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Fishery Bulletin 90|1). 1992 



resource rentals during the first three years of ITQ 

 management. This income exceeds the cost of the 

 buyback ($42.4 million NZ) and the entire cost of the 

 government's fisheries research, management, and en- 

 forcement programs (about $30 million NZ per year). 

 And there is the potential for resource rentals to in- 

 crease substantially (see previous discussion). On the 

 other hand, the authors are of the opinion that govern- 

 ment should increase fisheries research considerably 

 if it is to produce adequate stock assessments to sup- 

 port ITQ management (i.e., to conserve without being 

 too restrictive). Furthermore, if government had 

 entered the marketplace and purchased quota to im- 

 plement the reductions suggested by yield calculations 

 performed at the 1989 Fisheries Assessment Meetings 

 (Annala 1989), the cost would have far exceeded the 

 revenue from the ITQ system (e.g., the reductions for 

 orange roughy alone would have cost in the range of 

 $60-150 million NZ). 



Government intervention 



The third problem that ITQ management was intended 

 to solve was excess government intervention. To date, 

 it has not reduced government intervention except by 

 removing the moratorium on new licenses. The mora- 

 torium was replaced by the requirement to own quota. 

 In addition, there are new recordkeeping/reporting 

 requirements and complicated rules that are intended 

 to cope with bycatch (Annala et al. 1991). 



One form of government intervention that probably 

 hampered the fishing industry was restrictions on the 

 port at which harvesters were allowed to land their 

 catch. However, this restriction was removed prior to 

 ITQ management. Other forms of input controls, such 

 as minimum fish size restrictions and closed areas or 

 seasons, have usually not been removed. Some of these 

 restrictions are necessary, in addition to a quota, in 

 order to conserve the fisheries resources and to pre- 

 vent potential yield from being wasted." In other 

 cases, regulations were put in place to aid one segment 

 of the fishing industry relative to another. For exam- 

 ple, large factory trawlers are restricted from fishing 

 within 25 miles of the coast, which reduces direct com- 

 petition with smaller vessels. 



General reaction 



It is not surprising that implementation of ITQs in New 

 Zealand has been accompanied by controversy. The 



" Fisheries management needs to consider two control variables: the 

 fishing mortality rate which can be regulated by a quota, and the 

 age- or size-at-first-capture which can be regulated by gear restric- 

 tions, area/season closures, or minimum fish size (Sissenwine and 

 Shepherd 1987). 



newspapers report numerous charges by the industry 

 against the government. The industry is upset about 

 the level of resource rentals. There are complaints 

 about the fairness of the Quota Appeals Authority. 

 There were complaints that government had over- 

 estimated the productivity of the hoki resource when 

 it sold quota, and there are complaints that it has 

 overestimated the severity of the problem with orange 

 roughy now that it is attempting to reduce the quota. 

 Although there is strong support from industry and 

 government for ITQ management, many specific as- 

 pects of implementation are unpopular. This is probably 

 unavoidable for a system that is relatively complex and 

 so radically different from previous management. 



Potential problems 



From a theoretical perspective, ITQ management is an 

 ideal method which generates maximum net economic 

 returns, under some simplifying assumptions; but as 

 Copes (1986) points out, there are many potential 

 problems. Instead of reviewing Copes' list of potential 

 problems that apply to ITQ management in general, 

 this paper reviews actual and potential problems that 

 apply specifically to New Zealand. They are (1) prob- 

 lems arising from redefinition of quota ownership, (2) 

 implications of the Treaty of Waitangi, (3) inadequacy 

 of the scientific basis of TACs, (4) bycatch, (5) high- 

 grading, (6) enforcement, and (7) an adequate basis for 

 setting resource rentals. 



Redefinition of quota ownership 



The need to redefine ITQs from fixed quantities in 

 weight to proportions of the TAC resulted from gov- 

 ernment's failure to enter the marketplace to reduce 

 TACs when necessary. Early versions of the proposed 

 ITQ system included a "revolving fund" that would be 

 administered by the New Zealand Treasury. Resource 

 rentals and revenues from the sale of quota would have 

 gone into the fund which could then be used to buy back 

 quota as necessary. In fact, Crothers (1988) actually 

 reported that the revolving fund existed. However, the 

 fund never materialized and revenues paid to govern- 

 ment by the fishing industry were used for other 

 government functions. When faced with the over- 

 whelming cost of buying back quota to reduce the TAC 

 for orange roughy, the government announced its in- 

 tention to change the ITQ system from fixed to pro- 

 portional ITQ. The authors were surprised at how 

 rapidly government was able to obtain the legal 

 authority from Parliament to make such a fundamen- 

 tal, and economically significant, change in the system. 

 It took approximately one year from the time that 



