Cost of Fishery Management to the Private Sector

RESULTS

Ecological | Economic | Social | Governance

Has the cost of fishery management to the private sector changed?

Indicator: Cost of Fishery Management: Private

This indicator measures the amount of money spent by the fishing industry to comply with catch share program regulations. Together with Cost of Fishery Management: Public, this indicator answers the question of whether the cost of fishery management has changed, compared to the period before the catch share program.

Overview

The primary management cost to industry prior to the Shorebased IFQ Program was the implementation of measures for effective fishery monitoring. This included video surveillance in the shorebased Pacific whiting sector, logbook requirements for all vessels, and vessel monitoring systems since 2004. Observer coverage was required for 16 percent to 29 percent of the fleet, but those costs were covered by NMFS. To date, the costs of catch monitoring under the Shorebased IFQ Program have been funded primarily by NMFS, as was the case prior to program implementation. However, these costs are intended to be transferred to industry in phases. The Shorebased IFQ Program has also imposed new reporting and recordkeeping requirements to monitor program performance. Some fishermen may incur higher operating costs if their quota needs exceed the amount they were allocated.

Baseline Years: Prior to Catch Share Program

During the baseline period of 2002 through 2010, the costs of catch monitoring were funded largely by NMFS (Cost of Fishery Management: Public). In particular, NMFS supported the activities of the West Coast Groundfish Observer Program, which was implemented by the agency in 2001 to gather data on the total catch and discards of vessels participating in West Coast shorebased groundfish fisheries. Observer coverage of the limited entry trawl fleet began in September 2001, with a target coverage rate of 20 percent. This value was calculated as a proportion of fleet-wide non-whiting groundfish landings observed Data Quality: Observer Coverage).

In 2004, however, the observer sampling system in the shorebased Pacific whiting sector of the limited entry trawl fishery was replaced by an electronic monitoring system (EMS) in order to ensure that vessels complied with retention requirements. By 2008, the cost of EMS was transferred from NMFS to shorebased Pacific whiting vessels. This included leasing or purchasing EMS equipment from a NMFS-approved provider, equipment installation and maintenance costs, and the cost of initial interpretation of the EMS data. In 2010, the last year the EMS was in use, the annual cost for video monitoring was about $316,550 (approximately $10,500 per vessel).

During the baseline years, logbook and vessel monitoring system (VMS) requirements on the limited entry trawl fleet also added to the compliance costs related to catch monitoring. State fishery management agencies require logbooks to record fishing effort (location, time, and duration of trawl tows) as well as the total catch of species/species groups with sorting requirements. NMFS implemented a VMS in 2004 in order to maintain the integrity of closed areas, primarily Rockfish Conservation Areas and essential fish habitat areas (Management Framework). VMS equipment is required on all commercial vessels that retain federally managed groundfish species caught in federal waters. Vessels are responsible for paying all costs associated with purchasing, installing, and maintaining the VMS transceivers along with the transmission of data. The units range in price from $1,000 to $5,800, with transmission costs of $1.00 to $5.00 per day.

Compliance costs were also associated with gear requirements specified for the groundfish fishery. These requirements compelled some fishermen to change their fishing practices or to replace or modify existing fishing gear. For example, part of the strategy to rebuild shelf rockfish stocks included gear restrictions on the maximum diameter of footrope rollers and on the use of chafing gear. These restrictions prohibited vessels from delivering nearshore and shelf rockfish species and many flatfish species if they used footropes with rollers larger than the upper limit.

Catch Share Program

A key feature of the Shorebased IFQ Program is to shift from a largely NMFS-funded catch monitoring system that relied on observer sampling to an industry-funded system in which there is 100 percent at-sea observer coverage to ensure full individual vessel catch accountability. In addition, all deliveries of IFQ species/species groups to processing or buying facilities are to be verified by shoreside catch monitors (Shorebased IFQ Program and Data Quality: Observer Coverage). Typically, the shoreside catch monitors are at-sea observers who follow the fish off the boat into the plant. Under the Shorebased IFQ Program, shorebased Pacific whiting vessels are no longer monitored by EMS, as they are required to carry at-sea observers to monitor sorting and discarding of the catch.

Daily costs of observers and catch monitors, estimated at $450­­–$500, are being transferred to industry in phases over the first few years of the program. In the first and second years (2011–2012) of the program, industry was reimbursed by NMFS for about 90 percent of the costs of hiring and deploying observers and catch monitors. By 2014, the reimbursement covered about half the cost of observers. These costs likely place a disproportionate adverse economic burden on small fishing and processing/buying operations because the amounts are levied on a fixed per-day basis. Therefore, they represent a larger portion of small vessel or plant gross revenues than that of larger vessels or plants. In addition, some fishermen, particularly those based in smaller, more remote ports, may have encountered difficulties in procuring observer services from a provider, leading to delayed or missed fishing trips.

All limited entry trawl fishermen must continue to maintain state logbooks and comply with fishing gear and VMS equipment requirements. The Shorebased IFQ Program also includes a new requirement for annual submission of socioeconomic data (e.g., vessel/plant characteristics, capitalized investments, annual expenses, annual earnings, crew/labor payments, and quota and permit expenses) in order to help fishery managers monitor program performance. Limited entry trawl vessels and first receivers are required to submit data. The reporting burden associated with this requirement includes the time to review instructions, search existing data sources, gather and maintain the data needed, and complete and review the collection of information.

An additional operating cost that some fisherman may incur as a result of the Shorebased IFQ Program is the acquisition of additional quota pounds (QP) beyond their allocation. Fishermen who are unable to attain an acceptable level of profitability due to insufficient allocations may be compelled to either exit the fishery or acquire access to additional QP (Access and Exclusion Effects). In addition, fishermen must acquire QP to cover the catch in excess of their allocation or face a penalty—which could include monetary fines in addition to the value of the overage. Moreover, fishing operations may incur administrative costs associated with responding to NMFS investigations of overage events.

The costs to acquire QP include both the price of the QP and the costs necessary to complete the transaction, such as the time costs of searching out one or more possible sellers and negotiating the terms of the exchange. The “tie up” provision of the Shorebased IFQ Program, which prohibits a fisherman who experiences a QP overage from fishing in the groundfish trawl fishery, could also be considered a related cost, or sacrifice of potential profit, as longer QP acquisition times could lead to longer absence from fishing (Shorebased IFQ Program). Reduced catch limits for a given year can also raise transaction costs by reducing the average QP holding and, in turn, increasing the number of transactions needed to acquire the QP necessary to cover an overage. These costs related to the transfer of QP have likely diminished as a result of the establishment of an active QP trading market, as well as the negotiation of risk management agreements by some fishermen (Access and Exclusion Effects).

Finally, the Magnuson Stevens Act (MSA) requires fishermen to pay fees that cover the costs of management, data collection and analysis, and enforcement activities related to the Shoebased IFQ Program (Shorebased IFQ Program). The cost recovery fee amount due is calculated by multiplying ex-vessel value by a fee percentage determined annually by NMFS. The 2014 cost recovery fee percentage for the Shorebased IFQ Program was set at 3 percent, which is the maximum percentage allowable under the MSA. In order to reduce the burden on industry NMFS structured cost recovery for the Shorebased IFQ Program to coordinate with the Pacific Coast groundfish buyback program (History of Fishery).

Data Gaps and Limitations

Detailed data on fishery management costs incurred by the fishing industry are currently unavailable. However, the NMFS Northwest Fisheries Science Center is currently collecting cost data through the Economic Data Collection Program.

Information Sources

Matson, S. 2013. Annual Catch Report for the Pacific Coast Groundfish, Shorebased IFQ Program in 2012. National Marine Fisheries Service, Northwest Regional Office. Seattle, WA.

National Marine Fisheries Service. 2012.The West Coast groundfish IFQ fishery: Results from the first year of catch shares. Northwest Regional Office. Seattle, WA.

Pacific Fishery Management Council. 2010. Groundfish Document Library: Vessel Monitoring Systems. Available online: www.pcouncil.org/groundfish/background/document-library/vessel-monitoring-systems/

Pacific Fishery Management Council. 2012. Groundfish Advisory Subpanel report on trawl rationalization trailing actions and updates. Agenda Item I.5.b, Supplemental GAP Report, November 2012. Portland, OR.

Pacific Fishery Management Council and National Marine Fisheries Service. 2010. Rationalization of the Pacific Coast Groundfish Limited Entry Trawl Fishery; Final Environmental Impact Statement Including Regulatory Impact Review and Initial Regulatory Flexibility Analysis. Portland, OR.

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Industry Management Costs (pdf) – February 2015 (minor editorial revisions)

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Industry Management Costs (pdf) – September 2013 (initial release)

Updated: February 5, 2015