Fishery managers may also help protect  communities by adopting program rules aimed at protecting certain  groups of fishery participants. For facilitating new entry into IFQ fisheries,  the methods principally fall into three categories: (1) adopting quota  transfer rules that promote new entry, (2) setting aside quota for new  entrants, and (3) providing economic assistance to potential new entrants. Allowing communities to hold quota is the easiest and most direct way  under an IFQ program to help protect fishing communities. According to  fishery experts and participants, fishery managers can give each  community control over how to use the quota in ways that protect the  community’s economic viability, such as selling or leasing quota to  fishermen who reside in the community. Requiring quota holders to be on their vessels. Community Protection and New Entry Methods Raise a Variety of Issues That Require Consideration

In considering methods to protect communities and facilitate new entry  into IFQ fisheries, fishery managers face issues about efficiency, fairness,  and design and implementation. Community protection and new entry  methods are designed to achieve social objectives, but achieving these  objectives may undermine economic efficiency, one of the primary  benefits of an IFQ program, and raise questions of equity. However, given the particular  circumstances of the fishery and the goals of the IFQ program overall, it is  unlikely that any single method can protect every type of fishing  community or facilitate new entry into every IFQ fishery. Therefore, fishery managers have to decide how much  economic efficiency they are willing to sacrifice to protect communities or  facilitate new entry. Furthermore, methods that propose allocating quota to  communities or adopting rules aimed at making quota more available or  affordable to a certain group of fishermen can appear unfair to those who  did not benefit and could result in legal challenges. Defining community can be challenging because communities  can be defined in many ways. Economic assistance methods are designed to provide new entrants with  the capital needed to purchase quota and are the most direct method of  helping new entrants. Evaluations of Community Protection and New Entry Methods Would Enable Managers to Determine Their Effectiveness

Fishery managers have not conducted comprehensive evaluations of how  IFQ programs protect communities or facilitate new entry, because few  IFQ programs were designed with community protection or new entry as  objectives. In  comparing the key features of IFQ programs and these U.S. fishery  cooperatives, we identified the advantages and disadvantages of each  approach in key areas. IFQ Programs and Fishery Cooperatives Differ in Several Respects

While both IFQ programs and fishery cooperatives can vary widely, the  general characteristics of IFQ programs and fishery cooperatives differ in  the areas of regulatory and management framework, number of  participants, quota allocation and transfer, and monitoring and  enforcement. IFQ programs have greater stability than fishery cooperatives because  they are established and terminated by federal regulations, while  cooperatives are established and terminated by voluntary contractual  agreements. Finally, regarding monitoring and enforcement, IFQ programs are viewed  as being more difficult for NMFS to administer than fishery cooperatives,  because NMFS must monitor individual participants for compliance with  program rules, such as quota accumulation and catch limits. In contrast,  cooperatives are viewed as being simpler for NMFS to monitor and  enforce, because NMFS monitors one entity—the cooperative—and the  cooperative is responsible for monitoring the actions of its members. For this report, we reviewed foreign and domestic quota  programs and fishery cooperatives to determine (1) the methods available  for protecting the economic viability of fishing communities and  facilitating new entry into IFQ fisheries, (2) the key issues raised by  community protection and new entry methods, and (3) the comparative  advantages and disadvantages of the IFQ system and the fishery  cooperative approach.
Why GAO Did This Study

To assist in deliberations on individual fishing quota (IFQ) programs, GAO determined (1) the methods available for protecting the economic viability of fishing communities and facilitating new entry into IFQ fisheries, (2) the key issues faced by fishery managers in protecting communities and facilitating new entry, and (3) the comparative advantages and disadvantages of the IFQ system and the fishery cooperative approach.

What GAO Found

Several methods are available for protecting the economic viability of fishing communities and facilitating new entry into IFQ fisheries. The easiest and most direct way to help protect communities under an IFQ program is to allow the communities themselves to hold quota. Fishery managers can also help communities by adopting rules aimed at protecting certain groups of fishery participants. Methods for facilitating new entry principally fall into three categories: (1) adopting transfer rules on selling or leasing quota that help make quota more available and affordable to new entrants; (2) setting aside quota for new entrants; and (3) providing economic assistance, such as loans and subsidies, to new entrants. In considering methods to protect communities and facilitate new entry into IFQ fisheries, fishery managers face issues of efficiency and fairness, as well as design and implementation. Community protection and new entry methods are designed to achieve social objectives, but realizing these objectives may undermine economic efficiency and raise questions of equity. For example, allowing communities to hold quota may result in a loss of economic efficiency because communities may not have the knowledge and skills to manage the quota effectively. Similarly, rules to protect communities or facilitate new entry may appear to favor one group of fishermen over another. Furthermore, community protection and new entry methods raise a number of design and implementation challenges. For example, according to fishery experts, defining a community can be challenging because communities can be defined in geographic and nongeographic ways. Similarly, loans or grants may help provide new entrants with the capital needed to purchase quota, but they may also contribute to further quota price increases. Given the various issues that fishery managers face in developing community protection and new entry methods, it is unlikely that any single method can protect every type of fishing community or facilitate new entry into every IFQ fishery. Deciding which method(s) to use is made more challenging because fishery managers have not conducted comprehensive evaluations of how IFQ programs protect communities or facilitate new entry. In comparing the key features of IFQ programs and U.S. fishery cooperatives, we found that each approach has advantages and disadvantages in terms of regulatory and management framework, number of participants, quota allocation and transfer, and monitoring and enforcement. Specifically, in terms of regulatory and management framework, IFQ programs have greater stability than cooperatives because they are established by federal regulations, while cooperatives are voluntary contractual arrangements. In terms of quota allocation and transfer, IFQ programs are open in that they allow the transfer of quota to new entrants, whereas cooperatives are exclusive by contractual arrangement among members. In terms of monitoring and enforcement, IFQ programs are viewed as being more difficult to administer, because NMFS must monitor individual participants, while cooperatives are viewed to be simpler for NMFS to administer, because NMFS monitors only one entity--the cooperative. For some fisheries, a combined approach may be beneficial. For example, a cooperative of IFQ quota holders can combine an IFQ program's stability with a cooperative's collaboration to help manage the fishery.