Tallahassee Democrat
May 17, 2004

Florida's blue economy needs to be protected

By Brian Yablonski

My View

Letter in Response

The ocean is to Florida what oil is to Texas. It sustains our blue economy.

Our white sand beaches and cruise ships attract millions of tourists. Our seaports handle more than $33 billion in goods. Recreational fishermen and divers ply the waters off our 8,400 miles of coastline, while commercial fishermen support a $1 billion seafood industry.

Yet the state of the sea is not so good. That was the news presented last month by the U.S. Commission on Ocean Policy, the first comprehensive review of ocean policy in more than 30 years. Marine pollution, habitat destruction and coral reef degradation are just some of the threats. Overfishing is another concern.

According to the National Marine Fisheries Service, there are 86 overfished stocks in our nation's fisheries. In response, the commission provided almost 200 recommendations, but few of these addressed the underlying problem that plagues our oceans.

The waters off Florida present a "tragedy of the commons" scenario. Because the ocean is one big commons, essentially free for everyone, there is little incentive to conserve its resources. Ocean fisheries provide the perfect illustration. Fishermen are spurred to take as much of the catch as they can - or lose it to their competitors. This fish derby results not only in overfishing, but in more boats, more lines, more nets, more traps and more marine pollution.

Traditional government responses have been moratoriums, gear restrictions, or time-and-place regulations. A better approach would be to create incentives for stewardship through the equivalent of property rights in the harvest.

Florida has taken a positive step in this direction by experimenting with an effort quota system in the stone-crab fishery. Responding to damage caused by overfishing and too many traps in the water, the state issued a limited number of trap certificates to crab fishermen. The certificates can be bought and sold among fishermen for market value. Over time, the number of traps will be reduced as a small number of traps are retired following each transaction.

An even more effective tool for addressing the commons problem is the individual fishing quota (IFQ). While trap certificates limit an input to fishing, IFQs focus on the output.

Under an IFQ system, fish managers start out by doing what they do under the old management scheme. They determine an acceptable biological catch for an exploited species. Then, after deducting what is desired for recreational fishermen, they allocate an annual total allowable catch for commercial fishermen. Each commercial fisherman is then provided an IFQ, a percent share of the allowable catch. Initial allocation is based typically on the fisherman's catch history in the species. The fisherman can then buy, sell or trade the individual quota.

Since each fisherman knows how much he or she is allowed to catch, there is less incentive to race for the fish, so there is less gear loss and less by-catch of other species. Because they are tradable, IFQs tend to reduce overcapacity as more efficient fishermen buy out less efficient ones. And since fishermen have all year to reach their quota, they receive higher dock prices for fresh fish, rather than flood the market, lowering prices. Finally, fishermen have an asset whose value now depends on the health of their allocation.

In New Zealand, IFQs are considered property rights to shares of the total allocation. As a result, commercial fishermen have used their own money to invest in scientific research and stock enhancement. This effort, in turn, has benefited New Zealand's recreational fishermen, who have been granted higher bag limits because commercial scallopers have enhanced the scallop stocks.

The Commission on Ocean Policy did recommend Congress affirm the legality of IFQs and that fish managers consider their benefits. However, it also suggested that the quota allocation be time-limited and did not address quota transferability. But limiting the duration and transferability of IFQs removes the property right and hence the incentive to invest in stewardship.

Florida has been asked to respond to the commission report by Friday. Given our dependence on the ocean, perhaps no other state will have as much say in its future. My view is that Florida should use its opportunity to emphasize rights and responsibilities as a framework for ocean policy. It should voice its support for secure, transferable IFQs and for measures that give people in our blue economy the incentive to conserve.

Brian Yablonski of Tallahassee is a member of the Florida Fish and Wildlife Conservation Commission and an adjunct fellow with the Property and Environment Research Center in Bozeman, Mont. Contact him at Commissioners@fwc.state.fl.us.

Letter from Frederick W. Bell,
Professor Emeritus in Economics, Florida State University

Dear Commissioner Yablonski,

You had a fine article in the Democrat on monday. Under the Magnuson Act, the process of adopting ITQ's has been slow indeed. Trent Lott from Mississippi has objected to their use. Over the years, I have been Chief of Economic Research for the National Marine Fisheries Service and on the S&S Committee for the Gulf of Mexico Fishery Management Council. I have been on a sabbatical to Europe and Iceland to study ITQs.

One thing I have learned from other countries is that full property rights must be established including transferability which you point out. The transferability must be universal in that commercial can buy out recreational fishermen.

A graduate student of mine, Dr. Robert V. Leeworthy, is now the Chief Economist for NOAA and his dissertation for King Mackerel indicated that commercial fishing would disappear completely if a true market system characterized by ITQ's was instituted. Both sectors would gain economically as commercial fishermen would see capital transfers to them just for being there at the right time of true pure property right adoption.

After looking at various specifications, he was led to the conclusion that the market would about wipe out commercial fishing where there is a present sharing by both interests. Recreation is just too valuable relative to food.

I wonder how you and the Commission can cross jurisdictions such as now exists. Of course, the State of Florida has 3 miles on the East Coat and 9 miles on the West Coast. The rise of aquaculture in Florida could show just what full private property rights system would function to yield the highest economic value. I have published several articles on economic efficiency in aquaculture using crawfish as a case in point.

If I can be of any help to the Commission, please do not hesitate to call. You are asking the right questions and hopefully getting the right answers for the FWC. The trip between here and Montana must be something.

Cheers,
Dr. Frederick W. Bell, Professor Emeritus in economics, FSU. I can be reach at fwbell@garnet.acns.fsu.edu or FWELLBELL@aol. com. Keep up these good thoughts on IT or IF Q's.