Overview - Fisheries Act 1996

December 31 1996

A look back on the last year or two - by Ted Howard.

Publishet on the internet http://www.fishnet.co.nz/gen/actprobs.htm

The fisheries Act 1996 is seriously deficient in several major areas.

The re-write of the Fisheries Act started out as one of simplification. It has ended with a complex and unworkable system which needs modification before it can be implemented.

The reason for the deficiency is simple - lack of communication.

The process of development of the fisheries act over the last few years has been the biggest failure of communication that I have been involved in.

At times in the last two years I have been told by several ministry staff that they have been forbidden from speaking with me, and have not said or written anything further. Several industry leaders and environmentalists have taken similar stances. What is so threatening to so many people about one person's words ?

These are the major questions.

What has allowed this to happen ?

Different people have different understandings of communication.

There are still many people in industry who are trying to promote policies which give them personal advantage (there are also many who promote policies which advance the interests of all).

Within the ministry, many people are overwhelmed by the administrative complexity of the current systems. This has two effects:

  1. All thinking about possible new systems is overloaded with the complexity of the present one;
  2. Individuals are scared about going through a learning process with a new system, when they have just become comfortable with the present one (for all it's warts).

Within recreational and environmental interests there is often hostility and mistrust (which is reciprocated, and based upon hard experience, in many cases).

What are our objectives ?

These seem to have gotten lost somewhere in the process. To my mind there are 3 - in order:

  1. Biological sustainability;
  2. Economic efficiency;
  3. Administrative simplicity.

There are traps for the unwary in each of them.

Biological sustainability does not equate to maximum sustainable yield for all stocks independent of each other. What it means is all stocks in a sustainable equilibrium, or tending that way.

Over the ecosystem as a whole, economic efficiency requires a trend towards the maximum sustainable yield (MSY), but that need not apply to all stocks, at all times (and in any real fishery, almost certainly will not). The yield in these terms has an economic as well as a biological component - both of which are subservient to the underlying issue of sustainability. The Act's requirement for biological MSY on all stocks is impossible - and an economic (and biological) nonsense.

Administrative simplicity doesn't necessarily mean internal simplicity. A modern car with an electronic fuel injected engine and automatic transmission is simple to drive (administer) and very efficient (fuel economy, engine emissions, safety, etc), yet the internal workings of the electronic fuel injection, and the automatic transmission are known to very few. Things can be very complex internally, yet simple to administer, and efficient to use.

In taking the highly prescriptive route, the Fisheries Act 1996 has prevented much internal sophistication which could have lead to external simplicity and efficiency. Understandable given that many involved don't understand fisheries, or economics very well, and that industry has had a tendency to litigate to sort matters out. Communication breakdowns.

Models of fisheries biology, population dynamics, and economic yields, are far from simple. They are very sophisticated, and require a good understanding of mathematics to understand and use effectively. They are also far from perfect at this stage in their evolution, and their use is something of an art form in itself. There is no certainty in fisheries management, only balances of probabilities.

Administrative simplicity and efficiency can be gained from the use of sophisticated computer systems (like electronic fuel injection), provided that not everyone wants to understand what the "black boxes" are doing all of the time, and the black boxes actually produce the results.

How can we prevent it happening in the future ?

We can open channels of communication, and keep them open.

We can publish our ideas as ideas, and allow the possibility of other people building upon them, or rejecting them, without threatening individuals who express the ideas with physical or economic violence (I've had both).

By getting all ideas in the arena, those who must make the hard decisions get the best and worst advice - their job is to sort out which is which.

The internet provides an ideal environment. Where those who are committed to being involved in the process can do so, for relatively little cost. Articles can be published, and responses form threads which anyone can read and contribute to.

I am funding this site, in the interests of us all.

What exactly is unworkable about the current act ?

The focus on MSY is unworkable.

Quota owners need flexibility.

The issue of compensation for inter-sector allocation changes is un-resolved.

The focus on MSY is unworkable. Section 9 is great, if it had been left at that it would have been fine.

9. Environmental principles---All persons exercising or performing functions, duties, or powers under this Act, in relation to the utilisation of fisheries resources or ensuring sustainability, shall take into account the following environmental principles:

(a) Associated or dependent species should be maintained above a level that ensures their long-term viability:

(b) Biological diversity of the aquatic environment should be maintained:

(c) Habitat of particular significance for fisheries management should be protected.

However - the Act goes on to section 13, and becomes highly prescriptive in its interpretation of what section 9 means - and gets it seriously wrong.

13. Total allowable catch---(1) Subject to this section, the Minister shall, by notice in the Gazette, set in respect of the quota management area relating to each quota management stock a total allowable catch for that stock, and that total allowable catch shall continue to apply in each fishing year for that stock unless varied under this section.

(2) The Minister shall set a total allowable catch that---

(a) Maintains the stock at or above a level that can produce the maximum sustainable yield, having regard to the interdependence of stocks; or

(b) Enables the level of any stock whose current level is below that which can produce maximum sustainable yield to be altered---

(i) In a way and at a rate that will result in the stock being restored to or above a level that can produce the maximum sustainable yield, having regard to the interdependence of stocks and any environmental conditions affecting the stock; and

(ii) Within a period appropriate to the stock and its biological characteristics; or

(c) Enables the level of any stock whose current level is above that which can produce the maximum sustainable yield to be altered in a way and at a rate that will result in the stock moving towards or above a level that can produce the maximum sustainable yield, having regard to the interdependence of stocks.

Maximum Sustainable Yield (MSY) is not a biological criteria of sustainability, it is an economic criteria of maximisation of returns based upon the assumption of stable market demand. As such, it's incorporation in the Act as the only basis for biological management of individual stocks is logically unsustainable - it is an economic and biological nonsense.

The definition in the ACT states ``Maximum sustainable yield'', in relation to any stock, means the greatest yield that can be achieved over time while maintaining the stock's productive capacity, having regard to the population dynamics of the stock and any environmental factors that influence the stock.

Why should we conceivably force ourselves to take the maximum yield from our stocks every year - irrespective of market conditions, stock relationships, and harvest technology factors ? I can easily see how those who are responsible for setting the rules want everything to be simple - sorry - that's not how the world is. Anyone who wants a big salary in fisheries management or fisheries policy must be prepared to do something for it - and not simply say "it is what the act demands". The real world has many factors to take into account - and most people expect other people to make mistakes, just so long as they don't make the same mistake too often, it's just a part of life.

Quota owners need flexibility.

This has two aspects to it - what's in the Act, and what is missing.

The Act implements the ACE (Annual Catch Entitlements) system. ACE was designed to simplify the quota management system in two ways :

How do I know this ? I designed the ACE system, and wrote the original paper to the review task force (which Brent Wheeler took up as the prime recommendation) (and many papers since).

What has happened ? We have ACE - without either of the needs for it. We still have a complicated balancing regime, and the rights to the flexibility of under/over fishing have been removed.

We now have a very complicated system, with no justification for it's existence.

The rationale used to remove under/over fishing rights was:

  1. that they were complex (yes, they were under the old system, except that they weren't under ACE), and
  2. that there was biological danger to the fishery. Utter nonsense.

The first argument was the major rationale behind the ACE system.

The second argument is not consistent with section 67 of the Act.

67. Allocation of annual catch entitlement---(1) On the first day of each fishing year the chief executive shall allocate, to each quota owner whose quota has generated under section 66 of this Act an annual catch entitlement for any quota management stock, 75 percent of that quota owner's annual catch entitlement for that stock, as calculated by the chief executive under that section.

This can only make any sense if the effect of taking more fish in one year can be removed by taking less in the next year. This is the very thing which the 20% underfish right under ACE was to do - yet the argument was raised that it was biologically dangerous, and unsustainable. How can it be unsustainable in one part of the Act, yet the basis for another part ?

Underfish rights are an imperfect mechanism, but they do provide a degree of flexibility which is economically essential, at little or no biological cost. The economics of having a fixed tonnage allocation, with no flexibility, removes profitability by increasing the marginal cost of catching the last few percent of each stock in one's quota portfolio. It puts operators in a no win situation, where the pressure to dump fish is very high (all this for no biological or administrative advantage).

By-Catch-Trade-Off is a mechanism which could offer flexibility in other ways. If a portfolio approach to BCTO was taken, and over-fishing offences could only be paid for in the currency of quota rights (ACE) (ie remove the ability to pay deemed value with cash - but only with cash equivalents from the balance of your portfolio), then, with a little sophistication in the operation, economic pressures would be in complete harmony with biological requirements.

In my view, evolution of this concept holds the greatest rewards for fishers, managers and ecologists alike (a few processors and quota speculators who stand to lose product- or cash- flow are likely to make a lot of noise - but that's life). The greatest advantage of it is that it allows all fishers who make a reasonable effort to make a reasonable return on their quota portfolio. It also puts in place incentives to trade ACE at realistic prices, and gives fishers a practical (though costly) alternative to paying quota speculators (ie it is an economic balancing agent which keeps the market honest).

Resolve the issue of compensation for inter-sector allocation changes.

The debate currently raging over SNA1 is in part fuelled by this issue.

Under the original 1986 quota management system, ITQs were in tonnages. Quotas were adjusted by purchase or sale on the open market. Under this regime, changes in allocations between sectors (from commercial to recreational) resulted in compensation. The change to proportional quotas was rushed through via supplementary order paper to the third reading of a bill, and while designed to effect changes within the commercial allocation (which it does effectively) the issue of compensation for changes in allocations between sectors was not explicitly addressed, and has been in the "too hard" basket ever since. There is no doubt in my mind (as a recreational fisher, who does not own quota) that natural justice requires compensation at fair market rates.

There is an opportunity here to allow the free trade of rights between sectors, but such a concept may be a little too early for many of the sector groups - though some certainly display the level of understanding required to make it happen.

How are we going to create something workable ?

Modify Section 13 - in line with section 9 - making reference to MSY if appropriate.

Re-introduce underfish on ACE.

Make Balancing under ACE the simple matter it was initially intended.

Remove the ability to pay Deemed Values in dollars, and make them payable in quota of other stocks, with escalating scaling factors if excessive use is made of the mechanism. Give such quota as compensation to the people who suffer reductions in ACE due to over fishing of the TACC (under section 67).

Open for public debate the issues of non-commercial quota allocation and inter-sector quota trading, or at the very least - make allowance for payment of fair compensation where TAC is reallocated resulting in a reduction of TACC.

Make all defences relate to the Deemed Value of the balance of quota portfolio held. Catch beyond the value of the portfolio to be a serious offence - with immediate removal of permit (requiring re-issue at cost to fisher).

Everyone keep talking. Publish your thoughts. Use the internet to generate discussion.

With these changes - we have a great management structure. Without them - serious strife.

I don't need strife, I doubt you do either. Let's keep talking and make it happen.

Happy New Year!