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ITQ's in Chile: Measuring the Economic Benefits of Reform

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Abstract

In 2001 an individual (operationally transferable) quota system was introduced for all the most important industrial fisheries in Chile. This system was put in place after years of declining stocks and over investment. In this paper we describe this reform and estimate related allocative efficiency benefits for the most important industrial fishery in the country, the southern pelagic fishery. Benefits were estimated using a bioeconomic model and Monte Carlo techniques. This approach allows benefits to be estimated using more realistic counterfactual scenarios than just comparing the fishery before and after the reform. Estimated discounted net benefits reach US$123 to US$366 million in the period 2001 to 2020. Fleet size fell from 148 active boats in 2000 to 65 in 2002 as a direct consequence of the reform. Among the interesting features of the recent Chilean experience is the way the political economy of the reform was facilitated by the prior introduction of de facto individual quotas within the framework of fishery research activities. When the authorities closed the southern pelagic fishery because of biological problems between 1997 and 2000, they organized ‘experimental’ fishing expeditions in which participant boats were given the right to fish a certain amount of resources per expedition. This pseudo quota system allowed fishermen to experience directly the benefits of individual quotas and that was instrumental to the political agreement leading to the reform. This successful gradual approach may be of interest to other countries planning to introduce individual quotas. Finally, it is important to note that the Chilean southern industrial pelagic fishery has average catches of over 1.4 million tons a year, making it one of the largest fisheries in the world to be regulated by individual quotas.

Suggested Citation

  • Andrés Gomez-Lobo & Julio Peña & Patricio Barría, 2007. "ITQ's in Chile: Measuring the Economic Benefits of Reform," ILADES-Georgetown University Working Papers inv179, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines.
  • Handle: RePEc:ila:ilades:inv179
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    1. Peña-Torres, Julio & Vergara, Sebastián & Basch, Michael, 2004. "El dilema de la escala productiva frente a ciclos de abundancia. La pesca industrial en Chile," El Trimestre Económico, Fondo de Cultura Económica, vol. 0(283), pages 575-612, julio-sep.
    2. Julio Peña & Michael Basch & Sebastián Vergara, 2003. "Eficiencia Técnica y Escalas de Operación en Pesca Pelágica: Un Análisis de Fronteras Estocásticas," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 40(119), pages 47-87.
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    Cited by:

    1. Sigbjorn Tveteras & Carlos Paredes & Julio Peña, 2011. "Individual Fishing Quotas in Peru: Stopping the Race for Anchovies," ILADES-Georgetown University Working Papers inv263, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines.
    2. repec:kap:enreec:v:68:y:2017:i:2:d:10.1007_s10640-016-0017-3 is not listed on IDEAS
    3. Vincent Martinet & Michel de Lara & Julio Peña & Héctor Ramirez, 2010. "Evaluation of Management Procedures: Application to Chilean Jack Mackerel Fishery," ILADES-Georgetown University Working Papers inv255, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines.
    4. Vincent Martinet & Julio Peña-Torres & Michel Lara & Hector Ramírez C., 2016. "Risk and Sustainability: Assessing Fishery Management Strategies," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 64(4), pages 683-707, August.
    5. Vincent Martinet & Michel de Lara & Julio Peña & Héctor Ramirez, 2012. "Risk and Sustainability: Assessing Fisheries Management Strategies," ILADES-Georgetown University Working Papers inv276, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines.
    6. José-María Da-Rocha & Jaume Sempere, 2017. "ITQs, Firm Dynamics and Wealth Distribution: Does Full Tradability Increase Inequality?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 68(2), pages 249-273, October.
    7. Hospital, Justin & Beavers, Courtney, 2014. "Catch shares and the main Hawaiian Islands bottomfish fishery: Linking fishery conditions and fisher perceptions," Marine Policy, Elsevier, vol. 44(C), pages 9-17.

    More about this item

    Keywords

    Bioeconomic model; pelagic fisheries; individual transferable quotas;

    JEL classification:

    • Q22 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Fishery

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