Theory and Practice of ITQ's in Iceland; Privatisation of Common Fisheries Resources

"Fisheries management by individual transferable quotas (ITQ's) is being advocated by several fisheries economists as a solution to 'tragedy of commons' situations in the fisheries. Until lately, the studies of ITQ's have been purely theoretical, but now it is possible to study how the system works in real settings. Two countries, New Zealand and Iceland, have adopted ITQ's as an overall fisheries management system on a national level. In Iceland, fish quotas were made transferable within a set of limitations in 1984, but since 1991, quotas have been freely transferable. The gradual transformation of common property rights into private property rights under the ITQ regime, is basically consistent with the economic theory of ITQ's, though this part of the theory is often undercommunicated in the political rethorics. In the Icelandic case, the theoretical assumption that a ITQ-regime will discourage overinvestment in the fishing fleet seems questionable. The transferability of fishing rights (that is quotas), transforms them into a sort of currency. Thus, the ITQ-regime as such seems to represent a major input of 'new' capital into the fisheries, which in turn generates an incentive for investment. The economic theory of ITQ's also assumes that quota market prices will reflect the resource rent generated by the fisheries under an ITQ-regime. In Iceland the demand for quotas is influenced by unemployment and lack of alternative sources of income for fishermen. The interdependency between the quota market and the labor market is gradually creating a market price of fishermen's labor. This process, along with a rapid concentration of quota ownership is causing an increase in social differences and social conflict."