APPLYING RIGHTS-BASED MANAGEMENT - Chairman: Rolf Willman, Food and Agriculture Organization, Rome

Will Improving Access Rights Lead to Better Management - Quota Management in the Tasmanian Rock Lobster Fishery - W. Ford
Individual Transferable Catch Quota: Australian Experience in the Southern Bluefin Tuna Fishery - D.B. Campbell and T. Battaglene
Shark Bay Prawn Fishery - A Synoptic History and the Importance of “Property Rights” in its Ongoing Management - P.P. Rogers and J.P. Penn

Will Improving Access Rights Lead to Better Management - Quota Management in the Tasmanian Rock Lobster Fishery - W. Ford

W. Ford
Tasmanian Department of Primary Industries, Water and Environment
GPO Box 44A Hobart, TAS 7001
<[email protected]>

1. INTRODUCTION

In March 1998 individual transferable quotas were introduced into the Tasmanian rock lobster fishery and this quota system has provided the industry with increased security and certainty of access. The move to quota management took place after nearly ten years of debate among industry groups and with the Government. The debate focused on what management arrangements should be used to ensure the long-term sustainability of the fishery. During the debate little attention was paid to providing better, more secure access rights and these only became an issue during the final stages of developing the quota management arrangements.

As a result of the changes to the management regime, licence holders now have certainty of licence renewal, security of future access to the commercial fishery and access rights which effectively exist in perpetuity. There is only limited scope for the Government to remove quota units from a licence holder. The improvements in the access rights were achieved indirectly through the quota-arrangement negotiations rather than through a structured design process where fishers negotiated particular outcomes.

One of the important questions now facing the Tasmanian rock lobster industry is whether more secure access rights will lead to better management of the rock lobster fishery, and if so how? While it may be too soon to answer these questions there are already some trends emerging that show the industry is changing, both in terms of ownership and long-term business planning. It should be noted that the industry is not united on the notion of strengthening the nature of the property right, many are happy with what they have and fear that investors will move in and control the fishery. A major consideration for the industry and the Government is whether or not more secure access rights lead to other management problems in the future, and if so, what might these be and how could they be avoided? These issues will need to be discussed and considered as part of any structured negotiations on the future nature of the property right associated with rock lobster quota units.

2. THE FISHERY

The Tasmanian rock lobster (Jasus edwardsii) fishery is managed under output controls, specifically individual transferable quotas. The current total allowable commercial catch (TACC) for the fishery is 1500t, while the recreational catch is about 5% of this. The TACC is allocated across 10 507 quota units. The allocation mechanism is phasing down to an equal allocation per quota unit and in March 2001 the quota allocations will be equal. The initial allocation saw about 9% of the TACC allocated on the basis of past catch history.

The fishery operates from 1 March to 23 February with a two month closure between mid-September and mid-November. This closure is to protect the spawning female rock lobsters and is also the time when many of the male rock lobster are moulting, and consequently are of poor commercial quality.

The fishery is managed as a single zone with size limits for male and female rock lobster, which are 110mm and 105mm carapace length respectively. There are also a number of input, or gear, controls that operate on the fishery. Fishers are limited to using 50 traps and each trap must be less than 1200mm × 1200mm × 750mm. The limit on the number of traps is to minimise the amount of octopus predation and reduce gear conflicts between fishers, and between the recreational sector. Historically fishers have been able to catch well in excess of 1500t using 10 500 traps, so there are few fishers who would wish to see the trap limits increased or removed.

The fishery extends from water less than 5m in depth out to depths of 120m and up to 20 nautical miles from the coast. The fishing grounds extend from the far north-west of the State around to the far north-east. Figure 1 shows the jurisdiction of the fishery (Anon. 1997).

3. WHY QUOTA MANAGEMENT WAS INTRODUCED

In the mid to late 1980s the industry and scientists had become increasingly concerned about the sustainability of the fishery following the doubling of fishing effort in a little over ten years, while catches were remaining relatively stable. Given the fishery had been exploited from the middle of last century and there had been heavy fishing pressure during the 1960s, there was general concern that the stocks were declining.

During the early 1990s various management options were explored and debated within the industry and with government. It was apparent that there were only two options, either a substantial reduction in the fishing effort (about 30%) or the introduction of a total allowable catch. Unfortunately the industry was divided on the issue with the majority recognising there needed to be reductions in the catch and effort, but no agreement about how to do it. Finally, in August 1996 the Government decided that the fishery would be managed by output controls and that individual transferable quotas would be introduced.

Figure 1: The area of State waters for the Tasmanian rock lobster fishery and the approximate distribution of the fishing grounds

The Government had two objectives in mind, the first was to reduce the catch to a level which would be sustainable, and allow the biomass to rebuild over time. The second was to provide a mechanism whereby the industry could restructure and allow those who wished to leave the fishery to achieve a reasonable return on their access rights. It was recognised that whatever management option was adopted, reducing the catch would inevitably lead to less fishers participating in the fishery, and a more profitable industry. The Government, supported by a majority of the industry (about 75%), concluded that quota was the better option for achieving its two objectives.

The quota system has allowed the industry to commence restructuring. This process has seen the market value of the access rights increase from $A4000 per unit (rock lobster pot) in 1994 to $A10 000 in 1997, to about $A20 000 per unit (rock lobster quota unit) at present. While this has been beneficial to those leaving the fishery, those who have chosen to stay and invest in the fishery are paying considerable sums to buy back quota to achieve their previous catch levels.

In the first 18 months after quota was introduced it appears that the catch distribution of the fishery has changed little. It had been argued by some of the high catchers that the largely equal allocation of the quota (91% of the TACC) would mean that fishers would no longer be able to take large quantities, say in excess of 10t. Figure 2 shows clearly that this is not the case, in fact the number of licence holders taking more than 7t has remained the same, however there is a decrease in the number taking more than 11t. Given that 188t (11%) less was taken for the November 1998 to September 1999 period, compared to the same period two years earlier, it is surprising that the number of fishers able to take in excess of 7t has not changed.

The similarity of the catch distributions shown in Figure 2 has occurred because fishers are buying or leasing additional quota units to maintain their historic catch levels. It would appear that so far the restructuring of the fleet has resulted a decline in the number of fishers who catch small quantities of rock lobster, many of these fishermen are from the older generation and took the opportunity to retire from the fishery.

Figure 2: A comparison of the distribution of the size of the catch for the last full fishing season prior to the introduction of quota and for the same period after quota management was introduced

4. CHANGES TO OWNERSHIP OF THE ACCESS RIGHTS UNDER QUOTA MANAGEMENT

In October 1997 the rock lobster fishing fleet comprised 321 licences held by 294 licence holders and 308 vessels ranging in size from 6-26m in length. The majority of vessels are used primarily for rock lobster fishing but have the capacity to operate in other fisheries on a seasonal basis. The vessels are a mixture of wooden and steel displacement hull vessels, and a few fibreglass vessels. The average age of the fleet exceeds 15 years, with few new vessels operating in the fishery.

The industry is made up of fishers who own and operate licences, family operations, investors and lease holders. In January 1997, 188 licences were operated by the owner or by the nominated person if the holder was a company or partnership; 21 licences were operated by a family member of the owner, usually a son, brother, or husband. In some of these cases the operator may be purchasing the family business or has taken over the family business. At that time there were 112 licences that were leased or operated by someone other than the owner or the owner’s family. New participants must buy an existing licence to enter the fishery and no additional licences are being issued. As of October 1997, 83.7% of the 321 licences were held by Tasmania-based owners. It is clear that the number of licences owned by Tasmanians has decreased under quota management, particularly as investors are now considering buying licences with less than 10 quota units.

The restructuring of the industry has seen the number of vessels drop from 308 in 1996/97 to 270 in 1998/99. Many of the 38 vessels that left the fishery were operated by skippers under lease arrangements. Unfortunately, such fishers are the most vulnerable particularly if the capacity of a fishery is reduced and such licence holders need to re-invest in their future.

The ownership of the access rights, in terms of the holder of the licence, can be determined from the licensing records. It is difficult to determine if the holder of the licence is in fact the beneficial owner, that is, the person who ultimately owns the “property” of the licence. At this stage the Government does not collect information on beneficial ownership for the rock lobster fishery. The licences can be held by individuals, partnerships or companies. Where the licence is held by a company, trust or partnership, the holder must nominate a natural person under Section 77 of the Living Marine Resources Management Act 1995.

In October 1997 the minimum holding was a licence with 15 rock lobster pots, the maximum was 50 pots per licence with no limits on the number of licences. Under quota management the minimum holding is 5 rock lobster quota units and the maximum is 200 quota units and no more than 100 can be held on one licence. The change in the distribution of the access units is shown in Figure 3. The nature of the holding of the access rights has changed under quota management, fishers must now hold, or lease, quota to cover their catching requirements. This has resulted in a doubling of the number of licence holders who hold more than 50 units, which has happened because these fishers are the ones who have historically taken the larger catches, so they have had to re-invest in access rights to allow them to continue their fishing operations at former levels.

Figure 3: A comparison of the distribution of fishing units 6 months prior to the introduction of quota management and 18 months after the quota commenced

At the other end of the spectrum licence holders with small quota holdings increase. This group is made up of two types of licence holder: the first are vessel skippers who are trying to buy into the fishery, the second are investors looking for a sound investment with a good return. Currently the quota units are trading at between $A18 000 and $A20 000, with a return from leasing of $A1200 (6%-6.5%) after licence fees are deducted.

5. ROCK LOBSTER QUOTA UNITS AS AN ACCESS RIGHT

The rock lobster fishing licence and attached rock lobster quota units have the following characteristics:

i. The rock lobster quota units were allocated in perpetuity to the people who held commercial rock lobster licences by means of legislation (Living Marine Resources Management Act 1995). The quota units provide exclusive access to take 1/10,507 of the TACC. The quota units can be transfered free among the 315 licences. The licences and attached quota units are fully transferable.

ii. The licence is an annual licence which must be renewed by the Minister as long as (a) the licence fees are paid, and (b), the person has not been convicted of a relevant offence under a law of another State, Territory or the Commonwealth. If the licence renewal is refused under (b) the licence holder has a right of appeal to an independent appeal tribunal. Case history suggests that the refusal to renew a rock lobster licence on these grounds would require a serious offence in a rock lobster fishery. Therefore, this provision cannot be used for minor breaches of other fisheries laws.

iii. The Act provides that only the fishing licence is forfeited if 200 demerit points ($A20 000 in fines) are reached in any five year period and the rock lobster quota units are not forfeited. As the quota units are where the asset value lies, the licence holders investment is protected from forfeiture. While a licence holder who is convicted of the offences that resulted in the demerit points would be excluded from holding a licence for 5 years, they would be able to sell or transfer their quota units, thereby retaining the asset value of the quota. A licence holder who leased the licence to another fisher would not be prevented from buying another licence to transfer the quota units to.

iv. The Act requires that the holders of commercial fishing licences be allocated the rock lobster quota, regardless of the instrument that creates the licence. This means a new licence-type cannot be created to transfer the ownership of the quota units to a new group of licence holders.

6. PROPERTY RIGHT OR ACCESS RIGHT

The concept of property rights applied to fisheries seems to mean different things to different people. It is increasingly apparent that the term property right is being applied to a spectrum of access rights. This spectrum ranges from access rights that can best be described as tenuous, through the range of licences to a private property right (ECS 1997). Simply put, the property right attached to any access right to a fishery represents the security of tenure and access, the tradeability and value associated with any particular regime.

A licence to fish which is effectively issued in perpetuity, provides security of tenure, and is tradeable, may well be a strong property right. This property right may be further strengthened by providing access to a fixed share of the annual harvest, by providing some form of instrument that goes beyond a licence (Deed, contract or statutory fishing right) (ECS 1997). It may also be strengthened by providing a mechanism whereby the access right can be used as collateral for financiers to lend against.

7. WHAT DOES THE INDUSTRY WANT

The rock lobster industry is seeking a strengthening of the property right nature of the access rights. However, at this stage it is unclear what is being sought aside from providing a register of ownership that allows interested parties to register their financial interest. What is not clear yet is how far the characteristics of such a register should go, that is, ranging from an ability to register an interest, to effectively providing a mortgage system, with a form of title that can be held by a mortgagor.

A simple register would allow a bank to register an interest in a licence that should then satisfy a common law right to have an existing claim over the licence should the licence holder try to sell the licence. A system whereby a bank could effectively take a mortgage over a licence would work in the same way banks mortgage houses or land.

The industry and the Government will be discussing this issue over the next year. The industry’s main reason for wanting licence holders to be able to register an interest in rock lobster licences and their associated quota units is to ensure money can be borrowed against the licence. Historically, banks have only lent up to a percentage of the market value of the licence, often not more than 60%, and then only if there was considerable other collateral or guarantors. As the price of buying into this fishery, and other similarly well-managed Australian fisheries, increases it becomes harder for new entrants, particularly young fishers, to afford to buy a licence.

Providing a means whereby there is more incentive for financiers to lend funds equal to a greater portion of the value of the asset should make it easier for fishers to continue to buy licences and quota, rather than corporations. However, it can be argued that providing even more secure property rights will drive the price of access up further. In the long-term it is reasonable to expect that the price of the access rights in a sustainable, well-managed fishery, will reflect the investment potential with returns comparable to long-term bond rates.

At this stage the Tasmanian rock lobster industry is not seeking to replace their fishing licences with something that may have a greater property right value. Many in the industry feel they have a strong property right in their current licences and quota units. However, it is likely the industry will soon consider such options, following the Commonwealth’s statutory fishing right process. There are those in the industry who are concerned that such changes will lead to investor-control and less scope for fishers to own their own access rights.

8. BENEFITS OF STRONG PROPERTY RIGHTS TO THE MANAGEMENT OF THE RESOURCE

As more fisheries look at strengthening the nature of the property right that governs access to a fishery, the benefit to the management of the resource should be considered. If the nature of the property right, or the ownership of those rights, actually puts more pressure on the stock, is strengthening the property right in the public benefit? Fisheries managers, whether they be government or industry, must accept that they have a responsibility to manage fish stocks for future generations, such that they have the same, if not a better, opportunity to harvest fish. In economic terms this means the net present value of the stock should be high, and remain the same over time.

Achieving long-term sustainability and inter-generational equity may be at odds with the nature of the property right, particularly if the property rights are held by corporations who must provide a high return to shareholders. There may be an economic disincentive to invest in the resources when growth rates are low, that is, when the grow rate is less than the economic discount rate it makes economic sense to catch the fish sooner, or in extreme cases 'mine' the stock. However, fishers, even those with large investments in a fishery, tend not to act in an economically rational way, as they are often concerned about leaving the fishery for their sons and grandsons.

Providing a stronger property right, which encourages investors, may lead to more 'rational' economic behaviour, which may increase the pressure to harvest a larger portion of the fishery now if growth rates are low.

It has been commonly suggested that improving the property rights will lead to better management as licence holders accept greater responsibility for management. However, is this always going to be the case or are there other factors that determine the success or otherwise of management? One function of good management must certainly be the number of participants compared to the catch and its value. The fewer the participants, the greater the earning capacity of individual fishers or licence holders. A fishery which has few players should result in the licence holders taking a strong interest in the sustainable management of the resource, and will generally be easier because each participant can take sufficient fish to ensure the viability of their business. Similarly, fisheries with few participants should be cheaper to manage as fewer resources are required to monitor and service the industry.

While it is difficult to compare fisheries because of factors relating to fishing costs and price differences, it is worth considering the Australian rock lobster fishery as an example. The Tasmanian Rock Lobster Fishery has an annual TACC of 1500t and is divided among 294 licence holders and must provide for a fleet of 270 vessels, their running costs and maintenance. The average gross return is about $A153 000 per licence holder, based on an average beach price of $A30/kg for Jasus edwardsii.

The Western Australian Rock Lobster Fishery (Panulirus cygnus) lands on average about 10 500t of Western rock lobster, at an average price of about $A20/kg. This means that the average gross income for the 596 licence holders is about $A350 000. The average number of rock lobster pots is about 116, which have a market value of at least $A20 000 per pot, or $A2.3 million (Donohue and Barker 1999).

The South Australian Southern Zone Rock Lobster Fishery, which takes the same species as the Tasmanian fishery, and competes in the same market, landed 1685t in 1997. This catch was divided among 184 licence holders (SASZRL-FMC 1999). The average gross return would have been in the order of $A275 000 per licence holder. These licences are worth about $A21 000 per quota unit, with an average of 65 units per licence, putting the value of a licence at about $A1.4M (Donohue and Barker 1999).

The comparison can be extended further when the South Australian Northern Zone Rock Lobster Fishery is considered. These fishers numbering 73 landed about 950t in 1997 (SANZRL-FMC 1999). This fishery is managed entirely by input controls and supposedly lacks the strength or property right that quota fisheries have. However in 1997 the fishery saw gross earnings of about $A390 000 per licence holder. This fishery appears to be managed sustainably, is producing good returns, has an asset value of about $A26 000 per fishing unit, but may be perceived by some as having as strong a property right as a quota fishery. What would the industry, the public or the resource gain from strengthening the nature of the property right in this fishery probably very little.

At the other extreme is the Victorian Eastern Zone Rock Lobster Fishery, again the same species and market. This fishery is in the process of considering quota management. However, the fishery is likely to have a TACC of about 75t divided among 76 licence holders (Anon - Victorian Fisheries 1996). This is likely to result in a gross return of about $A30 000 per licence holder. Is the strengthened property right that quota supposedly brings going to make it any easier to manage this fishery? Probably not. The problem is likely to be exacerbated as individuals have little to lose and may therefore be less willing to ensure any management strategy works.

Obviously, the South Australian and Western Australian fishers have a greater income, and therefore arguably a greater incentive as individuals to ensure their fishery remains well managed. One aspect of the strength of a property right is exclusivity (ECS 1997), meaning less participants in the fishery leads to a more exclusive, and therefore stronger, property right.

9. FUTURE PROBLEMS FOR MANAGEMENT

The strengthening of the nature of the property right in a well managed fishery has the tendency to increase the cost of access because it enables a higher long-term return on investment. If the return on investment is better than the long-term bond rate there will be a greater number of investors seeking Tasmanian rock lobster licences and quota to add to their investment portfolios. This inevitably will see an increase in the number of “absentee landlords” who lease out their licence or quota units. What problems may this lead to in the future?

In Tasmania we are starting to see such affects in the abalone fishery. Within five years it is likely that the Tasmanian Abalone Fishery will be owned entirely by investors who do not fish for abalone and already there are many contract divers who work for less than 15% of the beach price received. In the rock lobster fishery we already have fishers who lease licences and quota from investor licence holders.

One implication of having secure property rights for a licence or quota unit, which cannot be removed if convicted of serious fisheries offences, may be little incentive for the licence holder to ensure his lessee does the right thing. This may be more of a problem in fisheries where there are a large number of licence holders. In most instances, licence holders would have no idea what the fishers may, or may not, do. In fact, as the number of investors increases the direct contact with the actual fishers will decrease. We already see a profitable business of broking in fish quota - essentially matching quota holders with fishers and charging a fee for the service.

Under such a system, what incentive is there for lease holders to ensure they comply with the rules of the fishery? If they themselves have no licence to lose, and the quota they lease is secure from forfeiture, then the incentive to comply must be in deterrent value of the chances of being caught and the subsequent penalties. So if there is little incentive for some lease holders to only catch the quota they have leased, where they are being paid a fraction of the beach price, what are the implications for management and the resource?

If such illegal activity occurs, and even worse, increases, the pressure on the resource will increase, inevitably leading to cuts in total allowable catches. Such illegal activity undermines the asset value of the quota or licence. The response by government would probably be to increase the enforcement regime, which in turn will increase the licence fees. These are likely to be passed onto the fishers, reducing their profitability and increasing the incentive to operate illegally.

But how can the licence holder, or quota holder, control it? The answer seems to be increasing the level of enforcement, and the costs of management, which in turn reduce the nett returns to either the fishers or the quota holders. It is reasonable to conclude that the cost of enforcement in a fishery with strong property rights is likely to increase in proportion to the number of fishers, and decrease with their level of incentive to do the right thing. It is difficult to see easy solutions to some of these potential problems, however they should not be dismissed by governments or the industry, or both may suffer in the future. These issues need to be considered when management systems are being developed, as it is often easier to deal with such potential problems before they arise.

10. CONCLUSION

The Tasmanian Rock Lobster Fishery is managed by individual transferable quotas which provide a secure property right which entitles the holder to take 1/10 507 of the allowable commercial catch of rock lobster for each quota unit held. The property right of the licence is fully transferable while the property right of the rock lobster quota units are transferable between licence holders. The fact that quota units must be held on a licence, of which there are 315, means the property right has the benefit of exclusivity.

What is lacking in the property right of the licences and quota units is a suitable mechanism to allow financiers to register an interest in the licence. This issue is being addressed, with the Government who are committed to strengthening the nature of the property right in this way before January 2001.

The industry and the Government need to keep a watchful eye in case the industry changes to one where the fishery is dominated by lease holder fishers, rather than licence holder fishers. One of the significant downsides to providing more secure property rights may be the potential problems associated with absentee landlords with little incentive or ability to ensure their contracted fishers comply with the rules of the fishery. Such problems will be compounded where the fishers do not receive sufficient payment for catching the quota, and feel they need to take extra fish to make their operation pay.

11. LITERATURE CITED

Anon. 1996. Victorian Fisheries, Victorian rock lobster fishery future management position paper, Unpublished report - Victorian Fisheries, Department of Natural Resources and Environment, Victoria.

Anon. 1997. DPIF, Rock lobster fishery policy document, Unpublished report - Department of Primary Industry and Fisheries, Tasmania.

Donohue, K. and E. Barker 1999. (draft), Comparative study of quota management of rock lobster fisheries, Unpublished report - Rock Lobster Industry Advisory Committee, Western Australia.

Economic Consulting Services (ECS) 1997. Use of market mechanisms for allocation of commercial fishing access entitlements in Western Australia, Unpublished report for the Fisheries Department of Western Australia, Western Australia.

Living Marine Resources Management Act 1995, Part 4 - Division 6A, Tasmanian Statue number 25 of 1995.

SANZRL - FMC 1999. Annual report 1997-98, Unpublished report - South Australian Northern Zone Rock Lobster Fishery Management Committee, South Australia.

SASZRL - FMC 1999. Annual report 1997-98, Unpublished report - South Australian Southern Zone Rock Lobster Fishery Management Committee, South Australia.

Individual Transferable Catch Quota: Australian Experience in the Southern Bluefin Tuna Fishery - D.B. Campbell and T. Battaglene

D.B. Campbell
David Campbell and Associates
PO Box 228 Kippax ACT 2615, Australia
<[email protected]>
and
T. Battaglene
Canberra Wine Bureau
Winemakers Federation of Australia (INC)
Canberra, Australia
<[email protected]>

ABSTRACT¹

¹ This paper will be published in full with the same title in Marine Policy, 24(2):09-117.

Furthermore, the use of individual transferable catch quota created an institutional structure through which the Japanese gained access to Australian quota by a series of joint ventures. The cash flow resulting from tuna leasing under the joint venture was instrumental in maintaining viability for some Australian operators. In addition, the joint venture facilitated the transfer of Japanese longlining and farming technologies to Australian operators.

It is highly likely that many of these benefits would have been foregone had some other form of management, aside from individual transferable catch quota, been used to achieve the fishery restructuring and manage the fishery.

Shark Bay Prawn Fishery - A Synoptic History and the Importance of “Property Rights” in its Ongoing Management - P.P. Rogers and J.P. Penn

P.P. Rogers and J.P. Penn
Fisheries WA
SGIO Atrium, Level 3, 170 St George's Terrace, Perth WA 6000, Australia
<[email protected]> <[email protected]>

1. INTRODUCTION

Shark Bay, a large hypersaline/marine embayment situated on the Western Australian coast between latitudes 24° 45’ S and 26° 45’ S and longitudes 112° 50’ E and 114° 20’E (Figure 1), is the site of WA’s most important penaeid prawn fishery, which has an annual value of production between $A30 million and $A40 million. Limited entry management of these prawn stocks was introduced in 1963 with initial access granted to 25 vessels. Over a period extending from 1963 to 1975 the number of vessels was gradually allowed to increase to 35 to maximize the social and economic benefits resulting from this fishery. Growth in fleet efficiency, i.e. increases in fishing power (Penn et al. 1997b) largely through improved technology, ultimately led to over-exploitation of the tiger prawn (Penaeus esculentus) stocks in the early 1980s. The king prawn (Penaeus (Melicertus) plebejus) stocks in contrast were not affected and increased production of this species compensated to some extent. The dual pressures of declining prices for prawns as world supply of aquaculture-produced prawns, expanded and lower tiger prawn catches ultimately led to a government-supported industry licence buyback scheme being implemented in 1990 at a cost of $A9.6 million. This reduced the fleet to 27 vessels for the 1990 and subsequent seasons. This buyback resulted in a substantial fishing effort reduction which, coupled with improved spatial closures, has resulted in the recovery of the tiger prawn stocks (Penn et al. 1997b) and improved returns to the industry. This paper traces some of the history regarding the management decision to vary the fleet numbers.

Figure 1: Boundaries of the shark Bay Prawn Managed Fishery

2. GRANTING OF ACCESS BETWEEN 1962 AND 1980

Although the presence of prawns in Shark Bay had been known since sailing ship surveys in 1905, the presence of commercially viable stocks was not confirmed until the late 1950s. Based on these latter surveys, commercial fishing began in 1962, when four vessels operated in the lower sections of the bay (Slack-Smith 1978). This delay in development was attributed to lack of processing capacity and the absence of experienced trawler skippers. This situation changed in 1962 when the Shark Bay whaling industry based at Carnarvon became uneconomic. The companies involved sought to diversify and began prawn trawling and processing using the infrastructure of the whaling industry.

The Nor’West Whaling Co. built two vessels and chartered a trawler from Queensland in 1962. They also commenced construction of a further five trawlers in late 1962 at a Fremantle shipyard. Because of the possibility of a rush of east coast vessels to Shark Bay, this company asked government for an exclusive licence to fish and process prawns in order to protect its capital investment. The discovery of large quantities of small prawns in the southern sections of the embayment also resulted in a request to close these prawn nursery areas to fishing.

The media interest in the developing prawn fishery and the likelihood of interstate vessels arriving in large numbers from Queensland resulted in the Minister for Fisheries announcing the following restrictions on 19 July 1962:

i. Fishing licences would not be issued to interstate trawlers unless they were purchased by, or under charter to, an approved local fisherman

ii. No local vessel was to fish for prawns in Shark Bay without the prior approval of the Department of Fisheries and Fauna and

iii. South of lines drawn east from Cape Bellefin access would be closed to all trawling.

The government received a number of objections to these restrictions in 1963 - in particular from fishermen already operating in the Shark Bay area. In February 1964, the government increased the number of concessions by five, three to Planet Fisheries and two to independent fishermen, one from Denham and the other from Carnarvon. This brought the total number of vessels and concessions to 30. Fishing access for these vessels was restricted to a three-year period.

Following Cabinet reviews of the Shark Bay prawn fishery in November 1966 and again in 1969 the government continued to support the retention of three-year licence periods (trienniums) but did not support an increase in vessel numbers. In 1971, the Nor’West Whaling Co. was permitted to have two additional “standby” vessels to cover for breakdowns. This situation was rationalised by issuing 32 full licences (Hancock 1975) for the 1972-74 triennium.

Following a scientific review in 1974 the then Minister approved three additional vessels on a trial basis for three years to “test” the potential for higher catches. These vessels, selected from the rock lobster fleet, were licensed for the 1975-77 triennium. These temporary licences were allocated through an administrative selection process based on criteria which partially took into account applicants’ prior fishing history and access to vessels with trawling and freezing capacity. Following a review at the end of the 1975-77 triennium these vessels were issued with permanent licences and in exchange gave up their licences in the rock lobster fishery.

The approach and evaluations undertaken by fisheries administrators over this time were reported as being consistent with that subsequently recommended by Gulland (1984), i.e. to issue licences in some arbitrary number not expected to exceed the optimum number and to adjust the level of access as data became available, i.e. an adaptive management approach.

Further analysis of performance of the fishery past the 1975-77 triennium did not support any further increase in licensing as the prawn catches had levelled off over the period with changes in both nominal and effective effort. It was of note that over the period 1962-1981, while “goodwill” values emerged for vessels with Shark Bay trawl licences, these were not significant relative to the capital invested in boats and were rarely reported at that time. These goodwill payments associated with vessel transfers were not considered by the government, which only recorded the vessel transfer on its register.

The triennium review process around the granting of licences effectively lapsed at the end of the 1978-81 period when it became clear that ongoing uncontrolled efficiency-gains by the existing vessels were affecting on the stocks. Additional vessels were neither desirable nor sensible in the light of the severe decline in the tiger prawn stock in 1980 (Penn et al. 1995). Authorisations effectively became perpetual in succession.

3. THE SHARK BAY PRAWN FISHERY - 1981 to 1989

Until the 1980s, there was no documented spawning stock/recruitment relationship for penaeid prawns (Penn et al. 1995). This may be partly attributed to the lack of reliable catch and effort data in most fisheries, and to the obscuring effect of the well-documented environmentally-driven variations in prawn recruitment.

The king prawn stocks in Shark Bay continued to be fairly resilient to fishing pressure, but there was a significant decline in tiger prawns, the second most important and most valuable species, in the 1980s. Catches of tiger prawns fell from an average of about 650t/yr in the 1970s to about 300t/yr through the 1980s. The reduction in catch was attributed to heavy fishing on pre-spawning tiger prawns resulting from increases in vessel size and fishing power, and particularly to the targeting of localised areas of high tiger prawn abundance using radar (Penn et al. 1989).

The increasing importance of scallop fishing and the development of a dedicated scallop trawl fleet within Shark Bay in 1981 and 1982 further complicated management arrangements. The Shark Bay prawn management plan left the way open for a new trawl fleet to be established in Shark Bay using 100 mm mesh (not capable of retaining prawns) to target scallops. This resulted in 26 additional vessels targeting the Shark Bay scallop stocks in 1982 and the eventual establishment of a second managed trawl fishery of 14 dedicated scallop vessels under limited entry management arrangements within Shark Bay in 1983.

Resource-sharing of the scallop catch between the established prawn fleet and the specialised scallop fleet has however continued to be a matter of contention since then. All prawn vessels gained an ongoing entitlement to take scallops as part of their fishing entitlement under the Shark Bay scallop management plan. Catch-sharing between the two fleets has proved to be difficult to manage, particularly owing to the significant year-to-year variations in abundance of scallops (from 100 to 4000t meat weight). Limits on crew numbers, gear types and opening times for trawling have been crucial to achieving reasonable catch-share balance between the fleets; however, Ministerial decisions on these topics have often been required when the two sectors could not agree on the equity issues.

Spatial and temporal closures in this prawn fishery through the 1980s did not prove to be particularly successful in improving the recruitment in the tiger prawn stock, causing industry and government to re-examine the value of a prawn licence buyback programme. Spatial and temporal closures introduced during the 1980s, while not improving the tiger prawn recruitment, were however particularly successful in improving the average size and market value of king prawns. This improved value of the king prawn catch, together with improved profitability associated with greater value of the secondary catch of scallops, resulted in vessel licence goodwill values increasing from about $A100 000-200 000 in the early 1980s to about $A500 000 in 1985 and close to $A1 million by 1990.

4. THE SHARK BAY PRAWN FISHERY - 1990 to 1999

In the period of 1989 and 1990, government and the prawning industry examined the value of introducing a licence buyback scheme. There were a number of drivers for this approach:

i. The fleet, through technological and replacement vessel design improvements, had excess fishing power capacity and generated unproductive competition between vessels.

ii. Reduced fishing effort would increase prospects of a recovery of more valuable tiger prawn stocks and therefore recover catches to their historical level of about 600t.

iii. A reduced number of prawning vessels could improve catch per vessel by sharing the available king prawn and scallop catch amongst fewer vessels, thus improving industry profitability.

iv. A similar buyback arrangement in the nearby Exmouth Gulf fishery in the 1980s had generated a recovery in tiger prawn stocks and profitability.

v. There continued to be concern at the effects of world aquaculture and the recognised need for economic adjustment to offset an expected reduction in long-term prices for prawns.

In assessing the licence buyback proposal, government and the prawning industry used a financial model to ascertain a bid price for licences. The scheme was targeted at acquiring between four and eight licences under an industry-funded licence buyback scheme financed through government loan facilities. Offers by individual industry members (vessels) to sell to the buyback scheme, i.e. to leave the fishery, had to be on a voluntary basis.

Figure 2: Shark Bay Annual Prawn Catch and Effort

To gain an understanding of the financial model developed and the setting of a final offer price, all licensees with their accountants and financial advisers were invited to attend a briefing on the discounted cash flow financial model developed. Offers were then invited from all licensees wishing to leave the industry, while individual commitments by those wishing to remain and meet the financial costs of the scheme were obtained by the management agency. The members of the Licence Buyback Management Advisory Committee established at the time indicated they would not support the buyback proposal unless the clear majority of industry licensees supported the scheme. This was achieved after detailed consideration and debate among the 35 vessel owners.

In early 1990, the scheme was established with 8 licences being acquired and removed from the fishery at a total cost of $A9.6 million ($A1.2m per vessel removed) financed initially over a 15-year period. The loan arrangements were renegotiated after significant falls in interest rates in the mid-1990s, although the full costs at all times were met by industry through an annual levy on the remaining vessel licences. Full payment is expected to be completed by 2003/2004.

In the 1998 season, Shark Bay prawn catches totalled 2185t, including 1614t of king prawns, 538t of tiger prawns and small quantities of other prawns, with 75t of scallop meat taken by the prawn fleet. These levels of catches in aggregate are relatively typical of production in recent seasons, which have seen the recovery of the tiger prawn catch closer to its historical 500-600t. The value of a licence in 1999 is reported at about $A2.5 million, with the average prawn catch per vessel now exceeding 80t/boat compared with about 40t in the early 1990s.

Fishing effort targeting prawns (rather than scallops) fell substantially at the time of the buyback (Figure 2) when the abundance of scallops coincidentally increased apparently due to environmental effects on scallop recruitment (Caputi et al. 1998). This environmental effect also appeared to have a negative impact on king prawn catches in this period (Lenanton et al. 1991). However, as the fishery re-focused on prawns following a return to “normal” scallop abundance, the remaining fleet adjusted to a slightly lower nominal effort level than before the buyback. This has been due to improved catch rates encouraging the fleet to fully use all of the fishing days allowed and to improvements in replacement vessels permitting operations in all weather conditions.

The Shark Bay prawn fishery is now considered one of the more profitable prawn fisheries in Australia. With recent trends in the fishery toward further increases in vessel efficiency through GPS, better-designed replacement vessels and trawl-nets, it is not surprising that some industry members are again exploring the question as to whether further vessel reductions to improve economic performance ought to be pursued at the end of the current licence-buyback scheme.

5. LESSONS LEARNT FROM THE MANAGEMENT HISTORY

5.1 Benefits from early intervention

Licence limitation with controls on fleet capacity has provided fishing companies and individual fishermen with security to make long-term investments in better vessels and processing capacity. While this is not an unexpected outcome, experience in other, less-controlled fisheries points to excess fishing capacity quickly developing and undermining the profitability of the fishery. With early government intervention in the case of Shark Bay in limiting vessel numbers and allowing more orderly development, while not completely avoiding the problem of over-fishing, the task of stock-recovery and management to improve economic performance has been made much easier.

5.2 Increased value of licences

The goodwill values in the Shark Bay prawn fishery, tied to authorisations to fish did not become significant until the early 1980s. This was in part due to the shift from shorter-term tenures tied to ongoing triennium reviews, which later became long-term more secure access entitlements. Both profitability and security of tenure have proved to be important elements in the development of goodwill values tied to licences and industry support for management. Licence values have grown significantly in Shark Bay from about $A100 000-200 000 to $A2.5 million over a 20-year period. This growth in value appears to have resulted from improvements in profit performance as well as industry confidence in management relative to the success of other prawn fishery management arrangements across Australia.

5.3 Renewable and transferable access rights

Early exercise of control on growth in the exploitation of the Shark Bay fishery, through licence limitation and effective granting of renewable and transferable access rights, has led to more effective management capacity. Specifically, the success of the buyback initiative introduced in the early 1990s illustrates the benefits of adaptive co-management. The introduction of this arrangement could not have been achieved without the corporate involvement of industry and government in this issue. The long-term protection of access rights (licence values) and confidence in management arrangements enabled industry to collectively and responsibly consider management alternatives and create innovative solutions. Having an already-established and profitable fishery did not inhibit the Shark Bay prawning industry from considering long-term issues and innovative management responses. Nor did the high goodwill-values tied to licences at the time impede industry involvement or financing arrangements. To the contrary, other than more recent entrants to the fishery, industry had significant capacity to fund the licence-buyout arrangement.

5.4 Industry support (and voluntary participation)

The voluntary licence buyout scheme achieved wide industry support and has proven to be a workable tool for economic and biological adjustments. The voluntary Shark Bay prawn licence buyback scheme was successful due to four prime factors: (a) the scheme was voluntary; (b) had wide industry support (greater than 75%); (c) costs were fully met by industry and (d), the remaining licence holders were the ultimate beneficiaries. Consistent with other licence-buyback schemes in Western Australia, the business case for adjustment or licence-acquisition was able to be adequately demonstrated. As a result of these factors, there was virtually no political impediment to the scheme being introduced.

The financial elements of the system were as follows:

Shark Bay Prawn Fishery buy-back scheme
	Licence value	$A1.2m
	Number of licences acquired	8
	Total industry debt	$A9.6m
Licensee	Repayments (first 15 months)	$A74 464
	Repayments (next four years)	$A63 555/yr
	Annual interest rate	15.5%
	Terms-	interest fixed for 5 years and interest floated for next 10 years

5.5 Early and effective control of fishing effort

Early controls on maximum boat-sizes and maximum gear-size specifications were critical in preventing excessive vessel over-capitalisation. These controls were important elements in preventing rapid escalation of fishing effort in the prawn fishery, and allowed the technology-driven overshoot in the effort-levels relative to the tiger prawn stock to be addressed. Specific management controls on gear were introduced early in the history of the fishery and have been a feature of the fishery since the mid-1970s. The current controls under the management plan are as in Table 1.

The primary controls introduced in 1963 to protect nursery areas have essentially remained unchanged over 30 years. Other measures, i.e. gear controls, vessel sizes etc., were introduced progressively as vessel competition increased and in the main kept fleet’s catching-capacity in balance with the need to optimise exploitation to maximise catch values from larger prawns and regenerate tiger prawn spawning-stock levels.

5.6 Control on fleet fishing capacity

Fleet-capacity controls were the cornerstone to preventing a rapid blowout in fishing effort. Increases in fishing power and increased effectiveness of fishing effort as better designed boats and technology continued to improve have been adjusted for by the fleet-reduction programme. Importantly, these input management controls provided a workable basis from which industry and government could adjust fishing capacity within workable time frames. These controls, consistent with other input-based managed fisheries, have not prevented effective effort from continuing to increase, but the adaptability of the overall management system has allowed ongoing adjustments.

5.7 Use of input controls

Quotas (ITQs) and more specific statutory rights have not been considered to be a workable management tool for the Shark Bay prawn fishery either in early 1962 or today. Variable annual recruitment to the prawn stocks and lack of predictability due to the environment, even when stock/recruitment relationships are known, make ITQs inappropriate as a form of management. The individual transferable effort (ITE) system adopted in this fishery (Penn et al. 1997a) is a more reliable management arrangement which allows industry to accommodate variations in prawn abundance while leaving sufficient escapement to maintain breeding stocks.

Table 1
Details of regulations

Regulation		Shark Bay Fishery
Limited entry
	Number of licensed trawlers	27
	Vessel replacement limit (max. size)	375 vessel units
Fishing gear controls
	Trawl nets (number and max. head-rope length)	2 × 14.6m
	Otter boards (max. dimensions)	2.4 × 0.9m
	Ground chain (max. number and size)	2 chains/net. 10mm link diameter
Closed seasons		November 1 to March 1 (adjusted annually to fit lunar cycles)
Within-season closures		3-5 days closed to fishing over each full moon
Closed areas
	Permanent nursery areas	Closed at all times
	Temporary nursery areas	Closed August 1 to April 15
	Spawning stock closure (for tiger prawns)	Variable (July-November)

5.8 Provision of information

Benefits from fishing rights arising out of access entitlements tied to licensing and management of prawn fisheries by input controls have been demonstrated in the Shark Bay prawn fishery. These have largely occurred as a consequence of early management by licence-limitation of the Shark Bay prawn fishery and the close involvement of industry and government in ongoing fishery management decision-making. The linkage of licensing to an obligation to provide detailed logbook information also facilitated the development of unique biological models (Penn et al. 1997b) covering breeding stock and recruitment that has enabled more effective management.

5.9 Industry responsibility (for the environment)

Industry responsibilities in the management system have extended beyond financial management and production outcomes of the fishery. The industry is now involved in development of fishing technology aimed at improving product quality and value while reducing bycatch wastage and minimising the risks of trawling on other non-fish species. At present, the Shark Bay prawning industry is, in partnership with government, developing new approaches to accommodate changing attitudes to natural resource use in Shark Bay, which has been listed as a World Heritage area. As a result of long-term and valuable access rights, the industry has had a significant incentive to participate in the process to develop environmentally responsible fishing practices through research programmes.

6. CONCLUSION

Tradeable access rights in the form of limited entry licences, together with other biologically-based input controls, have proven to be a successful long-term management approach for the Shark Bay prawn fishery. Individual licence values in excess of $A2.5 million are now being realised. The key benefit emerging from the use of such rights-based management is the incentive for industry to work with government to ensure long-term ecological sustainable fisheries production and deal with the short-term and longer-term fishery adjustments required to meet wider community expectations. Today, the Shark Bay prawn industry can be seen to be a successful and profitable fishery that contributes significantly to the economy of the State to the benefit of the wider community. However, neither industry nor government should remain complacent as technological changes will continue and will need to be taken into account by the management regime. Clearly, the basis for this success rests substantially on having an appropriate management based on access rights for the fishery. This will continue to engender the historical spirit of cooperation which has characterised this important fishery.

7. LITERATURE CITED

Caputi, N., J.W. Penn, L.M. Joll and C.F. Chubb 1998. Stock-recruitment-environment relationships for invertebrate species of Western Australia, in Proceedings of the North Pacific Symposium on Invertebrate Stock Assessment and Management, (eds) G.S. Jamieson and A. Campbell, Canadian Special Publications in Fisheries and Aquatic Science 125: 247-55.

Gulland, J.A. 1984. Introductory guidelines to shrimp management: some further thoughts, in Penaeid Shrimps, their Biology and Management, (eds) J.A. Gulland and B.J. Rothschild, Fishing News Books, Surrey, England, pp. 290-99.

Hancock, D.A. 1975. The basis for management of Western Australian prawn fisheries, in First Australian National Prawn Seminar, Maroochydore, Queensland, November 1973, (ed.) P.C. Young, Australian Government Publishing Service, Canberra, pp. 252-69.

Lenanton, R.C., L.M. Joll, J.W. Penn and K. Jones 1991. The influence of the Leeuwin Current on coastal fisheries in Western Australia, in The Leeuwin Current: an influence on the coastal climate and marine life of Western Australia, (eds) A.F. Pearce and D.I. Walker, Journal of the Royal Society of Western Australia 74: 101-114.

Penn, J.W., N. Caputi and N.G. Hall 1995. Spawner-recruit relationships for the tiger prawn (Penaeus esculentus) stocks in Western Australia. ICES Marine Science Symposia 199: 320-33.

Penn, J.W., N.G. Hall and N. Caputi 1989. Resource assessment and management perspectives of the prawn fisheries of Western Australia, in Marine Invertebrate Fisheries: their assessment and management, (ed.) J.F. Caddy, J. Wiley & Sons Inc., New York, pp. 115-40.

Penn, J.W., G.R. Morgan and P.J. Millington 1997a. Franchising fisheries resources, an alternative model for defining access rights in Western Australian fisheries, in Developing and Sustaining World Fisheries Resources: Proceedings of the Second World Fisheries Congress, (eds) D.A. Hancock, D.C. Smith, A. Grant and J.P. Beumer, CSIRO, Australia, pp. 383-90.

Penn, J.W., R.A. Watson, N. Caputi and N. Hall 1997b. Protecting vulnerable stocks in multi-species prawn fisheries, in Developing and Sustaining World Fisheries Resources: Proceedings of the Second World Fisheries Congress, (eds) D.A. Hancock, D.C. Smith, A. Grant and J.P. Beumer, CSIRO, Australia, pp.122-9.

Slack-Smith, R.J. 1978. Early history of the Shark Bay prawn fishery, Western Australia. Fisheries Research Bulletin (WA Department of Fisheries and Wildlife) 20, 44 p.