Examination of Witness (Questions 100-117)
Mr Aaron Hatcher
12 MARCH 2008
Q100 Viscount Ullswater: In its communication
on rights-based management, the European Commission highlights
one or two difficulties: relative stability, concentration of
rights (in terms of both ownership and geography), initial allocation
and duration of rights, discard problems (including highgrading)
and the need for efficient control and enforcement. How do you
evaluate those? Do you see those as barriers to the management
of fisheries?
Mr Hatcher: I think we have touched on all these
issues, and I think they are issues, but I do not see them as
barriers to having rights-based management, if that is the expression
you want to use. I do not like "rights-based management"
as a term, because all management is rights-based. You have a
right to fish at all if you have a licence; you have a right to
a fixed amount of fish if you have a fixed quota. As soon as you
start managing fisheries, you are introducing rights, and the
flip-side of that is that you are denying rights to others, otherwise
you just have a free-for-all, but they are all issues to be considered.
Relative stability and the issue of so-called quota hopping is
one that is peculiar to the CFP, but otherwise they are all issues
that have had to be confronted in other countries as well and
I am sure there are lots of lessons that we could learn from other
countries.
Q101 Viscount Ullswater: You seem
to almost have this sort of silver bullet approach of saying that,
if we really got to grips with ITQs, if we really managed it,
if we really had a communicable system which was flexible and
could be retrospective, could just deal with the problems as we
face them on a day-to-day basis, we would not over exploit the
resource, we would not have so many discards. Am I being just
too naive about it?
Mr Hatcher: I think we would probably be moving
in the right direction. Where success has been attributed to ITQ
systems there is sometimes a suspicion that it is the increased
focus on enforcement perhaps almost as much as the change in the
system that has been helpful in improving the health of fisheries,
but, yes, I would feel generally positive about moves in that
direction.
Q102 Chairman: We have talked about
tradeable quotas. What else is tradeable: tradeable effort, tradeable
rights to fish in particular areas. Are there examples of trades
in effort and trades in right to fish elsewhere in the fishing
regime?
Mr Hatcher: We have had trade in licences almost
since licensing began in this country, which also involves access
to areas. We have a large and complex licensing system, perhaps
less complex than it used to be, but it has always been more or
less tradeable.
Q103 Chairman: Is that a good thing
or a bad thing?
Mr Hatcher: I think generally it is a good thing.
There are lots of issues, but there are other issues to do with
introducing tradeability which are perhaps worth thinking about.
Rights to fish, essentially, give you a right to a stream of profits,
because fishing is, potentially at least, very profitable, and
so where quotas, for example, acquire value, that value represents
the stream of profits, economic profits, that can be derived from
those rights to fish. In most countries that have introduced ITQ
systems, and this includes the UK even though it does not have
an ITQ system proper, the way in which the initial distribution
of rights to fish has been made is basically to give the rights
to those to already in the industry in proportion to some indicator
of their involvement in the fishery, usually their track record
or catch history, or whatever you want to call it. Once those
rights have been given away in that way, then the economic value
of the fishery has been parcelled up and handed from the public
to the fishing industry. That is what economists refer to as "resource
rent". That profit that can be earned from the fishery has
been given away into private hands. That is more or less the same
for every country that has introduced an ITQ system, but that
is usually a decision that has been taken for political reasons,
not for economic reasons. That is not the way we approach things
with other natural resources, oil or gas, for example, where exploitation
rights are generally either leased off or subject to royalties,
or whatever. Usually the state, on behalf of the public, tries
to capture some of that resource rent for the public good, if
you like. That is a normative issue that is not on the EU list
of things to be thought about.
Q104 Viscount Ullswater: That could
be dealt with by permits or licences, could it not, by charging
for them.
Mr Hatcher: It could be dealt with by some sort
of what are referred to as "rent capture mechanisms".
There are ways in which some of this rent could be captured, yes,
as a first step, to cover some of the costs of management and
policing. There are a whole lot of design issues.
Q105 Chairman: You have tried these
arguments with the fishermen, have you?
Mr Hatcher: The fishermen are aware of arguments
for cost recovery, I think. They have a cost recovery scheme in
New Zealand. One problem with rent capture is that, once you have
given out the rights, effectively—the quota rights were
given to the industry some years ago in this country—once
you have first-round owners of fishing rights that have sold up
and moved on or retired, they have taken that wealth with them;
so the poor chap who has bought second-hand the fishing rights,
if you start taxing him to try and extract some of the rent, then
he is paying twice. That sort of thing would have to be introduced
probably gradually rather than as any sort of windfall tax, but
that is another issue, yes.
Q106 Lord Cameron of Dillington:
I would like to touch on some of the socio-economic effects involved
here. First of all, do I surmise from your answer to my earlier
question that you probably would prefer to see the TAC, for instance,
which currently is set higher than the scientific recommendations
in many cases because of socio-economic politico influences, you
would prefer to see the socio-economic problems perhaps caused
by a reduction in capacity, for instance, to be dealt with by
other methods rather than watering down what is a conservation
and efficiency allowable catch? That is the first part of the
question. The second part is that I was just wondering where ITQs
fit into this in terms of their effect on overall employment in
relation to the existing system?
Mr Hatcher: I do think that for too long fisheries
policy has been used, perhaps by other countries more than the
UK, as an instrument of social policy in order to maintain levels
of fishing employment, which has perhaps not helped achieve conservation
objectives. Yes, I think that effective and efficient management
should come first and socio-economic concerns should be dealt
with in working with the system rather than using the system to
try and achieve employment objectives, for example. You probably
cannot have an efficient and sustainable fishery and keep high
levels of employment in coastal regions in the way that maybe
we have to some extent so far, but most ITQ systems do constrain
tradeability to some extent. There are usually limits on how much
quota of any particular stock can be owned by one company, there
may be restrictions on tradeability within certain geographical
zones, and there are various ways that social concerns have been
built into quota management systems.
Q107 Earl of Dundee: Lord Brookeborough
mentioned the discard methods of New Zealand. What kind of practical
adjustments would we have to make here if we were to adopt quite
a number of details within the New Zealand Government's quota-based
management model?
Mr Hatcher: If I understand what you are saying,
we would have to have the flexibility in quota catch balancing
that they have in countries like New Zealand, where you have a
certain time period after you have landed fish in order to retrospectively,
for example, balance the amount of quota you have with your catches.
Q108 Earl of Dundee: Would you recommend
that here or not?
Mr Hatcher: Broadly, I suppose, yes, but you
cannot really look at these individual mechanisms in isolation.
They are part of a system that is designed for having quota tradeability.
Q109 Lord Cameron of Dillington:
Of course the advantage New Zealand has is that it is a single
country managing a fishery that really, apart from possibly Australia,
nobody else does. Within your whole system would you envisage
a European-wide ITQ system or a regionally-based ITQ system, either
at national level or even lower?
Mr Hatcher: I am really thinking of the approach
towards quota management at a national level.
Q110 Lord Cameron of Dillington:
At a national level?
Mr Hatcher: Yes. I have not really thought long
and hard about international trading in quotas.
Q111 Lord Cameron of Dillington:
Even within a region such as the North Sea, for instance. You
do not think you could manage? What about Norway?
Mr Hatcher: As things stand at the moment, it
would seem to just make everything more complicated than it needs
to be. To some extent there is international trading in quotas
de facto because of Dutch interests buying up UK fishing
licences, and quota allocations. The beam trawler fleet that used
to operate out of Lowestoft now operates out of Ijmuiden or wherever
else, but it is still UK quota.
Q112 Viscount Brookeborough: When
you say "national", do you mean UK or EU, because, after
all, this is a common fisheries policy.
Mr Hatcher: The UK is still—
Q113 Viscount Brookeborough: You
were considering national.
Mr Hatcher: No.
Q114 Viscount Brookeborough: We cannot
operate in isolation; therefore you are talking about EU?
Mr Hatcher: No, the UK has complete competence
to manage its quotas. The Common Fisheries Policy is not really
a management system; it is an allocation system. It does impose
a number of common technical conservation measures, closed areas
and things, and it has a terrible structural policy and it has
a marketing policy, but it is not a fisheries management system.
The CFP allocates national quotas from the TACs. It is completely
up to the Member States to do what it wants to do with the national
quotas. The Netherlands has had an ITQ system for some time now.
Q115 Chairman: Have you got any final
words of wisdom for us?
Mr Hatcher: None at all, no!
Q116 Chairman: Is there a secret
to getting fishermen to buy in? One of the problems, of course,
is that there is a tension between the scientists or the biologists
on the one side and the fishermen on the other side. There are
tensions between, obviously, the fish processors as well. Is there
any means by which the fishermen can buy in and have confidence
in the system and, therefore, see this working in their interests
rather than against their interests?
Mr Hatcher: I do not see why not. The experience
in New Zealand, for example, is that there are a number of quota
management companies, which are not really companies, they are
more co-operatives, which are just basically quota owners coming
together, and they work with the scientists to have input into
stock assessments, they work with managers and they contribute
towards the costs of management. It seems that there is buy-in,
if you like, in the New Zealand system. I see no reason why there
could not be a similar culture change here.
Q117 Chairman: That is interesting.
I think that might be one of the keys. Thank you very much indeed.
I have to say, I was extremely worried by your continual reference
to New Zealand, because I fear that some of my colleagues will
now argue we need to visit, whereas the best they are going to
get is a trip to Peterhead!
Mr Hatcher: The focus on New Zealand was partly
because it is one of the best documented systems; there is more
literature available on it. Also I was specifically pointed towards
New Zealand by your advisor, I believe.
Chairman: Thank you very much indeed for your
time.
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