FISHERIES ARE CLASSIC EXAMPLE OF THE "TRAGEDY OF THE COMMONS"
By Daniel K. Benjamin
Where the commons has
been at least partly privatized
there is less damage to fish stocks,
the fishing is safer, and fewer
resources are needed to
achieve a given harvest.
Fisheries provide the classic example of the tragedy
of the commons, which occurs when property rights are incomplete and access to a resource
is open. The migratory nature of most fish species makes it difficult to establish and protect
rights to fish in the sea, so the rule of capture prevails. The result is often
overexploitation of the resource. Economists long have argued that the waste associated
with this problem could be reduced if we "privatized the commons," that is,
created individual private property rights for common-pool resources. That process is
beginning to happen.
According to recent research on the British Columbia halibut fishery, where the commons
has been at least partly privatized, substantial ecological and economic benefits have
resulted. There is less damage to fish stocks, the fishing is safer, and fewer resources
are needed to achieve a given harvest (Grafton, Squires, and Fox 2000).
Since 1923 management of the Pacific halibut fishery has been regulated jointly by the
United States and Canada. Even so, for many years this fishery was on the decline, which
eventually prompted stringent controls. Beginning in 1979, the harvesting of halibut in
Canadian waters was restricted to Canadian fishers, and the number of vessels limited to
435, which was the number of licenses then in existence. A total
allowable catch was set each season to limit harvests. Despite these regulations, fishing
intensity increased during the 1980s. By 1988 the harvest had risen by 125 percent, even
though the length of the fishing season had been cut from 65 days per year to a mere 14.
Over the next two years, harvests dropped sharply, as the halibut stock showed signs of
Joint efforts by fishers and the Canadian Department of Fisheries and Oceans led to the
creation of a system of individual vessel quotas (IVQs) in 1991. Under the terms of this
program, existing license holders received without charge a percentage of the total
allowable catch. Thus, each vessel holder had secure property rights to a specified
poundage of fish. These rights were not, for the most part, transferable, although the
limits were eased some in 1993.
The improvements resulting from the IVQ system have come in part from the mere creation
of the individual quotas and in part from their transferability. The allocation of
individual harvest rights for each vessel eliminated the need for a short fishing season,
originally created in a futile effort to halt overfishing. Prior to IVQs, the short season
forced the fishers into the same prime areas at the same time, resulting in damaged and
lost fishing gear and "ghost fishing," in which lost fishing gear continued to
From six days in 1990, the season has been lengthened to 245 days. With the longer
season, vessels no longer conflict with one another, thereby preventing substantial losses
of gear and fish each season. Moreover, before the individual quotas, vessels had lots of
crew on board to ensure the most rapid possible harvesting of fish. Under IVQs, the total
number of crew members in the fleet quickly dropped by about 20 percent.
Under the old system, vessel owners felt compelled to fish regardless of weather
conditions, because the loss of even a day of fishing could make the difference between
profit and loss for the season. Now that pressure has been eliminated, greatly enhancing
the safety of the fishers.
The longer fishing season has enabled fishers to sell higher quality and fresher fish.
Prior to IVQs, only about half the catch could be sold as fresh fish, which are more
valuable; now nearly all of it is sold fresh. The result has been better product for
consumers and higher profits for producers.
The partial transferability of the IVQs added to the benefits of the system. For
example, the number of vessels has been reduced, because smaller, less efficient fishers
have sold or leased their licenses to more efficient operators. This has decreased capital
costs and reduced total crew in the fleet. Similarly, average vessel size has risen,
increasing the safety of the crews. Perhaps most importantly, transferability gets the
quotas into the hands of the "highliners," the skippers who are best at finding
the fish and harvesting them in the lowest-cost manner.
Despite the important improvements brought about by the IVQ system, there are still
deficiencies. For example, permanent transfers of quotas can only be made to vessels that
are no more than 10 feet longer than the transferring vessel, while temporary
(season-long) transfers are limited so that a vessel can fish no more than two IVQs.
Fishers also cannot always move to the size vessel they would like because the same
vessels are commonly used for salmon as for halibut fishing, and salmon fisheries are
still governed by rules that limit vessel sizes. And finally, further improvements could
surely be made if the total allowable catch reflected ongoing changes in economic factors,
rather than being arbitrarily set by the Canadian Department of Fisheries and Oceans.
So, although the move to IVQs has made a bad system considerably better, there is still
much to be done to eliminate the tragedy of the commons.
Grafton, R. Quentin, Dale Squires, and Kevin J. Fox. 2000. Private Property and
Economic Efficiency: A Study of A Common-Pool Resource. Journal of Law & Economics
Daniel K. Benjamin
is a PERC senior
His regular column,
Research and Policy
of recent academic
research. He can be
PERC Reports, Volume 19, Number 1, March 2001