to 757,307 metric tons during the early 1990s (Haward and Bergin 2001). Increased labor and operating costs interacted with the rise of still more sources of intense competition in the fishing grounds of the Pacific from the Philippines and Indonesia. All the while, the South Korean and Taiwanese fleets continued to expand, having a telling effect on earnings of the Japanese fleet (Haward and Bergin 2001). The Japanese government continued to pursue its responses to the tuna situation on the high seas with a special ardor, impelled by the cultural significance of high-seas fishing to many citizens of that country. This cultural aspect gave further legitimacy to the economic interests associated with the DWF fishing industry, as new competition and diplomatic moves affected Japanese fishing workers on the vessels, and as they impacted the communities that depended on fishing income from high-seas operations. As noted earlier, the Japanese government successfully concluded access agreements with island nations for licensing tuna fishing in Pacific EEZ areas. In addition, as we will discuss further, Japan has joined numerous multilateral international agreements,

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including RFMOs whose objectives are to establish sustainable regimes for various species, e.g., southern bluefin, or to control fishing effort and the manner in which it is exerted in large ocean regions. Other measures pursued by Japan include a policy of purchasing and scrapping vessels contributing to excess fishing capacity.12 At the same time, however, Japan has notoriously resisted scientific-management implementation policies of the IWC and several of the important RFMOs (see section “Historical Continuities and Variations”). No other issue in Japan’s domestic policy debates or in that country’s ocean diplomacy on the matter of high-seas tuna fishing has had greater attention in recent years than the questions of competition from flag-of-convenience (FOC) vessels, IUU operators, and the general situation of overcapacity. Japan’s government and its trade organizations have taken many initiatives to reduce pressure from these sources. It does not follow, however, that Japan demonstrates an equal enthusiasm for acceptance of further inroads on the traditional “freedom of the seas” by agreeing to the more severe regulatory measures that have been advocated or implemented for RFMO management in the interest of sustainability. That is, Japan has been at the forefront in seeking to reduce fishing capacity and to curb the IUU fishing that depletes tuna stocks and generates serious competition for Japanese vessels on the fishing grounds; yet Japan has established a record of resisting adoption of enforcement techniques, such as boarding of vessels in the enforcement of agreed RFMO catch quotas or enforcement of specific limits on size or character of the catch by inspection of cargo holds. Japan finally did accept the WCPFC policy on boarding. Nonetheless, while resisting new measures of regulation, Japan is prominent, though by no means alone, in the classic international game of blaming others when it comes to explaining why various fish stocks are in decline. It is necessary to distinguish measures designed to relieve pressure on the fishery resources from measures designed to advance protectionist objectives. This issue is a prominent one in the

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debates of Atlantic and Pacific tuna regimes, and also with respect to other regional fishery management regimes, in today’s global oceans diplomacy (Pl´e 2000). Reduction of fishing capacity may also achieve domestic objectives, it must be noted, for it can work to maintain stability in the competitive situation among the fishing fleets and fisheries sectors in the domestic economy.13

Japan and Tuna Fisheries Today Japan is both a major consumer and a major producer of tuna. More than 90% of the world’s sashimi tuna finds its way to the Japanese market, with annual consumption of approximately 450,000 metric tons.14 Japan captures approximately 200,000 metric tons of sashimi-grade tuna annually with its LSTLV fleet; together with Taiwan, their LSTLV fleets accounted for 72% of those vessels worldwide in 1997, when the tonnage of Japan’s fleet was at its height (Anonymous 2002a). Japan’s fleet has historically been, and still is today, especially dominant in the western and central Pacific Ocean (WCPO)—the area of concern to the WCPFC—in addition to the regions under management of ICCAT, CCSBT, the InterAmerican Tropical Tuna Commission (IATTC), and the Indian Ocean Tuna Commission (IOTC).15 RFMOs have allocated a substantial portion of the total catch to Japan’s fleets (longline and otherwise; Table 17.1)—often considerably greater than the catch allocated to other countries. For example, Japan’s longline allocation for bigeye tuna in the eastern Pacific Ocean was set at 34,076 metric tons annually for 2004–2006 compared with China’s 2,639 metric tons, South Korea’s 12,576 metric tons, and Taiwan’s 7,953 metric tons.16 Also, Japan’s fleet has historically predominated in the CCSBT region, and, until recent reductions due to allocation overages, Japan was allocated 6,065 of the total 14,930 metric tons for the southern bluefin tuna fishery, in comparison to Australia’s 5,265, South Korea’s 1,140, and Taiwan’s 1,140 metric tons. (Subsequently, Japan’s quota was punitively reduced after its cheating on quotas was discovered.)17

Despite Japan’s dominant role in the global tuna fisheries, there has been a decline in Japan’s tuna landings. Since the mid-1980s, and increasingly during the 1990s, the Japanese tuna sector has been transformed into a net importing industry because of rising competition from other Asian fishing nations, soaring labor and fuel costs, declining catches per unit of effort, and shortage of labor supply (Ono 2004, Miyake 2007). The fact that these pressures have been creating such problems for the tuna fleet, and the Japanese industry’s more general decline in many regards, may well go far toward explaining why it has been politically possible for Japan to undertake programs for reduction of fishing capacity. Voluntary cutbacks under recent conditions are less painful economically than they would have been earlier, when Japan’s tuna fleet was enjoying more prosperous times. Subsequent sections of this chapter describe IUU fishing and overcapacity measures directed toward Japan and Taiwan. To understand the context in which multilateral and unilateral actions have been taken, it is important to note how the issue of tuna links these two countries. Both are major competitors of the same resources. Taiwan currently has the largest fleet in the world. In 2005–2006, Taiwan had 614 LSTLVs and 34 large purse-seine vessels working in the Atlantic, Indian, and Pacific Oceans, with a total annual tuna catch between 480,000 and 560,000 metric tons.18 Japan is second only to Taiwan in its tuna DWF. Taiwan provides large quantities of tuna to Japan each year. In 1994, under pressure from the Japanese tuna industry, Taiwan agreed to limit its frozen tuna exports to Japan to no more than 99,000 metric tons per year, but trade records show that Taiwan’s tuna exporting industry exceeded those limits. In 2004, for instance, Taiwan exported 127,000 metric tons of frozen tuna to Japan.19 The Japanese and Taiwanese fleets are also interconnected. Retired Japanese fishing vessels and parts have been sold to Taiwan, exacerbating the overcapacity and IUU fishing problems and

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289

Table 17.1. Japan’s total tuna catch allocations assigned by regional fishery management organizations (in metric tons) (2003–2006).

2003

2004

2005

2006

2007

34,076

34,076

34,076

34,076

478.25

478.25

478.25

478.25

380.47

2,949

2,930

2,890

2,830

2,515.82

IATTC (bigeye) ICCAT Western Atlantic Ocean bluefin Eastern Atlantic Ocean and Mediterranean Sea bluefin Bigeye North Atlantic Ocean albacore CCSBT (southern bluefin)

– – 27,000 26,000 25,000 4% of bigeye 4% of bigeye 4% of bigeye 4% of bigeye 4% of bigeye longline catch* longline catch longline catch longline catch longline catch 6,065

6,065

6,065

6,065**

3,000

Note: Tabulated by the authors on the basis of IATTC Resolution C-04-09 (2004), IATTC Resolution C-06-02 (2006), ICCAT Recommendation 02-01 (2002a), ICCAT Recommendation 02-02 (2002b), ICCAT Recommendation 02-07 (2002c), ICCAT Recommendation 02-08 (2002d), ICCAT Recommendation 04-01 (2004), ICCAT Recommendation 03-06 (2003), ICCAT Recommendation 06-04 (2006a), ICCAT Recommendation 06-05 (2006b), ICCAT Recommendation 06-06 (2006c). Commission for the Conservation of Southern Bluefin Tuna—Management of SBT, http://www.ccsbt.org/docs/management.html; McNee, Andrew. AFMA Determines a National Catch Allocation for Southern Bluefin Tuna in the 2003/04 Season to be 5,265,000 kg. Doc. No. F2002/1438, available at http://www.afma.gov.au/fisheries/tuna/sbt/notices/2003/n301003.pdf (accessed November 10, 2007). * Maximum of 4% in weight of Japan’s total bigeye tuna longline catch in the Atlantic Ocean. ** Because Japan exceeded its national allocation by 1,790 metric tons in 2005, it voluntarily reduced its 2006 catch to 4,523 metric tons. (See CCSBT, Report of the Thirteenth Annual Meeting of the Commission, Attachment 12-5 Review of Japanese SBT Fisheries in the 2005 Fishing Season (2006)).

leading to the Joint Action Program described in the subsequent sections.

IUU Fishing and Overcapacity IUU fishing includes evasion of national, regional, and international laws, misreporting of catches, and fishing in the absence of a regulatory regime. The last category, unregulated fishing, is particularly problematic, and is often achieved through the use of flags of convenience (FOCs). According to international law, vessels fishing beyond

national waters are required to fly the flag of the state of its registry, which may or may not be the same state of residence for the vessel owner, captain, or crew. In order to evade national, regional, or international laws that would limit fishing activity in a region, a vessel owner may choose to register the vessel to a country that is not party to the regional conventions or has lax laws and enforcement for fishing. These flags are considered FOCs (DeSombre 2010). Vessels may register in multiple places and carry multiple flags (despite illegality under

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UNCLOS), and may sequentially reregister or reflag as flag states come under international or regional pressure to eliminate FOC vessels.20 An ICCAT list of FOC vessels targeted to be scrapped or reregistered to non-FOC states demonstrates the international nature of IUU fishing: the vessels were built in Japan and Taiwan, operated worldwide, and flagged to FOC countries, including Belize, Equatorial Guinea, Honduras, and St. Vincent and the Grenadines.21 Since the early 1990s, states have come together in the international arena to adopt resolutions to halt the destructive practices of IUU fishing. The United Nations General Assembly members have taken on the issue with multiple resolutions throughout the 1990s and into the first decade of the twenty-first century.22 FAO adopted the IPOAIUU that lists multiple approaches to addressing the problem by coastal, flag and port states, RFMOs, and through market-based approaches.23 It specifically requires all states to develop national plans of action to implement the IPOA-IUU; however, the target date for implementation, 2004, passed with few national plans in existence and increasing IUU fishing challenges.24 FAO members recommitted to addressing IUU fishing in 2005, agreeing to supplement existing monitoring, control, and surveillance (MCS) schemes25 ; increasing information exchange through FAO, RFMOs, and other arrangements; and seeking to eliminate FOC vessels by requiring a “genuine link” between flag states and registered fishing vessels, as called for in UNCLOS.26 A related challenge is that of overcapacity, commonly described as too many boats chasing too few fish.27 The fishing capacity of a vessel is a function of its efficiency in catching fish, which, in turn, is related to its size, speed, the equipment on the vessel, and the skill of its crew.28 As with IUU fishing, states have addressed overcapacity through international bodies, including the United Nations General Assembly, FAO with its IPOACapacity, and the United Nations Conference on Environment and Development in Agenda 21.29 It has been suggested that the LSTLV fleet reduce fishing capacity by 20–30% (Anonymous 1998).

Multilateral Efforts to Reduce Fishing Capacity and Halt IUU Fishing Since the early 1990s, ICCAT has led multilateral tuna fishery efforts to eliminate IUU fishing and reduce fishing capacity through a variety of resolutions and recommendations (Table 17.2). Among these, ICCAT called upon flag states to deter reflagging and take other measures to eliminate noncompliance. It established management measures, such as the tuna statistical document program, as a way to monitor compliance and catch rates. In addition to identification of noncomplying vessels and encouraging flag state action, ICCAT has recommended that port states implement trade restrictive measures and importation bans on Atlantic catches from several open-access countries whose FOC vessels are engaged in IUU fishing; these countries include Belize, Bolivia, Cambodia, Equatorial Guinea, Georgia, Honduras, St. Vincent and the Grenadines, and Sierra Leone. In 2006, recognizing that many stocks under ICCAT’s purview are fully fished or overfished, ICCAT established a Capacity Working Group to shed further light on the challenge. Because of fleet size and pressure, ICCAT has taken specific management measures to limit the activity of two of the largest DWFs in the world—Japan and Taiwan. Concerned about flaghopping and expanding IUU fleets, ICCAT called upon Japan and Taiwan to take action to address IUU fishing, and urged them to scrap IUU vessels.30 In 2005, ICCAT explicitly limited Taiwan-flagged vessels to 15 for the bigeye fishery. It further called for no at-sea transshipment of fish, landing only in one of two designated ports, with a mandatory landing once every 3 months, daily catch reports to Taiwan, quarterly catch reports to ICCAT, and 100% observer coverage.31 In contrast to the relatively long-term management of Atlantic tunas with accompanying management actions to address IUU fishing and overcapacity, until recently fishing in the WCPO operated in the absence of an RFMO. The WCPO includes the rich fishing waters surrounding the Pacific Island states—a region increasingly

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291

Table 17.2. ICCAT resolutions related to IUU fishing and overcapacity.

1992

1994

Recommendation by ICCAT Concerning the ICCAT Bluefin Tuna Statistical Document Program, Doc. No. 92-1 Resolution by ICCAT Regarding the Reflagging of Vessels to Avoid Compliance with Internationally Agreed Conservation & Management Measures for Living Marine Resources, Doc. No. 92-3 Resolution by ICCAT concerning an Action Plan to Ensure Effectiveness of the Conservation Program for Atlantic Bluefin Tuna, Doc. No. 94-3 Resolution by ICCAT on Interpretation and Application of the ICCAT Bluefin Tuna Statistical Document Program, Doc. No. 94-4 Resolution by ICCAT Regarding the Agreement to Promote Compliance with International Conservation and Management Measures by Fishing Vessels on the High Seas, Doc. No. 94-8 Resolution by ICCAT on Compliance with the ICCAT Conservation and Management Measures (including Addendum), Doc. No. 94-9

1996

Recommendation by ICCAT Regarding Belize and Honduras Pursuant to the 1994 Bluefin Tuna Action Plan Resolution, Doc. No. 96-11.

1998

Resolution by ICCAT Concerning the Unreported and Unregulated Catches of Tuna by Large-Scale Longline Vessels in the Convention Area, Doc. Id. 98-18 Recommendation by ICCAT on the Bigeye Tuna Conservation Measures for Fishing Vessels Larger than 24 m Length Overall (LOA)

1999

2000

Recommendation by ICCAT Concerning the Ban on Landings & Transshipments of Vessels from Non-Contracting Parties Identified as Having Committed Serious Infringement, Doc. No. 98-11 Resolution by ICCAT Calling for Further Actions Against Illegal, Unregulated, and Unreported Fishing Activities by Large-Scale Longline Vessels in the Convention Area and Other Areas, Doc. No. 99-11 Supplemental Resolution by ICCAT Concerning the Recommendation on the Bigeye Tuna Conservation Measures Supplemental Resolution by ICCAT to Enhance the Effectiveness of the ICCAT Measures to Eliminate Illegal, Unregulated and Unreported Fishing Activities by Large-Scale Tuna Longline Vessels in the Convention Area and Other Areas, Doc. No. 00-19 Recommendation by ICCAT Regarding Belize, Cambodia, Honduras, and St. Vincent & the Grenadines Pursuant to the 1998 Resolution Concerning the Unreported and Unregulated Catches of Tuna by Large-Scale Longline Vessels in the Convention Area, Doc No. 00–15 (recommendations to lift restrictions on Cambodia in 2004 by Doc. No. 04-15)

2002

Recommendation by ICCAT to Establish a List of Vessels Presumed to Have Carried Out Illegal, Unreported and Unregulated Fishing Activities in the ICCAT Convention Area, Doc. No. 02-23 (Continued)

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Table 17.2.

Continued

Resolution by ICCAT Concerning the Measures to Prevent the Laundering of Catches by Illegal, Unreported and Unregulated (IUU) Large-Scale Tuna Longline Fishing Vessels, Doc. No. 02-25 Resolution by ICCAT Regarding Process and Criteria for ICCAT IUU Trade Restrictive Measures, Doc. No. 02-27 Recommendation by ICCAT Regarding Bolivia Pursuant to the 1998 Resolution Concerning the Unreported and Unregulated Catches of Tuna by Large-Scale Longline Vessels in the Convention Area, Doc. No. 02-17 Recommendation by ICCAT for Trade Restrictive Measures on Sierra Leone, Doc. No. 02-19 (recommendations to lift restrictions in 2004 by Doc. No. 04-14) 2003

2005

2006

Recommendation by ICCAT Concerning the Continuance of Trade Measures Against Equatorial Guinea, Doc. No. 03-17 (recommendations to lift restrictions in 2004, Doc. No. 04-13) Recommendation by ICCAT for Bigeye Tuna Trade Restrictive Measures on Georgia, Doc. No. 03-18 Recommendation by ICCAT on Compliance with Statistical Reporting Obligations, Doc. No. 05-09 Resolution by ICCAT Concerning the Change in the Registry and Flagging of Vessels, Doc. No. 05-07 Recommendation by ICCAT Regarding the Control of Chinese Taipei’s Atlantic Bigeye Tuna Fishery, Doc. No. 05-02 Resolution by ICCAT to Establish a Capacity Working Group, Doc. 06-19

targeted by DWF nations. Two regional fishery bodies operate in this region. The first, the Forum Fisheries Agency (FFA), was established in 1979 to assist its members in negotiating fishery access agreements with DWF nations, and more recently it has taken a number of approaches to achieve effective MCS of its vast EEZs.32 Second, in a process that took several years and a series of multilateral high-level consultations (MHLCs) and preparatory conferences, FFA and DWF nations operating in the WCPO adopted the Convention on the Conservation and Management of Highly Migratory Fish Stocks in the WCPO, creating the WCPFC.33 Concerns about IUU fishing practices, including FOC fishing and increasing fishing capacity, have been issues at the forefront of the meetings leading up to the adoption

of the WCPFC convention. For example, the parties at the 2002 preparatory conference adopted a resolution urging restraint in fishing capacity and fishing effort expansion, calling for application of the precautionary approach, calling for compliance with the IPOA-IUU, and promoting regional cooperation.34 In 2003, the parties at the preparatory conference “strongly urge[d]” participants to implement fishing capacity and fishing effort resolutions, prevent purse-seine fleet expansion in the absence of legitimate licenses, and reduce excess fishing capacity.35 Other RFMOs have also confronted the issues of overcapacity and IUU fishing concerns. For example, the CCSBT adopted measures to discourage IUU fishing in 1999.36 Also, the IATTC and the IOTC have addressed IUU fishing in their

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annual sessions.37 (The IATTC resolution used fish-carrying capacity as a proxy for fishing capacity, but it is recognized that this is imperfect. It is recognized, e.g., that the fishing capacity of a vessel with a fish-carrying capacity of 2,000 metric tons is less than that of two vessels with carrying capacities of 1,000 metric tons each.) RFMO resolutions and recommendations to reduce fishing capacity and halt IUU fishing practices respond to international calls for action, such as the FAO IPOAs and United Nations General Assembly resolutions. Also, individual nations have led the charge at these multilateral fora and at other meetings to take action. Perhaps surprisingly, when considering its other ocean resource management policies, Japan has been an outspoken advocate for fishing capacity reduction and elimination of FOC vessels—a central challenge for IUU fishing.

Japan’s Mixed Role in Overcapacity and IUU Fishing Japan has been a target of ICCAT’s resolutions and recommendations regarding fishing capacity, and Japan’s response to increasing international and multilateral pressure to reduce fishing capacity and eliminate FOC vessels has been twofold: (1) domestic fleet reduction, and (2) pressuring other nations, primarily Taiwan, to reduce fishing capacity and eliminate FOC vessels.38 Japan has undertaken this second approach publicly through persistent comments and the distribution of issue papers at international and multilateral fora, including FAO meetings, RFMO meetings, and other fisheries events (Scheiber et al. 2007). This section describes comments and materials from a few of these meetings to demonstrate the role that Japan has played in elevating the issue of overcapacity and FOC fishing in the international arena. In subsequent sections, this chapter reflects on this policy in light of Japan’s ocean management actions, such as those relating to southern bluefin tuna and “scientific” whaling.

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Domestic and FOC Fleet Reduction Japan and Taiwan responded to calls for LSTLV capacity reduction and FOC elimination with a Joint Action Program in 1999 (updated in 2003).39 In accordance with the Program, Taiwan agreed to build new vessels only if old vessels of equivalent tonnage were scrapped; and to implement vesselbuilding restrictions. Taiwan set a tentative goal of retiring 60 large-scale longline vessels by the end of 2000 as the initial stage of its fleet reduction program. Japan agreed to reduce its licensed LSTLVs by approximately 20% (132 vessels),40 and agreed to take necessary measures to freeze approved LSTLV permits to prevent an increase in the number of its licensed vessels. Japan’s 1999 vessel reduction program was different from prior Japanese fishing capacity reduction programs—it was actually ordered that vessels be scrapped, thereby effectively reducing the fishing capacity of the world fishing fleet. A previous vessel reduction scheme had removed Japanese fishing licenses from 300 vessels, but with no scrapping.41 These vessels were sold and reflagged to other states, in particular to Taiwan.42 The recent vessel scrapping efforts have met with some serious criticism. These expressed criticisms highlight the problem that laws on the books, soft-law promises, and policy statements may not accurately reflect the realities of implementation. For example, it was reported that some of those Japanese secondhand FOC LSTLVs vessels that joined the 1999 scrapping program had not actually been scrapped, but were instead only slightly dismantled at the Japanese shipyards. They were later shipped to countries such as China, the Philippines, and Singapore to be reassembled, and exported again, becoming new FOC LSTLV vessels. Also, concerns have been expressed that the main engines and important parts of the scrapped vessels were sold overseas. One report indicates that the scrapped vessels were likely to be sold to competing organizations (mainly the Taiwanese longline industry) that were gaining unfair advantage by evading national and RFMO regulations.43 Many of the small Japanese

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trading companies disregarded the Japanese tuna trade regulations, continuing to import tuna products from the Taiwanese-owned IUU/FOC vessels, thus undermining the effectiveness of the Japan–Taiwan Joint Action Program.44 Under international pressure to reduce fishing capacity, Taiwanese vessel owners—some of whom were previously part of Japan’s DWF— initially fled Taiwan’s national jurisdiction45 by reregistering their vessels to open-access countries.46 Approximately 14% of large-scale fishing vessels built in 2001–2003 were flying FOCs, and by the end of 2003, 50 of the 51 LSTLVs built in Taiwan were flagged in FOC countries (including Belize, Bolivia, Cambodia, Georgia, Panama, and Vanuatu).47 The Joint Action Program called for the reduction of FOC vessels through reflagging and relicensing, and Taiwan agreed to start preparation for reflagging Taiwanese-owned FOC vessels back to Taiwan.48 Pressure at International Fora Japan has pushed for the development of lists of IUU fishing vessels operating in RFMO regions. For example, in 1999, it worked with the United States to develop a list of 350 FOC vessels operating in the ICCAT region.49 Japan has responded to ICCAT’s trade restriction and import ban resolutions and recommendations with port call bans.50 Ironically, the charges against Taiwan of illegal catches and exceeding of quotas that led to punitive action by ICCAT in 2005–2006 presaged the same kind of scenario shortly afterward in the Southwest Pacific, when Japan was discovered to be taking southern bluefin far in excess of its quota and was subjected to a punitive reduction in its quota for that species.51 The early ICCAT actions set the stage for what would be occurring in the WCPO, as Japan’s and Taiwan’s tuna fishing interests faced off against one another in the continuing global debate about reduction in fishing capacity and the IUU threat. Japan pursued the dual causes of reduction in fishing capacity and elimination of IUU fishing at

the conferences preparatory to the writing of the WCPFC convention. In 2002, Japan submitted a preparatory conference report accusing Taiwan’s vessels of “fish laundering” and reflagging LSTLVs to developing countries as a way to evade the 1999 Japan–Taiwan Joint Action Program commitments. Japan claimed that “[t]he import records as well as the alleged relationship between Chinese Taipei’s [Taiwan’s] LSTLVs and IUU LSTLVs clearly indicated that tuna caught by IUU LSTLVs are being imported to Japan in the names of duly licensed Chinese Taipei’s vessels (fish laundering).”52 The Japanese report concluded that the effectiveness of the existing WCPO measures based on negative listing has been undermined significantly because of the problems of flag-hopping, forgeries of certificates of registry, and fish laundering.53 Japan continued to press its campaign against Taiwan, contending at the fifth preparatory conference (2003) that Taiwan was responsible for the building of new “super” tuna purseseine vessels that would significantly increase fishing capacity. Among the newly constructed Taiwanese-owned vessels, five were over 2,000 gross registered tons (GRT) and an additional five were of lesser tonnage.54 The report pointed out that the purse-seine vessels of greater than 2,000 GRT deployed in the WCPO had increased from 0 in 1996 to 12 in 2003.55 In 2004, Japan circulated issue papers at several meetings, including the WCPFC preparatory conference and the FAO Technical Conference on IUU Fishing and Capacity, that presented data on overcapacity and IUU fishing by Taiwanese-controlled vessels.56 For example, the WCPFC paper contended that the data on hand were sufficient to identify 28 large purse-seiners as Taiwanese-controlled FOC vessels with ownership in seven companies altogether. Fourteen of the large purse seiners were known to be operating in the convention area of the WCPFC. Seven were 2,200 GRT or larger, each of them catching more than 10,000 metric tons of tunas annually.57 Based on FFA vessel lists, as Taiwan’s FOC fleet expanded from 11 to 28 vessels from 2000 to 2003, the number of purse-seine

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vessels from other major fishing member nations remained relatively stable with the exception of the Philippines: non-FOC Taiwan-flagged vessels ranged from 34 to 38, Japan-flagged vessels ranged from 34 to 35, South Korea-flagged vessels from 26 to 27, the US vessels decreased from 32 to 26, and the Philippine-flagged vessels increased from 9 to 23. Japan complained that “it is surprisingly evident that the Taiwanese fishing industry increased its purse-seine fishing capacity dramatically by use of FOC vessels, whereas all other major fishing fleets were restrained to the stable level of fishing capacity, or even reduced.”58 The Japanese paper concluded flatly that “it seems obvious that all of the seven Taiwanese companies intentionally circumvented the government licensing control by use of FOC so as to have their excessive fishing capacity for tunas in the Convention Area.”59 According to the Japanese estimates, the Taiwanese fishing industry had increased both FOCand Taiwanese-licensed LSTLVs operating in the Convention Area, whereas the number of Japanese and Korean longline vessels remained stable. The Taiwan-licensed fleet grew from 87 to 210 vessels and the Taiwan FOC fleet grew from 10 to 40 vessels in the period from 2000 to 2003. In contrast Japan’s fleet dropped from 211 in 2000 to 195 in 2003, and South Korea’s fleet increased from 134 in 2000 to 168 in 2003. China also increased the size of its tuna longline fleet in the WCPO. However, most of its vessels are relatively small, with low productivity.60 Japan’s FOC and fishing capacity reduction policies extended to the CCSBT meetings, at which Japan repeatedly urged the creation of a list of IUU fishing vessels catching southern bluefin tuna and a positive list of operators.61 The persistence of the Japanese in focusing attention on the IUU problem as the source of danger to survival of the southern bluefin stock is ironic, however, as we now know that, while voicing continual complaints about IUU operations, the Japanese fleet itself was fishing for southern bluefin at levels capable of catching three times its legal quota and was

295

concealing information as to the actual amount of its landings. Japan continued the FOC and fishing capacity discussion in the international arena. For example, a special IUU Workshop that was organized by the Organization for Economic Cooperation and Development (OECD 2004) became the occasion for a provocative head-to-head exchange between Taiwanese and Japanese delegates. Officers of the Japanese Ministry of Agriculture, Forestry and Fisheries presented a paper entitled “effort of elimination of IUU large-scale tuna long-line vessels,” stating that the “[g]lobal problem of IUU tuna long-line fishing was caused solely by the Taiwanese residents” (Hanafusa and Yagi 2004). The authors did concede that, thanks to the implementation of the 1999 and 2003 Japan–Taiwan Joint Action Programs and the efforts undertaken by the RFMOs, such as the establishment of the positive vessel listing scheme, the number of IUU LSTLVs had been reduced substantially. However, they argued that “Taiwanese fishermen [had] changed the type of fishery from large-scale long-line (over 24 m) to small-scale long-line (less than 23.9) as well as large-scale purse-seine fishery and continue catching tunas in the area where no management measures were introduced, i.e., western and central Pacific” (Hanafusa and Yagi 2004). The paper suggested that the following actions should be taken urgently to solve IUU and overcapacity problems: r Establishment by FAO of a global record of tuna fishing vessels, drawing data from the existing records of tuna vessels of relevant RFMOs. r Halt to the construction of new tuna vessels by developed states, parties, and fishing entities, except for vessels that would replace the existing licensed vessels with equivalent fishing capacity, whichever flag is used. r An initiative by FAO requesting that RFMOs establish, as a matter of priority, a system to smoothly transfer fishing capacity from developed states, parties, and fishing entities to developing states. r Agreement that a nation whose residents had caused rapid expansion of fishing capacity in

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the recent years should cut at least that expanded portion of its fishing capacity. r Establishment by RFMOs of market-oriented measures for purse-seine-caught tuna. Countries importing purse-seine-caught tuna must play a vital role. Japan, the report averred, had engaged in various bilateral consultations with several FOC states, including China, Indonesia, the Philippines, the Seychelles, and Vanuatu. The discussions with the Philippines had resulted in the reduction of longline FOC vessels owned by Philippine interests from 40 or more in 1998 to 14 in 2004. The discussions with China seem to have been less successful, with the authors stating only that “as a result of Japan–China consultations, China declared that they would terminate relations between their [FOC/IUU long-line vessels] and IUU fishermen.” Indonesia de-listed over 40 vessels as a result of consultations (Hanafusa and Yagi 2004). Meanwhile, the Japanese delegation distributed to delegates two reports of the Organization for the Promotion of Responsible Tuna Fisheries (OPRT), an organization in Japan avowedly committed to scientific studies and management but whose publications—including those handed out at the conference—in fact simply present the viewpoint of the longlining industry, denying that its technology is a threat to tuna stocks. It is critical of its segment’s competition from purse seiners, and its argument is that the seiners should be subject to more stringent fleet reduction and regulation of their operations than longliners.62 Several academics and environmental organization representatives at the conference commented from the floor that the Japanese position in favor of fleet reduction was not matched by any expression of strong interest in more vigorous management and enforcement measures that might reduce catch limits and establish other controls over Japan’s own longline fleet.63 The Taiwanese representative at the 2004 OECD workshop responded vigorously in defense of his country’s status and policies. Taiwan had carefully regulated its fishing capacity, he declared, but restraints on expansion of fish-

ing capacity had broken down during the early 1990s when the price of tuna in Japan increased considerably. To meet demand, Japan built new vessels and exported secondhand vessels to Taiwan. As demand continued to grow, so too did Taiwan’s fleet. In 1995, the operators in Taiwan started building new tuna longline vessels in local shipyards. The Taiwanese representative also highlighted Taiwan’s part in assisting with reduction in fishing capacity, consulting with Japan, establishing a method to reregister FOC vessels, providing financial support to Japan’s scrapping program, and taking domestic action.64 Cooperation with Taiwan In addition (and in response) to the Joint Action Programs, the Japanese and Taiwanese longline tuna fishing industries launched their own campaigns against IUU fishing. In December 2000, the tuna industries of Japan and Taiwan contributed funds to establish the OPRT, described above, with the main goal of combating IUU fishing.65 This organization was established under the guidance of the Japanese government, whose goals were to scrap secondhand FOC vessels originally constructed in Japan, to develop a global list of FOC tuna longline vessels, to enhance the collection of information on IUU fishing activities, and to combat IUU fishing activities internationally. The OPRT now includes longline fishing organizations from China, Ecuador, Indonesia, Japan, the Philippines, South Korea, and Taiwan.66 OPRT has stated that before the organization was established, there were 250 reported FOC tuna longline vessels that were shipping their catches to Japanese markets.67 As of March 2005, OPRT membership included 11 fishing organizations and 1,425 registered vessels, accounting for over 90% of the world’s LSTLV fleet (Table 17.3).68 The OPRT maintains its own publicly available positive list of vessels.69 For each vessel, it lists its name, ownership, and the regions in which the vessel operates. Such a composite list demonstrates that many vessels do not confine their fishing practices to one region, or even one ocean,

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Table 17.3. Organization for the Promotion of Responsible Tuna Fisheries (OPRT) membership.

Members

Vessels

Japan Federation of Japan Tuna Fisheries Cooperative Associations Japan Tuna Fisheries Association National Ocean Tuna Fishery Association National Offshore Tuna Fisheries Association Taiwan Deep Sea Boatowners and Exporters Association Korea Deep Sea Fisheries Association (Tuna Longline Fisheries Committee) OPRT Philippines Inc. Indonesia Tuna Association (ASTUIN) China Fisheries Association (Distant Water Fisheries Branch) FUNDATUN (Ecuador) Legitimized vessels (Vanuatu and Seychelles registered) Total

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600 172 18 14 113 5 1,425

Source: http://www2.convention.co.jp/maguro/e maguro/index.html.

supporting the need for cooperation among RFMOs. OPRT claims that because of positive vessel lists “tuna harvested by IUU/FOC vessels is unable to be traded in international markets.”70 While IUU fishing practices continue in the tuna fisheries, positive lists are a step in the direction of effective compliance and enforcement of tuna DWF.

Overcapacity and the IUU Issue in the Matrix of Japan’s Ocean Resource Policies Progress and Questions: The Western and Central Pacific Fisheries Convention In September 2000, both Japan and South Korea voted against the adoption of the WCPFC. Japan considered the Convention to be biased because of alleged discrimination against the interests of some DWF nations; and charged that the agreement focused too much on protecting the fisheries

interests of the coastal states, namely, the Pacific Island countries. Japan viewed the inclusion of the precautionary principle in the Convention71 as problematic, for it was seen as a doctrinal tool that could be wielded by the Commission to establish tighter control and smaller quotas of tuna in the WCPFC region. The Japanese position focused on the controversial question of how the treaty would affect traditional immunities of vessels at sea, as they had been protected by the “freedom of the seas” rules regarding navigation on the high seas. Japan suggested that before it would accept the terms of the WCPFC, there must be a revision of the provisions relating to boarding and inspection72 and to the regional observer program.73 Japan also objected to the convention’s prescribed procedures for the settlement of disputes,74 and to provisions regarding nonparties to the Convention.75 Also, it raised questions as to the overlapping management competence of CCSBT (which regulates southern bluefin tuna) and the potential regulatory jurisdiction of the new WCPFC.76 Two years later, however, a dramatic reversal came from Japan, when its delegates introduced

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a resolution at the third WCPFC preparatory conference, reversing its position on the treaty and apparently announcing its acceptance. The Japanese now also explicitly acknowledged a need to apply the precautionary approach to fisheries management, and reiterated its views as to the importance of limiting the expansion of fishing effort in the WCPO prior to entry into force of the WCPFC.77

Trade Restrictions and Other Measures Taken by Japan to Prevent IUU Fishing One major issue that has yet to be effectively addressed by the global community is control of the imports of catches of IUU vessels in the markets of receiving nations. Japan is the world’s largest importer of marine fish products. Moreover, it represents the leading import market for the highest-value fish, including tuna (especially bluefin) of sashimi quality.78 In 1999, it was estimated that approximately 40,000 metric tons of tuna sold in Japanese markets was caught by IUU fishing vessels.79 The World Wildlife Fund reported research in 2004 indicating that IUU fishing for bluefin tuna in the Atlantic Ocean and Mediterranean Sea is intimately linked to the incentive represented by the profitable Japanese market demand.80 Japan has adhered to RFMO decisions to ban imports of fish products from countries identified as undermining regional management schemes. In line with ICCAT policy on sanctions, in June 1996 Japan enacted the “Special Law on Measures to Reinforce Conservation and Management of Tuna Resources.”81 This law, which resulted in the ban on importation of Atlantic bluefin tuna from Belize and Honduras (two FOC states), was enacted in direct response to ICCAT recommendations.82 Also this law required that all frozen tuna (excluding albacore) transporters or importers to report the name of the fishing vessel, its flag, where the fish were caught, and information about the owner of the vessel or the catch.83 For example, in July 2003, Japan stated that it would ban port calls by fishing vessels flagged to Bolivia and Sierra Leone, based on ICCAT decisions.84 After cre-

ation of an ICCAT positive list of bluefin tuna farming facilities (“farming facilities authorized to operate for farming of bluefin tuna caught in the Convention area”), Japan implemented trade restrictive measures to prevent importation of unauthorized farmed bluefin tuna.85 Japan also requires all fish products to be labeled with information on place of origin.86 Japan is considering the adoption of an observer program, in which observers would accompany Japanese transshipping vessels that handle super-frozen tuna to help deal with the problem of “fish laundering” and other IUU fishing activities. In addition, Japan is considering setting up a DNA inspection mechanism, which, again, would help deal with the problem of “fish laundering.”87 Nonetheless, despite such trade barriers, illegally caught fish is still common in Japanese markets. For example, Russian fishing vessels are known to falsify records and take catches directly to Japan and South Korea, and the official Russian figures for the value of fish products delivered to Japan is a billion dollars less than the amount that Japanese traders report.88 Persistent subsidies give fleets breaks on costs such as those for fuel, vessel construction, and insurance. FAO states that world subsidies amount to $15 billion per year (whereas annual trade in fish products is $55 billion). Japan provides $3 billion, or a fifth of the world total. According to one study, the most heavily subsidized fishing industries are in the European Union, Japan, and China.89

Japan’s Resistance to Certain Conservation Measures Japan has been playing a major role in bringing up the issue of IUU fishing, particularly the problem of IUU/FOC fishing, in the discussions in the WCPFC negotiation process. However, 2 years before the adoption of the IPOA-IUU, Japan opposed the suggestion to adopt the precautionary approach at the MHLCs on South Pacific Tuna Fisheries. At the fifth MHLC, Japan “described the precautionary approach as a ‘dangerous concept’

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because it would preclude fishing except in ideal conditions.”90 (Later, however, Japan assumed a different posture, formally acknowledging that the principle is important.) In contrast to its policy of implementing fleet reduction, Japan has proven reluctant to burden its own fleet with regulations that would advance conservation of the marine environment. For example, a 2003 draft IATTC plan for managing fishing capacity in the eastern Pacific Ocean contained language that Japan wanted modified.91 First, the modifications that Japan recommended would have watered down the language by deleting all references to actions that “shall” be taken, substituting the word “should.”92 Second, the Japanese proposed the removal of language that referred to conservation of anything other than the fish stocks.93 In discussing conservation, the original language stated that “[t]he management of fishing capacity should facilitate conservation and sustainable use of tuna stocks in the EPO [Eastern Pacific Ocean] and the protection of the marine environment.”94 Japan proposed that the phrase “and the protection of the marine environment” be removed.95 Also, in a section discussing review and adjustments to the plan, the original language states that “[t]he overall capacity target should be reviewed regularly to ensure that it takes into account ecosystem considerations and that it remains in balance with the available fishery resources and management objectives.”96 Japan’s proposed modification called for deleting the phrase “that it takes into account ecosystem considerations and.”97 In the WCPFC preparatory conferences, too, Japan’s treatment of IUU issues was often similarly focused upon modifying assertive language, and the Japanese delegation apparently sought to divert attention from issues (other than overcapacity) that many other parties regarded as central to effectively addressing the IUU threat. Japan stated in July 2002 that—consistent with its stand on maintaining traditional immunities for vessels on the high seas—it did not agree with a proposed Convention provision regarding the boarding and inspection on the high seas by a third party, be-

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cause “rights and obligations of flag states on the high seas should be ensured as a matter of principle.”98 A reversal, or at least modification, of Japan’s basic position followed, as in July 2005 Japan finally acceded to the convention and became a member of the WCPFC, leaving its fishing vessels potentially liable to limited boarding and inspection at sea. As mentioned above, under guidance of the Japanese government, the longline tuna operators of both Japan and Taiwan joined forces to sponsor the OPRT trade organization. Conservation is OPRT’s stated goal, but the main thrust of arguments in its publications is negative and aimed at the purse-seining industry, which is in competition with longlining for some species of tunas. OPRT condemns the purse-seine industry for relying on what it claims is a destructive fishing technology.99 In contrast, the OPRT publications praise longlining as “a resource-friendly fishing technique”100 —a claim with that few ecologists or conservationists would agree.101 At a recent Japanese longlining conference in 2003 Japanese fishing industry, consumers, academics, and administrators issued the Kesennuma Declaration.102 This declaration denied claims that longlining is threatening sea turtles and sharks, despite decisions by CITES to list two shark species as endangered; the CITES action, this declaration asserted, was an “inappropriate application of the Convention” under which the action was taken, further declaring that “excessive restrictions . . . disregard the fact that many of the shark resources are abundant and can support sustainable use.”103 Also, the declaration states that appeals for moratoria on tuna longlining due to sea turtle bycatch “negat[e] the principles of sustainable use,” and reflected “a tendency to promote unnecessary restrictions in the absence of scientific evidence . . ..”104 Such assertions by OPRT and other Japanese fishing interests are not necessarily inaccurate in every instance. What is noteworthy for purposes here, however, in an assessment of how the problem of achieving sustainable tuna fishing is being debated, is that OPRT consistently

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points out the environmental problems associated with fishing activities other than longlining, while denying that longlining does any damage to the marine environment and resources (Hanafusa and Yagi 2004).105

Regulation—and a Resource Crisis—in the Southern Bluefin Tuna Regime Japan has engaged in longline fishing for southern bluefin tuna for more than 50 years (Caton 1991). Its catch peaked in the early 1960s at 75,000 metric tons—more than an order of magnitude more than Japan’s current allocation of just over 3,000 metric tons.106 The overall catch declined considerably during the 1980s, and Australia, Japan, and New Zealand engaged in trilateral management discussions during the mid-1980s to adopt voluntary catch limits.107 This relationship was formalized in 1994 with the creation of the CCSBT.108 Japan is a member of the CCSBT, which administers the southern bluefin tuna management regime; and in this forum too, there has been a long history of tension with regard to the Japanese position on sustainable management issues. During the mid-1990s, a conflict arose between Japan on one side and Australia and New Zealand on the other over scientific stock estimates—a dispute that found its way to the International Tribunal for the Law of the Sea (ITLOS). Japan had argued repeatedly at CCSBT meetings (as it did during litigation in ITLOS) that the stock was larger than the scientific board had estimated, and therefore that the total allowable catch (TAC) should be increased. From 1998 to 2000, Japan engaged in an “experimental fishing program,” and, in retaliation, Australia and New Zealand closed their ports to Japanese vessels and sought a solution via ITLOS.109 Australia and New Zealand have long charged that Japan was engaged in illegal and unregulated fishing by engaging in commercial fishing operations under the guise of science.110 The “experimental” catch was not trivial. In its first year of operation, the “experimental” program resulted in the additional catch of 1,464 metric tons of

southern bluefin tuna above its designated allocation. By restricting its experimental harvest to the areas where fish were known to be present, neglecting large areas where fish were apparently depleted—or at least not in evidence in commercial quantities—Japan was able to claim that southern bluefin were in healthy enough condition to warrant greater annual quotas. Japan contended that to obtain broader coverage of the migratory area, and thus lend its results scientific validity, was too expensive to be practical.111 Japan ended this program in 2000, but the issue of TAC continued to plague the CCSBT. From 1998 to 2003, the members disagreed on the TAC and allocation of that catch, leading to voluntary management of the resource.112 More recently, Japan was asked by an international committee on tuna fisheries to reduce its catch of southern bluefin tuna. According to a report submitted to the fourth meeting of the Interim Scientific Committee for Tuna and Tuna-like Species in the North Pacific Ocean, held in July 2005, Japan was increasing its catches of younger southern bluefin tuna.113 In January 2006, accepting the suggestion provided by the Commission’s Scientific Committee about the need for reductions in 2006–2007 to address the assessed stock status, the CCSBT proposed a significant cut in the TAC of 14,080 metric tons of southern bluefin tuna.114 In the several years prior to 2006, Japan was allocated 5,839–6,065 metric tons out of the TAC of 14,080 tons.115 Japan also conducted a socalled experimental fishing program that landed another 1,500–2,000 tons per season, from 1997 to 2005–2006. After the revelations of its underreported catching, in 2006, the Japanese allocation was adjusted downward to 3,000 metric tons (the TAC being set at 11,810 metric tons and Japan’s “scientific” program was suspended).116 The states submitted the dispute to ITLOS, which, in turn, sent the issue to arbitration, but its significance in the management of southern bluefin was overshadowed by a dramatic announcement in August 2006 that Japan had been fishing at levels far in excess of the amount required to harvest its quota. Richard McLoughlin, managing director of the Australian Fisheries

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Management Authority, who made this finding public, stated: “Essentially the Japanese have stolen $2 billion worth of fish from the international community [by dint of their own underreported fishing and their import of bluefin from IUU vessels], and have been sitting in meetings for fifteen years saying they are as pure as the driven snow.”117 By October, the CCSBT made it clear how outrageous it considered the excess catch to have been, announcing that Japan had now acknowledged that it had taken cumulatively over 100,000 metric tons in excess of its quotas, with the effect of drastically reducing the standing stock—according to one report, a reduction of fully 80%.118 Having acknowledged its deception and abuse of the management regime, Japan accepted radically reduced quotas, but not long afterward, the Commission announced that the entire scientific program had to be reevaluated because the damage to stock had been so devastating, and at the same time it had to reduce quotas for all parties to the Convention. The southern bluefin quota reductions for Japan were viewed as stopgap measures, with the stock not expected to recover for 7 or more years, if ever.119 The southern bluefin tuna scandal served as a dismal bookend, as it were, to Taiwan’s illegal overfishing of Atlantic bluefin. Taiwan was recently forced to accept punitive quota reductions, similar to those that Japan was forced to accept when its illegal fishing on southern bluefin area was found out. There is no comfort to be found in the ironic parallel pattern of behavior by these two fishing powers, which had faced off and exchanged heated charges of misbehavior on the fishing grounds for so many years.

The Whaling Controversies and the IWC Debates of policy in the IWC, which was established in 1946 by the International Convention for the Regulation of Whaling, have similarly produced severe tensions over Japanese policies regarding conservation and sustainability. The IWC agreed to institute a ban on commercial whaling

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in 1982, with a moratorium that went into effect in 1986—a measure justified by the fact that numerous species were near extinction after centuries of whaling, but especially as the result of modern large-scale whaling operations since the 1940s. Subsequently, in 1993, it adopted the Revised Management Procedure, “which permitted whaling only if impartial systematic surveys had determined that an individual stock was not in danger” (Aron et al. 1999). Although some stocks of whales are not endangered, the IWC has not lifted its ban on commercial whaling for any stock. Japan began its program to hunt whales in what it called “scientific research whaling” in the Antarctic Ocean in late 1987 and in the North Pacific in 1994. Japanese whaling vessels currently catch about 400 minke whales per year as part of the program in Antarctica. Much of the whale meat ends up on store shelves and in gourmet restaurants, which the Japanese government defends as a measure to avoid waste of food products beyond what is required for the scientific project. Environmental groups and many other IWC nations contend that Japanese “scientific research whaling” is actually thinly disguised commercial whaling (Scheiber 2000). Japan, however, maintains that “whaling itself has been sort of a symbol for Japanese identity”120 and that eating whale, regarded as a gourmet delicacy, is an important part of its cultural heritage.121 During the 18 years of whaling under the “Japan Whale Research Program under Special Permit in the Antarctic” (JARPA) program, more than 6,800 minke whales have been killed, compared with a total of 840 whales killed globally by Japan for scientific research in the 31-period prior to the IWC commercial whaling moratorium. At the June 2005 annual meeting of the IWC, Japan attempted to persuade member countries of the IWC to endorse its plan for increased whaling, which, if approved, would have doubled its catch of whales in the Southern Ocean Sanctuary around Antarctica, and also added endangered humpback and fin whales to its target list. However, the members of the IWC rejected the Japanese proposal. In a resolution adopted at the meeting, the IWC

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Scientific Committee was asked to review the outcomes of the scientific whaling program (JARPA I) that ended in March 2005,122 and the government of Japan was strongly urged to withdraw the newly proposed JARPA II program, or to revise it so that any information needed to meet the stated objectives of the proposal would be obtained using nonlethal means.123 Despite severe condemnation of its whaling policies, Japan holds to the position that whaling is no longer an issue of species conservation, as had been the situation during the 1960s and 1970s, when several species of whales had been overharvested and effective measures to protect the endangered species were urgently needed. The government of Japan maintains that most whale species are not endangered and that many species are abundant and increasing. Japan points out, for example, that there are more than 1 million minke whales worldwide; and even the IWC’s Scientific Committee has estimated that the Antarctic Ocean is capable of supporting an annual sustainable catch of at least 2,000 minke whales. Japan also contends that its scientific research whaling program, which employs both lethal and nonlethal methods, is not commercial whaling and is carefully designed by scientists to study the whale populations and ecological roles of the species, which is permitted and legal under the International Convention for the Regulation of Whaling.124 Many academic commentators and governmental officials involved in international fisheries and whaling policies have sharply criticized Japan’s whaling practices, while the activist organizations Greenpeace and Sea Shepherd have deployed ships to chase whaling vessels at sea in direct efforts to halt the Japanese harvest of Antarctic whales. Greenpeace states that its objective in the Antarctic Ocean is to focus international attention on Japan’s whaling activities, whereas Sea Shepherd attempts to forcefully disrupt what it considers to be an illegal operation.125 Protests in early 2006 garnered much publicity because they involved physical confrontations: a Greenpeace vessel was involved in a collision with a Japanese vessel that each side blames on the other, and a Sea Shepherd

boat intentionally side-swiped a Japanese whaling ship.126 Hideki Moronuki, head of the whaling section of the Ministry of Agriculture, Forestry and Fisheries of Japan, said that the increased level of confrontation may reduce Japanese whaling catch, but will not stop its research.127 Led by Brazil, 17 nations in January 2006 submitted a formal request to Japan asking that it end its whaling activities.128 Japan consistently adheres to its official position that its opting out of the IWC regulations and its disregard of the moratorium are justified because Japanese whaling is exclusively for “scientific research” purposes and consists of regulated catches of species of whales that Japan deems not to be endangered.

The Dilemma of “Sustainable Management”: Is It Always Conservation “for Use”? Aggressive as Japan has been in regard to the controversial whaling issues, on the larger question of conservation of high-seas fisheries, Japan appears to be increasingly willing to align itself with scientific management interests in regard to highseas fisheries resources. In general, its objective seems to be to maintain populations at levels capable of supporting maximum sustainable catches of stocks that are exploited by Japanese vessels or by other vessels that export substantial portions of their catches to Japan, rather than to maintain ecosystem integrity or to conserve certain species for aesthetic reasons. Thus, at international and regional meetings over in last several years, while the Japanese delegations have persistently voiced concern about the problem of FOCs, they have shown little or no interest in the adoption of strong measures to protect marine ecosystems—let alone measures that would force cutbacks in the scope and size of Japanese tuna-fishing operations on the high seas.129 To be sure, Japan has adhered to RFMO decisions to put in place new trade barriers to IUU fishing vessels. It has recently engaged in a large-scale vessel-scrapping program in response to RFMO

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pressure and the FAO IPOA for the Management of Fishing Capacity.130 Also, as discussed above, it has pursued bilateral negotiations with Taiwan to reduce fleet capacity. While results favorable to sustainability may be traced to these Japanese initiatives, this agenda may be more about protection of its own allocation and access to resources, that is, an effort to protect its tuna longline fleet and prevent diminishment of its allocation of international fishery resources than about protecting marine ecosystems. Japanese government and industry interests have sought to claim scientific backing for the tuna industry agenda, and in many instances they have published studies that dispute the evidence unfavorable to them published by scientists in the international management programs, the FAO, and the academic world. The most notorious example was how Japan, faced with a reduced allocation of southern bluefin tuna, contested the scientific data and engaged in its own “experimental” catch studies, a major step that led to the ITLOS arbitration and soon afterward the discovery of violations of the Convention by Japanese vessels and importers. Similarly, in defending its position on the whaling moratorium, Japan has repeatedly stated that its research shows that whales not only consume large quantities of fish,131 but also “undermine fisheries conservation efforts and world food security.”132 In regard to the CITES listing for protection of the great white sharks, moreover, Japan lodged a reservation, and thereby rejected the CITES designation for protection of these sharks.133 Again in the face of widely accepted scientific opinion globally, Japan asserts that “no scientific data shows the state of [of shark populations] being threatened with extinction and hardly any international trade is likely to impact the status of the species.”134 Furthermore, despite some bans on trade with IUU vessels, Japan long permitted large quantities of illegally caught fish and fish products to find their way into Japanese fish markets. This is important because Japan is the world’s largest importer of fish product, and among its imports are many high-value species that are known targets of IUU vessels.135

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This is not to say that the steps Japan has taken are not commendable or that other states that have high stakes in fisheries are not supporting conservation agendas for the same reason. Rather, this issue is presented to point out that “conservation” may be a loaded word that has less to do with notions of preservation and protection of biodiversity and more to do with protecting economic interests of those nations wishing to gain access to diminishing resources.

Historical Continuities and Variations The present situation in international politics and law bearing on IUU fishing issues is not without precedent, or indeed deep historical roots, as to how the global community has confronted the challenges involved in coping with overcapacity and the need for sustainability of limited marine resources. Taking a long view of the issues we have discussed, the contemporary problems in management of high-seas marine fisheries analyzed in these pages illustrate a convergence of core themes in the modern history of ocean fisheries management. Important as are variations over time and according to the specifics of the fisheries or regions of the oceans in question, the continuities are striking. First, the current IUU issues are illustrative of continuing efforts, across a broad front, to establish functionally defined global regimes that will address ocean-resource problems that were not satisfactorily anticipated or adequately addressed by the terms of the 1982 UNCLOS. These new regime issues involve responses to such diverse problems as, among others, the submerged wreckage of ships threatening environmental damage (White 2004), the presence of spent nuclear fuel rods dumped into the northern oceans,136 and the exploitation and ownership issues relating to genetic materials in the deep sea and in EEZ waters (Scheiber 1999, McLaughlin et al. 2004). Perhaps most prominent of all, in recent years, has been the

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question of high-seas fisheries and their effective management. This last question, which has animated our inquiry in this study, has resolved itself in the last decade to a matter of how the terms of the United Nations Agreement for the Implementation of the Provisions of the UNCLOS of December 10, 1982, relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks (United Nations Fish Stocks Agreement; in force as of December 11, 2001) can be worked out through the operation of RFMOs and through biand multilateral agreements concerning reduction of fishing capacity, and by other actions. A key to the resolution of this issue is the elimination of IUU fishing and the creation and maintenance of multilateral regimes that will provide effective scientific management, sustainability, and conservation of marine fisheries in the world’s high-seas ocean regions.137 A second respect in which the present study reflects historic, ongoing problems in ordering the law of the oceans is the question of achieving effective implementation in management programs that must rely upon the accuracy and comprehensiveness of the biological and oceanographic data made available to the scientists who conduct the assessments of the stocks of fish and other animals that are affected by the fisheries. The trend in fisheries science away from species-by-species analysis to ecosystem research has made the problem more difficult than ever. To be sure, the technology for empirical investigation of species and stocks has advanced enormously, especially as the result of DNA research. Nonetheless, the difficulties inherent in obtaining accurate data on the conditions and dynamics of habitats or ecosystems—as is required by the newer instruments of international law—remain intractable, as they have been from the start.138 By its very nature, ecosystem study requires that the lines of investigation be ever-ramifying and complex; and in the case of large marine ecosystems, such as the habitat for the distant-water tuna fisheries, the problems of applying ecosystem study to practical management are further

complicated by the movements of various species through numerous EEZs and by disputed claims of “historic interest” or “real interest.”139 Apart from these considerations, which are basic to the scientific paradigm and which derive from political boundaries and jurisdiction at sea, the most basic data on the status of stocks and trends in biomass, age structure, and health are largely undermined by the operations of IUU vessels (whose catches remain largely outside the database, as they are outside any regulatory or scientific regime) corrupt the estimates so vital to scientific management.140 Finally, the case of Japan’s relationship to the older RFMOs and the new WCPFC illustrates a timeless problem in the history of multilateral agreements for management. This is the problem of distinguishing self-interested, protectionist motive from genuinely conservationist-management objectives when a fishing nation negotiates a bior multilateral agreement, or when it participates in the implementation of a “sustainable fishing” or “conservationist” treaty. In the political and negotiating processes involved when such agreements are formed or administered, this distinction is often the focus of disputing not only among the state parties, but sometimes (perhaps commonly), even within the bureaucracies of the individual states. Deeply rooted historical continuities are involved in the ongoing confrontation of this last problem in the history of fisheries policies and international law. A dramatic example can be cited from the 1945 Truman Fisheries Proclamation,141 a US policy initiative that set off the torrent of offshore extended-jurisdiction claims by other states that inaugurated the modern “ocean enclosure” movement and led to the formulation of the EEZ concept that was incorporated in 1982 in the UNCLOS (Scheiber 2002). Thus, when the U.S. Department of State began to pursue talks with Canada, as early as the 1930s, looking toward a joint declaration of extended jurisdiction over fisheries—meaning a dramatic break from adherence to the classic 3-mile rule—the legal officers and policy officials were unabashedly seeking to give protection to the established US coastal

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salmon fishing industry in the Bristol Bay area and other waters off the shores of Alaska, British Columbia, and Washington. Early in the talks with Canada, the State Department negotiator went on record as referring to the object being to obtain “the exclusive right of fisheries that Canada and the United States are trying to establish on the West Coast.”142 Yet in the State Department itself, there was opposition to this approach by the economics and trade officers, who regarded it as a deviation from the basic multilateralist orientation on which U.S. war and postwar policy was principally based (Scheiber 1989). In the Canadian bureaucracy, there was a similar split, the political officers holding back from approving a two-nation proclamation on the grounds it would inspire similar measures by other coastal nations, with resultant harm to Canadian fishing interests in the Atlantic Ocean. Moreover, the Canadian political officers lined up against their own government’s fisheries management bureaucracy, contending that the exclusionist thrust of the Truman Proclamation would violate the solemn wartime commitment, in the Atlantic Charter, as to free access by all nations to global natural resources (Scheiber 2004). The Canadian Department of External Affairs thus circulated a memorandum in 1947 warning that exclusionism embodied in the Truman Proclamation, which was “supposed to be for strictly scientific purposes,” obviously had much to do with “eliminating undesirable competition.”143 Measures that “endeavoured to use conservation as a cloak for the protection of their fishing industries against legitimate foreign competition,” the memorandum continued, would undermine the advancement of United Nations efforts in the resources field and indeed threaten the future of multilateralism as the core principle of Allied postwar policy in the West (Scheiber 2004). In the following decade, during the negotiating process for the International North Pacific Fisheries Convention of 1952 (INPFC; subsequently replaced by the Convention for the Conservation of Anadromous Stocks in the North Pacific Ocean)—which was one of the first of the post– World War II multilateral agreements for ocean

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fisheries, and the first that instituted active regulation, as opposed to conducting research as a basis for future regulation—the same kind of tension was manifested. This Convention was an agreement among Canada, the United States, and Japan (then just emerging from the occupation), and was the first international fisheries treaty in the postwar era to incorporate the maximum sustainable yield concept as a basis for limiting fishing participation or levels of catch (Scheiber 1989). Again, the political officers in Ottawa objected to the manifestly self-interested objective of the Convention, which was drafted by the US officials with the central aim of requiring Japan to waive its rights under prevailing international law to fish anywhere beyond the 3 miles that marked the offshore territorial boundaries of the United States and Canada. The concept of extended offshore jurisdiction, the Canadian External Affairs Department complained, appeared to be “aimed more as protection against competition than at conservation,” whatever the pretensions as to sustainability embodied in the provisions for research and determination of maximum sustainable yield levels.144 Again there was division within the State Department itself: the department’s chief economics officer, Willard Thorp, opposed the proposed Convention, contending that “exclusion is too clearly the central objective”145 ; and Thorp was reported at a windup meeting as having “expatiated on the theme that a more multilateral type arrangement envisaging true international controls” was far preferable to the abstention concept in a three-nation agreement, with Japan obviously in no position at that time to push back successfully against American pressure to sign (Scheiber 2004).146 Ironically, it is a fact that Japan’s DWF interests were disadvantaged dramatically, at least in this one sector of the world’s oceans, in this first of the postwar multilateral ocean fisheries agreements. That fact may well be part of the explanation as to why Japan would subsequently adhere consistently to seriously hardline diplomacy, often bringing upon itself a strong reaction from other coastal states in global negotiations, in the decades that have passed since the North Pacific convention was concluded.147

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Conclusion As has been seen in the present chapter, the familiar, often complex, mixture of motives is strikingly evident in the policies of the major players in regard to ocean tuna resources as multilateral agreements are concluded. There is continuing debate, moreover, as to the way in which implementation of UNCLOS principles and the United Nations Fish Stocks Agreement mandates should best be pursued in the continuing regimeformation process.148 With respect specifically to the tuna management issue in the world’s oceans today, it can be taken as a given that, as developing fishing countries push for greater percentages of the catches, the countries with established fishing interests and large allocations will push back harder. Can there ever be a fair system that takes into consideration historical use and investment as balanced against claims based upon the urgent needs of developing countries (including the small island states of the Pacific), and that addresses issues of equity as to the needs and rights of states to share in a common resource? As more of the tuna resources are depleted, the problems will become more acute. Will there be effective global reductions in fishing capacity? Or, will other vessels be built that restore, or even increase, total fishing capacity? Resources are still being depleted at an alarming rate, and it is necessary for Japan and other major importing countries to move toward restricting imports more effectively so as to ban the products of IUU fishing. Scrapping of vessels is an important component of policy for any fishing state deemed to be contributing to excess fishing capacity. It is obvious from the history of fisheries diplomacy and RFMO deliberations that political pressure can work. In the last few years, as noted earlier, policy experts have also stressed the importance of getting the cooperation of financial institutions in the developed countries to cut off the lifeblood of capital for IUU ship purchases and operations.149 The list of countries making capacity reductions must be expanded, of course. To be truly effective, however, such efforts must be accompanied

by decreases in the allocated quotas of fishing in regulated regimes, by more effective enforcement of the regulations that are adopted, by expanded observer coverage, and by other measures directly concerned with monitoring, control, and surveillance at sea. Perhaps of paramount importance, as we have argued here, is the need for inclusion of all relevant DWF states in the regional organization, with appropriate negotiated adjustments of catch allocations to recognize diverse interests of fishing nations with adjustments that take account of historic rights and, equally, to recognize the needs and rights of smaller developing nations. Already there has been a formal move to achieve some harmonization of policies and better operational coordination among the RFMOs that are concerned globally with sustainability of tuna stocks.150 No less important than rules of fishing operations on the water, or upgraded enforcement and the everpresent allocation issues, is the imperative need for the RFMOs to adhere to key provisions of the United Nations Fish Stocks Agreement—the provisions mandating the adoption of the precautionary principle, the protection of fish habitat, and the deployment of an ecosystem approach in the evaluation of the fisheries and their environments. Only if the strengthening of regulatory authority in the RFMOs is achieved, and the authoritative application of sustainable regulation is imposed, can a turnaround in the critical global fisheries situation be realized.

Endnotes 1. United Nations, press release SEA/1852 (United Nations Conference to address law for high seas fishing, May 22–26, as Overfishing Causes Dramatic Decline in Stocks, May 18, 2006). See, e.g., sources of the Bluefin tuna crisis, cited n. 25, infra. 2. See also Commonwealth of Australia, Department of Agriculture, Fisheries and Forestry, Bureau of Rural Sciences, “Southern Bluefin Fishery,” from the Bureau’s website

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www.affa.gov.au/content/output.cfm, accessed December 26, 2006 (“spawning stock severely depleted and current catches severely limit probability of rebuilding”). See also text and notes, this chapter, for discussion of the overfishing scandal involving the Japanese fleet’s operations. 3. FAO Code of Conduct for Responsible Fisheries, adopted by FAO Conference on October 31, 1995, available at http://www.fao.org/ DOCREp/005/V987E/V9878e00.htm. IPOAs, available at http://www.fao.org. 4. FAO, International plan of action for the management of fishing capacity [hereinafter IPOA-Capacity], adopted by the 23rd Session of the FAO Committee on Fisheries in February 1999, available at http://www.fao. org/documents/show cdr.asp?url file=/docrep/ 006/x3170e/x3170e04.htm; FAO, international plan of action to prevent, deter and eliminate illegal, unreported and unregulated fishing [hereinafter IPOA-IUU] (endorsed by FAO on June 23, 2001), available at http://www.fao.org/ figis/servlet/static?dom=org&xml=ipoa IUU.xml. On the linkages between overcapacity and IUU fishing, see, e.g., 2005 Rome declaration on illegal, unreported and unregulated fishing (adopted by FAO Ministerial Meeting on Fisheries on March 12, 2005), available at ftp://ftp.fao.org/fi/DOCUMENT/ministerial/2005/ iuu/declaration.pdf. 5. Large-scale tuna long-line vessels (LSTLVs) are considered to be greater than 24 m in length and have freezing capacity. See IATTC, working group on stock assessments, target size for the tuna fleet in the eastern Pacific Ocean, Doc. No. SAR5-08 (2004), available at http://www.iattc.org/ PDFFiles2/SAR-5-08%20Target%20fleet%20 capacity.pdf. 6. These RFMOs include the International Commission for the Conservation of Atlantic Tunas (ICCAT), the Inter-American Tropical Tuna Commission (IATTC), the Indian Ocean Tuna Commission (IOTC), and the Commission for the Conservation and Management of Highly Migratory Fish Stocks in the Western and Central Pacific (WCPFC) was established in December 2004.

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7. Illustrating this buoyant increase in Pacific Rim tuna fishing in the postwar years, imports to the American domestic market rose from 117 million pounds in 1950 to 260 million pounds in 1957. See Scheiber (1986: 502–503). 8. See 2004: What are responsible fisheries? Proceedings of the twelfth biennial conference of the International Institute of Fisheries Economics & Trade (IIFET) (Yoshiaki Matsuda & Tadashi Yamamoto, eds.) (providing a map of Japanese fishing operations in the Pacific, by decade). 9. Chapman, Wilbert M. 1961. Recent trends in world tuna production and some problems arising therefrom (manuscript, copy on file with the U.S. National Marine Fisheries Service, Southwest Fisheries Center, La Jolla, CA, USA). 10. Even as the international talks proceeded, many of the coastal nations with important fishing grounds worked by DWF fleets, including Japan’s fleets, were extending the seaward limits of their claims to exclusive fishing zones. See, e.g., Scheiber and Carr (1992) (describing U.S. measures extending fishing protection offshore in this period). Japanese fishing interests were already under economic pressures prior to the advent of the creation of EEZs from which their fleets were suddenly, or gradually, excluded. See Stokke (1991). 11. See generally Friedheim (1984), in which Japanese ocean diplomacy during this period is discussed. The canonical text was written by Shigeru Oda, one of the world’s leading authorities on marine resources law and a judge on the International Court of Justice. See Oda (1989). 12. The scrapping program was initially designed only to diminish tonnage in the longliner fleet, whereas the more efficient and larger-scale seiner vessels of the Pacific fleet were not affected. See Haward and Bergin (2001). 13. See, e.g., Japan Fisheries Agency, Resources Management Department, available at http://www.jfa.maff.go.jp/jfapanf/english/index. htm (accessed November 10, 2007) (describing the need to plan for fisheries development in the face of reduced production and deteriorating

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fisheries through mechanisms such as control of fisheries and authorization for building vessels). 14. MAFF. July 19, 2002. The 21st General Assembly of the Association of Pacific Island Legislatures Held, MAFF Update No. 462, available at http://www.maff.go.jp/mud/462.html; FAO (2002: 32). An emerging crisis for the Japanese domestic tuna market, as international controls tighten and the stocks face serious declines, with concomitant shortages of supply and rising prices for the sashimi quality tuna, received front page attention in an article by Fackler (2007). 15. See, e.g., Caton (1991), who described Japan’s catch of southern bluefin tuna from 1952 through the 1980s; see also FAO, Fishery Country Profiles for the Tuvalu and the Marshall Islands, available at http://www.fao.org. 16. Resolution for A Multi-annual Program on the Conservation of Tuna in the Eastern Pacific Ocean for 2004, 2005 and 2006, IATTC 72nd meeting. Resolution C-04-09 (June 14–18, 2004). 17. Commission for the Conservation of Southern Bluefin Tuna—Management of SBT, Catch levels, http://www.ccsbt.org/docs/ management.html; CCSBT, Management of SBT, available at http://www.ccsbt.org/docs/ management.html (accessed November 10, 2007). Japan’s current total allowable catch is set at 3,000 metric tons and will not be reviewed again until 2009 unless exceptional circumstances require it. Ibid. 18. Fisheries Administration, Council of Agriculture, Executive Yuan, Yearbook of Fisheries Statistics in Taiwan and Fujen Areas—2003 (May 2004), at 127–28; 2006 yearbook, 12: Agriculture, available at http://www.gio.gov.tw/taiwanwebsite/5-gp/yearbook/2006/12Agriculture.htm. 19. Wu Kuo Chin, excerpt of translation (in Chinese), A Brief Summary of the Outcomes of Japan-Taiwan Negotiation Meeting over Fisheries Issues (March 15, 2005), available at http://www. tuna.org.tw. 20. OECD, Why fish piracy persists: the economics of illegal, unreported and unregulated fishing, p. 40.

21. Supplemental resolution by ICCAT to enhance the effectiveness of the ICCAT measures to eliminate illegal, unregulated and unreported fishing activities by large-scale tuna long-line vessels in the convention area and other areas, Doc. No. 00-19 (2000). 22. Unauthorized fishing in zones of national jurisdiction & its impact on the living marine resources of the world’s oceans & seas, G.A. Res. 49/116, U.N. GAOR, 92d plen. mtg., U.N. Doc. A/RES/49/116 (December 19, 1994); See also Doulman, David J. 2000. Illegal, unreported & unregulated fishing: mandate for an international plan of action, Doc. AUS:IUU/2000/4; G.A. Res. 50/25, U.N. GAOR, 50th Sess., 81st plen. mtg., U.N. Doc. A/RES/50/25 (December 5, 1995); G.A. Res. 51/36, U.N. GAOR, 51st Sess., 77th plen. mtg., U.N. Doc. A/RES/51/36 (December 9, 1996); G.A. Res. 52/29, U.N. GAOR, 52d Sess., 57th plen. mtg., U.N. Doc. A/RES/52/29 (January 26, 1998); G.A. Res. 53/33, U.N. GAOR, 53d Sess., 69th plen. mtg., U.N. Doc. A/RES/53/33 (January 6, 1999); G.A. Res. 55/8, U.N. GAOR, 55th Sess., 44th plen. mtg., U.N. Doc. A/RES/55/8 (March 2, 2001); G.A. Res. 57/142, U.N. GAOR, 57th Sess., 74th plen. mtg., U.N. Doc. A/RES/57/142 (February 26, 2003). G.A. Res. 55/8, U.N. GAOR, 55th Sess., 44th plen. mtg., U.N. Doc. A/RES/55/8 (March 2, 2001). 23. IPOA-IUU, supra n 4. 24. For a useful brief analysis, see Lodge (2004). See also Anon September 10, 2004. Shutting the door on illegal fishing, FAO Newsroom. “The FAO has been informed that IUU fishing accounts for up to 30 per cent of total catches in some important fisheries and that IUU catches, in one particular case, could be as high as three times the permitted catch level.” OECD, Why Fish Piracy Persists: The Economics of Illegal, Unreported and Unregulated Fishing, p. 126. 25. Flewwelling (1994) defines monitoring as “the continuous requirement for the measurement of fishing effort characteristics and resource yields,” control as “the regulatory conditions under which the exploitation of the resource may be conducted,” and surveillance as “the degree and

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types of observations required to maintain compliance with the regulatory controls imposed on fishing activities.” 26. The 2005 Rome declaration on illegal, unreported and unregulated fishing (March 12, 2005), available at http://www.fao.org; UNCLOS Art. 91; see also Molenaar (2000). 27. The phrase “too many boats chasing too few fish” has been used by many to describe the problem of overcapacity. See, e.g., Stone (1997), Teece (1997), O’Halloran, Julian. May 16, 1995. Files on Four, BBC. 28. The IPOA-Capacity does not define fishing capacity. However, at a previous technical conference the definition was proposed as follows: “[T]he ability of a stock of inputs (capital) to produce output (measured as either effort or catch). Fishing capacity is the ability of a vessel or fleet of vessels to catch fish.” The definition as quoted here was the subject of a great deal of debate. Report of the FAO Technical Working Group on the Management of Fishing Capacity. As technology advances, fewer boats may be needed to catch the same number of fish. In other words, a reduction in fleet number or tonnage does not necessarily represent an equivalent decrease in the overall fleet ability to exploit the resource. 29. Agenda 21: programme of action for sustainable development, at Chapter 17, ¶ 17.45, U.N. GAOR, 46th Sess., Agenda Item 21, UN Doc A/Conf.151/26 (August 12, 1992). See IPOACapacity, supra n 4. Paragraph 39 of the IPOACapacity urges states to take immediate action to reduce capacity in overfished fisheries including transboundary, straddling and highly migratory stocks, which would include overfished tuna stocks. 30. Resolution by ICCAT calling for further actions against illegal, unregulated, and unreported fishing activities by large-scale long-line vessels in the convention area and other areas, Doc. No. 99-11 (1999); supplemental resolution by ICCAT concerning the recommendation on the bigeye tuna conservation measures, Doc. 00-02 (2000); and supplemental resolution by ICCAT to enhance

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the effectiveness of the ICCAT measures to eliminate illegal, unregulated and unreported fishing activities by large-scale tuna long-line vessels in the convention area and other areas, Doc. No. 0019 (2000). 31. Recommendation by ICCAT regarding the control of Chinese Taipei’s Atlantic bigeye tuna fishery, Doc. No. 05-02 (2005). 32. See, e.g., Sutherland (1986); see also Moore (1987). 33. The Convention was adopted on September 5, 2000, and entered into force on June 19, 2004. For the text, visit the website of WCPFC at http://www.wcpfc.int/. It will place increased monitoring, control, and surveillance (MCS) responsibilities on FFA members. For background about the convention and the MHLCs, see Australia Department of Agriculture, Fisheries, and Forestry. Western and Central Pacific Oceans—Highly Migratory Fish Stocks, http:// www.daff.gov.au/fisheries/international/wcfpcfishstocks. 34. WCPFC. 2002. Resolution of the preparatory conference relating to illegal, unreported and unregulated fishing and limits of fishing capacity, ¶¶ 1–3, Doc. SWCFPC/PrepCon/22. 35. WCPFC. October 3, 2003. Resolution of the preparatory conference in response to the recommendations of the second meeting of the scientific coordination group on sustainable fisheries management. Doc. WCPFC/PrepCon/34. 36. MAFF. November 2, 2001. Summary of eighth annual meeting of the commission for the conservation of Southern Bluefin tuna held in Miyako City, Iwate prefecture. Update No. 334. 37. See, e.g., Anonymous (2000: 17–18); IOTC (2003). 38. See, e.g., MAFF. December 10, 1999. Sixteenth regular meeting of the ICCAT held. Update No. 339, available at http://www.maff.go.jp/mud/ 339.html. MAFF. December 21, 2001. Seventeenth regular meeting of ICCAT held, Update No. 436, available at http://www.maff.go.jp/ mud/436.html; Jhu, Bowun. December 19, 2005. Government to abide by ICCAT order to slash bigeye tuna catch. Taiwan Journal, available

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at http://taiwanjournal.nat.gov.tw/site/Tj/ct.asp? xItem=21685&CtNode=122. 39. Japan–Taiwan Joint Action Program to eliminate IUU large-scale tuna longline vessels. 1999, 2003. (agreements on file with authors) 40. Japan Fisheries Association. Japan reduced tuna fishing capacity as a conservation measure, available at http://www.suisankai. or.jp/iken e/iken99 e/ik003 e.html; MAFF. 2000. Japan & Taiwan consult on tuna fisheries, Number 352, March 24. 41. See Komatsu (2000). 42. Ibid. 43. As one Taiwanese author states, Taiwan bought the secondhand vessels and then later expanded its own fleet in order to meet the increasing demand of the Japanese tuna market. David Chang, Measures Taken by Taiwan in Combating FOC/IUU Fishing, paper presented to the Fisheries Development Council International, Taiwan, at the OECD Workshop on IUU Fishing, Paris, France (April 19–20, 2004). 44. Co-author Song’s interview with Mr James Tsai president of Fong Kuo Fishery Company, Ltd., Taiwan. 45. Under the Taiwanese fishery regulation enacted in 1989 and amended in 1995, no new fishing vessels can be built unless old vessels are scrapped, sunk, or exported. After 1995, no new vessel can be built to replace a vessel sold by export overseas. For Taiwan’s fishery laws and regulations, see Fisheries Administration, Council of Agriculture, Executive Yuan (The Cabinet), http://eng.coa.gov.tw/list.php?catid=8868. 46. See Matthew Gianni and Walt Simpson, Flags of Convenience, Transshipment, Re-Supply and At-Sea Infrastructure in Relation to IUU Fishing: Management Implications and Recommendations for International Action Arising from A Case Study Prepared for WWF, available at http:// www.oecd.org/dataoecd/1/23/31593522.PDF. 47. Ibid. 48. Joint Action Plan, supra n 39. Taiwan is currently in the process of considering new legislation that would regulate its nationals who invest in or operate fishing vessels under flags other than

its own. A draft law was submitted by the executive branch to the Legislative Yuan in May 2007. (Information in coauthor Song’s files) 49. MAFF. December 10, 1999. Sixteenth regular meeting of the ICCAT held. In MAFF Update No. 339, available at http://www.maff.go. jp/mud/339.html. 50. MAFF. June 30, 2000. Japan prohibits port call for tuna long-liners registered in Equatorial Guinea. In MAFF Update No. 365, available at http://www.maff.go.jp/mud/365.html. 51. See, e.g., the critique by the World Wildlife Fund (terming the ICCAT quota system “little more than a political tool, hiding practices of tuna fishing, shipping, processing, and trading that violate existing rules”) in the article Illegal Tuna Fishing Leads to Demise of Species. November 16, 2004. In http://www.innovationsreport.com/html/reports/environment sciences/ report-36227.html. 52. See paragraphs 2 and 3 of “Japanese report on current situation of IUU LSTLVS,” submitted at the third session of the WCPF PrepCon, Manila, Philippines, November 18–22, 2002, WCPFC/PrepCon/DP.8, November 19, 2002. 53. Ibid. ¶ 4. 54. See paper on estimate on impact as result of increase in fishing efforts by super purse-seiners in the western and central Pacific. September 29–October 3, 2003. Submitted by the Japanese delegation at the fifth session of WCPF PrepCon, held in Rarotonga, Cook Islands. “Super” purseseiners are vessels of very large scale, some of them running to 2,000 tons or more. These super purse-seiners complete one trip at an average of 28 days (this includes days of unloading the fish) with an average of 1,300 tons fish captured at about 324.8 tons fuel consumption. For information about the two super purse seiners built by Taiwan’s Ching Fu shipbuilding company, see http://www.cfsb.com.tw/h025e.html. 55. Ibid. 56. Information paper on expansion of fishing capacity in the WCPFC area during the preparatory conference process. April 17, 2004. Submitted by the delegation of Japan at the sixth session

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of WCPF PrepCon, held in Bali, Indonesia, April 19–23, 2004, WCPFC/PrepCon/DP.29; information paper on fish laundering activities by largescale tuna long-line vessels, submitted by the delegation of Japan, preparatory conference for the commission for the conservation and management of highly migratory fish stocks in the western and central Pacific, seventh session, Pohnpei, Federal States of Micronesia, December 6–7, 2004, WCPFC/PrepCon/DP.34 (November 29, 2004). 57. Ibid. at 3–4. 58. Ibid. at 1. 59. Ibid. at 4. 60. Ibid. at 7. 61. MAFF. November 2, 2001. Summary of eighth annual meeting of the commission for the conservation of Southern Bluefin tuna held in Miyako City, Iwate prefecture. In MAFF Update No. 430, available at http://www.maff.go.jp/mud/430.html. MAFF. October 31, 2003. Summary of the tenth annual meeting of the commission for the conservation of Southern Bluefin tuna. In MAFF Update No. 523, available at http://www.maff.go.jp/mud/523.html. 62. See text and discussion of OPRT publications, infra at notes 204 ff. The OPRT website is http://www.oprt.or.jp. 63. Comments from the conference discussions, recorded in personal notes of coauthor Scheiber. 64. Ibid. 65. The OPRT website is http://www.oprt.or.jp. Sano (2004). 66. OPRT, OPRT Participants, http://www2. convention.co.jp/maguro/e maguro/index.html. 67. Sano, supra n 65. 68. Anon. July 2005. OPRT Newsletter International, 7; see also Anon. February 2004. Ecuador’s FUNDATUNA Becomes New OPRT Member. OPRT Newsletter International, 3, available at http://www.oprt.or.jp; Sano, supra n 65 at ¶ 2. 69. See OPRT, OPRT Database, http://www. oprt.or.jp/eng/whitelist3/TF1 sender creator.cgi. 70. OPRT. November 15, 2004. OPRT promotes responsible tuna fisheries to ensure the sustainable use of tuna resources, in OPRT Pamphlets,

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http://www2.convention.co.jp/maguro/e maguro/ index.html. 71. WCPFC, Art. 6. 72. Ibid. at Art. 26. 73. Ibid. at Art. 28. 74. Ibid. at Art. 31. 75. Ibid. at Art. 32. 76. See Guo Chin-Lao’s translation of the article Masayuki, Komazu. 2002. International Fisheries News, pp. 42–51 (OFDC, Taiwan; in Chinese; on file with authors). 77. Preambulary clauses of the Resolution relating to IUU fishing and limits on fishing capacity, adopted on November 22, 2002, WCPCF/PrepCon/22. 78. For example, in 2001, a greater than 4,000 pound Bluefin tuna sold for over $170,000 in the Japanese fish market. See Anon., Bluefin Tuna under Threat as Fishermen Exploit Quota Loophole. November 7, 2003. At http://www. growfish.com.au/content.asp?contentid=831. 79. See Komatsu, supra n 41. 80. See Anonymous (2004). 81. 1996 Law No. 101. See Komatsu, supra n 41. 82. Ibid. ¶ 16(a). 83. Ibid. ¶ 16(d), app. 6. 84. See Anon. July 2003. Ban on port calls by IUU tuna fishing vessels. OPRT Newsletter International, 1:1, available at http://www.oprt.or.jp. The ban on Equatorial Guinea, Cambodia and Sierra Leone was lifted at the 2004 Annual ICCAT meeting. Anon. December 2004. BigEye Overfishing Addressed, OPRT Newsletter International, 6:5 (December 2004), available at http://www.oprt.or.jp. 85. Anon., ICCAT Announced Positive List for Tuna Farming, 6 OPRT Newsletter Int’l 4 (December 2004), available at http://www.oprt.or.jp; see also OPRT, Trade Management Measures for Farmed Tuna, available at http://www2.convention.co.jp/maguro/e maguro/ local/e news 041203 1.html. 86. See Komatsu, supra n 41. 87. Wu, Kuo Chin. February 15, 2005, and March 15, 2005. Excerpt and Translation of

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International News Reports (in Chinese), available at http://www.tuna.org.tw. 88. See Anonymous (2002b). 89. Oceana, EU Fisheries Is Heading in the Right Direction – Is Subsidy Policy on the Same Track? (Citing to Arnason, Ragnar. 1998). Fisheries Subsidies, Overcapitalization and Economic Losses (presented at the Workshop on Overcapacity, Overcapitalization and Subsidies in European Fisheries, Portsmouth, October 28–30, 1998). By contrast, the United States provides $150 million (according to World Resources Institute). Ibid. 90. In that light, when Japan proposed a resolution on IUU fishing and limits of fishing capacity in 2002 at the third session of WCPF PrepCon, held in Manila, Philippines, the real intention of Japan for doing so was questioned by several of the participating delegations. See, inter alia, Tarte, Sandra. August 1998. Negotiating a tuna management regime for the central and western Pacific: policy options and strategies for Pacific island states, seminar, Australian National University (cited in Anderson, Katherine. The New Fisheries Convention: A Turning Point for Oceania). 91. IATTC, Draft Plan for Regional Management of Fishing Capacity (with Modifications Proposed by Japan, September 2003), Doc. CAP-7-05 EPO Capacity Plan (June, 2003). 92. Ibid. 93. Ibid. at ¶¶ 10(d), 30. 94. Ibid. at ¶ 10(d). 95. Ibid. 96. Ibid. at ¶ 30. 97. Ibid. 98. MAFF, The 21st General Assembly of the Association of Pacific Island Legislatures Held, supra n 37. 99. Anon. September 2003. Governments, fishing industry renew their strong will to promote responsible management of tuna fisheries at WTLFC. OPRT Newsletter International, 2:1 (stating that the World Tuna Long-line Fishery Conference “expressed concern about a sharp increase in recent years in the number of largescale purse-seine fishing vessels that are inflicting mounting pressures on marine resources,

especially on juvenile fish.”); Anon. September 2003. Scientist stresses the need to control fishing efforts including purse-seine and farming. OPRT Newsletter International, 2:2. The article summarizes the scientist’s lecture, pointing out that the purse-seining accounts for 60% of the world tuna catch and that longlining “has not increased substantially except for 10 years in early developing period of this fishery.” Ibid. The OPRT also attacks tuna farming in a recent newsletter through an interview with a former ICCAT assistant executive secretary. Anon. July 2004. Warning against rapidly expanding tuna farming. OPRT Newsletter International, 4:1, available at http://www.oprt.or.jp. This is not to deny that the interview may accurately reflect the environmental issues and concerns associated with tuna farming. 100. Anon. September 2003. Longlining is a resource-friendly fishing technique: joint declaration at Kesennuma symposium. OPRT Newsletter International, 2:4. 101. If only tunas are considered, this is true, as longlines rarely catch tunas that are less then the “critical size”—the size at which the losses to the total weight of a cohort of fish due to natural mortality first equal the gains to that cohort due to growth. However, longlines also catch sharks, rays, and other species of fish, and also sea turtles and sea birds, most of which are of little or no commercial value and some of which are threatened or endangered. 102. Kesennuma declaration regarding sustainable utilization of shark resources and tuna longline fishing. July 11, 2003. Doc. No. AC19 Doc. 18.3 Annex 2, available at http://www.cites. org/common/com/ac/19/X-AC-19-18-3.pdf. 103. Ibid. 104. Ibid. 105. The position that OPRT and Japanese delegates take regarding the problems with purseseining methods are not surprising when considering the fact that longline fishing accounts for 60% of Japan’s tuna, in comparison to 20% from the purse-seine fishery. Also, longline vessels catch larger fish, which go for a high price on the sashimi market.

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106. Ibid. 107. Ibid. 108. CCSBT, Origins of the Convention, available at http://www.ccsbt.org/docs/about.html (accessed November 10, 2007). 109. MAFF. January 19, 2001. Special CCSBT Meeting Held. MAFF Update No. 391, available at http://www.maff.go.jp/mud/391.html. There is an abundant scholarly literature on the Southern Bluefin case in ITLOS. See, e.g., Sturtz (2001), Roman (2001), Marr (2000). 110. See ITLOS. July 30, 1999. Press release: dispute concerning Southern Bluefin tuna: Australia and New Zealand versus Japan—provisional measures requested, ITLOS/Press 24, available at http://www.itlos.org/news/press release/1999/ press release 24 en.pdf. 111. Sato (2001). On the litigation, see Hayashi (2000); see also ITLOS. August 9, 1999. Press release: Japan files response and counter request for provisional measures in case concerning conservation of tuna. ITLOS/Press 25, available at http://www.itlos.org/news/press release/1999/ press release 25 en.doc. To put this number in perspective, the current total allowed catch by Japan is 6,065 tons. See CCSBT, Catch Levels, http://www.ccsbt.org/docs/management.html. 112. MAFF, Summary of the Tenth Annual Meeting of the Commission for the Conservation of Southern Bluefin Tuna, supra n 66. 113. Anon. July 15, 2005. Tuna fishing nations urged to reduce bluefin catch, INFOFISH, available at http://www.infofish.org. 114. See China Times (Taipei), in Chinese, January 11 and 12, 2006. 115. CCSBT. 2006. Report of the thirteenth annual meeting of the commission, appendix 1. 116. See http://www.ccsbt.org/docs/ management.html. 117. Quoted in Reuters dispatch, August 12, 2006, Australian official says Japan breached tuna quota, see Anonymous (2006b). McLoughlin’s comments were made during a university speech with the understanding that his comments would remain anonymous; however, the speech was recorded and posted online. Darby,

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Andrew. August 10, 2007. Japan Illegally Poached Bluefin Tuna Worth $2 Billion. Cyber Diver News Network, available at http://www.cdnn. info/news/eco/e060810.html. 118. Bradford, Gilliam. October 16, 2006. Bluefin Tuna Plundering Catches Up with Japan, ABC ONLINE, http://www.abc.net.au/ news/newsitems/200610/s1765413.htm. 119. CCSBT, Recent News [2007]s, http:// www.ccsbt.org/docs/news.html. 120. Olsen, Kelly. June 24, 2005. Japan’s Point Man on Whaling Draws Good Reviews at Meeting, Associated Press, available at http://www. deseretnews.com/dn/view/0,1249,600144404,00. html. 121. Anon. April 4, 2005. Japan to Begin Whaling Again Regardless of World Criticism, Reuters. 122. MAFF. April 22, 2005. A Weekly Update of News from the Japanese, Ministry of Agriculture, Forestry and Fisheries, MAFF Update No. 583, available at http://www.maff.go.jp/ mud/583.html. 123. IWC Resolution on JARPA II, Res. 2005–1. 2005, available at http://www.iwcoffice. org/meetings/resolutions/resolution2005.htm#1. 124. Ministry of Foreign Affairs of Japan, the position of the Japanese government on research whaling, available at http://www.jfa. maff.go.jp/whale/index.htm. See also the defense of Japanese policy in light of general principles of international law, as contended for by Aron et al. (1999). An opposing view, dealing with the validity of Japan’s claims based on culture, and also placing the controversy in an historical context that includes the decision of the United States to rebuild the prostrate Japanese whaling industry during the postwar Occupation period, 1946–1953, is provided in, Scheiber (2000). See also Robert Friedheim (2001). 125. Anon. January 16, 2006. Whaling causes trouble on the high seas, Australian Broadcasting Company, available at http://www.abc. net.au/7.30/content/2006/s1548651.htm. 126. Anon. January 12, 2006. Japan says clashes at sea could reduce catch. Reuters Foundation AlertNet, see Vidal (2006).

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127. Ibid. 128. Anon. January 18, 2006. Nations urge Japan to stop whaling. Australian Associated Press, see ASOC (2006). 129. See Anon. June 26, 2005. Whaling activists to battle Japanese, The Sunday Mail (Queensland, Australia); Anon. June 24, 2005. Fed: HIS to seek US sanctions against Japan over whaling. Australian Associated Press NEWSFEED; Anon. June 24, 2005. Fed: whaling—a world where all is not as it seems. AAP NEWSFEED; and Anon. September 2004. Is the future of tuna resources ensured? OPRT Newsletter International 5:1–2, available at http://www.oprt.or.jp (interviewing current president of the OPRT, Isao Nakasu). 130. IPOA-Capacity, supra n 4. Under Section IV: immediate actions for major international fisheries requiring urgent measures, footnote 9 states “The required reduction would vary from fishery to fishery; e.g. a 20 to 30% reduction was mentioned for large-scale tuna long line fleet (Report of the FAO Technical Working Group on the Management of Fishing Capacity. La Jolla, United States of America, April 15–18, 1998. FAO Fisheries Report No. 586).” 131. See, e.g., MAFF. April 25, 2003. The 25th session of the committee on fisheries of FAO. MAFF Update No. 499, available at http://www.maff.go.jp/mud/499.html. 132. Ibid. (emphasis added). Similarly both Iceland’s and Norway’s and its whaling industry and government have claimed that commercial whale hunts are important for protection of fin fish stocks in ocean areas where the whales have been foraging with the result that fish stocks are being diminished and their fishing industries consequently harmed. See, e.g., Anonymous (2006a), available at http://science.monstersandcritics. com/news/article 1213353.php. 133. OPRT. January 5, 2005. Press release: Fisheries Agency, Japan, rejects acceptance of the introduction of trade regulations on great white sharks and Irrawaddy dolphins without reasonable rationale, available at http://www2. convention.co.jp/maguro/e maguro/index.html.

134. Ibid. 135. One article quotes FAO supervisor of fishmonitoring programs, Serge Garcia, as saying, “Only one of these big tuna [bluefin tuna] can be worth as much as the most expensive MercedesBenz. How do you expect criminal organizations not to want to be in on it?” Rosenblum, Mort. July 13, 2004. Tuna threatened by Japan, mafiaowned fishing operations, illegal fishing, high quotas. Cyber Divers News Network, available at http://www.cdnn.info/eco/e040713/e040713.html. Also, illegal fishing for lobster off the Kenyan coast is being exported mainly to Japan and Italy. Anon. February 1, 2004. Illegal fishing threatens lobsters along Kenyan coast. ABC News Online, available at http://www.abc. net.au/news/newsitems/200402/s1035785.htm. 136. Fornari, Daniel J. 2006. New opportunities and deep ocean technologies for assessing the feasibility of subseabed high-level radioactive waste disposal: twenty-first century oceanography applied to solving outstanding questions, presented to the Law of the Sea Institute, Conference: oceans in the nuclear age (February 10–11, 2006); Skaridov, Alexander S. 2006. Russian approach to the protection of the arctic seas from the radioactive wastes, presented to the Law of the Sea Institute, Conference: oceans in the nuclear age (February 10–11, 2006). Both on file with authors. See website and report of papers from the conference “oceans in the nuclear age,” available at http://www.law.berkeley.edu/centers/ilr/ona/pages/ toc.htm. 137. To be considered, in any list of the range of actions that can be taken to address the IUU problem, is a set of initiatives by the developed nations in which financing of IUU and FOC operations are accomplished, port and trade facilities extended, etc., as mentioned in the text, infra n 161. See Vidas (2004). The issue was also discussed in the recent OECD conference and reports on IUU issues. See, inter alia, Schmidt (2005). In the same way as Hayashi’s (1999, 2004) insight and unstinting administrative efforts were the keystone of the FAO movement to address the IUU problem in the last decade, so now Schmidt’s (2005) vision and

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initiatives within the OECD have been a crucial factor in drawing the governments of the developed industrial nations into the consideration of how joint and coordinated action by them can address the IUU problem internationally. 138. See Scheiber (1997). 139. Scheiber (1997), Kimball (2004), Parsons (2005), and Griffis and Kimball (1996). The ecosystem-oriented approach has remarkably deep historical roots, in some of the earliest of modern (i.e., post-1850) management programs. See, e.g., Margaret Deacon’s study of the Scottish management efforts in the late nineteenth century, in Ocean resources: industries and rivalries since 1800 (Harry N. Scheiber, ed.) (University of California, Berkeley, Center for the Study of Law and Society Working Papers, 1990). 140. To determine the condition of a specific fishery stock, or the dynamics that are affecting a stock and more generally its habitat, requires scientific investigation with accurate data. Uncertainties may have tragic consequences, as happened with Japan’s denial of the endangerment of the pygmy blue whale (Small 1971). For another contemporary example, see the discussion of the collapse of the cod (Schrank 1995). As traditional fisheries collapse, many operators are turning to deep-sea fisheries where the difficulties in scientific assessment and the ability to effectively manage and regulate are further exacerbated (Molenaar 2004), who discusses the deep sea fisheries issue in the context of international and regional fisheries and conservation agreements. For analysis of the 1995 Fish Stocks Agreement, as it provided definitions of “reference points” for designating stocks as imperiled, see Hayashi (1999). 141. Policy of the United States with respect to Coastal Fisheries in Certain Areas of the High Seas, by the President of the United States, Procl. No. 2668, 10 Fed. Reg. 12304 (September 28, 1945). 142. Canadian Department of External Affairs. January 27, 1944. Memorandum of a meeting on the north-western Atlantic fisheries problems, East

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Block. Documents Can. External Relations, No. 1062 at 1724. 143. Memorandum to staff regarding Japanese peace settlement: Canadian interest in regulation of Japanese fishing 12–13 (October 1947) (quoted in Scheiber 1999). 144. Memorandum of conversation, Subject: Japanese fishery treaty, between Mr Collins of Canadian embassy and Mr Johnson of northeast Asian office, March 23, 1950, dated March 24, 1950 (cited in Scheiber (2004). 145. Thorp quoted in office memorandum Mr Gay to Rusk, Merchant, and Johnson, July 27, 1951 (cited in Scheiber 2004). 146. Scheiber (2004) at 103, 103 n 261. 147. Of course, Japan’s economic interests have been consistently at stake, since its DWF fleet was the world’s most productive through nearly all the postwar era of the late twentieth century, as it remains today in the top level of production; and increasingly, cultural politics, expressed in Japanese interests’ claims for the sanctity of “freedom of the seas,” has also been a major factor in its often intransigent approach to international agreements restricting their fishing operations. On the heritage in Japanese ocean-law politics, see, e.g., Judge Shigeru Oda’s fascinating discussion of the abstention doctrine in the 1952 North Pacific agreement, and the subsequent history of Japan’s relations to Law of the Sea, in Oda (2004). For an argument that Japan has been inadequately assertive and should take a harder line in pursuing its interests, at least as to the IWC, see Friedheim (1999). 148. The incorporation of stock assessment analysis into management regimes is a deeply contested issue; for an overview and richly textured analysis of the problem today, see Stokke (2001). 149. See, e.g., Vidas (2004) and Schmidt (2005). 150. The formalization of discussions and movement toward collaborative effort began with a “Joint Meeting of Tuna RFMOs” held in Kobe, Japan, in January 2007; with a follow-up meeting scheduled for Raleigh, NC, USA, July 2007. Proceedings, reports and updates are in part

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now available and late postings will be found at http://www.tuna-org.org/#.

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Hampton J, JR Sibert, P Kleiber, MN Maunder, and SJ Harley. 2005. Decline of Pacific tuna populations exaggerated? Nature, 434(7037):E1–E2. Hanafusa K and N Yagi. 2004. Effort of elimination of IUU large-scale tuna long-line vessels, OECD Doc. No. AGR/FI/IUU(2004), 17:2–9. Haward M and A Bergin. 2001. The political economy of Japanese distant water tuna fisheries. Marine Policy, 25(2):91–101. Hayashi M. 1999. The 1995 Fish Stocks Agreement and the Law of the Sea. In Vidas D and W Østreng (eds) Order for the Oceans at the Turn of the Century. The Hague: Kluwer Law International, pp. 37–53. Hayashi M. 2000. The southern bluefin tuna cases: prescription of provisional measures by the International Tribunal for the Law of the Sea. Tulane Environmental Law Journal, 13(2):361–386. Hayashi M. 2004. Illegal, unreported, and unregulated (IUU) fishing: global and regional responses. In Caron DC and HN Scheiber (eds) Bringing New Law to Ocean Waters. Leiden: Martinus Nijhoff Publishers, pp. 95–123. Hey E. 2005. Reviewing implementation of the LOS convention and emerging international public law. In Elferink AGO (ed.) Stability and Change in the Law of the Sea: the Role of the LOS Convention. Leiden: Martinus Nijhoff Publishers, pp. 75–88. Inter-American Tropical Tuna Commission (IATTC). 2004. Resolution C-04-09: Resolution for a Multi-Annual Program on the Conservation of Tuna in the Eastern Tropical Pacific Ocean for 2004, 2005 and 2006. IATTC. 2006. Resolution C-06-02: Resolution for a Program on the Conservation of Tuna in the Eastern Tropical Pacific Ocean for 2007. International Commission for the Conservation of Atlantic Tuna (ICCAT). 2002a. Recommendation by ICCAT on Bigeye Tuna Conservation Measures (Recommendation 02-01). ICCAT. 2002b. Recommendation by ICCAT on North Atlantic Albacore Catch Limits (Recommendation 02-02 ALB.

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species. FAO Fisheries Technical Paper, 495: 84. Majkowski J. 2007. Global fishery resources of tuna and tuna-like species. FAO Fisheries Technical Paper, 483:54. Marr S. 2000. The southern bluefin tuna cases: the precautionary approach and conservation and management of fish resources. European Journal of International Law, 11(4):815–832. Maunder MN, JR Sibert, A Fonteneau, J Hampton, P Kleiber, and SJ Harley. 2006. Interpreting catch per unit effort data to assess the status of individual stocks and communities. ICES Journal of Marine Science, 63(8):1373–1385. McLaughlin RJ. 2004. Managing foreign access to marine genetic materials: moving from capture to cooperation. In Caron DC and HN Scheiber (eds) Bringing New Law to Ocean Waters. Leiden: Martinus Nijhoff Publishers, pp. 257–282. McNeely RL. 1961. The purse seine revolution in tuna fishing. Pacific Fisherman, 59(7):27–58. Miyake MP. 2007. Factors affecting recent developments in tuna longline fishing capacity and possible options for management of longline capacity. FAO Fisheries Proceedings, 8:107–116. Molenaar EJ. 2000. The concept of “real interest” and other aspects of co-operation through regional fisheries management mechanisms. International Journal of Marine and Coastal Law, 15(4):475–531. Molenaar EJ. 2004. Unregulated deep-sea fisheries: a need for a multi-level approach. International Journal of Marine and Coastal Law, 19(3):223–246. Moore G. 1987. Enforcement without Force: New Concepts in Compliance Control for Foreign Fishing Operations. In Essays in Memory of Jean Carroz (available at http://www. fao.org/docrep/s5280T/s5280t0m.htm). Myers RS and B Worm. 2003. Rapid worldwide depletion of predatory fish communities. Nature, 423(6937):280–283. Oda S. 1989. International Control of Sea Resources (Reprint with New Introduction) ( Publications on Ocean Development, Vol. 12). Dordrecht, Boston and London, 215 pp.

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Holders to Eliminate IUU Tuna Fishing Activities. AGR/FI/IUU(2004)13: ¶ 4. Sato Y. 2001. Japan’s efforts to responsibly manage southern bluefin tuna resources bear fruit. Japan Times, June 7, 2001:17. Scheiber HN. 1986. Pacific Ocean resources, science, and Law of the Sea: Wilbert M. Chapman and the Pacific fisheries, 1945–1970. Ecology Law Quarterly, 13(3):381–534. Scheiber HN. 1989. Origins of the abstention doctrine in ocean law: Japanese–U.S. relations and the Pacific fisheries. Ecology Law Quarterly, 16(1):24–95. Scheiber HN. 1997. From science to law to politics: an historical view of the ecosystem idea and its effect on resource management. Ecology Law Quarterly, 24(4):631–651. Scheiber HN. 1999. The biodiversity convention and access to genetic materials. In Vidas D and W Østreng (eds) Order for the Oceans at the Turn of the Century. The Hague: Kluwer Law International, pp. 187–201. Scheiber HN. 2000. Historical memory, cultural claims, and environmental ethics: the jurisprudence of whaling regulation. In Scheiber HN (ed.) Law of the Sea: the Common Heritage and Emerging Challenges. The Hague: Martinus Nijhoff Publishers, pp. 127–166. Scheiber HN. 2001a. Inter-Allied Conflict and Ocean Law, 1945–53: The Occupation Command’s Revival of Japanese Whaling and Marine Fisheries. Tapei: Academia Sinica Press, pp. 51–100 Scheiber HN. 2001b. Ocean governance and the marine fisheries crisis: two decades of innovation—and frustration. Virginia Environmental Law Journal, 2(1):119–137. Scheiber, HN. 2002. “Dealing with a Resource Crisis: Globalization and the Management of the Marine Fisheries,” Stanford Environmental Law Journal 21: 45–79. Scheiber HN. 2004. Japan, the North Atlantic Triangle, and the Pacific fisheries: a perspective on the origins of modern ocean law, 1930–1953. San Diego International Law Journal, 6(1):27–111.

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Chapter 18

Quasi-Property Rights and the Effectiveness of Atlantic Tuna Management D. G. Webster

Abstract

Introduction

It is well known that highly migratory species cannot be “owned” by any one fisher or fishing entity until they are caught. Nevertheless, fishing countries have developed a means of establishing quasiproperty rights by controlling access to their markets. Members of regional fisheries management organizations (RFMOs) regularly establish catch limits and national quota distributions, and then enforce these measures by refusing to import fish from nonmember or noncooperating countries and vessels that do not abide by the measures. Because most of the countries that benefit from these RFMOs are also major importers of tunas and tuna-like species, such tradebased exclusion has been a relatively effective means of reducing fishing by nonmember or noncooperating countries. This chapter traces the evolution of quasiproperty rights in the International Commission for the Conservation of Atlantic Tunas (ICCAT), the first RFMO to adopt such measures. Impediments to full implementation of quasi-property rights, such as increasing demands from developing countries and the ingenuity of the fleets of nonmember or noncooperating countries, are also covered. Finally, the future of quasi-property rights is discussed, including the potential for international tradable quota schemes.

Management of highly migratory species, such as tunas and swordfish, has long been thwarted by the vastness of the oceans and the territoriality of nation states. In order to ensure long-term benefits from such an immense expanse, national governments must cooperate with one another. No one government has the ability to police all the oceans, nor the power to control the millions of users that hail from all over the globe. At the same time, the current world system is based on the norm of sovereignty, which implicitly places national interests above global interests. While recognizing the need for collective action, national representatives have repeatedly conditioned their cooperation on the relative distribution of costs and benefits. The result has been a global tragedy of the commons. One popular solution to this problem has been the enclosure of coastal waters, which culminated in the establishment of 200-mile exclusive economic zones (EEZs) under the 1982 United Nations Convention on the Law of the Sea (UNCLOS III).1 The terms of this agreement were negotiated over two decades, reflecting the difficulty of reconciling national interests in ocean resources. Functional international law covering high-seas 321

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resources was not codified until 10 years later, with the UN Fish Stocks Agreement.2 Like UNCLOS III, this treaty provided for the establishment and protection of national access rights within the management regime. However, because of the geographic scope of these fish stocks, allocation of access rights was based on national influence within the related regional fisheries management organization (RFMO) rather than territorial claims. Another similarity between UNCLOS III and the UN Fish Stocks Agreement is that both codified existing practices. As Juda (1996) notes, governments claimed economic rights over 200-mile zones prior to their broad acceptance in the UNCLOS III regime. Likewise, RFMOs had established mechanisms for the allocation and enforcement of national access rights on the high seas several years before the adoption of the UN Straddling Stocks Agreement. While this agreement drew on practices from several RFMOs, the most groundbreaking combination of measures came directly from International Commission for the Conservation of Atlantic Tunas (ICCAT). Developed for the highly valuable Atlantic bluefin tuna, this package of national allocation of access rights protected by international monitoring and enforcement mechanisms proved to be quite popular. It has since been adopted for several other important species, and serves as a foundation for Article 19 of the UN Fish Stocks Agreement, which deals with compliance. Unlike the EEZ solution, which relies on welldefined areas of resource jurisdiction, this new multilateral management system creates quasiproperty rights through the assignment of national quotas, which can be regularly renegotiated within the relevant RFMO. Similarly, whereas EEZs are generally policed by their respective governments, national quotas are protected through international trade-based monitoring and enforcement. Production at the national level is tracked through trade, and if countries fail to enforce international measures, punitive action may be taken, including multilateral import prohibitions on the overfished species from the offending country. In this chapter, we explore the origins of this trade-based management combo at ICCAT and the broader implica-

tions of such quasi-property rights schemes for international fisheries management.

Origins of the Trade-Based Combo Catch limits, like quotas, are a well-established management tool in many fisheries. Usually, quotas are assigned to individual fishers by some government organization, although agreement on national quota allocations has also been observed in bilateral or trilateral agreements since the 1930s.3 However, ICCAT was one of the first large-scale RFMOs to adopt the practice. At the same time, ICCAT also pioneered the use of multilateral trade-based monitoring and enforcement for the protection of commercially targeted species. Multilateral trade sanctions for the protection of various species became part of international law with the institution of the Convention for the International Trade in Endangered Species (CITES) in 1973.4 About 2 years later, the International Whaling Commission (IWC) began to limit commercial harvests of various whale populations to their maximum sustainable yields. By 1982, members of the IWC decided that such limits were not sufficient, so they agreed to an international moratorium on commercial whaling in 1982.5 In these cases, complete prohibition of production or trade was viewed as the only means of ensuring compliance, given the difficulties of monitoring and enforcement. While it was not officially a part of international law until 1995, the eco-labeling scheme that emerged from the tuna–dolphin conflict in the eastern Pacific Ocean was a preliminary step toward protecting species without prohibiting the encircling of schools of tuna associated with dolphins. However, these measures were developed to protect dolphins that were accidentally caught in purse seines targeting tuna. Thus, management was a matter of bycatch avoidance, which was facilitated by new technologies, rather than by reducing harvests of the targeted species (DeSombre 1999). Bycatch is certainly an issue in many other RFMOs, but depletion of targeted species has also

18 Quasi-Property Rights and the Effectiveness of Atlantic Tuna Management

raised the need for reduction in directed harvests. Unlike whales, seals, and other marine mammals, there has not been sufficient political will to completely prohibit commercial exploitation of highly migratory species such as tunas and swordfish (Webster 2006). Instead, RFMOs searched for ways to limit harvests to the maximum sustainable yield. Initially, minimum size limits and seasonal closures were the methods of choice, but the former has been virtually impossible to implement and the latter requires rapid reporting, which is not politically viable in most RFMOs.6 Furthermore, lack of capacity or willingness to consistently monitor and report national fishing activities has undermined participants’ faith in the “honor system” encoded in most RFMO agreements. That is, most national representatives are skeptical of data such as reported landings that are provided by other RFMO members.7 Combined with an upsurge in nonmember fishing activities, otherwise known as illegal, unregulated, or unreported (IUU) fishing, this distrust created a demand for alternative monitoring and enforcement mechanisms that could be applied at the international level. Thus, by the early 1990s, the elements of a new management paradigm were readily available and in demand. The catalyst that amalgamated these preexisting concepts into the ICCAT trade-based combo was the 1991 nomination of western Atlantic bluefin tuna for a CITES listing. ICCAT had been attempting to manage this stock via a trilateral quota arrangement among the major producers (Canada, Japan, and the United States) since the early 1980s. Although reported landings were generally reduced to the level set by ICCAT, unreported landings, high levels of mixing between the eastern and western Atlantic stocks, and politicization of scientific advice had resulted in further declines in the western Atlantic stock. By 1991, ICCAT’s Standing Committee on Research and Statistics (SCRS) reported that the population of small- and medium-size western Atlantic bluefin had been stabilized, but that the population of adult, spawning bluefin had a 50%

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chance of being lower in 1993, even if the total catch were cut in half. In fact, it was expected that the population of spawning fish would remain below the 1992 level until 1995, and could stay depressed even longer.8 Similar circumspect advice had been meted out in previous years, with little response from members of ICCAT. However, in 1991 international environmental organizations such as the National Audubon Society and the World Wildlife Fund worked with Sweden in an attempt to list Atlantic bluefin tuna under CITES.9 Because such a listing would result in prohibition of trade in western Atlantic bluefin, this maneuver certainly got the attention of ICCAT contracting parties. With little discussion, ICCAT members with vessels targeting western Atlantic bluefin tuna agreed to a 4-year plan that would gradually reduce allowable landings of the stock from 2,660 to 1,729 metric tons (ICCAT 2007b: Rec. 91-1). Another major shift in 1991 was a pronounced and concerted movement by historically dominant fishing countries—including Canada, Japan, the United States, France, and Spain—to exclude nonmembers from exploiting both stocks of Atlantic bluefin tuna. At their behest, ICCAT took its first steps toward more effective monitoring and enforcement measures by setting up a working group to look into the technical aspects of trade documentation and the legal implications of sanctions (ICCAT 2007b: Res. 91-2). Such measures had been discussed in the past, but there was never enough political will to generate action. Between the CITES threat and evidence of increasing harvests by fleets from nonmember countries, incentives to exclude were much greater during the 1990s than they had been in the past. By 1992, ICCAT had adopted a statistical document program for bluefin tuna, so that it could track trade in the species (ICCAT 2007b: Rec. 92-1). This was closely followed by the 1994 Bluefin Action Plan, which provided for multilateral trade measures, and the first enforcement via sanctions, levied in 1996 against Belize, Honduras, and Panama (ICCAT 2007b: Res. 94-3, Rec. 96-11, and Rec. 96-12).

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Once this system was established, it was quickly applied to other stocks under ICCAT’s purview. In 1994, quota sharing was adopted for the heavily depleted northern Atlantic stock of swordfish, with the stipulation that trade-based enforcement mechanisms should follow. This was accomplished in the 1995 Swordfish Action Plan, which was a close copy of the Bluefin Action Plan and also applied to both the northern and southern Atlantic stocks of swordfish. Preexisting international enforcement mechanisms facilitated the adoption of sharing arrangements for southern Atlantic swordfish in 1997. It is one of the few stocks under ICCAT’s purview to be placed under management while thought to be at or near full exploitation (rather than overexploited). International monitoring and enforcement were adopted for bigeye tuna in the 1998 Resolution by ICCAT concerning the unreported and unregulated catches of tunas by large-scale longline vessels in the Convention area (IUU Resolution).10 This resolution is more general in regard to the species covered, but is quite specific in terms of vessel size. It applies only to large-scale longliners (>24 m in overall length) targeting Atlantic tunas, which has so far resulted in sanctions only on nonmember countries with fleets targeting bigeye tuna. Interestingly, this measure was adopted prior to the establishment of quota sharing by ICCAT, and was aimed almost exclusively at preventing incursions by fleets of nonmember countries. Prior to the adoption of this measure, the stock had been declining for years, but conflicts over relative gains had stymied Japanese proposals for quota sharing. The best that could be achieved was a limit on landings by vessels of Chinese Taipei’s large and highly mobile fleet (ICCAT 2007a: Res. 97-15).

Composition of the Trade-Based Combo All three international enforcement measures consist of similar mechanisms. First, there is a two-track monitoring system that combines

lists of “legal” and “illegal” vessels with tradedocumentation schemes. ICCAT members report all vessels registered by their governments to target the species in question in the Atlantic Ocean. These names are compiled into a positive or white list of “legal” vessels. Then, through their national representatives, fishers and enforcement agents can report “illegal” vessels that are not on the white list for a particular stock, but are targeting it. These vessels are then placed on a negative list; too many illegal vessels can get a country into trouble. Alternately, statistical document programs have been established for each of the three stocks currently managed using the trade-based combo. These documents are forms that must be filled out and validated upon landing of the fish and then reviewed and passed on at each point of trade. They let importing countries track each fish by country and area of origin so that they can identify products produced in contravention of ICCAT management measures. Trade documents can also be compared to the composition of catches at market to check for violations. As a virtual monopsonist in the market for sushi-quality bluefin and bigeye tuna, Japan has been a strong leader in tracking statistical documents and reporting overharvests for bigeye and bluefin tuna. Within ICCAT, there are two subcommittees that are responsible for reviewing this information, along with the national landings reported by various governments. The first one, established in 1992, is the Permanent Working Group for the Improvement of ICCAT Statistics and Conservation Measures (PWG). It is responsible for all breaches by countries that are not members of ICCAT. Oversight of commission members is the responsibility of the ICCAT Conservation and Management Measures Compliance Committee, which was created in 1995 (ICCAT 2007a: Res. 92-2; ICCAT 2007a: Oth. 95-15). This dual-track compliance system arose in part because membership has its privileges; namely the ability to either officially object—which exempts the member and its fleets from the offending management measure—or block consensus

18 Quasi-Property Rights and the Effectiveness of Atlantic Tuna Management

325

Table 18.1. Sanctions applied by ICCAT under the three action plans.

Bluefin action plan Year

Applied

1996

Belize Honduras Panama Equatorial Guinea*

1999

Removed

Swordfish action plan Applied

Removed

Applied

Removed

Belize Honduras

2000

2001 2002

IUU action plan (Bigeye)

Belize Cambodia Honduras St. Vincent and Grenadines Equatorial Guinea Honduras†

Honduras†

Sierra Leone

2003 2004

Bolivia Sierra Leone Georgia Equatorial Guinea† Sierra Leone Belize

Sierra Leone Belize

Equatorial Guinea† Sierra Leone Cambodia Belize St. Vincent and Grenadines

* Commission †

member without delegation in given year. Commission member in given year.

on measures, including sanctions. This also gives members a stronger voice when it comes to disputes over evidence of noncompliance. In addition, members can be penalized less stringently through reductions in quota, while most nonmembers do not receive specific quota allocations.11 It is also interesting to note that the majority of the countries that have been sanctioned by ICCAT are nonmembers. These countries, and the Action Plans under which they were cited, are listed in Table 18.1. Only Equatorial Guinea was a member when trade-based measures were put into place.

Moreover, it did not send a delegation to any of ICCAT’s annual meetings from 1999 to 2001, and therefore was not able to object to the sanctions that were levied against its bluefin and bigeye exports. When it did begin sending a delegation to the meetings, trade measures were quickly lifted. A similar pattern is evident for Panama and Honduras, which joined ICCAT after sanctions were put into place, and then saw those sanctions lifted. ICCAT members certainly learned from their experiences with Honduras and Panama. Requirements for the lifting of sanctions have

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50 45

Number of contracting parties

40 35 30 25 20 15 10 5 0 1970

1975

1980

1985

1990

1995

2000

2000

Year

Figure 18.1. Annual membership of ICCAT.

become more stringent over the years, and a clean slate is now considered to be a prerequisite for membership. Since 2001, several countries, including Belize, Sierra Leone, and St Vincent and the Grenadines, have struggled to overcome IUU status in order to get the sanctions lifted.12 In fact, membership in ICCAT substantially increased throughout the 1990s, as shown in Figure 18.1. Most of the new members in this period were developing coastal states, although several distant-water fishing countries, like China and the Philippines, have recently joined as well. Bringing new members into ICCAT should improve its effectiveness because more countries are engaged in the effort of cooperative international management, provided that the nonmembers are currently not cooperating with ICCAT, but would do so if they join. However, wider membership also means more demands for access to already depleted stocks. This, in turn, increases the pressure to set total allowable catches (TACs) above scientifically recommended levels, which has al-

ready undermined management of several important stocks. These and other aspects of the varied success of the ICCAT trade-based combo are discussed in the next section.

Effectiveness of the Trade-Based Combo The effectiveness of an international regime is a notoriously difficult concept to pin down. The same can be said of some part of a regime, such as the rules and norms associated with ICCAT’s trade-based combo of management measures. Yet this is one of the most important elements in the analysis of regimes, so we muddle on with imperfect definitions. Here, I intend to examine three interlocking aspects of effectiveness, efficacy, appropriateness, and legitimacy, which are loosely based on ideas of Young (1999). Efficacy asks whether a system of

18 Quasi-Property Rights and the Effectiveness of Atlantic Tuna Management

327

IUU/laundering Efficacy Single stock/fishery

Effiectiveness

Appropriateness TAC inflation

Legitimacy Uncommon heritage?

Figure 18.2. Framework of effectiveness.

measures works as applied. Appropriateness measures the usefulness of the applied measures relative to broader goals and alternative approaches. Following Odell (1982), Haas (1990), Peterson (2000), and others, legitimacy refers to participants’ acceptance of both management measures, such as the trade-based combo, and the institutions that produced them. It is an important contributor to both efficacy and appropriateness. As shown in Figure 18.2 (optional), there are several overlapping shortcomings in the effectiveness of the ICCAT trade-based combo. First, two issues arise when looking at the efficacy of the measures as adopted. One must ask, when ICCAT sets a TAC level, is it able to keep the catch from exceeding that amount? And then, does that limit have the intended effect on stock biomass? Unfortunately, the evidence is mixed. On paper, compliance seems to have improved, but there is still considerable evidence that fishers misreport landings, engage in smuggling activities, and even “launder” fish by falsifying trade documents. Moreover, trade documents do not track domestic consumption of the species of concern, and therefore many fish, particularly those below the minimum size limit agreed by ICCAT, are still

caught and sold. In an extreme case, recent estimates by the SCRS suggest that catches of eastern Atlantic bluefin tuna are about 18,000 tons greater than reported (ICCAT 2007b, 2: 59). Even in fisheries for which such misreporting is not so great, the potential for unrelated shifts in fishing effort—i.e., movement of part of the Spanish swordfish fleet from the northern Atlantic to the southern Atlantic—generate questions regarding the true impact of ICCAT management measures (ICCAT 2007b, 2: 84). As for the response of the stocks themselves to these measures, scientific analysis shows that two stocks that are managed under the trade-based combo—northern Atlantic swordfish and bigeye tuna—are almost at levels of biomass that are capable of supporting the respective maximum sustainable yeilds (MSYs). The SCRS not only attributes some part of the increase for northern Atlantic swordfish to the trade-based combo, but also notes concomitant improvements in environmental conditions for swordfish reproduction (ICCAT 2007b, 2). Similar conclusions were drawn from the most recent bigeye assessment (ICCAT 2007c, 2: 13–14). Ironically, the bluefin tuna stocks, for which the combo was first

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designed, are still severely overfished. In spite of considerable reductions in the TAC, western Atlantic bluefin is still at very low levels of biomass (about 40% of the level that would support MSY). On the other hand, overfishing in recent years has reduced the eastern Atlantic bluefin to about 50% of the level that would support MSY, and current harvest levels are thought to be unsustainable (ICCAT 2007b, 2: 53 and 61). IUU fishing and fish laundering are not the only reasons for these dismal numbers. There are also problems of efficacy and appropriateness associated with the single-stock and single-fishery application of the trade-based combo. Bycatches of managed species or nontarget fisheries can also undermine the efficacy of these measures by raising catches above the TAC levels. ICCAT has recognized this problem and attempted to deal with it in several ways. Minimum size limits were adopted for bluefin, bigeye, and swordfish, though landings of small fish remain extremely high, particularly for the tunas. Usually unreported, discards of dead small fish create an even greater problem because they can skew scientific assessments. Recently, various time–area closures have also been adopted, but these have not been as effective as desired (ICCAT 2007c: 14–15; ICCAT 2007b, 2: 52 and 60). In fact, the only bycatch remediation measures that have shown any efficacy are regulations put in place by individual countries, rather than by ICCAT as a whole. These include minimum size limits at landing, set and strongly enforced by the United States and Canada, and a prohibition on retaining swordfish that Japan instituted for its fleets targeting bigeye tuna (ICCAT 2007b, 2: 86). Ideally, all countries and entities would be willing and able to take such actions to prevent bycatches, but many, like the European Community (EC) would be forced to severely reduce its targeted harvests in order to reduce bycatch. This is because EC purse-seine fleets target large, mixed schools of small tunas, including juvenile bigeye, and practical technical solutions to remove this bycatch remain elusive.13 The mixed nature of such fishing operations and the nonselective character of other gears such as

the longlines used to target swordfish and adult bigeye tuna suggest that single-stock management may not be the most appropriate way to deal with these fisheries. Indeed, it is virtually impossible to use the trade-based combo on the fishery for small tunas without substantially increasing the level of direct monitoring (through observers), as is the case in the eastern Pacific Ocean, where the observer coverage is 100% of trips of vessels with fish-carrying capacities of more than 363 tons. Furthermore, these fish are not sold individually, but in huge mixed lots, so modification of the statistical document tracking system would also be required. Lastly, mixing between stocks of the same species, such as eastern and western Atlantic bluefin tuna, increases the scope of relative gains, allowing countries targeting each stock to compare their conservation efforts. This can delay management as recriminations take the place of constructive negotiations. Some analysts and advocates might go further, suggesting that the single-fishery/single-stock approach of the trade-based combo is inappropriate because it ignores the complexity of the ocean’s ecosystem and bycatches of many other species. For instance, Atlantic blue marlin and white marlin have been heavily depleted in large part because these relatively small stocks are bycatches for longliners targeting tunas and swordfish. ICCAT has taken some actions to reduce these incidental harvests, but, as in other bycatch cases, these numbers cannot be trusted because fishers can simply discard the unwanted catches at sea rather than attempting to avoid them. Since there is minimal international trade in these species, there is also no source for independent monitoring these catches. On the other side of the equation, scientists have been finding increases in populations that once were either competition or prey for commercially targeted species such as the tunas and swordfish. Perhaps the most disturbing is the northward movement of the Humbolt squid (Dosidicus gigas). Also a top-level predator, expanding populations of Humbolt squid will consume resources once dominated by tunas and tuna-like species.

18 Quasi-Property Rights and the Effectiveness of Atlantic Tuna Management

Such imbalances could lead to sudden and permanent changes in the life histories of various species, including those targeted by ICCAT members. If smaller populations of tunas are forced to compete with larger populations of squid, the combination of natural and man-made stressors could reduce populations even farther (Zeidberg and Robison 2007).14 While several alternatives to the single-stock approach have been proposed, it is not likely that this element in the trade-based combo will change anytime soon, as it is too heavily imbedded in both the science and the management of highly migratory species. That said, one can also question the appropriateness of the trade-based combo within this rubric because of the incidence of TAC inflation. This can occur in one of two ways. First, in several instances, the TAC for a particular stock has been set above the level prescribed by the SCRS in order to accommodate all demands by ICCAT members. In the case of southern Atlantic swordfish, this entailed setting a TAC that was actually greater than the amount that the fleet would be able to catch even if it fished at its full capacity. At the same time, political TAC inflation has been a major contributor to the decline of eastern Atlantic bluefin, and possibly the western Atlantic stock as well. The eastern Atlantic case is more obvious because ICCAT members simply disregard scientific advice. For the western stock, members choose to accept the most optimistic of several scenarios presented to them, rather than to maintain more stringent post-CITES limits on their catches. The western Atlantic bluefin case is related to another form of TAC inflation: the politicization of scientific advice. Sudden shifts in SCRS advice are often observed after the initial adoption of a trade-based combo or other management measures. In all cases, scientific assessments became more optimistic—and therefore recommendations became less restrictive—after the adoption of management measures. Furthermore, in several cases, it is clear that new findings by scientists from countries that resisted stringent management measures were most responsible for these shifts. For example, Japanese scientists introduced more

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positive assessments after the 1991 revolution in the management of western Atlantic bluefin, which then led to a quick return to higher TACs. Both types of TAC inflation can lead one to question the legitimacy of the trade-based combo as an exercise in international environmental management. Accusations fly in all directions during negotiations, calling into question the scientific foundation of every substantive proposal on the table. Countries that prefer lower TACs accuse others of watering down scientific advice, while those that prefer higher TACs or alternative measures claim that pessimistic science is being used only to placate domestic environmental interests. In 1995, the United Nations Food and Agriculture Organization included the “precautionary approach” concept in its Code of Conduct for Responsible Fishing Practices, ostensibly to eliminate conflicts over interpretation of scientific results. Nevertheless, ICCAT has not operationalized the idea, due to strong resistance from most members. Another problem of legitimacy that is directly related to the implementation of the trade-based combo has to do with the apportioning of a global resource. Historically dominant fishing states clearly view this system as a means of ensuring long-term access for their fleets via multilaterally approved quota measures. However, many developing countries have demanded their shares of access to these fisheries as well. This contest over norms of allocation—historical access versus development needs—led developing coastal states to organize in the late 1990s, creating the “Group of 18.”15 By holding up quota-sharing arrangements on stocks like bigeye tuna and southern Atlantic swordfish, the Group successfully negotiated for the establishment of an official ICCAT allocation criterion in 2001. Both historical and developing interests are represented in the document, but implementation of the new criteria has favored more powerful historical fishing countries as the desire for particular national quotas has eroded the joint resolve of the Group. Beyond the internal conflicts over access, there are those who would contest the legitimacy of transforming a global public good like the oceans

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into a club-good, even if the club is multilateral. This contestation appears in several ways. First, high levels of noncompliance by IUU fleets and the states that harbor them suggest that they do not respect the legitimacy of distribution through ICCAT. Second, high levels of nonreporting or misreporting by ICCAT member states show that even these countries may not respect ICCATs legitimacy except as a forum to advance their causes. As noted above, the norm of national interests first is prevalent at ICCAT and the other RFMOs. This undermines the legitimacy of the institution itself, as countries and fishing fleets may feel that they are entitled to circumvent ICCAT management if it will benefit national interests. Lastly, scientists have recently shown more concern regarding the need to maintain biodiversity in the oceans (Magnuson et al. 2006, and references cited therein), and environmental organizations such as Greenpeace and the World Wildlife Fund have endorsed this view. They point out the value of biodiversity and ecosystem services provided by many highly migratory species, including nontarget species such as blue marlin and white marlin. These interest groups have been most critical of the trade-based combo, and are most pessimistic about the long-term success of ICCAT itself. While interventions by such environmentoriented interests are increasing at the national level, their voices remain relatively muted within most national delegations.

Conclusion While there are many problems with the ICCAT trade-based combo, it is likely that these innovative measures have at least inhibited fishing effort targeting key commercial species. By slowing exploitation, quasi-property rights schemes can reverse the declines of some species and slow down those of others. So far, concerns regarding effectiveness have not been strong enough to threaten ICCAT’s existence or inhibit the adoption of similar trade-based schemes in other multilateral fisheries organizations (DeSombre 2005).

Future threats do remain, including the potential collapse of Atlantic bluefin fisheries and the possible collapse of bycatch species like white marlin. Hopefully, such crises will be seen as opportunities for improving management, rather than abandoning it all together. If enough public interest is generated, it might even be possible to move away from measures based on national interests, like the trade-based combo, to more holistic approaches such as marine protected areas.

Endnotes 1. UNCLOS III did not enter into force until 1994. However, the 200-mile EEZ became a de facto rule in the late 1970s (Peterson 1995). 2. Agreement for the Implementation of the Provisions of the United Nations Convention on the Law of the Sea of December 10, 1982, relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks. 3. Mostly United States–Canada management of North Pacific fur seal, halibut, and salmon (Peterson 1995, 268). 4. CITES did not enter into force until 1975. http://www.cites.org/eng/disc/what.shtml. 5. Prior to 1975, IWC (or ICRW [International Convention for the Regulation of Whaling]) quotas were neither stock specific (it used “bluewhale-units”) nor sufficient to halt the decline of several important whale species (Christy and Scott 1965: 151–152). Also, there are still several countries that do not support the whaling moratorium. 6. The Inter-American Tropical Tuna Commission (IATTC) is a major exception. It has had rapid reporting since the early 1960s. 7. Again, the IATTC is an exception. It has staff at all the major ports at which tunas caught in the eastern Pacific Ocean are unloaded who, among other things, validate landings data. 8. At half the current harvest, the 1994 stock of large bluefin had a 74% chance of being below the 1992 levels. The probabilities were split in 1995, with a 47% chance of the stock increasing above

18 Quasi-Property Rights and the Effectiveness of Atlantic Tuna Management

the 1992 level and a 27% chance that it would still be lower, depending upon the recruitment of the 1987 year class (ICCAT 1992: 121–122). 9. The National Audubon Society, as its name implies, started out at the national level, but it has since developed chapters in many nations around the world, where it is called Audubon International. 10. Coined in the late 1990s, ICCAT generally uses the term to IUU (illegal, unregulated, or unreported) to refer to any fishing activity that takes place in contravention of ICCAT recommendations, or is misreported to the Secretariat. 11. As a cooperating contracting party, Chinese Taipei has been allotted quotas, as have a few other nonmembers. 12. Belize and St Vincent and the Grenadines joined ICCAT in 2005 and 2006, respectively. Sierra Leone has not joined. 13. See Lennert-Cody et al. (2008) for preliminary results on bigeye avoidance in the eastern Pacific Ocean. 14. It should be noted, however, that Zeidberg and Robison’s conclusion has been disputed by Watters et al. (2008), who pointed out that “fishing-induced reductions of tunas and billfishes have been occurring for at least three decades before the squid’s range expansion, and the expansion occurred while tuna biomasses in the [eastern equatorial Pacific] were at contemporarily high levels.” 15. The terms “developing” and “state” are problematic in this context. However, members of this group self-identify using this terminology, so I believe that it is appropriate.

References Christy FT, Jr and A Scott. 1965. The Common Wealth in Ocean Fisheries, 2nd edn, Baltimore: The Johns Hopkins University Press, 281 pp. DeSombre ER. 1999. Tuna fishing and common pool resources. In Barkin S and G Shambaugh (eds) Anarchy and the Environment. Albany: SUNY Press, pp. 51–69.

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DeSombre ER. 2005. Fishing under flags of convenience: using market power to increase participation in international regulation. Global Environmental Politics, 5(4):73–94. Haas EB. 1990. When Knowledge Is Power: Three Models of Change in International Organizations. Berkeley: University of California Press, 266 pp. ICCAT. 1992. Annual Report. Madrid: International Commission for the Conservation of Atlantic Tunas. ICCAT. 2007a. Compendium of Management Recommendations Resolutions Adopted by ICCAT for the Conservation of Atlantic Tunas and Tuna-like Species. Madrid: International Commission for the Conservation of Atlantic Tunas (http://www.iccat.int/en/RecsRegs.asp). Accessed September 22, 2007. ICCAT. 2007b, Vol. 2. Annual Report of the Standing Committee on Research and Statistics. Madrid: International Commission for the Conservation of Atlantic Tunas (Publication occurs the year after each meeting is held. Prior to 1995 the proceedings of the Standing Committee on Research and Statistics were published in combination with the proceedings of the Commission.) ICCAT. 2007c. Report of the 2007 Bigeye Tuna Stock Assessment Session. Madrid, Spain, June 5–12, 2007 (http://www.iccat.int/Documents/ SCRS/DetRep/DET bet.pdf). Accessed September 22, 2007. ICCAT. 2007d. List of Contracting Parties. Madrid: ICCAT (http://www.iccat.int/en/contracting.htm Juda L. 1996. International Law and Ocean Use Management: The Evolution of Ocean Governance. New York: Routledge, 345 pp. Lennert-Cody CE, JJ Roberts, and RJ Stephenson. 2008. Effects of gear characteristics on the presence of bigeye tuna (Thunnus obesus) in the catches of the purse-seine fishery of the eastern Pacific Ocean. ICES Journal of Marine Science, 65(6):970–978. Magnuson JJ, JH Cowan, Jr, LR Crowder, DG Dallmeyer, RB Deriso, RT Paine, AM Parma,

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AA Rosenberg, and JE Wilen. 2006. Dynamic Changes in Marine Ecosystems: Fishing, Food Webs, and Future Options. Washington, DC: U.S. National Research Council, 153 pp. Odell JS. 1982. U.S. International Monetary Policy: Markets, Power, and Ideas as Sources of Change. Princeton: Princeton University Press, 385 pp. Peterson MJ. 1995. International fisheries management. In Haas PM, RO Keohane, and MA Levy (eds). Institutions for the Earth. Cambridge: The MIT Press, pp. 249–305. Peterson MJ. 2000. International organizations and the implementation of environmental regimes. In Young OR (ed.) Global Governance: Drawing Insights from the Environmental Experience. Cambridge: The MIT Press, pp. 115–151.

Watters GM, RJ Olson, JC Field, and TE Essington. 2008. Range expansion of the Humboldt squid was not caused by tuna fishing. Proceedings of the National Academy of Sciences of the United States, 105(3):E5. Webster DG. 2006. The marlin conundrums: turning the tide for by-catch species. Bulletin of Marine Science, 79(3):561– 575. Young OR (ed.). 1999. The Effectiveness of International Environmental Regimes. Cambridge: The MIT Press, 326 pp. Zeidberg LD and BH Robison. 2007. Invasive range expansion by the Humboldt squid, Dosidicus gigas, in the eastern North Pacific. Proceedings of the National Academy of Sciences of the United States, 104(31):12948– 12951.

Index

Abalone—PAU 7, 132–134 Access limited. See Limited access open. See Open access on the high seas, transformation of ACE (Annual Catch Entitlement), 159 Age maximum sustainable yield (AMSY), 12, 14–15 Agreement on the International Dolphin Conservation Program (AIDCP), 67, 244, 276 building on, 91 dolphin mortality limits (DMLs), 4, 55, 66, 76, 200, 265 flag changes and, 69 as a model, 94 Alaskan groundfish fishery, 21 Albacore (Thunnus alalunga), 12–13, 23, 30 catch allocations assigned to Japan, 289t American Fisheries Act, 234 AMSY (age maximum sustainable yield), 12, 14–15 Annual Catch Entitlement (ACE), 159 Antigua Convention, 100, 104–105 Asian Development Bank, 184 Attenuated property rights, 44 Auction, 139t, 140–141 Australia bluefin tuna management, 23, 157, 300 Heard Island–McDonald Island toothfish and mackerel icefish fishery, 47, 129–131, 130f individual fishing quotas (IFQs), 159 individual transferable quotas (ITQs), 53 New South Wales, farm size in, 144–145 prawn fishery, 46, 185, 237 Australian Fisheries Management Authority (AFMA), 129, 131 Belize, 270, 290 Commission for the Conservation of Southern Bluefin Tuna (CCSBT) and, 275

fish-carrying capacity limits, 109t illegal, unregulated, and unreported fishing, 290 International Commission for the Conservation of Atlantic Tunas (ICCAT) and, 273–274, 323, 325t removal of fishing vessels from registry, 278 swordfish, 106 Bering Sea Fur Seals Convention, 100 Bering Sea pollock cooperative, 47 Bering Sea pollock factory trawlers, 234 Bigeye (Thunnus obesus), 12–13, 30–31, 104, 273 catch allocations, 23, 289t Chinese Taipei quotas, 76 juvenile, caught by purse-seine vessels, 68, 72–73 overexploited stocks, 108, 157 Billfishes, 23, 226, 226t–227t Biodiversity conservation, 94 Blacklists, 274–275 Bluefin Action Plan, 323 Bluefins (Thunnus thynnus, T. orientalis, T. maccoyii), 12, 15, 22–23, 30, 106, 163 catch allocations, 157, 289t CCSBT. See Commission for the Conservation of Southern Bluefin Tuna severe depletion of, 67, 323 Bolivia, 270 fish-carrying capacity limits, 109t illegal, unregulated and unreported fishing, 290 International Commission for the Conservation of Atlantic Tunas (ICCAT) and, 274, 325t Japanese ban on port calls by vessels flagged to, 298 low-standard newcomer to ship registration, 278 Bottom trawling, 175 Brazil, 22 British Columbia Mifflin Plan, 230 Buybacks, 79–80, 181–192 to address ecological issues, 188 to address overcapacity and overfishing, 182

333

334

Index

Buybacks (Cont.) features of buyback programs, 183–186 buyback price formation process, 185–186 critical preconditions, 183 purchase vessels or licenses (permits)?, 184 reinvestment, 185 reuse of vessel, gear, license, 185 voluntary versus mandatory participation, 184–185 who pays for buybacks?, 183–184 industry perspective on, 188–189 lessons learned from the international experience, 189–192 to mitigate problems of excess capacity and have-nots, 22 overview, 181–182, 192 as transitional strategy, 182–183 vessel buybacks, 186–188 coastal and distant-water states, 187 financing buybacks, 187–188 limited access, 187 national sovereignty—individual vessels or flag states?, 187 Bycatch definition of, 225 incentives to address. See Bycatch issues, incentives to address individual transferable quotas for bycatches. See Quotas, individual transferable quotas for bycatches: lessons for the tuna–dolphin issue Bycatch issues, incentives to address, 225–244 conservation and management approaches, 233–243 approaches that reduce effort, 235–237 buybacks, 237–238 conservation investments and mitigation, 234–235 embargoes and sanctions, 236–237 limits on effort. See Efforts, limits on time–area closures, 236 voluntary agreements, 233–234 economic incentives, 229–233 property and use rights, 230–231 subsidies, 232–233 taxes and fees, 231–232 Inter-American Tropical Tuna Commission, 227–229 dolphins, 227–228 sea turtles, 228–229 overview, 225, 243–244 Purse–Seine fisheries of eastern Pacific Ocean (EPO), 225–227, 226t–227t

Cambodia, 270 Commission for the Conservation of Southern Bluefin Tuna (CCSBT) and, 275 illegal, unregulated and unreported fishing, 290 International Commission for the Conservation of Atlantic Tuna (ICCAT) and, 274, 325t low-standard newcomer to ship registration, 278 Canada British Columbia salmon troller buyback, 185 excluding non-ICCAT members from exploiting bluefin tuna stocks, 323 exclusive economic zone (EEZ), 305 fur seals, 100 individual transferable quotas, 53 Pacific halibut, 21 seizure of the Estai, 201 swordfish, 106 Western Atlantic bluefin, 22 Capacity, excess. See Excess fishing capacity Cape Cod Hook and Line cooperative, 46–47 Catch documentation schemes (CDSs), 262, 276 Catch limits, 71–73 CCAMLR (Commission for the Conservation of Antarctic Marine Living Resources), 68, 269, 276 CCSBT. See Commission for the Conservation of Southern Bluefin Tuna Chile, 50, 53, 203 China, 296, 297t, 298 bigeye tuna, 108 not ratifying Straddling and Highly Migratory Fish Stocks Agreement, 165 Chinese Taipei, 168, 324 bigeye tuna, 108 bluefin tuna allocation, 157 “Circle” hooks, 229, 234, 237, 239 CITES (Convention on International Trade and Endangered Species), 285, 299, 303, 322–323 Club good, 269 Cod, 67, 101 Code of Conduct for Responsible Fishing Practices, 284, 329 Columbia, 30 IATTC fish-carrying capacity limits, 109t minimizing tuna fishing impact on sea turtles, 229 “Command and control” regulations, 230 Commission for the Conservation and Management of Highly Migratory Fish Stocks in the Western and Central Pacific Ocean (VCPFC), 14

Index

Commission for the Conservation of Antarctic Marine Living Resources (CCAMLR), 68, 269, 276 Commission for the Conservation of Southern Bluefin Tuna (CCSBT), 14, 20, 101, 107, 156–157, 159 best prospects for emerging ITQ regime, 265–266 flags of convenience and, 272 Japanese catch allocations, 289t Japanese overfishing, 283, 285, 288, 292, 295, 300–301 overlap with WCPFC, 297 quota transfers, 261 regional vessel register (RVR), 66, 187 trade-related measures to address unregulated fishing, 275 Common pool resource (CPR), 269 Common property, 40 Community quotas, 56–57 Complete or fully structured property rights, 43–44 Conservation and management approaches to buybacks, 233–243 approaches that reduce effort, 235–237 buybacks, 237–238 conservation investments and mitigation, 234–235 embargoes and sanctions, 236–237 limits on effort. See Efforts, limits on time–area closures, 236 voluntary agreements, 233–234 “Contiguity” or geographical proximity, 172 Contracting, 44 Convention for the Preservation and Protection of Fur Seals, 66–67, 69 Convention on International Trade and Endangered Species (CITES), 285, 299, 303, 322–323 Convention on the Conservation and Management of Highly Migratory Fish Stocks, 163 Costa Rica, 108, 110 fish-carrying capacity limits, 109t minimizing tuna fishing impact on sea turtles, 229 CPR (common pool resource), 269 Cuba, 22 Customary use rights, 42 Denmark, 105 matjes herring, 47 Destructive fishing practices, 175 Developing nations, recognition of special needs of, 168 Distant-water fishing fleets (DWFs), 283–284 Distant-water fishing nations (DWFNs), 14, 164–166, 168, 252 Divisibility, 43

335

Dolphin mortality limits (DMLs), 4, 55, 66, 69, 76, 230, 234, 265–266 Dolphins conservation of, 94, 227–228, 234 eco-labeling scheme, 322 netting of tunas associated with, 30, 225–226, 226t–227t Dorado, 226t–227t, 242 Duration, 43 DWFNs (distant-water fishing nations), 14, 164–166, 168, 252 DWFs (distant-water fishing fleets), 283–286 Ecological issues, bybacks to address, 188 Ecuador, 12, 30–31, 90, 297t fish-carrying capacity limits, 109t minimizing tuna fishing impact on sea turtles, 228–229 EEZs. See Exclusive economic zones Efforts, limits on, 73, 238–243 industrial-level policies, 243 overview, 238 reducing bycatch per unit of effort, 238–243 economic incentives for bycatch utilization, 242 economic incentives for performance-based solutions, 240–242 economic incentives for technological and operational change, 238–240 El Salvador, 110 fish-carrying capacity limits, 109t minimizing tuna fishing impact on sea turtles, 229 Embargoes and sanctions, 236–237 Endangered Species Act (US), 235 Enforcement, 67, 167–168 Entry into a transnational fishery, 197–201 deterring, 198–201 custom (customary law), 199–200 domestic compliance, 198–199 preventing fishing in member parties’ EEZs, 200–201 trade measures, 199 unilateral actions by member parties, 201 limited entry, 45–46, 69–70, 77–78 qualification and, 201–202 Equatorial Guinea, 290 Commission for the Conservation of Southern Bluefin Tuna (CCSBT) and, 275 illegal, unregulated and unreported fishing, 290 Indian Ocean Tuna Commission (IOTC) and, 275

336

Index

Equatorial Guinea (Cont.) International Commission for the Conservation of Atlantic Tunas (ICCAT) and, 273–274, 325t low-standard newcomer to ship registration, 278 Equity, 170 Eritrea–Yemen Arbitration, 173–174 Estonia, 53 Excess fishing capacity, 11–35 addressing important capacity limitation issues, 20–24 buybacks to mitigate problems of excess capacity and have-nots, 22 changing view, 20–22 criteria for allocating catch and fleet capacity, 22–23 dealing with capacity growth, 23 problems of managing multispecies fisheries, 23–24 background information, 12–17 excess fishing capacity, 15–17 first international efforts to manage tunas, 13–15 status of stocks supporting tuna fisheries, 12–13 defining the problem, 17–19 downward trend, 17–18 management based on user or property rights, 18–19 need for agreement, 19 organizations that control fishing effort, 19–20 overview, 11–12, 32–35 possible options for limiting fishing capacity, 24–32 allocating the catch to users, 29–32 global register, 27 licensing, 27–29 options that do not remove the incentive for overcapacity, 24–29 options that tend to remove the incentive for overcapacity, 29–32 regional registers, 25–27 transferability of quotas, 32 vessel registers, 24 Exclusive economic zones (EEZs), 3, 39, 45, 57, 65, 87, 93, 101 creation of property rights in, 100 RFMO responsibility within, 172 roaming back and forth to high seas, 155 200 miles, 75, 252, 287, 321 UN Law of the Sea Convention, 164 Exclusivity, 43

FAO. See Food and Agriculture Organization Farmland, western US, assignment of property rights on, 143–145, 144f, 149t Faroe Islands, 106 FCAs (Fishery Cooperative Associations), 49 Federation of Seafood Harvesters (FISH), 234 FFA (Forum Fisheries Agency), 73, 75, 90, 157, 169, 265, 292 First possession, 139–140, 139t Fish-aggregating devices (FADs), 68, 225, 242 limiting number of auxiliary boats fishing, 231 Fisheries law and the transferability of quota, 99–124 capacity quota trading under the IATTC, 108, 109t, 110–111 national allocations under freedom of fishing, 100–106 national allocations analyzed from first principles, 102–104 origins of national allocations, 100–102 treaties constituting RFMOs, 104–106 overview, 32, 99–100, 111–114 quota trading by RFMOs, 106–108 Fishery Cooperative Associations (FCAs), 49 Fishing capacity excess. See Excess fishing capacity limits, 70–71, 71t Fishing rights, 44–57 community quotas, 56–57 hybrid rights, 57 individual transferable effort (ITE), 55–56 individual transferable quotas (ITQs), 53–55 limited entry or limited access, 45–46 state property, 57 territorial rights, 49–53 voluntary agreements or fishing cooperatives, 46–49 Flags of convenience (FOCs) and property rights on the high seas, 175, 262, 269–279, 289 Catch Documentation Scheme, 276 Commission for the Conservation of Southern Bluefin Tuna (CCSBT), 275 Cooperation among tuna RFMOs, 276 effects of trade restrictions, 277–279 fishing vessel registry, 270–272 Indian Ocean Tuna Commission (IOTC), 275 Inter-American Tropical Tuna Commission (IATTC), 275–276 International Commission for the Conservation of Atlantic Tunas (ICCAT), 272–274 legality, 276–277

Index

overview, 269–270 RFMOs and trading clubs, 272 Flexible property rights, 44 Food and Agriculture Organization (FAO), 70, 228, 283–284 Committee of Fisheries (COFI), 11–12, 15–16 Compliance Agreement, 253 Forum Fisheries Agency (FFA), 73, 75, 90, 157, 169, 265, 292 Fractional licensing, 27–28, 204 France, 106, 108 Fur seals, 45, 100–101, 198–199, 201 Geograpical proximity or “contiguity,” 172 Georges Bank Hook Sector allocation, 47 Georgia, 270 illegal, unregulated and unreported fishing, 290 Indian Ocean Tuna Commission (IOTC) and, 275 International Commission for the Conservation of Atlantic Tuna (ICCAT) and, 274, 325t Global Environmental Facility (GEF), 188 Global register, 27 Great Britain, 101, 106 Greenland, 53, 106 Grotius, Hugo, 251 Guatemala, 108, 110 fish-carrying capacity limits, 109t minimizing tuna fishing impact on sea turtles, 229 Gulf of Fonseca Case, 173–174 Haddock, 101 Halibut fishery, 137 Heard Island–McDonald Island toothfish and mackerel icefish fishery, 47, 129–131, 130f Herring, 47 Honduras, 270, 290 Commission for the Conservation of Southern Bluefin Tuna (CCSBT) and, 275 fish-carrying capacity limits, 109t illegal, unregulated and unreported fishing, 290 International Commission for the Conservation of Atlantic Tunas (ICCAT) and, 273–274, 323, 3235t removal of fishing vessels from registry, 278 Honolulu convention (2000), 168–169 Hooks “circle” hooks, 229, 234, 237, 239 “J” hooks, 229, 237, 239 Hybrid property rights, 41–42, 57, 93–94

337

IATTC. See Inter-American Tropical Tuna Commission IBSFC (International Baltic Sea Fisheries Commission), 107, 261 ICCAT. See International Commission for the Conservation of Atlantic Tunas Iceland, 50, 53 Illegal, unregulated and unreported (IUU) fishing, 34, 187, 197, 262, 284, 290, 298–299 India, 165 Indian Ocean Tuna Commission (IOTC), 14, 33, 101, 156, 187 Bigeye Tuna Statistical Document, 275 flags of convenience and unregulated fishing, 272, 275 Japan and, 288, 292 “positive lists” of authorized vessels, 24, 200 trading rights, 260 Individual transferable effort (ITE), 55–56, 73 Individual transferable quotas (ITQs), 3, 32, 34, 53–55, 72 for bycatches: lessons for the tuna–dolphin issue, 215–224 overview, 215–217, 222–224 random bycatches, 218–220, 219f–221f review of the literature, 217–218 skill differences in avoiding bycatches, 220–222, 222f–223f challenges of establishing, 251–252 Indonesia, 173, 296, 297t Inshore Potting Agreement (South Devon, England), 46 Institute of the Americas, University of California, San Diego, 4 Inter-American Development Bank, 184 Inter-American Tropical Tuna Commission (IATTC), 4, 156, 288, 299 allocating carrying capacities, 23, 89, 202–203, 206 allocating catch, 22 Japan, 289t bycatch example, 227–229 flags of convenience and unregulated fishing, 272, 275–276 illegal, unregulated and unreported fishing, 292–293 limiting number of auxiliary boats in FAD fishery, 231 Regional Vessel Register, 45, 66–67, 69–70, 91, 187, 195–196 coordination with Western and Central Pacific Fisheries Commission, 204–205 “grandfathering in” existing participants, 201 shortcomings, 24–25

338

Index

Inter-American Tropical Tuna Commission (Cont.) sea turtles, 228–229 trading rights, 99, 106, 260, 266 used as case study in formulating Article 64, 14 International Baltic Sea Fisheries Commission (IBSFC), 107, 261 International Commission for the Conservation of Atlantic Tunas (ICCAT), 14–15, 20, 66–68, 101, 106–108, 156–157, 159, 187 allocating catch, 23 annual membership, 326f Bluefin Tuna Statistical Document program, 272–273 flags of convenience and unregulated fishing, 270, 272–274 Japan, 284, 288, 289t, 293–294, 298 limiting capacity, 32–33 “positive lists” of authorized vessels, 24, 200 Quasi-property rights. See Quasi-property rights and the effectiveness of Atlantic tuna management resolutions related to IUU fishing and overcapacity, 291t–292t trading rights, 260, 265–266 International Court of Justice, 173–174 International Dolphin Conservation Program, 216 International Pacific Halibut Commission (IPHC), 21 International plans of action (IPOAs), 11, 284, 293, 303 International Tribunal for the Law of the Sea (ITLOS), 300, 303 International Whaling Commission (IWC), 101, 285, 301–302, 322 Introduction, 1–10 IOTC. See Indian Ocean Tuna Commission Italy, 182 ITE (individual transferable effort), 55–56, 73 ITQs. See Individual transferable quotas IUU (illegal, unregulated and unreported) fishing, 34, 187, 197, 262, 284, 290, 298–299 Jan Mayen Case, 173 Japan, 22, 182 bigeye tuna, 108 bluefin tuna, 23, 157 excluding non-ICCAT members from exploiting bluefin tuna stocks, 323 fishing effort within a TURF, 50 fur seals, 101 inshore fisheries, 49

International Commission for the Conservation of Atlantic Tunas (ICCAT) and, 284, 288, 289t, 293–294, 298 longline buyback, 185 policy description. See Japanese policies, ocean law, and tuna fisheries sea turtles, minimizing tuna fishing impact on, 229 swordfish, 106 Japanese policies, ocean law, and tuna fisheries, 283–306 historical continuities and variations, 303–306 overcapacity and IUU fishing, 285–297 contemporary role of Japan in international tuna fisheries, 288–289, 289t historical role of Japan in international tuna fisheries, 285–288 IUU fishing and overcapacity, 289–290 Japan’s mixed role, 293–297, 297t multilateral efforts to reduce fishing capacity and halt IUU fishing, 290, 291t–292t, 292–293 overcapacity and IUU in matrix of Japan’s ocean resource policies, 297–303 dilemma of “sustainable management,” 302–303 resistance to certain conservation measures, 298–300 southern bluefin tuna regime, 300–301 trade restrictions and other measures to prevent IUU fishing, 298 Western and Central Pacific Fisheries Convention, 297–298 whaling controversies and IWC, 301–302 overview, 283–285, 306 “J” hooks, 229, 237, 239 Jurisdictions, allocating fish across, 163–176 allocation options, 169–174 common, but differentiated, rights and responsibilities, 170–172 conservation is paramount, 169–170 “contiguity” or geographical proximity, 172 miscellaneous “equitable” criteria, 172–174 population and “dependence” on fish, 172 evolving into a rights-based system, 175 2000 Honolulu convention, 168–169 overview, 163, 176 punishing states for misbehaving, 175 controlling IUU fishing, 175 flags of convenience, 175 selfish and destructive fishing practices, 175 rewarding good states for good behavior, 174

Index

1995 Straddling and Highly Migratory Fish Stocks Agreement, 165–168 developing nations, recognition of special needs of, 168 dispute resolution, 168 duty to assess, collect, and share data, 167 duty to cooperate, 165 duty to work through existing or new fisheries organization, 165–166 enforcement methods, 167–168 precautionary principle, 166–167 1982 United Nations Law of the Sea Convention, 164 Korea, 297t Kyoto Protocol, 66, 75, 89, 99, 187, 203, 235 La Jolla Agreement, 55, 234 Law of the Sea Convention, 163–165, 168, 170–171, 174 Liberia, 165, 270 Licensing, 27–29, 202 Limited access, 45–46, 195–206 coastal states and DWFNs, 202–203 differentiation by sector or area, 204 entry into a transnational fishery, 197–201 deterring, 198–201 qualification and, 201–202 essential issues, 196–197 fractional licensing, 204 management of capacity units, 203–204 overview, 195–196, 205–206 regional vessel registers and global vessels, 204–205 Limited entry, 45–46, 69–70, 77–78 LOS, LOSC. See United Nations Convention on the Law of the Sea Magnuson–Stevens Fishery Conservation and Management Act, 242 Mahi-mahi, 23 Maine, “lobster gangs” of, 50 Malaysia, 173 Maldives, 12 Malta, removal of fishing vessels from registry, 278 Manta ray, 226t–227t Mare Liberum, 251 Marine Mammal Protection Act (MMPA), 227 Marine Stewardship Council label, 239 Mauritius, removal of fishing vessels from registry, 278 Maximum economic yield (MEY), 156 Maximum sustainable yield (MSY), 156

339

MCS (monitoring, control, and surveillance), 72, 74, 77, 92–93 Mexico, 30–31, 50 Baja California cooperatives for lobster and abalone, 46 fish-carrying capacity limits, 109t sea turtles, minimizing tuna fishing impact on, 229, 234 swordfish, 106 Mineral land, western US, assignment of property rights on, 141–142, 149t Minquiers and Ecrehos Case, 173 Miquelon, 106 MMPA (Marine Mammal Protection Act), 227 Monitoring, control, and surveillance (MCS), 72, 74, 77, 92–93 Montreal Protocol, 66, 187, 203, 235 Morocco, 106 MSY (maximum sustainable yield), 156 NAFO (Northwest Atlantic Fisheries Organization), 106 Namibia, 53 National Audubon Society, 323 National Marine Fisheries Service (NMFS), 228 NEAFC (Northeast Atlantic Fisheries Commission), 106 Netherlands fishing cooperatives, 47 ITQs used in, 53 New England Red Crab Harvesters Association, 47 New Zealand, 20, 72, 300 abalone—PAU 7, 132–134 bluefin tuna, 23, 157 fishing cooperatives, 47 IFQs, 159 Maori people, 42, 47 mussels and scallops, 50 southern rock lobster—CRA 8, 131–132 New Zealand Orange Roughy Management Company, 47 New Zealand Quota Management System, 127–129, 131–134 Nicaragua, 110 IATTC fish-carrying capacity limits, 109t sea turtles, minimizing tuna fishing impact on, 229 NMFS (National Marine Fisheries Service), 228 Nongovernmental organizations (NGOs), 184 Northeast Atlantic Fisheries Commission (NEAFC), 106, 261

340

Index

Open access on the high seas, transformation of, 40, 87–94 costs of measuring, bounding, and enforcing rights, 91–92 distribution of benefits and costs, 89–90 economics of international common property, 92–94 overview, 87–89, 94 transactions costs, 91 Optimum sustainable yield (OSY), 285 Organization for the Promotion of Responsible Tuna Fisheries (OPRT), 182, 186, 296, 297t, 299 Overcapacity and overfishing, bybacks to address, 182 Overcapacity issues viewed from boat deck and manager’s desk, 127–135 abalone—PAU 7, 132–134 “good” rights and how they might go “wrong,” 134 Heard Island–McDonald Island toothfish and mackerel icefish fishery, 129–131, 130f how much is enough?, 128 nature of rights, 128–129 overview, 127–128 responsibilities, 134–135 Southern rock lobster—CRA 8, 131–132, 132f

Philippines Commission for the Conservation of Southern Bluefin Tuna (CCSBT) and, 275 fishing cooperatives, 47 reduction in longline FOC vessels, 296 Population and “dependence” on fish, 172 Poverty Reduction Support Credits (PRSCs), 188 Preferential labels for sustainable fisheries, 239 Private property, 41 Property and use rights in fisheries, 39–58 characteristics, 43–44 flags of convenience and. See Flags of convenience and property rights on the high seas as incentives for bycatch reduction, 230–231 overview, 39, 57–58 property rights, 39–42 types of, 40–42 types of fishing rights, 44–57 community quotas, 56–57 hybrid rights, 57 individual transferable effort (ITE), 55–56 individual transferable quotas (ITQs), 53–55 limited entry or limited access, 45–46 state property, 57 territorial rights, 49–53 voluntary agreements or fishing cooperatives, 46–49 use rights, 42–43 PRSCs (Poverty Reduction Support Credits), 188 Purse-seine vessels and fisheries, 12, 35 capacity list (IATTC Web site), 110 eastern Pacific Ocean (EPO), 225–227, 226t–227t

Pacific hake cooperative, 47 Pacific halibut, 21 Pacific island states, 12 Palau Arrangement, 198, 202 Palmas Arbitration, 173 Panama, 270 Inter-American Tropical Tuna Commission (IATTC) and, 109t, 270 International Commission for the Conservation of Atlantic Tunas (ICCAT) and, 273–274, 323, 325t removal of fishing vessels from registry, 278 sea turtles, minimizing tuna fishing impact on, 229 Peru, 110 fish-carrying capacity limits, 109t sea turtles, minimizing tuna fishing impact on, 229

Quality of title (security), 43 Quasi-property rights and effectiveness of Atlantic tuna management, 321–330 composition of trade-based combo, 324–326, 325t, 326f effectiveness of trade-based combo, 326–330, 327f origins of trade-based combo, 322–324 overview, 321–322, 330 Quotas, 4 individual transferable quotas for bycatches: lessons for the tuna–dolphin issue, 215–224 overview, 215–217, 222–224 random bycatches, 218–220, 219f–221f review of the literature, 217–218 skill differences in avoiding bycatches, 220–222, 222f–223f

Northern Fur Seal Treaty, 45 North Pacific Fur Seal Treaty, 198–199, 201 North Pacific pollock fishery, 217 Northwest Atlantic Fisheries Organization (NAFO), 106 Norway, 50, 106, 173, 242 matjes herring, 47 Nova Scotia, 49–51

Index

international fisheries law and the transferability of quota. See Fisheries law and the transferability of quota trading by RFMOs, 106–108 transfers within RFMOs, 260–261 Rainbow runners, 23, 226t–227t Random bycatches, 218–220, 219f–221f Rangeland, western US, assignment of property rights on, 142–143, 149t Recreational fishers and buyback financing, 188 Regional fisheries management organizations (RFMOs), 197–201, 230, 251–252, 254–261, 263–266 economics of allocation in, 155–161 country allocations and multilateral governance, 159–160 economics of fishing and tuna RFMOs, 157–159 overview, 155–156, 160–161 past and current allocation practices of tuna RFMOs, 156–157 prospects for use rights in. See Use rights in regional fisheries management organizations trading and, 100–102, 272 treaties constituting, 104–106 vessels flying flags of convenience and, 269–270 Regional vessel registers (RVRs), 24–27, 34, 77–79, 110, 196, 262, 274 global vessels and, 204–205 Inter-American Tropical Tuna Commission (IATTC), 45, 66–67, 69–70, 91, 187, 195–196, 265–266 coordination with Western and Central Pacific Fisheries Commission, 204–205 “grandfathering in” existing participants, 201 shortcomings, 24–25 Registers. See Regional vessel registers (RVRs) Regulated common property, 40–41 Regulated open access, 40 Republic of Korea bigeye tuna, 108 bluefin tuna allocation, 157 Responsibilities, 134–135 Reuse of vessel, gear, license, 185 RFMOs. See Regional fisheries management organizations Rights, nature of, 128–129 Rights-based management, 3–4, 65–84 allocation of rights to states, individuals, or groups, 74–77 individuals or groups, 76

341

states, 75–77 taking stock of, 76 buybacks in the transition to rights-based management, 79–80 can rights put it right?. See Overcapacity issues viewed from boat deck and manager’s desk characteristics of rights with transboundary resources, 67–69 constraints, 77 lessons from assignment of property rights on Western US frontier. See Western US frontier, assignment of property rights on mechanics and MCS, 77–79 catch and bycatch limit, 78–79 limited entry and capacity allocations, 77–78 registers, 79 overview, 65–67, 80–82 types of rights adopted, 69–74 catch limits, 71–73 effort limits, 73 fishing capacity limits, 70–71, 71t limited entry, 69–70 taking stock of type of property right, 73–74 Rio Declaration, 170, 174 Russia, 106, 298 fur seals, 100 RVRs. See Regional vessel registers Salmon, 49–50, 185, 242 Sashimi-grade fish, 33, 35 Scottish salmon fisheries, 49–50 Sea birds, 94 Sea turtles, 94, 226t–227t, 227–229, 234, 237, 239 Sector or area, differentiation by, 204 Sector-Wide Approach Programs (SWAPs), 188 Senegal, 47, 106 Seychelles, 296, 297t Sharks, 23, 226–227, 226t–227t Sierra Leone illegal, unregulated and unreported fishing, 290 International Commission for the Conservation of Atlantic Tunas (ICCAT) and, 274, 325t Japanese ban on port calls by vessels flagged to, 298 low-standard newcomer to ship registration, 278 Skill differences in avoiding bycatches, 220–222, 222f–223f Skipjack (Katsuwonus pelamis), 12–13, 20, 30–31, 68, 72, 104 Southern bluefin tuna regime, 300–301 Southern Indian Ocean Fisheries Agreement, 105

342

Index

Southern rock lobster—CRA 8, 131–132, 132f South Korea, 288, 297 Spain, 30, 90 excluding non-ICCAT members from exploiting bluefin tuna stocks, 323 fish-carrying capacity limits, 109t St. Pierre, 106 St. Vincent and the Grenadines, 270, 290 illegal, unregulated and unreported fishing, 290 International Commission for the Conservation of Atlantic Tunas (ICCAT) and, 273–274, 325t State property, 57 State rights, 40 Sting ray, 226t–227t Stockholm Declaration, 170 Straddling and Highly Migratory Fish Stocks Agreement. See United Nations Fish Stocks Agreement (UNFSA) Subsidies as incentives for buybacks, 232–233 Surface water, western US, assignment of property rights on, 146, 148, 149t SWAPS (Sector-Wide Approach Programs), 188 Sweden, 50, 323 matjes herring, 47 Swordfish, 23, 67, 106, 182, 273 TAC (total allowable catch), 4, 52 Taiwan, 168, 284, 288, 290, 293–296, 297t, 301 Taxes and fees as incentives for buybacks, 231–232 Territorial rights, 49–53 Territorial use rights in fisheries (TURFs), 49, 52–53 Texas shrimp fishery, 188 Thunnus obesus. See Bigeye (Thunnus obesus) Thunnus thynnus, T. orientalis, T. maccoyii. See Bluefins (Thunnus thynnus, T. orientalis, T. maccoyii) Timberland, western US, assignment of property rights on, 145–146, 147f, 149t Time–area closures, 236 Tonga, 169 Total allowable catch (TAC), 4, 52 Trade restrictions, 68 effects of, 277–279 to prevent IUU fishing, 298 Transferability definition of, 43 of quota. See Fisheries law and the transferability of quota of rights, 4

Tuna–dolphin issue. See Individual quotas for bycatches: lessons for the tuna–dolphin issue “Tuna laundering,” 278 TURFS (territorial use rights in fisheries), 49, 52–53 UNFSA. See United Nations Fish Stocks Agreement UNIA (United Nations Implementing Agreement), 198 Uniform allocation, 139t, 140 United Kingdom, 101, 106 United Nations Convention on the Law of the Sea (UNCLOS), 13, 99, 163–164, 257, 263 flags of convenience and, 271 history of, 252–253, 286, 321–322 ITQ shares, 260 lack of adequate regulatory structure in certain areas, 284, 303–304 qualified freedom of fishing preserved, 40, 101–102, 104 UNFSA builds on, 155, 322 United Nations Fish Stocks Agreement (UNFSA), 13, 69–70, 81, 163, 169–172, 260, 304 countries ratifying, 165 country allocations, 159, 257 developing nations, recognition of special needs of, 168 dispute resolution, 168 duty to assess, collect, and share data, 167 duty to cooperate, 165, 197–198 duty to work through existing or new fisheries organization, 165–166 enforcement methods, 167–168, 262–264 history of, 155, 253–256, 322 precautionary principle, 166–167 quota transfers within, 101 United Nations Implementing Agreement (UNIA), 198 United States, 22 excluding non-ICCAT members from exploiting bluefin tuna stocks, 323 exclusive economic zone (EEZ), 305 fish-carrying capacity limits, 109t fishing cooperatives, 47 fur seals, 100 ITQs used in, 53 Makah Indian tribe, 42 oysters, 50 Pacific halibut, 21 salmon bycatches, voluntary program for retention of, 242 sea turtles, minimizing tuna fishing impact on, 229

Index

World Trade Organization actions against because of dolphin and sea turtle protection, 277 swordfish, 106 Unregulated common property, 40 Use rights in regional fisheries management organizations (RFMOs), 251–266 allocation dilemma, 256–259 allocation within RFMOs, 257–259 lessons from domestic ITQ programs, 256–257 enforcement dilemma, 261–263 lessons from domestic ITQ programs, 261 monitoring and enforcement on the high seas, 261–263 exclusion dilemma, 253–256 exclusive rights on the high seas, 253–256 lessons from domestic ITQ programs, 253 outlook, 263–266 general prognosis, 263–264 tuna RFMOs, 264–266 overview, 251–252, 266 transferability dilemma, 259–261 lessons from domestic ITQ programs, 259–260 quota transfers within RFMOs, 260–261 Vanuatu, 108, 296, 297t fish-carrying capacity limits, 109t ships registered in, 270 VCPFC (Commission for the Conservation and Management of Highly Migratory Fish Stocks in the Western and Central Pacific Ocean), 14 Venezuela, 30, 109t Vessel buybacks, 186–188 coastal and distant-water states, 187 financing buybacks, 187–188 limited access, 187 national sovereignty—individual vessels or flag states?, 187 Vessel Day Scheme, 73

343

Vessel monitoring systems (VMSs), 73–74, 169, 262 Vessel purchase or license (permit), 184 Vessel registers. See Regional vessel registers Vienna Convention on the Law of Treaties, 100 Voluntary agreements or fishing cooperatives, 46–49 Voluntary versus mandatory buyback participation, 184–185 Wahoo, 23, 226t–227t, 242 Western and Central Pacific Fisheries Commission (WCPFC), 20 allocation in, 156–157, 257 creation of, 14, 101, 272 Inter-American Tropical Tuna Commission (IATTC), cooperation with, 205 Japan and, 287–288, 292, 294, 297–299, 304 quota transfers, 261, 265 Western US frontier, assignment of property rights on, 137–150 allocation rules, 139–141 auction, 139t, 140–141 first possession, 139–140, 139t overview, 139t uniform allocation, 139t, 140 farmland, 143–145, 144f, 149t mineral land, 141–142, 149t overview, 137–139, 148–150, 149t rangeland, 142–143, 149t surface water, 146, 148, 149t timberland, 145–146, 147f, 149t Whaling. See International Whaling Commission World Bank, 183–184, 188 World Fish Center, 27 World Trade Organization (WTO), 277 World Wildlife Fund, 298, 323 Yellowfin (Thunnus albacares), 12–13, 30–31, 55, 70, 72–773 Yellowtail, 226, 226t–227t