CNBC Business | In Deep Water

In Deep Water

The EU's Common Fisheries Policy lies in tatters, as fears grow that fish stocks are reaching crisis point. Could a controversial system of fishery management be the saviour of an industry all at sea? Trevor Huggins reports

Hordes of jellyfish are floating aimlessly in a clear, sunlit sea and there is not a single fish in sight. The underwater camera shows a Mediterranean that has been transformed into a saltwater void, a damning indictment of greed and bureaucratic incompetence. This is not science fiction, but a haunting image from The End of the Line, a campaigning documentary about the plight of the world's crumbling fish stocks and an industry in crisis. Fishing, particularly in Europe, is in deep trouble.

In a humbling admission of the failure of its Common Fisheries Policy (CFP), a Green Paper from the European Commission said in April that a staggering 88% of the continent's stocks were over-fished and that 30% were in danger of collapse. In the North Sea, 93% of all cod are being fished before they can breed. Meanwhile, breeding stocks of bluefin tuna, a predator of the jellyfish and a prime source for Japanese sushi, will collapse within three years without drastic action, according to the WWF. Faced with the crisis, the Commission is looking for answers and environmental groups are demanding action. A possible solution, though controversial, is beginning to emerge: Individual Transferable Quotas (ITQ).

Already well-established in countries such as Australia, New Zealand and Iceland, an ITQ entitles a fisherman to catch a given annual quota, typically from a fishing ground within his country's 200-nautical-mile limit, though it could extend into vast areas of open sea for migratory species. For shrimps, an ITQ might cover a few square miles, for fish it could be 100,000 square miles or more. The right is usually given indefinitely, or for a long period of time, while the ‘T' in ITQ means he can sell all or part of his quota, either to retire or simply get out of the industry. The system has immediate implications; the main one being that the fisherman now has an asset whose market value is closely tied to the state of the fish stocks that swim beneath his boat. Suddenly, the poacher becomes gamekeeper. Armed with an ITQ, he now has a vested interest in laying nets that only catch mature fish, thereby allowing the stock to recover, and using his time, money and equipment more efficiently. Since ITQs are sold to fellow fishermen, the number of boats tends to reduce while the profits of those left tend to rise. It's a sharp contrast with the blunt instrument of limiting fishing to certain times of the year and pitching boats against each other in an often dangerous race against the clock.

Fridrik Arngrimsson, chief executive of the Federation of Icelandic Fishing Vessel Owners and an ITQ advocate, has seen both approaches at work. "ITQs have really made a difference compared to 20 or 30 years ago," he says. "I was a fisherman when I was studying at university and it was just a race to get as much as possible in as short a time as possible. It was a waste of money and energy. Now the thinking has completely changed. Although quantity is important, we are focusing more on the quality and value of what is caught. And now the interest of the vessel owners and the management of fish stocks go hand in hand. If you have a secured right you are willing to reduce the fishing effort to build up the stock because you will benefit from it when it recovers. We have seen that in many cases in Icelandic fisheries."

Ad-hoc evidence that stocks recover has been around for some time. What helped get the ITQ bandwagon rolling was a detailed study co-authored in September 2008 by Professor Chris Costello of the University of California, Santa Barbara, which proved that stock collapse can be prevented by ITQs. Separate research by other scientists showed that stocks then recover and the bandwagon has gained further momentum thanks to EU Fisheries Commissioner Joe Borg, who wants to reform the CFP. Having launched a period of consultation until December, Borg cannot appear to pre-judge its outcome. However, reading between the lines of his speech to the German Bundestag two months after launching the Green Paper is not a taxing exercise. "An effective management system building on individual rights relies on giving fishermen a right to fish which is secure enough to enable them to optimise the use of their vessels and maximise their income," he said. "[By making] these rights transferable, we could facilitate the long-term adjustment of the fleet and promote an economically self-reliant fishing fleet." Removing any lingering doubt, he later added: "A number of Member States – Spain, Portugal, Estonia, the UK, Netherlands and Denmark – have ITQs in place for parts or all of their fleets."

Professor Ragnar Arnason of the University of Iceland, a leading expert on fisheries management systems, is even more categorical: "The virtually uniform success of ITQs in a wide range of fisheries all over the world shows there can no longer be any reasonable doubt about its economic efficiency."

Better still for its supporters, business and politics are not the only forces behind the ITQ cause. Environmental groups also see the benefits of a system that could prevent the oceans from emptying. Aaron McLoughlin, head of the WWF's European Marine Programme, says: "We're very sympathetic towards ITQs and we'd support them. Europe still has too many boats chasing too few fish... and this is a very effective way of getting the capacity of the fleet down to the right size." However, his support comes with a caveat. "You could still have the right nominal size [of fleet] but if they weren't doing the right thing you'd still have the stocks being fished out. You still need fishing nets which don't catch juvenile cod and of course we wouldn't support the destruction of coral forests undersea, which is still happening."

Yet if ITQs are seen by many as the way ahead, they are also bitterly opposed by a section of public and political opinion for being a privatisation of the sea. Opponents also fear the effects on communities if ITQs are sold to boats from other, possibly far-flung ports and there has been anger too at so-called "armchair fishermen", who lease out part or all of their quota in return for a share of the profits. Scotland's fisheries secretary, Richard Lochhead, launched a frontal attack on the system as he unveiled a quota management review last year. "The measures I am outlining today will safeguard one of our national assets – our fish quota," he said. "They will also mean that any prospect of ITQs being introduced is dead in the water. ITQs are effectively the privatisation of fishing rights, which we do not support."

Though such attacks clearly carry some weight, there are good reasons to think they will not carry the day. Costello is one of many experts who rolls with the punches. "Privatisation is a real issue that needs to be discussed and confronted," he says "But there are different degrees to which you privatise... you can have caps on consolidations, so you don't have any one entity owning lots of rights, and sunset clauses where every 10-20 years there's a review of stewardship. The bottom line is the evidence and that certainly suggests that the more control the public sector has – and does not give rights or exclusivity to fishermen – the worse the thing performs." He believes half of the world's fish could be landed via some form of rights-based system within 10–15 years and that the key is choosing the right format. It's a view shared by Arnason, who believes that for the more artisanal fisheries, with low technology, low individual catch rates and primitive landing facilities, the cost of enforcing ITQs is simply too great. For these fisheries, possibly up to half of the global total in terms of value, a form of community rights would be more appropriate.

In fact, the success or failure of any rights-based system in saving the world's fish stocks could come down to the policing and paperwork. Mike Park, a boat owner and chairman of the Scottish White Fish Producers Association, recalls a quota-busting practice known as ‘black' fish landings, once rife in Scottish waters: "If you were better than your neighbour and caught more than him, you were faced with a dilemma – either you discard it or you land it illegally. Most fishermen chose the latter, which meant that during the 1990s and early 2000s anarchy prevailed." The introduction of a Register of Buyers and Sellers, which forced fisherman and customer to fully document the catch, stopped the illegality "almost overnight." Satellite tracking has also proved another effective way of making sure that boats stick to their areas, while fishermen's knowledge of what each other is up to also has a big part to play in keeping everyone on side. "There's a degree of peer pressure involved," says Park. "We now have vessels reporting on other vessels who they think are using illegals gears, for example." That said, the problem of policing the high seas beyond national 200-mile limits has yet to be solved.

As the world's fish stocks continue to dwindle, there is no doubt that action is needed and the time for simply wringing hands is over. Costello, like many experts, believe that while they cannot solve the problem alone, ITQs have a key role to play. "I think the biggest mistake would be to pretend that everything's fine and to not do anything," he said. "We're heading downhill and we're going to keep heading in that direction if we do nothing. The second biggest mistake would be to blindly apply only the ITQ tool and to say ‘Gee, they worked in New Zealand, let's just replicate them everywhere... but I do think that rights-based reforms of many, or all fisheries around the world would dramatically improve their performance." Clearly, most fishermen, politicians and scientists would welcome that; the challenge, though, is to make it happen.