Evaluating the New Zealand Individual Transferable Quota Market for Fisheries Management

Motu Working Paper No. 2003-02

21 Pages Posted: 22 Oct 2003

See all articles by Suzi Kerr

Suzi Kerr

Motu Economic and Public Policy Research Trust

Richard G. Newell

Duke University - Nicholas School of Environment; National Bureau of Economic Research (NBER); Resources for the Future

James N. Sanchirico

University of California, Davis - Environmental Science and Policy; Resources for the Future; Motu Economic and Public Policy Research Trust

Date Written: March 2003

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.

Keywords: Tradeable permits, quota, fisheries

JEL Classification: D49, Q22, Q21

Suggested Citation

Kerr, Suzi and Newell, Richard G. and Sanchirico, James N., Evaluating the New Zealand Individual Transferable Quota Market for Fisheries Management (March 2003). Motu Working Paper No. 2003-02. Available at SSRN: https://ssrn.com/abstract=441061 or http://dx.doi.org/10.2139/ssrn.441061

Suzi Kerr (Contact Author)

Motu Economic and Public Policy Research Trust ( email )

Level 1, 93 Cuba Street
P.O. Box 24390
Wellington, 6142
New Zealand
+64 4 383 4250 (Phone)
+64 4 383 4270 (Fax)

Richard G. Newell

Duke University - Nicholas School of Environment ( email )

Box 90228
Durham, NC 27708-0328
United States
919-681-8865 (Phone)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States

James N. Sanchirico

University of California, Davis - Environmental Science and Policy ( email )

One Shields Avenue
Davis, CA 95616
United States
(530) 754-9883 (Phone)
(530) 752-3350 (Fax)

HOME PAGE: http://www.des.ucdavis.edu/faculty/Sanchirico.html

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States

Motu Economic and Public Policy Research Trust ( email )

Level 1, 93 Cuba Street
P.O. Box 24390
Wellington, 6142
New Zealand

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