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Applying the Principles of Property Rights and Free Markets to the Problem of Overfishing and Declining Fish Stocks
Over-fishing is depleting America’s available supply of fishing stocks – leading to rationing, higher prices for consumers, taxpayer bailouts of fisheries, and the heavy hand of government regulation.
Under George W. Bush, the US Dept. of Commerce began testing the effectiveness of Catch Shares, a market-based program to manage fisheries. Catch Shares allocates a specific portion of a given fishery’s overall quota to fisherman – by individual, by ship, or by other means in lieu of telling them when or how they can fish.
Catch Shares allows flexibility in fishing schedules – something that’s not allowed under current rules – and for fishing incomes to be more stable without having to rely on taxpayer bailouts. Catch Shares give fishermen the freedom to fish.
Catch Shares is a more effective way to manage fisheries because it uses a property-right framework to address what is commonly known as “the tragedy of the commons.” It gives fishermen a stake in their future, a way to forecast their income, and the ability to sell or lease their share to another fisherman if they choose.
Where they have been implemented, Catch Shares have allowed longer but more productive seasons, an increase in revenues, job growth, a reduction in discards of dead and dying fish and an increase in safety. There are some, like Cong. Barney Frank, who want to shut down the Catch Shares program. They want to keep things as they are with continued over-fishing, subsidies and a crushing federal regulatory burden.
Catch Shares is a CONSERVATIVE approach to fisheries management. They:
· Utilize market-forces to allocate resources, encouraging conservation via personal responsibility;
· Operate under federalism and localism as its governing principles;
· Embrace resource usage rather than locked-out preservation;
· Save federal monies because they are not top-down, command-and-control environmental regulation.
Catch Shares = Freedom, Flexibility and Fiscal Responsibility!
Catch share fishery management programs – a market-based mechanism for federal fisheries - provide fishermen and other fishery participants with the license to harvest a specific amount of fish. Utilizing a property rights based licensing system, fishermen have more freedom to fish and more control over the lives. After the enactment of the law governing federal fishery resources – the 2007 reauthorization of the Magnuson-Stevens Fishery Conservation and Management Act - the Bush Administration encouraged the use of catch shares as a better fishery management tool because it puts fishermen in control of their businesses and encourages better resource management without the need for excessive government regulation. Now a new study shows that these market-based management systems, unlike traditional programs, can yield significant federal budget savings -- a notable outcome in the present fiscal budgetary environment.
The Problem with Traditional Management? It drains budget coffers while failing fishermen AND the general public!
Traditional fishery management is a failure. Typically, individual fishing activities are propped up by government subsidies, leading to a race to “catch” dwindling resources, creating inefficiencies in the marketplace. Over the past decade the U.S. government has spent, on average, more than $70 million annually bailing out failed federally managed fisheries (not including salmon fisheries, which receive additional aid) yet failing typically to improve the economic or biological condition of the fishery.
Under traditional management approaches, the government – and the public at large – earn a poor return on its investments in ocean fisheries. Reverting to this path will lead to similar, costly fishery disasters, once again putting the taxpayer on the hook for poor management decisions. Especially since the U.S. government absorbs a vast majority of the costs associated with managing fisheries under traditional programs.
Non-property rights based fishery management programs place the lion share of the burden of resource management on the taxpayer because the traditional management programs lack viable mechanisms by which industry helps pay for management costs. And fishing becomes less profitable for the fishing industry because these failed government policies on fisheries management lower revenues to the U.S. treasury. Catch share systems change that dynamic by giving fishermen a more secure stake in the resources they use, improving the economics for their personal and business lives all while encouraging conservation of a national resource.
The Bush Administration, which sought to grow the numbers of fisheries managed under catch shares, recognized the benefits of catch shares, stated in its 2008 fiscal year budget submission to Congress that “[m]arket-based approaches … move fisheries management away from cumbersome and inefficient regulatory practices and have been shown to lead to lengthened fishing seasons, improved product quality, and safer conditions for fishermen.”
As a matter of budget policy, it is better to invest in a program that will increase in value over time instead of a program that has fixed costs every year without increasing (and frequently declining) in value. Healthy fisheries produce greater economic output than depleted fisheries. Unfortunately, under traditional management programs, hundreds of millions of taxpayer dollars are spent managing fisheries every year without ensuring their future health or viability.
Please Take A Look At The Video Below - and scroll below for Catch Shares News!
Catch Shares News!
A Free-Market Solution For Fisheries (Published in the Washington Examiner, April 19, 2012)
by Andrew Langer, President, Institute for Liberty and Iain Murray, Vice-President for Strategy, Competitive Enterprise Institute
When humans first shifted from hunting and gathering to agriculture thousands of years ago, the establishment of private property rights yielded enormous benefits to natural resource conservation. People could finally address the problem which ecologist Garrett Hardin came to call “the tragedy of the commons.” The owner of a resource takes responsibility for its long-term conservation. If the owner fails to act, the resource ceases to be of any value to anyone. Likewise, if no one owns a given resource, everyone has an incentive to abuse and deplete it.
Today, that insight is the cornerstone of “free market environmentalism”—a way of looking at society’s concern for protecting natural resources that is consistent with private property rights and capitalist prosperity. Comprehensive studies of private conservation show the benefits of a property rights-based approach relying on private stewardship.
Today, the world’s ocean fisheries are an extremely valuable commonly held resource that is a source of great environmental concern. That is because it’s not just domestic producers who are putting pressure on a depleted resource as they seek to extract its riches. America’s fishermen are up against the world’s. Can the principles of private conservation be applied here as well?
Research suggests it can. A decade ago, scholar Michael DeAlessi offered some initial ideas to the U.S. on this approach in his groundbreaking work, Fishing for Solutions. Over the past decade, DeAlessi’s ideas have begun to be applied in a policy known as individual fishing quotas (IFQs), also called catch shares. The idea is simple: give fishermen an ownership stake in a particular fishery through the assignment of quotas, which can be traded. The quotas give individual fishermen – not bureaucrats - responsibility for managing each fishery. They, in turn, will work to maximize the longevity of that fishery, as it is in their long-term interest to do so.
Government steps out of the way and owners are allowed to be the stewards of the resources on which their livelihoods depend. The principles of property rights, free markets, and environmental conservation all come together. And it seems to be working.
For an example of how successful this approach can be, look to New Zealand. There, the value of fishing exports has increased from $469 million (US) in 1986, when the program began, to $923 million today. Fish landings have significantly increased. Almost all of the fish stocks originally included are now above sustainable levels.
It is also important to note that the property right involved is constitutionally protected -- it cannot be taken away by an arbitrary decision of government, as happened in Iceland in 2010. Fishermen will not be persuaded that catch-shares are a benefit to them and their families unless they can also be persuaded that bureaucrats will not revoke their rights to manage the fisheries they own. Indeed, one of the advantages of true catch-share programs is that it gets bureaucrats out of the way. The bureaucratic approach has failed for the Endangered Species Act—under which only a handful of species have recovered—and it would undoubtedly fail here.
Catch-shares allow fishermen to own fish stocks and manage them themselves, rather than depend on government bureaucracy. They are an innovative—perhaps revolutionary—solution, and they don’t require us to reinvent the wheel. If we want to save fish, genuine catch shares are the answer. The principles of private conservation underlying them work and will keep us in seafood for decades to come. More government bureaucracy is the last thing America’s—and the world’s—fisheries need.
New Study Shows Catch Shares Increase Profitability, Reduce the Deficit
A recent study published in the December 2010 Journal of Sustainable Development -- Can Catch Shares Reduce the Federal Deficit? – found that catch share programs are a good investment for the federal government, and would help to reduce the federal deficit by approximately $1 billion if broadly implemented in the United States. The study reports that the government’s costs to administer catch share programs are exceeded by the revenues to the government from more profitable fisheries, demonstrating that catch shares provide much greater value to the U.S. government as a management tool. (See http://www.ccsenet.org/journal/index.php/jsd/article/view/7748.)
According to the study, Catch shares, relative to traditional management programs will achieve significant budget savings, primarily due to increased profitability of fishermen. The results are a stronger, more stable fishing economy that in turn results in a better federal, state and local tax base. Further, since fishermen have an asset that now has value they are responsible for capital gains taxes for sales and/or leases of their shares.
Moreover, certain catch share programs permit the government to recover some of the costs of those programs, up to a limit, from the participants in the fishery in return for the opportunity to engage in the fishery. Traditional management requires the government to pay virtually all of these costs. Cost recovery helps offset administrative expenses to the government to implement catch share programs. Importantly, as the economics of the fishery recover, fishery participants are more financially capable to absorb these costs and still remain profitable. The study also predicts that “greater income for fishermen is likely to have ‘multiplier’ effects for revenue collection in local economies” – with additional deficit reduction implications not reflected in the $1 billion estimate.
Thus, market-based catch share systems improve the economic environment for fishermen, fishing communities and the federal government, while at the same time granting fishermen more flexibility and freedom to fish throughout the year with fewer burdensome government regulations.
Fox News Digital Network
March 1, 2011
Another Foolish Move By Congress
By Peter Roff
The 345-page GAO report released Tuesday identified nearly two score areas in which federal programs duplicate one another’s functions, are spread across several departments and agencies – making them candidates for consolidation – or are simply wasteful when it comes to the efficient use of taxpayer dollars.
In it’s zeal to find ways to cut federal spending the U.S. House of Representatives has focused instead on some things that are actually worthwhile rather than the waste. For example, while putting together the continuing resolution to fund the federal government through the end of the current fiscal year, the House voted to block federal funds from being used to expand “catch shares” -- the free market fisheries management system first established during the Bush Administration in 2008.
Contrary to what some claim, the ban won’t save the taxpayers any money; in fact it’s likely to put them on the hook for billions more in subsides for fisheries management.
Traditional U.S. fisheries management has been a failure. Over the last decade the federal government has spent nearly a billion dollars bailing out failed federally managed fisheries -- all without improving economic, environmental or biological conditions.
The result hasn’t just been bad for the taxpayer. Because of the way the subsidies work, they’ve been bad for the fishermen and bad for the fish. The traditional approach to fisheries management forces everyone to compete against one another in a race to “catch” as much of the fishing supply as possible –leading to dwindling resources and contributing to inefficiencies and distortions in the marketplace.
The better approach is to rely on the free-market and on property rights.
The Bush administration – which sought to grow the number of fisheries managed under a program known as “catch shares” said in its FY 2008 budget submission to Congress that “[M]arket-based approaches … move fisheries management away from cumbersome and inefficient regulatory practices and have been shown to lead to lengthened fishing seasons, improved product quality, and safer conditions for fishermen.”
Catch share systems change the existing dynamic, giving fishermen a more secure stake in the resources they use, improving the economics for their personal and business lives while encouraging conservation of a national resource that too often languishes in the tragedy of the commons.
What the “catch share” system does is provide fishermen and other fishery participants with a license to harvest a specific amount of fish. Those shares can be redeemed through fishing or they can be sold or leased to other concerns. The utilization of a property-rights based licensing system gives fisherman more freedom to fish – or not to fish should they choose or should circumstances require – and ultimately gives them greater control over their lives while providing a more reliable revenue stream and notably allowing for better management of resources without the need for onerous or excessive government regulation.
This isn’t just theory – where “catch shares” has been implemented fishermen have seen an increase in profitability and wages. In New England fleet-wide profits are up 10 percent over the same time last year. Wages have increased more than 100 percent for crew fishing in the Alaska crab catch share program. The implementation of the Alaska halibut “catch share” increased the price received by fishermen and improved the competitiveness of Alaska caught halibut in international markets. In the Gulf of Mexico, since the implementation of the red snapper catch share program in 2007, the value of the fishery (based on quota prices) has increased by 82 percent and the inflation adjusted ex-vessel price of red snapper has increased by 17 percent.
The program is also popular within the industry. In the Gulf of Mexico, fishermen have voted overwhelmingly to approve catch shares (by at least 80 percent for both red snapper and grouper catch share programs. In an Oregon Trawl Commission poll, twice as many fishermen responded to move forward with catch shares in the Pacific ground fish trawl fishery than to delay.
Catch share is not only a better deal for the fishing industry, its good for the U.S. taxpayer. A recent study published in the December 2010 Journal of Sustainable Development finds that Limited Access Privilege Programs – one form of catch share program -- would help reduce the federal deficit by over a billion dollars if broadly implemented in the U.S. The study reports that the government’s costs of administering these programs are exceeded by the revenues to the government from more profitable fisheries.
The benefits of catch shares, relative to tradition fisheries management programs, should be obvious. Taxpayers save. Fishermen profit. And the stability it encourages in the industry inevitably leads to a stronger, more stable fishing economy that broadens the tax base at the local, state and federal level.
While taxpayers of all stripes support efforts to reduce spending and control waste in government, attacking the catch shares program is pennywise and pound foolish. Given all the evidence that it is a success on most every level, Congress would be wise to continue and expand the catch shares program. As the GAO report makes clear, there are plenty of places where smart cuts can be made that actually will save the taxpayers money; this just isn’t one of them.
Peter Roff is a senior fellow at the non-partisan Institute for Liberty as well as a contributing editor at U.S. News & World Report.