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Evaluating the New Zealand Individual Transferable Quota Market for Fisheries Management

Author

Listed:
  • Suzi Kerr

    (Motu Economic and Public Policy Research)

  • Richard G. Newell

    (Resources for the Future)

  • James N. Sanchirico

    (Resources for the Future)

Abstract

The New Zealand ITQ system is a dynamic institution that has had many refinements since its inception more than 15 years ago. Nonetheless, the basic tenets of the system - setting a total allowable catch and leaving the market to determine the most profitable allocation of fishing effort - have remained intact. This paper assesses the New Zealand system to identify areas of success and/or possible improvement or expansion within it. The reasons for doing so are to highlight beneficial features and to identify features of the New Zealand ITQ system that are relevant to other potential tradable permit markets. Beneficial features include simple standardized rules for quota definition and trading across species and areas; very few restrictions on quota trading and holding; relative stability in the rules over time; and low levels of government involvement in the trading process. We find evidence that supports the assertion that fishers behave in a reasonably rational fashion and that the markets are relatively efficient. We do not find major changes in participation in these fisheries as a result of the system. We find evidence that suggests that the ITQ system is improving the profitability of fisheries in New Zealand. In general the evidence thus far suggests that the market is operating in a reasonably efficient manner and is providing significant economic gains. These factors suggest that New Zealand would want to have non-economic justifications for any significant changes to the system.

Suggested Citation

  • Suzi Kerr & Richard G. Newell & James N. Sanchirico, 2003. "Evaluating the New Zealand Individual Transferable Quota Market for Fisheries Management," Motu Working Papers 03_02, Motu Economic and Public Policy Research.
    • Handle: RePEc:mtu:wpaper:03_02
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    References listed on IDEAS

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    1. Grafton, R Quentin & Squires, Dale & Fox, Kevin J, 2000. "Private Property and Economic Efficiency: A Study of a Common-Pool Resource," Journal of Law and Economics, University of Chicago Press, vol. 43(2), pages 679-713, October.
    2. Batstone, C J & Sharp, B M H, 1999. "New Zealand's quota management system: the first ten years," Marine Policy, Elsevier, vol. 23(2), pages 177-190, March.
    3. S. Baranzoni & P. Bianchi & L. Lambertini, 2000. "Multiproduct Firms, Product Differentiation, and Market Structure," Working Papers 368, Dipartimento Scienze Economiche, Universita' di Bologna.
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    2. Mare, David, 2005. "Indirect Effects of Active Labour Market Policies," Motu Working Papers 292900, Motu Economic and Public Policy Research.
    3. Grimes, Arthur, 2005. "Regional and industry cycles in Australasia: Implications for a common currency," Journal of Asian Economics, Elsevier, vol. 16(3), pages 380-397, June.
    4. Arthur Grimes, 2006. "Intra & inter-regional industry shocks: A new metric with application to Australasian currency union," New Zealand Economic Papers, Taylor & Francis Journals, vol. 40(1), pages 23-44.
    5. Kelly Lock & Stefan Leslie, 2007. "New Zealand's Quota Management System: A History of the First 20 Years," Motu Working Papers 07_02, Motu Economic and Public Policy Research.
    6. David C. Maré & Michelle Poland, 2005. "Defining Geographic Communities," Motu Working Papers 05_09, Motu Economic and Public Policy Research.

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    More about this item

    JEL classification:

    • D49 - Microeconomics - - Market Structure, Pricing, and Design - - - Other
    • Q22 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Fishery
    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices

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