Chris Williams: Ownership Models for Natural Resources: Fisheries

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Chris Williams: Ownership Models for Natural Resources: Fisheries. A presentation at the TheIU.org 2013 Conference 'Economics for Conscious Evolution', London, UK, July 2013.

Transcript of Chris Williams: Ownership Models for Natural Resources: Fisheries

  • 1. Ownership Models for Natural Resources: Fisheries Chris Williams, nef

2. Work with artisanal fishing communities 3. Work with industrial lobster divers Community projects 4. www.neweconomics.org the new economics foundation 5. The marine socio-economics project (MSEP) www.mseproject.net 6. This presentation covers: Context for the presentation A brief overview of property rights Issues that arise with property failures A focus on fishing Ownership and co-management Quota as property Quota in the UK Issues with private property rights in fisheries Conclusions Ownership models 7. Context: The bio-capacity of the earth in relation to consumption trends (Wackernagel et al. 2002) 8. Context: we need more fish! 9. We are living of the natural capital (stock), not the interest (flow) STOCK VARIABLE OF THE RESOURCE FLOW VARIABLE OF THE RESOURCE /OUTPUT 10. Human activity is changing ecosystems worldwide. Ecosystems are particularly affected by large-scale fishing, freshwater use, and agriculture (MEA 2005). Degradation often occurs in settings of unclear ownership regimes. 11. Property is fundamental Property rights are central to the way that market economies work. Without clear and enforceable rights to property, and the freedom to sell these rights to somebody else, a market cannot function. 12. Aside from the practical challenges surrounding its enforcement, there are clear theoretical problems with the property rights system. Conventional economic theory associates these with non-rival consumption, access rights, and the unintended side-effects of use. These (as we will see later) are all of relevance to fisheries. Private property failures 13. refers to the capacity of some goods to not be depleted through use, e.g. lighthouses Additional consumers = no impact on the availability of the commodity, so enforcing private property rights does not guarantee a fair or efficient use. For that to occur, the commodity must be consumed as it is used, enabling the supply and demand price mechanism to function. If it does not, the commodity will almost certainly be under-supplied by the market alone. Non-rival consumption 14. Access Rights refers to the ability of the property owner to regulate access and use of the property, e.g. fences But at least some things are extremely hard to prevent access to. e.g. the road network or open seawater. (*these are termed public goods In economic models) 15. Because of the impossibility of restricting access to public goods, their use may become economically excessive. The sea becoming overfished, for instance, is a classic example of the tragedy of the commons in which free access leads to excessive consumption. A single fisher does not intend to deprive others of a livelihood, but the effect of their fishing activities is to reduce the number of healthy, breeding fish in the sea, which in turn contributes to a steady depletion of stocks over time. 16. Tragedy of the Commons, Garrett Hardin 1968 In other words, the action of fishing has a negative externality an unpaid cost that is paid for by others. Positive externalities sometimes exist, too: a lighthouse may be paid for by taxpayers in one country, but sailors from other nations would also benefit 17. In many cases, a private property regime may not be the best way of sharing out resources, due to the difficulty of enforcing meaningful property rights. As environmental issues (and fishing in particular) very often have this feature, private ownership models might not be the most suitable way to deliver environmental sustainability or social justice. There is, however, a classic argument in favour of granting property rights on public goods called the Coase Theorem. Different allocation mechanisms 18. Coase Theorem Impose at least some kind of property rights system over public goods, in order to allow users to trade their rights. Even if imperfectly enforced, Coase Theory maintains they would lead to a socially more optimal outcome than would otherwise occur. The Theorem provided the theoretical rationale for the introduction of carbon trading, in which a public good (the earths atmosphere) was subject to a trading regime. It is so far unclear if the attempt has been successful... 19. Why are property rights relevant to the marine environment and fisheries? Fisheries around the world have a dizzying array of management structures. Generally, these fall into private, public, or community cooperatives / co-management. In some cases, this has led to sustainable use of resources, allocated by public bodies (or government by proxy), rather than market-based mechanisms. In other cases, such as the EU, public management has failed to reverse the decline in fish stocks. 20. Example: the cooperative or common ownership approach Alaskan salmon In 1938 - 120 million fish harvested. Within 20 years - only 20 million fish. This resource was critical to coastal communities this was a key driver in Alaskas movement for becoming a US state.. Pressures on the habitat, overcapacity, conflicts, inequality between different gear types, and different harvesting methods were all contributing to the decline. The complexity was hampering sustainable management of the salmon fishery. Conaty, P. and Lewis, M. (2012). The Resilience Imperative: Cooperative Transitions to a Steady-state Economy. Gabriola Island, BC, Canada: New Society Publishers. 21. But, the fishing community decided to: Limit entry of new vessels Create hatcheries Start ocean ranching Work on stock enhancement Co-op Ownership with local Govt Common property harvest (70%) Set up RAAs Ownership change > outcome changed Success story for communities and salmon Co-management ideas are now widespread, with local or national government, NGOs, and other stakeholder groups sharing responsibility and the costs and benefits. This is more physical ownership, and there is a whole other side to it Public ownership failed to halt the decline! Privatisation was on offer.. 22. But there is more to it the issue of Quota Lets look at the UK as an example 23. Who owns me? 24. A brief history of UK fishing In the old days, when offshore fish stocks were large and fishing fleets were small, there was no call for either private ownership or government regulation. Private ownership of fisheries was effectively banned by the Magna Carta, in the 13th century. This action was followed by hundreds of years of free fishing in English waters. What came next? Industrialisation New gear Competition Declining catches CPUE 25. Declining CPUE 26. What has declining CPUE lead to? The race to fish the vicious cycle of getting bigger boats, better technology to out perform each other Where resource rent is not dealt with explicitly, the incentive for each fisher to attempt to catch fish before others do ensures that such rent is eventually all dissipated - i.e. it is invested in excess fishing capacity leading to overexploitation in both economic and biological terms. 27. Gear Seasons Geographical > Difficult as fishers want assurance Options: pay royalties on catch or restrict access (licensing) Limit on licenses and effort Limit number of traps or nets The need for regulation: 28. Quotas Limit catch per vessel Fishermen buy (or rent) quota for a particular species More tricky to enforce than closed seasons.. Catch according to supply and demand 29. Quota - is it private property? 17th century - two conditions for holding property in a thing. (1) power to appropriate the thing and hold it in possession against others (2) scarce and exhaustible, so that it was worth-while going to the trouble of holding it as property. Taken together, helps to explain why fresh-water fisheries, in rivers, lakes are often private property Same for tidal and inshore areas (land ownership) Therefore the English common law says that wild animals and wild fish (even fish reared in a hatchery) cannot be subject to property law until they have been caught and brought into the possession of the landowner, hunter or fisherman. This reasoning lies behind the common-law origin of the current law of capture. 30. ITQs Individual Transferrable Quota The big change: ITQs Exclusive Powers to act as an owner Duration and security = ability to manage it Transferable Effectively private property They can be bought, sold and leased Permits and licences are seen as property rights that are weak and have little of these characteristics. 31. Who owns quota in the UK? 32. So, who owns the right to fish? Industry is divided m Landmark ruling in July 2013 POs to