LICENSING AND FLEET DEVELOPMENT POLICY 83 



all have a significant impact on the development of the 

 industry. Unless their activities are well coordinated, they 

 can frustrate the objectives of licensing policy and aggra- 

 vate the complexity of fisheries regulation. This obviously 

 calls for sensitivity and close liaison among the levels of 

 government, their departments and ministries. 



The more a system depends on compelling licensees to 

 behave contrary to their economic interests, the more 

 complex the regulations need to be. Furthermore, a 

 licensing technique that relies on compulsion for achiev- 

 ing the desired objectives is under much more strain than 

 one that relies on private incentives. So, clearly, a licens- 

 ing policy that is consistent with licensees' economic 

 interests is preferable to one that is not. 



A review of the history of licensing reveals the crucial 

 significance of this. Attempts to control the growth of the 

 fleet by restricting one or more dimensions of fishing 

 power when vesselowners have strong incentives to 

 expand capacity generate ingenious innovations to cir- 

 cumvent the restrictions and thereby defeat their pur- 

 pose. Additional restrictions must be added to plug the 

 loopholes. But this becomes an exceedingly diflFicult and 

 costly administrative task. The likelihood that such 

 restrictive measures will be any more successful in the 

 future than they have been in the past is very low. There- 

 fore, when evaluating alternative approaches, I give pref- 

 erence to methods that will use private incentives in con- 

 structive ways. 



Evaluating Alternatives 



Although other matters peculiar to particular fisheries 

 must be considered as well, the foregoing considerations 

 are the ones that should be used in making decisions 

 about reforms in commercial fishing privileges. As such 

 they provide a framework for the following evaluations of 

 existing licensing arrangements and possible new 

 approaches in Pacific fisheries. 



Unrestricted licences Clearly, any system of fishing 

 privileges that fails to regulate either the numbers who 

 may fish or their individual catches is inadequate. Experi- 

 ence has repeatedly shown that such a licensing system 

 fails on all of the criteria listed above: it allows fishing 

 capacity to expand excessively, which prejudices resource 

 management; undermines the economic security of 

 fishermen; and eliminates scope for public revenues. 

 Then to conserve stocks being exploited by overexpanded 

 fleets, fishing gear, times and methods must be highly 

 regulated, with consequent heavy administrative burdens 

 and enforcement requirements. 



Experience has also shown that even in underdevel- 

 oped fisheries unrestricted licensing can quickly be over- 

 taken by events, making needed changes difficult. 

 Accordingly. I propose in Chapter 10 that the remaining 



licences of this form should be abolished and replaced by 

 more effective licensing arrangements. 



Limited-entry' licences In recent years limited-entry 

 licences have been adopted to control fleet development, 

 not only in the major fisheries of Canada's Pacific and 

 Atlantic coasts, but also in the United States, Australia 

 and a number of other countries.'* Under this system, 

 licences or permits convey fishing rights to a limited num- 

 ber of people or vessels. On the Pacific coast limited- 

 entry licences have been applied to vessels by restricting 

 vessel numbers, tonnage and length, and to persons by 

 restricting the number of individuals permitted to engage 

 vessels. Elsewhere licences have been used to restrict 

 engine horsepower and units of gear, among other things. 



This approach has a fundamental weakness: when one 

 or more inputs in the fishing process are restricted, the 

 capacity of the fleet can continue to expand by adding 

 other, unrestricted inputs. As a result, this technique has 

 consistently failed to achieve the desired results. For 

 example, in the Pacific salmon fishery, the initial restric- 

 tion on the number of vessels led to their being replaced 

 with larger vessels. Then, in an eflbrt to control vessel 

 size, restrictions on tonnage and length were added. 

 These led to further investment in new gear and vessel 

 improvements. In the roe-herring fisherv', restricting the 

 number of persons permitted to fish has not prevented 

 expansion of the fishing power of their vessels. 



Experience in other fisheries and in other countries has 

 been similar, though less dramatic.'" The basic problem is 

 that the design and structure of a fishing unit is flexible, 

 and restnctions on one or two dimensions cannot, in the 

 long run, prevent increased investment in other dimen- 

 sions. 



And while, theoretically, restrictions could be placed 

 on all dimensions of fishing effort simultaneously, such 

 restrictions would have to be so numerous and diverse 

 (covering vessel size, power, crew, time spent fishing, gear 

 for finding, catching and holding fish, and so on) that 

 they would be virtually impossible to administer and 

 enforce. In addition, they would preclude any technologi- 

 cal improvements in fishing. 



Governments in Canada and elsewhere have undoubt- 

 edly been attracted by the administrative simplicity of 

 rudimentary limited-entry licensing; but because it fails 

 to reduce or control expansion of fishing capacity, the 

 burden of closely regulating fishing methods remains. 



For these reasons, I propose in Chapter 8 that limited- 

 entry licensing systems be replaced by more effective 

 quota licences in those fisheries where it is feasible to do 

 so; this includes all of the significant commercial fisheries 

 other than the salmon and roe-herring fisheries. The 

 existing limited-entry licences in the smaller fisheries pro- 



