The Wall Street Journal
November 6, 2003

A Fish Story

Editorial

America can count many environmental successes over the past 30 years, but ocean fishing isn't one of them. Ocean fisheries are a classic example of the "tragedy of the commons": Because no one "owns" fish, no individual has an incentive to protect stocks for future generations.

Yet this is one area where environmentalists who understand the laws of economics are doing some creative thinking. They've come up with an innovative free-market solution, if only a couple of powerful U.S. Senators would allow them to proceed.

By some estimates, overfishing affects some 93 U.S. fish populations, or nearly one-third of the 304 that scientists have assessed. Fishing seasons have had to shrink to a few days in some places, forcing fishermen to risk their lives in Perfect Storms. The government also spends millions in taxpayer dollars on vessel-buyout programs to reduce the size of fishing fleets.

Overfishing also sends waves through the economy. The commercial seafood industry contributed $29 billion to U.S. GDP in 2001, and fishing is the No. 1 employer in Alaska. Yet West Coast ground fishermen have seen the 20-year average catch of about 74,000 tons fall by half in recent years. Sales from Oregon's groundfish fleet dropped to $14 million last year, from $35 million in 1995.

Government agencies have tried to regulate away these problems, but top-down mandates tend to do more harm than good. When authorities limit the number of fishing days, for instance, fishermen buy more boats (adding to overcapacity) and employ advanced gear. They also lower standards for the fish they keep, causing further harm to fish stocks.

The good news is that a market-based solution is already flourishing around the world. Individual fishing quotas (IFQs) are the equivalent of cap-and-trade pollution programs. Government authorities cap the total allowable catch and then allocate quotas among fishermen, usually based on the historical catch. The quotas become a "property right" that can be bought and sold among fishermen -- helping to reduce fleet capacity. And because fishermen have access to a guaranteed share of the catch, they don't race to compete, fishing seasons lengthen, prices rise and fish stocks grow.

Consider New Zealand, where IFQs started in 1986 and today cover 45 species, or more than 85% of the total commercial catch from Kiwi waters. Prior to IFQs, New Zealand had watched the catch of such key commercial species as red snapper fall by 43% from 1978 to 1983.

Since the introduction of IFQs, the country has seen a 37% decline in the number of quota owners, mostly in fisheries that were overfished and had overcapacity problems. Its 2002 assessments of main fisheries show that 80% are at or above sustainable target levels. The overall market value of New Zealand's IFQ fisheries has more than doubled in real terms from 1990 to 2000, even as fish stocks have grown. Examples from Iceland, Australia, Greenland and the Netherlands show similar impressive results.

Which is why environmental groups ranging from PERC to Environmental Defense have united to support more U.S. IFQs. Federal fisheries began a few IFQ programs (e.g., Alaskan halibut) in the early 1990s, only to have Congress impose a moratorium in 1996. That ban expired last year, but everyone is afraid to act without legislation giving explicit authority and guidelines for creating new IFQs.

The Bush Administration is on this case and sent draft legislation to Congress in June. It landed in a subcommittee chaired by Maine Senator Olympia Snowe, who is sympathetic to East Coast fishermen who worry that quotas will drive smaller fishing concerns out of business. That worry has proven to be groundless in New Zealand, and Ms. Snowe seemed to be more open to IFQs this summer.

But then came Alaska Senator Ted Stevens, who views IFQs as one more way to protect his home-state businesses from competition. He has included a rider on a spending bill that would create an IFQ program for crab fishing -- but at the price of handing Alaskan crab processors a monopoly. Ms. Snowe is fighting that rider.

Republicans often complain, and with cause, that green groups will never give them credit. But ocean fishing is an issue on which they can show inspired leadership consistent with their principles to solve a genuine environmental problem. If they let an easy one like this get away, they'll deserve a political roasting.