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Economic Implications of a Strategy to Purchase Alaska Halibut Fishery Commercial Fishing Sector Quota Shares to Create a Recreational Guided Angler Sector Harvest Common Pool

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Abstract
  • Alaska fishing charter service owners are seeking an increased share of halibut fish resources be reserved for the recreational guided angler sector. An organization representing the owners who fish in the International Pacific Halibut Commission Regulatory Area 2C (southeast Alaska) and Area 3A (southcentral Alaska) titled the Catch Accountability through Compensated Halibut (CATCH) Project are designing a plan whereby quota shares owned by commercial fishing sector are purchased and the quota pounds they represent are annually deposited in a guided angler harvest common pool. If necessary to assist in augmenting available harvestable fish from stock abundance to attain the same management regulations for both guided and unguided anglers in both regulatory areas, then the inter-sector transfers through purchases would be used. While this could be perceived as a fishery resource allocation dispute, the organization is not attempting to influence management bodies in reallocating the resource based on optimizing social welfare and economic development values. Instead the organization is looking for mechanisms that would allow it to purchase quota shares using voluntary market approaches consistent with privatized user rights and privileges. The quota share inter-sector transfer procedures will necessarily be complex for several reasons. The amount to purchase needs to be estimated within the bounds of possible future resource abundances and what new effort might be attracted into the guided angler sector. Guided angler trip demand forecasts must be developed to account for less restrictive regulations, possibly higher angler costs, and other guided angler motivations for trip making such as nationwide general economic conditions. The possible cost increases are because one quota share purchase fund raising option is to use proceeds from imposing a guided angler fishing license endorsement fee. Diverting quota pounds from the seafood market for the quota share amounts to be purchased during years of lower exploitable stock abundance (range of 500 thousand to one million net weight pounds in Area 2C) will not in itself appreciably influence harvest price. Another reason the plan is complex is that the existing program's quota share sales rules are highly regulated in order to satisfy an objective to retain the pre-privatized fishery structure. Quota share sales in recent years are very small and amounts needed for the inter-sector transfer would greatly exceed amounts annually coming to market. The inter-sector ask price would have to be high enough to incentivize new holders to the market. It is suggested that program rules on restraining certain transfers may need to be relaxed for sufficient purchases to occur. The acquisition is for an asset that is primarily needed by the guided angler sector during periods of relative low fish resource abundances. If stock recovery is sufficient, then the asset could be leased or even divested back to the commercial fishing sector. A report was developed by economists to assist in the CATCH Project design. The report explains there will be significant challenges in conducting purchases for the benefit of a heterogeneous set of fishing charter service firms. There will be plan design problems associated with determining own industry needs; estimating angler response to fees and the changed quality of the angling experience; and, assessing commercial fishing industry quota share supply functions. There is probably sufficient flexibility for federal authorization of such a program, although establishing one is without precedent. The approval of a design is neither imminent nor assured given the required state legislative and administrative processes, the many federal and international treaty implementing unknowns, judicial review avenues, etc. However, the innovative process is deserving of consideration due to higher marginal economic benefits to local communities and the nation from reserving additional recreationally harvested fish, and concerns for a viable charter industry from customer demand response for the unequal fishery access.
  • Keywords: Fisheries Quota Shares, Charter fisheries, Halibut fisheries
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  • Davis, Shannon, Gilbert Sylvia, and Chris Cusack. Economic Implications of a Strategy to Purchase Alaska Halibut Fishery Commercial Fishing Sector Quota Shares to Create a Recreational Guided Angler Sector Harvest Common Pool. Prepared by The Research Group, LLC, Corvallis, Oregon for the CATCH Project, Auke Bay, Alaska. August 2013.
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Table of Contents
  • 1: Overview; 2: Halibut Fishery Profile; 3: Inter-Sector Quota Share Transfer Economic Analysis Methods; 4: Quote Share Transfer Financing; 5: Quote Share Transfer Mechanisms; 6: Glossary; 7: Bibliography
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  • Catch Accountability through Compensated Halibut (CATCH) Project
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