GAO Report on IFQs
February 2004
Highlights
Why the GAO Did This Study
To assist in deliberations on
individual fishing quota (IFQ)
programs, GAO determined (1) the
methods available for protecting
the economic viability of fishing
communities and facilitating new
entry into IFQ fisheries, (2) the key
issues faced by fishery managers in
protecting communities and
facilitating new entry, and (3) the
comparative advantages and
disadvantages of the IFQ system
and the fishery cooperative
approach.
What GAO Recommends
GAO recommends that the Director
of the National Marine Fisheries
Service (NMFS) ensure that
regional fishery management
councils that are designing
community protection and new
entry methods for new or existing
IFQ programs
• Develop clearly defined and
measurable community
protection and new entry
objectives.
• Build performance measures
into the design of the IFQ
program.
• Monitor progress in meeting
the community protection and
new entry objectives.
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Methods for Community Protection and
New Entry Require Periodic Evaluation
What GAO Found
Several methods are available
for protecting the economic viability of fishing
communities and facilitating new entry into IFQ fisheries. The easiest and most
direct way to help protect communities under an IFQ program is to allow the
communities themselves to hold quota. Fishery managers can also help
communities by adopting rules aimed at protecting certain groups of fishery
participants. Methods for facilitating new entry principally fall into three
categories: (1) adopting transfer rules on selling or leasing quota that help
make quota more available and affordable to new entrants; (2) setting aside
quota for new entrants; and (3) providing economic assistance, such as loans
and subsidies, to new entrants.
In considering methods to protect communities and facilitate new entry into
IFQ fisheries, fishery managers face issues of efficiency and fairness, as well as
design and implementation. Community protection and new entry methods are
designed to achieve social objectives, but realizing these objectives may
undermine economic efficiency and raise questions of equity. For example,
allowing communities to hold quota may result in a loss of economic efficiency
because communities may not have the knowledge and skills to manage the
quota effectively. Similarly, rules to protect communities or facilitate new entry
may appear to favor one group of fishermen over another. Furthermore,
community protection and new entry methods raise a number of design and
implementation challenges. For example, according to fishery experts, defining
a community can be challenging because communities can be defined in
geographic and nongeographic ways. Similarly, loans or grants may help
provide new entrants with the capital needed to purchase quota, but they may
also contribute to further quota price increases. Given the various issues that
fishery managers face in developing community protection and new entry
methods, it is unlikely that any single method can protect every type of fishing
community or facilitate new entry into every IFQ fishery. Deciding which
method(s) to use is made more challenging because fishery managers have not
conducted comprehensive evaluations of how IFQ programs protect
communities or facilitate new entry.
In comparing the key features of IFQ programs and U.S. fishery cooperatives,
we found that each approach has advantages and disadvantages in terms of
regulatory and management framework, number of participants, quota
allocation and transfer, and monitoring and enforcement. Specifically, in terms
of regulatory and management framework, IFQ programs have greater stability
than cooperatives because they are established by federal regulations, while
cooperatives are voluntary contractual arrangements. In terms of quota
allocation and transfer, IFQ programs are open in that they allow the transfer of
quota to new entrants, whereas cooperatives are exclusive by contractual
arrangement among members. In terms of monitoring and enforcement, IFQ
programs are viewed as being more difficult to administer, because NMFS must
monitor individual participants, while cooperatives are viewed to be simpler for
NMFS to administer, because NMFS monitors only one entity—the cooperative.
For some fisheries, a combined approach may be beneficial. For example, a
cooperative of IFQ quota holders can combine an IFQ program’s stability with a
cooperative’s collaboration to help manage the fishery. |
