Ragnar ArnasonRagnar Arnason

Community Fisheries Community Fisheries ManagementManagement

What structure and why?What structure and why?

Fame workshop onFame workshop on New Developments in Rights-based Fisheries ManagementNew Developments in Rights-based Fisheries Management

Esbjerg, August 30-31 2005Esbjerg, August 30-31 2005

Subject of this lectureSubject of this lecture

Explore the conditions under which Explore the conditions under which community fishing rights will lead to community fishing rights will lead to

economically efficient fisheries economically efficient fisheries managementmanagement

I. BackgroundI. Background

Fisheries management is neededFisheries management is needed

• Research has determined two classes of Research has determined two classes of management methods that can workmanagement methods that can work

(i) Property rights regimes (widely applied)(i) Property rights regimes (widely applied)(ii) Taxes (apparently not been applied)(ii) Taxes (apparently not been applied)

• Fisheries are subject to well known Fisheries are subject to well known problems of economic inefficiencyproblems of economic inefficiency

Key Property Rights SystemsKey Property Rights Systems

1.1. Sole ownershipSole ownership2.2. TURFsTURFs3.3. IQs and ITQsIQs and ITQs4.4. Community rightsCommunity rights

Note: First three are Note: First three are individual rightsindividual rights but the but the fourth is a fourth is a collective rightcollective right

ExperienceExperience• Sole ownership is extremely rare – but Sole ownership is extremely rare – but

works!works!• TURFs more common - work!TURFs more common - work!• IQs fairly common - work to a degreeIQs fairly common - work to a degree• ITQs becoming increasingly common ITQs becoming increasingly common (over (over

10% of the global catch is taken under ITQs)10% of the global catch is taken under ITQs) - work! - work!

So, basically, individual property rights work!So, basically, individual property rights work!

Unfortunately:Unfortunately:Individual property rights cannot be Individual property rights cannot be

applied to all fisheriesapplied to all fisheries

• Sole ownershipSole ownership– Socio-political problemsSocio-political problems

• TURFsTURFs– Technical problems (exclusivity)Technical problems (exclusivity)

• ITQsITQs– Technical problems (enforcement)Technical problems (enforcement)– Socio-political problemsSocio-political problems

Therefore attention has beenTherefore attention has been drawn to drawn to

collective property rightscollective property rights

Community fishing rightsCommunity fishing rights

in particular.....in particular.....

What areWhat arecommunity fishing rights?community fishing rights?

• Fishing rights granted collectively to a Fishing rights granted collectively to a group of agentsgroup of agents

• These rights constitute a property rightThese rights constitute a property right• It gives the group the authority toIt gives the group the authority to

– Defend these rights against outsidersDefend these rights against outsiders– Conduct internal fisheries managementConduct internal fisheries management

Note: Community fishing rights Note: Community fishing rights do notdo not constitute constitute a fisheries management systema fisheries management system

RationaleRationale1.1. Enhances economic efficiency in fishingEnhances economic efficiency in fishing

– Fisheries managementFisheries management– EnforcementEnforcement

2.2. Socio-politically more appropriateSocio-politically more appropriate– More in accordance with tradition - naturalMore in accordance with tradition - natural– More fair - communities can control their own More fair - communities can control their own

destinydestiny3.3. Politically expedientPolitically expedient

– Relieves the government of a difficult problemRelieves the government of a difficult problem

Here only concerned with rationale no. 1Here only concerned with rationale no. 1

Why should community fishing Why should community fishing rights promote efficiency?rights promote efficiency?

1.1. In fisheries managementIn fisheries management– Better informationBetter information– More appropriate incentivesMore appropriate incentives

2.2. In fisheries enforcementIn fisheries enforcement– Better informationBetter information– More appropriate incentivesMore appropriate incentives– More powerful sanctionsMore powerful sanctions

Experience with Experience with community fisheries management community fisheries management

1.1. Empirical:Empirical:– Not much evidenceNot much evidence– Primarily anthropological and social evidence Primarily anthropological and social evidence

(not very hard data)(not very hard data)– Mixed outcomes – some fairly good, some Mixed outcomes – some fairly good, some

worse worse (Note: Tend not to observe the really bad ones)(Note: Tend not to observe the really bad ones)

2.2. ExperimentalExperimental– Mixed outcomesMixed outcomes

Outcomes of community fisheries Outcomes of community fisheries management seem to depend very much management seem to depend very much

on the particular situationon the particular situation

Crucial to adopt the appropriate Crucial to adopt the appropriate community design community design !!

So:So:

II. Design PrinciplesII. Design Principles

Conditions that contribute to efficient Conditions that contribute to efficient community fisheries managementcommunity fisheries management

High quality property rightHigh quality property right

1.1. SecuritySecurity2.2. ExclusivityExclusivity3.3. PermanencePermanence4.4. TransferabilityTransferability

Property rights attributes Property rights attributes [0,1][0,1]

High quality High quality Each attribute close to Each attribute close to 11

Perfect and actual property rightsPerfect and actual property rights

Actual property right

SecuritySecurity

ExclusivityExclusivity

PermanencePermanence

TransferabilityTransferabilityPerfect property right

TheoremTheorem(not proven in the paper)(not proven in the paper)

The lower the value of the property right The lower the value of the property right the less efficient is the associated the less efficient is the associated

economic activityeconomic activity

Community property rights should Community property rights should be as high quality as possible!be as high quality as possible!

Inclusive membershipInclusive membership

This means:This means:1.1. No outsiders at the beginningNo outsiders at the beginning2.2. No-one can leave to become an No-one can leave to become an

independent operator in the fisheryindependent operator in the fishery

(I.e. no-one can operate outside the (I.e. no-one can operate outside the community rules)community rules)

TheoremTheoremIf community management is successful, If community management is successful,

individual fishers will benefit from leavingindividual fishers will benefit from leaving- provided they can do so with impunity- provided they can do so with impunity

Fisheries communities should be Fisheries communities should be inclusiveinclusive

Homogeneous membershipHomogeneous membership

TheoremTheoremIf fishing community members are not If fishing community members are not

identical, bargaining identical, bargaining will notwill not lead to the lead to the most efficient fisherymost efficient fishery

- unless (perhaps) benefits are transferable- unless (perhaps) benefits are transferable

1.1. The composition of the fisheries community The composition of the fisheries community should be as homogeneous as possibleshould be as homogeneous as possible

2.2. I should only include fishermen – not other I should only include fishermen – not other professions or interestsprofessions or interests

3.3. It should preferably only include owners of It should preferably only include owners of fishing capital – not fishing labourfishing capital – not fishing labour

This implies:This implies:

Pay-offs as sharesPay-offs as shares

TheoremTheoremIf fishing community members receive benefits If fishing community members receive benefits

that are increasing in aggregate benefitsthat are increasing in aggregate benefits

(1) The bargaining solution is efficient!(1) The bargaining solution is efficient! (2) The competitive solution is efficient!(2) The competitive solution is efficient!

If at all possible, the fishing community should If at all possible, the fishing community should be set up so that each member’s benefits are an be set up so that each member’s benefits are an increasing function of aggregate benefitsincreasing function of aggregate benefits

This suggestsThis suggests

(1) Limited companies have this property(1) Limited companies have this property(2) Within-community ITQs have this propety(2) Within-community ITQs have this propety

NoteNote

Fishing CommunityFishing Community Practical design guidancePractical design guidance

- Summary -- Summary -1.1. The community rights should be as high The community rights should be as high

quality as possiblequality as possible2.2. The community should be inclusive – i.e. The community should be inclusive – i.e.

include all fishers in the areainclude all fishers in the area3.3. The community should have as The community should have as

homgeneous membership as possiblehomgeneous membership as possible4.4. Each membes pay-off should be Each membes pay-off should be

increasing in the aggregate pay-offincreasing in the aggregate pay-off

EndEnd