Priced out of ownership: Quota leasing impacts on the financial performance of owner-operators

Abstract Individual transferable quotas (ITQs) have been widely promoted as a means to improve the conservation and economic outcomes of fisheries by enabling the transfer of quota access privileges to the most efficient operators who in turn have a strong financial incentive to safeguard the long-term sustainability of the fishery. The British Columbia Pacific halibut fishery has long been held up as an example of successful ITQ management. An in-depth investigation of this fishery, however, has identified significant failings of the ITQ system. The ownership profile of the fishery has changed dramatically under ITQs, transitioning from predominantly owner-operated to absentee owners and lessee fishermen. An analysis of fishing enterprise financial performance demonstrates the overwhelming impact of leasing on the viability of fishing enterprises. A representative owner-operator fishing enterprise leasing more than 80% of the quota that it fishes, which characterizes all of the owner-operators that have entered the fishery since 2001, cannot earn enough from the fishery to re-invest, including replacement of the vessel or purchasing of quota. The fishery, under current leasing and purchase price conditions, is not self-sustaining as an owner-operator fishery. Socio-economic objectives for the fishery are not being met, raising important questions about the design and implementation of ITQ management systems.