Fisheries Buybacks Fisheries Buybacks Edited by Rita Curtis Economics and Social Analysis Program Office of Science and Technology NOAA Fisheries 1315 East-West Highway Silver Spring, Maryland 20910 USA [email protected] and Dale Squires NOAA Fisheries Southwest Fisheries Science Center 8604 La Jolla Shores Drive La Jolla, California 92037 USA [email protected] Presented at International Workshop on Fishing Vessel and License Buyback Programs University of California La Jolla, California March 22–24, 2004 Rita Curtisis Director of the Economics and Authorization to photocopy items for internal or Social Analysis Program, Office of Science and personal use, or the internal or personal use of Technology, NOAA Fisheries, Silver Springs, specific clients, is granted by Blackwell Maryland. She received a Ph.D. in Agricultural Publishing, provided that the base fee is paid and Resources from the University of Maryland. directly to the Copyright Clearance Center, She has published papers in the American 222 Rosewood Drive, Danvers, MA 01923. Journal of Agricultural Economics, Canadian For those organizations that have been granted Journal of Agricultural Economics, andMarine a photocopy license by CCC, a separate Resource Economics. system of payments has been arranged. The fee codes for users of the Transactional Dale Squiresis a Senior Scientist with NOAA Reporting Service is ISBN-13: 978-0-8138- Fisheries, Southwest Fisheries Science Center in 2546-5/2007. La Jolla, California, and Adjunct Professor of Economics at the University of California, San First edition, 2007 Diego. He has worked with the Food and Agriculture Organization of the United Nations, OECD, and WorldFish Center, been a visiting pro- Library of Congress Cataloging-in-Publication fessor or scientist in Europe, Australia, Canada, Data and Asia, and has over 25 years of experience with developed and developing country fisheries in the U.S., Australia, Europe, and Asia. Fisheries buybacks / edited by Rita Curtis and Dale Squires. — 1st ed. © 2007 Blackwell Publishing p. cm. All rights reserved “Presented at International Workshop on Chapters 1, 2, and 16 is the work of the U.S. Fishing Vessel and License Buyback Programs, Government and is not subject to U.S. copyright. University of California, La Jolla, California, March 22-24, 2004.” Blackwell Publishing Professional Includes index and references. 2121 State Avenue, Ames, Iowa 50014, USA ISBN-13: 978-0-8138-2546-5 (alk. paper) ISBN-10: 0-8138-2546-6 (alk. paper) Orders: 1-800-862-6657 1. Fisheries—Economic aspects—Case Office: 1-515-292-0140 studies. 2. Fishery management, International— Fax: 1-515-292-3348 Case studies. 3. Fishery policy—Case studies. Web site: www.blackwellprofessional.com I. Curtis, Rita (Rita Elizabeth), 1962- II. Squires, Dale. III. International Workshop on Blackwell Publishing Ltd Fishing Vessel and License Buyback Programs 9600 Garsington Road, Oxford OX4 2DQ, UK (2004 : La Jolla, San Diego, Calif.) Tel.: +44 (0)1865 776868 SH334.F566 2007 Blackwell Publishing Asia 338.3(cid:2)727—dc22 550 Swanston Street, Carlton, Victoria 3053, 2007003753 Australia Tel.: +61 (0)3 8359 1011 The last digit is the print number: 9 8 7 6 5 4 3 2 1 Contents Preface vii Rebecca Lent and William Hogarth Contributors ix Part I Fisheries Buybacks Overview 01 Introduction 3 Rita Curtis and Dale Squires 02 Lessons from Fisheries Buybacks 15 Theodore Groves and Dale Squires 03 Do Buyback Programs Make Sense? 55 Rögnvaldur Hannesson Part II Fishery Case Studies 04 Capacity Reduction and Productivity: A Profit Decomposition for the Australian South East Trawl Fishery 67 Kevin J. Fox, R. Quentin Grafton, Tom Kompas, and Tuong Nhu Che 05 A Case Study of Fishing Vessel Capacity Management Public Buyout Schemes: Community Experience through the Multi-Annual Guidance Programmes and Ways Forward 75 Jean-Claude Cueff 06 Vessel Decommissioning in Danish Fisheries 81 Eric Lindebo and Niels Vestergaard Appendix A Danish MAGP Fleet Segmentation and Reduction Rates 99 Appendix B Danish MAGP III and IV Results 101 Appendix C Danish Capacity Measurement and Registration 103 07 Decommissioning Schemes and Capacity Adjustment: A Preliminary Analysis of the French Experience 105 Olivier Guyader, Patrick Berthou, and Fabienne Daurès 08 The Decommissioning Scheme for the Italian Clam Fishery: A Case of Success 133 Massimo Spagnolo v vi Contents 09 Driftnets Buyback Program: A Case of Institutional Failure 145 Massimo Spagnolo and Rosaria Sabatella 10 The Impact of the European Union Buyback Scheme on the Italian Fleet: The Northern and Central Adriatic Sea Bottom Trawlers Case 157 Massimo Spagnolo and Evelina Sabatella 11 Buyback Programs for Fishing Vessels in Norway 177 Rögnvaldur Hannesson 12 The Effects of Buyback Programs in the British Columbia Salmon Fishery 191 R. Quentin Grafton and Harry W. Nelson 13 Effectiveness of Vessel Buyback Programs on the Offshore Fishery in Taiwan 203 Jenny Chin-Hwa Sun 14 The Texas Inshore Bay and Bait License Buyback Program 215 Robin Riechers, Wade Griffin, and Richard Woodward 15 Buyback Programs and Industry Restructuring in Fisheries 227 James E. Kirkley, John B. Walden, and James Waters 16 A Case Study of New England Groundfish Fishing Capacity Reduction 239 Eric Thunberg, Andrew Kitts, and John Walden Index 249 Preface The book Fisheries Buybacks is the outcome of a National Oceanic and Atmospheric Administration (NOAA) Fisheries—University of California, San Diego workshop in March 2004, entitled “International Workshop on Fishing Vessel and License Buyback Programs” held at the Institute of the Americas, University of California, San Diego. Buybacks of vessels, gear, and licenses or other forms of fishing rights are widely used throughout the world to address a number of issues and considerable amounts of public, in- dustry, and even nongovernmental organization (NGO) funds are expended in this regard. Nonetheless, although buybacks are widely used, and considerable funds are expended, little systematic attention has been given to evaluation of these programs with an eye to their strengths and weaknesses, most advantageous instances when to apply them, and how to de- sign them in a cost-efficient manner when they are applied. The workshop and book are meant to address this research and policy gap. The intent of the workshop was to survey and evaluate experiences with buybacks from across the globe to develop lessons for the future when policy makers are considering apply buybacks. A workshop centered on applications in fisheries across the globe required assem- bling social scientists, legal experts, policy makers, and fishermen from countries that have experience with buybacks. The published literature on buybacks in scholarly journals is not extensive, and most of the extant literature remains published as reports or conference and workshop presentations and proceedings that are difficult to access. As a consequence, most buybacks remain insufficiently examined. Case studies were prepared for a number of the fisheries in Australia, Asia, Europe, and North America that have received buybacks. These case studies were presented at the work- shop and were followed by discussions. The last day focused on extracting lessons to be learned from the case studies and discussions. These case studies were supplemented in the book by an interpretive essay that synthesizes these case studies, unpublished literature, and other sources of information. Chapter 1 introduces the book in greater depth and details its contents. Chapter 2 contains the essays that synthesize and interpret the case studies and extant literature. Chapter 3 ex- plains the root cause for the need for buybacks of vessels, licenses, or gear, the open-access property right, and observes that a solution to this fundamental problem will never be achieved unless access into the industry is sufficiently limited. The remaining chapters pro- vide the case studies. The authors are grateful to NOAA Fisheries for generously funding the workshop and pub- lication of the book. The authors are also grateful to NOAA Fisheries and the Department of Economics, University of California, for hosting the workshop. Thanks also go out to the au- thors of the chapters, discussants, presenters of presentations that were not written as chap- ters, and the other attendees of the workshop. The authors are especially grateful to Dr. Heidi vii viii Preface Gjertsen for substantial assistance in organizing and managing the workshop and preparations and follow-up, and keeping her patience throughout the process. The authors are also grate- ful to Quentin Grafton and Tom Kompas for reviewing Chapter 2 for content, Ben Gilbert who carefully read and edited Chapters 1 and 2 to improve the ease of reading, to Sally Mills for a heroic job of editing the papers, preparing the manuscripts for publication, and keeping Dale Squires on track with a light touch and humor, and to Erica Judisch at Blackwell for her excellent job in supporting the publication of the book, including managing the project and keeping the publication schedule on track in a cheery and positive manner. In the final analysis, we hope that the book will assist policy makers, industry, NGOs, and others in choosing whether or not to apply a buyback and, if so, some lessons that have been learned elsewhere that will provide a more effective program design and a “greater bang for the buck.” Rebecca Lent and William Hogarth Contributors Patrick Berthouis a Senior Fisheries Research Scientist at the French Research Institute for the Sustainable Exploitation of the Sea (Ifremer), where he has coordinated (1999–2004) the national fisheries monitoring system, managing resources, harvesting, and economics data and targeting all of the French fishing fleet components. He has been actively involved since 1977 in a number of projects relative to fisheries data network, shellfish stock assessment, fleet dynamics, and fisheries management options, including projects for small-scale coastal fisheries. He now heads one of the two fisheries programs at Ifremer, named Sidepeche, in charge of the “National Fisheries Monitoring System,” techniques of observation, stock as- sessment, and management options projects. Within this program, he has recently created a network of fishing effort and environment parameters measurements using sensors aboard fishing vessels, participating on a voluntary basis. Tuong Nhu Cheis a Senior Economist at the Australian Bureau of Agricultural and Resource Economics. She specializes in international trade, resource economics, and applied econo- metrics. She received her Ph.D. from Australian National University. Her recent work in- cludes the modeling of biosecurity issues and quarantine programs. Her main interest is the application of economics to policy concerns, including fishery management. Jean-Claude Cueffwas Head of Unit for “Management of Fleets” at the time of writing and is currently Head of Unit for “Aquaculture, Inland fisheries, processing and commercialization in the frame of structural funds for fisheries” in the Directorate General for Fisheries and Maritime Affairs, European Commission, Brussels. He is a French agronomist with a specialization in fisheries management. He started his professional experience in La Réunion Island on local stock assessments (1970 to 1972) and later in Japan as associate researcher in aquaculture at the Tokyo Fisheries University (Tokyo Suisan Daigaku) from 1972 to 1974. Back to France he was recruited by the Comité central des Pêches maritimes, the official French Fisheries Interprofessional Organisation, to deal mainly with migratory species management (tuna, eels, and salmonids). In 1988 he joined the European Commission in Brussels, to take over European Community programs to reduce the size of the Community fishing fleet. In 2006 he was given new responsibilities for aquaculture in the framework of the Community structural funds. Rita Curtisis Director of the Economics and Social Analysis Program, Office of Science and Technology, National Oceanic and Atmospheric Administration (NOAA) Fisheries, Silver Springs, Maryland. She received a Ph.D. in Agricultural and Resources from the University of Maryland. Fabienne Daurèsworks as a research fellow in fisheries economics at the French Research Institute for the Sustainable Exploitation of the Sea (Ifremer). She has experience in applying ix x Contributors economic analysis to the management of fisheries both at the national and European levels. She has coordinated the Ifremer’s Network for the Collection of Economic Data for the French fishing sector since 2001 and is currently involved in European research projects on economic indicators in fisheries. She frequently works as an expert for the Scientific Technical, Economic Committee for Fisheries of the European Commission (STECF), the General Fisheries Commission for the Mediterranean (CGFM), and the Ministry of Agri- culture and Fisheries in France. Kevin Fox is a Professor of Economics and Director of the Center for Applied Economic Research at the School of Economics, Faculty of Business, University of New South Wales, Australia. He is a member of the Australian Bureau of Statistics Methodology Advisory Committee, and has been a consultant for agencies such as the Reserve Bank of New Zealand, the Swiss National Bank, the Australian Bureau of Agricultural and Resource Economics, the Asian Development Bank, and the New Zealand Treasury. He is an Associate Editor of the Journal of Productivity Analysis. His research interests are primarily in the field of economic measurement, with a focus on productivity, prices, and efficiency analysis. Quentin Grafton is a Professor of Economics and the Research Director of the Crawford School of Economics and Government, Australian National University. He is in the List of Top 500 of the World’s Economists (1994–1998), “Revealed Performances: Worldwide Rankings of Economists and Economics Departments,” is listed in the 2005 and 2006 Marquis Edition Who’s Who in the World, the Marquis 9th Edition Who’s Who in Science and Engineering, and in the 33rd edition of the Dictionary of International Biography (in press). He has published extensively in environmental and resource economics, especially in fisheries economics, and has been the recipient of several prestigious research prizes. He is the author or editor of 8 books and 50 plus journal articles, many chapters in books, and several important texts in en- vironmental economics including The Economics of the Environment and Natural Resources. He has advised extensively on the issues of environmental, natural resources, and agricultural economics to organizations in Australasia, North America, and Europe. Wade Griffin is a Professor in production and resource economics in the Department of Agriculture at Texas A&M University. His research program is concerned with developing management simulation models to evaluate policy alternatives proposed by fisheries manage- ment bodies. In addition his research is concerned with economic feasibility of aquaculture. Dr. Griffin’s teaching responsibilities are in the undergraduate program. Theodore Groves is a Professor in the Department of Economics at the University of California, San Diego, a Fellow of the Econometric Society, and a Fellow of the American Academy of Arts and Sciences. He contributed widely to the economic theory of organization and planning and public and welfare economics before turning his attention to environmental and resource economics. Recent research has focused on the conservation of Pacific sea tur- tles, the conservation and management of transnational fisheries for highly migratory species, and voluntary agreements among fishers to manage the commons problem and protected species and other ecosystem issues. His research on cooperatives is focused on applying the economic theory of teams, of which he is a main contributor. Olivier Guyader works as a research fellow in fisheries economics at the French Research Institute for the Sustainable Exploitation of the Sea (Ifremer), Plouzané, France. He has been Contributors xi involved in several European research projects in fleet and bioeconomics modeling, and he coordinates a project on small-scale coastal fisheries in Europe. He also contributes actively to the collection of economic data on commercial and recreational fisheries and intervenes regularly as an expert for the Scientific Technical, Economic Committee for Fisheries of the European Commission and for the Ministry of Agriculture and Fisheries in France. Rögnvaldur Hannessonhas been a Professor of Fisheries Economics at the Norwegian School of Economics and Management in Bergen, Norway, since 1983. He was born and raised in Iceland. He has a Ph.D. in economics from the University of Lund, Sweden. He has done con- sultancy work on fisheries for the World Bank, the Organisation for Economic Co-operation and Development (OECD), and the Food and Agriculture Organization (FAO), and has served on the advisory committee on fisheries research for the FAO, 1998–2004. In 1996–1997, he served on a committee for the U.S. National Research Council evaluating individual fishing quotas. His most recent book is The Privatization of the Oceans, published by the MIT Press. He has been prominent in the debate on fisheries policy in Norway and Iceland. His research and teaching interests besides fisheries economics include petroleum and resource economics. His interests outside of academia include history, hiking, and traveling. James Kirkleyis a Professor of Marine Science at the Virginia Institute of Marine Sciences, School of Marine Science, College of William and Mary, Virginia. He is the former Chair of Department of Coastal and Ocean Policy, and was previously employed by NOAA Fisheries, Woods Hole, Massachusetts. His professional interests include fisheries management, pro- duction and productivity in fisheries, reproductive biology, ecosystem valuation, capacity and related reduction programs, and quantitative methods. Andrew Kitts is an Industry Economist in the Social Sciences Branch of National Oceanic and Atmospheric Administration (NOAA) Fisheries, Northeast Fisheries Science Center in Woods Hole, Massachusetts. The Social Sciences Branch provides economic and social im- pact analysis and guidance to regional fishery management bodies. He manages fisheries cost and earnings data collection programs and conducts research on fisheries cooperatives. Tom Kompasis an Associate Professor of Economics and Director of the International and Development Economics Program at the Crawford School of Economics and Government, Australian National University, and is a Senior Economist at the Australian Bureau of Agri- cultural and Resource Economics. He is Editor of the Australian Journal of Agricultural and Resource Economics and the ranking scientific member (economist) for the South East Fishery and Northern Prawn Resource Assessment Groups in Australia. His area of specialty is economic dynamics. Erik Lindebo currently works as a fisheries economist for the European Commission in Brussels. He previously spent 7 years working for the Danish Research Institute of Food Economics (FOI) analyzing economic aspects of national and European Union (EU) fisheries policies. He also has valuable working experience at the Sea Fish Industry Authority, UK, and the World Bank, Australia. He has been engaged in consultancy for the Food and Agriculture Organization (FAO), working on the regional response to International Plan of Action (IPOA)—capacity and the production and use of trash fish in Southeast Asia. He obtained his Ph.D. in 2005 from the University of Southern Denmark, with a dissertation entitled “Managing Capacity in European Fisheries.”