Balancing Efficiency and Risk with Flexible Catch Balancing Policies

Abstract

In multispecies fisheries managed with individual fishery quotas (IFQs), fishers targeting certain species often have insufficient quota to cover other jointly caught species. New Zealand employs a unique dual price-quantity system to address this problem. In lieu of acquiring quota, fishers can opt to pay a fee per unit of catch known as deemed value. Although designed primarily to create flexibility in catch balancing for individuals, this system can allow aggregate catches to exceed total allowable catches (TACs). The deemed value system reduces the likelihood that target species catches are constrained by TACs of bycatch species, but also increases the risk of overexploitation of bycatch species. Using a bioeconomic model, we evaluate the risk and efficiency of alternative deemed value policies in fisheries with one target and one bycatch species. Our simulations suggest that increasing deemed values above ex-vessel price in response to TACs being exceeded can control risk of overexploitation without reducing overall efficiency but does shift rents from owners of target species quota to owners of bycatch species quota