Stage 1 Analysis of the Trawl IQ Program April 2006 Marcus Hartley Presentation to Pacific Fishery Management Council Workshop on Trawl IQs

Outline of this Presentation Scope of Work of the Stage 1 Analysis Overview of Outline Sections Purpose and Need, Goals and Objectives Timetable for Analysis and Implementation NEPA Guidance Direct & Indirect Effects Analysis Cumulative Effects Analysis

Scope of Work for the Stage 1 Analysis The first stage entails the development of the introductory chapters, outline, and analytical framework for the EIS/RIR/IRFA/SIA. It will entail the gathering of information and sufficient analysis to fully develop a detailed, specific and documented analytical framework approach to address each feature of the alternatives and their likely impacts, along with an assessment of the overall differences in impacts among the alternatives.

Scope of Work for Stage 2 The second stage will be to complete the EIS, as well as RIR, IRFA and SIA Stage 2 will be based on the framework developed in Stage 1

Outline of this Presentation Scope of Work of the Stage 1 Analysis Overview of Outline Sections Purpose and Need, Goals and Objectives Timetable for analysis and implementation NEPA Guidance Direct & Indirect Effects Analysis Cumulative Effects Analysis

Chapter 1: Introduction Need for Action—Problems for Resolution Background to Purpose and Need Purpose of the Proposed Actions Goals Objectives Constraints and Guiding Principles Description of Proposed Alternatives Scoping Summary

Chapter 2: Analytical Framework Provides a summary of the analytical framework used in the analysis. Includes a list of affected resources along with an initial description of indicators and significance criteria.

Chapter 3: Resource and Stakeholder Profiles Will provide (in Stage 2) summary profiles of affected resources and stakeholder groups showing historical and baseline conditions

Chapter 4: Components Analysis The components table deconstructs the alternatives into component parts consisting of elements, options, and sub-options that combine together to create the proposed alternatives. The components analysis will examine (in Stage 2) individual elements, options and sub-options, including some options and sub-options that have not specifically been included in the Alternatives In this chapter options and sub-options will be examined (in Stage 2) independent from the Alternatives.

Chapter 5: Direct and Indirect Effects Analysis The Stage 2 analysis will use a “resource- based” approach to examine direct and indirect effects of the Alternatives. In a “resource-based” approach, a single section of the document examines and describes the direct and indirect effects of all of the alternatives assessed for a particular resource or stakeholder group. The Alternatives will be examined holistically, as opposed to the single issue approach in the components analysis

Chapter 6: Cumulative Effects Analysis Will contain the cumulative effects (CE) analysis. Will explicitly take into account reasonably foreseeable future events (RFFEs)—both endogenous and exogenous—that have the potential to create effects on affected resources and stakeholders. The CE analysis will follow the same general format as the direct and indirect effects analysis looking at the alternatives holistically from the perspective of each stakeholder/resource group.

Chapter 7: Summary of Other Environmental Management Issues Will contain a review of other issues typically found in NEPA documents including: Short-term uses versus long-term productivity Irreversible resource commitments and energy requirements Conservation potential of the alternatives

Chapter 8: Consistency with the Groundfish FMP and National Standards Will summarize the consistency of the proposed action: with the Trawl IQ program “goals, objectives, and constraints and guiding principles” the Groundfish FMP goals and objectives and the ten MSA National Standards

Chapter 9: Cross-Cutting Mandates Will examine the Trawl IQ Alternatives for consistency with other federal laws

Other Required Chapters Chapter 10: List of Preparers Chapter 11: Acronyms and Glossary Chapter 12: Literature Cited Chapter 13: Index

Appendix A: RIR Regulatory Impact Review (RIR) Economic Analysis of the Alternatives Initial Regulatory Flexibility Analysis (IRFA)

Appendix A: RIR (cont.) Economic Analysis of the Alts. Net Benefits: Benefit-Cost Framework Overall Change in B-Cs Change in Distribution of B-Cs Regional Economic Impacts: Change in Income and Employment by Region

Appendix A: RIR (cont.) Initial Regulatory Flexibility Analysis (IRFA) Impacts on Small Entities Compliance Requirements/Costs Additional Regulatory Burden Conflicts with Other Federal Rules

Appendix B: Social Impact Assessment Technical Appendix SIA two-pronged approach Summary tables based on quantitative information; presented in body of EIS/RIR; focuses on distribution of sectors across communities Detailed community context information; presented in technical appendix; focuses on community engagement and dependency

Appendix B: Social Impact Assessment Technical Appendix Balance of quantitative and qualitative Limits of available information Range, direction, and likely order of magnitude of social and community impacts

SIA Technical Appendix Contents Introduction Overview of Trawl Community Socioeconomic Profiles Background and Methodology

SIA Technical Appendix Contents Community Variability Location and Historical Ties to the Fishery Community Socioeconomic Structures Social Impact Experience with IFQ or Other Rationalization Programs Summary Review of Relevant Literature Region-Specific Experience

SIA Technical Appendix Contents Community Profiles Community #1 Community Demographics Local Economy and Links to the Trawl Fishery Community Revenues Summary of Recent Community Rationalization Experience Differential Impacts of Trawl Fishery Management Alternatives Community #2 (and so on)

Outline of this Presentation Scope of Work of the Stage 1 Analysis Overview of Outline Sections Purpose and Need, Goals and Objectives Time table for analysis and implementation NEPA Guidance Direct & Indirect Effects Analysis Cumulative Effects Analysis

Need for Action— Council Problem Statement In summary, management of the fishery is challenged with the competing goals of: minimizing bycatch, taking advantage of the available allowable harvests of more abundant stocks (including conducting safe and efficient harvest activities in a manner that optimizes net benefits over the short-term and long-term), increasing management efficiency, responding to community interest.

Goals Increase regional and national net benefits including improvements in economic, social, environmental and fishery management objectives. Achieve capacity rationalization through market forces and create an environment for decision making that can rapidly and efficiently adjust to changing conditions.

Objectives Provide for a viable, profitable and efficient groundfish fishery. Minimize negative ecological impact while taking the available harvest. Reduce bycatch and discard mortality. Promote individual accountability – responsibility for catch (landed catch and discards). Increase stability for business planning.

Objectives (continued) Increase operational flexibility. Minimize adverse effects from an IFQ program on fishing communities to the extent practical. Promote measurable economic and employment benefits through the seafood catching, processing, distribution elements, and support sectors of the industry. Provide quality product for the consumer. Increase safety in the fishery.

Constraints and Guiding Principles The Alternatives should strive to realize the goals and objectives… Taking into account the biological structure of the stocks including such factors as populations and genetics. Taking into account the need to ensure that the total OYs and ABC for the trawl and all other sectors are not exceeded. Accounting for total groundfish mortality. Avoiding provisions where the primary intent is a change in marketing power balance between harvesting and processing sectors.

Constraints and Guiding Principles (continued) The Alternatives should strive to realize the goal and objectives… Avoiding excessive quota concentration. Providing efficient and effective monitoring and enforcement. Designing a responsive review evaluation and modification mechanism. Taking into account the management and administrative costs of implementing and overseeing the IFQ program and complementary catch monitoring programs and the limited state and federal resources available.

Outline of this Presentation Scope of Work of the Stage 1 Analysis Overview of Outline Sections Purpose and Need, Goals and Objectives Time table for analysis and implementation NEPA Guidance Direct & Indirect Effects Analysis Cumulative Effects Analysis

Timeline for the Analysis Page 35

Figure 2.1 Details Stage 1 and Stage 2 analyses take place through 2nd quarter of Final Council decision in 4 th Quarter 2007 Data to be used: Fishery data from 2005 will be used, along with information from earlier years. The specifications containing ABC and OY projections for 2007 and 2008 will be used. Population and employment estimates through 2005 Drafting of final EIS, FMP language, implementation plans, proposed rule, and the secretarial review and decision process will require at least a full year (2008). Implementation by NMFS will require 1 year, through 2009 Fishing under IFQ Program could begin in 2010

Outline of this Presentation Scope of Work of the Stage 1 Analysis Overview of Outline Sections Purpose and Need, Goals and Objectives Time table for analysis and implementation NEPA Guidance Direct & Indirect Effects Analysis Cumulative Effects Analysis

Council on Environment Quality (CEQ) Guidance on NEPA Effects include ecological (such as the effects on natural resources and on the components, structures, and functioning of affected ecosystems), aesthetic, historic, cultural, economic, social, or health, whether direct, indirect or cumulative. Effects may also include those resulting from actions which may have both beneficial and detrimental effects, even if on balance the agency believes that the effect will be beneficial.

CEQ: Direct and Indirect Effects “Effects” include: (a) Direct effects which are caused by the action and occur at the same time and place. (b) Indirect effects which are caused by the action and later in time or further removed in distance, but which are still reasonably foreseeable. Indirect effects may include growth-inducing effects and other effects related to induced changes in the pattern of land use, population density or growth rate, and related effects on air and water and other natural systems, including ecosystems.

Cumulative Impacts Cumulative impacts are the impact(s) on the environment which result from the incremental impact of the actions when added to other past, present and reasonably foreseeable future actions regardless of what agency (federal or non- federal) or person undertakes such actions. Cumulative effects can result from individually minor but collectively significant actions taking place over a period of time.

Outline of this Presentation Scope of Work of the Stage 1 Analysis Overview of Outline Sections Purpose and Need, Goals and Objectives Time table for analysis and implementation NEPA Guidance Direct & Indirect Effects Analysis Cumulative Effects Analysis

Analytical Conditons Historical conditions Conditions of the resources and stakeholder groups for previous years Baseline conditons The status of affected resources as of Status of stocks, ABCs, OYs, The numbers of vessels and processors, and ownership interests and residences of owners. Community populations and employment reflect 2005 information. The status of other affected resources and stakeholders as of Trends will also be examined. Differences in the baseline conditions and historical conditions will be noted and discussed

Assessing direct/indirect effects: 3-Step Process Examine & document the forces that are likely to change the baseline conditions of affected resources Forces are the aspects of the proposed alternative and how people will react to them Project and predict the conditions of the affected resources after the forces from Step 1 have acted. Document how conditions have changed from baseline conditions in the case of the No-Action Alternative, or from the No-Action Alternative in the case of Action Alternatives

Causes of indirect effects Behavior changes of directly affected stakeholders cause indirect effects Examples: Harvest timing shifts to a period with lower incidental catches of overfished species, but the shift increases interactions with other species A permit holder sells trawl QS allocation and increases effort in non-trawl fisheries A change in product quality changes consumer willingness to pay

Assumptions under No-Action Alternative No-action Alternative assumes fishery resources at groundfish harvest specifications. All other resources, resource users and stakeholders will be assumed to start at baseline levels. The number of vessels and processors will mirror those seen in 2005, 2005 ex-vessel and wholesale prices, community population etc., will be used All existing regulations as modified by actions that the Council has approved, but which have not yet been implemented by NMFS Includes Essential Fish Habitat measures Assume Sector Allocations authorized under Amendment 18 will be in place.

Direct/Indirect Effect Analysis of the No Action Alternative Step 1: Examine the forces that are likely to create changes in the conditions of the resources

Major forces under the No-Action Alternative Overfished species constraining harvest of target species reducing profits in the fishery No requirement to report discards so lots of uncertainty Low harvester profit levels make it difficult for harvesters to pay for observers/monitoring Cumulative trip limits preclude optimization of harvesting patterns for harvesters Cumulative trip limits ensure steady flow of fish to processors and consumer markets Lack of incentives to take individual action to reduce incidental catch Any savings the individual makes will accrue to the entire harvesting sector and not to the individual Other Sectors can cause seasons to end

Direct/Indirect Effect Analysis of the No Action Alternative Step 2: Project the conditions of the affected resources after the forces from Step 1 have acted Methods Assume continuation of recent trends from baseline conditions Interview harvesters and processors on other potential changes

Direct/Indirect Effect Analysis of the No Action Alternative (continued) Step 3: Document how conditions have changed from baseline conditions The Stage 2 analysis will show the differences between outcomes under No-Action Alternative and baseline conditions

Direct/Indirect Effect Analysis of Action Alternatives Step 1: Examine the forces that are likely to create changes in the conditions of the resources. Changes in OYs—Stage 2 analysis will use Specifications Total catch reporting Monitoring of catch with observers or video cameras Other changes embedded in the Alternatives

Direct/Indirect Effects—Step 1 Other major forces under IFQs Allocation of QS/QP to harvesters and (potentially to processors) grants access to an annually determined quantity of fish IFQs allow the optimization of harvests of groundfish within the constraints of other regulations and market forces, including: markets for end products sold to consumers, markets in which harvesters sell their catches to fish buyers and processors, and new markets for QS and QP that are created by the program.

Direct/Indirect Effects of Action Alternatives—Step 2 Primary forces lead to behavioral changes creating direct and indirect impacts Incentives to reduce incidental catch so that greater amounts of target species can be harvested Spatial and temporal changes in fishing patterns Changes in the relationships between harvesters and processors Initial allocation and consolidation will also alter fishing patterns and distribution of activities across the harvesting and processing sectors

Direct/Indirect Effect Analysis of Action Alternatives—Step 2 (continued) How to Predict Changes Allocations are determined by formula Compare Allocations to harvesting and processing patterns Predicting changes in behavior patterns Harvests are likely to shift to periods of lower incidental catch Harvests are likely shift to areas of lower incidental catch But will processors pay the same price for fish if all harvests take place in one period? Will processors be able or willing to purchase and process in condensed periods of time?

Direct/Indirect Effect Analysis of Action Alternatives—Step 2 (continued) No good model to predict temporal or spatial changes Examine Bycatch Model and observer data to determine periods of lowest incidental catch by target strategy Examine observer data to see differences in incidental catches by target fishery within periods. Assess ex-vessel and processed product price elasticity to determine price changes and processor willingness to buy Use game theory and experimental economics Interview harvesters and processors

Direct/Indirect Effect Analysis of Action Alternatives—Step 2 (continued) Predicting consolidation Examine historical patterns—permit holders that are less dependent on fishery may be more likely to exit. Examine cost data that are currently being collected— permit holders that are least efficient may be more likely to exit the fishery Examine allocations to see if the permit holder will be able to continue fishing at levels that would pay fixed costs plus cost of observer/monitoring

Direct/Indirect Effect Analysis of Action Alternatives—Step 2 (continued) Predicting cost of QS/QP What is the marginal revenue that can be earned by purchasing additional QS/QP If the lack of QP for an incidental catch species is constraining target catches, then prices may be quite high and will be tied to the marginal revenue the target species, more than they will be tied to the value of the constraining species.

Direct/Indirect Effect Analysis of Action Alternatives—Step 3 Compare the projected conditions from Step 2 with the conditions projected from Step 2 of the analysis of the No-Action Alternative. Direct and indirect effects are the differences between the conditions under the Action Alternative and their respective conditions for the No-Action Alternative.

Predictions and Scenarios The Consulting Team believes that reliable and robust mathematical or theoretical models that predict behavioral changes under the action alternatives will not be possible within the Council’s time and budget constraints. Interviews with stakeholders may produce the best predictions. Analytical Scenarios will be a primary tool that will be used to assess direct/indirect effects.

Analytical Scenarios The scenarios would be developed as a means to demonstrate differences in the way the various alternatives perform under plausible conditions Scenarios are not predictions, but tools that will be used to demonstrate potential impacts

Scenarios that could be added to the No-Action Alternative Alternative Levels of Observer Coverage on Trawl Vessels Alternative requirements for the reporting of discards for trawl vessels

Scenarios applicable to both the No- Action and Action Alternatives High Abundance of Groundfish Species Low Abundance of Groundfish Species A stock that is currently not overfished falls into overfished status A stock that is currently in an overfished status is rebuilt Alternative sector allocations

Scenarios that could be added to the Action Alternatives Assume no transfers of QS occur Assume a moderate fleet consolidation: QS are transferred and vessels drop out of the fishery such that the average vessel remaining in the industry fishes an average of 150 days per year. Assume a high fleet consolidation such that the average vessel fishes 270 days per year Assume a very quick transition (1-year) to a moderately consolidated fleet Assume a relative slow transition (5-years) to a moderately consolidated fleet

Scenarios that could be added to the Action Alternatives (continued) Assume all harvests for primary target species are made in months with lowest incidental catch rates Assume all harvests for primary target species made in geographic areas with lowest incidental catch rates Assume no shift in temporal/spatial distribution, but assume all catch shifts to above average incidental catch rates

Outline of this Presentation Scope of Work of the Stage 1 Analysis Overview of Outline Sections Purpose and Need, Goals and Objectives Time table for analysis and implementation NEPA Guidance Direct & Indirect Effects Analysis Cumulative Effects Analysis

Framework for Cumulative Effects Analysis CE analysis takes into account reasonably foreseeable future events (RFFEs) Future conditions related to each of the Alternatives will be based on exogenous RFFEs and endogenous RFFEs specific to each of those alternatives.

Step-wise Process for CE Analysis Step 1 examines and documents behavioral changing forces including those examined in direct/indirect analysis and RFFEs Step 2 projects the future conditions of the affected resources under the alternative after the forces from Step 1 have acted Step 3 documents how the future conditions have changed under the alternative. In the case of the No-Action Alternative, the change is measured as the difference from the current conditions. In the case of the Action Alternatives, the change is measured with respect to the Future Conditions under the No-Action Alternative.

Step-wise Process for CE Analysis (continued) Step 4 documents whether the status of any of the affected resources or stakeholder groups has, as a result of the combination of past, present, and reasonably foreseeable future events or actions, changed significantly in ways that were not already apparent in the baseline conditions