The World Bank/WBI’s CBNRM Initiative

Case Received: February 4, 1998

Author: Ken Hughey

Tel.: +64 03 3252811

Fax: +64 03 3253841

Email: Hugheyk@lincoln.ac.nz

New Zealand’s Exclusive Economic Zone (EEZ), comprising of 1.2 million square nautical miles, is one of the World’s largest. Yet New Zealand has a population of only 4 million and has a developing economy still based heavily on primary production, i.e. farming, forestry, nature based tourism and fishing. Despite these development characteristics, and, as with many nations, New Zealand’s fish stock is under intense extractive pressure - it urgently needs innovative, adaptive and workable fisheries policy. Fisheries management in New Zealand is typical of other nations, having proceeded through several phases: ‘non-development’, strict licensing, total deregulation - encouragement- of -development, a phaseperiod of confusion with both highly regulated and non regulated fisheries phase, and then panic. This panic phase was associated with over- capitalisation and signs of resource depletion. New Zealand’s policy has then initially diverged from that of many other nations and has been the response has been a management philosophy based on a property rights regime, typically referred to as the Quota Management System (QMS) based on Individual Transferable Quotas (ITQs).

The move to a property rights based fisheries management regime has resulted in some surprising behavioural outcomes. Perhaps most surprising has been the rapid move to ‘collectivism’ (or stakeholder groupings). Essentially, and in relation to the move towards cost recovery, fishing industry groups have realised that as long as they are using a common resource they must manage that resource collectively themselves. So, while QMS provides security of ownership, voluntary collective self management helps provide for sustainable use resource which is one of the core goals of the Fisheries Act. There are many examples of these stakeholder groups with perhaps the Challenger Scallop Enhancement Company the best developed and hence the focus of this paper.

The Challenger Scallop Enhancement Company manages the scallop fishery in the Nelson-Marlborough area of northern South Island, New Zealand. The company operates within a market led economy and within a political system which also has a clear market focus. The move to a property rights focus in fisheries management has matched other approaches within primary industry sectors where all government subsidies have been removed.

The Challenger Scallop Enhancement Company was studied as part of research into planned and actual outcomes from a range of community based resource management groups.

The fishery was first commercially exploited in 1957/8. Initially there were only a few boats mainly targeting green mussels with scallops being a bycatch. In the late 1960s there was a boom in the scallop industry and many boats joined the fleet. Catches peaked and then declined in the late 1970s and early 1980s. This decline was associated with reduced processing and less employment in the industry. During all of these periods the industry has been subject to a variety of government interventions, e.g. licensing.

There was enormous growth in the New Zealand fishing industry during the 1970s and 1980s. Issues of biological and economic sustainability emerged as critical to the industry and the nation - industry restructuring was inevitable. In 1983 a new comprehensive Fisheries Act was passed in which economic goals were stated alongside biological goals. Unfortunately while some of the ends were clear and the government was explicit about the means, fisheries management plans (FMPs), the fisheries management planning process proved impractical. Concurrently, government introduced initiatives for managing the relatively unexploited deepwater species within the 200 mile EEZ and for the first time individual company transferable quotas were introduced.

In 1983 a new comprehensive Fisheries Act was passed - in that Act economic goals were stated alongside biological goals. Unfortunately while some of the ends were clear government was not explicit about the means. However, at the same time government was introducing initiatives for managing the relatively unexploited deepwater species within the 200 mile EEZ. The notion of individual company transferable quotas was introduced, and this acted as a model for the 1986 Fisheries Amendment Act which used the concept of individual transferable quotas . This Act established an economic model, the quota management system (QMS), based on clear property rights, i.e. individual transferable quotas (ITQ), to fish stocks, within the fisheries policy framework. These ITQ were allocated within fisheries’ regions (i.e. fisheries management areas for various fish stocks) and could be freely traded within, but not between regions.

Under the 1996 Act fish stocks are to be maintained at or moved toward a level that can produce the maximum sustained yield (MSY). In determining the rate at which a stock is moved towards the Maximum Sustained Yield (MSY) target, the Minister of Fisheries must consider relevant social, economic and cultural factors (Pfahlert 1996). These considerations incorporate a precautionary approach to fisheries management (Hughey 1996).

At the heart of the QMS are two types of catch limits - the total allowable catch (TAC) and the total allowable commercial catch (TACC). A TACC must be set for all stocks within the QMS. This sets the portion of the TAC which can be taken by the commercial sector. From the TAC the Minister quantifies the TACC for a particular fishing year, making allowance for recreational and Maori customary non-commercial fishing interests and all other typesources of fishing.

And so while quota was allocated on a regional and fish stock basis to those who could demonstrate a catch history this frequently resulted in fisheries characterised by:

• a large number of small fishers;

• geographically dispersed fishers; and

• low technology fishers.

These characteristics, combined, meant fishers were exhibiting little in the way of cooperative behaviour. There were three possible responses to this situation:

• no change would occur or be promoted leading to problems with enforcement, problems with non agreed objectives, uncontrolled targeting of stocks, etc;

• large companies, in the free market, would buy all of the quota and behave with monopoly control;

• government or industry would take the initiative to coordinate activities.

Several factors conspired to result in stakeholder (industry) initiatives occurring. Firstly, it is in the fishers own interests to cooperate on quota and fisheries management issues, e.g. self regulation and enforcement, user funded research, reducing cost recovery charges to government, improved accountability, etc., all of which contribute to improved prospects for profitability; and secondly, the Fisheries Act includes rules for quota aggregation limits.

Initial voluntary initiatives, either promoted by the industry or by government, led to quota holders joining together in self management groups; initially these groups were loose associations or affiliations. With the Fisheries Act 1996 government provided a mechanism and rationale for these groups to form companies to promote self management of their own fisheries. The first of these companies was the Challenger Scallop Enhancement Company.

The outcomes outlined below are based on interviews with Company directors (quota holders) and comments from policy analysts from the Ministry of Fisheries.

Positive outcomes from being in a stakeholder grouping, from the fishers’ perspectives are:

• strong support from quota holders/fishers

• a professionally managed company/stakeholder group

• employment maintained directly in fishing and processing

• increased accountability

• more certainty with less government interference

• increased focus on sustainable management

• ability to fund and undertake their own research

• ability to develop own management regime, e.g. rotational harvesting,

• ability to self police their ‘own’ rules

• ability to negotiate directly with other users, e.g. recreational and tourism based

• improved awareness and accountability for environmental matters.

Areas for further consideration include:

• need to maintain active fishers as company directors

• aggregation rules need to be clarified especially with regard to ‘exceptions’.

MFish is strongly supportive of these stakeholder groupings and it is actively supporting their development in many areas. Government views the groups as better promoting sustainable fisheries management (a key policy direction) and as a least cost policy tool which complements existing property rights approaches to fisheries management.

Successful implementation of the ITQ/QMS requires a high degree of self management. Formal stakeholder groups where each stakeholder (quota holder) is accountable to the others is vital. The government is therefore responsible for establishing the policy framework, deciding the TAC and TACC, and the fishers are responsible for implementing a sustainable management regime. Each of the Directors and policy officials interviewed agreed that stakeholder groups are potentially universally applicable so long as:

• recreational and cultural catches are considered (some suggest these catches should be allocated and managed as quotas)

• the ownership of information developed by the Company is considered

• aggregation of quota is strictly controlled, i.e. small quota owners should be viewed as a help, not a hindrance

• active fishers and processors are Directors.

New Zealand is widely regarded as leading the world in fisheries management policy and practice. Already the ITQ/QMS is being shown to be leading to sustainable fisheries management for many New Zealand fish stocks (see Hughey 1997). However, enhanced prospects for sustainable fisheries within the context of a precautionary management approach, requires greater involvement and accountability for individual fishers. The development of stakeholder groups, with statutory support, is occurring quickly in New Zealand. Initial findings indicate this development provides a major opportunity for fishers, processors and those reliant on the industry. Consequently the initiative has potential in both the developed and developing countries as a mechanism for sustainable fisheries management.

I thank the Directors of the Challenger Scallop Enhancement Company for providing me with the inspiration and information necessary for the preparation of this paper.

Hughey, K. F. D. (1996). Thinking nationally and acting locally to promote sustainable coastal resource management. In Resource Management: Issues, Visions, Practice (pp. 76-88). Lincoln University, Canterbury, New Zealand: Centre for Resource Management, Lincoln University.

Hughey, K.F.D. (1997). Fisheries Management in New Zealand - privatising the policy net to sustain the catch? Environmental Politics 6(4).

Pfahlert, J. (1996). The Fisheries Act 1996. Seafood New Zealand 4, 10-13.