At present, the United States gives its fishing industry the 200 nautical miles exclusive economic zone off the coast with special fishing rights. This area covers 11.4 million square kilometers which is the largest zone in the world, even exceeding the land area of the United States. The large fishing area makes the United States the fifth leading producer of fish after China, Peru, India and Indonesia, with 3.8 percent of the world total.

Historically, the fisheries developed as each area was settled. Tracing back to 1871, Congress wrote that “… the most valuable food fishes of the coast and the lakes of the U.S. are rapidly diminishing in number, to the public injury, and so as materially to affect the interests of trade and commerce….”

Based on the long history and the large scale of fishing industry in the United States, the sustainability of fishery resources has been a long-standing concern. However, the federal government did not begin actively managing fisheries until the Magnuson–Stevens Fishery Conservation and Management Act (MSA) established in 1976. The Magnuson–Stevens Act is the primary law governing marine fisheries management in United States federal waters.

Obviously, the U.S. Catch Share Programs are authorized under the Magnuson–Stevens Act.

The Catch Share Programs

As defined, catch share programs are “…a fishery management tool that dedicates a secure share of quota allowing individual fishermen, fishing cooperatives, fishing communities or other entities to harvest a fixed amount of fish.” Actually, it is a general term including many specific programs such as “Individual Transferable Quota (ITQs)” programs, “Individual Fishing Quota (IFQ)” programs, “Limited Access Privilege Program” programs, and other exclusive allocation measures such as “Territorial Use Rights Fisheries (TURFs)”.

Catch share programs have been used in U.S. federal fisheries since 1990 and now include 15 different programs currently in operation (see Table 1) from Alaska to Florida managed by six different Councils. Because of the different regions and different councils, I infer that the program design might varies widely and reflects unique fishery characteristics and program objectives. However, after looking through all the 15 programs I find that most of the catch share programs have several objectives in common. The most frequent program objectives can be concluded to be meeting conservation requirements, improving economic efficiency and flexibility, reducing excess capacity, and improving safety at sea.

 

Table 1.  U.S. Catch Share Programs by Fishery Management Council

 

The catch share programs have a more than 20-years history which cover the main regions of American fishing industry including Mid-Atlantic, New England and North pacific, etc. From the list we can find that most of the specific programs basically focus on one category. In my opinion, this kind of set may help achieve the annual catch limits more effectively to eliminate overfishing and reduce the negative biological and economic impacts of the race for fish.

To understand the catch share programs better, I would like to choose one specific program as an example and analyze it in the rest of the blog to present the mechanism and the effects of the programs.

The following graph shows the timeline and the distribution of the programs (see Graph 1). I decide to choose Northeast General Category Atlantic Sea Scallop IFQ from 2010 in New England region.

Graph 1. Timeline and Distribution of Catch Share Programs

Work Mechanism of GCASS IFQ

GCASS IFQ refers to General Category Atlantic Sea Scallop Individual Fishing Quota. The Atlantic sea scallop (see Graph 2) is one of the most valuable fisheries in the United States.  The primary range for the Atlantic sea scallop fishery is landed in New England and Mid-Atlantic ports. The General Category Scallop fishery was historically an open access fishery, allowing smaller vessels to harvest up to 400 pounds of Atlantic sea scallops. While the scallop fishery was not overfished or experiencing overfishing, there were concerns of overcapacity. In 2007, the New England Fishery Management Council proposed that the limited access fleet received 95% and the General Category Scallop Individual Fishing Quota (IFQ) fleet received 5% of total quota.

Graph 2. Atlantic Sea Scallop

 

As we all know, the purpose of quota share caps is to prevent individual shareholders from controlling production, as well as to achieve management objectives. The IFQ Program is subject to an ownership cap set at no more than 2.5% for any one vessel and 5% for any one individual. In the event that a single entity (an individual owner or ownership group) owns more than one vessel, the entity may not hold more than 5% of the total allocation. Allocations may be transferred on a permanent basis or transferred on an annual basis to another IFQ allocation holder, provided the ownership caps are maintained.

The effects of GCASS IFQ

There are two clear objectives of the Scallop IFQ Program. The first one is to control capacity and mortality in the general category scallop fishery. The second one is to allow for better timely integration of sea scallop assessment results in management.

In the first year of IFQ Program, implementation of the general category quota was set at 2.6 million (5% of the total scallop quota) pounds of scallop meats. The general category scallop fleet landed 4.1 million pounds of scallop meats during the Baseline Period[1]. Almost 2.3 million pounds, or 89% of the quota was utilized in 2010 (see Graph 3).

 Graph 3

 

Capacity, as measured by active vessels decreased by almost one-half in 2010 when compared to the Baseline Period. In 2011, the number of entities holding quota share decreased by 12% and the number of active vessels decreased by 4% in 2011.

Economic benefits, as measured by scallop revenue, and average prices have increased under the IFQ Program. Despite scallop landings decreasing 43% in 2010 relative to the Baseline Period, revenue only decreased by 24%. This was in part due to higher prices. However, in 2011, landings of scallops increased by 26% and revenue increased by 50% relative to the previous year. Ex-vessel prices for scallops increased from $6.52 in the Baseline Period to $8.78 per pound in 2010 and to $10.40 in 2011, a 60% increase in average price since the Program began.

Economic efficiency, as measured by revenue per vessel, has been steadily increasing since implementation of the IFQ Program. Revenue per vessel increased by 31% to $127,000 in 2010 when compared to the Baseline Period* and increased by 55% in 2011 relative to 2010.

Total revenue from scallop trips and non-scallop trips was $50 million during the Baseline Period. Total revenue increased by 23% to $62 million in 2010 and by another 33% to $83 million in 2011.

Revenue Distribution, as measured by the Gini coefficient which measures the distribution of revenue among entities holding shares in the Scallop IFQ Program. The Gini coefficient for the General Category Scallop IFQ Program increased from 0.51 in the Baseline Period* to 0.55 in 2010 and decreased to 0.53 in 2011.

Conclusion

Overall, these programs were successful in having fishermen observe quota limits, improving overall economic benefits and efficiency, and ending the race to fish, thereby reducing pressure on fishermen to fish during unsafe conditions. Catch share programs have also been effective in reducing fishing capacity. However, catch share programs have had distributional consequences as reductions in the number of active vessels may have been counterbalanced by reductions in the number of shareholders.

 

 

 

 

References

[1] Ayeisha A. Brinson and Eric M. The Economic Performance of U.S. Catch Share Programs. U.S. Department of Commerce, August 2013

[2] NOAA Catch Share Performance Indicator Series, 2013

[3] United Nations Convention on the Law of the Sea – Part V

[4] NOAA CATCH SHARE POLICY. National Oceanic and Atmospheric Administration. 2010.

 

 

 

 

 

 

 

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Environmental protection is an eternal topic. Global warming caused by carbon emissions is changing our economy, health and communities in diverse ways. One third of the greenhouse gas emissions in the US are from Traffic. Especially in California, this rate reaches up to around 40%. Obviously, the speed of California traffic greenhouse gas emissions increased faster than the population growth which become the main source of environmental problems. In these circumstances, the Low-carbon Fuel Standard (LCFS) were released to fight global warming by reducing the amount of carbon emitted when transportation fuels are used. Adopted in 2007, California’s Low Carbon Fuel Standard requires a 10 percent reduction in the carbon intensity of transportation fuels by 2020, as measured on a lifecycle basis. The goals of the program are to reduce greenhouse gas emissions from the transportation sector, diversify the transportation fuels sector, and to spur investment and innovation in lower carbon fuels. Under the LCFS, fuel providers would be required to measure the impact of their products on global warming on a per-unit basis and reduce this impact.  There is no doubt that this standard can stimulate improvements in transportation-fuel technologies, and it can be a good template for other states and other countries to imitate.

Background

California contributes 7.5% of the total greenhouse gas (GHG) emissions in the USA, or 1.8% of global GHG emissions. In 2005, Governor’s Executive Order S-3-05 required that California reduce GHG emissions to 1990 levels by 2020 and to 80% below 1990 levels by 2050.

As it mentioned above, the goal of the standard is measured on a lifecycle basis. The lifecycle includes two parts of the total fuel cycle. Here, the term WTW which represents the “well-to-wheels” are used to discuss the total life cycle emissions for a vehicle-fuel combination including the fuel production, processing and transportation and the vehicles.

Goals

The design of the Low Carbon Fuel Standard (LCFS) should therefore respond to the following goals:

1. Encourage investment and improvement in current and near-term technologies that will help meet the 2020 goal

2.  Stimulate innovation and development of new technologies that can dramatically lower GHG emissions at low costs and can start to be deployed by 2020 or soon thereafter, creating the conditions for meeting the later 2050 goal

3.  Contribute to attainment of related objectives as much as possible, including economic growth, air quality and other environmental protection goals, affordable energy prices, environmental justice, and diverse and reliable energy sources.

Work Mechanism

The Low-carbon Fuel Standard requires producers of petroleum-based fuels to reduce the carbon intensity of their products, beginning with a quarter of a percent in 2011 culminating in a 10 percent total reduction in 2020. Petroleum importers, refiners and wholesalers can either develop their own low carbon fuel products, or buy LCFS Credits from other companies that develop and sell low carbon alternative fuels, such as biofuels, electricity, natural gas or hydrogen.

The LCFS has several principal elements. First, it establishes a life cycle-scale assessment of the carbon content for each fuel used in the LCFS. This method captures the energy used to create each fuel from the initial point of extraction or cultivation, to transport, to refining, to distribution to the final point of sale.

Second, the LCFS establishes an implementation schedule. 2010 was a reporting year, while 2011 was the first year of formal implementation where petroleum fuel producers and importers had to reduce the carbon content of their fuel by a quarter of a percent. The reduction requirements will increase steadily to the full 10% reduction in 2020.

The LCFS program also has a registry of alternative fuel producers who have submitted all appropriate documentation and are eligible to participate in the LCFS Credit Market and sell or trade credits for their low carbon alternative fuel products.

Implementation Status

The Low Carbon Fuel Standard sets declining annual targets, starting slowly with a 0.25% reduction in 2011 and increasing to 10% reduction by 2020.

In 2012, low carbon fuels displaced roughly 1.06 billion gallons of gasoline and 45 million gasoline gallon equivalents of diesel (representing 6.2% of total gasoline and diesel fuel) at average carbon intensities of 84.95g CO₂e/MJ and 58.34g CO₂e/MJ respectively.

By the end of 2012, the program recorded net excess credits of 1.285 million metric tons (MMT) of CO₂e. This bank of excess credits represents about half of that needed to meet the 2013 LCFS obligation, though some of these credits may be required to offset deficits created from use of higher carbon petroleum fuels in 2011 and 2012.

LCFS credit prices reported to the California Air Resources Board (ARB) averaged about $13.50/MT CO2e in 2012 and $27.70 for the first two months of 2013.

Credit prices increased to over $35 between mid-January and late February 2013, according to Oil Petroleum Information Service (OPIS) and Argus Media (Argus) reports.

Since implementation, regulated parties have responded to the LCFS by lowering the CI of the California fuel pool. Continued LCFS compliance will require continued CI reductions.

Impacts

The Low-carbon Fuel Standard in California is the first standard to reduce the carbon emission in transportation sector in US. It has been presented as a model to establish a national low-carbon fuel standards at the federal level.

The low carbon fuel standard differs significantly from President Bush’s proposal to indiscriminately expand “alternative fuels” without paying attention to their environmental consequences. Instead of bringing coal-based liquid fuels and more of today’s corn-based ethanol in Bush’s proposal, the LCFS has incentives and rules needed to transform these technologies so that they can compete in energy markets that take climate change seriously.

It will take time to solve the climate change and oil import problems because the cars last for many years and the energy supply system also changes slowly.  If it successes in 2020, the new low carbon fuel standard will give the agricultural, energy and automotive industries incentives to lower the carbon intensity of today’s fuels and begin to develop the next generation of truly low-carbon fuels and vehicles

References

[1] Alexander E. Farrell, Daniel Sperling. A Low-Carbon Fuel Standard for California Part 1: Technical Analysis. Davis, CA, Institute of Transportation, August 1, 2007

[2] Alexander E. Farrell, Daniel Sperling. A Low-Carbon Fuel Standard for California Part 2: Policy Analysis.  Davis, CA, Institute of Transportation, August 1, 2007

[3] Elizabeth Burton, Niall Mateer, John Beyer. California’s Policy Approach to Develop Carbon Capture, Utilization and Sequestration as a Mitigation Technology. Energy Procedia, 2012. Available from www.sciencedirect.com

[4] Tiax LLC. Full Fuel Cycle Assessment: Well-to-Wheels Energy Inputs, Emissions, and Water Impacts. California Energy Commission, CEC-600-2007-004-REV, August 1, 2007

[5] ICF International, California’s Low Carbon Fuel Standard: Compliance Outlook for 2020. CalETC, June, 2013

[6] News Release. UC experts detail new standard for cleaner transportation fuels. Berkeley, CA, August 2, 2007. Available from http://www.energy.ca.gov/low_carbon_fuel_standard/

[7] Sonia Yeh, Julie Witcover, Jeff Kessler. Status Review of California’s Low Carbon Fuel Standard. Research Report – UCD-ITS-RR-13-06, Davis, CA, Institute of Transportation, 2013

[8] Low Carbon Fuel Standard. Fuels and Transportation Division Emerging Fuels and Technologies Office, Available from http://www.energy.ca.gov/low_carbon_fuel_standard/ ; accessed on March 10, 2014