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Tag: fish

System of Individual Transferable Quotas

Various characteristics of Icelandic economy seem to confirm the fact, that an affluent society, where the GDP per capita in 2007 was $66,240.30, is heavily dependent on the fisheries. According to recent analysis, export of fish products in foreign trade, account for around 75% of all marine goods export in Iceland and 50% of the foreign exchange income from marine goods in general.

Following these statistics, it was found out that the total, direct and indirect fisheries’ contribution is estimated to be within the borders of 40% – 45% of GDP and might differ around 5% by looking at different sources. Using other words, without the fishery based economy, Icelandic GDP would be estimated as 60% of the current one. However, not only the state’s economy is strongly based on fisheries.

The analysis must take into account, that the fisheries determine the major of citizens personal, individual income and income distribution, and what is more, in some part of Iceland as for instance West Fiords, around Husavik or Ólafsfjordur and many others, they are virtually the only basis for any economic activity. More than 40 different kinds of species in Iceland are harvested for the commercial purpose and the total annual catch in recent years, up to 2008, has fluctuated around 1.5 up to 2.2 million metric tons.

It would be worth to mention, that according to the statistics from 2008, the most significant species for Icelandic fisheries are cod, which accounts for about 30% of total catch, beside that one, very valuable are also haddock, redfish and pollock which percentage in total catch can be generally estimated for around 15 % of a total catch.

According to the latest news, there has been certain tendency regarding development of property rights in fisheries. Some of the European countries as Denmark, including Faroe Islands, United Kingdom or Ireland, performed the National Quota Management, some of them as Netherlands, New Zealand and Iceland, implemented the ITQs system. It has to be mentioned, that Iceland, where the private property has been generally believed to be fundamental to motivate the economy efficiency and productivity on land, took a leading role in this development and as one of the first countries to introduce individual vessel quotas and individual transferable quotas in major offshore fisheries.

Historical data show that in Iceland, vessel catch quotas were implemented in 1975 in the herring fishery, in 1979 these were made transferable, and in the 1980s started to be used in all fisheries within exclusive economic zone and Icelandic vessels operating outside of this area, creating the current ITQ system.

Addressing this discussion, it seems to be necessarily to analyze the conventional property rights in Iceland from the legal point of view. Icelandic property rights are neither fixed nor absolute and recognized as sort of privilege which allows to exclude others form some benefits. This concept places the one who holds the rights in certain position in respect to the others who are obligated to follow those rules.

On the other hand, the legal theory states that property right is an aggregate and collection of rights. In this bundle we have to include the authority to control something and to dispose it to the others. The concept behind the implementation of ITQs system lays in the theory that it is a right to fish which is a subject of the concept, not the ownership of marine natural resources itself. It shows to be obvious that no one can posses the rights to the fish unless it has been caught. The natural marine resources are the common property of Icelandic nation.

Current ITQs system has been based on the general provisions of the property rights. It was implemented by the Icelandic Fisheries Management Act of 1990 and changed through next two decades. The last alteration of this document took place in 2006 and provides with the essential features of current ITQ system. Though there might be notice disjunction between the art.1 and art. 4 of the FMA where the first states: “The exploitable marine stocks of the Icelandic fishing banks are the common property of the Icelandic nation.´ while the other seems to negate this statement: “No one may pursue commercial fishing in Icelandic waters without having a general fishing permit.”

This allows to come to the conclusion, that the Icelandic fisheries management system is the closed shop system. Regarding ITQs, this feature puts an emphasis on their exclusive nature. It seems to occur as self evident, that one licensee cannot exclude all others from fishing. Analyzing the document, it can be said that the parties which enjoy a fishing license, in the same time enjoy the exclusive right to run commercial or professional fisheries in Icelandic waters. According to the FMA, current quota system represents shares in total allowable catch. TAC is set annually by the Minister of Fisheries and based on the recommendation from the Marine Research Institute which on the other hand relies on the information from the fishermen and researchers. All commercial fishing activities are subject to these quotas. Currently there are 15 species which are subject to TAC and in the same time to ITQs system. The quota share is multiplied by the TAC to give the quantity which each vessel is concerned during the fishing year in question. This is referred to as the vessels´ catch quota. Permanent quota shares and annual catch quotas are divisible and transferable to other fishing vessels. The allocation of quotas is subject to a fishing fee. Individual enterprises may not control more than the equivalent of 12% of the value of the total quotas allocated for all species, and 12% to 35% for individual species.

The dispute arises when the one starts to think about the transferability of both, TAC and ITQ. The rule says that both of them can be transferred without any restrictions, though the Ministry of Fisheries must agree to distribute them fairly among the geographical regions. After it is done, according to the FMA we can point out the option, where the holder of an ITQ can, wholly of partly transfer its share to another licensed vessel. New regulations implemented in 1990 made it very common to sell the share by private holders, because the extreme amount of money was offered by the big enterprises.

Icelandic ITQs system has or could have, great impact on economic efficiency and what fallows, the maximization of wealth not only among the quota holders but also other citizens who, indirectly benefit from fisheries industry. By implementing ITQs system in Iceland, the interest in the fisheries, coming from big national corporations, was noticed. Those companies, larger entitles different from the Icelandic government, began to actually achieve economy of scale, what means that they were able to give out the product on the lower cost, what means the lower price, because of the progressing massive production and fish processing.

While the ITQs system is being implemented, decision making process starts to depend on the market and current economic situation, rather than being done by non market focused entitles in bureaucratic way, what means faster and more efficient for economy ways. Iceland seems to be very good example for such an observations but similarity might be noticed also in New Zealand, where actually the government’s fishery policy became more efficient when the private sector started to provide with services as opposed to the public ones.

Icelandic ITQ system, shares some of the features with its utopist idea of its impact on economic efficiency. However, there are particular aspects of this dimension, which differ from the theoretical ideal and subtract from its economic efficiency. In the Icelandic ITQ system, which is strongly associated with fishing vessels, only those who actually own vessels with a valid fishing license, can own quotas. What is more, the total holdings of quotas cannot exceed the fishing capacity of the vessel in question. This regulation severely restricts the set of potential holders of ITQs and clearly subtracts from the ability of the quota market to generate the most economically beneficial allocation of those.

The Fisheries Management Act of 1990 implemented a clause setting a limit on the quota holdings of any single vessel, what stated that no vessel can have a larger TAC share than it could catch within the fishing year. Art.13 of FMA states the maximum fishing quota share for fishing vessels owned by individual parties, whether natural or legal persons, or owned by connected parties. Nevertheless, it came to the point that eleven largest firms in Iceland hold about 33% of the demersal quotas and about 32% of all ITQs. Fifty biggest harvesting companies, in 1997 (the last available data) held more than 60% in all ITQs in the beginning of that fishing year.

Icelandic ITQs system increases the economic efficiency by lowering the cost of harvesting, cost of production and price of the out coming product. It allows cheaper labor power and decrease the time spent on the sea by the single fisherman. After actual implementation of ITQs, the human’s migration from small villages in the far north or north – east, down to bigger agglomerations, where the large companies are operating, was noticed. Versions of the ITQs fisheries management have been occurring in Icelandic fisheries since early 1980s and its performance should be considered objectively. The evidence on the economic benefits of the ITQ system is becoming clearer and the TAC for some species will be increased in the near future. The regional impact of the ITQs system shall be taken into account.

Source: Center of the Icelandic Ministry of Fisheries and Agriculture

March 29, 2012
Aquaculture in the Arctic

Aquaculture is an important part of the food sector in the world. Aquaculture involves cultivating freshwater and saltwater populations under controlled conditions, and can be contrasted with commercial fishing, which is the harvesting of wild fish.

Aquaculture is predominantly for human consumption. Aquaculture accounted for 45,7% of fish consumption in the world in 2008. It has grown rapidly over the last 50-60 years, the annual production in 1950 was around 1 million tons compared to 52.500 thousand tons in 2008.

Some nations have a long history of aquaculture but Asia dominates the world production, around 88,8% of the world aquaculture production comes from Asia. China alone is responsible for 62,3% of that.

China produced around 32.736 thousand tons in 2008. India is next (3479 t), Vietnam (2462 t) and then Indonesia, Thailand and Bangladesh all between 1000 and 2000 thousand tons.

Norway is next with 844.000 tons, the largest of the Arctic states, and USA has 500.000 million. Russia was under 100.000 tons, Canada 15.360 tons and Iceland only around 5000 tons.

The Arctic states produce enormous amounts of fish product s with aquaculture. The industry is a complicated process, if properly regulated; aquaculture can provide good opportunities for local development without large impacts on the ecosystem. Poorly managed and poorly regulated aquaculture, however, can have severe negative impacts through the release of excessive nutrients and chemicals, as well as escapes of farmed fish and the risk of disease transfer.

More stable and predictable production volumes, as well as large markets in the EU and the US, are among the advantages of aquaculture, the farming of marine organisms, seen from a business perspective. Salmon and trout are common industries both in Norway and USA to a large scale. Other countries participate as well.

The expansion of the aquaculture industry gives rise to two overriding concerns: the intrusion of fish farms into vulnerable marine and coastal areas, and the overall sustainability of an industry that depends on large catches of wild fish to feed farmed fish.

Below is an overview of agriculture in the eight Arctic states.

Norway (844.000 tones): Intensive farming of Atlantic salmon is by far the most important activity, accounting for more than 80 percent of the total Norwegian aquaculture production. Rainbow trout is also important and several marine finfish (cod, halibut) and shellfish species (blue mussel, oysters) are in the process of becoming commercialized. Ninety-five percent of Norwegian production is exported with the EU being the main market.

USA (500.000 tones): The aquaculture industry in the United States of America has become well established over the last 35 years but faces significant challenges to maintain continued growth. The mainstay of the industry is the production of channel catfish which occurs largely in earthen ponds in the southeastern States of Mississippi, Louisiana, Arkansas, and Alabama. Catfish represent 81 percent of the 287.132 tons of finfish produced in 2008. There is a steady incline of total production from 1950 when it was around 50.000 tons. The peak was in 2003 when it went over 600.000 tons. But generally since then the number is around 500.000 tons. By law, aquaculture is federally defined as agriculture in the USA.

Canada (140.000 tones): The aquaculture industry in Canada is a dynamic sector which has experienced significant growth since 2000 primarily as a result of increases in production of Atlantic salmon in marine net pens. The salmon farms are located in sheltered waters of the Pacific Ocean off of British Columbia, and in the Atlantic Maritime provinces of Nova Scotia and New Brunswick. Atlantic salmon sales generated 88 percent of the aquaculture industry’s total value in 2010 and 70 percent of tonnage.

Russia (100.000 tones): There are four types of aquaculture activity in the Russian Federation: pasturable, ponds, industrial and recreational. There are 295 freshwater fish species in the water bodies of the Russian Federation. 63 fish species, crustacean species and mollusks are reared artificially. 27 fish breeds, crossbreeds as well as 9 domesticated forms of carp, salmon, sturgeon, coregonid and cichlid fish are now cultivated. In this century the production is around 100.000 tons annually.

Denmark (36.000 tones): Ranking sixth in the world’s leading exporters of fish products, Denmark has a strong position in fish production and aquaculture has a long and well established tradition in the country. The main product produced is rainbow trout from freshwater ponds and mariculture units, the latter also producing roe as an important by-product. Eel is farmed in recirculated freshwater tank systems; mussels and oysters are produced in minor quantities and turbot fry is exported for further on growing. A variety of other species are raised primarily for restocking which represents an increasing share of total turnover.

Finland (15.000 tones): With decreasing catches of wild salmon in the Baltic Sea, aquaculture became a commercial activity in the 1970s and intensified in the 1980s. Most of the aquaculture installations are located in coastal areas and mariculture is particularly important in the Archipelago Sea and along the west coast of Finland. The most important species in aquaculture is rainbow trout raised in sea cages, representing around 80 per cent of the total production from aquaculture. The rest consists of rainbow trout raised in freshwater ponds and a few other finfish. There is also farming of crayfish and production of fry and salmon for restocking purposes in the Baltic Sea.

Sweden (6500 tones): Rainbow is the dominant specie in Swedish aquaculture. Total production in 2003 was just over 6500 tons. Sea trout, arctic char and salmon are amongst other species. Aquaculture is not a big part of the fishing industry in Sweden. It has had a steady production of around 5000-7000 tons for the last 20 years.

Iceland (5000 tones): Aquaculture began in Iceland just before the year 1900 with the first attempts to fertilize and hatch salmonid ova and to release the emerging fry into rivers. During the period 1985-90 a large-scale build up of salmonid farms took place. Most of these farms became bankrupt, however, and the nineties were characterized by stagnation in production. In the nineties, Icelandic scientist and farmers worked on developing aquaculture of species such as Atlantic halibut, turbot, abalone and Atlantic cod. From 2000 onwards, the main increase has occurred in the production of Atlantic salmon, Arctic char and Atlantic cod. Since 2004 Iceland has produces around 5000 tons annually with aquaculture.

Sources: Food and Agriculture Organization of the United Nations , Grida , Fisheries.is , ACIA Report

March 16, 2012
Catch by Countries

Here is a graph that shows how much six Arctic states caught. The numbers do not include whaling, but the numbers are in tons.

The numbers date back from 1950, except for Russia.

This shows the biggest fishing nations in the Arctic.

It shows very well that USA is the biggest fishing nation, somewhat a surprise for many.

Russia is also very big in numbers, especially in 1990.

It is very interesting to compare this to the importance of fishing for the countries, and the export numbers. It shows that although both USA and Russia are hunting a lot, it is not very important for their economy.

October 21, 2011
Political overview

“Counting fish is somewhat just like counting trees, except you can’t see the fish and it moves” This joke explains the nature of fish and its ability to move. Living resources like fish and other marine animals change their distribution patterns in relation to their habitual conditions, regardless of Exclusive Economic Zones and other jurisdictional waters.

This fact can and has caused some political disputes, even though the Legal issues in connection with maritime boundaries and rights to fisheries both in countries’ economic zones as well as international waters have mostly been settled under the United Nation Convention for the Law of the Sea (UNCLOS).

The distribution patterns of some species are changing faster than international agreements and conventions, causing disagreement of utilization of those species. The most recent case is the Mackerel dispute of Iceland and the European Union and other contracting parties (coastal states) of the North East Atlantic Fisheries Commission (NEAFC).

During the recent years, Atlantic Mackerel has entered Icelandic waters due to warming waters and is in search for nutrition. The Mackerel extracts biomass from Icelandic waters and migrates again into coastal states waters, causing a huge biomass transfer. The composition of the biomass that the Mackerel transfers is thought to be spawns and fingerlings of economically valuable species and nutrition for those economically valuable species, such as small capelin and herring. In spite of that, Iceland has not been issued any quota from the overall maximum allowable catch issued by NEAFC, based on recommendations from the International Council for the Exploration of the Sea (ICES).

In the beginning the EU and the other coastal states did not want to recognize the fact that Mackerel was in Icelandic waters, however the catch over the recent years in Icelandic waters can’t be ignored. The Mackerel started as a by catch with herring fisheries in Iceland but is now in great abundance that direct harvest of Mackerel has started. Therefore Icelandic officials issued a unilateral quota, since it was not allowed any from the overall maximum allowable catch issued by NEAFC, based on recommendations from ICES.

Still, there is no agreement and currently Iceland has issued quota in Icelandic waters for 130.000 tons. That is addition to the total recommended catch from ICES, since the other states refuse to give share and accept Iceland as a coastal state with Mackerel. This economical and political approach by the states might therefore threaten the Mackerel stock since no agreement is available of total catch.

Disputes like those might become more common in the future since changes are occurring and economical valuable species will move to find their ideal habitat and they do not care about man made Exclusive Economic Zones. Economical and political approach of controlling maximum allowable catch of species is not in favor of the environment. An ecosystem approach has to be established in order to be able to utilize marine resources in a sustainable way. In order to do that a collective responsibility has to be established within stakeholders of this abundant resource that has supported Arctic peoples and others over the centuries.

March 10, 2011