Market Solutions to Overfishing
November 12, 2003
Environmentalists who understand the laws of economics are doing some creative thinking to solve the problem of overfishing. They've come up with a powerful free-market solution called individual fishing quotas (IFQs).
Flourishing around the world, IFQs are the equivalent of cap-and-trade pollution programs:
- Government authorities cap the total allowable catch and then allocate quotas among fishermen, usually based on the historical catch.
- The quotas become a "property right" that can be bought and sold among fishermen -- helping to reduce fleet capacity.
- And because fishermen have access to a guaranteed share of the catch, they don't race to compete, fishing seasons lengthen, prices rise and fish stocks grow.
- Since the introduction of IFQs, the country has seen a 37 percent decline in the number of quota owners, mostly in fisheries that were overfished and had overcapacity problems.
- Its 2002 assessments of main fisheries show that 80 percent are at or above sustainable target levels.
- The overall market value of New Zealand's IFQ fisheries has more than doubled in real terms from 1990 to 2000, even as fish stocks have grown.
Examples from Iceland, Australia, Greenland and the Netherlands show similar impressive results.
Source: Editorial, "A Fish Story," Wall Street Journal, November 6, 2003.
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