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Fishery Bulletin 90(1). 1992 



a Government buyback of quota. Crothers (1988) in- 

 dicates that the buyback was to facilitate an orderly 

 "rationalization" of the industry, and to help create a 

 climate of support for ITQ management. Clark et al. 

 (1988) indicates the buyback was to reduce the mis- 

 match of fleet capacity to available catch. If the Govern- 

 ment was not able to buy back as much quota as was 

 necessary, prorated cuts in quota were made. This 

 threat of proration probably encouraged permit holders 

 to be more reasonable in determining the selling price 

 of their provisional allocation of quota. 



The buyback cost the Government $42.4 million NZ 

 to purchase 15,700 tons of quota (the annual amount 

 the owners would have been entitled to catch in 

 perpetuity). Prorated cuts were made to reduce quota 

 by an additional 9500 tons. Presumably, the Govern- 

 ment felt that the potential increase in value of the 

 fishery when overfished stocks recovered merited the 

 cost of the buyback and the short-term losses that 

 resulted from prorated cuts. 



Relatively few stocks accounted for most of the cost 

 of the buyback. Table 1 indicates that more than 85% 

 of funds spent on the buyback were used to buy quota 

 for four species (mostly in one management area where 

 traditional inshore fisheries are prosecuted). Nearly 

 50% were used for the snapper fisheries. The total 

 reduction from SCHs to TACs for the 1986-87 fishing 

 year (which began 1 October 1986) was 6%. For the 

 21 species that were involved in the buyback and pro- 

 rated cuts, the reduction was about 24%. For the four 

 primary species involved, the reduction was 54%. 



Table 2 gives detailed information for the four 

 primary species affected by the buyback and prorated 

 costs. It is noteworthy that, in all cases, the SCH great- 

 ly exceeded the actual catch in the year just prior to 

 ITQs (1985-86). This means that a portion of the quota 

 that was bought back probably would not have been 

 caught. In fact, in all cases the actual catch in the first 

 year of the ITQ system (1986-87) was lower than the 

 TAG. This suggests there may have been a declining 

 trend in the resource condition from the base period 

 when SCHs were established to the point in time when 

 ITQs were implemented. It also seems likely, in the 

 authors opinion, that SCHs were inflated by the in- 

 dustry (i.e., a moral hazard phenomenon) in anticipa- 

 tion of ITQs. As a result, the government may have 

 spent much of the $42.4 million NZ to buy back quota 

 which would not have been caught; therefore, the 

 buyback may have had relatively little effect on fishing 

 mortality rates. 



Since ITQ management was implemented in 1986, 

 stock assessments have been conducted annually for 

 each management unit, to the extent that the available 

 data allow. These assessments are conducted in Fish- 

 eries Assessment Meetings (FAMs) during the middle 



of the fishing year (April or May) in order to recom- 

 mend TAG adjustments for the next fishing year 

 (beginning in October). New Zealand law requires that 

 the TAG be set to produce the maximum sustainable 

 yield (MSY), as qualified by relevant factors including 

 economic and environmental considerations and 

 regional or global standards. Methods for estimating 

 yields have been refined since 1985 when the initial 

 TACs were calculated. New Zealand scientists now in- 

 terpret MSY in two alternative ways: a static inter- 

 pretation in which MSY is the maximum constant yield 

 (MC Y) that can be taken year after year from a fishery, 

 and a dynamic interpretation in which MSY is the max- 

 imum average yield (MAY) that can be attained by 

 varying the current annual yield (CAY) in response to 

 fluctuations in stock size (Annala 1989 and 1990, Mace 

 and Sissenwine 1989). MCY estimates are based on 

 historic estimates of stock biomass from resource 

 surveys, stock production models, or landings statistics. 

 CAY estimates are generally based on recent estimates 



