Ræða Sjávarútvegsráðherra í Lerwik 1. október 2003.
Lerwick, 1 October 2003
Address by Árni M. Mathiesen, Iceland's Minister of Fisheries at the North Atlantic Conference
Individual transferable quotas - the Icelandic experience
Ladies and Gentlemen:
Not all that long ago, people still believed that the fish in the sea were a practically inexhaustible resource, although few if any believe this today. To the contrary, we can only get long term benefits harvesting the seas by acting responsibly. However, the fact that the living marine resources are renewable resources is what makes it possible to utilise them in a sustainable manner.
In order for that to be possible it is necessary for the authorities to have at their disposal an effective fisheries management system. But is there a recipe for the ideal fisheries management system? Those of us gathered here probably have differing opinions as to what such a system should be based upon. I would like to use the opportunity provided to me here today to outline my views as to what characteristics such a system should have.
In my opinion a strong and effective fisheries management system should consist of five main aspects:
1. comprehensive and accurate registering of catch;
2. comprehensive research and data processing;
3. effective surveillance and enforcement with clear penalties for violations;
4. dynamic management and rapid responses;
5. a rights-based management system.
The core prerequisite for a strong fisheries management system is for the authorities to be able to control the quantity of catch taken from the marine ecosystem at any given time. Success is dependent upon the existence of an efficient information system. Information can be gathered both aboard fishing vessels, through entries in catch log books, and from the registration of catch upon landing.
Catch information is among the most important information upon which scientists can base their estimates of stock size and the state of stocks. Uncertainty in this regard leads to increased uncertainty in the results. Which is why it is important that skippers take their entries in catch log books very seriously, and thus ensure that the registration of catch quantities for each species is as accurate as possible. In addition to the catch log books, important information is provided when catch is weighed in and recorded upon landing.
This information, in addition to the data gathered by marine research vessels, is the basis for stock size measurement, upon which figures for total allowable catches, or TACs, for individual fishing stocks, are based.
The authorities must be able to apply suitable punishment to anyone who does not follow the rules. Surveillance institutions must have effective control measures at their disposal. Cancellation of fishing permits is an example of this. The extensive surveillance is not limited merely to recording of catch. It must cover weighing in of catch, discarding of fish and fishing gear used, to mention only a few areas.
Which brings us to the fourth point, dynamic management and rapid responses. To manage fisheries, authorities need to be able to respond immediately when conditions so require. The competent parties must be able to apply protection measures if environmental conditions demand it. This can, for instance, be the case if juvenile fish suddenly collect in fishing grounds – in which case it must be possible to close them without delay. Similarly, circumstances may require changes to fishing gear or special treatment of spawning grounds, to mention a few examples.
Last but far from least, a strong system of fisheries management should be founded on rights-based management. This means that access to fisheries, in the form of catch quota for example, are basically private property rights, despite the fact that the fishing resource as such may be a declared a national asset according to law. By its very nature, this system demands responsibility from those who enjoy permanent possession of fishing rights. Closely related to this private property rights approach is the question of consultation between stakeholders in fisheries with regard to the structure and management discussions. This can be explained by theories of political economy, as taking the private property rights approach means putting long-term interests at the forefront.
It is in this context that I would like to discuss further the Icelandic experience of managing fisheries using a system of individual transferable quotas, popularly known as ITQs.
The Icelandic ITQ system
Fishing of most commercial stocks in waters of Icelandic jurisdiction is managed with individual transferable quotas (ITQs). This applies equally to demersal species (such as cod and haddock), pelagic species (such as capelin and herring) and crustaceans (such as shrimp). Almost all economically important species are covered by the quota system and the combined catch value of these species accounts for over 95% of the total catch value of stocks caught within Icelandic waters.
When the quota system was introduced in 1984, all fishing vessels holding commercial fishing permits were allocated a fixed quota share of the species subject to decisions on total allowable catch, TAC, when the law came into effect. The quota share for each vessel was calculated on the basis of the catch performance of individual vessels for the species concerned during a specified number of years preceding the entry into force of the law. The same applies to the quota share for new species to which the fisheries management system has been extended since the original introduction of the law.
At the beginning of each fishing year the TAC for individual species is divided up between all the fishing vessels which hold a quota share for the species concerned. The combined quota share for all vessels amounts to 100% of each species. The quota share is multiplied by the TAC to give the quantity which each vessel is authorised to catch of the species concerned during the fishing year in question. This is referred to as the vessel's catch quota for the species in question.
A vessel's catch quota can change for a number of reasons:
- if the TAC is increased or reduced;
- by transfer of catch quota for a single fishing year (rental quota);
- by transfer of quota share (permanent quota);
- by taking advantage of the option of moving catch quota from one fishing year to another;
- by taking advantage of a limited option to exchange one species for another.
As indicated earlier, both quota shares and catch quotas may be transferred between vessels. Although the transfer of harvest rights between fishing vessels is not valid until it has received the confirmation of the Directorate of Fisheries, there are in fact few limitations on transfers of either quota shares or catch quotas between fishing vessels. There is an active market for harvest rights and their price is determined by current supply and demand.
The ideology behind the Icelandic quota system is simple. The aim of dividing up TACs among individual fishing vessels was to prevent the wasted effort involved in competing for limited catch. In order that the introduction of the system would cause a minimum of disruption when it began, harvest rights were allocated to fishing vessels on the basis of their past catch performance. The decision to have quotas that were transferable from one vessel to another was intended to increase the cost-effectiveness of fishing and allow vessel operators flexibility. This applies to both catch quotas and fixed quota shares.
In addition to TACs and quotas, various rules are laid down to encourage optimal exploitation of the total catch which is decided upon. Some relevant examples of these are temporary and permanent closures of fishing areas, rules on outfitting of gear, such as mesh size, regional limitations on various types of gear, and many other significant measures enabling optimal exploitation of fishing stocks.
Decisions on the Total Allowable Catch (TAC) for individual species are taken by the Minister of Fisheries and based on the advice of the Icelandic Marine Research Institute. Assessments by the Marine Research Institute of the size of individual species are based on comprehensive data obtained from a variety of sources. Some of this information is obtained by means of an annual trawler and net "rally", where the Institute leases a number of fishing vessels and crew and has them fish using their respective gear in the same predetermined areas year after year. In addition the Institute makes use of information from the catch log books of fishing vessels, landing reports and other data. The scientific data of the Institute is subsequently submitted to scientists of the International Council for the Exploration of the Sea, ICES. The final advice of the Institute is available around the end of May/beginning of June for the fishing year which commences on 1st of September, approximately three months later. Where cod is concerned a specific catch rule is applied which was formulated jointly by marine biologists and economists. A special catch rule is also followed in deciding the TAC for capelin. The aim is to establish such rules for most commercial stocks.
Although the general trends have been positive, there have been instances where it proved necessary to substantially reduce cod catches in Icelandic waters while the ITQ system has been in place. These decisions were received with widespread understanding, both in the fisheries sector and the nation at large. Vessel operators and fishermen responded responsibly to the perceived necessity of reducing the cod catch since they were convinced that they would reap the subsequent rewards. Since the value of quotas held by individual vessel operators is greater in the case of transferable quotas, there are grounds for assuming that this system will make them more prepared to accept a temporary reduction of harvest rights than another system of management which might possibly involve more uncertainty for the future for each individual vessel operator and fisherman. The experience in Iceland, whether it can be traced directly to the quota system or not, is that fishermen and vessel operators have shown understanding that it can be advisable to reduce catches temporarily to rebuild fishing stocks.
Fisheries management with individual transferable quotas creates flexibility for vessel operators. At the same time, transfers reduce the need for centralised decisions by the authorities. This is because individual vessel operators can increase or reduce their harvest rights and change their composition in accordance with what they feel is cost-effective. This is possible without infringing the rights of others, since full payment is made. Payment for harvest rights is either made in monetary form or by exchanging rights.
The cost-effectiveness of fishing in Iceland has increased substantially due to the ITQ system. Many enterprises have been merged to allow increased efficiency in fishing and processing and also to spread operating risks. Enterprises, for instance, holding only rights to demersal species have merged with others holding harvest rights for herring, capelin and shrimp. Both management and ownership of enterprises has changed drastically in recent years and presently most of the country's larger fishery enterprises are listed on the stock market. Previously, fishery enterprises were often family businesses, whereas now numerous individuals, pension funds and companies have holdings in these enterprises.
The Icelandic economy is dependent upon the fisheries sector. We therefore have to make sure that the sector is in good enough economic shape to remain the backbone of the economy. Unlike many other countries, Iceland does not subsidise the fisheries sector. In fact a special fee is put on the fisheries sector.
The Icelandic parliament, Althingi, has passed legislation which results in the fisheries sector paying higher levies to the public purse than other industries from September next year. Fisheries will thus finance an even greater portion of the costs arising directly from their activities and the general public will receive a visible portion of the rent returned by the utilisation of the country's living marine resources.
Conclusion
We like to characterise our fisheries management system as being science based and market driven. Basing management decisions on the best available science is of critical importance to ensure that the utilisation is sustainable and we can continue to reap the benefits of our living marine resources in the long term.
The "market driven" part is very important too. It is Iceland's experience that it is very useful to use the market forces to maximise long term economic benefits from utilising living marine resources. Rather than having a system that creates pressure from the fisheries sector for short term gains we believe rights-based management systems can be used to create pressures from the fisheries sector for long term thinking and an emphasis on sustainability. Furthermore, an absence of subsidies creates an atmosphere where the sector faces problems by dealing with them rather than by lobbying for the government to solve the problems for them by increased financial transfers.