Political Economy and the Choice of Fishery Management Strategies

1
Political Economy and the Choice of Fishery
Management Strategies

• Robert T. Deacon
• University of California, Santa Barbara
• Resources for the Future
• World Bank Workshop on Fishery Reform
• Dhaka, Bangladesh
• July 2011

2
Introduction

• Trends in world fisheries
• Widespread biological decline
• Prediction that all worlds 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).

3
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.

4
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.)

5
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.

6
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,
  governments 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, governments
  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 governments coercive power for
  exclusion
• Outcome depends on governments 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
• Govt. 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 govt.
  (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 Mexicos 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

• Namibias 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 Namibias 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 governments 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.