Fisheries and the Persistence of Wildly Inefficient Rules

Managers consider a fishery collapsed in a given year if the harvest from that year is less than 10 percent of the maximum recorded harvest. In 2003, roughly 27% of the world’s fisheries were collapsed. Should fisheries mismanagement continue apace, the collapsed share of world fisheries will grow even larger. One estimate from the journal Science suggests universal collapse as early as 2048.

A combination of improvements in fishing technology and unchecked access to fisheries led to this unfortunate outcome. Collapsed fisheries highlight the fact that sustainable growth and development rely on something more than just the power of technology. The ideas behind fishing nets and trawlers fit nicely into the category of technology, but there is another category of ideas needed to ensure a sustainable catch: rules.

In some cases, rules lag behind technologies because it takes time to discover and deploy new rules, just as it takes time to discover and deploy new technologies. For example, fisheries managers often responded to overfishing by shortening the season. This rule created highly inefficient derby-like conditions. The race to harvest in the narrower window of time did little to stop over-harvesting and had its own negative consequences. People got good at fishing fast, and fast fishing is wasteful fishing.

In the 1970s, a small number of managers began using a rule that turns out to work much better, one based on individual tradable quotas (ITQs), or catch shares. A catch share gives the owner rights to a fraction of the total allowable catch in a fishery. Because the catch shares can be bought and sold in a market, the value of the share is based on the productivity of the fishery. As a result, the fishermen who own the shares have a strong incentive to preserve the fishery, thereby increasing the value of their rights.

Another recent Science article suggests that the use of ITQs in all fisheries since 1970 would have reduced the share of collapsed fisheries from 23 percent in 2003 to 9 percent. Despite the general efficacy of catch shares, the fraction of the world’s fisheries managed with similar mechanisms remains very small. According to Donald Leal, just 15 commercial fisheries use catch shares in the United States and less the 2 percent of fisheries worldwide have adopted similar strategies. Alex Tabarrok points to fishery managers’ recent decision to use catch shares in New England, but local legislators there appear poised to challenge the implementation.

Catch share programs present difficulties of their own, but none seem insurmountable. The administrators who oversee the program will need to gain some experience. Scientists have to properly estimate fish stocks to set appropriate limits. Fishers who find themselves out of work because of tighter limits will ask for adjustment assistance. Additional conservation measures may be needed even after shares are assigned. Nonetheless, dealing with these issues while halting the trend toward collapse looks better than the alternative.

The challenge in fisheries management is a smaller scale version of the central problem in development. Both technologies and rules are types of ideas. Both are nonrival and can be copied. New fishing technologies like remote sensing get diffused quickly, yet we’re much slower to adopt new and more effective rules like catch shares. For fishing communities and larger scale human societies alike, the challenge is to devise systems of rules that adapt to the inevitability of changing circumstances.

One of the deep puzzles in social life is that wildly inefficient rules persist even after better rules have been prototyped and demonstrated. It is easy to attribute the inefficiencies seen in poor countries to “bad governance,” implicitly by “bad people.” Before passing judgement, we’d do well to ask why all societies, including the United States, are excruciatingly slow to adopt rules that could make everyone better off.