Iceland has one of the most effective fisheries management programmes in the world. In the 1960s and 1970s, it had the same depletion problem currently facing many fisheries. In response, its government initially imposed restrictions on the number of days trawlers could put to sea to catch certain species. This led to fishing derbies, where fishermen competed to catch as many fish as possible in the limited time available. Inevitably, catches continued to exceed sustainable levels.

Starting in 1979, the Icelandic government gradually introduced a system of individual transferable share quotas (ITQs), which essentially give boat owners the right to catch a specific proportion of the total allowable catch of certain species.

  • If a boat owner does not wish to use all his ITQ he can sell part of it to someone else, encouraging more efficient use of the capital invested in boats and equipment.

  • Because ITQs entitle their owners to a specific share of the future stock of fish, they create incentives to ensure that stocks are sustainable.

  • Since the introduction of ITQs, capital invested in Icelandic fisheries (boats and equipment) has been gradually falling and catches have fallen to sustainable levels, whilst the value of catches has risen.

    However, the success of the ITQ system has provoked political pressure for the imposition of a "resource rent" tax. A more appropriate next step, says analyst Hannes Gissurarson, would be to introduce a cost-recovery charge and give ITQ owners greater say in the administration and enforcement of the system.

    ITQs and other property-rights approaches (the essential component of which is exclusive access) offer the best hope for effective fisheries management.

    Source: Hannes H. Gissurarson, Overfishing: The Icelandic Solution, Studies on the Environment No. 17, September 2000, Institute of Economic Affairs, Institute of Economic Affairs, 2 Lord North Street, Westminster, London, SW1P 3LB, U.K.

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