Impacts of individual transferable quotas in Canadian sablefish fisheries : an economic analysis

In 1990, the Department of Fisheries and Oceans implemented the Individual Transferable Quotas (ITQ) system to achieve its management goals. The purpose of this study is to investigate the effectiveness of this system. It aims to determine whether and how the ITQ system creates an economically viable industry; what problems the ITQ system has generated and what factors should be considered in addressing them; and what the risk of holding these quotas is to the fisher. To this end, I will focus on efficiency as a critical dimension of economic viability and the fisher’s competitiveness. I will begin by comparing the ITQ to the Limited Entry system which preceded it and explore claims regarding the impact of ITQs on the sustainability and viability of fishing firms and the sablefish fishery. Next, I will conduct a detailed and comprehensive analysis of the industry’s cost structure that highlights the value/purchase price of the quota, which is widely considered to be a crude measure of industry profitability. This analysis will examine Barichello’s (1996) model in order to calculate the risk associated with holding sablefish quotes and Monk and Pearson’s (1989) Policy Analysis Matrix (PAM) in order to determine whether the sablefish industry is efficient. I will then source industry information to compute the costs of fishing by conducting a financial analysis of firms that are representative of the sablefish fishery. The cost structure presented in the financial analysis will be utilized to apply the PAM to the sablefish fishery, which will determine whether it is efficient and if the ITQ system has created a highly subsidized industry. My analyses will demonstrate that the industry is economically viable under the ITQ system and that if the ITQ system was meant to correct market failures in the sablefish industry, it has partially succeeded in doing so. Key findings will be related to criticisms of ITQs and the implications of these findings will be considered. Lastly, I will detail the questions that the research has raised and make recommendations for future research.Land and Food Systems, Faculty ofGraduat