Resource Conservation and Private Management Solutions

The frequent failure of government fisheries management around the world over is well documented, these failures have generally stemmed from the fact that most regulations or restrictions on fisheries did not take the fundamental importance of the distribution of property rights into account. Property rights (or, who owns what) essentially define who has the right to do what with a resource, and economists studying natural resources, and fisheries in particular, have been quick to point out the fundamental importance of property rights institutions to conservation. The allocation of property rights essentially set the rules of the game, and are generally assigned either to no one (open-access), government, or to private individuals or groups. Any attempt to exert control over resources is an attempt to define property rights.

Thus, the classic case of the tragedy of the commons described by Garret Hardin is really a problem of ill-defined property rights. Without the right to exclude anyone from a resource, there is no way to benefit from practicing conservation, and so everyone tries to harvest as much as possible, as quickly as possible, or, as Hardin described, "ruin is the destination toward which all men rush."

Getting the incentives wrong has resulted in all sorts of fisheries management nightmares, from common tales of overfishing, to more outlandish examples of the Chesapeake Bay’s oyster-catching skipjack fleet which is still powered by sail, to salmon boats in Alaska fishing with feet of each other. One of the most telling examples used to be the Alaskan Halibut fishery, where for many years regulators attempted to limit harvests in this fishery by through the length of the fishing season. Not surprisingly, the industry responded by figuring out how to catch more fish more quickly, and before long a season that was once months long was down to two days, with no discernible reductions in the total harvests.

Garret Hardin recognized the importance of incentives, and in his seminal article he suggested private ownership as one possible solution to the problem. Unfortunately, clearly defined and readily enforceable private property rights to marine resources are rare. However, those few examples that do exist strongly support the arguments of theorists who have promoted private property rights in the oceans as a means to improve resource management. One example is the oyster industry in the United states, where private oyster leases and public beds both exist in the Chesapeake Bay. In the 1970s by Richard Agnello and Lawrence Donnelley, economists at the University of Delaware, looked at oyster beds in the Chesapeake Bay (in Maryland and Virginia) and compared those managed by state regulators with those owned by private leaseholders. They found that the leased oyster beds were healthier, better maintained, and produced better quality oysters.

The Washington state oyster industry has even more secure rights to their oyster beds – Washington is the only state in the U.S. where there is fee simple ownership of tidelands and subtidal lands. In contrast to the technological stagnation in Maryland, Washington oyster harvests have soared with seed from the Washington oyster growers’ own high-tech hatcheries.

Another form of private ownership that can be effective but which is often overlooked is the institution of common property, where rights are controlled by a group instead of individuals. In many cases these regimes are not legally recognized, but as long as they are enforceable they can be workable. In the Maine lobster fishery, for example, the lobstermen have formed ‘harbor gangs’ that mark territories and turn away outsiders. As a result, lobstermen in these gangs have higher catches, larger lobsters, and larger incomes than lobstermen who fish outside controlled areas. These gangs are often composed of members of a particular family or of long-standing community membership.

Another example is coral reef protection in some areas in the South Pacific. Reef tenure there may take the form of ownership by a clan, chief or family, and often extends from the beach to the outer edge of the reef, sometimes even miles out to sea. These reefs are valuable assets to the community and so are fiercely protected. In Palau, community-managed fisheries employ closed seasons and areas, abide by size limits and even impose quotas to ensure conservation.

The recent trend in fisheries management regimes, however, has been a move toward approximating these rights, in particular by instituting some form of tradable harvest rights, most often known as Individual Transferable Quotas, or ITQs. In fact, since ITQs were created in the Alaskan Halibut fishery in 1995, the season is back to a normal length and the fishermen still in the fishery are generally pleased. A recent letter from a small boat halibut fisherman to the Alaska Fisherman’s Journal summed up some of the advantages of the Alaskan ITQ program: "We fish better weather, deliver a better product, and have a better market. This is a better deal."

The most comprehensive systems of ITQs have been created in New Zealand and Iceland, and in both cases appears to be a great success. The quota system has reduced the race to fish and addressed many of the perverse incentives that existed under previous regulatory-intensive regimes. In fact, there is little argument today over the positive effect of an ITQ-type system on the economics of fishing (although just how to allocate them is still a major hurdle). Conservation, however, is another matter.

Where overfishing was the reason for government intervention in the past, it is now quickly becoming conservation and environmental protection. The worry is not over the target fish, but over the marine environment in general. Issues such as bycatch, protecting biodiversity, the effects of dredging on the seafloor, and perhaps most importantly, marine reserves, are all leaping to the forefront of the fisheries management debate.

But it is worth asking whether a political, regulatory approach to marine environmental protection be any more successful than the political, regulatory approach to overfishing has been? It would appear not.

Well-defined private property rights, however, offer a real chance to not only protect the surrounding environment, but also to reduce conflict between fishermen and those advocating increased government involvement in the fisheries for conservation reasons.

Forms of marine reserves, for example, were commonly created in the South Pacific by communities with secure tenure over their reefs. Companies in New Zealand also set aside large areas to investigate the effects of reserves on their fisheries. They are hesitant to publicize any of this information, however, because of the fear that they will lose the right to fish there should they choose in the future, again underlining the conflict that a regulatory approach creates.

One of the best examples of private resource protection comes from the oyster industry in Washington state, where clear title to oyster beds has also led to a long term interest in the health of Washington’s waters. In fact, the Washington oyster growers have been, for almost a century, the staunchest defenders of water quality in that state, and are the main reason that Willapa Bay in the southern part of the state is often referred to as the cleanest estuary in the United States.

Similarly, private riparian rights to salmon are common in England and Wales. Under the common law there, riparian owners have an undisputed right to clean water, so in the event of pollution upstream, downstream owners can sue for damages. Since its formation in the 1950s, riparian owners under the auspices of the Angler’s Cooperative Association (ACA) have successfully prosecuted thousands of cases against polluters.

Private ownership of the rights to fish salmon in inland waters are also the norm in Iceland, and this has inspired Orri Vigfusson, chairman of the North Atlantic Salmon Fund (NASF), to go farther afield to protect salmon. By buying out almost the entire offshore salmon fisheries of Greenland and the Faeroe Islands, NASF has ensured very large returns of salmon to rivers and streams throughout the North Atlantic.

Just about everywhere else in the world, however, commercial and recreation fishing interests are at odds. Without any clear ownership of either segment of the fisheries, it is almost impossible for these disparate interests to broker deals amongst themselves as they have in the UK and through Orri Vigfusson. Instead, conflict and political expropriation is the norm.

Despite different views on what fish are worth to recreational vs. commercial fishermen, the only real indicator of willingness to pay is when the rights to catch those fish are freely tradable between the sectors.

Those conservation measures that are not grounded in better identifying who own the right to what ignore what has caused most of the fundamental improvements in fisheries management that we have today – that is, strengthening, or at least approximating, private property rights. By undermining those rights, both the marine environment and those who depend on it for their livelihoods will suffer.

Of course, there is form of fishing right that is a silver bullet. Each case is different and constantly changing with the costs of defining and enforcing those rights that do exist. The South Australian lobster management system – where one section is managed under ITQs and the other simply by controls on inputs (e.g. trap limits) – is a perfect example. While some may argue over which system – input or output – is superior, it seems clear that both sides are right! In other words, the lobstermen have had enough of a hand in defining how their fishery is managed that each system has evolved to suit the situation in the fishery. In the more crowded southern area, ITQs make sense because they are easier to monitor and deliver higher returns. In the spread-out northern zone, input controls make more sense.

What is most important in this case is the ability of these rights to evolve. The experience of the New Zealand ITQ system, for example, has shown that the closer an ITQ resembles a private right, the greater the flexibility there is to adapt and evolve into a system with the strongest possible incentives for conservation. The fishing industry there is continually taking on more and more responsibilities for fisheries management and scientific research, and innovating new ways to protect their investments by maintaining the healthiest ecosystem possible.

To conclude, it is simply impossible to say what the ideal structure of property rights is, and thus it is crucial that in any system of private rights to the fisheries, those rights must be allowed to evolve and change over time. For the lobster fishermen of Australia, of course it is important to address specific management concerns such a certain marine reserve proposal or the input vs. output debate. But it is also worthwhile to stop every once in a while to remember just how far you’ve come, and to look to the future to see just how far you might go to "Manage your destiny".