Icelandic Fisheries LegislationDevelopment and Experience

Presentation

November 2005

The Icelandic Fishing Industry

• Catches 1,7 – 2,1 million tons• Normally 2% - 2,5% of the world’s catches of wild

fish• Market value of seafood around 2 billion US

dollars• Most important exporting industry in Iceland• 60% of merchandise exports• 40% of total exports of goods and services

Catch in Icelandic Fishing Grounds 1905-2004

0

400.000

800.000

1.200.000

1.600.000

2.000.000

2.400.000

1905 1910 1915 1920 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000

AnnaðKrabbadýrLoðnaSíldKarfiUfsiÝsa Þorskur

Fyrri heimsstyrjöld World War I

Seinni heimsstyrjöld World War II

4 mílur 4 miles

200 mílur 200 miles

12 mílur 12 miles

50 mílur 50 miles

Other Crustaceans

Capelin Herring Redfish

Saithe Haddock

Cod

PILLARS OF FISHERIES MANAGEMENT

• HOW MUCH?• WHO?• HOW (WHERE,WHEN)?

Milestones in Control of Fisheries

• 3 miles in 1901• Icelandic Law on Scientific Conservation of the

Continental Shelf Fisheries in 1948• 4 miles in 1952• 12 miles in 1958

EFFECTIVE MANAGEMENT IMPOSSIBLE

• Capacity Increases• Productivity Gains• In 1975 Foreign Vessels Were Catching

– About a Third of the Cod– A Quarter of the Haddock– Half of the Saithe– Half of the Redfish

• 50 miles in 1972• 200 miles in 1976• UN Convention on the Law of the Sea 1994

PROBLEMS IN SPITE OF EXTENSIONS

• HOW MUCH and WHO problems not solved by extensions

• 4 years periods in the mid 1970’s: the cod stock less than 1 million tons, the spawning stock of cod less than 200 thousand tons

• The problem had become “Icelandic”• The HOW answers did’t solve the problems

Development of Fisheries Management

• 1973 - 1974: Quotas in inshore shrimp and scallop fisheries

• 1975: Individual quotas in Icelandic herring• 1980: Individual quotas in capelin

Development of Fisheries Management - Groundfish

• 1976 - 1983: First TACs and restrictions of fishing efforts. Cod fishery gradually limited from 323 to 215 days a year.

• 1983: Spawning stock of cod estimated at an all time low (just over 200000 tonnes)

• 1983: Total catch of cod exceeded advice by 100000 tonnes

Quota System Developed

• 1984: First individual vessel quotas– Cod, haddock, saithe, redfish, Greenland halibut, plaice,

ocean catfish– Allocations based on catches in reference period 1981-1983

• 1985 - 1990: Period of Effort Option– Vessels could choose effort restrictions

• Catches still in excess of TAC and advice

1990: Fisheries Management Act

• Only the quota option except for the small boats• Fishing vessels are allocated a fixed quota share of the

species subject to TAC• No sunset clause in the legislation indicating a degree of

permanence of fishing rights• The law says that the fish stocks are the common property

of the Icelandic nation• Transferability of quota shares

• The quota share is multiplied by the TAC to give the quantity which each vessel is authorized to catch of the respective species during a single fishing year (September - August).

• This is referred to as the vessel’s annual catch quota and is transferable

• 1% quota share = 1% of the annual catch quota

ANNUAL CATCH QUOTA

SMALL BOATS SEPARATE

• A separate quota regime for most of the smallest boats (6 tons or less, now 15 tons)

• Only long-line or hand-line fishing• Full transferability between the small boats• Not possible to transfer from the small boats to

the larger vessels• Development from an effort based system to

quota

SHOCK ABSORBERS AND REGIONAL POLICY INSTRUMENTS

• Up to 12000 tons of cod equivalent ground fish as a shock absorbers and regional policy instruments (normally less than 3% of the total catch)

• Response to drastic reductions in stocks in isolated cases • Reactions to regional shocks• Long line preferential allocation• Now phasing out: Small additional allocations to small

boats and a special 3000 tons allocation

FLEXIBILITY

• Flexibility in annual catches. • For ground fish species other than cod it is possible to

exceed the annual quota and have quotas in other species reduced correspondingly.

• Limits for each species: 2% of total quota holdings• Limit for total interspecies transfers: 5% of total quota

holdings• For most species it is possible to move up to 20% of the

annual quota to the next fishing year or move 5% from the next year to the current year.

ANTI DISCARD FEATURES

• Discard prohibition clause.• It is possible to land up to 5% of allocated quota (0.5% for

pelagic species) without charging it against the quota allocation.

• This catch is sold at an auction• 20% of the proceedings go to the company• 80% are used to fund marine research

• It is also possible to land undersize fish (10% of each landing) and charge half of it against the quota

LIMITS ON CONCENTRATION AND TRANSFERS

• Single or related companies can’t hold more than 12% of the total annual quota (on cod equivalent basis).

• The maximum share for each species with limitations is 20%. Exceptions are 12% for cod and 35% for redfish

• A vessel can’t catch less than 50% of its annual catch quota for more than 2 consecutive years

• It is only possible to transfer 50% of the annual catch quota from a vessel

RESOURCE TAX

• 9.5% tax rate on calculated industry wide gross profits phased in from 2004 to 2009. (Initially 6%)

• The tax base is calculated as the value of the landings minus estimated cost. The main cost factors are labor, fuel and other operating cost.

TAC DECISIONS

• Decisions on total allowable catch (TAC) are taken by the Minister of Fisheries

• The decision is based on the advice of the Marine Research Institute.

• Special catch rules are applied for cod, herring and capelin

Are There Any Concerns?

• Estimations of the stocks are subject to uncertainty

• Ecosystem based approach underdeveloped• Pressures from stakeholders and different

interests• General limitations of rules• The HOW question forgotten

CONTENTIOUS ISSUES

• Methods and management advice of the MRI• Political preferrence of small boats• Concentrations and resistance to change• Pricing of fish in vertically integrated companies• Pricing of fish when quota is rented• The resource tax

EFFECTIVE MANAGEMENT

• Decisions on the total allowable catch are followed relatively closly

• No “holes” in the system any more. All vessels are subject to quotas

The Cod Stock

Cod:Advice-Quota-Catch and Catch per Unit Effort

Greenland Halibut:Advice-Quota-Catch

Herring:Advice-Quota-Catch

Redfish:Advice-quota-Catch

Haddock:Advice-Quota-Catch

Saithe:Advice-Quota-Catch

Capelin:Advice-Quota-Catch

Offshore Shrimp:Advice-Quota-Catch

INCREASED EFFICIENCY

• Focus on reducing waste and earning profits• Fewer people are needed to work in the industry• The standard of living of those who are engaged

with the industry has improved

PROFITABILITY HAS IMPORVED

%

0

5

10

15

20

25

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

Harvesting as a % of revenues

Processing, % of revenue

Linear (Harvesting as a % ofrevenues)Linear (Processing, % of revenue)

ITQ system in 1984

Transferable qotas in 1990

Employment in Fisheries

0

5.000

10.000

15.000

1992 1994 1996 1998 2000 2002 2004

Fiskvinnsla (e. fishprocessing)

Fiskveiðar (e.fishing)

NEW WAYS OF THINKING

• Economic operators have an incentive to emphasize long term interests and they have most at stake in the sustainability of their fishery

• Operations can be organised with the market as a point of departure with ever smaller number of people creating ever greater values

THRIVING INDUSTRYSUCCESSFUL EXPERIENCE

• Always try to adapt to the markets• Seek the higher end markets• Constant development of new methods and

products• High productivity is the basis of survival• The quota regime ha become more and more

entrenched• Tensions have subsided• Successful ITQs