ICES CM 2013/C:01
Fishing for revenue: how leasing quota can be hazardous to your health
Timothy Emery (1), Klaas Hartmann (1), Bridget Green (1), Caleb Gardner (1) and John Tisdell (2)
(1) Institute for Marine and Antarctic Studies, University of Tasmania, Australia; (2) School of Economics and
Finance, University of Tasmania, Australia. Presenter contact details: [email protected]
Summary
Fisheries management decisions have the ability to influence the safety of resource users by affecting
how and when they fish. In the Tasmanian southern rock lobster (Jasus edwardsii) (TSRL) fishery in
Australia, the expansion of the quota lease market under individual transferable quota (ITQ)
management coincided with a rise in the number of commercial fishing fatalities. Consequently, a
discrete choice model was fitted to compare whether physical risk tolerance varied between fishers who
owned the majority of their quota units (quota owners) and those who mainly leased (lease quota
fishers). In general, fishers were averse to physical risk, however this was offset by increases in expected
revenue. Lease quota fishers were more responsive to changes in expected revenue, which contributed
to risk tolerance levels that were significantly higher than quota owners in some areas. This pattern in
behaviour appeared to be related to the cost of leasing quota. Although ITQs have often been considered
to reduce the incentive for fishers to operate in hazardous weather conditions, this assumes fishing by
quota owners. This doesn’t necessarily hold true for lease quota fishers, where in some instances, there
remains an economic incentive to fish in conditions with high levels of physical risk.
Introduction
Fishing is a dangerous occupation with high rates of fatalities and injuries due to the nature of working
conditions and unpredictability of the environment (Mayhew, 2003). In providing fishers with a
guaranteed fixed proportion or share of the total allowable catch (TAC) as quota units, ITQ management
theoretically improves sea safety as fishers have more flexibility in choosing when to fish. This assumes
however, that fishing is undertaken by quota owners. In many ITQ fisheries, there is an increasing
disconnect between those that own the quota and those that actually fish the quota. For example, ITQs
were introduced in the early 1990s in the British Columbia halibut fishery and by 2006, 79% of the quota
was leased out by quota owners (Pinkerton and Edwards, 2009). Lease quota fishers are not guided by
the same incentive structure generated by ITQ management that theoretically regulates the behaviour
of quota owners (Gibbs, 2009). This is because they operate on the margin between the quota lease price
and market price and do not receive any benefit from improvement in the resource rent (which flows
to quota owners). Having to pay to lease quota units can create greater incentives for lease quota fishers
to respond to changes in expected revenue than quota owners, meaning they may choose to fish more
in hazardous weather conditions. The TSRL fishery was used as a case-study to test this theory, as the
number of commercial fishing fatalities in recent years has increased commensurate with the expansion
of the quota lease market under ITQ management.
Materials and Methods
A discrete choice model of daily participation was fitted for the TSRL fishery to assess the physical risk
tolerance of fishers under ITQs. A fisher’s decision of whether to go fishing on each day was related to
the average significant wave height, length of vessel, home port of vessel, expected revenue, expected
revenue variability and the proportion of quota units a fisher owned to held at the end of the fishing
season. This was modelled using a binomial general linear model with a logit link function and was
applied to data spanning ten fishing seasons, between 1 March 2001 and 28 February 2011. Individual
logbook data was used to identify where a fisher chose to fish or could have fished each day. Rules were
developed to determine the location that a fisher could have chosen to fish on the days between fishing
trips or during trips that were not reported in the logbook (i.e. where they did not set or haul any pots).
These rules were conditional on the location of the last and first new fishing event (i.e. where they
previously and subsequently set and hauled their pots). As the fishery has distinct modes of fishing
ICES CM 2013/C:01
around the State, the state-wide model was sub-divided into three specific geographical areas for
comparison (east coast & Hobart, south-west coast and King Island).
Results and Discussion
In general, fishers were averse to physical risk, however this was offset by increases in expected
revenue. In other words, fishers were more likely to choose to fish in hazardous weather conditions if
there was a greater financial incentive. For example, when expected revenue was $35 a potlift and
significant wave heights were ≥5m, the model predicted (for a set of given values) that there was a 45%
(42-47%, 95% CI) probability that a quota owner would chose to fish off the east coast and Hobart,
compared to 72% (69-77%, 95% CI), when
expected revenue was $70 a potlift. The
relationship between quota ownership and
revenue was significantly different in all areas
(p<0.001), except off the east coast and Hobart
where it was suggestive but not definitive
(p=0.08). In these areas, lease quota fishers
responded more positively to increases in
expected revenue than quota owners, which Statewide and in the area off King Island led to physical
risk tolerances that were significantly higher than
quota owners (Figure 1). For example, when
expected revenue was $70 a potlift and significant
wave heights were ≥5m, the model predicted
there was a 42% (38-48%, 95% CI) probability a
quota owner would chose to fish off King Island,
compared to a 59% (51-67%, 95% CI) probability a
lease quota fisher would chose to fish. This was
probably due to the added costs of leasing quota
and operating at a diminished daily profit margin
between the lease and market price, which created Figure 1. How the decision to fish is influenced by the
interaction between the proportion of quota units owned
a greater economic incentive to fish than for quota to held and expected revenue at hazardous wave heights
owners. The inherent risk of lease fishers was also (i.e. ≥5m) both State-wide (a) and at King Island (b). A
compounded in the TSRL fishery due to lease higher contribution to the logit index indicates a higher
quota fishers using significantly smaller vessels in probability of choosing to fish.
all areas (p<0.001).
The assumption that ITQs will improve overall sea safety, may not be as applicable to those fisheries
that are dominated by fishers who lease in the majority of their quota units, as they are more motivated
in some instances, by an economic incentive to fish in hazardous weather conditions. Given the
significant increase in the amount of lease quota fishing occurring in many ITQ fisheries (Pinkerton and
Edwards, 2009), decision-makers have a responsibility to consider these behavioural differences when
developing and/or modifying, fisheries regulations and/or policy. Decision-makers could prevent the
development of a large-lease dependent fishery through restrictions on the transferability of quota units
or through the use of owner-on-board provisions (Pinkerton and Edwards, 2009).
References
Gibbs, M.T. 2009. Individual transferable quotas and ecosystem-based fisheries management: it's all in the T. Fish
and Fisheries, 10: 470-474.
Mayhew, C. 2003. Fatalities among fishing workers: does size matter? The Journal of occupational health and
safety, Australia and New Zealand, 18: 245-251.
Pinkerton, E., Edwards, D.N. 2009. The elephant in the room: The hidden costs of leasing individual transferable
fishing quotas. Marine Policy, 33: 707-713.