Wednesday, March 20, 2013

System turns US fishing rights into commodity, squeezes small fishermen

For centuries, men like Larry Collins, a garrulous crab and sole fisherman, were free to harvest the seas. But sweeping across the globe is a system that slowly and steadily hands over a $400 billion ocean fishing industry to corporations. The system, called catch shares, in most cases favors large fishing fleets, a review of the systems operating across the United States shows.

“We’ve been frozen out,” said Collins, who docks near the Golden Gate Bridge. “This system has given it all to the big guys.”

More and more wild-caught fish species and fishing territories in the United States are managed under catch shares, which work by providing harvesting or access rights to fishermen. These rights – worth tens of billions of dollars in the United States alone – are translated into a percentage, or share, that can then be divided, traded, sold, bought or leveraged for financing, just like any asset.

Catch shares have been backed by an alliance of conservative, free-market advocates and environmental groups, some of which have financed scientific studies promoting the merits of the system, the Center for Investigative Reporting has found.

Thousands of jobs have been lost in regions across the United States where catch-share management plans have been implemented, researchers have noted.

There are 15 catch-share systems in the United States, stretching from the North Pacific’s frigid gray waters along the coast of Alaska and the Aleutian Islands down to the Gulf of Mexico.

More than 3,700 vessels are no longer active in the 10 defined fishing areas that have operated under catch shares since before 2010. That could account for as many as 18,000 lost jobs, according to estimates from researchers who track the fishing industry.

Nowhere is that more apparent than in the surf clam fishing fleet of the mid-Atlantic. The region was the first to implement catch shares more than 20 years ago. Since then, the surf clam fleet has declined by more than 60 percent. In 1990, there were 128 boats. Today, there are fewer than 50. “There’s been a lot of consolidation,” said Carolyn Creed, a Rutgers University anthropologist who has studied catch shares in the mid-Atlantic region. “It’s not the frontier like it used to be. Everything is clean and so businesslike.”

Catch shares are part of a larger government-regulated movement that over the past few decades has been turning the country’s natural resources into marketable commodities to be traded, leased and carefully controlled – including the rights to pollute the air, trade and bank endangered species, and sell and distribute water. Canada, the Netherlands and Iceland were the first countries to experiment with the idea of privatizing fisheries in the 1970s. New Zealand made it national policy in the mid-1980s. These fisheries are defined as regions where certain species of fish are harvested.

Today, fishery experts estimate there are about 150 major fisheries worldwide managed under a form of rights-based management, including catch shares, which accounts for roughly 10 percent of the world’s commercial marine harvest. Some of the nation’s largest ocean territories are managed under catch shares, including Alaska’s pollock, halibut and sablefish fisheries.

Proponents such as the Environmental Defense Fund argue that if a fisherman or seafood company owns a percentage stake, it will take better care of it. They contend it brings economic efficiency to a system in which too many boats are chasing after too few fish.

But it’s more than that, promoters say. Because the system brings financial rewards to those who stay in the system, those who remain have more of a stake in seeing the system thrive. “In traditional fisheries management, there are perverse incentives that actually penalize conservation,” said Tom Lalley, a former spokesman for the Environmental Defense Fund, referring to traditional “derby fishing,” in which boats catch as much they can in a certain period of time. Catch shares, he said, are “about getting the incentives right. It’s about getting them aligned.” Critics, including small fishermen and independent scientists, say the system doesn’t live up to its billing. They note that the nation’s fish stocks have been rebuilding steadily over the past decade with the use of catch limits, but not necessarily catch shares.

Congress required catch limits in every fishery by 2011 when it reauthorized the nation’s fishery law, the Magnuson-Stevens Act, in 2006. Catch limits put a cap on the number of fish that can be harvested in a fishery. By contrast, the catch-share system is a management tool that provides exclusive access to fishing harvesting rights.

Catch shares require catch limits, however, and critics of the management tool question whether any positive environmental results are actually the result of effective catch limits – not privatization. “Catch limits work,” said Lee Crockett, director of federal fisheries policy with the Pew Environment Group. He pointed to the success of the mid-Atlantic flounder fishery, which crashed during the 1980s and 1990s. The fishery, now considered healthy, was rebuilt using an overall catch limit, which included size limits and gear restrictions.

Awarding shares in the Pacific actually has benefited trawlers that contributed to the demise of some fish species such as canary and yelloweye rockfish, records and interviews show. When the catch-share system was implemented in 2011, all shares went to fishermen and fishing companies that exclusively used trawling boats. A decade before, government regulators and environmental groups blamed trawlers for overfishing and environmental destruction that prompted the entire fishery to be shut down.

Fishermen like Collins, the San Francisco fisherman, who relied on traps or hook-and-line practices found themselves locked out because the government excluded fishermen who didn’t use trawlers. “Those drag boats, they pull in about 100,000 pounds every week,” Collins said. “I maybe pulled in 200 pounds, and I rarely had any bycatch,” or unwanted fish that are thrown overboard. Collins, along with other fishermen and some small fishing organizations, sued the government over catch shares, arguing that the program unfairly shut out small fishermen. He lost the case in September but is considering an appeal.

Squeezed out of the initial allocation, Collins knows he won’t be able to get back in without having to buy shares from the same fishermen he believes depleted the territory back in the 1990s. “I believe local families should have access to local fish stocks. And there’s a danger that will never happen again,” Collins said. “If you’re going to privatize the system, give the shares to the community, not the guys driving Mercedes, not the guys who got those Mercedes by destroying the fishery.”

Alliance of diverse groups

Collins’ antipathy for the catch-share program represents a tiny voice drowned out by an alliance of environmental groups, free-market advocates, food retailers, seafood companies and private equity firms that is waging a broad and sophisticated campaign to transform the nation’s fisheries. Conservative interests – many of them free-market advocates, including the Charles Koch Foundation and the Reason Foundation – have aligned with progressive groups such as the Environmental Defense Fund to fuel a heavily funded campaign to consolidate the fishing industry, public records and interviews show.

Through a network of nonprofits, these groups have paid for research bolstering claims that too many fishermen have depleted the oceans.

Over the past six years, a handful of nonprofits have leveraged about $65 million to promote catch shares and nearly $650 million to promote new and “sustainable” fishing practices and policies by creating markets and businesses to push new forms of management, underwriting scientific research showing the oceans are depleted, and developing marketing campaigns designed to educate consumers about overfishing.

Throughout 2012, the Environmental Defense Fund’s website proclaimed that “the oceans are emptying of seafood” and “overfishing is the biggest reason.” The group’s website touted catch shares as the answer, citing facts and figures that have been contradicted by many academics and fishery managers.

The website cited, for instance, a 2006 study in the journal Science that predicted all “fish and seafood species worldwide would crash by 2048” if management practices didn’t change. That prediction has been countered and contradicted by dozens of scientists, including the author of the study, who backed off the statement in a subsequent article published in the same journal. “It was one of the stupidest statements I had ever seen,” said Ray Hilborn, a fisheries biologist at the University of Washington in Seattle, who has followed global fisheries for three decades. Months after the Center for Investigative Reporting inquired, the Environmental Defense Fund removed the study, and some of its other claims, in January.

Corporations see benefits

Catch-share systems vary from region to region and market to market. But they all are controlled by the federal government. Regulators have worked with regional fishery management organizations to divvy up shares – or a percentage of the fishery – to fishermen and corporations. The government allocates shares based on past fishing hauls: The more you fished a region, the more shares you received. But from there, each system can vary. Some systems limit the number of shares any one entity can own; others require that owners must actively fish. And some place no restrictions on the number of shares awarded.

In each case, shares have been awarded to the fishermen and corporations at no cost. But they can turn around and sell these shares. “This system represents a gifting of public wealth to private individuals,” said Daniel Bromley, an economist emeritus at the University of Wisconsin in Madison.

Defenders of the system say the giveaway of shares to fishermen was necessary and fair. “These guys have invested their own resources in the fisheries for years. They’ve bought boats and permits, spent their time and their lives fishing,” said Don Leal, director of research with the Property and Environment Research Center, a free-market environmental think tank based in Bozeman, Mont.

Some of the biggest beneficiaries have been corporate interests. For instance, according to government records, four companies own 77 percent of one type of Bering Sea crab shares: Trident Seafoods and Icicle Seafoods, both headquartered in Seattle, and two Japanese conglomerates, Maruha Nichiro and Nippon Suisan Kaisha.

Last year, more than 80 million tons of crab were hauled into Alaska ports, worth about $250 million. And in New Zealand, where catch shares are the national policy, the government estimates that eight companies control 80 percent of the industry’s production.

Most researchers and managers acknowledge that the system will shrink the fishing fleet, hitting independent, small-scale fishermen the hardest, while protecting big corporate fleets. “No matter what you do, there is a dynamic that is going to unfold in predictable ways, toward the concentration of wealth and away from public participation,” said Bonnie McCay, an anthropologist at Rutgers University who was a member of a National Research Council panel assembled by Congress in the late 1990s to assess catch shares.

Struggling for a share

The job losses identified in fishing villages along the North Atlantic coast have prompted the New England regional management council to consider introducing safeguards for small fishermen and capping the amount of shares any one entity can own. “Consolidation is a feature of every catch-share system,” said Ed Backus of the Portland, Ore.-based Ecotrust, an environmental organization. “You’re going to create winners and losers.” And the winners tend to include larger boats and corporate fleets. “I know a lot of guys who are raving about catch shares,” said Zed Blue, a Bellingham, Wash.-based fisherman, who fishes Dungeness crab and tuna off the Washington coast. “But those are the guys who got something. … For the rest of us, the crew, the fishermen that didn’t own boats, it’s a disaster.”

Collins, the San Francisco fisherman, said he can’t afford to buy enough shares of the Pacific’s lucrative groundfish fishery to make it worth his time. Instead, he and other small-scale fishermen in San Francisco have built a co-op in the hope that if they pool their money, they might be able to buy some shares from the fishing fleets that were allocated larger chunks of the market, or from smaller entities that can’t afford to hold onto their shares.

But if the Pacific groundfish market follows the trajectory of the halibut market, most small-scale fishermen will be priced out, Collins said.

In January, halibut shares were being sold for between $30 and $45 per pound, depending on the area fished. The price is a one-time cost that a fisherman or corporation will pay to gain access to fish under catch shares – if they weren’t given the shares during the initial allocation. And because halibut is a fish that is caught en masse, a fisherman would have to buy thousands, if not tens of thousands, of pounds to fish effectively. “You’re talking hundreds of thousands or millions of dollars to fish,” said Collins, who said he used to just pay to renew his commercial fishing license every year, which would cost him “maybe $100, something like that. We didn’t used to have to buy the fish before we caught them.”

Farther up the coast, in Alaska’s North Pacific pollock fishery, the largest share owners include some of the nation’s biggest seafood harvesters and processors, including Trident Seafoods and Icicle Seafoods. Some of these companies are working with the government to expand catch shares. The private equity firm Paine & Partners, which owns Icicle Seafoods, is co-sponsoring a World Bank initiative with the National Oceanic and Atmospheric Administration to expand catch shares globally.

Paine & Partners did not respond to repeated requests for an interview and would not reply to questions about its contribution to the program.

In 2010, The Carlyle Group, the second-largest private equity firm in the world, acquired the China Fishery Group, whose fleet trolls from the Arctic to the South Pacific and supplies fish across the globe. It owns one of the world’s largest fish-processing vessels, a 50,000-ton behemoth called the Lafayette. After the Carlyle acquisition, the China Fishery Group released a new business strategy, which included buying shares in global fisheries. The company now owns nearly 20 percent of Peru’s fishing region. It also owns shares in the North Pacific but declined to comment on where.

Both Paine & Partners and The Carlyle Group have been part of the alliance paying for the marketing push to adopt catch shares around the globe.

In 2012, Paine & Partners joined a coalition that is raising $1.5 billion to convert fisheries worldwide, and The Carlyle Group’s China Fishery Group sponsored a global conference in Singapore to support catch shares and a new “blue economy.”

Catch limits come into play

Fish populations around the nation are rebounding. But it’s not because of catch shares. Nearly half of the 128 fish populations that have been subject to overfishing since 2003 now are thriving, having been fully rebuilt over the past decade, according to government records. Five of those populations have been rebuilt under catch-shares management – the St. Matthew Island blue king crab, snow crab, Pacific coast widow rockfish, Gulf of Mexico red snapper and Atlantic windowpane flounder, according to Connie Barclay, a spokeswoman for the National Oceanic and Atmospheric Administration.

Barclay said it would be hard to attribute rebuilding to catch shares in any of those cases. Crockett, director of federal fisheries policy for the Pew Environment Group, agrees and credits the rebuilding to strict catch limits, which the government began to institute in 2006.

The difference between catch limits and catch shares “is a distinction I think that is often deliberately conflated” by the government and groups advocating for the new system, Crockett said.

And despite the government’s claims that catch shares can eliminate overfishing, nine of the 15 fisheries now in place were put in fisheries that were not overfished and where overfishing was not occurring. Scientists are not surprised. “Catch-share proponents say the system can improve the health of fisheries,” said Tim Essington, a fisheries scientist at the University of Washington in Seattle. “But that’s not what our research showed. They generally don’t lead to more fish to catch.”

Essington’s work, and other academic research on catch shares, shows little evidence that the system will rebuild fish populations. “Catch share programs have been implemented in a variety of fisheries for diverse reasons,” Barclay said. “The main objectives have been to address overcapacity and to improve economic and ecological sustainability.”

Financing scientific studies

Since 2000, 47 studies have looked at environmental effects of catch shares. Slightly more than half, 24, found no effect or negative effects, including the four most comprehensive and recent studies, a review of the research shows. The Center for Investigative Reporting found that the seafood industry and the environmental groups advancing the system paid for 11 of the 23 studies that praised catch shares. In six cases, funding could not be established.

Roughly 2 out of 3 favorable studies with clear funding sources were paid for by an industry that has spent more than $200 million promoting the system. Five independent government studies have found positive effects from the system. One of the most notable and widely cited studies, a 2008 article in the journal Science by University of California, Santa Barbara researchers, showed that in fisheries where catch shares had been implemented, the system could halt and even reverse fishery collapse.

That study, according to both the Environmental Defense Fund and a researcher at UC Santa Barbara, was largely paid for with a $5 million grant from the Paul G. Allen Family Foundation as part of a partnership between the university and the environmental group. A spokeswoman for the foundation said the grant money was given only to the university and not the environmental organization.

With the study in hand, the Environmental Defense Fund has attempted to advance the cause. In a letter to the TED foundation, an Environmental Defense Fund vice president outlined the organization’s partnership with UC Santa Barbara and its involvement in the research, noting that the study has helped contribute to “a campaign to convert the majority of U.S., Canadian and Latin American fisheries to catch shares.” “In a nutshell, the effort was our attempt to rescue West Coast fisheries from the failures of the broken regulatory system,” said John Mimikakis, a spokesman for the Environmental Defense Fund.

Another study, published in 2012 in the journal Marine Policy, also funded by the Environmental Defense Fund, showed that catch shares improved environmental and economic conditions in fisheries where the system had been established.

The Environmental Defense Fund did not respond to questions about the study’s cost.

“I don't understand why some of my colleagues seem to be turning to catch shares as the solution or the only alternative to open access,” said Mark Spalding, president of The Ocean Foundation, an environmental advocacy group based in Washington, D.C. “But anytime we get into silver bullet solutions, we’re making a mistake.”

Source: Center for Investigative Reporting

Image courtesy of Jeffpro57 via Flickr (CC BY 2.0)