The ArcticMainpage
Click to view
of this article
Quota systems and resource management: Icelandic fishing
by Gísli Pálsson and Agnar Helgason
Previous ChapterPrevious Chapter Next ChapterNext Chapter
The Icelandic ITQ System
  When the ITQ system was first implemented in 1984, each fishing vessel over 10 tons was allotted a fixed proportion (aflahlutdeild) of future total allowable catches of cod and five other demersal fish species. Catch-quotas (aflamark) for each species, measured in tons, were allotted annually on the basis of this permanent ITQ-share. Thus, while a vessel's annual ITQ allotment would vary in size with the total allowable catch, its permanent ITQ-share remained constant. Moreover, a new licensing scheme stipulated that new vessels could only be introduced to the fisheries given that one or more existing vessels of equivalent size were eliminated in return.
  This arrangement did not go uncontested, for there were heated debates about what to allocate and to whom. The issues involved illustrate the conflict between the assumptions and rationalities of the discourse of different groups of 'producers'. Boat-owners argued for 'catch-quotas', to be allocated to their boats, claiming that they alone are entitled to the rents produced by the ITQ system. The traditional usufruct rights of boat owners, they argued, should be transferred into permanent 'ownership' of the fishing stocks in the form of a fixed share of the catch, a transferable quota. For them, the ITQ system was only a logical extension of the cod wars; a 'rational' use of resources could only be expected as long as the ones who used them were dependent upon them as owners. Some fishermen, on the other hand, advocated an 'effort-quota', to be allocated to skippers or crews. In fishing, they argued, value was created through the application of their expertise and labour power and not that of the equipment, the boat and the fishing gear. Under a system of effort-quotas successful skippers would be rewarded for their exceptional contribution to the economy by an extra catch. Fishermen often insisted that as the 'real' producers of wealth they were entitled to quotas. As one skipper put it:

who has more rights concerning quota-payments . . ., the man who hires crew-men, the one who finds the fish and brings the catch ashore, or the boy who inherits the boat of his father but has never been at sea?

  The allocation of quotas to skippers on the basis of their 'fishiness', some skippers argued, would be economical in the long run; costs and effort might be significantly reduced by making fishing the privilege of the most efficient skippers.
  The authorities partly conceded to such criticism when revising the regulatory framework of the ITQ system, and in 1985 it was decided that henceforth all vessels with fishing licences would be permitted to choose between the ITQ system and the effort-quota system. It turned out that quite a few were willing to bet on the effort-quota and the skipper. However, in 1988 the effort-quota system was made a significantly less attractive option, and it was finally abolished in 1990. The ITQ system has been revised several times.
  Table 1 shows some important moments in the history of the ITQ system. One of the major changes relate to the transferability of ITQs. In order to achieve maximum efficiency, many economists assume, fishing rights must emulate private property rights to the fullest extent possible (14,15,16,17). In effect, this requires them to be incorporated into the market system, where they need to be quantifiable, fully divisible and independently tradable rights, held by individuals and companies on a long-term basis. ITQ systems are generally thought to be a particularly suitable means of achieving these ends. To begin with, however, the Icelandic ITQ system only partly conformed to the ideals of commoditization set out by resource economists. While ITQ shares could be leased relatively freely, they could only be bought or sold en masse along with the fishing vessel to which they were originally allotted; that is, they were not fully divisible or independently tradable. Moreover, the ITQ system had not been permanently instated. Quotas did not, therefore, constitute true private property rights (18,19,20). Nevertheless, the system introduced to the Icelandic fisheries in 1984 was an individual transferable quota (ITQ) system, albeit one which set restrictions on transferability. Eventually, in 1990, several radical alterations were made to the existing ITQ system.
  The rationale for the new laws was a complex one, incorporating, among other things, a marked shift in emphasis from the exclusively ecological objective of maximum sustainable yield (MSY) to the economic goal of maximum economic yield (MEY).18 Firstly, the effort-quota system was abolished, and all the vessels previously fishing under that system were incorporated into the ITQ system proper. Secondly, the system was further extended by allocating ITQ shares to approximately 900 smaller vessels (6-10 tons) that had been fishing under fleet-quota restrictions. As a result, the number of ITQ-holders increased by 156% (from 451 in 1990 to 1155 in 1991). Thirdly, the ITQ system was extended to include the fisheries of five new species: herring, capelin, shrimp, lobster and scallop. Finally, and arguably most significantly, the ITQ system was extended indefinitely into the distant future and ITQs became fully divisible and independently transferable, making ITQs more akin to permanent property rights. These changes, in effect, marked the full institution of the ITQ system in the demersal fisheries, culminating the process of enclosure and privatization initiated in 1984.
  The following analysis, based on descriptive statistics, focuses on changes in the actual distribution of fishing rights from the onset of ITQ management in 1984. One event in the history of the ITQ system makes temporal distributional comparisons of ITQs particularly problematic: that is, the inclusion in 1991 of approximately 900 small boats (6-10 tons). While it is of great interest to examine the fate of the small-scale ITQ-holders that were incorporated into the system in 1991, their addition precludes a meaningful comparison with distributions before this time. The solution we propose to this problem is to tackle these issues in two separate analyses. On the one hand, we examine and compare the distributions of ITQs before and after 1991, excluding all 6-10 ton boats in the latter period, and thereby making comparison with the earlier period more valid. On the other hand, we provide an exclusive analysis of the latter period, including all boats with ITQs. This will enable us to observe to a greater extent the impact of the 1990 fisheries management legislation on the operators of smaller vessels with ITQs. Our analysis is restricted to the demersal fish species (cod, haddock, redfish, saithe, Greenland halibut, and plaice) that were originally subjected to ITQ management in 1984. These six species are of great economic significance to Icelanders, with cod being by far the single most important. In order to present our results in the clearest manner possible, a single measure is used to represent ITQ holdings in these six species. This is the so-called 'cod equivalent' (þorskígildi), a measure that is based on the relative market values of the different species; essentially, it is a means for converting the value of fish species into the 'currency' of cod.
Previous ChapterPrevious Chapter Next ChapterNext Chapter
Quota systems and resource management: Icelandic fishing,
by Gísli Pálsson and Agnar Helgason .
Copyright Stefansson Arctic Institute and individual authors ©2000
Developed in partnership with the EU Raphael Programme