The equity debate: distributional impacts of individual transferable quotas

Abstract

The twin goals of economic efficiency and social equity often seem at odds, particularly in the debate over two marine policy approaches: firm-level regulation of inputs and outputs (''command and control'') and individual transferable quotas. This paper examines the debate over social equity in a US fishery that transitioned from command and control to individual transferable quotas-the mid-Atlantic clam fishery. The analysis draws on 17 years of data on fishing trips, vessel ownership, tradable property rights ownership, and output market shares. The results show that no segment of the industry was disproportionately adversely affected by the regulatory change; however, they also demonstrate the emergence of a new sector in the industry, which is predominantly made up of former small-scale harvesters. r

Distributional effects of property rights: Transitions in the Atlantic Herring fishery

“…Efficiency is increasing in vessel size; this may generate policy concern over the equity of tradable quota programs since the least-efficient, smaller boats may be forced out of the fishery. In addition, the more recent processor-contracted vessels are among the least efficient, a result similar to that found in other studies [16,17].…”

“…In addition to gear type, vessels' comparative advantages can be distinguished by their gross registered tonnage. These conflicts between gear classes over unequal distribution of policy benefits and costs are evident in other fisheries and have been shown to affect policy decisions [15][16][17].…”

“…The graph is useful for determining the long-run fleet size needed to harvest a given level of catch. 16 The lower arrow suggests that while 54 boats have been active (at least minimally) in the previous four years, a fleet less than 1/3 of that size could harvest the same amount at a more efficient level. Although the assumptions required to achieve maximum efficiency under an ITQ system are restrictive, we can expect to see a substantial exit of capital from the industry in the long run.…”

“…A significant shift in the harvest from Maine to Massachusetts would result from the introduction of property rights, 15 Logbook data indicate that vessels rarely vary the number of crew per fishing trip, and therefore we fix the crew level at its average level. 16 Note: The flatter portions of the cumulative harvest graph indicate smaller boats fishing a relatively limited number of days. Specifically, the 1st, 3rd, and 8th most efficient vessels are in the smallest size class and therefore our analysis assumes they are unable to increase their current effort levels (1, 4 and 80 fishing days respectively).…”

Limited-access Privilege Programs in the Mid-Atlantic Fisheries

“…After an extensive study of the number of fi rms (rather than vessels), Brandt (2005) concluded that ITQ's in the clam fi shery did not harm small fi shermen or force them out of the fi shery to the benefi t of larger, vertically integrated processors, indicating that the decline in the number of vessels in the fi shery masks the fact that far fewer fi rms left the industry.…”