Sissenwine and Mace: ITQ management in New Zealand 



151 



of stock biomass and a target level of fishing mortal- 

 ity which is expected to produce MAY. Although the 

 dynamic (CAY) strategy leads to higher average yields, 

 the static (MCY) option has received the most atten- 

 tion for two reasons. First, the ITQ system was initially 

 specified in terms of fixed weights of quota, valid in 

 perpetuity. In practice, most TACs were constant. 

 Second, the facilities for fisheries research are inade- 

 quate for providing frequent updates of stock status 

 for all but a few of the more important fish stocks. 



It should be recognized that FAMs are only part of 

 the process of determining the level of TACs. The ac- 

 tual advice to the Minister of Fisheries on the setting 

 of TACs is given by senior government officials who 

 integrate stock assessment information with other 

 considerations, including an evaluation of the risk to 

 the resource of not adjusting a TAG. But the authors 

 consider FAMs the best source of information on the 

 condition of the fisheries resources, since they are open 

 scientific meetings which formally document their 

 deliberations and conclusions. 



When ITQ management was implemented, the gov- 

 ernment stated that it would adjust the TAC by enter- 

 ing the market to buy or sell quota at market-deter- 

 mined prices. Government also reserved the option to 

 make prorated cuts in quota. During the first three 

 years of ITQ management, government either sold 

 quota in perpetuity or leased annual quota for barra- 

 cuda, hake, ling, orange roughy, hoki, and stargazer 

 (Table 3). Most transactions were in the first year. A 

 total of $84.2 million NZ was collected in quota sales 

 and lease fees. But since the initial buyback when ITQs 

 were implemented, government has not entered the 

 marketplace to reduce any TAGs,^ despite the fact 

 that the need for reductions has been indicated by 

 several stock assessments (Annala 1989 and 1990; see 

 next section). 



Since ITQ management should increase resource 

 rent, government charges an annual royalty (known as 

 a resource rental) on quota holdings. In order to dis- 

 courage speculation on quota (i.e., owning it without 

 using it), resource rentals are charged on quota hold- 

 ings rather than landings. This practice is an implied 

 guarantee that fish are abundant enough for all quota 

 to be caught without dissipating rent, which may not 

 be the case due to assessment errors, failure to adjust 

 TACs when assessments indicate TACs are too high, 

 and because of varying economic conditions. 



Gilbert (1988) estimated that the ITQ system could 

 result in resource rents (referred to as surpluses in his 



*The TAC for orange roughy on the Chatham Rise was reduced by 

 exchanging quota in that area for quota on the Challenger Plateau. 

 This was a temporary reduction for 1988-89, although stock 

 assessments indicated that a permanent reduction was necessary. 



paper) of 15-45% of the first sale value of the catch, 

 depending on the species. His estimates reflect only the 

 benefits of reducing effort relative to the open-access 

 equilibrium (although the validity of an open-access 

 equilibrium baseline is questionable for some of New 

 Zealand's fisheries). They do not include the benefits 

 of eliminating competition for shares of an overall TAG. 

 If the average rent is 25% of the first sale value of the 

 fishing, then there is the potential for government to 

 extract at least $90 million NZ annually (i.e., 25% 

 of the 1987 first sale) as resource rentals. Resource 

 rentals averaged about $20 million NZ annually dur- 

 ing the first three years of ITQ management. 



On 1 April 1990, ITQs were redefined as portions of 

 annual TACs. This eliminated the need for government 

 to adjust TACs by entering the marketplace to buy and 

 sell quota, and makes it more practical to vary TACs 

 in response to the inherent variability in fisheries 

 resources, and other factors (e.g., new scientific infor- 

 mation). The change to proportional ITQs came at a 

 time when government was facing a large liability 

 (discussed further below) to buy quota to adjust TACs. 

 Therefore, government agreed to freeze the rate of 

 resource rentals for five years and redistribute the 

 resource rentals to industry as compensation for TAG 

 reductions. 



What has happened 

 under ITQ management 



It is probably too early to conduct a formal evaluation 

 of ITQ management in New Zealand. A transition 

 period of 3-5 years, or longer, is to be expected. Many 

 of the species in New Zealand are long-lived, and it is 

 likely that adjustments in the condition of the resource, 

 which ultimately affect the economic benefits, will be 

 protracted. However, since some authors have already 

 declared New Zealand's ITQ management a success 



