MORE THOUGHTS ABOUT CATCH SHARES IN THE MID-ATLANTIC

The New York Marine Resources Advisory Council held its July meeting last Tuesday.  Like many meetings these days, it was held as a webinar, not in person, but that didn’t prevent the Council from addressing a full agenda.

One of the issues on the agenda was commercial bluefish management.

That’s a particular problem this year, after an operational stock assessment released a year ago showed that the bluefish stock is overfished, with recreational landings much higher than previously believed.  

In response to that assessment, the Mid-Atlantic Fishery Management Council reduced both the commercial and recreational harvest limits for the 2020 season.  That proved to be a double-whammy for the commercial sector, because not only was its harvest limit substantially lowered, but it could no longer fish on what managers wrongfully believed was unharvested recreational quota, that such managers could shift to the commercial side.

Thus, New York commercial fishermen found themselves with a 2020 bluefish quota that was roughly one-third of the size of the quota that they had in 2019.  Although New York representatives on the Mid-Atlantic Council’s Bluefish Advisory Panel didn’t think that the state’s commercial fishermen would fill even that small quota this year, that prediction turned out to be wrong.

Quirks in New York’s bluefish fishery make its quota very difficult to manage.  

One problem is that bluefish are a schooling fish, so that even when fish are generally scarce, as they are today, it’s common for them to be very abundant in a few locations for a period of time, even if they’re all but absent everywhere else.  In recent years, large numbers of bluefish have shown up off eastern Long Island in May, resulting in very high weekly landings.

As might be expected, those high early-season landings drive down the price that the fishermen get for their catch.  The Mid-Atlantic Council’s Bluefish Advisory Panel provides “fishery performance reports” each season, and it’s fairly typical to read such things as

“NY—Large runs of large (7-pound) bluefish arrived pretty much on normal schedule (third week of May) and were caught from Montauk up into Peconic Bay.  The abundance of menhaden likely draws the bluefish up into the bays.  Last present (early summer), the size of the bluefish is in the 3-pound range.  Price has gone from a low of $0.20 to (at present) $0.60 per pound.  Most of the catch is by gill net.  [emphasis added]”

and

“NY—In the past several years, commercial landings have been above the allocation to the state, and the state had to get transfers from states that do not land their entire bluefish quota.  It seems the quota is exceeded almost every year by some amount and we expect it to be exceeded this year…

“During the run of larger fish at the end of May, prices dipped to $0.20-$0.25 per pound, but with the current run of 3-pound fish the price seems to stay around $0.50 - $0.70 per pound.  [emphasis added]”

So New York's commercial bluefish fishermen go out when bluefish are very abundant, land more fish than the market can easily handle, drive down prices and burn up quota without receiving a reasonable return for their efforts.  Then when prices rebound later in the summer, they find that they don’t have enough quota left to fill the demand.

That didn’t happen in 2019, when a scarcity of bluefish, even in May, kept prices in the range of $0.70 to $0.90 per pound, provided that fishermen could find any fish to catch.  

But from what representatives of the Department of Environmental Conservation said at the Advisory Council meeting this week, it did happen again this year, with New York commercial fishermen exceeding their May-June quota so badly—even though it was bolstered by a rollover of uncaught fish from the January-April period, and the transfer of 100,000 pounds of quota from other states to New York—that it is very unlikely that the commercial bluefish season can remain open throughout the summer unless the trip limit is reduced from 500 pounds to something far lower—perhaps something in the 150 pounds per trip range.

Cutting the trip limit that way might keep the season open, but it would undoubtedly lead to another problem—dead discards.  When a school of bluefish passes by, gill nets tend to entangle large numbers at one time, and those captured fish quickly die.  If the trip limit is lowered from 500 to 150 pounds, there is a very good chance that hundreds of pounds of bluefish will be returned, dead, to the sea every time a fisherman hauls back his gear.

And, because of a quirk in the bluefish management plan, those discarded fish aren’t accounted for.  

The bluefish stock assessment assumes that there are no commercial deaddiscards, and neither the Mid-Atlantic Council nor the Atlantic States MarineFisheries Commission deducts any allowance for dead discards from thecommercial catch limit when calculating how many bluefish may be legallylanded.  Thus, the stock assessment understates bluefish mortality by not considering dead discards, annual fishing mortality is underestimated, and commercial fishermen, unlike their recreational counterparts, are not held accountable in any way for the dead bluefish that they dump over the side.

New York’s fishery managers are thus forced into a lose-lose situation, where they can either keep the trip limit high, and shut down the fishery for weeks before the next quota period begins, or they can cut the trip limit significantly, knowing that if they do so, it will lead to a substantial level of unaccounted-for dead discards, which is not a prudent way to manage an overfished stock.

One might think that the fishermen themselves would try to alleviate the problem by setting less gear for shorter soak times in an effort to avoid flooding the market, but that’s not how the bluefish fishery works.

The bluefish fishery is what’s known as an “open access”fishery; that means that any commercial fisherman may apply for a federalbluefish permit, regardless of whether that fisherman had participated in thefishery before, and regardless of the number of other fishermen that are alsotargeting bluefish.  That allowsfishermen to move in and out of the fishery when they believe it isadvantageous to do so, and makes it very difficult to determine who is fishingfor bluefish at any given time.

The bluefish fishery in New York, and in most other states, is also what’s known as a “derby” fishery, in which commercial fishermen have an overall state quota, and vie with each other to bring as many fish as possible back to the dock, until the quota for that current period, and/or for the year, has been exhausted.  

Derby fisheries invoke the Tragedy of the Commons, in which fishermen who try to rationally and sustainably manage their landings find themselves at a real disadvantage, and their efforts to fish rationally wasted, when less prudent fishermen rush out to land as large a share of the quota as possible, as quickly as they can.

Applying that problem to New York’s spring bluefish fishery, it is very likely that most fishermen would rather not set a lot of gear, flood the market with bluefish, and drive the price down to unprofitable levels.  But the unfortunate truth is that in a derby fishery, the fishermen who get out when the season opens and manage to be the first to get the fish back to the dock will get a reasonable price for their catch, with that price declining as more fish enter the stream of commerce.

At that point, fishermen could refrain from fishing for a few days, let the price for bluefish recover, and then go back out and set just enough gear to make a profitable catch, without flooding the market and crashing the price once again.  And some fishermen do stop fishing when the price drops too much.  However, unless everyone agrees to stop fishing until the price bounces back, and unless everyone agrees on a rational plan to prevent new catches of bluefish from flooding—which is a virtual impossibility to accomplish—such restraint only places prudent fishermen at a disadvantage, as imprudent fishermen continue to fish, continue to depress the market price, and continue to use up quota, so that when the price does reach a point where the fishermen can make decent money, there isn’t enough quota left to support their efforts.

Thus, derby fisheries lead to the irrational situation where fishermen seek to catch as much fish as they can, as quickly as they can, even if doing so drives down the price and the resultant profitablility, because if they don’t do so, there won’t be any quota left to catch and to profit from when the market price improves.

That situation doesn’t just apply to New York bluefish; it’s endemic in many, if not most, derby-type fisheries, both in the United States and around the world.

There is a rational answer to it, but it’s an answer that’s not at all popular among the region’s commercial fishermen:  catch shares.

Under a catch share system, each vessel is assigned a percentage share of the overall commercial quota (catch shares could also make sense in some for-hire fisheries, too, but that’s a discussion for a different time), that the vessel may harvest at any time during the year.  There is no need to rush out at the beginning of the season to load up on fish and try to get them back at the dock; there is no need to keep fishing should the price fall, just to be sure that you don’t get shut out when the quota is exhausted.

Instead, each vessel can tailor its landings to its particular circumstances, and the needs of the markets that it serves.

Perhaps one fisherman wants to land a big part of his or her quota in May, getting it landed and allowing the fisherman to move on to other species.  Under a catch share program, that fisherman may do so.

Or maybe a fisherman makes an arrangement with a market to supply it with a modest, but steady supply of fresh bluefish throughout the year, perhaps at a pre-negotiated price.  Under a catch share program, that fisherman would know that there would always be quota available to support such arrangement.

Or maybe a vessel has quota that isn’t always used.  

The trip limit for New York’s January-April period is 5,000 pounds, because bluefish aren’t always caught at that time of year, but when they are, it’s usually by a trawler that lands thousands of pounds at a time.  This year, that didn’t happen, and only about 1,600 pounds was landed for the entire 4-month period.  Under a catch share system, a vessel has the option of leasing any unneeded quota to another vessel that is able to use it later in the fishing year.

Catch share programs give fishermen more flexibility as to how and when they will fish.  They generally eliminate the extreme price swings inherent in a derby fishery, and allow fishermen to align landings with market demand.  Because fishermen must exit the fishery for the rest of they year once they catch all of their assigned quota (unless they lease more), they are an effective way to avoid overfishing.  And because the amount of fish each fisherman/vessel may land increases if the biomass and annual catch limit increases, and decreases if a stock declines, catch shares give fisherman an incentive to be good stewards of the fish that they pursue.

Even so, catch shares are often reviled by fishermen, who believe that they keep them out of fisheries that they’d like to enter, and prevent them from growing their business simply by catching more fish. Yet in just about every other industry one can imagine, people expect to invest capital in order to expand, and it’s hard to understand why such investment, through the lease or purchase of quota, shouldn’t apply to fishermen, too.

There is also a worry that catch shares result in small operators leasing or selling their quota and leaving the fishery, leaving a fishery largely composed of the biggest fishing businesses.  There’s no doubt that most catch share fisheries have witnessed such trend.  But those who exited such fisheries have done so voluntarily, believing that it made more financial sense to lease or sell out than to continue to fish on too small of a quota; no one was forced to leave.  Plus, those who were awarded small quotas couldn’t have been landing many fish, or at least, not legally landing many fish, before catch shares were initiated, or their quota would have been higher.

Anyway, we’ve seen consolidation in just about every other industry, from drug stores to lawyers to accounting firms.  It’s difficult to argue that fishermen, for some reason, ought to be immune.

Catch shares are both effective and controversial.  Setting up a catch share system in the mid-Atlantic, or in any mid-Atlantic state, would require a serious investment of time and money.

But the expense and trouble could be worthwhile.  Once up and running, a catch share system would lead to more effective management of species such as bluefish, while derby fisheries will continue to provide neither economic efficiency nor sufficient quota for all.