A New Era in Fisheries?

Americans are eating more fish. Per capita consumption of seafood in the United States rose nearly 6 percent in 1985, according to information released by the National Oceanic and Atmospheric Administration. This latest bit of news likely did not make the headlines of the local newspaper, but for fishery managers and resource economists interested in fisheries, the implications of a rising demand for fish are substantial. The reason for an increase in consumption of fish is derived in part from the health consciousness of the eighties and the perception that fish is a lean, healthy source of protein. But is this rise in demand for fish good for fisheries? Can fisheries (fish populations and all principal users of those populations) expand without inflicting further damage on the world's depressed wild fish stocks? Resource economists and fisheries managers are observing noteworthy new trends in those fisheries that are responding to incentives for increased production.

In the foreword to a 1969 RFF book by James Crutchfield and Giulio Pontecorvo, The Pacific Salmon Fisheries: A Study of Irrational Conservation, Francis T. Christy, Jr., argued that "fisheries in the United States are beset by senseless restrictions and marked by obsolescence, waste, and poverty . . . and there is little hope for change—unless dramatically new institutions and new forms of management can be developed and adopted." The underlying condition that prompted Christy to pen these words was the tradition of open access to fish stocks characteristic of North American fisheries. Open-access fisheries, Crutchfield and Pontecorvo maintained, inevitably lead to biological overexploitation of stocks, decreased levels of production, and inefficient use of capital and labor. In the absence of any substantial effort to limit entry to the fisheries, they concluded, the salmon industry of the Northeast Pacific was doomed to a future of economic waste. Furthermore, they suggested that since the problems of the Pacific salmon industry were indicative of fisheries in general, their conclusions might reasonably be extended to most of the world's commercially important fisheries.

In many ways Crutchfield's and Pontecorvo's predictions have proven prophetic. Overcapitalization of the fishing sector and depressed finfish and shellfish stocks, resulting in dissipation of economic rents, continue despite a growing body of bioeconomic research and government regulation. However, there are indications that recent developments in the fishing industry signal the beginning of a new era of rational management for some aquatic resources. The driving force behind this transition is a progressive shift away from open-access fisheries to a situation in which individuals, states, and corporations have exclusive or proprietary rights to use of certain fish stocks. An integral part of the change is the increased reliance upon aquaculture to produce fish in industries previously dominated by search-and-capture technologies. Anthropologist Courtland Smith of Oregon State University sees this transition as a natural evolution of fisheries, similar to that in society from hunting and gathering to agriculture.

Catfish aquaculture and salmon ranching

If there is a difference in the fisheries' transition, it is the evolutionary pace. For instance, the transition in the catfish industry has been swift. Historically, catfish sold in the southeastern United States were produced by commercial fishermen harvesting wild stocks from lakes and rivers. As late as 1976, the annual harvest of wild catfish exceeded cultured production by more than 10 million live weight pounds. Improvements in aquacultural techniques and the expansion of markets for processed catfish over the past decade have led to increased reliance on producers who rear the fish in privately owned and intensively managed ponds and reservoirs. Currently, more than 90 percent of the catfish marketed in the United States come from aquaculture.

The catfish fisheries illustrate a central dichotomy between aquaculture and harvest of wild stocks. Wild and cultured fish occupy opposite positions on a continuum of property rights. The wild fish in essence belong to no one until the time they are legally reduced to possession according to the laws of the state. Following their harvest, all rights to benefits from them belong to successful fishermen. In contrast, the cultured fish that are spawned and raised in a privately owned reservoir are the exclusive property of the owner of the reservoir regardless of whether or not the owner chooses to harvest the fish.

One of the benefits the owner of cultured fish may choose to exploit is the capacity of the fish to produce additional fish for future harvest, an option not assured the consumer of wild fish. The absence of control over possible future benefits leads to overharvesting of wild fish by individuals who seek to maximize present value and heavily discount possible future benefits. A recurring theme in natural resource economics literature is the existence of property rights as an incentive to conservation and the rational utilization of renewable resources. The exploitation of such rights in the catfish industry permits producers to take advantage of an expanding market for their product.

Like the catfish industry, the salmon industry (the most valuable finfish fisheries in the United States) is currently experiencing dramatic change at both the national and international levels. In the salmon fisheries one finds a broad range of technologies in use, property rights exploited, and potential conflicts. These complexities result in part from the biological constraints of the species. Salmon are anadromous: they spawn in freshwater but spend a large portion of their lives in the oceans. In nature, their migrations from spawning grounds to feeding grounds carry them across state and international boundaries, making effective management an extremely complicated and difficult task.

Salmon also have the innate ability to return for spawning to the specific stream or hatchery location from which they originated, a trait exploited by fishermen since ancient times. Returning salmon are at their peak weight and are susceptible to capture while confined to narrow channels or shallow water. This permits the development of a highly efficient terminal fishery. The Indian tribes of the Pacific Northwest earned their sustenance for centuries by catching returning adults within the rivers.

With industrial development, improvements in implements (gear) and vessel construction and propulsion facilitated the harvest of salmon in areas not previously fished, such as the open ocean. This equipment allows fishermen to intercept fish returning to the rivers, thus reducing the value of fishing grounds controlled by riparian landowners. Extensive disagreements and litigation among states, nations, recreational and commercial fishermen, and Native American tribes have arisen concerning their rights to harvest fish. The modern history of the salmon industry, particularly in the North Pacific, exhibits all the associated ills of an open-access fishery, including growing fishing pressure, declines in stock levels and harvest, and increasing prices.

In attempts to bolster declining production, the United States, Canada, the Soviet Union, and Japan have built and operated hatcheries since the turn of the century. A number of hatcheries have also been constructed by various entities to mitigate environmental damage from hydroelectric development. In North America, most of the cost of hatcheries has been borne by taxpayers or purchasers of hydroelectric power while the benefits have been reaped by fishery participants, including foreign fishing vessels intercepting stocks on the high seas. Returns from public hatchery plantings have often been less than anticipated because of disease and technical failures. On economic grounds, it has become increasingly difficult to justify continued public subsidy of a commercial fleet characterized by excess capacity and overcapitalization. Continued justification for public hatchery expenditures are a result in part of ever-expanding recreational fisheries in which the value to consumers per caught fish is greater than in the commercial sector.

The declining abundance of wild salmon stocks and the disappointing returns from public hatchery plantings, combined with the rising consumer demand for fish, has resulted in a market in which high-quality salmon demand premium prices. A single large chinook salmon can command well over $100 in the retail market. Such price incentives prompt additional fishing pressures, which further reduce stock levels, creating a vicious cycle. Attempts to limit the effects of overfishing on existing stocks by controlling harvest have generally involved gear restrictions, quotas, and temporal and spatial closures of fishing areas, all of which contribute to inefficiencies in the fishery.

The price incentives have attracted a new breed of producer to the Pacific Northwest salmon industry in recent years. Large industrial corporations such as Weyerhaeuser and British Petroleum have begun to try their hand at commercial salmon ranching in Oregon and California. Juvenile salmon are hatched and reared in corporate hatcheries and then released into the sea. When surviving adults return to the spawning facility, they are harvested or used for spawning. The technical feasibility for salmon ranching has existed for some time, but economic rationalization awaited improvements in salmon culture and a congenial marketplace.

In Alaska, a series of laws passed since 1974 has created a climate in which private, nonprofit hatchery corporations can prosper. Two main features of these laws are a severance tax collected from commercial fishermen to offset hatchery costs, and the creation of exclusive fishing zones near hatchery locations in which fishing rights belong to the hatchery corporations. The majority of salmon produced in Alaska still come from wild stocks, but the proportion derived from hatcheries is expected to increase as technologies improve.

William McNeil of Oregon State University points out that in salmon ranching there are both substantial risks and the potential for impressive gains. Salmon ranching, McNeil notes, is much like agriculture in that it may experience crop failures; indeed, 1983 was a year of failure for the salmon crop in Oregon and California because of poor environmental conditions. One major difference between salmon ranching and conventional livestock ranching is that for a large portion of the salmon's life cycle, ranchers have no control over the well-being of their stock. In addition, little is understood about the factors affecting salmon survival and growth in the ocean.

The problem of mixed stocks

When cultured salmon mix in the ocean or rivers with wild salmon stocks, two problems may result. The first, common to mixed-stock fisheries, arises because all stocks are subject to similar levels of fishing effort. This can lead to extinction of less robust stocks which lack the compensatory capacity to withstand the shared levels of fishing pressure. James Anderson of the University of Rhode Island, evaluating the potential conflict between wild and cultured salmon in an analysis of the bioeconomics of salmon ranching, concludes that when private aquaculture and open-access fisheries of wild and cultured stocks coexist, the equilibrium level of production will tend to shift from wild to cultured stocks as prices go higher. The shift occurs as fishing efforts and hatchery production both rise as prices increase. The increased fishing effort will drive the wild stocks toward extinction. But as Anderson points out, cooperation between salmon ranchers and commercial fishermen can yield profits for both without resulting in extinction of the wild stocks.

The second potential problem with mixing wild and cultured stocks involves the genetic diversity of the wild stocks. Crossbreeding might occur when returning adult cultured fish stray into spawning areas for wild fish. This inadvertent cross-breeding between stocks may then dilute the wild gene pool and lead to reduced capacity to adapt to changing environmental conditions. Because wild and cultured fish may be exposed to different selective pressures, the cultured stocks may lose various genetic traits that are advantageous to wild fish. Many individuals and agencies in the Pacific Northwest recognize the considerable nonmarket values of wild stocks. Faced with the prospect of losing these stocks and under pressure from salmon ranchers and commercial fishermen alike, state and federal regulatory agencies are hard-pressed to develop innovative management schemes which satisfy all parties.

In certain countries where concern for wild stocks may be lessened or technologies are employed which avoid the problems of mixed-stock fisheries, aquaculture plays the major role in fish production. In Japan, the shift from wild to hatchery stocks is nearly complete. Almost all of the commercially important salmon originating in Japan are spawned in hatcheries. The Japanese have invested extensively in hatcheries, and have a well-defined system of property rights designed to maximize return on investment. All juvenile salmon released from hatcheries and all returning adults are considered the property of the national government. Fishing is permitted only to those persons obtaining special licenses from the government, and no recreational salmon fisheries exist. The commercial fisheries are limited to the coastal waters and the high seas, while fish within the rivers are reserved for hatchery use. Most high-seas fishing has traditionally been aimed at stocks originating in North America and elsewhere outside Japan. Efforts by the United States, Canada, and the Soviet Union to limit foreign interception of salmon stocks has severely curtailed the Japanese high-seas fisheries and given further impetus to the Japanese hatchery program.

In Norway recent advances in technology have created the opportunity for the Norwegians to dominate the world's fresh and frozen salmon markets in coming years. The new technology involves raising Atlantic salmon in net-pens along Norway's extensive and convoluted coast. Salmon are placed in pens as fry and fed a diet of processed fish meal until they reach marketable size. The property rights to the fish are acquired when the fry are purchased from hatcheries. Much of the uncertainty of salmon ranching and many problems of mixed-stock fisheries are avoided. Producers are better able to control the size and the time of availability of their product, and have embarked on a program to produce a genetically superior race of salmon for pen-raising. Most of the production now comes from small-scale operations much like family farms. The Norwegians have been able to expand production at an explosive pace by taking advantage of both a well-developed infrastructure for processing seafood and the existing markets for salmon in Europe. Frank Gjerset of the Atlantic Salmon Company in Trondheim, Norway, predicts that Norway will quadruple recent production levels and will produce between 90 and 100 metric tons of salmon in 1990—nearly twice the present worldwide production of coho and chinook salmon, chief competitors of pen-raised salmon in the marketplace.

One can only speculate as to the future of the salmon industry. The success of the Norwegians with pen-raised salmon is likely to incite similar endeavors in North America, where ready access to markets in the United States and Canada should provide a competitive advantage. Pen-raised salmon from North America and Europe are expected to compete increasingly with fish currently produced by salmon ranchers and commercial fishermen in the Pacific Northwest; it should be interesting to see how the present Northwest fisheries, which share much of the same resources but are antagonist to a degree, react to competition from a separate sector. The fishery of Alaska should be relatively insulated from competition with pen-raised salmon, since most of the Alaskan output is directed to the canned salmon market. However, a large share of the fish from Alaska are destined for export to Japan, and these fish must compete with fish from Japan's hatchery program. Beyond that, substantial increases in worldwide aquaculture production could lead to a fall in market prices, and while this might be a boon for consumers, it would foretell the demise of struggling commercial fleets in certain regions. Resource economists and fishery managers with an eye on the salmon industry will have plenty to watch in the coming years.