The Florida spiny lobster trap certificate program (TCP) is one of the oldest U.S. fisheries programs involving tradable effort permits. Under the TCP, fishers must own a certificate (and pay an associated annual fee) for each trap used. The program was created in 1992 to address overcapitalization amid growing social conflict in the fishery due to open-access regulation. Consequently, the total number of certificates (effort) is periodically reduced. However, no terminal effort level was designated so an intense debate has developed over future reductions. A bioeconomic analysis revealed that the current effort level (which is 34% below the initial level) remains approximately three times higher than even the most liberal estimate of “optimal” effort (i.e., effort that would generate the maximum economic yield). An analysis of the certificate market also indicated that prices have not approached levels reflecting the net present value of rents at the optimal effort level. These results suggest that existing regulations have failed to achieve the potentially large economic surplus that could result from optimal management. Prior to the implementation of similar programs, resource managers may want to consider lessons learned from the TCP. First, the social and political forces created by granting harvest rights tend to accentuate the problems of contracting among heterogeneous participants. Second, the fee schedule and budgetary issues can affect the structure and performance of the transfer market. Lastly, an elusive social surplus may not be a sufficient reward to overcome social, economic, and regulatory impediments to economically optimal regulation.
Larkin, S.L. and J.W. Milon. Tradable Effort Permits: A Case Study of the Florida Spiny Lobster Trap Certificate Program. In: Microbehavior and Macroresults: Proceedings of the Tenth Biennial Conference of the International Institute of Fisheries Economics and Trade, July 10-14, 2000, Corvallis, Oregon, USA. Compiled by Richard S. Johnston and Ann L. Shriver. International Institute of Fisheries Economics and Trade (IIFET), Corvallis, 2001.