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Individual Transferrable Quotas: New Zealand’s Experience

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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Individual Transferrable Quotas: New Zealand’s Experience

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  1. Individual Transferrable Quotas: New Zealand’s Experience

  2. New Zealand Fisheries Waters • Large EEZ (4.4 million km2) • 70% below 1,000 m • Medium productivity • Commercial Fisheries • Non-commercial Fisheries

  3. 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

  4. 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

  5. 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

  6. 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

  7. 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

  8. Outcomes • Reflect two primary policy objectives of QMS • Resource sustainability delivered • Economic performance improved

  9. Fleet rationalisation

  10. Quota rationalisation

  11. Export value/volume

  12. Benefits/Gains

  13. 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

  14. What general conclusions can be drawn from the NZ experience?

  15. 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

  16. 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

  17. Other key considerations • Avoid disadvantaging competing sectors • Design policy to encourage collective responsibility • Do not overlook importance of integrated planning

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