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Individual Transferrable Quotas: New Zealand’s Experience

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Individual Transferrable Quotas: New Zealand’s Experience. New Zealand Fisheries Waters. Large EEZ (4.4 million km 2 ) 70% below 1,000 m Medium productivity Commercial Fisheries Non-commercial Fisheries. Reform Context (early 1980s). Classic fisheries issues Inshore stocks overfished

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new zealand fisheries waters
New Zealand Fisheries Waters
  • Large EEZ (4.4 million km2)
  • 70% below 1,000 m
  • Medium productivity
  • Commercial Fisheries
  • Non-commercial Fisheries
reform context early 1980s
Reform Context (early 1980s)
  • Classic fisheries issues
    • Inshore stocks overfished
    • Commercial fisheries over-capitalised
    • Unprofitable, uncompetitive, rent dissipation
    • Declining recreational fishing
    • Risk of extending problems to newly developing deepwater fisheries
new zealand s response
New Zealand’s Response
  • Objectives of the Quota Management System
    • Primarily economic drivers
    • Restore profitability to inshore fisheries
    • Avoid over-capitalisation in new deep-water fisheries
    • Limit catches to MSY
    • QMS in place since 1986, after 25+ years experience everyone has adjusted
quota management system qms
Quota Management System (QMS)
  • Several refinements have been made since 1986 but the basic tenets remain:
    • Setting catch limits
    • No discarding QMS species
    • Individual Transferable Quotas (ITQs)
    • Markets determine allocation of commercial effort
    • Monitoring and enforcement
new zealand s itqs
New Zealand's ITQs
  • Species and area specific
  • Perpetual and transferable
  • Generate ACE (annual catch entitlement)
  • Some ownership restrictions
      • Maximum holdings (aggregation limits) 10-45% of TACC
      • No foreign ownership
  • Ongoing allocation only via ITQ and ACE trading
cost recovery subsidies
Cost Recovery/Subsidies
  • NZ originally considered resource rentals based on the decision to allocate quota without tender process
  • Now use cost recovery mechanism to charge quota holders selected government costs (e.g. observers, fisheries research, administration)
  • No subsidies in QMS system; quota owners pay c. 30-35% of government costs
  • Reflect two primary policy objectives of QMS
    • Resource sustainability delivered
    • Economic performance improved
challenges unique to qms
Challenges unique to QMS
  • Designing systems to administer and audit QMS
  • Required refinements to suit local conditions and policy requirements
  • Social impacts anticipated and managed
    • Social dislocation in small coastal fishing communities
    • Growth in large vertically-integrated fishing ports
general conclusions
General conclusions
  • QMS objectives focused on economic efficiency
    • NZ’s ITQ design choices reflect this objective
    • If you have other management objectives,

… the design of your rights based management regime would be different

general conclusions1
General conclusions
  • NZ’s policy design features allowed for controlled industry restructuring
    • Building legitimacy and collaboration is key to success
    • Quota allocation on catch history basis
    • Strongly specified ITQ (perpetual, tradable and enshrined in law)
    • Provides certainty/security for investment
    • Quota ownership limits
other key considerations
Other key considerations
  • Avoid disadvantaging competing sectors
  • Design policy to encourage collective responsibility
  • Do not overlook importance of integrated planning