The Anatomy of a Multispecies Individual 

Fishing Quota (IFQ) “Market” in 

Development

Daniel S. Holland and Karma Norman

U.S. Department of Commerce

National Oceanic and Atmospheric Administration

National Marine Fisheries Service

NOAA Technical Memorandum NMFS-F/SPO-158

September 2015

The Anatomy of a Multispecies Individual Fishing Quota 

(IFQ) “Market” in Development

Daniel S. Holland and Karma Norman

Conservation Biology Division

Northwest Fisheries Science Center

National Marine Fisheries Service

National Oceanic and Atmospheric Administration

2725 Montlake Blvd. E.

Seattle, WA 98112

NOAA Technical Memorandum NMFS-F/SPO-158

September 2015

U.S. Department of Commerce

Penny S. Pritzker, Secretary 

National Oceanic and Atmospheric Administration

Kathryn D. Sullivan, Administrator

National Marine Fisheries Service

Eileen Sobeck, Assistant Administrator for Fisheries
ii

Recommended citation:

Holland, D. S., and K. Norman. 2015. The Anatomy of a Multispecies Individual Fishing Quota 

(IFQ) “Market” in Development. U.S. Dept. of Commer., NOAA. NOAA Technical 

Memorandum NMFS-F/SPO-158, 30 p.

Copies of this report may be obtained from:

Dan Holland

Northwest Fisheries Science Center

2725 Montlake Blvd. E.

Seattle, WA 98112

Or online at:

http://spo.nmfs.noaa.gov/tm/
iii

Table of Contents

Abstract...........................................................................................................................................vi

Introduction .................................................................................................................................... 1

Background on the IFQ Program .................................................................................................... 2

Characteristics of QP Transfers....................................................................................................... 5

QP Trading Patterns and Networks .............................................................................................. 12

Network Analysis .......................................................................................................................... 15

QP Prices....................................................................................................................................... 21

Discussion...................................................................................................................................... 27

References .................................................................................................................................... 30
iv

List of Tables 

Table 1: Catches as a Percentage of Total IFQ Quota Pound Allocations 2011–2013.....................................4

Table 2: Count of Transfers by Type, Year, and Single vs. Multiple Species Transferred (with multispecies 

transfer counted as one transfer)....................................................................................................7

Table 3 Count of Transfers by Type, Year, and Single vs. Multiple Species Transferred (with each species 

in multispecies transfers counted as a separate transfer) ..............................................................7

Table 4: Total Pounds of QP Transferred by Type, Year, and Single vs. Multiple Species Transferred in 

Millions of Pounds ...........................................................................................................................7

Table 5: Total Sector Allocation of QP by IFQ Stock in 2013 and Percent Transferred by Transfer Type. 

Note that percentages exceed 100 percent because QP can be transferred more than once......8

Table 6: Counts of Single-Species and Multispecies Cash Sale Transfers of Each IFQ stock 2011–2014 .....9

Table 7: Number of Linkages between QS and/or QP Owners by Transfer Type and Year........................12

Table 8 Average Annual Prices, Count of Transfers, and Coefficient of Variation (CV) of Prices, for SingleSpecies QP Cash Sales Reported to NMFS with Prices ..................................................................22

Table 9 Average Annual QP Prices from Jefferson Trading Auctions, Count of Sales on Jefferson Trading, 

and Ratio of Jefferson Trading Prices to NMFS Prices from Single-Species Cash Sales.................25

Table 10 Regression of Price Dispersion as a Function of Count of Single-species Cash Sales ..................26

Table 11 Bi-annual QP Prices and Price Dispersion from Single-Species Cash Sales..................................27
v

List of Figures

Figure 1: Percent of Annual Cash and/or Barter Transfers that were Cash Sales vs. Barter Depending on 

Whether the Parties Involved Landed Fish to the Same Processor...............................................10

Figure 2: Ratio of Transfers to a State from Another State to Transfers from a State to Another State by 

Type of Transfer for Transfers Occurring in the Years 2011–2014................................................11

Figure 3: Percent of Linkages between Account Owners that Landed Fish to the Same Processor that Did 

or Did Not Undertake Some Cash Transactions.............................................................................13

Figure 4 Percent of Linkages between Account Owners that Included some Cash Transactions that Did or 

Did Not Land Fish to the Same Processor......................................................................................13

Figure 5 Ratio of the Number of Trade Linkages between Account Owners that Have Incoming Interstate

QP Transfers Over Those Having Outgoing Interstate Transfers for Years 2011–2014.................14

Figure 6 Networks of Trading Relationships in 2011 (upper) and 2014 (lower) Based on All Transfers Not 

Identified as Self-Trades ................................................................................................................16

Figure 7 Networks of Trading Relationships in 2011 (upper) and 2014 (lower) Including Only Linkages 

with Cash and/or Barter Transfers.................................................................................................17

Figure 8 Networks of Market Maker Trading Relationships in 2011 (upper) and 2014 (lower) Including 

Only Linkages with Cash Sales .......................................................................................................18

Figure 9 Networks of Sablefish Trading Relationships in 2011 (upper) and 2014 (lower) Including Only 

Linkages with Cash Sales................................................................................................................19

Figure 10 Network of Trading Relationships in 2014 Highlighting Trades between States........................20
vi

Abstract

In 2011 an individual fishing quota (IFQ) system was implemented for the limited entry trawl component 

of the Pacific groundfish fishery in the United States as part of a fishery rationalization program that 

included cooperatives for the at-sea whiting component of the fishery. The IFQ system allocates quota 

shares (QS) for 29 IFQ stocks and individual bycatch quota (IBQ) shares for Pacific halibut. Each year 

quota share owners are issued quota pounds (QP), which can be used to balance their own catches of 

IFQ species or can be traded or sold. Transferability allows QP to be acquired by the fishermen who can 

generate the most value with it. The complex multispecies nature of this fishery and the requirement to 

balance all catch with QP makes QP transferability a critical part of this IFQ system, since fishermen have 

limited ability to control the species composition of their catch and may need to acquire QP to cover 

unplanned catch. Although a web-based system was created to enable QP transfers, this did not create 

a functional QP market automatically. Rather the market (and a variety of other mechanisms for 

distribution of QP) is developing organically as quota holders, fishermen, and intermediaries develop 

trading and contractual relationships, and as QP values are determined and evolve. We describe the 

structure of the QP market, how it has developed, and how it is performing. We discuss the 

impediments to QP market efficiency and make recommendations on how more efficient multispecies 

markets might be facilitated in this and other multispecies IFQ fisheries.
1

Introduction

In January of 2011 an individual fishery quota (IFQ) system was implemented for the limited entry trawl 

component of the Pacific Coast groundfish fishery in the United States as part of a fishery rationalization 

program that included cooperatives for the at-sea whiting component of the fishery. The IFQ system 

allocates quota shares (QS) for 29 IFQ stocks and individual bycatch quota (IBQ) shares for Pacific 

halibut. Each year quota share owners are allocated quota pounds (QP) which can be used to balance 

their own catches or can be traded or sold. QPs must be transferred from a QS account to a vessel 

account in order to be fished, and can also be transferred between vessel accounts. QS was not initially 

transferable, but became so in 2014.

The IFQ program was a major change from the previous system which set species quotas on 

what an individual could land during each 2-month period but allowed fishermen to discard fish once 

they reached their landings limit and continue fishing for other species. IFQ rules require fishermen to 

balance all IFQ species catch with QP, whether the fish is landed or discarded. Fishermen whose catches 

exceed their QP holdings must acquire QP from other quota holders or cease fishing and potentially face 

penalties. Since fishermen have limited ability to control the species composition of their catch, a wellfunctioning QP market is essential to enable them to match catches with QP. Transferability of QP also 

offers the possibility for fishermen to adjust their catch and quota pound portfolios to better fit their 

business plans by acquiring or selling QP. Businesses can now buy and sell QS to adjust their annual QP 

allocations, but we focus on the QP market in this report, as QS trading was only allowed as of 2014.

For most fishery participants, buying and selling QP was a completely new activity when the IFQ 

system was implemented. The National Marine Fisheries Service (NMFS) provided a publicly available 

listing of IFQ permit holders and their QS and QP holdings (https://www.webapps.nwfsc.noaa.gov/ifq/), 

and a web-based system to implement transfers of QP between permit holders. This provided a 

relatively simple and efficient means to transfer QP and provided some information on who might have 

QP to sell, but it did not automatically create a functional QP market. The market is developing 

organically as quota holders, fishermen, and intermediaries develop trading relationships. 

QP transfers can provide useful information to fishing businesses, fishery managers, and other 

fishery stakeholders. Price information on prior QP sales provides a basis for negotiating sale prices. 

Price information provides businesses important information for business planning (e.g., whether to 

expand or contract their planned catches of various IFQ species and buy or sell QP accordingly). 

Theoretically, QP prices should provide an indication of profitability of the fishery and thus a means to 

assess economic performance of the fishery (Newell et al. 2007). Prices of QP should provide a measure 

of the profit that can be generated from an additional pound of quota in the current year. In a 

multispecies fishery, the value of QP may be more complex because an additional pound of quota for 

one species may allow more catch of other species for which QP is not limiting (Holland 2013). For 

example, if a fisherman typically catches 1 pound of canary rockfish for every 1,000 pounds of sablefish 

and has additional sablefish QP but no canary QP, an additional pound of QP might be worth much of 

the profit that could be gained from landing an additional 1,000 pounds of sablefish. Analysis of QP 

transfers can also reveal geographic and sectoral shifts of quota ownership and fishery participation that 

are important to fishery managers and stakeholders. Understanding these shifts can be particularly 

important in evaluating and minimizing adverse economic impacts on fishing communities as mandated 

by National Standard 8 of the Magnuson-Stevens Fishery Conservation and Management Act (MSA), and 
2

potentially for evaluating optimal yield as mandated under National Standard 1 of the MSA. Information 

on transfers can be used to construct social networks that reveal how the market is structured and how 

thick the market is, which may be helpful in identifying impediments to market efficiency.

We analyze all QP transfers made in years 2011–2013, the first 3 years of the Pacific Coast 

Groundfish IFQ program’s operation. We explore the structure of the QP market, how it has developed, 

how it is performing, and where it appears to be failing to work efficiently. We explore the 

characteristics of the QP market and trading networks in terms of how they are organized. As we show, 

arm’s length sales of QP for cash represent only a small part of the overall system for distributing and 

redistributing QP among vessels. A variety of other mechanisms—including intra-firm transfers, 

contractual relationships, barter, and risk pools—account for the bulk of transfers. Our findings identify 

a number of factors that can inhibit development and operation of an efficient QP market in a 

multispecies IFQ program, and we discuss how policies can facilitate or impede the operation of QP 

markets and other mechanisms for getting QP to those who can make best use of it. 

Background on the IFQ Program 

The Pacific Coast Groundfish FMP covers more than 90 species, including 64 rockfish species, 12 flatfish 

species, 12 roundfish species, and six species of sharks and skates harvested off the coasts of California, 

Oregon, and Washington using a number of gears. The fishery has traditionally been divided into a trawl 

fishery and a fixed gear fishery, each with a different set of regulations and allocations of the overall 

total allowable catch (TAC) of the species they catch. The limited entry trawl sector of the groundfish 

fishery includes a demersal trawl fishery that targets a wide variety of rockfish, roundfish, and flatfish 

species, as well as a distinct midwater trawl fishery for Pacific whiting that takes only minimal amounts 

of other groundfish. 

In 2011 an IFQ system was implemented for the limited entry trawl sector of the Pacific Coast 

Groundfish Fishery.1 The IFQ includes 25 species or species groups divided into 29 separate IFQ stocks 

and one IBQ stock (Table 1).2 Vessels fishing in the IFQ fishery also land a number of other species that 

are not included in the IFQ program and thus do not require balancing catch with QP. Although the IFQ 

system was implemented for the trawl sector of the groundfish fishery, a “gear switching” provision 

allows fishermen to use longlines or fish pots to harvest IFQ quota pounds while registered to a trawl 

limited entry permit. This partially integrates a fishery that had been managed with largely separate 

management approaches and allocations for trawl and fixed gear sectors, although a separate fixed gear 

fishery still remains. Many trawl participants who have traditionally fished with trawl gear have used the 

provision to switch gears on one or more trips, and some traditional fixed gear fishermen have entered 

the IFQ program by registering their vessel to a trawl limited entry program, opening a vessel account, 

and obtaining QPs.

This report focuses on the IFQ component of the trawl fishery and the transfers of QP between 

participants in that fishery. Catches of IFQ species during the first 3 years of the program have been far 

below the total QP allocated for all but a few species (Table 1). Catches exceeded 90 percent of 

allocated QP for only three stocks (Pacific whiting, sablefish north of 40°10' latitude, and petrale sole). 

 1 Part of the allocation for Pacific whiting is allocated to catcher-processors and vessels delivering to at-sea 

processors, and these sectors are managed with cooperatives rather than IFQs. 2 Sablefish, lingcod, shortspine thoryheads, minor shelf rockfish, and minor slope rockfish each have separate 

IFQ stocks north and south of specified latitude.
3

The reasons why much of the allocations is left unharvested are not completely clear and likely vary 

from species to species. A lack of markets for fish, or prices too low to make harvest economical, may 

be part of the reason, but concerns about availability of quota pounds to cover unexpected bycatch may 

also have discouraged targeting of some species that are found in areas where bycatch risk is high. 

Prior to implementation of the IFQ program, there was substantial concern that very small total 

quotas for several overfished rockfish species might constrain catches of other IFQ species. Species of 

concern included bocaccio, canary rockfish, cowcod, darkblotched rockfish, Pacific Ocean perch, widow 

rockfish, and yelloweye rockfish. The most severe example is yelloweye rockfish, which had a total 

allocation of only 1,323 pounds of QP in 2011 and a median QP allocation of only 4 pounds. There was 

also concern about Pacific halibut that cannot be retained, but catches must be matched with individual 

bycatch QP. In response to these concerns a number of fishery participants formed risk pools in which 

they pooled QP for the overfished rockfish species and for Pacific halibut IFQ (see Holland and Jannot 

2012). The risk pools reduce the risk that an individual fisherman will be shut down by an unexpected 

bycatch event and fail to find anyone to sell them QP. However, to ensure that risk pool members take 

due care to avoid bycatch, the risk pools also require members to follow a number of rules designed to 

reduce bycatch, for example avoiding certain areas with high bycatch risk (Holland and Jannot 2012).

During the first 3 years of the IFQ program, catches have in fact not exceeded 50 percent of total 

QP in aggregate for any of these potentially constraining rockfish species. Yelloweye catches were only 

10 percent of QP in 2011 and only 6 percent in 2012 and 2013. For canary rockfish, which was frequently 

mentioned by fishermen as one of the biggest concerns, catches have not exceeded 28 percent of total 

QP in any year. Although aggregate catches have been far below QP, catches tend to be very uneven, so 

some individuals have caught more than the QP they were originally allocated and had to acquire 

additional QP. Anecdotal reports indicate that many other fishermen may have opted not to pursue 

certain species in shelf areas because of the risk of exhausting QP allocations for species like yelloweye 

and canary rockfish and being forced to tie up if they could not find QP on the market. This suggests a 

failure of the market to distribute QP effectively and a lack of confidence in the QP market as a source of 

QP should an individual need to acquire more. Our analysis can neither confirm nor dispute this 

hypothesis explicitly, but we do present evidence that the market is highly complex and arguably 

inefficient to date.
4

Table 1: Catches as a Percentage of Total IFQ Quota Pound Allocations 2011–2013

Catches vs. Total IFQ Quota Pound Allocations 2011 2012 2013 2014

2014 Sector 

Quota 

Pounds

Arrowtooth flounder (TAC dropped 60% in 2013) 20% 26% 63% 50% 7,643,603

Bocaccio rockfish South of 40°10' N. 9% 15% 17% 11% 174,165

Canary rockfish 14% 28% 26% 26% 90,610

Chilipepper rockfish South of 40°10' N. 21% 22% 36% 29% 2,352,883

Cowcod South of 40°10' N. 1% 5% 22% 20% 2,205

Darkblotched rockfish 36% 36% 44% 35% 613,789

Dover sole 35% 33% 36% 29% 49,018,682

English sole 1% 2% 3% 5% 11,598,189

Lingcod (combined North and South of 40°10' N.) 16% 21% 21% 11% 3,592,323

Longspine thornyheads North of 34°27' N. 49% 48% 59% 50% 3,993,453

Minor shelf rockfish North of 40°10' N. 3% 8% 6% 7% 1,119,948

Minor shelf rockfish South of 40°10' N. 3% 15% 25% 12% 178,574

Minor slope rockfish North of 40°10' N. 17% 27% 25% 23% 1,740,285

Minor slope rockfish South of 40°10' N. 14% 33% 31% 26% 834,736

Other flatfish 17% 16% 19% 20% 9,245,746

Pacific cod 22% 35% 14% 15% 2,483,309

Pacific halibut (IBQ) North of 40°10' N. 28% 43% 31% 25% 236,660

Pacific ocean perch North of 40°10' N. 39% 45% 45% 36% 247,535

Pacific whiting 98% 96% 99% 83% 263,309,103

Petrale sole 93% 100% 92% 97% 5,242,593

Sablefish North of 36° N. 94% 91% 100% 95% 4,382,790

Sablefish South of 36° N. 86% 44% 15% 32% 1,439,839

Shortspine thornyheads North of 34°27' N. 50% 50% 60% 50% 3,025,822

Shortspine thornyheads South of 34°27' N. 17% 1% 7% 5% 110,231

Splitnose rockfish South of 40°10' N. 3% 4% 3% 4% 3,472,501

Starry flounder 2% 1% 0% 2% 1,665,592

Widow rockfish 40% 45% 41% 66% 2,191,020

Yelloweye rockfish 10% 6% 6% 6% 2,205

Yellowtail rockfish North of 40°10' N. 24% 32% 27% 40% 6,479,055
5

Characteristics of QP Transfers

Because all QP transfers must be done through an online system operated by NMFS, we are able to 

analyse the full population of QP transfers. When making QP transfers through this system, the account 

holder making the transfer must indicate, along with the quantities of QP to be transferred, whether the 

transfer is a “self-trade” (meant to indicate a transfer within a company), a “cash sale,” a “barter,” “cash 

and barter,”, or “other.” Barter is meant to indicate swaps of QP (e.g., 1,000 pounds of petrale sole for 

200 pounds of canary); however, there were some indications that individuals were designating a 

transfer as barter when in fact the compensation was in some form other than QP. In 2013 a 

parenthetical clarification, “swap quota pounds for quota pounds,” was added next to the radio button 

for “barter.” 

The great majority of QP transfers made are identified as self-trades (Table 2). At the beginning 

of the year, individual quota share account holders are allocated QP and must transfer this into vessel 

accounts for it to be used to balance catch; therefore, many of these self-trade transfers are quota share 

permit owners transferring QP to their own vessel account, while others are between vessel accounts 

owned by the same company. Depending on the year, from 33 percent to 39 percent of annual transfers 

are self-trades. If transfers of each species in multiple species transfers are each counted as separate 

transfers, then from 52 percent to 57 percent of all transfers are designated self-trades, reflecting the 

fact that these transfers have, on average, a larger number of species included than other transfer 

types. 

If we consider only what appear to be arm’s-length transfers (those that were not self-trades), 

the most frequent transfer designation is “other.” Although transferors are asked to describe any nonmonetary compensation for the transfer, this is not required and the field is generally left blank. 

Descriptions that are provided suggest that “other” includes transfers made to and from risk pools and 

cooperatives, contractual arrangements where payment is a share of revenue when fish is landed, and 

various miscellaneous reasons (such as gifts, corrections to prior transfers, and bycatch QP to go along 

with a separate sale of target species QP). Depending on the year, trades designated as “other” make 

up from 46 percent to 57 percent of all transfers that are not designated as self-trades (Tables 2 and 3), 

and from 54 percent to 66 percent if each species in a multispecies trade is counted as a separate 

transfer. Single-species transfers make up the majority of transfers designated as “other” when 

considering each multispecies transfer as a single transfer. However, if each species transferred in a 

multispecies transfer is considered as an individual transfer, then multispecies transfers are more 

common since each multispecies transfer tends to include a number of species.

A substantial number of transfers are described as barter. As noted above, this category was 

meant to designate swaps of QP, though it may in fact include some transfers where another form of inkind compensation was used, particularly prior to 2013. There is no explicit link between the transfers 

that make up different sides of a barter transaction. Attempts to match up both sides of barter trades 

have been successful for only a fraction of transfers identified as barter through 2012. We have not yet 

attempted to match up barter trades reported in 2013. Barter transfers accounted for 16 percent to 22 

percent of annual transfers other than self-trades. Barter’s share of not-self transfers is smaller (9% to 

15%) if each species of multiple species transfers is considered a separate transfer; however, the 

number of species transferred in multispecies barter transfers tends to be smaller than for other types 

of multispecies transfers. 
6

Cash sales include both single-species and multispecies transfers. Although the transferor is 

asked to provide a price per pound for each individual species in the multispecies trade, this is not 

required and rarely filled out. The overall value of the sale must be indicated (though a value of zero 

can be entered), and this provides a way to calculate price per pound for single-species transfers. With 

enough multispecies transfers with a total value assigned, it might be possible to estimate species-level 

prices from multispecies cash sales and possibly barter trades using a hedonic framework (Holland 

2013). But, to date, data have been insufficient to support such an estimation (see section on QP prices). 

The number of single-species cash sales increased each year during the first 3 years of the 

program, from 292 in 2011, to 340 in 2012 and 384 in 2013 (Table 2). Although the total number of 

single-species cash sale transfers increased, they fell as a percentage of all non-self-trades, from 22 

percent to 21 percent of the total. Multispecies cash sales fell from 8 percent to 3 percent of non-selftrades between 2011 and 2013. Multispecies cash sales had, on average, 17, 21, and 24 species per 

transfer in 2011, 2012 and 2013, respectively. Consequently, multispecies cash sales make up a higher 

proportion of overall non-self-trades when each species is counted as a separate transfer or if the share 

of total pounds transferred is considered. If we consider each species as a separate transfer, 

multispecies cash sales accounted for 23 percent of non-self-trades in 2011, but fell to 15 percent by 

2013 (Table 3).

The amount of transfer activity, and the prevalence of different transfer types, varies 

significantly by IFQ stock. Table 5 shows total transfers in 2014 by transfer type as a percentage of total 

QP allocated for each IFQ stock. Note that, because QP can be transferred more than once, these totals 

exceed 100 percent of the total QP allocated. Much of the QP that was later traded in “market” 

transactions (i.e., not self-trades) was first transferred from a quota share account to a vessel account. 

Cash sales range from a low of 4 percent of total QP for splitnose rockfish to a high of 28 percent for 

Pacific cod. As noted above, while there are fewer multispecies cash sales than single-species cash sales, 

cash sales for many of these species are primarily part of sales of multispecies packages. QP of only a 

few species (Pacific whiting, petrale sole, and sablefish) is frequently sold individually, while every 

species is included in several multispecies cash sales each year (Table 6). 
7

Table 2: Count of Transfers by Type, Year, and Single vs. Multiple Species Transferred (with 

multispecies transfer counted as one transfer)

Transfer 2011 2012 2013 2014

Type Single Multi Single Multi Single Multi Single Multi

Cash Sale 292 101 340 67 384 63 411 62

Barter 223 66 275 48 262 35 191 37

Cash and Barter 23 11 37 11 48 12 31 9

Other 409 201 606 260 663 400 596 360

Self-Trade 423 408 512 308 641 327 528 326

Not Self Transfers 2157 2464 2835 2551

Table 3 Count of Transfers by Type, Year, and Single vs. Multiple Species Transferred (with each 

species in multispecies transfers counted as a separate transfer)

Transfer 2011 2012 2013 2014

Type Single Multi Single Multi Single Multi Single Multi

Cash Sale 292 967 340 763 384 733 411 676

Barter 223 394 274 187 262 166 191 190

Cash and Barter 23 60 37 50 48 116 31 68

Other 409 1870 606 1520 663 2649 596 2409

Self-Trade 423 5107 512 3648 641 5411 528 3817

Total 9768 7937 11073 8917

Table 4: Total Pounds of QP Transferred by Type, Year, and Single vs. Multiple Species Transferred in 

Millions of Pounds

Transfer 2011 2012 2013 2014

Type Single Multi Single Multi Single Multi Single Multi

Cash Sale

 

8.6 

 

21.9 

 

15.8 

 

21.2 

 

10.7 

 

16.6 

 

13.7 

 

15.0 

Barter

 

37.7 

 

16.5 

 

23.5 

 

5.9 

 

15.4 

 

3.7 

 

12.7 

 

4.6 

Cash and 

Barter

 

1.3 

 

0.7 

 

3.6 

 

1.4 

 

1.5 

 

3.1 

 

1.5 

 

5.8 

Other

 

63.2 

 

78.2 

 

69.4 

 

40.3 

 

69.9 

 

79.7 

 

100.9 

 

66.8 

SelfTrade 

26.5 

 

269.2 

 

81.7 

 

144.1 

 

68.0 

 

187.7 

 

58.3 

 

219.3 

All 

Transfers 524 407 456 499
8

Table 5: Total Sector Allocation of QP by IFQ Stock in 2013 and Percent Transferred by Transfer Type.

Note that percentages exceed 100 percent because QP can be transferred more than once.

OPTIMAL_YIELD_CATEGORY

Sector Quota 

Pounds

Cash 

Sale

Cash 

and 

Barter Barter Other

SelfTrade

Arrowtooth flounder 7,643,603 15% 1% 4% 27% 83%

Bocaccio rockfish South of 40°10' N. 174,165 11% 13% 10% 110% 42%

Canary rockfish 90,610 21% 1% 5% 76% 68%

Chilipepper rockfish South of 40°10' N. 2,352,883 14% 5% 3% 76% 68%

Cowcod South of 40°10' N. 2,205 9% 18% 20% 211% 34%

Darkblotched rockfish 613,789 16% 1% 7% 58% 81%

Dover sole 49,018,682 8% 3% 4% 36% 73%

English sole 11,598,189 11% 4% 2% 37% 63%

Lingcod North of 40°10' N. 2,546,670 11% 3% 5% 38% 72%

Lingcod South of 40°10' N. 1,045,653 9% 2% 4% 35% 64%

Longspine thornyheads North of 34°27' N. 3,993,453 21% 2% 11% 45% 79%

Minor shelf rockfish North of 40°10' N. 1,119,948 14% 3% 1% 33% 73%

Minor slope rockfish North of 40°10' N. 178,574 13% 3% 3% 70% 58%

Minor shelf rockfish South of 40°10' N. 1,740,285 15% 2% 3% 37% 69%

Minor slope rockfish South of 40°10' N. 834,736 9% 1% 5% 88% 56%

Other flatfish 9,245,746 12% 8% 3% 53% 57%

Pacific cod 2,483,309 20% 2% 3% 36% 66%

Pacific halibut (IBQ) North of 40°10' N. 236,660 13% 0% 8% 38% 60%

Pacific ocean perch North of 40°10' N. 247,535 20% 0% 7% 48% 75%

Pacific whiting 263,309,103 5% 1% 4% 44% 72%

Petrale sole 5,242,593 29% 1% 18% 46% 78%

Sablefish North of 36° N. 4,382,790 27% 3% 15% 41% 83%

Sablefish South of 36° N. 1,439,839 18% 6% 1% 64% 52%

Shortspine thornyheads North of 34°27' N. 3,025,822 19% 1% 8% 57% 79%

Shortspine thornyheads South of 34°27' N. 110,231 6% 3% 2% 72% 35%

Splitnose rockfish South of 40°10' N. 3,472,501 4% 4% 1% 65% 54%

Starry flounder 1,665,592 6% 4% 1% 32% 84%

Widow rockfish 2,191,020 24% 7% 8% 84% 74%

Yelloweye rockfish 2,205 23% 0% 3% 71% 57%

Yellowtail rockfish North of 40°10' N. 6,479,055 19% 2% 5% 36% 76%
9

Table 6: Counts of Single-Species and Multispecies Cash Sale Transfers of Each IFQ stock 2011–2014

IFQ 2011 2012 2013 2014

Species Single Multi Single Multi Single Multi Single Multi

Arrowtooth flounder 1 46 2 32 10 27 8 19

Bocaccio rockfish South of 40°10' N. 3 13 4 9 5 12 7 10

Canary rockfish 5 21 16 24 12 28 17 24

Chilipepper rockfish South of 40°10' N. 3 20 7 24 9 24 13 21

Cowcod South of 40°10' N. 2 13 2 9 4 12 2 8

Darkblotched rockfish 4 38 7 31 10 34 10 25

Dover sole 6 54 31 5 25 1 20

English sole 1 38 27 21 26

Lingcod 2 29 4 23 2 46 1 54

Longspine thornyheads North of 34°27' N. 5 53 13 39 20 33 24 28

Minor shelf rockfish North of 40°10' N. 1 24 2 22 24 9 18

Minor slope rockfish North of 40°10' N. 1 30 6 26 5 19 2 18

Minor shelf rockfish South of 40°10' N. 3 35 6 25 3 25 4 28

Minor slope rockfish South of 40°10' N. 7 31 7 29 9 24 1 19

Other flatfish 1 41 1 22 24 2 31

Pacific cod 14 21 11 23 1 22 5 24

Pacific halibut (IBQ) North of 40°10' N. 5 23 10 27 22 28 17 23

Pacific ocean perch North of 40°10' N. 3 32 4 26 17 30 19 24

Pacific whiting 31 43 82 26 63 21 34 30

Petrale sole 40 53 23 37 56 31 60 27

Sablefish North of 36° N. 64 56 49 37 78 26 67 25

Sablefish South of 36° N. 67 35 34 26 8 23 22 16

Shortspine thornyheads North of 34°27' N. 2 56 11 39 12 32 11 36

Shortspine thornyheads South of 34°27' N. 3 24 1 25 3 22 4 15

Splitnose rockfish South of 40°10' N. 1 26 1 25 1 21 17

Starry flounder 2 27 22 21 16

Widow rockfish 7 34 12 31 11 30 36 26

Yelloweye rockfish 7 25 11 22 12 25 14 18

Yellowtail rockfish North of 40°10' N. 1 26 14 24 6 23 21 30
10

0%

10%

20%

30%

40%

50%

60%

70%

80%

2011 2012 2013 2014 2011 2012 2013 2014

Cash Sale Barter

Fished to Different Processor Fished to Same Processor

The choice between barter and cash sales appears to be somewhat dependent on whether the 

parties have some existing linkages. If we consider only “market” transfers (those identified as either 

barter, cash, or cash and barter), there is a clear preference for using barter over cash sales as the 

mechanism of trade when both parties own vessels that land fish to the same processor (Figure 1). In 

contrast, cash sales are preferred for parties that do not share a processor (Figure 1). For parties that do

not fish to the same processor, 67 percent of market transfers are cash sales and 28 percent are barter, 

whereas for parties that do fish to the same processor only 28 percent are cash sales and 64 percent are 

barters. It is not clear why this is the case, but it may be that processors tend to broker barter trades 

between vessels that land fish to them, and they may favor barter arrangements over cash when they 

themselves make transfers to vessels that fish to them. 

Figure 1: Percent of Annual Cash and/or Barter Transfers that were Cash Sales vs. Barter Depending on 

Whether the Parties Involved Landed Fish to the Same Processor.

The movement of QP between states may be of some interest to stakeholders and managers to 

assess some of the distributional implications of the IFQ system. Geographical shifts in QP may also help 

differentiate whether spatial shifts in fishing activity are the result of vessels moving or of QP moving to 

vessels. This information can also reveal how the market is organized and the extent to which proximity 

(e.g., being from the same state) makes trading relationships more likely. 

In terms of total transfers from 2011 to 2014 that were not self-trades, approximately 62 

percent were between account owners from the same state. However, when considering only market 

transfers (cash and or barter), only 50 percent are between account owners from the same state. Cash 

sales are also about 50 percent intra-state trades. The ratio of trades to and from different states differs 

substantially. The ratio of transfers to California from other states relative to transfers from California to 

other states is 0.36, indicating a much higher likelihood of transfers moving QP out of California than 

into it (Figure 2). The opposite is true for Oregon and Washington; Oregon has a substantially higher 

ratio of incoming transfers to outgoing than either California or Washington when considering all 

transfers that are not self-trades and all market transfers. However, for cash sales both Washington and 

Oregon have around 1.8 incoming cash transfers per outgoing transfer.
11

 -

 0.10

 0.20

 0.30

 0.40

 0.50

 0.60

 0.70

Ratio of Transfers In/Out

California

Not Self-trade Market Cash

 -

 1.00

 2.00

 3.00

 4.00

 5.00

 6.00

 7.00

Ratio of Transfers In/Out

Oregon

 -

 0.50

 1.00

 1.50

 2.00

 2.50

2011 2012 2013 2014

Ratio of Transfers In/Out

Year

Washington

Figure 2: Ratio of Transfers to a State from Another State to Transfers from a State to Another State 

by Type of Transfer for Transfers Occurring in the Years 2011–2014.
12

QP Trading Patterns and Networks

Ultimately the QP market and the overall system for distributing QP is a set of trading relationships that 

can be represented by quota account owner-to-owner linkages for which transfers were observed. This 

arguably provides a better idea of the thickness of the market than the quantity of transfers. It is 

illustrative to examine the thickness of this trading network overall and for specific types of transfers 

(Table 7).Overall there are more than 300 unique QS and/or vessel account owners (most of these have 

both QS and vessel accounts and some have multiple accounts). Despite the relatively small number of 

owners, if each of these owners transacted with all the others, this would result in very large set of 

trading relationships, but in fact the total of intra-owner trading relationships is relatively small, growing 

from 540 to 600 (Table 7). This suggests that on average each owner trades with about two others, but 

some have many links and others have only one or none. 

If we consider only linkages that undertook cash or barter transfers, the number falls by about 

one-third, rising from 389 in 2011 to 408 in 2013. There are fewer than 300 owner-to-owner links for 

which cash transfers, including both single-species and multispecies transfers, were observed in a given 

year. Only about 11 percent of total linkages were observed to use the Jefferson Trading website (an 

auction site that enables individuals to post QP for sale in auctions or for immediate purchase at a 

particular price) to facilitate trades in 2011, but this nearly doubled to 117, or 20 percent of all ownerto-owner linkages, in 2013. This could also be an underestimate, as not all transfers that took place on 

Jefferson Trading could be matched to transfers in the NMFS database. Sablefish was transferred across 

40 to 50 percent of these linkages depending on the year, but only 16 to 23 percent had transfers of 

canary rockfish, suggesting a relatively thin market for this species (which is often mentioned as one 

that constrains fishermen’s ability to use other QP).

Table 7: Number of Linkages between QS and/or QP Owners by Transfer Type and Year

Number of Unique Links Percent of Total Links

YEAR 2011 2012 2013 2014 2011 2012 2013 2014

Not Self Transfers 540 564 600 608 100% 100% 100% 100%

Cash and/or Barter 389 369 408 394 72% 65% 68% 65%

Cash Sales 259 245 292 273 48% 43% 49% 45%

Jefferson Auction 62 85 117 137 11% 15% 20% 23%

Same Processor 160 158 159 137 30% 28% 27% 23%

Sablefish 270 228 234 223 50% 40% 39% 37%

"Bycatch" Species 202 234 280 309 37% 41% 47% 51%

Canary Rockfish 86 130 132 138 16% 23% 22% 23%
13

Although some trading relationships are essentially anonymous and facilitated by a broker or 

the Jefferson Trading website, most are not. Rather they involve the two trading partners finding each 

other somehow and negotiating a trade. Individuals who land fish to the same processor might be more 

likely to know each other and have an idea of what QP each other has and needs. Processors may also 

be in a position to act as brokers, either acquiring and distributing QP to vessels that fish to them, or 

facilitating trades between those vessels—sometimes even acting as account managers. When 

considering the linkages between individuals that do or do not fish to the same processor, it is clear that 

for those who do not fish to the same processor the trading relationship is more likely to be based on 

cash transactions, whereas those who fish to the same processor are likely to use non-cash means of 

compensation (Figures 3 and 4).

Figure 3: Percent of Linkages between Account Owners that Landed Fish to the Same Processor that 

Did or Did Not Undertake Some Cash Transactions

Figure 4 Percent of Linkages between Account Owners that Included some Cash Transactions that Did 

or Did Not Land Fish to the Same Processor
14

0

0.1

0.2

0.3

0.4

0.5

0.6

Ratio of Linkages In/Out

California

Not Self-trade Market Cash

 -

 1.00

 2.00

 3.00

 4.00

 5.00

 6.00

Ratio of Linkages In/Out

Oregon

 -

 0.50

 1.00

 1.50

 2.00

 2.50

2011 2012 2013 2014

Ratio of Linkages In/Out

Year

Washington

In the prior section we noted that a higher share of transfers indicated QP moving from a 

California owner to an owner from anther state than the reverse, but that the opposite was true for 

Oregon and Washington, which had more incoming than outgoing inter-state transfers. The same is true 

when we look at the trading relationships and consider the ratio of the number of linkages with 

outgoing inter-state trades relative to linkages with incoming trades (Figure 5). More California owners 

are “exporting” QP than are “importing” it, and the reverse is true for both Oregon and Washington. The 

difference is particularly strong when we consider just linkages that were observed to utilize Jefferson 

Trading. Oregon owners who use Jefferson Trading are more than 4.5 times more likely to be QP buyers 

than sellers, whereas Californian owners who use Jefferson Trading are nearly 4.5 times as likely to be 

selling QP. 

Figure 5 Ratio of the Number of Trade Linkages between Account Owners that Have Incoming 

Interstate QP Transfers Over Those Having Outgoing Interstate Transfers for Years 2011–2014.
15

Network Analysis

We use UCInet network analysis software (Borgatti et al. 2002) to analyse networks of QP 

trading for different categories of transactions. Network images can be useful in understanding the 

qualitative characteristics of the QP market, in particular the degree to which trading is coordinated. 

The network software UCInet is used to map networks visually, showing unique quota account owners 

(who in some cases own multiple QS or vessel accounts) as nodes. Although we count separate accounts 

as one account owner if the name of the account owner is the same or self-trades occurred between the 

accounts, some of these account owners may not be fully independent—e.g., in some cases multiple 

account owners could be subsidiaries of a larger entity. Arrows between the nodes indicated where 

trading activity has taken place and the direction of transfers. The color, size, thickness, shape, etc. of 

symbols representing account holders and linkages between them can be made to vary with 

characteristics, which can reveal qualities of the network that might not be immediately obvious from 

simply looking at data. For example, one can vary the color of nodes by whether they are active vessels 

to identify how QP moves from inactive to active quota owners or through brokers. The network 

analysis software also provides quantitative measures such as network density (which might be 

considered a proxy for market thickness in this case) or node centrality (which provides a measure of the 

importance of particular account owners in the overall network). Comparison of networks over time can 

tell us whether the market is thickening or thinning and how it is changing qualitatively.

In Figure 6, the network for all transfers not labelled by the transferor as self-trades is shown. 

The size of the nodes and the centrality of their position in the network reflects the number of linkages 

they have in the network. Additionally, in Figures 6 through 9, nodes that include at least one vessel 

account to which landings were attributed are colored blue, while those without active vessels are 

colored red. The thickness of the lines connecting nodes is proportional to the number of transactions 

between those nodes and, in Figure 8 bright green lines indicate trades between nodes that were 

mediated by a “market maker.” 

While the network of trading linkages between account owners is complex, it is in fact fairly 

sparse relative to potential density. A commonly used measure of network density is the ratio of the 

actual number of linkages between nodes over the potential number if all nodes were linked to all 

others. This measure of density for the network based on all transfers that were not self-trades was 

0.0272 in 2011 and 0.0486 in 2014.
16

Figure 6 Networks of Trading Relationships in 2011 (upper) and 2014 (lower) Based on All Transfers 

Not Identified as Self-Trades
17

If we consider only transfers labelled by the transferors as cash sales, barter, or cash and barter, 

which we consider to be “market” transactions, the density of the network is only 0.0198 in 2011 and 

0.0182 in 2014, indicating a much smaller set of trading relationships between account holders relative 

to the network with all transfers that were not self-trades (Figure 7). 

Figure 7 Networks of Trading Relationships in 2011 (upper) and 2014 (lower) Including Only Linkages 

with Cash and/or Barter Transfers
18

The network is sparser still when only linkages involving at least some cash sales are included in 

the network. Density falls to 0.0116 for 2014. As noted earlier, a significant proportion of cash sales are 

facilitated by Jefferson Trading. The density of this network (e.g., relationships between account holders 

that we could identify as using Jefferson Trading to facilitate cash trades, highlighted in green) was only 

0.0027 in 2011, about a quarter the density of the network for all cash sales. But density for the 

Jefferson Trading network increased by about one-third to 0.0036 in 2012 and to 0.0052 in 2013. In

2014 the density for the Jefferson Trading network was 0.0059, more than twice the density in 2011 

(Figure 8). 

Figure 8 Networks of Market Maker Trading Relationships in 2011 (upper) and 2014 (lower) Including 

Only Linkages with Cash Sales 
19

The networks presented above include transfers of all IFQ species, but it useful to consider 

networks for particular species or species groups. For example, one of the most heavily traded species 

is sablefish. However density of this network (Figure 9), at 0.0095, is only about one-third of that of the 

network for all species transfers. If we consider a species like widow rockfish (not shown), which is 

primarily an incidentally caught species, the network is thinner still with a density of only 0.0079.

Figure 9 Networks of Sablefish Trading Relationships in 2011 (upper) and 2014 (lower) Including Only 

Linkages with Cash Sales 
20

Lastly, Figure 10 uses three node colors to highlight the state of origin for quota owners: red 

represents California, blue represents Oregon, and black represents Washington state. This suggests 

that all three states have some entities with many connections (recall that the size of the nodes and the 

centrality of their position in the network reflect the number of linkages they have in the network), and 

that there are many linkages between entities from different states, rather than a set of isolated state 

networks.

Figure 10 Network of Trading Relationships in 2014 Highlighting Trades between States
21

QP Prices

Although cash sales that include only a single species make up only a fraction of QP transfers, they are 

the only means by which QP prices can be estimated given the amount of market activity to date. In 

principle, species-specific QP implicit prices might be estimated from multispecies QP cash sales using a 

hedonic framework, and implicit relative values for barter data might be revealed by a modified hedonic 

model (Holland 2013). However, there do not appear to be enough multispecies cash sales or enough 

variation in their make-up to estimate a hedonic model with reliable prices. Hedonic models estimated 

with combined single-species and multispecies cash sale data yield prices nearly identical to the 

averages from single-species trades when the appropriate weighted least squares estimation model is 

used,3 and price estimates are not statistically significant (and many appear unrealistic) for species that 

did not have single-species cash sales.

For cash sales that only included a single species, we calculate annual prices and price dispersion 

(Table 8). To maintain confidentiality, prices are shown only when they represent transfers from at least 

three unique buyer-seller combinations. Thus, for some of the more rarely traded species, it is not 

possible to present prices. The number of IFQ stocks with reportable prices (i.e., more than three sellers 

and buyers) increased from 16 stocks in 2011 to 22 stocks in 2013. The number with at least 10 priced 

cash transfers increased from just five stocks in 2011 to 11 stocks in 2013. Thus there are signs that the 

activity in the cash market for QP, and the availability and reliability of price information, is increasing. 

However, the market is still quite thin for most species.

 3 Holland (2013) undertook a Monte Carlo analysis that demonstrated that bias in price estimates from a 

hedonic price model from multispecies QP sales could be estimated with a weight least squares estimator using 

weights equal to 1 over the sum of the squared quantities in the trade. 
22

Table 8 Average Annual Prices, Count of Transfers, and Coefficient of Variation (CV) of Prices, for 

Single-Species QP Cash Sales Reported to NMFS with Prices

2011 2012

OPTIMAL_YIELD_CATEGORY Price C.V. Count Price C.V. Count

Arrowtooth flounder 0% - 80% 2 

Bocaccio rockfish South of 40°10' N. 42% 3 0% 1 

Canary rockfish 18% 4 $ 1.49 57% 15 

Chilipepper rockfish South of 40°10' N. 36% 3 $ 0.03 62% 7 

Cowcod South of 40°10' N. 10% 2 101% 2 

Darkblotched rockfish $ 0.40 119% 4 $ 0.22 49% 6 

Dover sole $ 0.05 74% 5 0% - 

English sole 0% - 0% - 

Lingcod 77% 2 $ 0.05 38% 4 

Lingcod North of 40°10' N. 0% - 0% - 

Lingcod South of 40°10' N. 0% - 0% - 

Longspine thornyheads North of 34°27' N. $ 0.04 84% 5 $ 0.05 55% 12 

Minor shelf rockfish North of 40°10' N. 0% 1 30% 2 

Minor slope rockfish North of 40°10' N. 0% 1 $ 0.04 11% 4 

Minor shelf rockfish South of 40°10' N. 0% - 0% 2 

Minor slope rockfish South of 40°10' N. $ 0.05 85% 7 $ 0.03 33% 7 

Other flatfish 0% - 0% 1 

Pacific cod $ 0.05 28% 11 $ 0.02 52% 9 

Pacific halibut (IBQ) North of 40°10' N. $ 1.31 45% 5 $ 1.19 19% 10 

Pacific ocean perch North of 40°10' N. 69% 3 56% 3 

Pacific whiting $ 0.02 70% 29 $ 0.04 31% 65 

Petrale sole $ 0.34 29% 38 $ 0.40 12% 20 

Sablefish North of 36° N. $ 1.06 41% 58 $ 1.04 36% 47 

Sablefish South of 36° N. $ 0.76 54% 62 $ 1.05 9% 31 

Shortspine thornyheads North of 34°27' N. 71% 2 $ 0.05 59% 9 

Shortspine thornyheads South of 34°27' N. $ 0.17 58% 3 0% 1 

Splitnose rockfish South of 40°10' N. 0% - 0% 1 

Starry flounder 0% - 0% - 

Widow rockfish $ 0.44 62% 6 $ 0.34 57% 9 

Yelloweye rockfish 105% 4 $ 21.76 33% 9 

Yellowtail rockfish North of 40°10' N. 0% 1 $ 0.01 39% 10 
23

Table 8 continued

2013 2014

Average Pounds 

OPTIMAL_YIELD_CATEGORY Price C.V. Count Price C.V. Count Tranferred

Arrowtooth flounder $ 0.01 81% 8 $0.00 76% 8 49,059 

Bocaccio rockfish South of 40°10' N. $ 0.20 17% 4 15% 7 1,449 

Canary rockfish $ 3.09 26% 12 $2.12 35% 17 300 

Chilipepper rockfish South of 40°10' N. $ 0.02 64% 8 32% 12 23,163 

Cowcod South of 40°10' N. 54% 4 35% 2 13 

Darkblotched rockfish $ 0.53 51% 10 $1.08 22% 10 1,947 

Dover sole $ 0.00 91% 3 0% 1 118,385 

English sole 0% - 0% - - 

Lingcod 0% - 0% - 11,221 

Lingcod North of 40°10' N. 0% 1 0% 1 16,123 

Lingcod South of 40°10' N. 0% - 0% - - 

Longspine thornyheads North of 34°27' N. $ 0.05 45% 15 $0.06 120% 20 15,004 

Minor shelf rockfish North of 40°10' N. 0% - 16% 9 3,246 

Minor slope rockfish North of 40°10' N. $ 0.03 53% 3 $0.02 58% 4 10,231 

Minor shelf rockfish South of 40°10' N. $ 0.04 19% 5 48% 2 5,476 

Minor slope rockfish South of 40°10' N. 13% 7 0% - 8,286 

Other flatfish 0% - 0% 1 63,881 

Pacific cod 0% 1 94% 4 25,791 

Pacific halibut (IBQ) North of 40°10' N. $ 1.76 51% 21 $0.58 64% 15 1,007 

Pacific ocean perch North of 40°10' N. $ 0.75 45% 14 $0.98 44% 15 1,073 

Pacific whiting $ 0.04 43% 54 $0.03 47% 29 179,150 

Petrale sole $ 0.25 32% 50 $0.28 16% 58 10,448 

Sablefish North of 36° N. $ 0.88 17% 66 $1.00 26% 62 10,303 

Sablefish South of 36° N. $ 0.26 31% 8 $0.16 37% 22 6,922 

Shortspine thornyheads North of 34°27' N. $ 0.05 46% 10 $0.06 35% 9 11,090 

Shortspine thornyheads South of 34°27' N. 15% 3 48% 4 788 

Splitnose rockfish South of 40°10' N. 0% - 0% - 16,500 

Starry flounder 0% - 0% - - 

Widow rockfish $ 0.53 45% 10 $0.23 45% 34 6,933 

Yelloweye rockfish $ 29.58 53% 11 $27.07 10% 12 10 

Yellowtail rockfish North of 40°10' N. $ 0.03 10% 6 $0.02 34% 21 28,301 
24

Because NMFS has not published prices from QP sales and would likely not be able to do so for 

most species until well into the year (due to the small number of trades and confidentiality issues), the 

only publicly available means of price discovery for QP prices to date is auction closing prices from 

Jefferson Trading (http://jeffersonstatetradingco.com). Jefferson Trading has been running timed 

auctions for QP since the IFQ program’s inception and has been posting closing prices. The entire history 

of auction closing prices can be downloaded from their website. Average prices from Jefferson Trading 

differ, in some cases substantially, from the average of NMFS prices (Table 9). The discrepancies 

presumably reflect transfers reported to NMFS that were not arranged through Jefferson Trading. 

Differences may also reflect some transfers facilitated by Jefferson Trading for which prices were not 

reported to NMFS. For the more frequently traded IFQ stocks, Jefferson Trading average prices are 

mostly within 20 percent of NMFS average prices, suggesting that they provide a reasonable means of 

price discovery for the wider cash sale market.
25

Table 9 Average Annual QP Prices from Jefferson Trading Auctions, Count of Sales on Jefferson Trading, and Ratio of Jefferson Trading Prices 

to NMFS Prices from Single-Species Cash Sales.

2011 2012 2013 2014

OPTIMAL_YIELD_CATEGORY Price Count Ratio Price Count Ratio Price Count Ratio Price Count Ratio

Arrowtooth flounder $ - - $ 0.01 1 $ 0.01 6 70% $ 0.00 8 83%

Bocaccio rockfish South of 40°10' N. $ 0.23 6 $ 0.18 3 $ 0.24 5 108% $ 0.31 9 

Canary rockfish $ 1.63 6 $ 2.09 13 115% $ 3.47 15 101% $ 2.43 19 106%

Chilipepper rockfish South of 40°10' N. $ 0.05 5 $ 0.02 6 59% $ 0.02 7 87% $ 0.03 13 

Cowcod South of 40°10' N. $ 0.54 2 $ 1.92 2 $ 2.19 5 $ 4.79 3 

Darkblotched rockfish $ 0.48 2 131% $ 0.48 6 108% $ 0.77 15 104% $ 1.30 14 111%

Dover sole $ 0.03 3 60% $ - - $ 0.002 2 33% $ 0.01 2 

English sole $ - - $ - - $ - - $ - - 

Lingcod $ - - $ 0.05 4 95% $ 0.04 1 $ 0.01 1 

Lingcod North of 40°10' N. $ - - $ - - $ - - $ - - 

Lingcod South of 40°10' N. $ - - $ - - $ - - $ - - 

Longspine thornyheads North of 34°27' N. $ 0.05 6 101% $ 0.05 11 84% $ 0.04 20 83% $ 0.07 18 86%

Minor shelf rockfish North of 40°10' N. $ - - $ 0.05 2 $ - - $ 0.02 8 

Minor slope rockfish North of 40°10' N. $ - - $ 0.03 4 85% $ 0.02 2 78% $ 0.02 2 115%

Minor shelf rockfish South of 40°10' N. $ - - $ 0.03 2 $ 0.04 5 118% $ 0.03 2 

Minor slope rockfish South of 40°10' N. $ 0.05 6 69% $ 0.03 7 100% $ 0.05 10 $ - - 

Other flatfish $ - - $ 0.04 1 $ - - $ 0.00 3 

Pacific cod $ 0.03 2 66% $ 0.04 2 158% $ - - $ 0.01 2 

Pacific halibut (IBQ) North of 40°10' N. $ 1.41 6 100% $ 1.04 11 93% $ 1.79 22 104% $ 0.98 15 93%

Pacific ocean perch North of 40°10' N. $ 0.26 1 $ 0.24 4 $ 0.84 15 95% $ 1.26 21 111%

Pacific whiting $ 0.02 8 78% $ 0.04 10 101% $ 0.10 14 257% $ 0.05 16 123%

Petrale sole $ 0.35 10 100% $ 0.44 7 109% $ 0.28 27 101% $ 0.29 45 101%

Sablefish North of 36° N. $ 1.17 19 108% $ 1.17 31 122% $ 0.88 20 103% $ 1.10 30 105%

Sablefish South of 36° N. $ 0.76 22 90% $ 0.97 8 97% $ 0.22 4 85% $ 0.10 5 65%

Shortspine thornyheads North of 34°27' N. $ 0.03 1 $ 0.05 7 87% $ 0.05 11 107% $ 0.07 12 117%

Shortspine thornyheads South of 34°27' N. $ 0.05 1 33% $ 0.03 1 $ 0.04 4 $ 0.06 2 

Splitnose rockfish South of 40°10' N. $ - - $ - - $ - - $ - - 

Starry flounder $ - - $ - - $ - - $ - - 

Widow rockfish $ 0.16 3 34% $ 0.52 7 120% $ 0.63 18 89% $ 0.30 26 118%

Yelloweye rockfish $ 39.60 5 $ 17.75 11 84% $ 25.44 14 78% $ 27.13 12 101%

Yellowtail rockfish North of 40°10' N. $ 0.04 1 $ 0.02 7 154% $ 0.03 8 99% $ 0.02 18 95%
26

It is not clear what number of trades would be required to produce meaningful price estimates 

that are representative of value. Price dispersion provides one measure of price reliability and market 

efficiency. Newell et al. (2005) suggest that the price dispersion of 25 to 35 percent observed in the 

New Zealand quota lease4 market is “reasonable” when compared to price dispersion in commonplace 

commodities. Price dispersion for QP sales in the Pacific groundfish fishery is somewhat higher (Table 

8). For several species, price dispersion has declined over the 2011–2013 period, but this is not the case 

for all species. If we consider stocks that had at least two buyers and two sellers in a given year, price 

dispersion averaged across stocks fell from 61 percent in 2011 to 44 percent in 2012. It fell again slightly 

to 42 percent in 2013, but increased to 45 percent in 2013. There is a weak but statistically significant 

relationship between the number of transfers for a stock in a year and price dispersion (Table 10). This 

fitted relationship predicts that price dispersion would fall from 53 percent with five trades to 33 

percent with 50 trades and 12 percent with 100 trades. 

Table 10 Regression of Price Dispersion as a Function of Count of Single-species Cash Sales

Variable Coefficients P-value

Intercept 0.548 0.00

Transfer Count -0.0043 0.01

R Square .083

A decline in price dispersion may be an indicator that the market is becoming more efficient (the 

law of one price prevailing), but high price dispersion may also be the result of changes in prices over 

the year. Presumably prices are a function of derived demand (associated with the net value of the 

catch enabled by the QP), but also a function of supply relative to demand. For a target species like 

sablefish, petrale sole, or whiting—for which QP is mostly utilized —we might expect prices to reflect 

average or marginal profits associated with catches. However, prices may decline toward the end of the 

year if it looks like there will be more QP left unutilized than can be carried over (each vessel account 

can carry over as much as 10 percent of its QP by species). QP prices might also change, however, if exvessel prices unexpectedly changed during the year. This could result in either increased or decreased 

QP prices, but either way it would contribute to higher price dispersion, which cannot really be ascribed 

to inefficient pricing by the market except to the extent that the market was not able to anticipate the 

changes. For most species, there are not enough transfers to calculate more than annual prices, but for 

a few of the more frequently traded species we can calculate at least semi-annual prices. For the 

Northern sablefish stock, QP prices were lower in the second half of the year than the first, and most of 

the cash sales also occurred in the second half the year. The same is true for petrale sole in 2013, but 

there was no difference in prices by semester in 2012 and prices were higher in the second semester in 

2011. 

 4 Leasing quota is essentially the same as selling QP.
27

Table 11 Bi-annual QP Prices and Price Dispersion from Single-Species Cash Sales

Pacific Whiting Petrale Sole Sablefish (N. of 40'10")

Year Semester Price Count C.V. Price Count C.V. Price Count C.V.

2011 1 $1.01 

 

4 25%

2011 2 $0.02 

 

29 81% $0.36 

 

36 24% $1.10 

 

54 42%

2012 1 $0.04 

 

16 34% $0.40 

 

13 8% $1.35 

 

12 20%

2012 2 $0.04 

 

49 27% $0.40 

 

7 19% $0.83

 

35 32%

2013 1 $0.05 

 

9 80% $0.35 

 

16 17% $1.00 

 

11 6%

2013 2 $0.04 

 

45 14% $0.24 

 

34 31% $0.83 

 

55 17%

2014 1 $0.05 

 

15 36% $0.31 

 

23 11% $1.06 

 

21 9%

2014 2 $0.03 

 

14 37% $0.28 

 

35 17% $1.04 

 

41 32%

One thing that is seemingly in conflict with efficient market pricing is that QP prices are a 

significant fraction of ex-vessel price for some species for which there is substantial unused QP available. 

In fact, for some species like canary and yelloweye rockfish, QP prices are well above ex-vessel price 

even though only a small fraction of total QP was used in any year. If there is substantial excess supply 

of QP, we might expect these prices to fall, particularly after surpluses persist for a few years. In the case 

of yelloweye rockfish, the high prices may really reflect transactions costs. Individual transfers are very 

small and total transfer values are not large, and the high cost per pound may reflect distribution of the 

transactions costs over a small number of pounds (averaging only 8 pounds). This explanation is 

somewhat less likely for canary, for which transfers average more than 245 pounds per transfer. For 

Pacific halibut, which has a zero ex-vessel value (since it cannot be retained), average QP prices ranging 

from $1.42 to $1.73 over the 2011–2013 period are quite surprising given that utilization of QP in 

aggregate has not exceeded 43 percent (Table 1). Average QP trades of Pacific halibut are more than 

1,000 pounds, decreasing the likelihood that prices can be ascribed primarily to transactions costs. 

Regardless of whether these high prices can be ascribed to transactions costs, they suggest inefficiency 

in the QP market because some individuals are paying substantial amounts for QP while others are 

simply leaving QP unused.

Discussion

The role of an efficient QP market is at least three-fold. First, it serves to allocate QP to its highest value 

use (or at least to those who value it most). Second, it influences behavior. For example, prices for QP 

should encourage efficient use and discipline inefficient use of QP (i.e., generating the greatest value 

from its use and forcing inefficient players out of the fishery). In a multispecies fishery, QP prices, 

through the out-of-pocket cost or the opportunity cost of QP, should induce fishermen to avoid 

constraining fish stocks for which QP prices are high. A third important role of QP markets is to provide 
28

information to fishing businesses, fishery managers, and other stakeholder to support business planning 

and policy decisions. The prices generated by QP markets also provide information to QP market 

participants on how to set prices in subsequent transactions. This not only lowers negotiation costs, but 

helps buyers and sellers to decide whether and how much of a commodity to offer to buy or sell on the 

market. For those decisions to be optimal, with the right amounts of QP going to those who value it 

most, everyone must have a good idea of what prices others are willing to sell or buy at.

The extent to which the distribution that occurs through the QP market maximizes value, 

provides the correct behavioral incentives, and provides useful and interpretable information depends 

on whether the market is operating efficiently. A well-functioning market makes it possible for 

transacting parties to find each other, determine mutually acceptable quantities of the commodity to 

trade and negotiate compensation, and carry out the transaction with confidence. An efficient market 

also implies that the process of carrying out these transactions is easy and inexpensive (i.e., with 

minimal transactions costs).5 Furthermore, we would expect prices (or in-kind compensation) in an 

efficient market to reflect the marginal value of the commodity and that prices would be fairly 

homogeneous, at least at a given point6

 

An effective and efficient QP market is not automatically created when an IFQ system is created, 

even if a tool for implementing transfers is in place. The analysis in this report suggests that the QP 

market for Pacific groundfish IFQ has not been operating efficiently. Price dispersion is high. The market 

is thin, particularly for species that are not primary targets. High prices for QP of some species with 

substantial unused QP in aggregate indicate high transactions costs or a failure to match up those with 

unused QP to those who could use it. Anecdotal evidence suggests this is occurring as a result of 

“hoarding” driven by the combination of uncertainty about individual QP needs and a lack of confidence 

that one could acquire QP on the market at a foreseeable price should it be needed unexpectedly. There 

are some indications that market efficiency is increasing slowly, but the market may take many years to 

mature into an efficient market.

IFQ markets, particularly in multispecies fisheries with many jointly caught species, pose a 

number of challenges, so it is perhaps not surprising that an efficient market has not quickly emerged. 

The value of QP is a function of the value that can be produced with it rather than a consumption or 

resale value, and that value is generally uncertain until the fish is actually landed and sold. In 

multispecies fisheries the value of QP for one species is likely to be partly a function of holdings of QP of 

other species, as a portfolio of QP is needed to balance catch of a mixed bag of species. Even if a 

fisherman has a good idea of his overall QP needs, it may be difficult to determine what he should pay 

for a given species and how much he should buy unless he can simultaneously purchase the desired 

quantities of the other species in the portfolio at acceptable prices. When there are relatively few 

buyers and sellers, limited information on who has QP to sell, and substantial heterogeneity in the types 

and locations of fishing operations that result in different relative QP needs and values, it is not 

surprising that transactions costs remain high.

As our analysis shows, the forms of compensation used in inter-firm QP transactions are quite 

diverse and transfers are not dominated by cash sales with individual species prices. Rather barter and 

 5 Dahlman (1979 J. Law and Econ 22(1), 141-162) described transactions costs as “search and information 

costs, bargaining and decision costs, policing and enforcement costs.” 6 Assuming the prices reflect willingness to pay and thus the implicit value of the QP, a lack of price 

homogeneity for a commodity that is identical suggest that overall benefits would have been increased if more QP 

had gone to the individual who paid a higher price and less to the one who paid less. Alternatively, if prices do not 

reflect willingness to pay, they are not sending the right signals to buyers, who thus may be offering too little or 

too much for sale.
29

contractual arrangements, including risk pools, are common. Given that QP of a given species is a 

straightforward non-differentiable commodity, we might expect to see a higher prevalence of cash sales 

and the lack of them may suggest an inefficient market. 7 However, these transaction methods may be 

largely a product of uncertainty about the value of QP to the users that would purchase it. That value 

depends on whether the QP will actually be needed to balance catch or can be carried forward to the 

next year, and on the cost of harvesting the fish and the price received for it. A contractual arrangement 

(e.g., for a percentage of the value of the landed fish) shares the risk between the buyer and seller and, 

if the seller of the quota pounds is the buyer of the fish, they may be in a better position to bear some of 

that risk. Barter enables individuals to trade less-valued QP for more valued QP without having to put 

cash up front, which may be difficult and risky financially for an individual fisherman. Multispecies cash 

sales or barter, while they may result in less efficient pricing of particular species, enable fishermen to 

acquire a balanced portfolio of QP and reduce the risk they will be left holding QP for species they can’t 

catch without more QP of jointly caught species. 

Economists tend to trust that competitive markets are the most efficient means of distributing 

scarce resources (e.g., QP), but this may not be the case when these markets are inherently thin and 

must distribute multiple goods with jointly determined and highly uncertain values. As we noted, 

arm’s-length cash sales of QP make up only a fraction of the transfers that occur in the IFQ system, and 

it seems likely that other means of distributing QP play an important role in the IFQ systems and will 

continue to. The centralized decision-making of a large firm (whether an owner of vessels or a processor 

that owns or buys and distributes QP to the vessels that deliver fish to it) that can harness disparate 

information and/or can mitigate risk associated with uncertainty may actually be able to do a better job 

of maximizing value. It is notable that, in mature multispecies IFQ systems in New Zealand, Iceland, and 

British Columbia much of the quota share has been acquired by large firms, often by processors or 

vertically integrated firms with processing and harvesting capacity. Part of the reason for this is 

undoubtedly to increase their ability to build stable markets for their products by gaining control of 

what fish is landed when, but these firms are also able to move QP around to the vessels that fish to 

them to ensure it is used efficiently. Cooperatives might achieve similar gains, depending on how they 

are organized and operated. Risk pools also play an important role in managing risk associate with highly 

uncertain QP needs. 

There may be things that regulators can do to facilitate development of an efficient QP market 

and to nurture or at least not undermine other mechanisms for distributing QP in the fishery. Regulators 

should make as much information as possible available in a timely and easily accessible manner. 

Confidentiality rules limit this to some degree, and not providing confidentiality might be 

counterproductive if it undermined full and honest price reporting. However, it should be possible to 

provide and regularly update prices once the threshold of three unique parties is reached. Rules that at 

face value appear to be designed to make the market more competitive (e.g., aggregation limits, 

prohibiting subtracting quota cost from ex-vessel price) may actually constrain useful distribution 

mechanisms (e.g., risk pools and cooperatives), though they may also be necessary to avoid abuses of 

market power. There are likely to be trade-offs in terms of allowing useful organizational mechanisms 

for quota distribution and abuses that can occur as a result of centralized control and “market power.” 

Most multispecies IFQ fisheries include a number of catch balancing mechanisms that provide 

flexibility and thereby reduce the uncertainty and risk fishermen face if their catches turn out to be 

different than expected. The provisions that allow carry-forward of 10 percent of QP are an example of 

this, though they are less flexible that some other IFQ systems (e.g., vessels in British Columbia can carry 

 7 Both because more sales would occur if transactions costs were low and because there is little reason to 

believe that distribution is optimal, as individual users are unlikely to by paying the same for QP. 
30

forward or back up to 30 percent of QP). Iceland allows conversion of QP from one species to another 

to cover overages. New Zealand allows individuals to land catch for which they do not hold QP and pay a 

“deemed value” in lieu of balancing in with QP. The deemed value can be refunded up through the end 

of the year if the individual acquired QP to balance the catch. Deemed values effectively provide 

fishermen with a known maximum price for QP and also provide some guidance for the market (i.e., an 

upper bound for price). The Pacific groundfish fishery is highly complex and has relatively rigid catch 

balancing rules, which make an efficient market doubly important but may also undermine its 

operations. Although it may not be legal or desirable to implement approaches used elsewhere, it may 

be possible to increase flexibility. For example regulators could operate a limited deemed value scheme, 

perhaps designed primarily to give individuals time to acquire QP on the market without being forced to 

tie up.8

 Fishermen might also simply be given more time to balance QP deficits before being forced to 

tie up. 

Acknowledgements

We are grateful to Jeff Cowen, who filled numerous data requests required for this analysis, and to the 

entire Scientific Data Management group that constructed and maintain the system that enables quota 

transfers and collects data on them. We are also grateful to several members of the NMFS Western 

Region Permits & Monitoring Branch for extensive and valuable comments on an earlier draft of this 

report.

References

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Holland, D.S. 2013. Making Cents Out of Barter Data from the British Columbia Groundfish ITQ Market. 

Marine Resource Economics 28(4):311-30.

Holland, D.S. and J.E. Jannot 2012. Bycatch Risk Pools for the US West Coast Groundfish Fishery. 

Ecological Economics 78:132-47.

Newell, R.G., J.N. Sanchirico, and S. Kerr. 2005. Fishing Quota Markets. Journal of Environmental 

Economics and Management 49:437-62.

Newell, R.G., K.L. Papps, and J.S. Sanchirico 2007. Asset Pricing in Created Markets. American Journal of 

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 8 This might be accomplished by setting very high deemed values that would incentivize fishermen to look for 

QP on the market and seek a refund of QP, thereby limiting the net use of deemed value of balanced catch and the 

pool of QP required to support the system.