A numerical comparison of fish quota values and standard resource rent calculations using New Zealand’s commercial fish resource Paper for 13 th Meeting of the London group on Environmental Accounting Brussels, 29 September - 3 October 2008 Jane Harkness and Luke Aki Presentation Jane Harkness – Statistics New Zealand

Introduction Asset accounts in monetary terms Methodology determined by data availability Market value approach Residual value approach

Summary of results

The Quota Management System Began in 1986 –In 1986 the QMS managed 27 species –In 2007 the QMS managed 96 species

The Fisheries Management Areas Species are managed in Quota Management Areas, 618 in Fisheries Management Areas FMAs hoki HOK has one QMA cardinal fish CDL has 10

The Fish Monetary Stock Account Asset value of New Zealand’s commercial fish resource Exclusions Recreational catch Customary fishing Aquaculture Non QMS species

Management Mechanisms Quota represents shares for a species in a Quota Management Area Total Allowable Commercial Catch TACC is set annually The Quota holding generates an Annual Catch Entitlement ACE (after 2001)

Methodology, Fish Monetary Stock Account Quota x TACC Where Quota information is absent ACE trades used as approximation of resource rent RR Quota x TACC + NPV Assumptions

Data & Methods Ministry of Fisheries administer the QMS and assist in interpretation of data Data supply –Supplied by FishServe –Trades of Quota and ACE must be registered –TACC, catch also supplied

Issues Choice of discount rate Reliability of price information Comparability of alternate methods for estimating resource rent

Residual value estimates of the fish stock where market price information is not available Asset value is estimated based on the NPV of the implied resource rents

Estimating a resource rent R = TR - (IC+CE+CFC+NIT+NP) NP = i * K Where R resource rent TR total revenue IC intermediate consumption CE compensation of employees CFC consumption of fixed capital NIT net taxes on production NP normal profit i the rate of return on capital K the value of fixed capital stock

Excluding QMS transactions from income and expenditure ITQ are classified as intangible non- produced assets Trades are capital transactions ACE sales/purchases classified as rent

Differences in scope Residual valuation covers fishing and aquaculture Market valuation covers species managed under the QMS

Fishing and fish processing High levels of integration Fish processing is included in Other food manufacturing Can all assets be identified and measured

Where is the quota held Quota Shareholding for Selected Species 1 by Industrial Classification 2 ANZSIC divisionPercent A Agriculture, Forestry and Fishing2 C Manufacturing23 F Wholesale Trade1 L Property and Business Services46 M Government Administration and Defence24 unallocated3 1 hake, hoki, ling, orange roughy, oreo, scampi, snapper, squid 2 Australian and New Zealand Standard Industrial Classification (ANZSIC) 1996 version 4.1

Units may Own quota but no longer engaged in fishing Own quota with an associated company classified to fishing Own quota and engaged in fishing but classified to fish processing

Accounting or economic valuations Fixed assets Historic or book value asset prices Or Current replacement cost

Expected or actual catch Expected volumes and prices Or Actual harvest experience

questions Discount rate in actual years Cost recovery or resource rent Residual method operation and theory