In Nature (volume 455, no. 23) Geoffrey Heal and Wolfram Schlenker discusses individual transferable quotas (ITQs) and their potential to improve the health of both fish stocks and fisheries. They show empirically how ITQs have increased catches in 121 fisheries around the world. From their final discussion:
If ITQs work, why haven’t they been more widely used? Undoubtedly, this is partly because, until [recent research], we have not had unambiguous evidence that they do work. This study should give ITQ implementation a boost. But there are also some political, ideological and regulatory issues in the way. Some environmental groups are opposed to anything based on market principles. Others feel that ocean fisheries are common property that everyone should be free to use them, and that it is wrong to establish ownership rights in the sea. It is to be hoped that clear evidence of the effectiveness of ITQs will lead their opponents to think again. Finally, ITQs work best when a fish species resides exclusively within the waters of a particular country. Fish species in international waters, or migratory species, would require international agreements, with the complication that individual might have an incentive to cheat.
Another problematic issue with ITQs that Messrs. Heal and Schlenker don’t discuss is how they change the distribution of income from a fishery. In a functioning market (which ITQs require to work properly), implementation of ITQs transfer all future income from a fishery to the quota holders at the time of implementation. Some people suggest that when ITQs were implemented on Iceland, a lot of fishermen got a lot of money they did not know what to spend on and that at least some of that money went into building the Icelandic financial adventure that eventually collapsed.