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Buy-Back Programs in the British Columbia Salmon FisheryBy R. Quentin Grafton and Harry W. Nelson International Workshop on Fishing Vessel and License Buy-Back Programs Institute of the Americas, University of California, San Diego La Jolla, California March 22, 2004
Overview • Brief History of the Fishery • Introduction of Licensing • Buyback Programs (five in all over 30 years) • Lessons Learned (including unexpected ones) • Did it Work?
Brief History • Commercial fishery developed in late 1800’s • Expansion to open ocean (troll fleet) • Northern Region (Skeena) • Southern Region (Fraser) • Five commercial species • Sockeye, Coho, Chinook, Pink and Chum
Brief History (2) • Overcrowding and capacity concerns raised at turn of the century • Number of fishers increased as early limitations failed • Long-standing Aboriginal participation
Introduction of Licensing • Davis Report called for limitation in size of fleet and area restrictions • Limited entry first introduced through Davis Plan in 1969 • Permitted multiple gear types and could fish anywhere open to commercial fishing (no area restrictions) • Introduced first buyback • Gear restrictions and vessel replacement rules subsequently introduced in 1970’s
British Columbia Buyback Programs • Five distinct programs • 1970-1973 • 1981 • 1993 • 1996 • 1998-2000 • Differ in objectives and operation
Early Buyback Programs • Purpose was fleet reduction • Purchase vessels and licenses • Small ($6 million or $25 million in $1992) • funded from vessel sales and general revenues • 1970-73 retired 361 vessels (6% of then salmon fleet)
Early Buyback Programs (2) • First lesson learned • Government makes a poor vessel owner and vessel broker • Pearse Report in early 1980’s investigates problems in salmon fishery and calls for buyback • Also calls for area restrictions, limited length licenses (put up for bid), and landing royalties • 1981 buyback retires only licenses • 26 licenses retired (less than 1% of fleet)
Buyback Programs in the 1990’s • Three different programs • Different objectives • Differ in scope • Similar design
The 1993 Buyback Program • Pilot program in 1993 • Objective to retire licenses in commercial sector to transfer to aboriginal fishery • Spent $5.95 million to retire 75 licenses (about 2% of the fleet)
The 1993 Program (2) • Design of Program • Restricted to eligible licenses • Designed as a reverse auction • Ranked by strict $ bid per potential catching effort per foot • Retired predominantly smaller vessels and few seine vessels • Use committee of industry representatives to evaluate bids
The 1996 Program • Two major programs in late 1990’s • Salmon fishery in as state of crisis • Objective to reduce fleet • Large program $80 million • Introduced in conjunction with the Mifflin Plan
The 1996 Program (2) • Again reverse auction • Two multiple rounds • Government announced funds available and target of 20% • Attempt to maintain fleet balance (equal across gear types)
The 1996 Mifflin Plan • The Mifflin Plan introduced major changes to licensing system • Area licensing • Single gear licensing • Stacking (market rationalization) • Promised greater certainty through reaching agreement over allocation and improved fishing opportunities • Did it all work?
The 1998-2000 Buyback Program • Same objective • Significantly larger at $200 million • Again a reverse auction • Implemented in three multiple rounds • Government target of 50% reduction across all gear types
The 1998-2000 Buybacks (2) • Achieve balanced reduction • Met through targeting seiners • No longer strict $ per foot rankings • Retirement of smaller vessels • Exit of older fishers
Lessons Learned • Voluntary buybacks enjoy fishers support • Need seen to maintain “equity” • Multiple rounds allow adjusting bid values • Rules out “stink” bids • Important for government to signal in forming expectations • Funds available and targeted level • Prices paid slightly greater than estimates of “market value”
Unexpected Lessons • Remaining licenses fished harder (but this was not completely unexpected) • More unexpected was that proceeds went back into licenses (to shelter from taxes) • Not a lesson but consequence? • license values have increased (up 20% for trollers and gillnetters since last buyback) • Perceptions of improved profitability? • Further buyback? • Government purchases under ATP?
Did It Work? • Fishers saw the buybacks as meeting a political objective with no meaningful reduction in capacity • Localized benefits by area and gear type but not for all • If salmon prices improve how much effort could return? • Push for IVQ’s and lower numbers may make more politically palatable (as older fishers disproportionately exited industry)