Individual Transferable Quotas fail to deliver in New Zealand

The Individual Transferable Quota (ITQ)system was introduced in New Zealand in response to pleas by independent owner-operators and small-scale commercial fishermen, through their Federation, to save the coastal fisheries. They believed that their economic situation would improve only if their fisheries were conserved.

The present status of the fishery in Northland (region North of Auckland)and the consequences for its independent fishermen and their communities provide a critical evaluation of the efficacy of ITQs. Northland, one of the most economically depressed regions of the country, has always been strongly dependent on fisheries. It is also notorious for high unemployment rates. Northland was also the only region for which any attempt was made to determine the socio-economic importance of commercial fishing for local communities before the ITQ System was introduced.

More recently, the New Zealand Fishing Industry Board (FIB)did a survey to show the economic benefit of the seafood industry for the region. Significantly, while demonstrating the importance of the industry, this study did not make any comparisons with the pre-ITQ survey. Although categories differ, there appears to be a major decline in direct employment. It appears that, in aggregate, direct employment in the fishing industry in Northland has been reduced from the 700 reported in the earlier study to 579 in the more recent one.

Independent fishermen, who had been the system’s strongest advocates, now talk of `betrayal, apathy and disgust’. One fisherman said, `I have fished for 20 years. After 20 years, I had to sell my quota to get out of financial strife. The last five years have been downhill’. Having to lease (rent)quotas now, his operation is even more marginal. As profits are low, wages for the crew are also low. The net effect appears to be a transfer of profits from the local community to company shareholders.

The quota system also has consequences for conservation. The reduced profits from leasing quotas, for example, increases the incentive to bypass regulations as, for example, by bringing in and reporting only fish that meets the size and quality required by the high-value Japanese `Iki jimi’ (ceremonial)snapper market.

Other fish, caught over the allocated quota, may be dumped and, therefore, wasted. `I never met a fisherman who liked dumping, putting good fish back,’ said a fisherman. But the deemed value (the surrender price paid to the authorities for snapper caught over quota)is NZ$ 20 per kg, while the port price is NZ$ 4. One recreational fisher reported seeing large numbers of fish, which he believes were discards from the commercial fishery, washed up on beaches several times this season.

Alternatively, fish can be landed for the black market. There is certainly good anecdotal evidence that the `informal economy’ is thriving. This implies that much more fish is being caught than is reported and that conservation goals are taking a back-seat.

Snapper, for instance, is commercially the most important species for Northland. It was one of the prime species the ITQ system intended to save but was not very effective in doing so. The implications for small-scale fishers are serious. Following the annual stock assessment last year, a reduction in the Total Allowable Commercial Catch (TAC)was proposed. If, in order to save the snapper, quotas are actually reduced, the larger, vertically integrated and diversified companies can probably hang on, but most of the remaining independent fishers, many already marginal, will face bankruptcy.

In general, fishermen see the quota management system as a source of revenue for the government that reduces their incomes and economic viability, while doing little for conservation. Even domestic consumers are not satisfied as availability of fish reduces in the domestic market and prices rise. Said one, `You know how hard it is to get fish here and you go to Sydney or Melbourne in Australia and all our beautiful fish are there, cheaper than we can get in New Zealand.’