1. Icelandic Fisheries Legislation Development and Experience Presentation November 2005

2. The Icelandic Fishing Industry Catches 1,7 – 2,1 million tons Normally 2% - 2,5% of the world’s catches of wild fish Market value of seafood around 2 billion US dollars Most important exporting industry in Iceland 60% of merchandise exports 40% of total exports of goods and services

3. Catch in Icelandic Fishing Grounds 1905-2004

4. PILLARS OF FISHERIES MANAGEMENT HOW MUCH? WHO? HOW (WHERE,WHEN)?

5. Milestones in Control of Fisheries 3 miles in 1901 Icelandic Law on Scientific Conservation of the Continental Shelf Fisheries in 1948 4 miles in 1952 12 miles in 1958

6. EFFECTIVE MANAGEMENT IMPOSSIBLE Capacity Increases Productivity Gains In 1975 Foreign Vessels Were Catching –About a Third of the Cod –A Quarter of the Haddock –Half of the Saithe –Half of the Redfish 50 miles in 1972 200 miles in 1976 UN Convention on the Law of the Sea 1994

7. PROBLEMS IN SPITE OF EXTENSIONS HOW MUCH and WHO problems not solved by extensions 4 years periods in the mid 1970’s: the cod stock less than 1 million tons, the spawning stock of cod less than 200 thousand tons The problem had become “Icelandic” The HOW answers did’t solve the problems

8. Development of Fisheries Management 1973 - 1974: Quotas in inshore shrimp and scallop fisheries 1975: Individual quotas in Icelandic herring 1980: Individual quotas in capelin

9. Development of Fisheries Management - Groundfish 1976 - 1983: First TACs and restrictions of fishing efforts. Cod fishery gradually limited from 323 to 215 days a year. 1983: Spawning stock of cod estimated at an all time low (just over 200000 tonnes) 1983: Total catch of cod exceeded advice by 100000 tonnes

10. Quota System Developed 1984: First individual vessel quotas –Cod, haddock, saithe, redfish, Greenland halibut, plaice, ocean catfish –Allocations based on catches in reference period 1981-1983 1985 - 1990: Period of Effort Option –Vessels could choose effort restrictions Catches still in excess of TAC and advice

11. 1990: Fisheries Management Act Only the quota option except for the small boats Fishing vessels are allocated a fixed quota share of the species subject to TAC No sunset clause in the legislation indicating a degree of permanence of fishing rights The law says that the fish stocks are the common property of the Icelandic nation Transferability of quota shares

12. The quota share is multiplied by the TAC to give the quantity which each vessel is authorized to catch of the respective species during a single fishing year (September - August). This is referred to as the vessel’s annual catch quota and is transferable 1% quota share = 1% of the annual catch quota ANNUAL CATCH QUOTA

13. SMALL BOATS SEPARATE A separate quota regime for most of the smallest boats (6 tons or less, now 15 tons) Only long-line or hand-line fishing Full transferability between the small boats Not possible to transfer from the small boats to the larger vessels Development from an effort based system to quota

14. SHOCK ABSORBERS AND REGIONAL POLICY INSTRUMENTS Up to 12000 tons of cod equivalent ground fish as a shock absorbers and regional policy instruments (normally less than 3% of the total catch) Response to drastic reductions in stocks in isolated cases Reactions to regional shocks Long line preferential allocation Now phasing out: Small additional allocations to small boats and a special 3000 tons allocation

15. FLEXIBILITY Flexibility in annual catches. For ground fish species other than cod it is possible to exceed the annual quota and have quotas in other species reduced correspondingly. Limits for each species: 2% of total quota holdings Limit for total interspecies transfers: 5% of total quota holdings For most species it is possible to move up to 20% of the annual quota to the next fishing year or move 5% from the next year to the current year.

16. ANTI DISCARD FEATURES Discard prohibition clause. It is possible to land up to 5% of allocated quota (0.5% for pelagic species) without charging it against the quota allocation. This catch is sold at an auction 20% of the proceedings go to the company 80% are used to fund marine research It is also possible to land undersize fish (10% of each landing) and charge half of it against the quota

17. LIMITS ON CONCENTRATION AND TRANSFERS Single or related companies can’t hold more than 12% of the total annual quota (on cod equivalent basis). The maximum share for each species with limitations is 20%. Exceptions are 12% for cod and 35% for redfish A vessel can’t catch less than 50% of its annual catch quota for more than 2 consecutive years It is only possible to transfer 50% of the annual catch quota from a vessel

18. RESOURCE TAX 9.5% tax rate on calculated industry wide gross profits phased in from 2004 to 2009. (Initially 6%) The tax base is calculated as the value of the landings minus estimated cost. The main cost factors are labor, fuel and other operating cost.

19. TAC DECISIONS Decisions on total allowable catch (TAC) are taken by the Minister of Fisheries The decision is based on the advice of the Marine Research Institute. Special catch rules are applied for cod, herring and capelin

20. Are There Any Concerns? Estimations of the stocks are subject to uncertainty Ecosystem based approach underdeveloped Pressures from stakeholders and different interests General limitations of rules The HOW question forgotten

21. CONTENTIOUS ISSUES Methods and management advice of the MRI Political preferrence of small boats Concentrations and resistance to change Pricing of fish in vertically integrated companies Pricing of fish when quota is rented The resource tax

22. EFFECTIVE MANAGEMENT Decisions on the total allowable catch are followed relatively closly No “holes” in the system any more. All vessels are subject to quotas

23. The Cod Stock

24. Cod:Advice-Quota-Catch and Catch per Unit Effort

25. Greenland Halibut:Advice-Quota- Catch

26. Herring:Advice-Quota-Catch

27. Redfish:Advice-quota-Catch

28. Haddock:Advice-Quota-Catch

29. Saithe:Advice-Quota-Catch

30. Capelin:Advice-Quota-Catch

31. Offshore Shrimp:Advice-Quota-Catch

32. INCREASED EFFICIENCY Focus on reducing waste and earning profits Fewer people are needed to work in the industry The standard of living of those who are engaged with the industry has improved

33. PROFITABILITY HAS IMPORVED

34. Employment in Fisheries

35. NEW WAYS OF THINKING Economic operators have an incentive to emphasize long term interests and they have most at stake in the sustainability of their fishery Operations can be organised with the market as a point of departure with ever smaller number of people creating ever greater values

36. THRIVING INDUSTRY SUCCESSFUL EXPERIENCE Always try to adapt to the markets Seek the higher end markets Constant development of new methods and products High productivity is the basis of survival The quota regime ha become more and more entrenched Tensions have subsided Successful ITQs