# Presentation: 703910

## Buy-Back Programs in the British Columbia Salmon FisheryBy R. Quentin Grafton and Harry W. Nelson

- International Workshop on Fishing Vessel and License Buy-Back Programs
- Institute of the Americas, University of California, San Diego
- La Jolla, California
- March 22, 2004

## Overview

- Brief History of the Fishery
- Introduction of Licensing
- Buyback Programs (five in all over 30 years)
- Lessons Learned (including unexpected ones)
- Did it Work?

## Brief History

- Commercial fishery developed in late 1800’s
- Expansion to open ocean (troll fleet)
- Northern Region (Skeena)
- Southern Region (Fraser)
- Five commercial species
- Sockeye, Coho, Chinook, Pink and Chum

## Brief History (2)

- Overcrowding and capacity concerns raised at turn of the century
- Number of fishers increased as early limitations failed
- Long-standing Aboriginal participation

## Introduction of Licensing

- Davis Report called for limitation in size of fleet and area restrictions
- Limited entry first introduced through Davis Plan in 1969
- Permitted multiple gear types and could fish anywhere open to commercial fishing (no area restrictions)
- Introduced first buyback
- Gear restrictions and vessel replacement rules subsequently introduced in 1970’s

## British Columbia Buyback Programs

- Five distinct programs
- 1970-1973
- 1981
- 1993
- 1996
- 1998-2000
- Differ in objectives and operation

## Early Buyback Programs

- Purpose was fleet reduction
- Purchase vessels and licenses
- Small ($6 million or $25 million in $1992)
- funded from vessel sales and general revenues
- 1970-73 retired 361 vessels (6% of then salmon fleet)

## Early Buyback Programs (2)

- First lesson learned
- Government makes a poor vessel owner and vessel broker
- Pearse Report in early 1980’s investigates problems in salmon fishery and calls for buyback
- Also calls for area restrictions, limited length licenses (put up for bid), and landing royalties
- 1981 buyback retires only licenses
- 26 licenses retired (less than 1% of fleet)

## Buyback Programs in the 1990’s

- Three different programs
- Different objectives
- Differ in scope
- Similar design

## The 1993 Buyback Program

- Pilot program in 1993
- Objective to retire licenses in commercial sector to transfer to aboriginal fishery
- Spent $5.95 million to retire 75 licenses (about 2% of the fleet)

## The 1993 Program (2)

- Design of Program
- Restricted to eligible licenses
- Designed as a reverse auction
- Ranked by strict $ bid per potential catching effort per foot
- Retired predominantly smaller vessels and few seine vessels
- Use committee of industry representatives to evaluate bids

## The 1996 Program

- Two major programs in late 1990’s
- Salmon fishery in as state of crisis
- Objective to reduce fleet
- Large program $80 million
- Introduced in conjunction with the Mifflin Plan

## Slide 13

## The 1996 Program (2)

- Again reverse auction
- Two multiple rounds
- Government announced funds available and target of 20%
- Attempt to maintain fleet balance (equal across gear types)

## The 1996 Mifflin Plan

- The Mifflin Plan introduced major changes to licensing system
- Area licensing
- Single gear licensing
- Stacking (market rationalization)
- Promised greater certainty through reaching agreement over allocation and improved fishing opportunities
- Did it all work?

## Results of 1996 Program

**Notes:**
9%; 20%; and 23%

## The 1998-2000 Buyback Program

- Same objective
- Significantly larger at $200 million
- Again a reverse auction
- Implemented in three multiple rounds
- Government target of 50% reduction across all gear types

## Results of the 1998-2000 Program

## The 1998-2000 Buybacks (2)

- Achieve balanced reduction
- Met through targeting seiners
- No longer strict $ per foot rankings
- Retirement of smaller vessels
- Exit of older fishers

## Lessons Learned

- Voluntary buybacks enjoy fishers support
- Need seen to maintain “equity”
- Multiple rounds allow adjusting bid values
- Rules out “stink” bids
- Important for government to signal in forming expectations
- Funds available and targeted level
- Prices paid slightly greater than estimates of “market value”

## Unexpected Lessons

- Remaining licenses fished harder (but this was not completely unexpected)
- More unexpected was that proceeds went back into licenses (to shelter from taxes)
- Not a lesson but consequence?
- license values have increased (up 20% for trollers and gillnetters since last buyback)
- Perceptions of improved profitability?
- Further buyback?
- Government purchases under ATP?

## Did It Work?

- Fishers saw the buybacks as meeting a political objective with no meaningful reduction in capacity
- Localized benefits by area and gear type but not for all
- If salmon prices improve how much effort could return?
- Push for IVQ’s and lower numbers may make more politically palatable (as older fishers disproportionately exited industry)