Addressing Social and Economic Objectives in ITQ Fishery
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ADDRESSING QUESTIONS ON THE SOCIAL AND ECONOMIC OUTCOMES OF AN INDIVIDUAL TRANSFERABLE QUOTA FISHERY by Danielle Noella Edwards BSc, The University of Victoria, 1999 MRM (Planning), Simon Fraser University, 2009 A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY in THE FACULTY OF GRADUATE AND POSTDOCTORAL STUDIES (Resource Management and Environmental Studies) THE UNIVERSITY OF BRITISH COLUMBIA (Vancouver) November 2019 © Danielle Edwards, 2019 The following individuals certify that they have read, and recommend to the Faculty of Graduate and Postdoctoral Studies for acceptance, the dissertation entitled: Addressing Questions on the Social and Economic Outcomes of an Individual Transferable Quota Fishery submitted by Danielle Noella Edwards in partial fulfillment of the requirements for the degree of Doctor of Philosophy in The Faculty of Graduate and Postdoctoral Studies (Resource Management and Environmental Studies) Examining Committee: Dr. Villy Christensen Co-supervisor Dr. Evelyn Pinkerton Co-supervisor Dr. Ussif Rashid Sumaila Supervisory Committee Member Dr. Dianne Newell University Examiner Dr. Wei Cui University Examiner ii Abstract In Canada, fisheries are expected to contribute to prosperous coastal communities and the maintenance of stable and viable fishing fleets, alongside other objectives that include conservation and complying with legal obligations to Indigenous Peoples. Individual transferable quotas (ITQs) have been promoted as a management approach to improve the conservation and economic outcomes of fisheries. The use of ITQs in British Columbia (BC) groundfish fisheries is widespread, following successive introductions of ITQs into the fisheries since 1990. There has been no comprehensive evaluation of the social and economic outcomes of ITQ management in the BC fisheries during this time, despite more than a decade of fishery participants and Indigenous and coastal community representatives raising concerns about the negative impacts of quota ownership and leasing. With a focus on the BC Pacific halibut fishery, I construct a database for licences and quota, including ownership and leasing. I examine changes in the ownership profile of the fishery over a 25-year period and consider the extent to which processors exercise control over the quota market through leasing. I construct a financial enterprise model based on accounting principles to assess the impact of quota ownership and leasing prices on the financial performance of owner-operator halibut vessels. I compare the results of this research against objectives for fisheries in Canada, determined through an extensive search of the literature, including current and historical policy and legal documents, conference proceedings, testimony to Senate and House of Commons committees, speeches and briefing material dating from the 1970s. Owner-operators have been increasingly marginalized in the halibut fishery. Owner-operators that have entered the fishery since 2001 catch 15% but own less than 1% of the halibut quota. iii Lease fees for halibut have regularly exceeded 80% of the landed price, reducing lessee fishing enterprises to minimal earnings that do not support reinvestment or renewal of the fleet. The BC halibut fishery is not meeting objectives for fisheries in Canada with respect to fleet viability and the equitable distribution of benefits. I provide an overview of measures that can be used for a just and fair transformation of fisheries to achieve socio-economic objectives. iv Lay Summary The British Columbia Pacific halibut fishery has long been held up as an example of successful fisheries management. Through an in-depth investigation of this fishery, I have identified significant failings of the management system. The ownership profile of the fishery has changed dramatically since the introduction of individual transferable quotas (ITQs), which allow the holder of the ITQ to catch or transfer the privilege to catch halibut. The fishery has transitioned from predominantly owner-operated to absentee investor owners and lessee fishermen. An analysis of fishing enterprise financial performance demonstrates the overwhelming negative impact of leasing on fishing enterprises. New owner-operator entrants cannot earn enough from the fishery to re-invest, including vessel maintenance and replacement. The fishery, under current conditions, is not self-sustaining as an owner-operator fishery. Socio-economic objectives are not being met, raising important questions about the design and implementation of ITQ management systems and their use in Canada’s fisheries. v Preface The work undertaken in this thesis developed from research questions posed by the Canadian Fisheries Research Network (CFRN), with a goal of researching questions that are relevant to Canadian fisheries while simultaneously fostering collaboration between members of industry, government and academia. The questions examined in this thesis were developed in partnership with representatives from small boat / inshore fisheries in BC as part of the research co- construction process. I completed this dissertation while employed with the federal public service of Canada. However, this work is in no way a reflection of the Government of Canada or any of its departments, agencies, or personnel. The analysis conducted and views expressed are entirely my own. Furthermore, none of this work used resources provided for official government business. All government data used in the dissertation are publicly available, either being available online, in published reports, or through Access to Information Act requests. I wrote this entire thesis with my supervisors, Dr. Villy Christensen and Dr. Evelyn Pinkerton, providing guidance. All chapters aside from Chapters 1 and 6 were prepared as individual manuscripts. Chapters 2 through 4 were submitted to peer-reviewed journals and accepted for publication. Further, Appendix B is based on a published peer-reviewed paper. I am the senior author on all chapters (and Appendix B) and was responsible for the data compilation and the design and implementation of the analyses. vi A version of Chapter 2 has been published as: Edwards, D.N. and E. Pinkerton. 2019. Rise of the Investor Class in the British Columbia Pacific Halibut Fishery. Marine Policy 109. I gathered necessary data, undertook the data analysis and wrote the manuscript. E. Pinkerton and V. Christensen provided guidance at the conceptualization and initial draft stages. The co-author, E. Pinkerton, provided comments for improvement of the final manuscript. A version of Chapter 3 has been published as: Edwards, D.N. and E. Pinkerton. 2019. The Hidden Role of Processors in an Individual Transferable Quota Fishery. Ecology and Society 24(3): 36. I gathered necessary data, undertook the data analysis and wrote the manuscript. E. Pinkerton and V. Christensen provided guidance at the conceptualization and initial draft stages. The co-author, E. Pinkerton, provided comments for improvement of the final manuscript. A version of Chapter 4 has been accepted for publication in Marine Policy as: Edwards, D.N. and E. Pinkerton. 2019. Priced Out of Ownership: Quota leasing impacts on the financial performance of owner-operators. I gathered necessary data, undertook the data analysis and wrote the manuscript. E. Pinkerton and V. Christensen provided guidance at the conceptualization and initial draft stages. The co-author, E. Pinkerton, provided comments for improvement of the final manuscript. For Chapter 5, I undertook the analysis and wrote the manuscript. E. Pinkerton and V. Christensen provided guidance at the conceptualization and initial draft stages, and comments for improvement of the final manuscript. vii A version of Appendix B, provided as supplementary material, has been published as: Edwards, D.N. and D.G. Edwards. (2017). Licence Banks as a tool to mitigate corporate control of fisheries: A British Columbia groundfish example. Marine Policy 80: 141-146. While published during the period of this dissertation research, this paper was not prepared under the auspices of this research project. The paper provides a summary of, and observations on, a project undertaken prior to the start of this dissertation. The paper is included here to provide additional background and context as well as an example of licence banks, which is a concept discussed in chapter 5. I wrote the manuscript and gathered reference materials. Dan Edwards contributed to the identification of lessons learned as well as comments for improvement of the manuscript in all stages, including conceptualization, drafting and finalizing the manuscript. viii Table of Contents Abstract .......................................................................................................................................... iii Lay Summary ...................................................................................................................................v Preface............................................................................................................................................ vi Table of Contents ........................................................................................................................... ix List of Tables ............................................................................................................................... xiv List of Figures ................................................................................................................................xv