Profit and Price Effects of Multi-species Individual Transferable Quotas

Regulators in many countries have adopted individual transferable quotas as a means of dealing with the open access problem inherent in fisheries. Using individual vessel data prior to and after the introduction of ITQs in Canada's multi‐species Scotia‐Fundy mobile gear fishery, the paper uses an index number profit decomposition to compare vessel performance over time and across individual vessels. The approach allows us to undertake both an ex post evaluation of short‐term impacts of ITQs and an ex ante evaluation of longer term impacts. With respect to short‐term impacts, the results suggest that larger vessels have benefited the most from the introduction of ITQs, but that all vessels have enjoyed increases in the prices received for those fish species that are included in the quota program. With respect to longer‐term impacts, the transferability provisions of the ITQ program have encouraged exit and more efficient operations to prevail.