FISHERIES ARE CLASSIC EXAMPLE OF THE

"TRAGEDY OF THE COMMONS"

PERC Report:
Volume 19, No.1, Spring 2001

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Fisheries are Classic
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Author: Daniel Benjamin

By Daniel K. Benjamin
Where the commons has
been at least partly privatized
there is less damage to fish stocks,
the fishing is safer, and fewer
resources are needed to
achieve a given harvest.

Fisheries provide the classic example of the tragedy of the commons, which occurs
when property rights are incomplete and access to a resource is open. The
migratory nature of most fish species makes it difficult to establish and protect
rights to fish in the sea, so the rule of capture prevails. The result is often
overexploitation of the resource. Economists long have argued that the waste
associated with this problem could be reduced if we "privatized the commons," that
is, created individual private property rights for common-pool resources. That
process is beginning to happen.
According to recent research on the British Columbia halibut fishery, where the
commons has been at least partly privatized, substantial ecological and economic
benefits have resulted. There is less damage to fish stocks, the fishing is safer, and
fewer resources are needed to achieve a given harvest (Grafton, Squires, and Fox
2000).
Since 1923 management of the Pacific halibut fishery has been regulated jointly by
the United States and Canada. Even so, for many years this fishery was on the
decline, which eventually prompted stringent controls. Beginning in 1979, the
harvesting of halibut in Canadian waters was restricted to Canadian fishers, and the
number of vessels limited to 435, which was the number of licenses then in
existence. A total allowable catch was set each season to limit harvests. Despite
these regulations, fishing intensity increased during the 1980s. By 1988 the harvest
had risen by 125 percent, even though the length of the fishing season had been cut
from 65 days per year to a mere 14. Over the next two years, harvests dropped
sharply, as the halibut stock showed signs of collapse.

Joint efforts by fishers and the Canadian Department of Fisheries and Oceans led to
the creation of a system of individual vessel quotas (IVQs) in 1991. Under the terms
of this program, existing license holders received without charge a percentage of the
total allowable catch. Thus, each vessel holder had secure property rights to a
specified poundage of fish. These rights were not, for the most part, transferable,
although the limits were eased some in 1993.
The improvements resulting from the IVQ system have come in part from the mere
creation of the individual quotas and in part from their transferability. The
allocation of individual harvest rights for each vessel eliminated the need for a short
fishing season, originally created in a futile effort to halt overfishing. Prior to IVQs,
the short season forced the fishers into the same prime areas at the same time,
resulting in damaged and lost fishing gear and "ghost fishing," in which lost fishing
gear continued to catch fish.
From six days in 1990, the season has been lengthened to 245 days. With the longer
season, vessels no longer conflict with one another, thereby preventing substantial
losses of gear and fish each season. Moreover, before the individual quotas, vessels
had lots of crew on board to ensure the most rapid possible harvesting of fish.
Under IVQs, the total number of crew members in the fleet quickly dropped by
about 20 percent.
Under the old system, vessel owners felt compelled to fish regardless of weather
conditions, because the loss of even a day of fishing could make the difference
between profit and loss for the season. Now that pressure has been eliminated,
greatly enhancing the safety of the fishers.
The longer fishing season has enabled fishers to sell higher quality and fresher fish.
Prior to IVQs, only about half the catch could be sold as fresh fish, which are more
valuable; now nearly all of it is sold fresh. The result has been better product for
consumers and higher profits for producers.
The partial transferability of the IVQs added to the benefits of the system. For
example, the number of vessels has been reduced, because smaller, less efficient
fishers have sold or leased their licenses to more efficient operators. This has
decreased capital costs and reduced total crew in the fleet. Similarly, average vessel
size has risen, increasing the safety of the crews. Perhaps most importantly,
transferability gets the quotas into the hands of the "highliners," the skippers who
are best at finding the fish and harvesting them in the lowest-cost manner.
Despite the important improvements brought about by the IVQ system, there are
still deficiencies. For example, permanent transfers of quotas can only be made to
vessels that are no more than 10 feet longer than the transferring vessel, while
temporary (season-long) transfers are limited so that a vessel can fish no more than
two IVQs. Fishers also cannot always move to the size vessel they would like
because the same vessels are commonly used for salmon as for halibut fishing, and

salmon fisheries are still governed by rules that limit vessel sizes. And finally,
further improvements could surely be made if the total allowable catch reflected
ongoing changes in economic factors, rather than being arbitrarily set by the
Canadian Department of Fisheries and Oceans.
So, although the move to IVQs has made a bad system considerably better, there is
still much to be done to eliminate the tragedy of the commons.
REFERENCE
Grafton, R. Quentin, Dale Squires, and Kevin J. Fox. 2000. Private Property and
Economic Efficiency: A Study of A Common-Pool Resource. Journal of Law &
Economics 43(October): 679713.

Daniel K. Benjamin is a PERC senior associate and professor of economics at

Clemson University. His regular column, "Tangents-Where Research and Policy
Meet," investigates policy implications of recent academic research. He can be
reached at: wahoo@clemson.edu

Topics: Fisheries Property Rights

Type: Tangents
Media Source:

DANIEL BENJAMIN
The effect of government policy changes on the private sector
has been the unifying theme that ties together Daniel K.
Benjamin's broad-scale research. He not only examines the
outcomes of policy changes, but also the reasons behind the
modifications.Taxes, unemployment, risk assessment, and
drugs have been the focus of much of Benjamin's...
Read More >
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