Dysfunction by design: Consequences of limitations on transferability of catch shares in the Alaska pollock fishery

The Eastern Bering Sea fishery for pollock is one of the largest fisheries in the world and has often been touted as an example of sustainable fisheries management. Yet, sustainability requires more than protection of the biological productivity of the targeted fish species. It requires preservation of the flows of net social and economic benefits of the fishery, and flexible governance and management institutions that allow for adaptation to changes in fish abundance as well as changes in consumer demand and in the prices of key inputs. From an economic perspective, the Alaska pollock fishery was unsustainable before passage of the American Fisheries Act (AFA) in 1998. The AFA permanently divided the pollock Total Allowable Catch (TAC) giving a 10% allocation to the Community Development Quota (CDQ) program and partitioning the remainder among four fishing sectors. It allowed CDQ to be leased to any sector but largely prohibited leasing or sale between other sectors. These limits on intersectoral transfers have reduced the ability of sectors to respond to changes in the abundance and distribution of pollock, implementation of management measures intended to benefit other species, and changes in the prices of input factors and products. This paper explores these consequences.