158 



Fishery Bulletin 90(1), 1992 



to overpay to adjust TACs downward. But it should 

 be noted that the Government did sell quota for similar- 

 ly high prices. In any case, it seems more practical to 

 define quota as a portion of the TAG, in an uncertain 

 and dynamic environment. 



In the authors' opinion, New Zealand fisheries man- 

 agers underestimated the complexity of the bycatch 

 problem. In a multispecies setting, the apparent in- 

 dependent fluctuations of each species complicate the 

 bycatch problem. In general, insufficient information, 

 variabOity between harvesters, and the complex organ- 

 ization of fisheries mean that it will be difficult to solve 

 the bycatch problem by adjusting a tax on bycatch. 

 Many fisheries are essentially single-species (e.g., surf 

 clams, herring, scallops, lobsters). These are the best 

 candidates for ITQ management with respect to by- 

 catch. If ITQ management is to be applied to multi- 

 species fisheries (e.g., New England groundfish), it 

 might be better to exclude some of the minor species 

 from the scheme, or to recognize that they may need 

 to be "sacrificed" in order to optimize fishing on the 

 more valuable species. 



New Zealand lacked adequate stock assessment data 

 for a quota-based management system such as ITQs. 

 And, unfortunately, it will take time to develop appro- 

 priate time-series of data. In addition, there is much 

 that needs to be learned about the basic biology of the 

 deepwater species, many of which have only recently 

 been discovered in commercially viable quantities. The 

 basis for stock assessments is better in some other 

 places (e.g., throughout North America and Europe), 

 but the expectations for a high degree of precision may 

 still make stock assessment capability problematic. 



ITQ management requires adequate monitoring and 

 enforcement capabOity to track individual catches. New 

 Zealand's enforcement of ITQs is geared towards in- 

 vestigations by accountants and auditors, instead of 

 traditional fisheries officers. In order for these inves- 

 tigators to be effective, the New Zealand fishing in- 

 dustry is required to maintain detailed "paper trails" 

 for products. Penalties for violations are severe. It is 

 too early to say whether this scheme is working, but 

 it is obvious that it will be necessary to impose addi- 

 tional recordkeeping to enforce ITQs in most cases in 

 the United States. 



It is unclear how serious the overcapitalization prob- 

 lem was in New Zealand, but there are U.S. fisheries 

 that are severely overcapitalized (e.g., New England 

 groundfish). The buyback scheme in New Zealand pro- 

 bably did little to reduce overcapitalization. If a buy- 

 back scheme is intended to reduce overcapitalization, 

 funds should be used to reduce capital, and not hypo- 

 thetical catches that might not have been taken 

 anyway. 



A positive lesson that should be learned from New 

 Zealand is the need to be clear about objectives when 

 applying an ITQ system. Glearly, one of the intentions 

 of New Zealand's fisheries managers was to increase 

 resource rent in the fisheries and to extract the rent 

 (through annual royalty payments^^) for the general 

 benefit of the country. What will be the objective for 

 applying ITQ management elsewhere? If the objective 

 is conservation, then quota management (or other 

 forms of management) is sufficient in theory, although 

 pressure from an overcapitalized fishing industry may 

 prevent TAGs from being set conservatively enough. 

 If the objective is economic efficiency, then it is impor- 

 tant to address distributional issues (resource rents, 

 producer surplus, and consumer surplus). 



There is a great potential for ITQ management, but 

 it is not a panacea. When ITQ management is applied, 

 it is important that it be approached with realism and 

 based on adequate experience and data. 



Postscript 



Approximately 20 months have passed since New 

 Zealand converted its ITQ program from one of fixed 

 quota valid in perpetuity to one based on quota speci- 

 fied as a proportion of an annual TAG (also referred 

 to as a percentage ITQ system in New Zealand or a 

 percentage quota share system in the United States). 

 As predicted in this paper, the transition has been con- 

 troversial, in part because compensation available to 

 the industry in the form of resource rentals has not 

 been as large as anticipated. As a result, the fishing 

 industry filed a $150 million NZ court action against 

 the government. The lawsuit has since been settled out 

 of court. 



In spite of the change from fixed to variable quota, 

 most TAGs have remained unchanged from one year 

 to the next. This is partly a result of inadequate infor- 

 mation for stock assessments. However, there have 

 been three notable reductions in TACs. The total hoki 

 TAG has been reduced from 250,000 to 200,000 tons, 

 Ghallenger orange roughy from 12,000 to 1900 tons, 

 and Chatham Rise orange roughy from 32,800 to 

 23,800 tons. The reduction in hoki quota was a reflec- 

 tion of new stock assessment results suggesting that 

 then-current TACs were unlikely to be sustainable; the 

 reductions in orange roughy TACs resulted from 

 assessment results suggesting that stock collapse was 

 imminent. 



The anticipated need for large reductions in the 

 Chatham Rise orange roughy TAG was one of the 



"At present, a legal basis for resource rentals in an ITQ system is 

 lacking in the Unites States. 



