Individual Transferrable Quotas: New Zealand’s Experience

New Zealand Fisheries Waters• Large EEZ (4.4

million km2)• 70% below 1,000 m• Medium productivity• Commercial Fisheries• Non-commercial

Fisheries

Reform Context (early 1980s)• Classic fisheries issues

– Inshore stocks overfished– Commercial fisheries over-capitalised– Unprofitable, uncompetitive, rent dissipation– Declining recreational fishing– Risk of extending problems to newly developing deepwater

fisheries

New Zealand’s Response• Objectives of the Quota Management

System– Primarily economic drivers– Restore profitability to inshore fisheries– Avoid over-capitalisation in new deep-water fisheries– Limit catches to MSY– QMS in place since 1986, after 25+ years experience

everyone has adjusted

Quota Management System (QMS)

• Several refinements have been made since 1986 but the basic tenets remain:– Setting catch limits– No discarding QMS species– Individual Transferable Quotas (ITQs)– Markets determine allocation of commercial effort– Monitoring and enforcement

New Zealand's ITQs• Species and area specific• Perpetual and transferable • Generate ACE (annual catch entitlement)• Some ownership restrictions

• Maximum holdings (aggregation limits) 10-45% of TACC• No foreign ownership

• Ongoing allocation only via ITQ and ACE trading

Cost Recovery/Subsidies• NZ originally considered resource rentals

based on the decision to allocate quota without tender process

• Now use cost recovery mechanism to charge quota holders selected government costs (e.g. observers, fisheries research, administration)

• No subsidies in QMS system; quota owners pay c. 30-35% of government costs

Outcomes• Reflect two primary

policy objectives of QMS– Resource

sustainability delivered

– Economic performance improved

Fleet rationalisation

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110

500

1000

1500

2000

2500

3000

Registered fishing vessels

Quota rationalisation

198619871988198919901991199219931994199519961997199819992000200120022003200420052006200720082009201020110

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Combined total quota owners for 16 selected inshore species

Export value/volume

Benefits/Gains

Challenges unique to QMS• Designing systems to administer and audit QMS

• Required refinements to suit local conditions and policy requirements

• Social impacts anticipated and managed– Social dislocation in small coastal fishing

communities

– Growth in large vertically-integrated fishing ports

What general conclusions can be drawn from the NZ experience?

General conclusions• QMS objectives focused on economic

efficiency

– NZ’s ITQ design choices reflect this objective

– If you have other management objectives,

… the design of your rights based management regime would be different

General conclusions• NZ’s policy design features allowed for

controlled industry restructuring– Building legitimacy and collaboration is key to success– Quota allocation on catch history basis– Strongly specified ITQ (perpetual, tradable and enshrined in

law)– Provides certainty/security for investment– Quota ownership limits

Other key considerations• Avoid disadvantaging competing sectors

• Design policy to encourage collective responsibility

• Do not overlook importance of integrated planning