Commercial Fisheries:

Entry of Fishermen Limits Benefits of Buyback Programs

RCED-00-120: Published: Jun 14, 2000. Publicly Released: Jun 22, 2000.

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Pursuant to a congressional request, GAO reviewed the National Marine Fisheries Service's (NMFS) fisheries buyback programs, focusing on: (1) the extent to which the buyback programs have affected fishing capacity; (2) potential ways the buyback programs can be made more effective; and (3) NMFS' efforts to evaluate the effectiveness of buyback programs.

GAO noted that: (1) buyback programs in New England, the Bering Sea, and Washington State initially removed from 10 to 24 percent of their respective fishing capacities; (2) however, the experiences of these three cases demonstrate that long-term effectiveness of buyback programs depends upon whether fishermen return to the fishery; (3) the $24.4 million New England buyback removed 79 vessels that accounted for 19 percent of the groundfish catch in that fishery; (4) however, 62 additional vessels have become active since the buyback because no steps were taken during the program to prevent previously inactive vessels from engaging in fishing; (5) these vessels have begun to erode the capacity reductions made by the buyback because they have replaced fishing capacity by as much as two-thirds of that purchased through the buyback; (6) experience also shows that, while buyback programs reduce capacity in one fishery, the recipients of the buyback may simply shift that capacity to another fishery not subject to the buyback; (7) for example, according to GAO's survey of fishermen who participated in the New England buyback, nine recipients who formerly fished for groundfish are now primarily lobster fisherman--a fishery that is also classified as overfished throughout much of its area; (8) the effectiveness of buyback programs in reducing fishing capacity depends upon whether fishermen return to the fishery and also whether remaining fisherman have an incentive to invest in larger or better-equipped fishing vessels; (9) in most fisheries, fisherman have an incentive to increase their fishing capacity in order to catch fish before someone else does, which is called the "race to fish"; (10) however, when buyback programs are accompanied by other measures that reduce incentives for larger or better-equipped fishing vessels, capacity reductions from a buyback need not erode; (11) NMFS has made limited efforts to evaluate buyback programs, assessing only the fishing capacity reductions in the New England groundfish buyback because it was required to do so; and (12) because evaluations can identify ways to improve future programs, prudent management suggests that buyback programs should be evaluated.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: While NMFS agrees with the intent of the recommendation to restrict buyback participants from reentering a buyback fishery, it said that it lacks the authority to do so. NMFS said that its buyback regulations provide for demonstrating how each buyback request complies with the statutory requirements in these areas. NMFS will treat buybacks under disaster assistance as though they were subject to these requirements, except in the most extreme cases of financial distress. NMFS also plans to develop performance measures for future buyback programs. However, as of August 2003, only one buyback program has been implemented that, in NMFS' view, would be subject to such performance measures. In this case, performance measures were considered during the development of the program's design. Although GAO believes that the portion of the recommendation related to performance measures should apply to all buyback programs, regardless of the legislative authority, NMFS did not apply it to two buybacks authorized by special statute and about whose elements NMFS has no significant discretion.

    Recommendation: Before new buyback programs are used to reduce fishing capacity, they should be made more effective. To do this, the Secretary of Commerce should direct NMFS to design future buyback programs to: (1) restrict buyback participants from entering a fishery that has excess fishing capacity; (2) restrict the use of unused fishing permits in a buyback fishery with excess fishing capacity; (3) identify mechanisms to minimize the incentives to increase fishing capacity in a buyback fishery; and (4) develop performance measures that relate to program goals and broader legislative goals, such as the need to better manage fishing capacity and conserve fish stocks.

    Agency Affected: Department of Commerce

  2. Status: Closed - Implemented

    Comments: According to the National Marine Fisheries Service, should any future funding or other authority allow NMFS to design and implement any buybacks, NMFS will develop performance measures that relate to program goals and broader legislative goals, such as the need to better manage fishing capacity. Future buybacks designed by Congress to NMFS will be evaluated against appropriate performance measures.

    Recommendation: Before new buyback programs are used to reduce fishing capacity, they should be made more effective. To do this, the Secretary of Commerce should direct NMFS to evaluate the results of future buyback programs against the performance measures.

    Agency Affected: Department of Commerce

 

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