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Political Economy and the Choice of Fishery Management Strategies

Robert T. DeaconUniversity of California, Santa Barbara

Resources for the Future

World Bank Workshop on Fishery ReformDhaka, Bangladesh

July 2011

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Introduction

Trends in world fisheries

• Widespread biological decline

– Prediction that all world’s capture fisheries will be ‘collapsed’ by 2048.

– Increases in fraction of fisheries FAO has declared over-exploited

• Dismal economic performance

– Potential rent in capture fisheries $80B/year;

– Actual ‘rent’ is -$30B/year (loss).

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Introduction

Reasons for both ‘tragedies’: Lack of property rights

• Access to fish stocks traditionally based on rule of capture

– Encourages wasteful race to fish.

– Eliminates any incentive to protect or steward the resource.

• Sharp contrast to owned biological resources

– Stocks of owned animals (cattle, sheep, etc.) not in danger;

– Aquaculture is expanding exponentially;

– Both types of owned resources are generating rents;

– Other unowned natural resources (common pool oil, forests, groundwater) suffering same fate as ‘wild’ fish stocks.

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Introduction

Glimmer of hope: Spread of rights-based management

• Principle: Manage resource by assigning secure rights to use it

• Rights-based approaches:

– Quantitative catch rights assigned to individuals (ITQs).

– Spatially delineated rights (TURFs).

– Management rights assigned to user groups (Coops and harvester assns.)

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Introduction

Evidence of impact

• Biological status– Fisheries managed with ‘catch shares’ show no sign of collapse; stock

status becomes stable or improves.

– Case studies show that bycatch diminishes when ITQs are established.

• Economic status – Individual transferable quotas (ITQs) generate rents visible in quota prices.

– Experience with management by coops indicates generation of profits.

– ITQ and coop management improves product quality for consumers.

– Rights-based management reduces hazards in fishing and excess costs in processing.

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Introduction

Applying rights-based strategies

• Choice can depend on ecology of species

– TURFs vs. ITQs for sedentary vs. mobile species.

• Strategies can be combined to achieve full potential

– Individual transferable quotas (ITQs) combined with marine protected area to avoid habitat damage or protect critical nursery habitat.

– Coops may use internal ITQs to allocate effort among members.

– TURFs may form coops to organize effort, monitor and enforce, etc.

• Choice depends critically on host country political institutions

– Focus of this presentation.

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General objective

Identify politically viable approaches to management reform

• Find pathways to reform that are promising in specific political / institutional contexts.

• Draw on examples of successful approaches in fisheries, e.g., coops, harvester assns., TURFs, ITQs, …

• No presumption that a single approach is best in all contexts.

• Different instruments can be combined to achieve objectives.

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Steps toward objective

Link fishery reform strategies to political / governance institutions

• Identify dimensions of the fishery management problem.

• Describe current theories of political institutions and governance.

• Find a strategy for each management dimension that is well suited to a given political context.

Emphasize fishery cooperatives

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Essential features of a fishery cooperative / harvester association

From REEP

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Ingredients

Dimensions of management policy (and property rights)

• Management tasks:

– Delineate exclusive rights to harvest;

– Limit catch;

– Monitor and enforce resource use rights; sanction violators;

– Specify who decides how, where, when harvesting occurs.

• Different tasks may be assigned to different parties

– Government agency vs. coop, vs individual fishers, …

• Principle: Assign tasks to align incentives for rent capture.

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Ingredients

Governance theories focused on distribution of political power

• If political power is broadly distributed, government’s coercive power likely to be used to provide public goods:

– Economies of scale in providing public goods to large populations;

– Public goods include courts, police; general rule of law;

• If political power is concentrated, government’s coercive power likely to be used to enrich political elites:

– Transfers include transfer of resources to political friends;

– Corruption likely when rule of law is absent.

References: Acemoglu and Johnson, JPE, 2001; Bueno de Mesquita, et al, Cambridge Univ. Press, 2003; LaPorta, et al, JLEO, 1998; Lizzeri and Persico, AER, 2001; Milesi-Ferretti, et al, QJE, 2002; Putnam, Princeton Univ. Press, 1993.

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Assigning tasks

Delineating exclusive access

• If one relies on government’s coercive power for exclusion:

– Outcome depends on government’s orientation: broad-based rule of law vs. rent transfer to elites;

– Essential role for government: authorize & legitimize exclusive rights;

– Rely on users for mechanics of exclusion.

• Evidence from case studies

– User-based exclusion generally ineffective in developing and developed countries;

– User-implemented catch limits rare in developing countries;

– User-implemented catch limits fairly prominent and often effective in developed countries.

– May be due to difference in security of claims to future rents.

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Assigning tasks

Monitoring, enforcing, sanctioning

• State vs. user enforcement results in different incentives:

– User enforcement: collective incentive, but face free-rider problem;

– Gov’t. enforcement: enforcers may have little stake in effective enforcement, may use authority for rent-seeking;

• Evidence from case studies of fisheries, forests, irrigation:

– User-based enforcement generally more effective, particularly when government legitimizes;

– Mixed evidence on users’ ability to overcome free-riding;

• User-adopted sanctions more effective than gov’t. (irrigation)

• Limitation: Studies do not control for political systems.

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Assigning tasks

Allocating catch, coordinating effort to avoid conflicts

• Consistent evidence that user-groups can solve these problems:

– Case studies from numerous developing and developed country fisheries;

– Experimental evidence: subjects can coordinate when allowed to communicate even without commitment mechanism.

• Systems examined amount to coops or harvester associations.

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Examples

User-based management in a weak rule of law state: Mexico’s lobster cooperatives

• Harvester coops in Baja California, formed in 1930s.

– Authoritarian national government; apparently uninterested in fishery.

– State authority legitimizes coops’ right of exclusion.

• Performance of fishery and cooperatives:

– Stocks and catches stable since 1980s;

– Coops manage effort limits; enforce compliance with regulations;

– Fishery certified as ‘sustainable’ by MSC in 2004.

• Possible key to success: Benign neglect by central government.

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Examples

Namibia’s approach: Enabling rent capture by broad stakeholder groups

• Namibian independence in 1990

– Pre-independence: fishing largely uncontrolled, exploited by foreigners.

– New government strongly democratic.

• Independent Namibia’s fishery policy

– Declare and defend 200 mile limit;

– Design management to broadly distribute rents among population;

– Some short run inefficiency, but prevents capture by political elites.

• Fisheries performing well biologically and economically.

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Examples

Modifying top-down policy is strong rule of law state to enable innovation by users: Chignik (U.S.) coop

• Prior management regime

– Limited entry, TAC limit, season closure;

– Race to fish, inefficient use of effort, poor economic performance.

• Chignik harvesters’ coop formed in 2002

– Membership voluntary; profits shared equally;

– State assigned share of TAC, depending on membership;

– Coop eliminated race to fish, rationalized effort, coordinated fishing, generated rents.

• Violated regulations; declared illegal after 3 years.

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Examples

Overcoming regulatory rigidity by empowering users in strong rule of law countries.

• Yaquina Bay (U.S.) herring roe fishery– Originally limited entry with TAC; allowed permit holders to divide TAC among

themselves.

– Ended race to fish, encouraged user-support research on stocks.

• Challenger Scallop Enhancement Co. (New Zealand)

– 38 catch quota owners formed a company to manage fishery collectively;

– CSEC now sets catch limits, coordinates harvest areas, reseeds depleted areas, invests in research.

• Paua management by user groups (New Zealand)

– Quota owners formed association to coordinate actions.

– Share information on stock locations, impose size limits, reseed depleted areas, reduce incidental mortality.

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Conclusions

What can we recommend?• Recognize government’s motivation when choosing policy

– Motives depend on underlying political institutions: broad-based vs. narrowly-focused political power.

– Government is not a generic entity; consider different levels of government.– Assign greater management responsibility to users when governments are

unreliable.

• Assigning rents to users encourages stewardship and rent generation

– Evidence of stewardship by ITQ quota owners and coops.

• Research on performance should account for institutional differences.

– Important for assessing performance of user-based vs. government monitoring, enforcement, sanctioning.

– Case study and experimental work should be designed to include these factors.

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Examples

Contracting to achieve environmental objectives in weak rule of law states: Debt-for-nature swaps

• Goal: overcome lax or nonexistent enforcement of property rights.

• Conservation NGOs fund enforcement of laws on ‘paper parks’ in Latin America and elsewhere.

• Assets are nominally owned by host government.

• Swaps are structured to:

– Avoid including host government as party (due to sovereignty);

– Make it costly for host government to reneg;

– Minimize possibility host government can seize conservation assets.