A model for simulating trading of fisheries quota

Individual transferable quotas (ITQs) have long been proposed as a way of increasing the profitability of fisheries by introducing a rights based, tradeable permit system that fosters stewardship of the resource, breaking the cycle of over-capitalisation and over-exploitation. Under ITQs, fishers receive a share of total allowable catch (TAC) and are free to use it or sell it. In this paper we develop a model to simulate trading of fisheries quota in an ITQ market. We build on a multi-species population and vessel dynamics model developed for common coral trout (Plectropomus leopardus) and red throat emperor (Lethrinus miniatus) in the Coral Reef Fin Fish Fishery (CRFFF), a $AU 50 million fishery operating on the Great Barrier Reef of Australia, where an ITQ fisheries management system has been operating since 2004. The model considers initial quota allocation to vessels, seasonal fish prices and individual variable costs, fishing efficiency and experience., Vessel operators can either purchase or sell quota of either species, if it was in their interest to do so to maximise profit. This depends on the cost each vessel incurs per day fishing, seasonal fish prices and historical catch rates experienced by the vessel operator, which in turn depends on the catchable biomass of the species and the vessel's own fishing efficiency. Results show projected fishing effort trajectories under a range of TAC levels for coral trout and red throat emperor. Results also show the profitability of the fishery under a range of management options. In general, as the TAC for the primary targeted species, coral trout, increased, so too did the effort. Fishing effort under the current TAC arrangement decreased, mimicking the actual effort level since 2004. Effort dynamics were also more sensitive to the coral trout TAC, the more valuable primary target species, compared to the TAC of the less valuable red throat emperor. Discarding of red throat emperor was also high when the ratio of coral trout TAC to red throat emperor TAC was high. The results help managers in understanding the implications of their quota-related decisions, illustrate what might be expected with trading in a multi-species quota system and indicate what to expect in the CRFFF as that multi-species ITQ system matures.