The design of fishing-right systems—the new South Wales experience

The Australian state of New South Wales (NSW) recently passed legislation to introduce a fishery-share system. It is similar in general form and purpose to the ‘ITQ’ or individual transferable quota fishery management systems found in New Zealand, Iceland, Australia, Canada and other countries but has special design features, including the allotment of shares for ‘fisheries’ that include many different species. The system is designed to give fishers security within the context of an adaptive resource management system designed to ensure that fishery use is sustainable and consistent with social objectives as they change through time. The systemʹs conceptual framework is of relevance to other fisheries and also many other industries that use natural resources. Consistent with periodically revised management plans, rights to harvest specific amounts of fish or to use certain classes of boats and gear are issued in proportion to the number of shares held in each fishery (fishery being flexibly defined by region and habitat, with or without further specification by gear-type, species group or single species). The management plan might, for example, specify a relationship between number of shares and size of boat or net. Any quotas are allocated in proportion to the number of shares held. Subject to compliance with periodically reviewed share conditions, rights are perpetual and give each fisher a direct financial interest in the future of the fishery. Shares are mortgageable and fully transferable. Driven by the management plan, structural adjustment is delegated to the market and individual fishers. A dual property-right structure is used to minimize transfer costs, and encourage self-enforcement and compliance. The institutional arrangements used to administer the system and periodically revise system parameters give commercial fishers, in consultation with recreational fishers, considerable control over their destiny. Management costs will be recovered via a range of direct charges. The legislation provides the option of a return to the community to be collected via the periodic sale of a proportion of each shareholding. If this option is adopted, it will force the rapid formation of a ‘mature share market’, reduce entry and oligopoly problems, automatically collect the economic rent embodied in the fishery in an efficient apolitical manner, and also provide transparent information on the status of each fishery and the performance of its resource managers.