I have had the privilege of studying the effects of New Zealand’s quota management systems (QMS) on participants since its 1986 implementation. I have done this on three sabbatical leaves (1986-7, 1995, 2005-6). Below I have outlined some key historical events and changes that have happened to New Zealand fisheries to give study tour participants a concise orientation.

Before October 1986 QMS implementation

During the 1970s New Zealand, like many nations, encouraged fishery development as 200-mile exclusive economic zones were established. By the early 1980s many people perceived problems of over-harvest and overcapitalization in NZ inshore fisheries. The government took the following steps:

• Placed a moratorium on new entrants into the fishery

• Removed part timers from the fisheries. One needed to demonstrate that they earned $10,000 or 80% of their income from commercial fishing to receive a fishing permit.

• Established enterprise allocations to vertically integrated companies to encourage development of the deepwater fishery by New Zealanders and replacement of foreign fleets. These allocations consisted of exclusive access to a portion of the deepwater species quota such as orange roughy (Hoplostethus atlanticus). This served as a “pretest” of an ITQ system with few participants.

By the mid-1980s, three events converged to form a “perfect storm” that led to the surprisingly rapid development and implementation of New Zealand’s individual transferable quota system. These included:

• A major national economic crisis and call for government action

• Government policy to move towards market-based systems, privatize some government services and assets, remove subsidies. Economic reforms pushed forward by Finance Minister Roger Douglas. (“Rogernomics”).

• Widely held perception of a major crisis with inshore fisheries

QMS Implemented in 1986

The initial quota management system (QMS) using individual transferable quotas (ITQs) implemented on October 1 for all major finfish fisheries was derived almost directly from a 1979 paper by Maloney and Pearse (Journal of Fisheries Research Board of Canada 36: 859-866). Key elements of the initial QMS design included:

• Each permit holder was issued provisional ITQ based on 1982-84 historical catch. If the total provisional quota issued exceeded the regional TAC for a species, a competitive tendering process gave people an opportunity to voluntarily sell out completely or partially to the government. If insufficient quota was tendered back, the government did across-the-board ITQ cuts without compensation to reach the desired TAC level. About NZ $45 million was spent lower TACs; primarily for snapper.

• Government entered the market to adjust TACs by buying back quota or auctioning off quota.

• Initially resource rentals were set at a low $3/ton level.

• For most species, aggregation limits were initially set at 20% in any management zone.

• Persons normally resident in New Zealand may own quota. They don’t have to be in the fishing industry.

• Government assumed it owned fishing rights on behalf of the people of New Zealand and could proceed with ITQs.

• Government rather than industry assumed most of the risk.

Some of the early outcomes observed included:

• Immediate increases in strategies to add value to catch through processing, marketing, chilled and live exports, etc.

• Some change in gear types to target fish for higher priced markets

• About 20% of ITQ owners sold out

• Relatively little participation by recreational angler groups and environmental groups

• Initial challenges to QMS system by Maori based on Treaty of Waitangi

• Debates about setting TACs and resource rentals

• Primary enforcement issues were high grading species with price differentials, bycatch in mix species fisheries, under/non-reporting of landings

Pre-1995 Changes

When I returned in 1995 to continue my study there had been significant changes to the QMS including:

• The system changed to a proportional ITQ where each quota holder received a proportion of the TAC. This removed the government from the market and switch risk towards industry. This switch occurred when government realized that it couldn’t afford to compensate quota holders for large reductions in the orange roughy TACs and fully compensate for transfer of quota assets to Maori after initial settlement.

• Resource rentals were replaced by cost recovery. Determining reasonable rent levels had proven difficult and the switch to cost recovery coincided with the switch to proportional ITQs and the Maori settlements.

• Initial settlement of Maori fishery claims had occurred and the Treaty of Waitangi Fisheries Commission was established to manage quota on behalf of Maori.

• Numerous Quota holder organizations formed to pursue tasks of shared interest (devolution of management tasks, marketing, exploratory fishing and research, co-management, etc).

• Increased aggregation of quota by seafood companies. This included consolidation of companies.

• Diversification of seafood companies and individual fishermen into aquaculture.

• Increased participation in the management process by environmental groups and recreational fishing groups. Allocation issues between commercial and recreational fishing intensified, especially for the snapper fishery near Auckland.

Current Situation

Since my return in October 2005, I’ve observed the following changes over the past decade:

• Passage of the Maori Fisheries Act in 2004 begins the allocation of quota to tribes (iwi) and increased Maori commercial activity.

• The Fisheries Act of 1996 established annual catch entitlements (ACE) which separate the quota (“property right”) from the annual catch generated by that quota. ACE can be sold and some quota owners sell their ACE rather than fishing it (e.g. retired fishermen, investors, companies). Some fishermen have sold their quota, but fish ACE owned by others.

• The Minister of Fisheries sets a total allowable commercial catch (TACC) after subtracting recreational, Maori customary take, and other uses from the TAC.

• Many of the initial quota owners are retiring or leaving the fishery and it is a difficult economic climate for new entrants.

• The economic climate for exporting currently is very poor due to the sustained strength of the New Zealand currency and weakness of markets for high-end products. When this is combined with rising fuel costs and cost recovery fees, many participants are struggling economically.

• Aggregation of quota by seafood companies appears to be continuing.

• Aquaculture, especially shellfish, has continued to expand.

• Privatization and co-management of tasks previously done by government has continued, though there are some indications that this trend may be changing.

• Some quota owners are worried about erosion quota value do to increases in marine reserves and reallocation of TAC to recreational users in some fisheries.

Additional Reading

Annala, J. 1996. New Zealand’s ITQ system: have the first eight years been a success or failure? Fish Biology 6: 43-62.

Dewees, C.M. 1989. Assessment of the implementation of individual transferable quotas in New Zealand’s inshore fishery’ N. Amer. Jrnl. Fish. Mgmt.: 9: 131-139.

Dewees, C.M. 1998. Effects of individual quota systems on New Zealand and British Columbia fisheries. Ecological Applications 8(1) Supplement: S133-138.

Hersoug, B. 2002. Unfished Business: New Zealand’s Experience with Rights-based Fisheries Management. Delft: Eburon. 246 p.

Johnson, D. 2004. Hooked: the Story of the New Zealand fishing Industry. Christchurch, New Zealand: Hazard Press Ltd for Fishing Industry Association. 551 p.

NRC. 1999. Sharing the Fish: Toward a National Policy on Individual Fishing Quotas. National Research Council. Washington, DC: National Academy Press.

Informative Websites

NZ Seafood Industry Council

http://www.seafood.co.nz (SeaFic home page)
http://www.seafood.co.nz/business (seafood business data)
http://www.seafood.co.nz/industry (contact information for industry orgs.)

NZ Ministry of Fisheries

http://fish.govt.nz (home page)
http://services.fish.govt.nz/indicators (status of fisheries reports)

Te Ohu Kaimoana

http://teohu.maori.nz (umbrella Maori fisheries organization)

Aotearoa Fisheries

http://afl.maori.nz (primary Maori company under Te Ohu)

Recreational Fishing Council

http://fishing.net.nz/organizations/rfc/index.cfm

- Christopher Dewees, Marine Fisheries Specialist,
University of California, Davis