Ecological fisheries management using individual transferable share quotas

This paper is concerned with the optimal management of fisheries in the ecological context. All fish stocks are embedded in an ecosystem. Therefore, to obtain maximum economic benefits, fisheries management must take due account of the corresponding web of ecological interrelationships. Unfortunately, however, due to the inherent complexity of ecosystems and the scarcity of the relevant empirical information, sensible ecological fisheries management is very difficult to achieve in most cases. This paper suggests a particular application of the individual transferable share quota (ITSQ) system that offers a potentially fruitful approach to the problem of ecological fisheries management. Under the particular ITSQ framework defined in the paper, the task of the fisheries manager is reduced to that of determining the current optimal vector of total allowable catch (TAC); i.e., the one that maximizes the present value of current and expected future fisheries rents from the ecosystem. Given the customary assumptions about market efficiency, this can be shown to be equivalent to setting TACs so that share quota prices are maximized. Since share quota prices are directly observable in the quota market, this is a comparatively easy task for the fisheries manager. This procedure, referred to as minimum information management (MIM) in the paper, obviously greatly simplifies the ecological fisheries management problem. An interesting implication of the analysis is that in the ecological context, economic optimality may easily require some TACs and some share quota prices to be negative.