nfcc: national fisheries conservation center

Lessons from the CDQ Program for Quota-Based Management
By John Bundy

This essay briefly describes the Community Development Quota (CDQ) program and focuses on its quota-based fisheries management aspect as may be relevant to advancing to other quota-based systems.

The CDQ program is the result of a political process and decision in 1992 by the North Pacific Fisheries Management Council to allocate 7.5% of the Bering Sea/Aleutian Island management area pollock total allowable catch to economically disadvantaged communities within 50 nautical miles of the Bering Sea. The communities involved in the program now total 65, and have divided themselves into six "CDQ groups," which typically have been organized as non-profit economic development corporations under Alaska State law. Although started as a temporary program to "jump start" local economies into fisheries-related activity, it is fair to say that the program was essentially made permanent by statute in 1996. (See section 305(i) of the Sustainable Fisheries Act). The CDQ share of pollock quota was increased in 1998 to 10% of the total allowable catch by statute (Section 206(a) of the American Fisheries Act). The CDQ program has also been expanded to include a share of halibut, sablefish, crab, cod, and other groundfish.

To my knowledge, a thorough, objective, comprehensive, and accurate socio-economic analysis of the impacts of the CDQ program has not yet been done. The best available description and survey of the program is the National Research Council's report, The Community Quota Program in Alaska. It finds "that the program appears on-route to accomplishing [its] goals...to provide communities with the means to develop ongoing commercial fishing activities, create employment opportunities, attract capital, develop infrastructure, and generally promote positive social and economic conditions."

A few basic statistics illustrate the magnitude of economic development and assistance brought to the coastal communities by the CDQ program. The 65 communities have a total combined population of about 23,300. Since inception of the program in 1992, more than $150 million has been paid in royalties, much of which has been used to permanently endow educational scholarship assistance for young people. In addition, more than $30 million has been paid in the form of wages and earnings to residents of the communities. Almost all of this comes directly from private companies operating offshore in the pollock fishery. Indeed, all six CDQ groups have formed partnerships with offshore pollock companies: five with factory trawler operations and one with an offshore mothership operation. Today, five CDQ groups are part owners of factory trawler companies. The company I work for, and partly own, is owned 50% by the Norton Sound CDQ group.

The alliance between private business and the communities has not been without some difficulties, but the program on balance has been a success story. A basic reason for the success is that CDQ is a quota-based system of fisheries management and has clearly demonstrated that such systems create wealth, in addition to better conservation, when compared to open access. Thus, from an operational standpoint, with respect to the CDQ portion of our fishery, we have enjoyed the benefits of an individual quota system in the Bering Sea pollock fishery since 1992. Whether CDQ, Individual Transferable Quota, or harvest cooperative system, many of the basic benefits are the same, and they make clear that an individual quota-based system is beneficial for the public, consumers, owners, and fishers.

Deliberate Fishing Adds Value. From 1992 to 1999, our pollock fishing was a combination of CDQ and open access, and we were in an ideal position to compare the two. When open access fishing ended and CDQ began, the entire focus of the vessel would change from catching the most fish to maximizing the value of each fish. Both quality and recovery improved, and we were able to take more time to change the product mix in response to the marketplace. It was clear from our daily production reports that when the pace slowed, our crew was able to create more value from the same amount (harvest) of fish, and quality would take precedence over sheer production. The crew was able to rest more often and work more safely. In the end, since everyone on the vessel was on a share system, everyone made more money. (In 1999, the open access fishing was converted to a quota-based system also, through a harvest cooperative system under the American Fisheries Act).

Markets. Our markets, domestically and in Japan, told us that CDQ production was preferable to open access, because we could plan the timing of production, transportation to the market, and better control quality. (Before the Magnuson Act, when Japan dominated the pollock fishery off Alaska, they had a strict vessel quota system that maximized quality).

Bycatch. The Alaska Department of Fish & Game commissioned a study of CDQ pollock fishing which concluded that "the CDQ fishery allows harvesting of the Bering Sea pollock resource to be conducted in a much more efficient manner with less waste and discards." Slower, more deliberate fishing results in fewer regulatory and economic discards. For example, we work with our CDQ partner specifically on the issue of salmon bycatch and, if it becomes an issue during CDQ fishing, we take the time to find grounds where we are not encountering salmon. Bycatch during CDQ fishing is carefully monitored at all times by two federal observers on each factory trawler and is also reported by our CDQ partner to the State of Alaska. The bycatch rate of all non-target species during CDQ pollock fishing would routinely fall below 2%. This rate is lower than virtually any major commercial (or recreational) fishery in the world. Indeed, with the advent of the pollock harvest cooperative starting in 1999, together with the CDQ portion of the fishery and our continued efforts to find ways to minimize bycatch, the rate for the entire pollock factory trawler fleet is often less than 1% for an entire season.

Economic Efficiency. Through numerous international agreements, it is the policy of the United Nations, as well as the United States, to reduce capitalization involved in commercial fisheries. Simple common sense indicates that an ITQ or similar quota-based system is the best way to accomplish this goal, often with no cost to the public. With CDQ, because it is a quota, we were able to schedule fishing activity in a manner that would reduce costs and maximize value by timing production to the market. We were also able to make better capital investment decisions based on a known quantity of fish. Opportunities for economic efficiency grew further as we were able, through private agreement, to form harvest cooperatives in the whiting fishery off Washington and Oregon, and then the pollock fishery off Alaska. Almost immediately in those fisheries, because of the end of the race for fish, and the ability to transfer quota and make better economic decisions, the size of the factory trawler fleet has been reduced to a more optimum size.

John Bundy is president of Glacier Fish Company, and co-founder and initial president of both the Pacific Whiting Conservation Cooperative and Pollock Conservation Cooperative. Glacier Fish, partially owned by a CDQ group, owns and operates two pollock factory trawlers and one freezer longliner operating in the North Pacific.