Sissenwine and Mace: ITQ management in New Zealand 



153 



abundance. On the other hand, the dedine in the abun- 

 dance of orange roughy probably has not increased 

 harvesting costs so far. Although orange roughy abun- 

 dance has decreased considerably, the catch has been 

 stable. Since orange roughy are fished in dense, spatial- 

 ly and temporally predictable aggregations, the catch 

 rate is probably relatively insensitive to overall popula- 

 tion size (see Paloheimo and Dickie 1964, for a general 

 discussion of the phenomenon). 



It is difficult to determine whether the initial buyback 

 of quota and prorated cuts reduced excess capital, but 

 it seems unlikely. As noted earlier, it probably did not 

 reduce fishing mortality in most cases because the 

 quota that was bought back would probably not have 

 been caught. Fishing mortality is a function of capital 

 investment in the harvesting sector (e.g., number of 

 vessels), labor inputs (e.g., number of days the vessels 

 are operated), and technology. It seems unlikely that 

 capital would have been removed from the fishery 

 unless fishing mortality were reduced. 



There is evidence that quota holdings have been con- 

 solidated, presumably to more efficient owners.* Dur- 

 ing the period October 1986-April 1988, there were 

 15,580 quota sales involving 453,000 tons, and 3417 

 leases of quota involving 253,000 tons, the sum of 

 which exceeds the total amount of quotas (494,000 tons 

 owned privately and 64,000 owned by government); 

 therefore, some quota was involved in multiple trans- 

 actions (Muse and Schelle 1988). According to Bevin 

 et al. (1989), the total number of quota holders de- 

 creased by 5.7% during the first two years of ITQ 

 management. The amount of quota held by the top ten 

 quota owners increased from 57% to 80% of the total. 

 The number of quota holders with more than 50 tons 

 decreased by 37%. This consolidation in ownership of 

 quota does not necessarily mean that vessel ownership 

 has also been consolidated. Apparently, a number of 

 vessel owners who have sold their ITQ allotments to 

 fishing companies have also entered contracts to fish 

 that quota for periods of several years. 



Unfortunately, the authors have not been able to ob- 

 tain reliable data on the number of vessels in the fishery 

 prior to and since ITQ management. There are some 

 data available (e.g., Anonymous 1987, Bevin et al. 

 1989), but the information is inconsistent. There are 



* There is a legal limit to how much consolidation can occur. It is illegal 

 for a company to own more than 35% of the quota for a species 

 in any management area, or more than 20% of the quota for a 

 species overall. It is interesting that some segments of the fishing 

 industry have viewed the potential of consolidation of ownership 

 of quota negatively, while government fisheries managers have 

 generally viewed it as part of the process of increasing economic 

 efficiency (i.e., efficient harvesters can afford to buy quota from 

 less efficient harvesters). New Zealand government officials also 

 note that consolidation should reduce the cost of managing the ITQ 

 system. 



data that indicate a slight decrease in investment in 

 the harvesting sector in 1987, after several years 

 of steady growth (Bevin et al. 1989). On the other hand, 

 the data indicate that employment and investment 

 in the fisheries increased steadily through 1987 

 (Table 4).^ 



It is also difficult to evaluate the effects of eliminat- 

 ing competition for TACs, but there are some positive 

 signs. In informal discussions with members of the 

 fishing industry, the authors have been told that har- 

 vesters have modified their fishing practices to reduce 

 costs and/or increase the market value of their catches. 



At this stage, it is unclear what economic effects ITQ 

 management has had. But, all other things being equal, 

 it seems reasonable that ITQ management should have 

 increased economic benefits. Unfortunately, all other 

 things are not equal. 



Two events unrelated to ITQ management have 

 adversely affected the economic condition of the New 

 Zealand fishing industry. They are a weakening of the 

 price of product in export markets (particularly orange 

 roughy in the USA) and unfavorable exchange rates. 

 As a result, the industry had only a 4.3% return on in- 

 vestment (before income taxes) during the one-year 

 period beginning 1 April 1987 (Bevin et al. 1989). i^ 



While the overall economic benefit of ITQ manage- 

 ment to New Zealand is unclear so far, it was profitable 

 for the government. As noted earlier, the government's 

 revenues from sale or lease of quota was $84.2 million 

 NZ. It also collected about $60 million dollars in 



"Note that there was a high rate of inflation during this period (3.6. 

 9.4, 15.3, 18.2, and 9.6% in 1983-87, respectively, or 69% overall) 

 which approximately offsets the increase in nominal value of capital 

 investment. 



"It should be recognized that the economic condition of the New 

 Zealand industry is a controversial matter because of resource 

 rentals and fuel excise taxes. Bevin et al. (1989) indicate that in 

 1987 the industry paid $55 million NZ in resource rentals and fuel 

 excise taxes which reduced the rate of return on investment from 

 16.2% to 4.3% (before income taxes). 



