Doc. 8184

7 September 1998

Sustainable exploitation of living marine resources

Opinion¹

Committee on Science and Technology

Rapporteur: Mr Tómas I. Olrich, Iceland, European Democratic Group

1.        Introduction

The report on sustainable exploitation of living marine resources deals with an extremely complicated issue. While recognising the excellent work of our rapporteur on this important issue, the objective of the present report for opinion is to add some information and suggest amendments meant to broaden the scope of the proposed recommendations. Those suggestions are established upon long standing experiences that some countries, depending on fisheries, have accumulated and the scientific conclusions they have drawn from an interdisciplinary approach to sustainable fisheries management.

It is essential that the sustainable exploitation of living marine resources be founded on a balanced scientific approach. Fishing activities involve economic, biological, oceanographic, climatic, environmental and social aspects. This clearly points to the need for a holistic, interdisciplinary approach to the exploitation problem.

Complicated to understand and difficult to monitor, the oceans have changed role: for centuries they were almost exclusively a vital source of food for coastal communities. Gradually they have become the area of intense maritime traffic and transport, and provide today an important part of world output of raw energy materials. The interests at stake have multiplied and somewhat overshadowed the food producing role of the sea.

The oceans, however, remain an important source of food for mankind. As long as the sea remains a supplier of natural raw material for food, a healthy state of the marine environment will continue to be of a vital importance for human society. Thus the prudent exploitation of marine resources for food production, being based on the healthy state of the marine environment, guarantees a close monitoring of the ecological aspects of the oceans: the fishing communities are directly dependent on the sustainable and healthy management of the resource. Their economic dependence on the sea should provide a warrant for sound and sustainable exploitation, provided that these communities enjoy economic benefits from the fishing activity, contribute to improving the scientific knowledge of the marine environment and have a say in the matter.

If fishing, to remain economically sound, must be run on the basis of sustainable exploitation, the industry and the operators must be motivated to support and strengthen measures to exploit the resource in a sustainable way. The fishing sector, however, has a low economic profile in most European countries and is not supposed to strengthen society by generating profit. This low profile has direct influences on the whole industry and on the scientific foundation for the exploitation: the fishing sector, operators and industry, tend to contribute little to the scientific effort, which in turn weakens the co-operation ground between operators, the scientific community and the relevant authorities.

The low economic aspect of fisheries is harmful for fishing communities and puts fisheries policies as well as marine research in a vicious degrading circle. A special focus is needed on the economic aspect of fisheries. The scientific approach to the sustainable exploitation of marine resources must allow for thorough economic studies and take into account the scientific findings of those nations that have succeeded in combining their biological and economic research effort to manage their resources in a sustainable way. To some extent the economic approach should become central.

The present report for opinion stresses the need for a multidisciplinary scientific approach. Such a balanced approach alone will enable fisheries policies to be integrated into a coherent European maritime policies.

2.        Scientific basis for exploitation

Biological aspects

Although marine biological research has played an important role in the development of marine resource utilisation in the past and basic knowledge of resources always has been of importance, industrialisation and modern harvesting technology require much more detailed knowledge of the resource and the physical/chemical environment than ever before. While fisheries scientists and oceanographers in the past devoted much of their efforts to locate new fishing grounds, which was much appreciated by the fisherman, the main role of the science in recent years has been to assess the size and productivity of the resource in order to provide a basis for rational management of the stocks. This task has become increasingly important as the fishing fleet has become more and more efficient and the number of both fully utilised and over-exploited fish stocks has grown.

Today there is a continuing need for detailed studies on the biology of exploited species, both in time and space, because important parameters usually change with time and from one location to another. Parameters may also change in response to the density of the resource population, e.g. due directly to harvest or due to natural or other changes in environmental factors that are of significance for the state of the stock in question. Studies usually require a systematic sampling scheme that is designed and conducted so as to avoid a biased view of the situation. Usually it would be most economic to collect samples from the fisheries operations, which requires quite sophisticated planning and co-ordination.

Catch statistics are likewise an important source of information, although they may not always be very reliable for technical or operational reasons. Every effort should be made to automate collection of information on fisheries operations as well as the processing of data that will secure fisheries scientists the most reliable information possible on all relevant aspects of the fishery. Regular surveys, independent of fishing operations, where standard equipment is employed to study changes in abundance of different resources in time and space, are therefore extremely valuable in modern assessment of fish stocks, because the various technical innovations and improvements in commercial operations often distort measures used to estimate parameters.

Systematic long-term monitoring of the environmental parameters affecting utilised stocks is also necessary for proper understanding of resource development, while close linking of environmental and biological studies of individual species or stocks is strongly advocated in order to facilitate necessary studies on recruitment and reproduction processes.

Species and stocks should not only be studied in isolation; on the contrary, there is a strong need to obtain information on dynamic relationships between different species and stocks under varying environmental conditions. Here, modelling work can be of great use and is a necessary element in generating prognoses of stock development in a multi species context. Application of modern statistical tools, using powerful computers for minimising risk of failure in management advice, is also a great improvement on the procedures used in the past.

Research institutions and scientists across national borders can often much better address these important tasks when joining forces, because marine research often requires vessel-at-sea-time that typically is rather costly. Also, high-technological solutions of equipment development for marine research is much better realised in co-operation between two or several laboratories in one or more countries.

The research community and the operators

It is a common belief that the fisherman and fishing industry on the one hand, and the fisheries scientists on the other hand, are in great dispute on the status of the resource. While these alleged disputes beyond doubt often are exaggerated, such conflicts occur and are often due to misinformation or communication failure between the two parties.

Efforts need be made on both sides to stimulate dissemination of relevant information; the scientists need to explain their findings in a clear and accessible manner, where the experience of the fisherman is incorporated in the scientific assessment as far as possible, and the fishing communities need to make efforts to bring its message forward in a clear and balanced way.

There are ways to strengthen the link between the fishermen and the operators on the one hand and the scientists and the authorities on the other in order to reach consensus on long-term sustainable strategies.

Catch rules as a form of long-term harvesting strategies

While the scientific basis frequently is sufficient for rational management purposes, there appears too often to be a lack of will and understanding by fishermen, vessel owners, local communities and even the national authorities to implement a responsible fisheries strategy. Often, although the relevant authorities do have such understanding and will, the immense pressure from local interests will make such a policy difficult to implement. When the stock situation is poor the tendency usually is to view the situation more optimistically in order to avoid severe measures that will cause short-term economic cuts. Too often, shortsighted gains rule out management measures that would facilitate long-term stability and relatively higher long-term yields.

To deal with this question, modern statistical tools have made possible the development of long-term catch rules that are being tested by mathematical models and risk analyses, incorporating both biological factors and special features of the resource in question as well as economic factors of relevance for the exploitation of this resource. In principle, specific catch rules are needed for each stock.

Such rules (sometimes called harvesting control laws) secure the sustainability of the resource as well as the economic benefits for all participants, both in terms of higher and more stable yields. In adopting such well founded harvesting strategies, far less arguing about TACs takes place, making life easier for all concerned, including the politicians and the decision-makers, the scientists providing the advice and the industry that will enjoy lesser fluctuations in catches. Scientifically based management combined with the active involvement of the resource user guarantees that the best results are obtained. An approach of this kind seems therefore to be most suitable when it comes to securing long-term sustainability of fish stocks.

The economic approach

Fishing as well as other utilisation of living marine resources is first and foremost an economic activity. Its purpose, as that of any other industry, is to provide a sustainable flow of benefits to human society. This objective is not achieved automatically. Compared to many other industries, the fishing activity is subject to a series of special problems that subtract from its ability to generate maximum economic benefits.

First, fisheries are based on extraction from biological resources whose dynamics are imperfectly understood and quantified. In order to generate maximum economic benefits from living marine resources it is necessary to greatly improve our knowledge of their population dynamics.

Second, most ocean resources constitute the common property of many potential harvesters. This arrangement leads to an inexorable gravitation toward economically inefficient exploitation in the form of excessive harvesting and harvesting effort accompanied by overly small biological stocks. It is important to realise that this depressing outcome is totally independent of the state of biological knowledge. The common property arrangement of ocean resources results in a complete dissipation of economic benefits irrespective of the existing biological knowledge. This observation implies the need for an appropriate institutional framework to guide individual actions to the common end. This is the problem of devising and installing the appropriate fisheries management regime, dealt with in chapter 4 of this paper.

Third, many fisheries are operated as a traditional production activity from small coastal communities. This suggests that there may be considerable „social costs“ associated with the implementation of a new institutional arrangement for the fisheries. These costs are easily translated into political pressures that may thwart the movement toward an improved fisheries management regime, even if the overall economic benefits greatly exceed the costs.

These observations have important implications for the research needed to provide a proper scientific foundation for the exploitation of living marine resources.

      First of all, the overriding objective of fisheries and the exploitation of living marine resources in general must be the generation of net economic benefits. Any deviation from this objective makes society as a whole worse off and is therefore difficult to justify. This suggests that an increased emphasis should be placed on research in the area of the economics of fisheries. In particular, this emphasis should be on the design of fisheries management systems conducive to the maximisation of net long-term economic benefits from the fishing activity.

      The fishing activity involves economic, biological, oceanographic, climatic, environmental and social aspects. This suggests the need for a holistic, interdisciplinary approach to the fisheries problem. Moreover, although, European university systems routinely produce experts in each of these areas, there may be a need for developing a more interdisciplinary university education in what may be called fisheries science.

      Third, recognising that scientific knowledge is a public good, not least in the area of fisheries that are fraught with economic problems, there may be good reason to expand public support for fisheries research and, even more importantly, the dissemination of fisheries scientific knowledge. In fisheries subject to inferior fisheries management systems, this is likely to facilitate the transition to more appropriate ones. In fisheries already under an efficient fisheries management system, this is likely to improve the operation of these systems.

      It is sometimes maintained that traditional fishing operated from small coastal communities is somehow preferable to more technologically advanced fishing methods. A general assertion of this type is neither supported by biological nor economic science. From the biological perspective, the main human impact on fish population dynamics comes from the total volume harvest and not the types or homeports of the fishing vessels conducting the fishing. From the economic perspective, what counts is the size of the long-term economic benefits generated by the fisheries. Thus, modern large-scale fishing techniques are preferable to traditional small scale ones only if they generate more net economic benefits, and vice versa. Fortunately, although the market price system encourages overfishing and excessive fishing effort, it normally provides good guidance as to the proper technology and vessel size composition of the fishing fleet. The implication is that as a rule government interference in the structure and composition of the fishing industry should be avoided.

3.        External and internal hazards

External Hazards

      Degradation of the marine environment from pollution is undoubtedly the most serious current external hazard to the sustainable utilisation of marine resources. The impact of climate changes on marine exploitation although somewhat speculative must also be considered a potential future threat.

      Marine pollution may disrupt the sustainable utilisation of marine living resources in two major ways. Firstly, pollution may diminish the biological productivity of the oceans and thus produce basically the same effects as overfishing on stock recruitment. Secondly, certain chemicals that are responsible for marine pollution today exhibit characteristics that may damage the healthy image of marine products which retailers have begun to exploit in marketing marine products.

      Marine pollution has many different sources. It is convenient, however, to consider two basic origins: the land-based activities on the one hand and sea-based operations on the other. Pollution from land-based activities enters the sea either through direct run-off or indirectly through the atmosphere. Close to 80% of marine pollution stems from land-based sources while approximately 20% comes from sea-based operations.

      Efforts by governments to address this issue at the intergovernmental level have not been commensurate to the relative importance of these sources. Thus, there are five legally binding global conventions that have been adopted to control pollution from sea-based activities, whereas the United Nations Law of the Sea Convention is the only global convention to address pollution from land-based activities, and in a somewhat non-specific terms at that.

      Despite considerable improvements in environmental technology and better environmental practices in the developed countries, the pressure on the oceans has increased enormously during the past 50 years. During this, the world population has grown from 2 billion to 5.8 billion and at the same time colossal urban growth has taken place in most parts of the world. It is estimated that the world's cities are growing by 1 million inhabitants each week. This concentration of people, which takes place in most cases in coastal regions, is fuelling a series of environmental problems, mainly due to lack of planning and insufficient pollution control.

      It is well recognised that a substantial part of marine biological productivity originates in the relatively shallow coastal waters and on the continental shelves. Coastal waters are believed to provide 30% of the total marine biological production and between 70-80% of all fish catches. Increased discharges of untreated sewage and industrial pollution are beginning to disturb the marine ecological balance and, perhaps the most seriously, the spawning and nursery areas for fish in many coastal regions. One sign of increased pollution in coastal waters is the increased frequency of harmful alga blooms, which have caused sizeable losses to the fishing industry in the last decade.

      Another imminent threat to the marine environment is the continuous increase of man-made chemicals released into the environment. It is estimated that we have introduced approximately 100,000 man-made chemicals into our daily lives. Many of these substances eventually find their way into the ocean and cannot be dealt with by its assimilative capacity, but accumulates in the food chain. Up to now too little emphasis has been given to precautionary assessment of these effects on marine life.

      A report released last year by the United Nations Environment Programme (UNEP) on the Status of the Environment reveals that degradation of the marine and coastal zones continues in all regions of the world. Furthermore in four out of seven regions the rate of degradation is increasing. And in all regions there are signs of serious pollution caused by land-based activities. According to the report, around 1/3 of the world's coastal regions run a high risk with respect to degradation, particularly from land-based sources of pollution and infrastructure development. What we do not know, however, is to what extent this degradation has so far affected the oceans, productivity or other ecological services of the oceans.

      Another report released last year on the State of the Arctic shows that the Arctic marine environment, which we believed until lately to be relatively secure from threats of pollution, has been hit by chemical pollution originating in other quarters of the world. For some of the region's predators, the contaminant level of a number of so-called persistent organic pollutants (POPs) has already exceeded some thresholds associated with reproductive, immune suppressive and neurobehavioral effects in animals in laboratory tests. These increases in contaminant level are mostly related to the marine food web. Recent studies on the effect of certain POPs indicate that these effects may be much more profound and serious to humans than has hitherto generally been recognised. The presence of persistent organic pollutants in the marine environment is almost exclusively related to land-based sources.

      Another source of pollution threat to the legitimate uses of the sea, are discharges of radionuclides mainly from the reprocessing of spent nuclear fuel. Most radioactive substances have extremely wide radius of action and transport easily with ocean currents. Evidence shows that traces of radionuclides are carried long distances far from their release into distant waters where contamination of marine biota takes place. The effect of these releases on fisheries and consumption of marine products in some regions, such as in the Irish Sea, is well known.

Internal Hazards

      While external hazards to living marine resources stem from activities outside the use of marine resources (such as pollution from land-based activities and alterations in the global climate), internal hazards stem directly from the utilization of these resources. Among the most obvious of these hazards are overfishing and marine habitat degradation caused by fishing, shipping and ocean mining.

      Excessive harvesting and the resulting decline of marine stocks is an almost universal feature of ocean fisheries. According to a recent FAO report (FAO, 1997), some 35% of the world’s most important fisheries are currently declining due to overexploitation. The worst situation is found in parts of the Atlantic, where overall harvests have been declining since the beginning of the 1980s in spite of continually increasing fishing effort.

      Excessive harvesting constitutes a major threat to living marine resources. Not only does it threaten the survival of the stocks subject to the harvesting activity, it also constitutes, in many cases, a major disturbance to the marine ecosystem that may easily lead to ecological shifts that may be all but irreversible. It should be noted that ecological shifts, by replacing highly valuable species with less valuable ones, would normally be detrimental to human interests.

      Excessive harvesting of ocean fish stocks is fundamentally caused by an inappropriate institutional structure governing the harvesting activity. Most ocean fisheries are the common property of a group of users. Under these circumstances, each fisherman finds himself locked in competition with numerous other fishermen for a share in a total catch that is bounded by the productivity of the underlying biological resource. The outcome is not only biological overfishing but also the loss of any potential economic surplus offered by the fishery.

      Many types of fishing activity have an noticeable impact on the marine environment. Although the main source of marine pollution is land based activity, a certain degree of marine pollution accompanies many types of fishing. Also of concern is the impact of some fishing gear on certain types of the ocean bottom habitat.

      Similar concerns apply to ocean shipping and mining. Ocean shipping causes marine pollution that may reach extreme levels in certain areas and instances. Ocean mining is also polluting and has in some cases a substantial impact on the bottom environment.

      It is important to realize that the detrimental effects of fishing, shipping and ocean mining on the marine environment are in many respects consequences of the same basic cause as excessive fishing, namely the common property arrangement of the ocean. Since the ocean environment is for the most part a common property of the many, individual fishing vessels, shipping companies and ocean mining operations have very little incentive for actions to preserve the environment. Also, since the ocean environment is, for the most part, a common property, they are allowed to damage it with virtual impunity.

References

FAO. 1997. Review of the State of World Fishery Resources: Marine Fisheries. Food and Agriculture Organization of the United Nations, Rome.

4.        Management systems

      Due to their biological productivity and high unit value many living marine resources are capable of generating substantial economic benefits. However, as has become widely recognized, there are fundamental obstacles to actually realizing these potential benefits². More precisely, it turns out that the traditional common property status of living marine resources is incompatible with an economically efficient utilization of these resources.³

      It is not difficult to see that this common property nature of ocean resources basically forces the harvesters to over exploit the resources, even against their own better judgement. Thus, for instance, when many fishermen have access to the same fish stock, each has every reason to grasp as large a share of the potential yield as possible lest the other fishermen reap all the benefits the resource can offer. Prudent harvesting exhibited by one fisherman in order to maintain the stocks will, for the most part, only benefits other more aggressive fishermen without preventing the ultimate decline of the stocks. Thus, each individual fisherman, acting in isolation, is powerless to alter the course of the fishery. His best course of action is to try to grasp his share as quickly as possible while the resource is large enough to yield some profits. The end result, of course, is excessive fishing effort (relative to the productive capacity of the fish stocks), over exploited fish stocks and little or no net economic benefits.⁴

      This prediction fits closely the observed pattern of common property fisheries around the world. All over the world such fisheries are characterised by excessive fishing capital and fishing effort, depressed fish stocks and little or no net economic returns.⁵

      To solve the fisheries problem, a great number of different management methods have been suggested and tried. Most of these, however, are conveniently grouped into two broad classes; (1) biological fisheries management and (2) economic fisheries management, as illustrated in Figure 1:

Figure 1

Fisheries Management Methods: Classification

      Biological fisheries management measures, such as total allowable catch (TAC), mesh size regulations, area closures, nursery ground protection etc., may conserve and even enhance the fish stocks. They, however, fail to generate economic rents (or net economic benefits) because they do not remove the common property aspect of the fishery that is at the root of the fisheries problem.⁶

      Thus, it appears that solely biological fisheries management measures, while perhaps well suited to preserve the fish stocks, are useless from an economic point of view. In fact, the outcome is typically even worse! Setting and enforcing biological fisheries restrictions is invariably costly. Usually, these costs are quite substantial. Since, as we have already seen, biological fisheries management generates no economic benefits to speak of, these costs represent a net loss. Hence, we must conclude that fisheries management based exclusively on biological conservation measures will generally generate a negative economic return! Such measures are therefore not to be recommended unless the only alternative is the biological destruction of the fish stocks.

      The same applies to direct economic restrictions. Such restrictions take various forms. There are limitations on days at sea, fishing time, engine size, vessel hold capacity etc. These methods also fail to generate economic rents because they do not affect the common property nature of the fishery. As a result, the fishermen are still forced to compete with each other for a share in the catch until all potential economic rents from the fishery have been wasted.⁷

      Restrictions on fishing effort have been tried in many fisheries.⁸ However, irrespective of the precise nature of the effort constraints, the outcome is generally the same. Fishing effort is a composite of many variables. In their attempts to maximise their returns from the fishery, competing fishermen always expand fishing effort variables that are not subject to restrictions. If the number of fishing days is limited, investment in larger and more powerful vessels is usually observed. If there are restrictions on the hold capacity of the vessels, fishermen will counteract by adding vessels and employing speedier ones. If there are simultaneous restrictions on the number of vessels, fishing days, hold capacity and engine capacity, there will simply be investment in fish-finding equipment, fishing gear and similar variables. The end result is always the same. Competing fishermen will find ways to invest in uncontrolled effort variables. This investment, moreover, does not come to a halt until all potential economic rents from the fishery have been dissipated. It is important to realise that as long as there are any economic rents in the fishery, there will be an incentive to find ways to bypass the restrictions.

      The conclusion therefore must be that direct fisheries management methods are unlikely to generate significant economic benefits. Moreover, since the maintenance and enforcement of such measures is usually quite costly, the net benefits generated may easily turn out to be negative!

      The only fisheries management methods that have any chance of success are indirect economic ones. The most prominent of these are (a) corrective taxes and (b) property rights based instruments such as individual transferable quotas. Both taxes and individual transferable quotas are theoretically capable of achieving economic efficiency in the fisheries; taxes by rendering increased fishing effort less attractive to the fishing firms, property rights by eliminating the common property problem. There are, however, substantial socio-political problems as well as some practical ones with taxes as a fisheries management tool. In any case, taxes have not been used as the main fisheries management tool in any significant ocean fishery. Individual transferable quotas, on the other hand, have been employed in many fisheries around the world with a good deal of success and are rapidly spreading.

      Individual harvesting quotas constitute a private property right in harvesting quantity. Since each fisher's use of the fish stock is restricted by his quota holdings, the common property nature of the fishery is greatly reduced. Thus, instead of competing with his fellow fishermen for catch from a limited resource, the fisherman, under an individual quota system, can concentrate on minimising the cost of harvesting his catch quota and maximising its value by improving its quality.

      Transferable and perfectly divisible catch quotas are usually referred to as individual transferable quotas or ITQs. If the ITQs are also permanent they constitute a relatively high quality property right, not unlike exclusive user rights to a forest or a piece of land. In that case, standard economic theory should apply and, barring other externalities, such as crowding on the fishing grounds, the fishery should automatically reach full efficiency.

      This important point may be explained in a little more detail: First, if catch quotas are transferable a market for the quotas will emerge. With the help of this market the quotas will tend to revert to the most efficient fishing firms. The more efficient the quota market the more pronounced this tendency will be. In this manner, an ITQ-based fisheries management system will tend to guarantee that the total allowable catch (TAC) is always caught by the most efficient fishing firms.

      Second, if the catch quotas are also permanent, fishing firms will find it to their advantage to adjust the capacity of the fishing fleet to the socially optimal level. After all, due to the transferability of the quotas, only the most efficient firms will do the harvesting. These firms will not hold excessive fishing capital. If they did, they would not be fully efficient and would lose out in the market for quotas. Therefore, aggregate-fishing capital will tend towards the socially optimal level.

      In addition to quota permanence and transferability, it is important that the ITQ-right be defined as a fraction or a share of the TAC every year. This gives the ITQ holders a vested interest in the welfare of the fish stocks. They become, in effect, stakeholders in the fishery. Consequently they will use their influence— both in their fishing operations and politically — to promote the conservation and enhancement of the fish stocks as well as their ocean habitat. For in this way they can maximise the value of their asset— the ITQ share.

      This is, of course, the fundamental advantage of the ITQ fisheries management system. The system can be shown to produce economically optimal results on analytical assumptions that are no more restrictive than those used to justify the market system itself. Apart from corrective taxes no other fisheries management system that has been proposed can claim this feature.

      There are several other important positive aspects of the ITQ system of which a few should be mentioned here.

(1)       Decentralised management

First, the ITQ system is fundamentally a decentralised fisheries management system. Under the ITQ management regime the government's only role is to set the TAC and to enforce the property rights. Apart from this, the fishery manages itself. There is no need for input restrictions, investment constraints or any other interference in the decisions of fishing firms. Given the familiar problems of centralised government, this, of course, is a great advantage.

(2)       More stable supply of fish

The ITQ system may in many cases be expected to produce a more stable supply of fish. By allocating private property rights in the harvesting process, the ITQ system offers fishing firms the opportunity to adjust the harvesting activity to market conditions. This means, ceteris paribus, reduced harvesting activity during periods of relatively low prices and vice versa. By harvesting arbitrage of this kind, the ITQ system is likely to smooth out fluctuations in fish supply and prices compared to what would otherwise be the case.

(3)       Improved quality of fish landings

Thirdly, the ITQ system is likely to improve the quality of fish landings. For individual fishing firms under the ITQ system, profit maximisation requires the maximisation of the returns from a given catch quota. An obvious way to do this is to improve the quality of the harvest. Thus, under the ITQ system, one may confidently expect a significant improvement in the average quality of landings. This has, in fact been the experience of the nations that have introduced ITQs in their fisheries.⁹

(4)       Fishermen's Safety

By allocating property rights in the harvesting quantity the ITQ system largely eliminates the need to race for fish. Thus, the ITQ system greatly reduces the need to pursue fishing in dangerous conditions with the result that safety at sea should be increased. There is as yet little hard evidence on increased safety under ITQ systems. What evidence there is, however, tends to confirm the above theoretical predictions. ¹⁰

      ITQs are of course not perfect. Most importantly they require a level of enforcement of the quota constraint that is, in some cases, difficult to maintain.

      Discarding of catch at sea is a frequently quoted problem with the ITQ system. While a concern in this regard seems justified, it is important to take a balanced view of the situation. It seems that virtually all fisheries management systems of any significance generate an excessive incentive to discard catch. The ITQ system is no exception in this respect. This is readily understandable. In an ITQ managed fishery, the fisherman would normally prefer to discard a particular fish when its unit price ashore less the corresponding quota value does not cover the cost of handling, storage and transport to port. This represents an extra incentive to discard catch under the ITQ system. Whether this actually means increased discards compared to another fisheries management system is another matter, however. The reason is that counteracting this increased incentive to discard under an ITQ system is an increased incentive to employ more selective fishing gear and fishing methods. Therefore, the total impact on the volume of discarding is uncertain. It may even be the case that discards are reduced under an ITQ system relative to many other fisheries management systems. In limited effort systems, time and capacity constraints also encourage discards of certain types of catches.

Since the general extension of national exclusive economic zones to 200 miles in the 1970s there has been a clear trend toward the adoption of property rights-based fisheries management systems worldwide. In particular the development has been toward regimes of individual quotas (IQs) and individual transferable quotas (ITQs).

ITQs have already been implemented in a few hundred ocean fisheries around the world. At least five significant fishing nations — Australia, Greenland, Holland, Iceland and New Zealand — currently employ ITQs as a major component of their fisheries management system. Several others, including Canada, Chile, Norway, Namibia, South Africa and the United States, use ITQs in some of their fisheries.

The experience with ITQs has generally been quite positive. Fishing effort has usually decreased and fishing fleets contracted. Depleted stocks have recovered and the quality of landed catch has increased. In fact, due to the increased emphasis on product value and quality, total employment in the fishing industry has usually not been found to contract. Finally, economic rents have generally greatly increased. It seems that ITQs are the only fisheries management system currently employed around the world that can claim this degree of general success. As a result, ITQ managed fisheries are getting more numerous every year.

References

Arnason, R. 1990. Minimum Information Management in Fisheries. Canadian Journal of Economics 23, pp. 630-653.

Arnason, R. 1994. Theoretical and Practical Fishery Management. In E.A. Loyayza (ed.) Managing Fishery Resources, World Bank Discussion Papers 217.

Christy, F.T. 1997. Economic Waste in Fisheries: Impediments to Change and Conditions for Improvement. In E.K. Pikitch at al. (eds) Global Trends: Fisheries Management. American Fisheries Society, Bethesda Maryland.

FAO. 1993. Marine Fisheries and the Law of the Sea: A Decade of Change. Special Chapter (revised). Food and Agriculture Organization of the United Nations , Fisheries Circular 853, Rome.

FAO. 1997. Review of the State of World Fishery Resources: Marine Fisheries. Food and Agriculture Organization of the United Nations, Rome.

Hannesson, R. 1994. Trends in Fishery Management. In E.A. Loyayza (ed.) Managing Fishery Resources, World Bank Discussion Papers 217.

Hardin, G. 1968. The Tragedy of the Commons. Science 162, pp. 1243-1247.

OECD. 1997. Towards Sustainable Fisheries: Economic Aspects of the Management of Living Marine Resources. Organization of Economic Co-operation and Development, Paris.

OECD. 1997b. Towards Sustainable Fisheries: Economic Aspects of the Management of Living Marine Resources: Issue Papers. Organization of Economic Co-operation and Development, Paris.

Scott, A.D. 1988. Development of Property in the Fishery. Marine Resource Economics 5, pp. 289-311.

Scott, A.D. 1993. Obstacles to Fishery Self-Government. Marine Resource Economics 8, pp. 187-199.

Sutinen, J., P. Mace, J. Kirkley, W. Depaul and S. Edwards. 1992. An Overview of Individual Transferable Quotas. In L.G. Anderson (ed.) Consideration of the Potential Use of Individual Transferable Quotas in U.S. Fisheries, Vol 1 Overview Document, National Marine Fisheries Service.

5. Conclusion

      The dynamics of fish stocks are poorly understood and difficult to quantify. To exploit the biological resources of the sea, it is necessary to greatly improve our knowledge of population dynamics of living marine resources.

      Fishing, as well as other forms of utilisation of marine resources are first and foremost an economic activity. Its purpose is to provide a sustainable flow of benefits to human society. Unfortunately, in recent years, the relative economic efficiency of the fishing industry has significantly declined in many European countries. This is partly due to overexploitation of, and the consequent reduced yield from, many fish stocks and partly to the fact that many fisheries are operated as traditional production activities and have not benefited from technological innovation and scientific research.

      The currently widespread low economic performance of fishing is not only harmful to the fishing communities. It is detrimental to society as a whole since it devalues the social importance of coastal communities and weakens the willingness of national authorities to maintain strong scientific research in the field of marine biology and fishing economics.

      From the ecological point of view this trend is no less damaging. The fishing communities and the fishing industry, whose continued viability depends entirely on a healthy state of the marine environment, have a direct long-term interest in the sound and sustainable management of marine resources. Strong fishing communities, supported by improved research and understanding of marine biology and fisheries economies are thus likely to operate as guardians of the marine environment. Weak fishing communities sustained by government subsidies are much less likely to act in this way.

      Fishing has, for centuries been conducted within the organisational framework of common property, free enterprise and competition. This framework ignores the biological and economic laws of the fishing activity and leads to biologically excessive exploitation and economically inferior results. This situation has to be fundamentally changed. Fisherman, fishing companies and the fishing industry as a whole have to adapt to new circumstances and adopt exploitation practices based on rational analysis and the long-term view. Governments, in shaping exploitation strategies, have to give priority to solutions that facilitate the transformation of the industry mentality from the short-term catches to long-term sustainable harvest levels. For this to be feasible, it is crucial to form a link between the vested interests of the fishing industry and the socially most beneficial sustainable exploitation of the marine resources. One obvious way to do this is to allocate property rights of sufficiently high quality (e.g. security of title, duration, exclusivity and transferability) to individual fishermen or fishing companies. ITQs constitute examples of such rights.

      The overriding goal of fisheries and the exploitation of living marine resources in general must be the generation of net economic long-term benefits. Any deviation from this objective makes society as a whole worse off and is therefore difficult to justify. An increased emphasis should be placed on research in the area of the economics of fisheries, and in particular on the design of management systems conducive to the maximisation of net economic long-term benefits from the fishing activity.

      The fishing activity involves economic, biological, oceanographic, climatic, environmental and social aspects. There is an urgent need for a holistic, interdisciplinary approach to the fisheries problem. Although European universities routinely produce experts in each of these fields, there is a need for a more interdisciplinary university education in what may be called fisheries science.

6. Proposals of amendments

Amendment 1

Substitute paragraph 1.i. by the following paragraph: "its Resolution 1091 (1996), 1012 (1993), 972 (1991), 929 (1989) and Order No. 522, all of which address problems related to the sustainable exploitation of living marine resources. It stresses the importance of those resources whose exploitation provides food and employment for large sections of the population;"

Amendment 2

Replace paragraph 3. With the following: "The primary aim of fish stocks management at a time when many stocks are being over-exploited must be sustainable exploitation of fish resources at a level which produces long-term economic benefits to society. This presupposes better understanding and effective control of the fishing effort."

Amendment 3

In paragraph 6 delete the word "also" and replace "commercial" by "off-shore".

Amendment 4

In paragraph 7.i. after "research "add: "to secure the long-term development of fishing communities;" and delete:"… in order to strike an appropriate balance…" to the end of the paragraph.

Amendment 5

Delete paragraph 7.ii.

Amendment 6

In paragraph 8 delete the last sentence beginning with "It is opposed to all…"

Amendment 7

Add at the end of paragraph 9.i. the words "… without prejudice to existing agreements between states;"

Amendment 8

Delete paragraph 9.ii.

Amendment 9

In paragraph 10, after the words "… potential resources and the ", add the words "biological and economic".

Amendment 10

Insert, after paragraph 10, a new paragraph:

"The Assembly encourages fisheries managers and scientists, in cases where adequate biological and economic knowledge exists, to develop catch rules incorporating long-term harvesting strategies. In formulating such catch rules, a precautionary approach shall be applied towards the objective of maximum long-term economic yield."

Amendment 11

In paragraph 12.i. delete bracket "(joint management, transferable individual quotas, etc…)

Amendment 12

In paragraph 12.iv. add after "practical measures" the words: ", as appropriate."

Amendment 13

Replace paragraph 12.v. with the following: "protect the rights of fishers and other fishing industry workers and provide them, through environmentally and economically sound management of fish stocks, with fair living standards and with preferential access to traditional fishing grounds and to resources in the waters under their jurisdiction;"

Amendment 14

After paragraph 12.v. add a new paragraph:

"avoid incorporating or allowing in the fisheries management, incentives for wasteful fishing practices;"

Amendment 15

At the end of paragraph 12.ix., add the words "and end the release of radioactive materials into the ocean;"

Amendment 16

Insert, after paragraph 12.ix. of the draft resolution, a new paragraph:

"strengthen a holistic, interdisciplinary approach to fisheries management problems, by encouraging and supporting the development of appropriate interdisciplinary university education in the field of fisheries sciences."

-oOo-

Committee for report: Committee on Agriculture and Rural Development

Committee for opinion: Committee on Science and Technology

Reference to committee: Order No. 522 (1996)

Opinion approved by the committee on 1st September 1998

¹

See Doc. 8165

²        See e.g. OECD 1997, FAO 1993, 1997.

³        This was first pointed out to the English speaking world by Gordon (1954) and Scott (1955).

⁴        This individual helplessness in the face of a disaster prompted Hardin (1968) to refer to the situation as the "Tragedy of the Commons".

⁵        See e.g. OECD 1997, FAO 1993, Christy 1997, Arnason 1994.

⁶        It is important to realise that this assessment only applies to biological management used solely without any complementary management measures. Biological fisheries management measures such as TAC, juvenile protection etc. generally constitute an integral part in efficient fisheries management systems based on property rights.

⁷        For empirical confirmation of this observation see OECD 1997.

⁸        The most notorious case is US Pacific halibut fishery where the fishing season that initially lasted for most of the year ended up by being less than 48 hours.

⁹        OECD 1997.

¹⁰        See Sutinen et al. 1992, OECD 1997.