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The Privatization of the Oceans

June 13, 2012

I just finished reading The Privatization of the Oceans by Rögnvaldur Hannesson.  The book covers the history of property rights as applied to natural resources, the recent rise of exclusive access rights in fisheries, and the increased use of a very specific kind of access right – an individual transferable quota (ITQ) – in developed countries.  In my view, the book provides a great history of property rights as applied to natural resources, but is rather weak and misguided on its argument and evaluation of ITQs.

First to what I liked.  I really enjoyed reading about the progressive use of property rights in Western society. This is largely the story of capitalism beginning with the enclosure movement, and Hannesson nicely points out how the introduction of property rights led to far greater productivity and that their use was often contentious as it produced both winners and losers.

Here’s a quote:

[W]e have several examples of how property rights have changed form on land that previously was common.  This has happened as a result of technological changes or changes in demand, making it worthwhile to claim individual property rights to previously common land or to change the form of land tenure. In the English enclosures, as a result of a rising demand for corn, common pastures were claimed by individuals, fenced in, and turned into farms. In Scotland, increased demand for wool made it more profitable to turn the Highlands into grassland for flocks of sheep than to extract rents from subsistence farmers and squatters, who were forcibly driven away.  In the 1870s, the invention of barbed wire made it possible to contain herds of cattle, making it worthwhile to claim individual property rights to what was previously grassland in the American West.

Hannesson’s case studies show that the application of private property-based management regimes to natural resources led to great production increases and yet were sometimes brutal and nearly always contentious.  This has strong parallels with the movement to privatize the oceans, first through the establishment of territorial waters by the so-called ‘cannon shot’ rule all the way through to the 200-mile exclusive economic zones we have today.

Now to what I didn’t like.  Hannesson assumes that allocative efficiency – i.e. producing the most fish with the least effort – is the most important goal of fisheries management.

The subject of this book provides a fairly clear-cut case: as long as we regard fish primarily as a source of food and other material benefits, the problem in fisheries worldwide is absence of property rights and market transactions rather than the opposite.  [p. 12]

And what about jobs?  Economic stability? Ecological sustainability? Hannesson holds a thinly veiled contempt for these alternative goals.  For example, with regard to employment, he writes this on Norway in the mid-1980s:

An attempt was made to introduce ITQs, but this proved more difficult than reforming monetary policy.  One reason for this failure was the view, well entrenched among local politicians, the bureaucracy, in academia, and even some industry circles, that the role of the fishing industry is to provide employment and maintain communities in areas where there are few other opportunities. With an outlook like that, efficiency enhancing mechanisms like ITQs have little role to play and would even run counter to the objectives of maintaining employment and supporting disadvantaged communities. [pp. 86-87]

Later on Hannesson explains just what he thinks of protecting employment:

These examples [of computers, direct dial telephony, and steamships] make us look back and wonder how many of the technological or institutional innovations that have brought us the benefits of modern life would have been put in practice if they had been hostage to a process committed to “transparency and stakeholders’ representation”…The wagon makers’ and saddle makers’ unions would probably have found many faults with the automobile… [p. 174]

And with respect to ecological sustainability and cultural values, he has this gem at the end of his book:

An increasing part of the public, otherwise remote from anything having to do with fish and fisheries, is taking a growing interest in fish as wildlife and not as a source of material wealth. Exclusive use rights have no role to play in that universe; fishing is an activity that preferably should be gotten out of the way but may be tolerated if it is pursued by primitive methods and some cute ethnic minorities.  The greatest threat to fisheries in the future may not be overfishing and depletion of fish stocks but rampant environmentalism. [bold added; p. 178]

It really blew me away how Hannesson again and again tried to hammer home his economic fundamentalism:

Given the emphasis the coastal states of the world put on establishing the 200-mile zone as a part of international law, it is a bit surprising how little interest many of them seem to take in promoting economically efficient utilization of the fish resources inside their zone…Apparently many governments perceive other benefits than economic efficiency from their fisheries.  Some governments see fisheries as a generator of jobs in economically depressed areas.  From a wider perspective this is wasteful; it would be better to encourage people to move to areas where there labor is in demand, or at the very least not to discourage them from doing so.  In the worst of cases, preserving jobs in the fishing industry has proved to be utterly self-defeating. [p. 169]

I ultimately think that a balance can be found between preserving employment and reaping gains through more efficient production processes and perhaps even many of the case studies in Hannesson’s book would show this if they were rewritten.

Another problem I had with Hannesson was his view that access rights are only used properly when they maximize allocative efficiency.  Of course, no surprise here given his ideological position, but his presentation gives a really lopsided view of how rights-based management for fisheries might favor widespread employment or protect ecosystems.  For example, the Baja Lobster Cooperatives manage their fisheries through TURFs and have important gear restrictions that have lowered the efficiency of the fishermen to protect the stocks.  This has also supported greater employment numbers as more advanced catching methods would require fewer fishermen.  And the IATTC has a dolphin mortality quota that has overtime brought down the number of dolphins killed in tuna fishing. (Oddly, the preceding link goes to a document by Hannesson…perhaps he’s come around on environmentalism since the book?)

Putting this all together, you could probably skip Hannesson’s book altogether.  If you want your fix of resource management regimes, you should check out Oran Young’s classic that I reviewed here.  And if you want to know about rights-based fisheries management, you can find a nice orientation at EDF’s website here.

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