In 2007 the Gulf snapper fishery moved to an individual fishing quota management system (IFQ). Under this system, each fisher was allocated a certain amount of fish for the year instead of having a fishing season and race to fish. 

Kingpins of the Gulf make millions off red snapper harvest without ever going fishing
by Ben Raines, AL.com January 24^th 2016

“AL.com has looked into the issue of leasing of red snapper quota, and found that prices for commercial leases have meant working fishermen often pay more to lease snapper quota from the quota holders than they earn from the catching the fish itself. They question why commercial snapper, unlike oil or forestry products, should not be put out to bid, but allocated to the historical fishermen.”

Raines concluded that 77 percent of the annual red snapper catch is held by just 55 people.

“The IFQ program succeeded in its goals of making the snapper fleet smaller and safer, keeping the harvest within the annual quota, and providing the public a year-round source of red snapper,” Bob Shipp, retired chairman of the Gulf of Mexico Fishery Management Council told Raines. But Shipp also feels the system has become incredibly unfair, with a fortunate few now holding a disproportionate amount of the quota and subjecting those fishermen without the means to own more quota to a subordinate position Raines compares to “modern-day serfs.”

Shipp proposes redistributing the red snapper quota to those who have actually been on the water since the 2007 when the IFQ system began, but he doubts this will ever happen because of financial and political pressures.

Comment by Bruce Turris, President of Pacific Fisheries Management Inc.

Without the shift to ITQs the US commercial Gulf snapper fishery may not even exist today.  Even if it had continued to exist, the value would be a small fraction of the current return under ITQs.  The issue of leasing is a complicated matter, and while Raines may have risen “some legitimate questions about the outcomes of ITQ programs,” he did not adequately explain where the fishery would be without ITQs and why leasing is an important (some would say essential) element of ITQ fisheries.

In the Gulf snapper fishery, an ITQ system is beneficial for the following reasons:

1. It allows for new entrants, trying to buy into the industry (but lacking sufficient capital), to access additional quota that provides for a viable business operation that will allow them to purchase additional quota in the future
2. It improves economic efficiency by existing operators that need additional quota to address short-term market demand (quantity, quality) or as they move towards achieving long-term business objectives (market access, economies of scale, specialization, and vertical integration
3. New vessel repair opportunities, better safety on the water, and family or health issues fall into an important category of social benefits due to reduced pressures to fish during bad weather
4. ITQs address the multispecies realities of fishing and the need to move fish around to cover bycatch or targeted species overages (required to stay within sustainable harvest levels and comply with government management objectives and market eco-certification requirements) or to avoid uneconomical trips required to catch 100% of the vessel’s allocation (which often leads to over harvesting)
5. It facilitates the movement of quota to operations that enhance resource sustainability (reduced habitat impact, improved selectivity, lower release mortality).

A comparable leasing regime exists in the British Columbia groundfish fishery, where every vessel is accountable and responsible for every pound of groundfish mortality it causes, regardless of the targeted species. This fishery couldn’t operate without it.  It is important for everyone to appreciate that the real problem isn’t leasing, but rather finding the right balance between the operational needs of a properly managed fishery and society’s need for a “fair” distribution of resource income.  This is, in large part what Community Development Quota (CDQ) programs in Alaska and the Groundfish Development Quota (GDQ) in BC are intended to do: Ensure that some of the benefits derived from the fishery stay in coastal communities (but even these programs don’t meet everyone’s social objectives).

Finding allocation formulas and transferability rules that accomplish such a balance is difficult and can be very specific to a fishery, industry and region. However, starting with clear objectives and an understanding of why transferability and leasing is necessary is important.

Bruce Turris is the president of Pacific Fisheries Management Inc. See some of his recent publications here.