Toward market orientation: the role of auctioning individual seasonal quotas (ISQ)

This paper explores fish auctions as a management tool for allocation of quotas and a motivating institution for market-oriented value adding (MOVA) among target fishery groups, as an alternative or supplement to the individually transferable quota (ITQ) system. A management model is developed where administrative allocation of fishing rights to preferred target groups is combined with auctioning of individual seasonal quota (ISQ) rights as leasing contracts to fishery companies. It is shown how the management model maintains the positive effect of ITQs in terms of maximizing the resource rent in fisheries whilst the negative effects in terms of privatization, unfair allocation, concentration of quota power and possibly weakened linkages between fish resource utilization and coastal communities, are avoided. The costs of the administrative constraints should be weighed against the advantages of the model: (1) Sustainability and fair social allocation of the rights to utilization of the fish resources can be maintained without privatization. (2) Motivating MOVA among target groups through the allocation of ISQs to the most market-oriented and efficient fishers is encouraged since quota is leased but not owned. (3) Collective use of the resource rent is extended to the wider community.