1Overview of Alaska Fisheries ManagementGunnar KnappProfessor of EconomicsInstitute of Social and Economic ResearchUniversity of Alaska AnchoragePrepared forEconomics 300: The Economy of AlaskaUpdated March 20062“Fisheries management” refers to allthe rules that affect who can fish,how they can fish, where they canfish, and how much they can catch3Fisheries management goals• Fisheries management has multiple goals:– To protect fishery resources– To promote a profitable fishing industry– To achieve social goals (equitable distribution of benefits,cultural traditions, etc.)• Fisheries management is verycomplicated and difficult because:– There are multiple goals,some of which conflict– Not everyone agrees about the goals– There is lots of scientific uncertainty4What matters for a healthy seafood industry?• Resources, prices, costs and allocation all matter for a healthy seafoodindustry.• Some of what matters is beyond our control• But how we manage our fisheries affects all of these factorsNature MarketsFishery ManagementResources PricesCostsWhat wecan’tcontrolWhat wecancontrolAllocation of Catches and BenefitsWhat wecan’tcontrolNature MarketsFishery ManagementResources PricesCostsWhat wecan’tcontrolWhat wecancontrolAllocation of Catches and BenefitsWhat wecan’tcontrol5The Statehas management authority for Alaska fisheries occurring primarily between 0and 3 miles from shore.The federal governmenthas management authority forAlaska fisheries occurringprimarily between 3 and200 miles from shore.Federal governmentMostgroundfishFederal government (crab management is partially delegatedto the state)Most shellfishFederal government (quotas set by International PacificHalibut Commission)HalibutStateHerringStateSalmonManagement AuthoritySpecies group6Important management decisions for federally managedfisheries in Alaskawaters are made by the North Pacific Fishery Management Council.• The members of the Council are appointed mostly from the fishing industryby the Governors of Alaska, Washington, Oregon• The Council meets six or more time each year, most frequently inAnchorage. Hundreds of people attend these meetings to testify andattempt to influence policy• The Council carried extensive analyses of management issues, bothbiological and economic• This “Council System” was set up to provide for fisheries managementwhich is sensitive to the concerns of the fishing industry• But some people criticize the Council because of the potential for conflictsof interest as industry members decide about management issues thataffect their own businesses—and also because they think having industrymembers decide how much fish to catch is like having the fox guarding thechickens.• Other areas around the country also have “fishery management councils.”for example, there is a “New England Fishery Management Council” and a“Gulf Fishery Management Council.” Most people think that the NorthPacific Fishery Management Council has been the most successful of theseCouncils in establishing good policies to manage fishery resources.7Important decisions for fisheriesmanaged by the State of Alaskaare made by the Board of Fisheries.• The Board of Fisheries is acitizen board appointed by theGovernor of Alaska (subject toconfirmation by Legislature)• The Board manages not only commercial but also sport fisheries• The Board meets several times per year to hold hearings andvote on policies. Hundreds ofpeople attend the meetings totestify to try to influence the Board’s decisions.• Unlike the North Pacific Fishery Management Council, the Boardhas no research staff and nobudget to analyze issues.• Many of the decisions madeby the Board are about verycontroversial issues, such ashow to allocate fish betweencommercial and sport fishermen8An Alaska Board of Fisheries Meeting9Throughout the long history of the Alaskafishing industry, fishery managementhas been very controversial. One main reason is that how a fishery ismanaged determines—either directly or indirectly--who catches how much fishand who makes how much money.Often people argue that a particular regulation is needed for “conservation”purposes (to protect the fish resource from over-fishing) when their main goal isto affect “allocation” (who gets to fish and how much fish they can catch).Alaska has many restrictions on the kinds of fishing gear that fishermen canuse. Many of these deliberately limit the efficiency of fishing—they increase thecost of catching fish. The basic goal for these restrictions is to create jobs andfishing opportunities for Alaskans. The less efficient the gear—the fewer fish afisherman can catch—the more fishermen there can be.Many people (including myself) have pointed out that limiting efficiency is fineas long as the fishery is profitable—because it spreads the wealth among morepeople. But it is hard to justify when the fishery is no longer profitable, as isnow the case in much of the Alaska salmon fishery.10One example of a restriction which deliberately reduces efficiency is Alaska’sban on the use of salmon traps.A salmon trap can catch a lot of fish using very few workers. Basically a longnet is stretched across an area where the fish migrate, leading the fish to asmall opening, which they swim into and then can’t get out of. Beforestatehood, a large share of Alaska salmon were caught in traps.An old picture of an Alaskafloating salmon trapI took this picture of a painting of a Russian salmon trapfrom a mural of Russian fishing gear types at theFisheries Technical University in Vladivostok.11Salmon traps have a lot ofadvantages as a fishing gear:•They are efficient: fish swim to the trap•They are good for quality: fish can be kept alive until ready forprocessing•They can be good for the resource:– They allow fishermen to catchexactly the number of fish themanagers want to allow them tocatch (and then let the rest go)– They allow fishermen to releaselive species that they don’t wantfishermen to catch (for example, king salmon that might bevaluable for sport fishing)12However, the traps used in the Alaska salmon fishery before statehoodwere extremely unpopular.• Most of the traps were owned by “Outside” (non-Alaskan)processors• Alaska fishermen resented the trapsbecause the traps caught a lotof the fish—leaving less fish for Alaskan fishermen to catch• Resentment of traps was an importantfactor in the political battle forAlaska statehood during the 1950s.Many Alaskans supportedstatehood because it would allowthe state to manage the salmonfisheries, which would allow themto get rid of the fish traps.• Traps were banned when Alaska became a state in 1959• The ban on salmon traps continues to this day.• Some people (including myself) are questioning whether it makessense to ban the use of one of themost cost-effective ways ofcatching salmon.13Another example of a restriction which deliberately limits efficiency isthe limits on the size of boats which may be used in various Alaskasalmon fisheries.• For example, in the Bristol Bay salmon drift gillnet fishery, boats arenot allowed to be longer than 32 feet.• People are smart. When you restrict how they do something, theyoften figure out another way to do thesame thing. In Bristol Bay,because the boat length has been restricted, over time people havebuilt boats that were wider and taller.• Fishermen have an incentive to investin bigger boats so that theycan catch a larger share of the resource. But if everyone builds aboat that is twice as expensive, they end up all doubling their costswithout any change in their total value (because more boats doesn’tmean any more total fish available to be caught). This makes thefishery less efficient and less profitable.14This is a 32’ Bristol Bay fishing boattypical of thosebuilt in the 1970s.Photograph by Norm Van Vactor15And here, with it, is a Bristol Bay fishing boat that was built in the 1990s.Photograph by Norm Van Vactor16In the 1970s, the State of Alaska introduced a new system of fisheriesmanagement for the Alaska salmon fishery called “limited entry.” Previously,anyone who wanted to fish was allowed to. As a result, more and more peoplewere fishing for salmon, resulting in less and less fish for the averagefisherman to catch.The “Limited Entry” system put a cap on the maximum number of peopleallowed to fish. There were a fixed number of permits in each area. Onlypeople with a limited entry permit were allowed to fish.The permits were originally given out for free to people with a history ofparticipation in the salmon fishery. After that, the only way to get a permit wasto buy one (or inherit one or be given one). In the late 1980s, when salmonprices were very high, permits became very valuable—sometimes selling forseveral hundred thousand dollars. In the 1990s, as salmon prices declined, sodid permit prices.Limited entry was very controversial at first, because many people thought itwasn’t right that only some people should have the exclusive right to fish forsalmon in Alaska—since the fish are a public resource.17Total Earnings and Average Permit Price:Bristol Bay Salmon Drift Net Fishery$0$20$40$60$80$100$120$140$160$180$200 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999

Total gross earnings ($ millions)$0$50$100$150$200$250$300 Average permit price ($000)Total Gross Earnings ($ millions)Average Permit Price ($000)This graph shows the dramatic decline in the value of the Bristol Bay salmonharvest duringthe 1990s, and the corresponding decline in Bristol Bay limited entry permit prices.18A problem that persistedin Alaska salmon fisheriesdespite limited entry wasthat there were still toomany boats in somefisheries—as illustrated inthis picture from theBristol Bay salmonfishery. When priceswere high everyone couldstill make money, but nowmost people think thathaving so many boatscompeting with eachother is an inefficiency wecan no longer afford.Photograph by Bart Eaton19“Restructuring” and “Rationalization”• “Restructuring” is significantly changing the management of a fisheryto reduce costs, increase value of achieve other objectives.• The introduction of limited entry in the Alaska salmon fisheriesrepresented a major “restructuring” of the salmon fisheries.• In recent years, there has beena lot of debate about restructuringother Alaska fisheries—and more restructuring of salmon fisheries.• Very significant changes have occurred in the management ofAlaska’s halibut and sablefish fisheries, Bering Sea pollock fisheries,and crab fisheries.• Some people think that the newmanagement systems which havebeen introduced in those fisheries are more “rational” than thesystems they replaced.• For this reason, “restructuring” isalso referred to using the term“rationalization” (but noteveryone likes this term!)20Individual Fishing Quotas (IFQs)One of the most important examplesof “restructuring” or “rationalization”of an Alaska fishery occurredin 1995 in the halibut fishery.Prior to 1995, the halibut fishery was “open access”—anyone whowanted to fish was allowed to.As more and more boats began fishingfor halibut, the managers had to makethe seasons shorter and shorter.By the mid-1980s, the halibut fishing season was reduced to just two24-hour fishing periods per year.In 1995, the management was changed to an “Individual Fishing Quota”or “IFQ” system. Under the IFQ system, individual fishermen wereallocated specific shares (percentages) of the total quota or catch limit,based on how much fish they had caughtin the past. They could catchonly as many fish as their individual quota allowed.Fishermen received their original IFQ shares for free. If fishermenwanted to catch more fish, theycould buy more quota from otherfishermen. Or if they wanted to getout of the business, they could selltheir quota—which quickly became quite valuable.21Arguments For IFQsUnder the IFQ system, instead of looking for ways to catch fish faster, fishermenlook for ways to catch fish more efficiently.When the IFQ system was introduced for halibut, the number of boats fishing forhalibut was greatly reduced because fishermen could save a lot of money byfishing for a lot of quota from a single boat rather than fishing for small amountsof quota from a lot of boats. This saved a lot of money which would otherwisehave been spent on fuel and fishing gear.The fishing season was extended from two days to nine months. Spreading thefishing season out greatly increased thevalue of the fishery because most ofthe fish could be sold fresh—which was impossible formerly when all the fishwere caught at the same time.The IFQ system also made the halibut fishery safer. Fishermen could catch fishwhen the weather was good, rather than having to fish during the short two-dayseason even if the weather was bad.22Arguments Against IFQsEven though IFQs make fisheries more efficient, many fishermen stronglydislike them, for a number of reasons.Many fishermen don’t like the way the quotas were allocated, based on howmuch fish people had caught in the past, before the IFQ system. Quotas areworth a lot of money, and some of the people who received quotas for freemade a lot of money by selling their quotas.Other people don’t like the fact that with IFQs, fishing is no longer open toanyone who wants to fish. Before you can fish, you have to buy quota fromsomeone, which is very expensive. This makes it hard for young people to getinto the halibut fishing business.Other people don’t like the fact that IFQs reduce the number of fishing jobs,because there are many fewer boats (fishing for a longer period of time).23Another major change in Alaska fisheries management which occurredin the 1990s was the Community Development Quota, or “CDQ”program.Under the CDQ program, a portion ofthe Bering Sea fishing catch(currently 10%) is allocated to six groups of villages in western Alaskawithin 50 miles of bhe Bering Sea Coast (known as “CDQ groups”).At first these CDQ groups did not own any of the large fishing boatsneeded to catch Bering Sea fish suchas pollock. So they formedpartnerships with large fishing corporations under which the corporationspaid the CDQ groups for theright to catch their fish.Under the CDQ program, the CDQ groups have earned tens of millionsof dollars, which they have used (as required by law) for economicinvestments in western Alaska. Several of the CDQ groups haveinvested in their partners’ corporations. In this way they have becomeimportant players in the Bering Sea fishing industry.24These are the six CDQ groups:• Aleutian Pribilof Island CommunityDevelopment Association (6communities)• Bristol Bay Economic Development Corporation (17 communities)• Central Bering Sea Fishermen’s Association (1 community)• Coastal Villages Region Fund (20 communities)• Norton Sound Economic Development Corporation (15communities)• Yukon Delta Fisheries DevelopmentAssociation (6 communities)25This map showsthe six CDQgroups and thevillages theyrepresent.26Effects of the Alaska CDQ Program(as described in a 2002 report bythe economic consulting firmNorthern Economics):“Over the duration of the CDQ program, annual pollock CDQ royaltieshave consistently exceeded$13 million. In 2000, theCDQ groups received nearly $33 million in pollock CDQ royalties, whileroyalties from the multi-species program provided the groups an additional $7.4 million.The revenue stream from the lease of CDQ allocations has permitted the CDQ groups to makesubstantial fisheries related investments. The value of CDQ groupassets in aggregate increasedfrom nearly $15 million in 1992 to over$152 million in 2000.All six CDQ groups have acquired ownership interests in the offshore pollock-processing sector. Inaddition, some CDQ groups have invested in inshore processing plants, motherships, and catcherprocessors that operate in the crab, halibut, andgroundfish fisheries.These investments have significantly increased theparticipation of Alaskaresidents in fisheriesdominated by Seattle-based companies. A number of CDQ groups have also promoted investment inlocal, small-scale fishing operations targeting salmon, herring, halibut, or other species. For example,CDQ groups have channeled significant resources towardlocal fisheries-related infrastructuredevelopment.”27Crab RationalizationThe most recent restructuring of a major Alaska fishery began in 2005 inthe Bering Sea crab fisheries.Under the new system, crab vesselowners received IFQs for crab, similarto those in the halibut fishery.A very controversial new feature ofthe crab management system wasthat fish processors also received“Individual Processor Quotas” (IPQs).Fishermen are required to sell most of their catch to processors whoown IPQs. Most fishermen strongly dislike this feature of crabrationalization.In the very first year of crab rationalization, the number of boats fishingfor crab fell by almost 2/3—fromabout 250 boats to less than 90--resulting in a loss of about 900crab fishing jobs. Many Alaskafishermen are vehemently opposed tothe changes which occurred withcrab rationalization.28Businesses which sell supplies and services to fishing boats arealso affected by rationalization.Business which store and loadcrab pots are directly affected bythe decline in the number of crabpots fished which occurred withrationalization.The number of pots registered inthe 2005 Bristol Bay Red KingCrab fishery fell by 68%.