Northwest Fisheries Science Center

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Document Type: Journal Article
Center: NWFSC
Document ID: 8799
Title: Can Vessel Buybacks Pay Off: An Evaluation of an Industry Funded Fishing Vessel Buyback
Author: Daniel S. Holland, Erin Steiner, Amanda Warlick
Publication Year: 2017
Journal: Marine Policy
Volume: 82
Pages: 8-15
DOI: http://dx.doi.org/10.1016/j.marpol.2017.05.002
Keywords: Vessel Buyback,catch shares,Permit Buyback,
Abstract:

 Fishing vessel and permit buyback programs have been implemented to reduce excess capacity and improve profitability in a number of fisheries around the world. These programs are generally publicly funded, but in a few cases they have been financed by loans to be paid back by the remaining fleet. In 2003 a buyback permanently removed 91 vessels and 239 fishing permits from the Pacific groundfish trawl fishery and associated corollary fisheries of Dungeness crab and pink shrimp.  The buyback was financed with $10 million in public funding and a $36 million loan to be repaid over 30 years with fees on landings. In the same year a control date was set for an individual fishing quota (IFQ) program in the groundfish trawl fishery. When the IFQ was implemented in 2011, the permit owners that had remained in the fishery after the buyback were allocated the quota shares that would otherwise have been issued to the permits bought back in 2003. We use estimates of annual net revenue based on comprehensive cost-earnings data, and also estimates of quota lease value, to provide alternative estimates of the annual profits generated by the quota that would have been allocated to the retired permits and compare those values to the cost of servicing the buyback loan. The results provide evidence that a buyback program, when implemented in conjunction with an IFQ, can enable a sustained increase in profitability sufficient to justify the cost of the buyback and provide a means for the industry to finance consolidation. 

Description:

We use estimates of annual net revenue based on comprehensive cost-earnings data, and also estimates of quota lease value, to provide alternative estimates of the annual profits generated by the quota that would have been allocated to permits retired in a buyback program for the Pacific groundfish trawl fishery. The results provide evidence that a buyback program, when implemented in conjunction with an IFQ, can enable a sustained increase in profitability sufficient to justify the cost of the buyback and provide a means for the industry to finance consolidation.

Theme: Sustainable, safe and secure seafood for healthy populations and vibrant communities
Foci: Support effective catch share management and evaluation
Support effective catch share management and evaluation
Official Citation:

Holland, D.S., E. Steiner, and A. Warlick. 2017. Can Vessel Buybacks Pay Off: An Evaluation of an Industry Funded Fishing Vessel Buyback. Marine Policy 82:8-15 doi.org/10.1016/j.marpol.2017.05.002.