Rebuilding the Hoki Fishery in New Zealand 1

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1 REBUILDING THE HOKI FISHERY IN NEW ZEALAND 1 Rebuilding the Hoki Fishery in New Zealand 1 General information This case study focuses on the trawl fishery for New Zealand Hoki (Macruronus novaezelandiae) in New Zealand fishery waters 2. The fishery was developed in the 1970s by fishing vessels from Japan and the former USSR. After the declaration of New Zealand s Exclusive Economic Zone in 1978 fishing by foreign licence vessels was phased out and all fishing rights allocated to New Zealand companies. These companies use both New Zealand owned vessels and foreign charter vessels. Hoki has consistently been one of New Zealand s most valuable fisheries. Figure 1. Administrative Boundaries of the New Zealand Hoki Fishery During the July September spawning season hoki are caught mostly off the West Coast of the South Island and in Cook Strait. Outside the spawning season they are mostly caught in the Chatham Rise and Sub-Antarctic fishing areas. The fishery is 1 2 This case study has been prepared in collaboration with Mr. Jonathan Peacey. Unless otherwise referenced, information in this case study is drawn from the documents: Report from the Fisheries Assessment Plenary, [various years]: stock assessments and yield estimates; and Initial Advice Papers and Final Advice Papers for the Minister of Fisheries prepared by the Ministry of Fisheries in various years. 1

2 2 REBUILDING THE HOKI FISHERY IN NEW ZEALAND managed as two stocks 3 under a single Total Allowable Commercial Catch 4 (TACC) for HOK1 (the HOK10 stock has a nominal TACC for administrative purposes only). When the stock boundaries were defined it was assumed there was single hoki stock. When it was shown that there were two stocks the industry agreed to set voluntary sets catch limits for the two stocks rather than go through the complex process of splitting HOK1 into two administrative stocks. If the industry chose not to adhere to voluntary stock limits the government would likely establish separate administrative stocks with separate TACCs. The size of the hoki stock is strongly affected by variable recruitment. Catch limits are adjusted in response to changes in the size of the hoki stock. The highest TACC for the hoki fishery was 250,000 tonnes, in place from the 1986/87 5 fishing year to 1988/89 and again from 1996/97 to 2000/01. Stock size declined as a result of high catches and poor recruitment and, in response, the TACC was reduced in four steps to 90,000 tonnes between 2001/02 and 2007/08. The TACC was increased to 100,000 tonnes in 2009/10 and a further increase in TACC is proposed for the 2010/11 fishing year. The four TACC reductions were part of New Zealand s generic fisheries management processes rather than a one-off rebuilding plan for hoki. For the purposes of this case study the Hoki Fishery Rebuilding Programme is defined as the decisions from 2001 to 2009 to reduce (and later increase) the hoki TACC, and the fisheries assessment and management advice that supported these changes. Initially the Rebuilding Programme was based on the Fisheries Act 1996 rebuilding target of setting a TAC to restore the stock, to or above a level that can produce the maximum sustainable yield (MSY). At the time, this was estimated to be 30 40% B 0 (unfished biomass) for hoki. From 2009/10 the estimate of B MSY was revised 6 to around 24% B 0, however, at the same time the industry and government agreed on a target stock size of 35 50% B 0. The Fisheries Act does not specify a timeframe for rebuilding a fish stock and it is only in the last few years that guidance has been provided in the Harvest Strategy Standard. The only major threat to the Rebuilding Programme was poor recruitment, which may be affected by climate The two stocks (Figure 2) have different spawning areas but juveniles from both stocks share the same grounds on the Chatham Rise. The Act requires the setting of both a Total Allowable Commercial Catch (TACC) and a Total Allowable Catch (TAC), which includes the TACC and allowances for catches by recreational and customary Maori fishers and other sources of mortality. For hoki (which has minimal noncommercial catch) the TACC and TAC are very similar. The fishing year for the hoki fishery is from 1 October to 30 September. The estimate of B MSY used for management purposes was changed in 2009 from a proxy of 30 40% B 0 to 24% for the Eastern Stock and 25% for the Western Stock. However, the lower figures are based on a perfect world definition of B MSY requiring a number of assumptions to be met. The Ministry s Chief Scientist considers this unrealistic and prefers a B MSY estimate of 35 40% B 0 based on a real world definition (Mace, personal communication). 2

3 REBUILDING THE HOKI FISHERY IN NEW ZEALAND 3 Figure 2. New Zealand Hoki Fishery: Eastern and Western Stocks Institutional framework Legislation/authority New Zealand fisheries are managed primarily under the Fisheries Act Changes in fishery catch limits are determined by the Minister of Fisheries; most other management measures are determined by Cabinet on the recommendation of the Minister. The Minister receives advice from the Ministry of Fisheries (the Ministry), which also provides or purchases fisheries management services including compliance, fisheries research, data management, administration of fishing rights, and stakeholder consultation. The Ministry runs annual processes by which: (i) research needs are identified and prioritised; (ii) the status of fish stocks is reviewed, taking into account latest catch and effort information and any relevant research; and (iii) advice is prepared for the Minister on management measures and required fisheries services. The first two of these processes are open to all stakeholders and there is formal consultation with stakeholders on proposed management advice and services. The Ministry operates an open tender system for most research projects; however, much of the research for hoki and other deepwater fisheries is undertaken by the government-owned National Institute of Marine and Atmospheric Research (NIWA). The Fisheries Act 1996 provides for the development of fisheries plans to guide decisions on fisheries management measures and provision of services. The Ministry, working with the industry and other stakeholders, completed a draft fisheries plan for the hoki fishery in May

4 4 REBUILDING THE HOKI FISHERY IN NEW ZEALAND Relevant policies and guidelines The most important policy relevant to the Rebuilding Programme is provided by the Fisheries Act For fish stocks below B MSY the Act requires TACs to be set at a level that will restore the stock, to or above a level that can produce the maximum sustainable yield. When a fish stock is at or above B MSY the TAC must be set at a level that maintains it at or above B MSY. The Act does not specify the required rate at which a fishery must be rebuilt to B MSY. The Ministry s perspective, informed by relevant Court decisions, is that, provided there is an intent to move the stock towards B MSY in the longer-term and the TAC poses no risk to the stock, the rate of rebuild of a fish stock is a matter for the Minister to determine, taking into account social, cultural and economic factors he or she considers relevant (MoF personal communication 7 ). So, in 2001 when the Rebuilding Programme was initiated there was no government policy on the rate of rebuild. In 2001 the hoki fishery was certified in the Marine Stewardship Council (MSC) Programme subject to a number of conditions. These included a number of Minor Corrective Action Requests to address identified weaknesses including, CAR 002 (b): There is a high probability that the Eastern hoki stock will not remain above the limit reference point (B MSY ) (SGS 2001). The fishery was re-certified in 2006 subject to a set of Corrective Action Requests including, CAR 07/01: Rebuilding plan: A rebuilding plan for the western stock is required (SGS 2007). The desire of quota owners to maintain MSC certification has encouraged them to support the Rebuilding Programme. However, while the conditions for MSC certification emphasised the need to rebuild the western stock and maintain both stocks above B MSY they did not specify a timeframe for the rebuild. From 2006 the Ministry started developing fisheries standards to provide guidance on implementing the Fisheries Act. In 2008 the Minister approved the Harvest Strategy Standard, which guides setting of catch limits and specifies a maximum period for rebuilding depleted fish stocks. The rebuild is to be achieved within twice the period in which the stock would rebuild in the absence of fishing. Although not approved until 2008, drafts of the Harvest Strategy Standard were taken into consideration by the Hoki Fishery Assessment Working Group from about From 2006 the Ministry started working with the Deepwater Group and other stakeholders to develop a fisheries plan for deepwater and middle-depth fisheries (including hoki). The draft Fisheries Plan was released in May 2010, however, earlier drafts of the Fisheries Plan have influenced management of the hoki fishery including the required rate of rebuild for a fishery. Institutional changes There have been a number of relevant institutional changes since the Hoki Fishery Rebuilding Programme was started in 2000 but none were as a direct result of the Programme. Since 1996 most owners of hoki quota shares were members of the Hoki Fishery Management Company (HFMC). This company represented hoki quota owners interests 7 From the Minister s Decision Letter to stakeholders explaining his decision on the TAC and TACC for the SNA1 (Snapper 1) fish stock for the 1997/98 fishing year. 4

5 REBUILDING THE HOKI FISHERY IN NEW ZEALAND 5 to the government and provided some services on behalf of members. Since 2001, these services included coordinating the voluntary stock catch limits, implementing the voluntary code of practice, and activities related to obtaining and maintaining Marine Stewardship Council certification of the fishery. In 2005 the Deepwater Group took over the work of the HFMC and now represents the interests of most holders of deepwater fish quota, including hoki. The Deepwater Group also purchases independent stock assessment advice. The industry-owned New Zealand Seafood Industry Council represents the fishing industry in generic issues and provides services to the Deepwater Group, primarily stock assessment advice. The Ministry of Fisheries structure and processes have evolved during the period of the Rebuilding Programme. One of the most significant changes was that in 2006 the Ministry of Fisheries Operations Group was re-organised to give a stronger focus on working with stakeholders to develop fisheries plans. In 2006 the Ministry and the Deepwater Group signed a Memorandum of Understanding setting out how the two organisations would work together to maximise the value obtained from the fishery within environmental limits. The collaborative work programme includes developing the fisheries plan and associated research plan, maintaining MSC certification, and minimising environmental impacts of the fishery. Fisheries rebuilding programme framework Management response Consistent with the normal operation of the Quota Management System, the key management change used in the Rebuilding Programme was the reduction of the TACC. This occurred in four steps: from 250,000 tonnes to 200,000 tonnes in 2001/02, to 180,000 tonnes in 2003/04, to 100,000 tonnes in 2004/05 and to 90,000 tonnes (Figure 3). For quota owners each reduction in TACC had the effect of reducing the Annual Catch Entitlement (ACE) (described below) generated by each quota share. A summary of the results of annual hoki stock assessments and resulting TACC changes are shown for the Western Stock in Annex 8A:1 and for the Eastern Stock in Annex 8A:2. The stock status trajectory for the Western Stock is shown in Annex A:3 and for the Eastern Stocks in Annex A:4. In 2001 the industry implemented a voluntary code of practice. A key aspect of the Code was the TACC split between the two hoki stocks. This was considered a necessary management control by stock assessment scientists and managers and if it had not been implemented by voluntary agreement would likely have been regulated. The voluntary stock catch limits in the Code of Practice were modified through the period of the Rebuilding Programme in response to the relative sizes of the two hoki stocks. The Code of Practice also included measures designed to reduce catches of juvenile hoki. Initially this involved a restriction on fishing in areas shallower than 450 m and a move on rule applicable when too many juvenile hoki were caught. In 2009 the measures to protect juvenile hoki were modified, with the depth restriction replaced by a restriction on target fishing for hoki by vessels longer than 28 m in four areas thought to have high concentrations of juvenile hoki. 5

6 6 REBUILDING THE HOKI FISHERY IN NEW ZEALAND Figure 8.3. TACCs and annual catches Source: Ministry of Fisheries, 2010a. Monitoring and enforcement The Rebuilding Programme did not contain any new monitoring and enforcement measures; existing measures were maintained and remain current now. Reporting and monitoring measures include: The requirement for all vessels longer than 28 m length to use an approved satellite vessel monitoring system. The requirement to report catch against ACE (Annual Catch Entitlement) and to report catch and effort and the location of fishing operations. The requirement to carry a government observer when requested. (The proportion of fishing trips carrying observers varies between fisheries and years.) Patrols by Royal New Zealand Air Force planes and Royal New Zealand Navy vessels. Breaches of fisheries rule and especially misreporting of catch are punishable by severe penalties, including fines of up to NZ$250,000; forfeiture of catch, vessel, and quota shares; and imprisonment of up to five years. Performance measurement and evaluation Progress towards the target of rebuilding the fish stock was measured through regular stock assessment and management advice processes. Key inputs to these assessments are data from annual fishery-independent surveys. Since 2001 the Ministry has commissioned a hoki trawl surveys on the Chatham Rise and in the Sub-Antarctic area every year. Hoki 6

7 REBUILDING THE HOKI FISHERY IN NEW ZEALAND 7 acoustic surveys have been undertaken in Cook Strait every year except 2004 either commissioned by the Ministry or undertaken by the industry. A summary of the results of stock assessments and the corresponding adjustments to the hoki TACC is shown in Annexes A:1 and A:2. There were no specific economic targets in the Rebuilding Programme and, therefore, no specific economic measures were required to monitor progress. Now that the Rebuilding Programme is complete, the Deepwater Group and the Ministry are developing economic targets to guide future management. Post Rebuilding management In 2001/02, when the Rebuilding Programme started, it did not contain specific postrebuilding management or control rules other than the requirement in the Fisheries Act to set a TAC that maintains the stock at or above B MSY. Over the last few years the Ministry and the Deepwater Group, in consultation with other stakeholders, have developed a Draft Fishery Plan for the Hoki Fishery that includes control rules to give effect to the Harvest Strategy Standard. The core elements of the Hoki Fishery Harvest Strategy are set out in Table 8.1. Table 8.1. Hoki fishery harvest strategy Harvest strategy components Management target range of 35 50% B 0 Soft limit of 20% B 0 Hard limit of 10% B 0 Rebuild strategy Harvest control rule Source: Ministry of Fisheries (2010b) Management response Stock permitted to fluctuate within this management target to an acceptable level A formal time constrained rebuilding plan should be implemented if this limit is reached The limit below which fisheries should be considered for closure Catch limit set at a level that allows the fish stock to rebuild to target level within twice the period required for the stock to rebuild to target level in the absence of fishing To be determined There are important commercial advantages for the industry in maintaining the hoki stock above B MSY. First, recruitment to the stock is variable and the higher stock level provides a buffer that allows catches to be maintained in periods of poor recruitment. Certainty of supply is an advantage for marketing seafood. Second, a larger stock size supports higher catch rates and lower catching costs. Economic aspects Economic analysis The Fisheries Act 1996 provides only high level guidance to managers in respect of economic objectives. The purpose of the Act is to provide for the utilisation of fisheries resources while ensuring sustainability. Utilisation is defined as conserving, using, enhancing, and developing fisheries resources to enable people to provide for their social, economic, and cultural wellbeing. Each time the Ministry proposes a change in TACC or 7

8 8 REBUILDING THE HOKI FISHERY IN NEW ZEALAND other management measure, advice on the expected economic impacts is provided to the Minister. This advice addresses the extent to which the proposed measure enables people to provide for their economic wellbeing. The lack of regular collection of enterprise level fishery economic information limits the extent of economic analyses to support this advice. The cost to the industry of proposed TACC changes is a major factor taken into account when choosing between different TACC reduction options (and hence different rates of rebuild). In the Ministry s 2001 Final Advice to the Minister the section on social, cultural and economic issues associated with a TACC reduction noted: The value of hoki quota. Trends in hoki export value. Distribution of quota shares (ten quota holders owned 95% of hoki quota shares). The amount of quota traded (and that the Ministry did not know what effect the TACC reduction would have on quota prices). The fact that some fishers would be unable to obtain hoki ACE to cover their catch. Hoki is taken in a number of fisheries and fishers in some fisheries may be unable to cover their hoki catch with ACE and may have to pay deemed values. Industry advice on the reducing reliance on charter fishing vessels due to major investment in domestically owned vessels. The move towards year round use of domestically owned vessels in the hoki fishery and the increasing reliance on the Chatham Rise Fishery (most New Zealand vessels are unsuitable for fishing in the Sub-Antarctic fishing areas). Industry advice that companies would need a few years to restructure their fishing fleets to adjust to the TACC reductions. In other years advice to the Minister has included industry estimates of likely loss of employment that would result from proposed TACC reductions. Consistent with the lack of enterprise level economic information, the Ministry s advice contained no quantitative analysis of the issues raised. The Hoki Fishery Rebuilding Programme did not involve the development of any new economic mechanisms but relied on existing economic mechanisms. When the Rebuilding Programme began the fishery was already managed in the Quota Management System. This system is described by various authors (e.g., Peacey 2002; Lock and Leslie 2007). In brief, the in-perpetuity rights to a share of the TACC for the hoki stock are freely traded with limits only on the aggregation of quota shares (maximum 45%) and foreign ownership of quota shares (maximum 24.9%). Each year every quota share (100 million shares for each fish stock) generates Annual Catch Entitlement (ACE) based on the TACC set for that year. ACE is fully tradable and, except for a potential carryforward to the following year of up to 10% of uncaught ACE for some fish stocks, is only valid for the current fishing year. Commercial fishers must hold a fishing permit and report all catch. All catches of fish stocks managed in the QMS must be covered by the equivalent amount of ACE or the fisher must pay a Deemed Value to the government. Deemed values are set for each fish stock at a level intended to deter catching of that fish stock by fishers who hold no ACE for that fish stock and encourage fishers to obtain ACE to cover catch. 8

9 REBUILDING THE HOKI FISHERY IN NEW ZEALAND 9 Since 2001 the New Zealand Hoki Fishery has been certified under the MSC Certification Programme. It is unclear what premium is obtained for hoki products because of certification. However, an indication of the value of certification to the industry is that industry funded the assessment required for re-certification of the fishery in 2006 and is seeking certification for other fisheries for which they own quota shares. The current development of a 10-year research programme for deepwater and middledepth fisheries by the Deepwater Group and the Ministry is designed, in part, to support MSC certification of more fisheries. Ex ante and ex post evaluation The primary goal of the Rebuilding Programme was to rebuild the fishery initially to B MSY and later to a management target of % of B 0. This was achieved by 2009 or earlier, allowing the TACC to be increased. Although the focus of the B MSY target is biological, it is also used as a proxy for long-term sustainability and productivity of the fishery, which are critical to the economic success of the industry. There are no enterprise-level economic data with which to assess the performance of the Rebuilding Programme. There are, however, measures that give an indication of the overall economic performance of the fishery. Annex B: 1 shows the export returns from the fishery throughout the period of the Rebuilding Programme. The volume of hoki exports declined throughout the period, consistent with the reduction in TACCs and catches. The price per kilogram and total value of exports declined until 2004, after which both values increased. The per kilogram export value is determined primarily by prices on world markets. It is also influenced by the type of products produced in the fishery. The Port Price is based on an estimate of the average landed value of product and is used to calculate the share of government and industry levies to be paid by hoki quota owners in respect of their quota shares. Port prices since the 1997/98 fishing year are shown in Annex B:2. As expected in an export dominated fishery, Port Prices generally followed export values. The best indicator of the total value of the hoki stock is the monetary value calculated by the Department of Statistics. This value is based on the trading price of hoki quota shares and ACE and provides an overall asset value for the hoki stock. The monetary value of the hoki stock throughout the period covered by the Rebuilding Programme is shown in Annex B:3. Of particular note is that, after declining for the first four years of the rebuild strategy, the value of the hoki stock increased steadily from 2005, despite the further reduction in TACC in By 2009 the monetary value of the stock was only 20% lower than in 2001 when the TACC was 250,000 tonnes. This indicates that quota owners were confident of the sustainability of the fishery and their future income from the fishery. Annex B:4 shows the size of the fleet targeting deepwater fisheries, including hoki. The number of vessels in all size classes over 24 m length declined by 40% from 2000/01 to 2009/10. The number of vessels in the size class that accounts for most of the hoki catch larger than 46 m length declined by 36% over the same period. However, all these vessels are also used in fisheries other than hoki and hence the change in fleet size cannot be attributed solely to changes in hoki TACC. Seafood companies continually review their operations to maximise profitability. Over the period of the Rebuilding Programme some companies have reduced the level of 9

10 10 REBUILDING THE HOKI FISHERY IN NEW ZEALAND New Zealand shore-based processing and increased the amount of hoki processed on board fishing vessels and in China. Social aspects Key stakeholders The Fisheries Act 1996 recognises four classes of stakeholders with whom the Minister is required to consult on management measures: Maori (New Zealand s original Polynesian settlers) environmental, commercial, and recreational interests. Catches of hoki by recreational and customary Maori interests is considered negligible and annual allowances of only 20 tonnes are made for each of these sectors. The stakeholders that have shown most interest in management of the hoki fishery are the industry and environmental interests. Environmental interests promote sustainable fishing, including both maintaining target fish stocks at appropriate levels and minimising impacts of fishing on the aquatic environment. Typically, environmental interests have advocated earlier and more severe cuts in TACCs than other stakeholders. Quota owners were represented primarily by the HFMC and later by the Deepwater Group. The larger New Zealand seafood companies are vertically integrated with interests in quota, harvesting, processing, and marketing. Therefore, all parts of the value chain are represented by quota owners. Hoki is also caught by smaller owner-operator vessels, whose owners may own few or no quota shares and rely instead on buying ACE each year from quota owners. The interests of some owner-operators are represented by the Federation of Commercial Fishermen. Stakeholder participation There is extensive stakeholder involvement in all aspects of fisheries management in New Zealand. Membership of the Ministry s fishery assessment working groups, fishery assessment plenary, and research advisory meetings are open to stakeholders and able to consider stakeholder-generated information. The Hoki and Middle-depths Fishery Assessment Working Group had a key role in developing the Rebuilding Programme. At the time the Programme was designed the main hoki stock assessments were undertaken by the government-owned research institute, NIWA. The Industry commissioned independent stock assessments undertaken by University of Washington scientists. Scientists from both research organisations participated in Working Group meetings and the results of both assessments were presented in management advice to the Minister. Of particular interest is that in 2001 the Industry-commissioned stock assessment presented a significantly more pessimistic view of the western hoki stock than the assessment by NIWA. Environmental interests participated in the Working Group and Plenary. There is also extensive consultation on fisheries management proposals. This occurs primarily by preparation of an Initial Position Paper that sets out the state of the stock, management options and, if appropriate, the Ministry s preferred option. Stakeholders typically have at least 4 weeks to provide feedback on the Ministry s interpretation of scientific information and on management proposals. Industry feedback may include information on expected impacts on the industry of the proposed TACC changes. This is important given the lack of enterprise level economic data available to the Ministry. The 10

11 REBUILDING THE HOKI FISHERY IN NEW ZEALAND 11 Ministry then considers stakeholder feedback and prepares a Final Advice Paper for the Minister. There are also usually opportunities for informal consultation on the proposals. In the latter phase of the Rebuilding Programme there was increased collaboration between the Ministry s fisheries management team and the Deepwater Group. This included joint development of the draft fishery plan and management proposals, including determining the hoki fishery harvest strategy and rebuilding plan. Equity and distributional issues The main distributional and equity issue is the potential different impacts of TACC adjustments on owner-operator fishers (or ACE fishers ) and larger, vertically integrated companies using larger vessels. Most owner-operators use smaller fishing vessels and own few quota shares, depending instead on buying ACE each year. Typically owneroperators have supported smaller TACC cuts than those supported by larger companies and have expressed concerns about the voluntary stock catch limits between the eastern and western stocks. Concerns by owner-operators about larger TACC reductions can be attributed to two issues. First, when TACCs are reduced less ACE is generated and quota owners may use more of the ACE generated by their quota shares for their own fishing vessels rather than sell it to other fishers. Second, owner-operators usually do not own many quota shares and, therefore, do not have any guarantee of obtaining a share of future increased catches and income that may result from larger TACC reductions in the short term. Having to split their overall hoki catch between the two stocks in proportion to the voluntary stock limits could cause difficulties for some owners of small parcels of quota shares. This is because owner-operators using smaller fishing vessels are typically more reliant on nearshore fishing areas from which large vessels are excluded and which are considered part of the Eastern Stock. Owner-operator concerns about the magnitude of TACC reductions were taken into account by the Minister when making decisions on proposed TACC reductions. Concerns about the voluntary stock limits have been addressed by the Deepwater Group and its members. The company accepts it may be impractical for owners of small parcels of quota shares to split their catches between the two stocks in proportion to the voluntary catch limits and does not expect them to split their catches. However, each year quota owners who together own a substantial majority of quota shares agree to abide by the voluntary are stock limits, with some utilising the trading system run by the Deepwater Group that allows members to trade voluntary catching rights between the two stocks 8 9. Compensation mechanisms The Fisheries Act 1996 specifically excludes government liability to pay compensation or damages to any person for any measure taken to ensure sustainability (including TACC reductions). 8 Deepwater Company (personal communication) 9 The voluntary TACC split was not always implemented exactly as planned (e.g., in 2007/08 and 2008/09 the catch from the Western Stock was around 30,000 tonnes compared with the planned 25,000 tonnes). Actual catches from each stock were used in stock assessments and for planning future management measures in the Rebuilding Programme. 11

12 12 REBUILDING THE HOKI FISHERY IN NEW ZEALAND Despite there being no government-funded compensation the full transferability of quota shares and ACE means fishers have different options for responding to TACC reductions. If the TACC reduction results in their quota shares generating insufficient ACE to operate an economic fishing operation fishers can try to purchase more quota shares and/or ACE. Alternatively, fishers can choose to sell their quota shares or ACE. This provides what could be considered a type of industry-funded compensation for those quota owners who choose to leave the fishery. Implementation issues and lessons learned Institutional and policy challenges The key challenges faced when designing and implementing the Rebuilding Programme were the uncertainty of information on which decisions were based and the magnitude of the TACC reduction required. Uncertainty Investment in research is insufficient to obtain precise estimates of the state of most New Zealand fish stocks. This means decisions must be made on the basis of information that often has wide confidence bounds. For example, Annex 1:1 shows that biomass estimates for the Western Hoki Stock resulting from different estimation methods (CPUE, Acoustic MIAEL, Acoustic Bayesian) range from % B 0 with a range across all methods of % B 0. Over the period to the Rebuilding Programme some of the model runs used in the assessments were deemed biologically unfeasible and discontinued, which had the effect of narrowing the range of biomass estimates. The challenge presented by limited information was addressed in part by the nature of the research planning and stock assessment processes. The openness of the processes meant that all stakeholders had opportunity to contribute to decisions on which research projects should be undertaken and to review and debate the assessment methods and use of data. Industry participants in Working Groups sometimes including fishing vessel skippers were also more willing to contribute information from their on-the-water observations to help scientists understand the implications of fisheries data. There was significant tension between participants in some Working Group meetings but the openness of the process increased industry stakeholder confidence in the assessment. However, environmental interests have expressed concern that significant industry involvement in stock assessment processes has the potential to inappropriately influence stock assessments and resulting management advice. Industry confidence in assessments was also enhanced by stakeholders being able to commission their own assessments using the same data. Industry s decision to invest in independent assessments of the hoki stocks was all the more significant because 100% of the costs of the government s primary assessment are already recovered from quota owners. In effect, quota owners paid for two assessments of the same fishery. The fact that the industry-commissioned assessment of the western stock was more pessimistic than the government-commissioned assessment helped build confidence in the assessments commissioned by the government. Since 2001 quota owners has funded stock assessment experts to represent them in the hoki stock assessment process but have not commissioned independent stock assessments. More recently the Deepwater Group and the Ministry have collaborated more closely on research planning. 12

13 REBUILDING THE HOKI FISHERY IN NEW ZEALAND 13 The way in which implications of assessments were presented also helped overcome the problems associated with imprecise data. The results of different feasible modelling runs were presented to stakeholders and the Minister and the assessment outcomes were presented in different ways. For example, in 2001 outcomes were presented as: the probability of the biomass next year going below 20% B 0 the size of the biomass in 2005 relative to the current biomass the size of the biomass in 2005 relative to B 0 the probability of the biomass in 2005 being below the current biomass the probability of the biomass in 2005 being below 20% B 0 the probability of the biomass in 2005 being below 30% B 0 As a result of these processes there was agreement by all stakeholders that a significant TACC reduction was required, although there were different views on the appropriate level of the new TACC. The level of agreement was sufficient for the Minister to able to make a large reduction in the TACC (and further reductions in subsequent years) without major stakeholder opposition. Fisheries management in New Zealand is mostly non-political and bipartisan support was maintained throughout the Hoki Fishery Rebuilding Programme. Magnitude of TACC reductions The size of the reductions in Hoki TACC in the period of the Rebuilding Programme (250,000 to 90,000 tonnes) imposed major impacts on the industry. Reductions in export value and initial reductions in the value of the hoki stock give an indication of the impacts. Some fishing companies were forced to restructure their fishing fleets at considerable cost. The nature of the QMS meant that quota owners had confidence in future returns from their investment in reducing the TACC and flexibility to adjust their fishing operations to maintain profitability in the face of the TACC reductions. The fact that quota shares are in-perpetuity rights to future catches from the fishery mean that quota owners can view TACC reductions as an investment in their future income. Hoki is a moderately productive species, which means that fishers can expect a return on their investment within a reasonable timeframe. The ability to trade quota shares and ACE freely allowed quota owners and fishers to optimise the level of their catching rights to match their fishing operation. The ability for quota owners to use foreign charter vessels to harvest hoki and opportunities to process hoki in countries with lower wage rates (e.g., China) has also allowed quota owners to minimise costs. This high level of operational flexibility on the part of quota owners has had implications on levels of employment in New Zealand fish processing sector. Design and implementation costs There were few specific costs for government in designing and implementing the Rebuilding Programme because the Programme was developed in the context of regular assessment and management processes. 13

14 14 REBUILDING THE HOKI FISHERY IN NEW ZEALAND The costs to quota owners were large. The biggest cost was the reduction in income resulting from lower catches and the need to restructure their operations to match the smaller throughput. The total export value of the fishery dropped from over NZD300 million to less than NZD150 million. The industry also paid tens of thousands of dollars to purchase alternative stock assessments and expert representation in the stock assessment process (in addition to the millions of dollars levied each year from the industry to fund Ministry-purchased stock assessments and other fisheries services). Lessons learned The value of rights based management New Zealand s experience with the successful Hoki Fishery Rebuilding Programme has confirmed the value of a tradable rights based system. The system made it relatively simple to implement the Rebuilding Programme and provided the flexibility necessary for the industry to cope with reduced TACCs without the need for compensation. The output-based nature of the New Zealand system means that the Rebuilding Programme could be implemented through adjusting only one control measure, the TACC. The industry chose to establish additional voluntary controls measures, however, the TACC adjustments were the primary control. The tradable nature of the system meant that fishing operations could adjust their long-term rights in the fishery (by buying or selling quota shares) and their within-year catching rights (by buying and selling ACE). It also allowed quota owners to leave the fishery with some financial reward if their quota share ownership was too small to be economic. The additional flexibility provided by New Zealand investment rules for quota owners to charter foreign fishing vessels and move fish processing operations to countries where labour is cheaper also helped quota owners cope with the TACC reduction. Fishers without quota shares faced a reduced supply of ACE but still had some flexibility to purchase ACE. The number of shore-based fish processing jobs declined. The value of regular stakeholder participation in management The experience with the Rebuilding Programme also confirmed the value of regular stakeholder participation in open and transparent research and management processes. Stakeholder participation improved the usefulness of available data and the industry s investment in additional assessments provided a broader range of assessment methods. Industry confidence in the assessment and management process was significantly improved by participation of industry representatives and scientists. The fact that stakeholders had already participated in these processes for some years likely made it easier for them to address the difficult challenges involved in developing the Rebuilding Programme. It is unclear to what extent MSC certification of the hoki fishery contributed to the successful Rebuilding Programme. Certainly it encouraged quota owners to support the Programme; however, it is possible this support would have been forthcoming in the absence of certification. Other lessons Ultimately, the success of the Hoki Fishery Rebuilding Programme was dependent on the level of recruitment to the fish stock. The reduction in hoki stock size that generated 14

15 REBUILDING THE HOKI FISHERY IN NEW ZEALAND 15 the need for a Rebuilding Programme was due, in part, to poor recruitment for a number of years. Projections of stock rebuild trajectories under different TACCs were very dependent on recruitment. Had there been continuing poor recruitment the stock would not have rebuilt as quickly and the TACC would likely have had to be reduced even further. Significant management changes have occurred during the period of the Rebuilding Programme. In particular, estimates of B MSY have been reduced 10 but the industry and Ministry have agreed that hoki stocks should be managed above B MSY. These changes and the implementation of the new Harvest Strategy Standard have, in effect, seen a transition from a rebuilding programme to an ongoing management plan designed to maintain hoki stocks at optimum levels. Enhanced collaboration between the Ministry and industry is providing the basis for development of a Fishery Plan that will allow the industry to obtain improved value from the fishery while ensuring environmental requirements are met. The steadily increasing monetary value of the hoki stock since 2005 is an indication of the confidence hoki quota owners have in the future of the fishery. 10 See Footnote 7. 15

16 16 REBUILDING THE HOKI FISHERY IN NEW ZEALAND References Department of Statistics (2010), Fish Monetary Stock Account ISSN (online) Published February 2010, (accessed 13/8/2010). Lock, K and Leslie, S. (2007), New Zealand's Quota Management System: A History of the First 20 Years, Motu Working Paper m_a_history_of_the_first_20_years (Accessed 18 August 2010) Ministry of Fisheries (MoF) (Various years: ), Review of sustainability measures and other management measures for 1 October [Various years; ]; Initial Advice Paper, Ministry of Fisheries, Wellington. Ministry of Fisheries (MoF) (Various years: ), Review of sustainability measures and other management measures for 1 October [Various years; ]; Final Advice Paper, Ministry of Fisheries, Wellington. Ministry of Fisheries (MoF) (2001), Report from the Fisheries Assessment Plenary, May 2001: stock assessments and yield estimates, Wellington. Ministry of Fisheries (MoF) (Various years: ), Report from the Fisheries Assessment Plenary, May [Various years: ]: stock assessments and yield estimates, Ministry of Fisheries, Wellington. Ministry of Fisheries (MoF) (2010a), Report from the Fisheries Assessment Plenary, May 2010: stock assessments and yield estimates, Ministry of Fisheries, Wellington. Ministry of Fisheries (MoF) (2010b), Draft National Fisheries Plan for Deepwater and Middle-depth Fisheries, February Peacey, J. (2002), Managing catch limits in multi-species, ITQ fisheries, IIFET Conference paper, atch+limits+in+multi-species+itq+fisheries.htm (Accessed 18 August 2010) SGS (2001), MAD-06 MSC Fisheries Certification; Public Summary Report, (Accessed 16/8/2010) SGS (2007), MSC Fisheries Certification Public Summary Report, (Accessed 16/8/2010) 16

17 REBUILDING THE HOKI FISHERY IN NEW ZEALAND 17 Annex A Years Biomass MSY Biomass Limit Biomass (BMSY) Ref. Point (BLIM) Target (BTARG) Biomass estimates 2000/ % B0 BMSY CPUE: 48% B 0 (28 75%) Acoustic MIAEL: 106% B 0 (range %) Acoustic Bayesian: 112% B 0 (70 168%) 2001/ % B0 BMSY B2001 NIWA 11 : 38% B0 ; UW: 17% Table A.1. Rebuilding Indicators -- Western Stock Science Advice The stock assessment for the western stock of hoki is inconclusive as there is a discrepancy between the time series of abundance indices from acoustic surveys and CPUE analysis of the WCSI spawning grounds. The risk to the eastern stock could be decreased if a smaller proportion of the total catch was taken from this stock, but this would also increase risk in the western stock. Overall TACC / voluntary stock catch limit (tonnes) 250,000/ ** Stock is below MSY proxies 12 (MCY: 69% B0; CAY: 43% B0) 200,000/ 130,000 B / % B0 BMSY B2002: 36 56% B0 MCY estimates (for the two stocks combined) lie between t and t, and CAY estimates (for ) are between t and t. (All yield estimates depend on how the catch is split between the fisheries ).. These results are markedly more optimistic than those from the 2001 assessment. The main reason for this appears to be that the relative weightings given to the various data sets have been improved. 200,000/ 130, / % B0 BMSY B2003: 25 to 35 %B0 Recent recruitment ( ) is estimated to have been poor. Continued fishing of this stock at 180,000/ ** current catch levels is likely to deplete it further. 2004/ % B0 BMSY B2004: 13 22% B0 Recent recruitment poor. Current catches levels unlikely to be sustainable and may not even be 100,000/ 40,000 feasible in the short term. 2005/ % B0 BMSY B2005: 18 23% B0 Current catch levels likely sustainable 100,000/ 40, / % B0 BMSY B2006: 20 24% B0 Current catches likely sustainable and allow biomass to increase unless recruitment is poor 100,000/ 40, / % B0 BMSY B2007: 15 24% B0 Increase unlikely unless improved recruitment and/or reduced fishing mortality. 90,000/ 25, / % B0 BMSY B2008: B0 Biomass likely to increase with current catch levels 90,000/ 25, /10 25% B0 Soft: 20% B % B0 B2009: 36 39% B0 40% >60% likelihood that stock is above lower end of interim management target 110,000/ 50,000 Hard 10% B0 2010/11 25% B0 Soft: 20% B0 Hard 10% B % B0 B2010: 40 52% B0 90% -99% likelihood that stock is above lower end of management target ** No voluntary stock catch limits in place Source: Ministry of Fisheries: Report from the Fisheries Assessment Plenary [Various Years]: stock assessments and yield estimates. 11 NIWA: National Institute of Water and Atmosphere, commissioned by the Ministry; UW: University of Washington, commissioned by the Industry 12 MCY: Maximum Constant Yield: CAY: Current Annual Yield 17

18 18 REBUILDING THE HOKI FISHERY IN NEW ZEALAND Table A.2. Rebuilding Indicators -- Eastern Stock Bioma ss Year MSY (BMSY ) 2000/ % B0 2001/ % B0 2002/ % B0 2003/ % B0 Biomass Limit Reference Point (BLIM) 2004/ % B0 2005/ % B0 2006/ % B0 2007/ % B0 2008/ % B0 2009/10 24% B0 Soft: 20% B0 Hard 10% B0 Biomass Target (BTARG) Biomass estimates BMSY CPUE: 43% B 0 (14 98%) Acoustic MIAEL: 48% B 0 (11 128%) Acoustic Bayesian: 50% B0 (28 77%) Science Advice Given the current assumptions about hoki stock structure and if the eastern stock size is at the lower end of biomass estimates, then the current distribution of catches at the present TACC may cause the eastern stock to decline to unacceptably low levels. Overall TACC / Voluntary stock catch limit (tonnes) 250,000/ ** BMSY B2001: 21% B0 Well below MSY proxies (MCY 56% B0; CAY 37% B0) 200,000/ 70,000 BMSY B2002: 30 48% B0 MCY estimates (for the two stocks combined) lie between t and t, and CAY estimates (for ) are between t and t. (All yield estimates depend on how the catch is split between the fisheries ) These results are markedly more optimistic than those from the 2001 assessment. The main reason for this appears to be that the relative weightings given to the various data sets have been improved. The Plenary no longer has confidence in the conclusion from the 2001 assessment that the eastern stock is at a low level. 200,000/ 70,000 BMSY B2003: near 50 %B0 or greater The model results indicate there has been above average 180,000/ ** recruitment in two or three of the recent years ( ) and that it is unlikely that fishing at current catch levels will deplete this stock. BMSY B2004: at or above 40% B0 Current catches levels unlikely to substantially increase or 100,000/ 60,000 decrease stock. BMSY B2005: 35 42% B0 Current catches levels likely sustainable 100,000/ 60,000 BMSY B2006: 41 49% B0 Current catches likely sustainable and allow biomass to 100,000/ 60,000 increase unless recruitment is poor BMSY B2007: 37 51% B0 At or above BMSY 90,000/ 65,000 BMSY B2008: B0 Stock likely to remain near current levels with current catches 35 50% B0 B2009: 48% B0 >90% likelihood that stock is above lower end of interim management target 90,000/ 65, ,000/ 60,000 18

19 REBUILDING THE HOKI FISHERY IN NEW ZEALAND 19 Bioma Year ss MSY (BMSY ) Biomass Limit Reference Point (BLIM) 2010/11 24% B0 Soft: 20% B0 Hard 10% B0 Biomass Target (BTARG) Biomass estimates Science Advice 35 50% B0 B2010: 51 57% B0 99% likelihood that stock is above lower end of management target From Ministry of Fisheries: Report from the Fisheries Assessment Plenary [Various Years]: stock assessments and yield estimates. ** No voluntary stock catch limits in place Overall TACC / Voluntary stock catch limit (tonnes) 19

20 Fishing intensity, U Hard limit Soft limit Target zone Hard limit Soft limit Target zone 20 REBUILDING THE HOKI FISHERY IN NEW ZEALAND Figure A.1. Historical Western Stock Status Trajectory and Current Status Source : MoF (2010a) Run Target zone Run Target zone Spawning biomass (%B 0 ) Trajectory over time of fishing intensity (U) and spawning biomass (%B 0), for the western hoki stock from the start of the assessment period in 1972 (represented by a red square), to The vertical line at 10%B 0 represents the hard limit, that at 20%B 0 is the soft limit, and the shaded area represents the interim management target ranges in biomass and fishing intensity. Biomass estimates are based on MCMC results, while fishing intensity is based on corresponding MPD results. (The key difference between the model runs is that Run 2.1 assumes no cryptic biomass; Run 2.2 assumes cryptic biomass) REBUILDING FISHERIES OECD 2012

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