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Privatising the common fisheries policy

3 years ago, Written by , Posted in Academia, Articles, Media re-posts

By Liza Griffin, 4 October 2012, Open Democracy

This vital matter of public concern, with far-reaching ramifications for our relationship to nature should be subject to greater democratic debate.

Fish are a matter of public concern. Stories concerning rebellious fishers protesting against draconian EU regulation often fill the pages of newspapers, as does commentary urging consumers to buy the most sustainable species in their weekly shop. And fishermen, as the last of the hunters, capture a collective imagination that is fed by this intense media interest.

But perhaps the central reason why fisheries are a public issue is that they constitute part of the earth’s ‘commons’. Commons are resources like land, air, forests or oceans which are held in common. Because they belong to no individual in particular, commons tend to be deemed a public good.

This idea that fisheries belong to a commons was embedded in the EU’s 1957 founding Treaty of Rome, which declared that its fish stocks are a shared resource constituting a ‘common pond’. For the nascent European Community of the 1950s, food security and co-operation between nations were high on the political agenda after the depredation of World War II. Fisheries thus became symbolic for the Community, as a potentially unifying, but mobile, resource and as an important source of food, demanding international collaboration for its effective management.

However, Europe had previously suffered from the effects of overfishing, with the ruinous collapse of the once booming North Sea herring fisheries in the early twentieth century. Cognisant of this, the EU established a Common Fisheries Policy (CFP) in the 1970s. However, despite successive rounds of reform, the CFP has thus far failed to deliver a sustainable fishing industry for Europe.

CFP reforms, 2013
It is proposed that the reforms planned for early 2013 will be markedly different from previous incarnations. Eurocrats claim to have learned from past mistakes: the centralised and bureaucratic policy of previous CFP regimes will be replaced by more efficient and responsive management, they say. Public campaigns on the impacts of fish consumption have been instrumental in politicising the problems of the former CFP. In the UK ‘Hugh’s Fish Fight’ – a high profile media crusade run by TV Chef, Hugh Fearnley-Whittingstall – has been credited with triggering EU debate about the North Sea discards problem, making much of the alarming statistic that over a million tonnes a year of edible fish are thrown overboard, dead or dying, into the North Sea from whence they came because fishers do not have the quota to land them legally. This kind of outcry has been the driver for a discard ban which will form the focus of the 2013 CFP reform.

Another equally significant keystone of the reform, the introduction of privatised fishing quotas, has received little media attention and significantly less public debate. From 2014, EU fleets will formally be allocated quotas of tradable rights to fish. Individual transferable quotas, (ITQs) are a form of privatisation, where shares of fishing effort are allocated to individual fishers, who can either use that effort themselves, or sell or lease it on an open market to someone else. Under this system, fishers may own, buy or sell quotas as they might a boat.

Adopting this approach is understandable since privatisation is mooted by many commentators as an appropriate response to the tragedy of the commons parable, of which overfishing is an example. Garett Hardin’s (1968) scenario offers the most enduring explanation for overexploitation of common property resources. These are resources that, because of their nature, are difficult to divide up, fence in, or exclude users from. As a result, what one resource user takes out of the commons determines what is available to other users, frequently leading to ‘tragedy’ or the unavoidable ultimate overuse and destruction of the commons.

The much-debated allegory, of farmers grazing their animals on commonly-owned land, purports to demonstrate how resource exploitation for economic gain can lead to the neglect of a community’s broader responsibilities. It depicts how environmental or social ‘externalities’ (for example pollution or resource exhaustion) arise because the economic rationality of individual self-interest drives actors to maximise their economic gain while minimising their costs. They do this to their advantage, since in a commons the costs of resource use are shared by all, yet the benefits accrue to individuals. When producers, in competition, observe other producers externalising their costs to society at large and profiting by it, they see that it is economically rational to follow suit. The ultimate result is overexploitation, where everyone loses.

If EU fishers are perceived to be pursuing their self-interest in the common pond, eventual overexploitation is to be expected. Free marketers argue that the problem lies with the lack of private property rights over the commons – property rights they assert, encourage internalisation of externalities. If you own the resource, the argument goes, you will be more likely to look after it. In fishing, an informal market of quota exchange has already developed and several EU Member States – for example, the UK – currently allocate tradable fishing rights to their national fleets.

The select few
But the market in these rights has often occurred in non-transparent and iniquitous ways. Indeed, some have labelled this a privatisation of public rights by stealth. According to researcher Emma Cardwell, these public goods have been bought, sold and leased for private profit in an unofficial, opaque, and loosely regulated quota market and have ended up concentrated in the hands of a few wealthy fishers at the expense of other sectors of the fleet. Unsubstantiated rumours abound that the Royal Bank of Scotland and even Manchester United PLC now own highly valuable fishing rights in Britain. If this is true then ITQs are hardly likely to encourage good stewardship if those who own fishing quotas are not the same as those who actually fish.

From 2014 all EU Member States will be allowed to trade fishing rights for vessels larger than 12 metres. Initially such trade will only be organised nationally: it is not expected to be extended to the European level, where the ‘relative stability’ principle will continue to prevail. According to this all Member States are assured fixed proportions of the stocks based on their historical catches.

ITQs are according to Bonnie McCay (Agricultural and Resource Economics Review, 2004) an inevitable step in a process of ‘civilizing the unruly frontier of marine fishing’. ITQs have long been posited as a means to reduce incentives for overcapitalization (the capacity of the Community far exceeds available resources) and overexploitation in fisheries. Indeed, they may well make fishers’ lives easier because they can sell rights in hard times or purchase them in better times in order to land valuable fish instead of dumping it overboard because they have no allocation for it.

Despite the professed attractions of this effective privatization of fishing rights, some commentators argue that its promises are overblown or unsupported in practice. Indeed, there is resistance to tradable quotas, both from certain quarters of the fishing industry and environmental groups. Some argue that since ITQ constitute legal property rights it may lead to a situation where governments have to compensate rights holders if, and when the value of their property is diminished by natural forces or regulatory actions. To evade this potential problem, CFP proposals call their tradable quotas ‘transferable fishing concessions’ which establish user entitlements not rights. The former may be recalled, the latter may not.

A further problem with ITQs lies in the perceived injustice of the fact that they are often distributed free of charge. Unsurprisingly, this has been deemed socially unfair, since fishers effectively benefit from a government ‘windfall’ from which they may immediately profit should they decide to sell their quotas. ITQ windfall profits typically go to a select few at the initial allocation. ITQs also increase the cost of entry into the fishery because fishers need not only purchase vessel licenses and equipment, but also the right to fish. This may make it harder for individual firms to start up

More tangible and disturbing concerns, however, stem from the fact that markets in fish quotas create winners and losers whereby capital and benefits become concentrated into relatively few hands. For without regulatory safeguards ITQs create a situation where ‘efficient’ fishing companies – those with bigger profit margins – can buy out less efficient ones. Already, in the UK, fishing rights are becoming concentrated in the hands of the most economically efficient fishers.

The UK picture is complex, but it seems that unfettered ITQs are leading to buyouts as larger operators take over quotas from fishermen with smaller boats and gear. As has been documented in Iceland and Alaska, this problem of shifts in ITQ ownership may have devastating impacts on coastal communities. Such experience has led the EU to exclude vessels up to 12 metres length from participating in the quotas scheme, in order to protect small-scale inshore fishing and the communities that depend on it. However, the European Commission has made it clear that any mechanisms implemented to restrict concentration regulations ‘must respect Internal Market and competition rules’.

Notwithstanding the issue of social justice, privatising the oceans is not a guarantee of sustainability. While it is expected that fishers who own access to a resource will want to protect it so that they can harvest it in the future, it might equally be in the fishers’ interest to fully harvest the resource while prices are high, and when it becomes depleted merely move on to another fishery in response to the resource destruction predicted by the tragedy of the commons. And since the fishery is in effect ‘private,’ then public interests cannot easily intervene to stop this process. Furthermore, like non-tradable quotas, ITQs can also encourage high grading, where less valuable fish are discarded in favour of the more valuable ones, thus assuring that the market returns of a given quota share are optimized.

It seems that ITQs are more effective methods for attaining economic efficiency (in the conventional sense of profit maximisation) in fisheries than they are for providing incentives for stewardship. Rational economic behaviour can be damaging to the sustainability of natural resource management even when, as in the case of ITQs, access is no longer open. There are ‘tragedies of the privatized commons’ just as there are tragedies of the open-access commons. Thus, while ITQ programmes may be effective at reducing fishing capacity, this usually comes at some degree of social, economic and environmental cost.

There is a growing body of literature that seeks to understand such processes as neoliberalisation. Neoliberalism embraces deregulation, voluntarism, and the privatisation of previously publically-held goods, in order for markets to operate.

While some remain committed to neoliberal governance, others express deep concerns about the prospect of these approaches achieving sustainable and equitable fisheries. Privatisation, according to David Harvey, amounts to ‘accumulation by dispossession’ where capital becomes concentrated thereby dispossessing the public of their wealth.

The issue of tradable quotas for fishing also raises important ethical questions about whether our ‘common heritage’ should be for sale. Privatising ocean resources may not be an attractive solution when they are conceptualised as part of the ‘common heritage of mankind’ and a public good. Furthermore, marketisation transforms the social relations of environmental management: fisheries as an economic commodity rather than a public resource redefines users as individual self-interested agents rather than as collective actors working for the wider good. We need to question whether this is a desirable state of affairs.

Some elements of the CFP reform have been subject to passionate media coverage but this arguably more pervasive feature of the CFP, effective privatization, has not received anything approaching the same media scrutiny. This vital matter of public concern, with far-reaching ramifications for our relationship to nature should be subject to greater democratic debate. Plans in 2011 to privatise Britain’s forests were met with public uproar and an eventual U-turn. Let’s not let this one slip through the net.