An overview of Alaska's fisheries and their evolution Criddle...An Overview of Alaska's Fisheries and Their Industrial Evolution Keith R. Criddle Stevens Professor of Marine Policy

An Overview of Alaska's Fisheries and Their Industrial Evolution

Keith R. CriddleStevens Professor of Marine Policy

UAF School of Fisheries and Ocean SciencesJuneau, AK

Fish Facts

• Catches from the Alaska region in 2005 totaled– 59% of US landings by weight– 33% of US landings by exvessel gross

revenue• If Alaska were a nation, her catches would be

the world’s 7th highest.• Five of the top ten (by value) US fishing ports

are located in Alaska• No fisheries in the Alaska region are currently

designated as “overfished”.

Ex-Vessel Gross Revenues from Alaska Region Fisheries

$0

$500

$1,000

$1,500

$2,000

$2,500

1984 1989 1994 1999 2004

mil

lio

ns

(20

05

ba

se)

GroundfishHalibutSalmonShellfish

Ex-Vessel Gross Revenue from Alaska Region Fisheries

0%

20%

40%

60%

80%

100%

1984 1989 1994 1999 2004

GroundfishHalibutSalmonShellfish

First-Wholesale Gross Revenue from Alaska Region Fisheries

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

2002 2003 2004 2005

mil

lio

ns

(20

05

ba

se)

crab halbut

salmon groundfish

Exvessel/First-Wholesale Price Ratios for Alaska Region Catches

0%

20%

40%

60%

80%

100%

120%

2002 2003 2004 2005

Shellfish Salmon

Herring Halibut

Groundfish

Fishing Gear in Alaska

• Trawl (shellfish, bottom, pelagic)—scallop, shrimp, groundfish

• Purse Seine—herring, salmon• Gillnet—salmon • Pot (single, longline)—crab, cod, sablefish• Longline—halibut, sablefish• Jig—rockfish, cod• Troll—salmon • Fish Wheel—salmon• Dive—shellfish • Dip net—salmon• Rod-and-Reel—sport fisheries

Trawl Catcher/Processor

Trawler

Pots

Longline

Purse Seine

Gillnet

Troll

Fish Wheel

Dip Net

Rod and Reel

Shorebased Processor

Floating Processor

Catcher/Processor

Milestones in the Evolution of Alaska Region Fisheries

• Up to and throughout most of the 19th century, the principle use of Alaska region fisheries was subsistence. In addition to salmon, herring, smelt, and halibut, subsistence users harvested marine mammals and seabirds.

• During the late 1800s, commercial fisheries developed for salmon, halibut, and cod.


• The halibut fishery was brought under an overall quota management structure under the Halibut Convention of 1923.

• The salmon fishery was managed by regional monopsonies (canneries) throughout the first half of the 20th century. – Concern about the power of the canneries

contributed to the statehood movement, leading to constitutional and statutory provisions that banned economically efficient harvest technologies (traps and weirs) in favor of fleets of small fishing boats racing one another for catch shares.


• High seas drift gillnet fisheries for salmon flourished in the north Pacific from the mid-1950s through 1978, when they were prohibited by treaty.

• Beginning in the mid-1950s, fleets from Japan, Russia, Korea, and Eastern Europe began to focus ever-increasing effort on stocks of walleye pollock, yellowfin sole and other shelf flatfish species, Pacific ocean perch, sablefish, and herring in the eastern Bering Sea.


• Beginning in 1964, foreign vessels were banned from fishing within the three-mile state territorial waters.

• Beginning in 1966, foreign vessels were required to obtain fishing permits for waters from three to twelve miles offshore

• Beginning in 1976, the permit requirements were extended to 200 miles pursuant to the MSFCMA.


• By 1985, foreign fishing was replaced by joint ventures between US flagged catcher boats that delivered to foreign processing vessels and by catcher-processors.

• By 1990, joint ventures were replaced by US flagged catcher boats that delivered to domestic processors and by domestic catcher-processors.

• In contrast with the groundfish fisheries, the crab fisheries that developed in the 1960s were dominated by domestic vessels.

Sample Topics for Experimental Economics• Rent distribution between harvesters and

processors– Role of harvesting and processing portfolios of species– Role of vertical integration vs vertical coordination– Role of horizontal integration– Negotiation over value of products and byproducts

• How governance structures affect rent distribution– among sectors within fisheries – across sectors (including commercial, sport,

subsistence, and vicarious consumption) with overlapping target and incidental catches

Sample Topics for Experimental Economics• Labor compensation/collective bargaining

– The role of share systems– Labor contracts under alternative fishery

governance structures

• Uncertainty/Variability and games against nature– Annual and decadal-scale variability, ocean

regime shifts, climate change

• Market studies– Willingness-to-pay for tangible and credence

attributes

Legal Context of US Fisheries

• Federal statutes and regulations • Multi-state compacts• State statutes and regulations • Tribal laws and ordinances• International treaties• Individual rights• Common law

– creation and enforcement of private contracts– identification of remedies for nuisances and torts– Public Trust Doctrine

Property Law

• Defines how entitlements and liabilities are distributed between individuals, groups, and government.

• Is the basis for fisheries governance regimes: open-access, regulated access, common property, territorial use rights, limited access privileges, cooperatives, individual fishing quotas, sole ownership, etc.

• Fishing, like all other economic activities, is “rights-based”; fisheries differ in who holds what rights.

Public Trust Doctrine

• Is a caution regarding the alienation of public trust resources

• A public trust interest is: a title held in trust for the people of the States that they may enjoy the navigation of the waters, carry on commerce over them, and have liberty of fishing therein freed from the obstruction or interference of private parties. …The State can no more abdicate its trust over property in which the whole people are interested, like navigable waters and the soils under them, so as to leave them entirely under the use and control of private parties than it can abdicate its police powers in the administration of government and the preservation of the peace.

(Illinois Central R.R. Co. v. Illinois 1892)

Public Trust Doctrine

• Does not prohibit alienation of navigable waterways, submerged lands, or living aquatic resources; it suggests that alienation is permissible when the public interest or public use is improved thereby or when alienation does not substantially impair the public interest or the use of remaining resources.

(NRC 1999, Simmons 2007)

• When the right to harvest fishery resources is conveyed to individuals, the government typically retains a trust responsibility for safeguarding the sustainability of those resources. (McCay 1998, NRC 1999)

Federal Constitution

• Authority to control the use of federal lands and associated resources, including fugitive resources and actions on non-federal lands that impinge on federal resources.

Article 4, Section 3

• Authority over any activity that could potentially affect interstate commerce, e.g., transport of fish across state boundaries or from federal waters.


• Authority to enact treaties.Article 2, Section 2


• State authority to control the use of state lands and associated resources, including fugitive resources and actions on private lands that impinge on state resources.

• Interstate compacts are delegations of state authority. Compacts can be formed from bottom-up (e.g., ASMFC) or from top down (e.g., regional FMCs).

• Tribes are dependent sovereigns with authority to regulate resources on tribal lands and to consult with the federal government regarding resource uses off tribal lands that might impact tribal resources.


• Individual rights include: – States are prohibited from discriminating

against citizens of other states. While nonresidents may be charged higher fees for access to resources, fee differentials must reflect real differences in costs.


– Private ownership interests are protected from uncompensated takings once those interests have been established, for example, through capture.

Amendment V

State Law and Regulation

• Use of fishery resources within states is governed under state constitutions, statutes, regulations, and common law precedents.

• These laws differ widely among the states. For example, Virginia law allows for submerged lands to be leased for oyster culture while Maryland law does not.

Alaska Constitution

• Wherever occurring in their natural state, fish, wildlife, and waters are reserved to the people for common use. Article VIII, Section 3

• Fish, forests, wildlife, grasslands, and all other replenishable resources belonging to the State shall be utilized, developed, and maintained on the sustained yield principle, subject to preferences among beneficial uses. Article VIII, Section 4

• No exclusive right or special privilege of fishery shall be created or authorized in the natural waters of the State. This section does not restrict the power of the State to limit entry into any fishery for purposes of resource conservation, to prevent economic distress among fishermen and those dependent upon them for a livelihood and to promote the efficient development of aquaculture in the State. Article VIII, Section 15

Federal Statutes, Regulations, and Executive Orders

• MMPA requires assessment of impacts that proposed actions might have on populations of marine mammals.

• ESA requires the conservation of listed species.

• NEPA requires evaluation of environmental consequences of proposed actions.

• MSFCMA requires preparation of FMPs and identification of EFH for managed species in the US EEZ and supersedes state authority where state actions interfere with federal purposes.

MSFCMA

• The Secretary of Commerce promulgates implements, and enforces FMPs.

• Eight regional FMCs advise the Secretary on how to implement the Act for individual fisheries.

• The Secretary defers to the FMCs insofar as their FMPs meet requirements of the MSFCMA.

• The Secretary has the authority to implement “Secretarial plans” if an FMC fails to act.

• Section 301—National Standards• Section 303A—Rules for LAPs

FMC Regions

• New England (ME, NH, MA, RI, CT)• Mid-Atlantic (NY, NJ, PA, DE, MD, VA, NC) • South Atlantic (NC, SC, GA, FL) • Gulf of Mexico (FL, AL, MS, LA, TX)• Caribbean (Puerto Rico and US VI)• Western Pacific (HI, AS, GU, and US Pacific

island possessions)• Pacific (CA, OR, WA) • North Pacific (AK, WA, OR)

FMC Composition

Voting Members• The director of the marine resource management

agency of each member state.• Public members nominated by their governors and

selected by the Secretary of Commerce. • A representative of the NMFS.• The Pacific FMC includes a tribal representative.

Non-Voting Members• Representatives of interstate fishery commissions,

US CG, US FWS, and US State Department.

FMC Advisors

• Advisory panels (AP) representing commercial and recreation fishing interests and conservation and civic organizations

• Scientific and statistical committees (SSC) composed of research scientists drawn from state and federal research labs and universities

Sample Topics for Experimental Economics

• How do procedural and jurisdictional conflicts among federal statutes and regulations affect the outcome of games?

• Can experiments help predict outcomes when stakeholders, agencies, and nature engage in concurrent overlapping games?

• Can experiments help predict outcomes when stakeholders and agencies have the ability to change rules at the same time that they choose strategies?


• Enforcement strategies devised by NMFS, USCG, and States represent games between rule makers and rule breakers. How do the evolving structure of regulation and variations in the probability of detection affect outcomes of these stochastic games?

• Can experimental economics suggest general principals that apply to the outcome of games that are internal to the regulatory system, e.g., conflicting objectives between the FMCs, NMFS regional offices, and NMFS DC?


• Stakeholders dissatisfied with FMC decisions can appeal for congressional intervention—senators can (and do) trump the FMP process. For example senators from MS blocked red snapper IFQ program, senators from ME and MA have overturned catch limits and effort restrictions, the senior senator from AK has legislated programs that are not allowed under MSFCMA. Can experimental economics provide general guidelines regarding the implication of the existence of these non-cooperative or rule changing strategies affect the outcome of games?


• FMC meetings are imperfectly repeated games with slowly evolving memberships and terminal periods for individual FMC members. How do imperfect repetition and terminal periods affect the outcome of games?

• How do referendum requirements affect the feasibility of implementing LAP programs in Gulf of Mexico and New England fisheries?

• How will the 10-year duration (with renewal) limitation on LAPs affect the likelihood of achieving cooperative solutions?

• Do the LAP requirements encourage adoption of alternative regulatory structures?

Salmon Management

Salmon

• By the late 1960’s, Alaska’s salmon fisheries were the scenes of intensive derbies.

• The License Limitation Act (1972) authorized license limitation programs in Alaska’s salmon, herring, and shellfish fisheries.

• However, in Alaska as elsewhere, license limitation failed to provide economic stability—the number of platforms was limited, but their fishing power was not.

Global Catches of Chinook, Coho, Sockeye, & Atlantic Salmon

0.00

0.05

0.10

0.15

0.20

0.25

0.30

1970 1975 1980 1985 1990 1995 2000 2005

mill

ion

mt

Rest of WorldRussiaJapanCanadaUS (other)Alaska

Alaska

Canada

Global Catches of Chinook, Coho, Sockeye, & Atlantic Salmon

0%

20%

40%

60%

80%

100%

1970 1975 1980 1985 1990 1995 2000 2005

Canada Alaska Russia

Alaska Exvessel Revenues

0

200

400

600

800

1,000

1,200

1,400

1980 1985 1990 1995 2000 2005

$US

mill

ion

(200

5 ba

se)

cohochinooksockeyechumpink

While Alaska dominates the supply of high-value salmon catches, revenues

to Alaskan fishermen have tanked.

Exvessel Prices in Alaska

$0

$1

$2

$3

1985 1990 1995 2000 2005

$US

per

lb (2

005

base

)

chinookcohosockeye

Mean trend = $-0.035/year

Global Production of Chinook, Coho, Sockeye, Atlantic Salmon & Marine-reared Rainbow Trout

0.0

0.5

1.0

1.5

2.0

1970 1975 1980 1985 1990 1995 2000 2005

mill

ion

mt

ROW FarmCanada FarmUK FarmNorway FarmChile FarmROW CatchAlaska Catch

Norway

Chile

Alaska

World production of high-valuesalmon has increased >9x in 30 years

Global Production of Good Salmon

0%

20%

40%

60%

80%

100%

1970 1975 1980 1985 1990 1995 2000 2005

mill

ion

mt

ROW CatchROW FarmCanadaUKNorwayChileAlaska

AlaskaChile

Norway

Alaska has gone from producing about 50% of world supply to producing less than 10%

Salmon

• While Alaska’s salmon management has been a biological success (or fortunate result of a favorable environment), it has been an abject economic failure.

• To those unfamiliar with the spendthrift incentives of the race-for-fish, it begs comprehension to learn that Alaska’s salmon capture fisheries fail to generate rents comparable to those generated in salmon aquaculture, where feed and smolt costs alone are over $1.50/kg round weight.


• Can cooperative outcomes (e.g., Chignik-type co-ops) be attained under limitations imposed by Alaskan constitution?

• Can cooperative outcomes be achieved among heterogeneous user groups in sequential fisheries such as the Yukon?

• What will affect the likelihood of achieving a cooperative outcome in the next negotiation round for the 3-party Pacific salmon treaty?

• What is consumer willingness to pay for niche-marketed salmon products?

BSAI Pollock

BSAI Pollock

• Pre-1976 – Foreign fishing• 1976-1985—Foreign fishing replaced by joint ventures• 1985-1990—Joint ventures replaced by fully domestic• 1991—Inshore/Offshore I (harvesting capacity ≈ 2X;

processing capacity ≈ 1.5X) CDQ share = 7.5%• 1995—Inshore/Offshore II; Inshore and CDQ shares

increased• 1994-1998 cycle of bankruptcy and recapitalization• 1996—Moratorium on entry• 1998—Inshore/Offshore III pre-empted by American

Fisheries Act (AFA). AFA has resulted in higher utilization rates, increased economic returns, reduced bycatch, improved management precision, and helped industry accommodate changes in fishing seasons and areas required to conserve Steller sea lions.


• What are the advantages and disadvantages of cooperatives with contractual sub-allocation of target catch shares relative to IFQs?

• How do bycatch and Steller sea lion issues affect the stability of cooperative outcomes?

• What are limitations on heterogeneity and the number of participants in achieving and maintaining cooperative outcomes?

• Can the success of the pollock cooperatives be achieved in other groundfish fisheries?

Halibut & Sablefish Management

Halibut & Sablefish Management

1880 Commercial fishery begins1923 Halibut Commission formed1976 MSFCMA enacted1982 Authority to allocate catch delegated to NPFMC1991 Canada implements commercial-sector IVQs1991 Alaska approves commercial-sector IFQs1995 Alaska implements commercial-sector IFQs2000 Charter sector GHL approved2001 Charter sector IFQ approved2002 Community ownership of IFQs approved2003 Charter sector GHL implemented2004 Subsistence management formalized2004 Community-ownership of IFQs implemented2005 Charter sector Charter IFQ rescinded2007 Charter sector daily and annual bag limits

What are the economic effects (first 10 years) of halibut IFQs?

• Season length increased from ~2 days to ~260 days

• Catch-per-day decreased from ~30 million lbs to ~0.3 million lbs

• The number of QS holders decreased from about 4800 to about 3150

• The number of vessels decreased from about 3400 to about 1385


• The annual number of SAR missions decreased from an average of about 28 to an average of about 7.

• Catch went from exceeding TAC by an average of over 5% to under-harvesting by an average of 1.5%

• Ghostfishing mortality decreased from about 3% of TAC to less than 1.5% of TAC


• Average exvessel price (Alaska) increased $0.24/lb; about $11 million per year in exvessel revenue.

• In aggregate, fishermen gained about 92% of this increase.

• In aggregate, processors gained about 8%.• The distribution of gains from this program has

influenced the structure of all subsequent programs in Alaska.


• What are characteristics of institutional structures that will facilitate the achievement of cooperative solutions to the commercial-sport allocation problem?

• What are characteristics of alternative regulatory structures (annual bag limits, slot limits, days-of-week closures, increased license fees, differentiation between resident and nonresident catch limits) for constraining sport catches to a hard cap?

BSAI Crab

BSAI Crab

• In-season management of the crab fishery has been largely delegated to ADF&G, which has sought to control catch and stabilize crab populations through size-sex-season regulations.

• Under SSS management, season length became increasingly compressed during the 1980s. Managers introduced limits on the number of pots (baited traps) per vessel for the principal stocks and also “super-exclusive” areas for several minor crab stocks.

BSAI Crab

• Season compression is particularly problematic in the crab fisheries, because the fisheries occur in the winter in hazardous fishing conditions that can be compounded by the race-to-fish within short seasons.

• Because crab must be processed live, as the number of crab fishing vessels increased, processors also increased their capacity.

BSAI Crab Rationalisation

• The BSAI crab rationalisation program includes harvesting quota shares issued to fishing vessel owners and to skippers and processing quota shares issued to shore-based and floating processors. It also includes provisions to encourage the formation of cooperatives among harvesters.


• What are likely effects of changes in the delivery requirements?

• What are likely effects of modifications of the arbitration structure?

• What changes would need to be implemented to encourage maximization of joint rents across harvesting and processing?

• How constraining are the community protection provisions?

• How stable are cooperative and non-cooperative strategies in face of stochastic crab stocks?

Questions? Comments?

Sample Topics for Experimental Economics• Rent distribution between harvesters and

processors– Role of harvesting and processing portfolios of species– Role of vertical integration vs vertical coordination– Role of horizontal integration– Negotiation over value of products and byproducts

• How governance structures affect rent distribution– among sectors within fisheries – across sectors (including commercial, sport,

subsistence, and vicarious consumption) with overlapping target and incidental catches


• Labor compensation/collective bargaining– The role of share systems– Labor contracts under alternative fishery

governance structures

• Uncertainty/Variability and games against nature– Fish stocks are stochastic

• Market studies– Willingness-to-pay for tangible and credence

attributes


• How do procedural and jurisdictional conflicts among federal statutes and regulations affect the outcome of games?

• Can experiments help predict outcomes when stakeholders, agencies, and nature engage in concurrent overlapping games?

• Can experiments help predict outcomes when stakeholders and agencies have the ability to change rules at the same time that they choose strategies?


• Enforcement strategies devised by NMFS, USCG, and States represent games between rule makers and rule breakers. How do the evolving structure of regulation and variations in the probability of detection affect outcomes of these stochastic games?

• Can experimental economics suggest general principals that apply to the outcome of games that are internal to the regulatory system, e.g., conflicting objectives between the FMCs, NMFS regional offices, and NMFS DC?


• Stakeholders dissatisfied with FMC decisions can appeal for congressional intervention—senators can (and do) trump the FMP process. For example senators from MS blocked red snapper IFQ program, senators from ME and MA have overturned catch limits and effort restrictions, the senior senator from AK has legislated programs that are not allowed under MSFCMA. Can experimental economics provide general guidelines regarding the implication of the existence of these non-cooperative or rule changing strategies affect the outcome of games?


• FMC meetings are imperfectly repeated games with slowly evolving memberships … that is, there are terminal periods for individual FMC members. How do imperfect repetition and terminal periods affect the outcome of games?

• How do referendum requirements affect the feasibility of implementing LAP programs in Gulf of Mexico and New England fisheries?

• How will the 10-year duration (with renewal) limitation on LAPs affect the likelihood of achieving cooperative solutions?

• Do the LAP requirements encourage adoption of alternative regulatory structures?


• Can cooperative outcomes (e.g., Chignik-type co-ops) be attained under limitations imposed by Alaskan constitution?

• Can cooperative outcomes be achieved among heterogeneous user groups in sequential fisheries such as the Yukon?

• What will affect the likelihood of achieving a cooperative outcome in the next negotiation round for the 3-party Pacific salmon treaty?

• What is consumer willingness to pay for niche-marketed salmon products?


• What are the advantages and disadvantages of cooperatives with contractual sub-allocation of target catch shares relative to IFQs?

• How do bycatch and Steller sea lion issues affect the stability of cooperative outcomes?

• What are limitations on heterogeneity and the number of participants in achieving and maintaining cooperative outcomes?

• Can the success of the pollock cooperatives be achieved in other groundfish fisheries?


• What are characteristics of institutional structures that will facilitate the achievement of cooperative solutions to the commercial-sport allocation problem?

• What are characteristics of alternative regulatory structures (annual bag limits, slot limits, days-of-week closures, increased license fees, differentiation between resident and nonresident catch limits) for constraining sport catches to a hard cap?


• What are likely effects of changes in the delivery requirements?

• What are likely effects of modifications of the arbitration structure?

• What changes would need to be implemented to encourage maximization of joint rents across harvesting and processing?

• How constraining are the community protection provisions?

• How stable are cooperative and non-cooperative strategies in face of stochastic crab stocks?

Documents

An overview of Alaska's fisheries and their evolution Criddle...An Overview of Alaska's Fisheries and Their Industrial Evolution Keith R. Criddle Stevens Professor of Marine Policy