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The Distribution
Of ITQs: The Whole Period |
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Despite restrictions on direct transactions
with ITQs before 1990, boat owners could sell their ITQ holdings
indirectly. This was accomplished simply by selling the vessels
to which the non-divisible ITQs were attached. It is difficult to
estimate the amount of capital involved in such transactions, but
there were reports of vessels having been sold at a price two or
even three times that of their 'real' value. Thus, even though long-term
fishing rights (the ITQs themselves) could not be bought or sold
separately, they nonetheless acquired an indirect exchange value
that was added on to the value of a vessel when it changed hands.
A preliminary analysis of such indirect transactions with ITQs,
reveals a substantial increase in vessels with ITQs changing hands
from 1984 to 1990. The proportion of ITQs (measured in cod-equivalents)
that changed hands through the sale of vessels doubled in a six
year period, from 6% to 12.5%. Notably, the proportion of vessel
transactions dropped after 1990, when ITQs became divisible and
independently transferable -- and no longer needed to be traded
indirectly. Generally, though, the proportion of vessels changing
hands is positively correlated to the accompanying proportion of
ITQs (in other words, the lines are parallel). |
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While the general trend is clear,
there are two irregularities that seem to distort the pattern. First
there is a striking upswing of ITQs changing hands in 1986, relative
to a decrease of the proportion of vessel transactions. This aberration
is largely due to the privatization of a fishing company that formerly
belonged to the City of Reykjavík and controlled the largest
share of ITQs in the industry. The second apparent irregularity
is the decline in the proportion of ITQs changing hands in 1987
and 1988. This is almost certainly due to the large number of vessels
that were exploiting the effort-quota system at this time. The effort-quota
system appears to have been introduced to the fisheries in order
to appease boat owners who were dissatisfied with their initial
ITQ allocation. This system only restricted the number of days that
vessels had access to the fishing grounds, and thus provided boat
owners with an opportunity to exceed the catch restrictions dictated
by the ITQ system. Moreover, the effort-quota system offered boat
owners a chance to procure a new enlarged fishing history. If successful,
an operator could return his or her vessel to the ITQ system in
the following fishing year, with an increased share of ITQs. As
a result, many operators who required more ITQs joined the effort-quota
system, instead of buying vessels with fishing rights. |
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So far we have mentioned two methods
that boat owners were able use to alter their share of fishing rights
in the ITQ system before 1991. The third method, direct transactions
with ITQs, was made available after 1990 and soon became the most
prevalent way of acquiring additional fishing rights. Our Quotabase
allows us to examine the changing distribution of ITQs in greater
detail. There are radical changes in the total number of ITQ-holders
from 1984 (excluding 6-10 ton boats for 1991-1994) and the relative
size of four groups of ITQ-holders, 'giants', 'large' owners, 'small'
owners, and 'dwarves' -- those who own more than 1% of the ITQs,
0.3-1%, 0.1-0.3%, and 0-0.1%, respectively. While being arbitrary,
the demarcation of these groups provides a simple and effective
way of discerning distributional changes of ITQs among boat owners,
taking into account the fact that the distribution is positively
skewed. What is perhaps most striking is the steady decrease in
the total number of ITQ holders, from 535 in 1984 to 391 in 1994
(a reduction of 26.9%). Also notable is the gradual increase in
the number of 'giants' concurrent with the diminishing numbers of
the other three groups. |
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A different way of examining these
distributional changes is to compare the aggregate ITQ shares of
the same four groups. The relative distribution of ITQs between
the four respective groups of ITQ holders has changed fundamentally
over the same eleven year period. What emerges is that the 'giants'
have almost doubled their share of the overall ITQs, while the other
groups all seem to be losing ITQs. In general, this seems to be
in accordance with the changes in the numbers of the four groups.
Thus, given the increase in the number of 'giants', one would expect
a corresponding increase in their overall share of ITQs, and conversely,
a decrease in the shares of the other groups, reflecting their diminishing
numbers. |
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However, it is interesting to examine
whether the respective increases and decreases are in just proportion
to each other. One way of ascertaining this is to calculate the
average ITQ shares for the four groups. As it turns out, only the
'giants'' average shows a substantial increase, going from 1.64%
in 1984 to 1.91% in 1994. The aggregate shares of all other groups
remain relatively constant, apart from 'large' ITQ holders, whose
average share is slightly reduced from 0.58% in 1984 to 0.52% in
1994. In addition to the concentration caused by the decrease in
the number of ITQ-holders, then, the 'giant' companies seem to be
accumulating a disproportionate share of the ITQs. |
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It appears that the most conspicuous
reduction in the total number of ITQ holders occurs before 1991,
after which this process subsequently slows down. In contrast, while
there is only a gradual shift toward the concentration of ITQs before
1991, this process becomes somewhat more intensified after 1990.
Significantly, this transitional point in time coincides with the
radical transformation of the ITQ system brought about by the fisheries
management legislation of 1990 when restrictions on the transferability
of ITQs were lifted. This intensification may, in part, be attributed
to the incorporation of 6-10 ton boats into the ITQ system in 1991.
While these boats are excluded from the analysis presented above,
their ITQs nevertheless penetrate our data indirectly through the
purchasing activities of the larger companies. Indeed, as we will
see, these companies bought out many of the small operators that
had recently become ITQ holders. |
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