Groundfish Fleet Restructuring Information and Analysis Project

4. Results of Policy-Oriented Scenarios

In this section, we consider some refinements of the basic approach for modeling fleet reductions. The four scenarios considered so far are premised on the numerical capacity estimates and various ways of reducing the number of vessels to the amount needed to harvest the 2000 allocations. In this chapter we turn to two more policy-oriented scenarios that also have the effect of reducing or restructuring the fleet.

The first of these is the 2002 in-season shelf closure, which is presumed to have resulted in the displacement or even cessation of some fishing effort. Actual fishery data for 2002 could be analyzed to see what actually happened to the various fleet sectors. Here, however, we use this case to illustrate a central feature of the GFR approach-the analysis of spatially or geographically circumscribed management measures. Beginning with the 2002 in-season measures, the PFMC is managing the fishery with reference to particular depth contours, making it necessary and desirable to analyze the impacts of such measures on coastal communities. The GFR framework provides a mechanism for this sort of analysis, and may serve as a useful prototype for spatially integrated databases that support fishery management in the future.

The second scenario we consider in this chapter is a permit stacking idea for the limited entry trawl sector that is currently under discussion at the council. Pending approval of a (partially) federally funded buy-back of vessels in one or more fishery sectors, such a permit-stacking scheme is a likely option for consideration. We conclude this chapter with a discussion of other policy-relevant scenarios that could be analyzed using the GFR framework, notably a vessel buy-back.

 

4.1 2002 Shelf Closure

Partway through the 2002 fishing season, the PFMC responded to landings data signals and emerging stock information by closing parts of the continental shelf to targeted groundfish fisheries in order to protect fish populations at risk of being overfished. As of July 1, 2002, vessels were prohibited from targeting groundfish between 20 and 150 fathoms South of Cape Mendocino, and effective September 1, between 100 and 250 north of there. By preventing vessels from fishing in certain areas, such measures may lead to a geographic redistribution of the fleet. To the extent that vessels have no alternatives for the areas they are now prevented from fishing, area closures may also result in permanent fleet reductions.

Area and depth-based management measures such as the 2002 in-season closures are likely to continue to be part of fishery management in the foreseeable future. Using the GFR framework, we used the depth delineations of the closure areas in a hypothetical scenario. The actual shelf closures went into effect partway through the season. Since we had only data on annual landings per vessel available for the whole coast, we made the simplifying assumption that the closures were in effect for the entire year. In this scenario, we asked what would have happened if the fleet (in the 2000 base year) had not been able to fish in the areas that were closed in 2002. As in the other scenarios, we excluded whiting from the analysis. Furthermore, we assumed that there were no substitutions of landings from catches made in other areas. In reality, vessels are likely to be able to relocate to other fishing areas for at least a portion of the catch foregone in the closure areas. The actual 2002 landing records could be used to determine the size and extent of this potential displacement effect, especially in comparison to catch locations in previous years. As a first estimate, however, the shelf closure scenario gives an idea of the order of magnitude of the impacts that area closures such as the 2002 in-season measures have on coastal communities.

Using the GFR framework, we can identify individual vessels and the areas where they fished. It is then possible to identify the vessels affected by the closures, and profile them in terms of size, landing ports, homeports, gear types and so on. Due to the uncertainty associated with the way actual fishing locations are recorded in the trawl logbooks or have to be inferred from the landing receipts, this is not a precise picture of the number of vessels affected by the closure. We can, however, infer from the past distribution of the fleet the vessel types and communities most likely to have been affected by the 2002 closures. This can further be tested using the actual landings data for the 2002 season as they become available.

In order to match the closure areas with our statistical 9km x 9km blocks, we weighted the percentage of each block falling within the closure area. We designated any block with 40% or more overlap as inside the closure area. Pending the release of waypoints used for enforcement, we are using the actual fathom lines to delineate the closure. Summarizing the information from these closed blocks, we can identity the vessels affected, and trace them and the associated impacts to the landing ports on the coast.

Of the around 2,750 different vessels (by size) catching groundfish in 2000, more reported landings from outside (82.3%) than inside (51.5%) the closure areas. Notice that the percentages do not add up because vessels may be fishing in both. The only vessel class that did not record any landings from inside the closed areas where vessels over 120 feet in length; these, however, account for less than 0.5% of the overall fleet. We did not investigate what, if any, vessels or vessel classes relied exclusively on the closure area for their groundfish landings, although it would be possible to do so in the GFR framework. Of those vessels for which length information is recorded in the fish tickets, between 44% and 62% made landings from inside the closed areas, suggesting that these areas are of varying importance for the various size and gear groups. Figure 9 summarizes this for the entire coast.

FIGURE 9: Number of Vessels (by Length) Fishing Inside and Outside Closure Areas, Compared to Total Number of Vessels (base)

The example of Newport and Port Orford illustrate the geographical differences of the reliance of different vessel classes on the shelf closure areas. Focusing again on vessel size, Figure 10 shows the size distribution of vessels fishing inside and outside the closure area, compared to the base year number of vessels making landings in the port groups associated with the two ports. As expected, the use of the shelf closure area mirrors the pattern of the base distribution: vessels landing groundfish in the Brookings Area port group (which Port Orford belongs to) tend to be smaller than vessels in the Newport Area. Interestingly, the largest group of vessels-those in the under 35' class-in Port Orford appears to be the least affected by the closed areas, since most of them fish outside. While vessels in the 36-80' range are roughly equally affected, accounting for around 37% of vessels making landings in each port group, there is a noticeably effect on the second largest vessel group in Newport, those between 61 and 80' in size. Of those, almost 85% recorded landings from inside the closure areas in 2000, suggesting that this fleet sector would be most adversely affected.

FIGURE 10: Brookings and Newport Port Group Vessels (by Length Group) Fishing Inside/outside the Shelf Closure Areas, Compared To Base

In terms of the income impacts associated with spatial management measures, the basic logic of this scenario is that immediately upon the shelf closure, a number of vessels that typically fished in the closed areas were prevented from fishing there. The number of vessels, landings, and revenues displaced can be interpreted as an upper estimate of the effect of the closure. Many of the vessels are likely to adapt, and move farther offshore or closer inshore. In order to estimate the likely behavioral response, however, it is useful to know which gear types and size classes were fishing in the now closed areas, since their response will depend on factors such as size (which together with horsepower, fishing gear used and safety equipment constitutes the seaworthiness of a vessel, and thus determined how far offshore it can feasibly fish). The adaptive response could potentially be inferred using data for subsequent years, i.e. testing where vessels displaced in 2002 ended up fishing in 2003.

We consider the effect of the shelf closure in terms of the catch that would have been foregone had the same measure been in effect in 2000, and assuming that the entire annual catch from that area would have been affected. Landings from the shelf closure area accounted for 7% of total pounds landed coast-wide, and for 21% of ex vessel revenues. Not surprisingly, perhaps, the share of landings and revenues from inside the 2002 closure areas differs considerably along the coast; see Figure 11.

FIGURE 11: Landings and Revenues From Inside the 2002 Shelf Closure Area

Clearly, some parts of the coast rely more heavily on the areas closed in 2002 than others. The catch made in the closure areas may be small in absolute terms (as indicated by the total overall income generated, see Figure 12), yet account for a high proportion of groundfish landings in a port, e.g. in Southern California. There is considerable uncertainty associated with these coast-wide estimates. In particular, we suspect that the high reliance on the shelf closure areas in parts of California is an artifact of our algorithm for spatially interpreting fish tickets. As explained in the methods section in Part II, this algorithm relies-among other things-on species distributions derived from trawl surveys periodically conducted by NMFS off the West Coast. These, however, are not conducted over the entire length of the coast. Another confounding factor is the bottom topography in parts of California. For example, groundfish fisheries in Santa Barbara and Bodega target the waters around the Channel Islands and Cordell Bank, respectively. These are comparatively small areas of lesser depth that likely fall inside 9km x 9km blocks used in our fish ticket analysis. In other words, we may be counting landings as coming from inside the closure area that in actuality come from adjacent shallower areas.

Area-based management measures such as the 2002 shelf closures are not capacity reductions per se. Unless they are placed such that they inadvertently displace an entire fleet sector from its home or foraging area, they are more likely to result in the relocation of effort. These dynamics remain an area for further research. In the short run, the shelf closure has the effect of "eliminating" vessels from a particular area and can be interpreted as an upper estimate of the potential impacts. Many vessels will likely relocate, but it is not clear where and how fast. The initial impact effect, therefore, gives again an upper bound of the cost associated with the shelf closure measures. In contrast to the numerical scenarios, the effect may not so much be to redistribute landings and revenues from the exiting vessels to those remaining as to lower landings and revenues permanently. Figure 12 summarizes this effect along the coast, effectively depicting the income generated by vessels after the shelf closure, and absent any relocation of effort.

Figure 12 illustrates the degree to which the shelf closure affects different ports: in this scenario, after the shelf closure considerably less groundfish-related income is generated in places like Coos Bay and Coastal Washington than in, say, Eureka. In the case of Newport and Port Orford, while the absolute effects are greater in Newport, the relative change is bigger in Port Orford: the income lost due to the shelf closure is around $2.8 million in the Newport Area and $800,000 in the Brookings Area, or 11% and 20% of the 2000 base income, respectively. Clearly the effects on ports will depend on the extent to which fishermen can relocate to other areas. This and other questions about the effects on particular communities of spatial measures such as the 2002 in-season shelf closures remain a topic for further research. It is possible, using the GFR platform, to consider these relative impacts on a more detailed scale. Finer-scale fishery data would allow the consideration of seasonal effects, and a census of vessels in particular ports could be used to gauge the relocation possibilities. Together with the pending refinement and updating of the FEAM, it would then possible to assess the coast-wide impacts of spatial management measures and various alternative scenarios for how these are administered.

FIGURE 12: Income Impacts Before and After the Shelf Closure

The coast-wide summary of results masks some considerable regional differences in how this scenario impacts communities. Consider our reference ports, Newport and Port Orford, which belong to the Newport Area and Brookings Area port group, respectively. In the Brookings Area, the shelf closure area accounts for 12% of landings and 16% of revenues. In the Newport Area, however, the reliance on these now closed areas is much less in terms of landings, and somewhat higher in revenues. This suggests that while only a small portion of total groundfish landings in Newport comes from the shelf closure areas (2%), they are relatively higher in market value, accounting for close to 20% of groundfish ex vessel revenues. Geographical differences like these suggest that spatial management measures may have downstream effects on the seafood value chain, e.g. if certain kinds of products are not available. Significantly, Port Orford accounts for 2/3 of the Brooking Area landings from inside the shelf closure area, and the impacts are consequently higher. Using the FEAM to translate landings into local income generated, and assuming that the multipliers-which capture the downstream "footprint" of each pound landed in terms of the dollars generated-are the same in the ports as for the whole port group, there emerge considerable differences in how Newport and Port Orford fare under the shelf closure scenario.

Figure 13 shows the groundfish landings, ex vessel revenues and income for both ports in the 2000 base year and after the shelf closure scenario. Assuming there are no other factors adversely affecting the groundfish fleet, then Newport experiences only a slight decrease in landings and associated ex vessel revenues. Similarly, the amount of income generated from groundfish landed in Newport stays at around 90% of its base level. In contrast, Port Orford experiences much more severe effects. While its base year reliance on the shelf closure areas are much smaller in absolute terms, their relative importance for the port is borne out by the 40% reductions in landings and revenues, and the almost 50% reduction in income generated from groundfish landings. On a per-pound basis, fish landed in Port Orford is more valuable than in Newport, which is likely the result of the species targeted, as well as the preferred product forms they are processed into.

FIGURE 13: The Shelf Closure Impacts on Port Orford and Newport

 

4.2 Permit Stacking

The PFMC is considering permit stacking in the LE trawl fleet, analogous to the permit stacking that has already taken place in the LE sablefish fishery. It is not clear yet what exactly the rules for such a trawl permit-stacking scheme would be. In the interest of investigating the sorts of geographic and distributional effects that might reasonably be expected, we designed a hypothetical permit-stacking scenario in consultation with our partners at PMCC.

In this scenario, we asked what would happen if half the trawl fleet is removed by permit stacking. Leaving the other fishery sectors unchanged from the base year, we sorted each vessel size group of the LE trawl sector according to ex vessel revenues in 2000. We then assumed that the higher revenue vessels would stay in the fishery, and the lower revenue ones would sell their permits and exit the fleet. We further assumed that willingness to buy or sell is proportionate to ex vessel revenues, and paired the highest revenue "buyer" with the highest revenue "exiter". The landings associated with each exiting vessels were then reassigned to each buying vessel. The match is exactly one-to-one, i.e. the remaining vessels all have two permits stacked.

There were a total of 243 LE trawlers in 2000, which were distributed as follows across the vessel size classes:

• 2 in the 0–35 foot range;
• 92 in the 35–60 foot range;
• 116 in the 61–80 foot range;
• 32 in the 81–120 foot range; and
• 1 in the 120+ foot range.

After the permit stacking, there are half as many vessels in each size class, for a total of 122 LE trawlers. We assumed the sole vessel in the 120+ foot range would stay in the fleet for the purpose of our analysis.

To understand the impact of this scenario on the coast, consider that each trawler has potentially multiple landing ports. Assuming that trip limits stay the same and there are no reductions associated with stacked permits, the aggregate landings and revenues can be expected to stay the same as in the base year. Since vessels may be making ladings in multiple ports, we assigned the landings associated with the exiting vessels to those remaining in the fishery, and also assigned them proportionately to the various ports along the coast. This rests on the assumption that there is no change in the distribution of processors; this and other dynamic factors are outside the scope of our analysis.

The main effect of the permit stacking scenario is to make the vessels remaining in the fishery better off. We assumed that after stacking, the 2000 landings associated with the exiting vessel would accrue to the vessel remaining. Our analysis suggests that there are considerable differences in how much better off individual stackers can expect to become after stacking. There are a number of interesting patterns:

1. Among vessels in the 36–60 foot class (VS2), the average revenue increase after stacking is 20%. However, the biggest increases range from 25–37% of pre-stacking revenues, and are realized by vessels that made landed between $125,000 and $300,000 worth of groundfish in 2000;
2. There is no statistical correlation between pre-stacking revenues and the post-stacking increases in revenues; in fact, some vessels that are very close to the $125,000 mark have considerably smaller revenue gains-some as little as 7%;
3. Among vessels between 61 and 80 feet in length (VS3), the average revenue increase is almost double that of the VS2 group: almost 40%. Most revenue gains range from 40–50% and are realized by vessels that landed between $230,000 and $440,000 in groundfish revenues in 2000;
4. In the 81 to 120 foot class (VS4), the average gain is 33%, with the high end of these (between 35% and 45%) being realized by vessels that made between $335,000 and $570,000 worth of groundfish landings in 2000.

As should be apparent from these numbers, the permit stacking stands most to benefit vessels in the 61 to 80 foot range. These vessels would also land more than a third (38%) of groundfish landings (in 2000 terms), and almost 90% of the total jointly with the group of next larger vessels-those between 81 and 120 feet in lengths.

As for the spatial aspects of the LE trawl permit stacking, the effects vary along the coast. Not surprisingly, ports with larger trawl fleets are relatively more affected. We modeled the distributive effect on landing ports by assigning landings associated with the exiting vessels to those that bought their permits. The implicit assumption is that the remaining vessels would land their now stacked catch in the same ports as did the exiting vessels. Clearly, given market conditions and relationships with processors, this is not necessarily the case. Figure 14 below summarizes the results of the stacking scenario in reference to the base income impacts.

FIGURE 14: Coastwide Income Impacts After Stacking in the LE Trawl Fleet

Interestingly, applying the FEAM to the landings resulting in each port after the permits have been stacked, this scenario results in a net gain of income along the coast: around $3 million more than in the base year, or $142 million versus $139 million. This would suggest that permit stacking, even in a single sector can have positive income effects-at least in aggregate, at the scale of the whole coast.

Detailed results for all ports can be found in Appendix C, where this scenario (No. 5) is summarized along with the earlier four numerical ones. Although all but two (Los Angeles and San Diego) of the port groups are affected in the permit stacking scenario, at the smaller spatial scale of the ports the results are more striking. Since some ports have no trawlers at all, significantly fewer ports are affected by this than by any other scenario we analyzed: only 1/3 of the 99 total. In terms of our reference ports, the trawl permit stacking scenarios has no impact on Port Orford. This is not surprising since no trawl vessels are home-ported there. By contrast, Newport illustrates how the fleet might gain from stacking permits in the LE trawl sector. Again, assuming that processing and harvesting sector structures as embedded in the FEAM remain the same, Newport stands to experience a 17% increase in landings, a 19% increase in ex vessel revenues, and a 13% increase in groundfish-related income.

A number of caveats apply to this scenario, which-although more policy-oriented than the earlier numerical ones-is still somewhat removed from reality. For example, the groundfish-exclusive focus of our analysis may lead to the inadvertent elimination of more diversified vessels. Although less likely in the LE trawl sector, we cannot exclude the possibility that some vessels identified as "exiters" because of their relatively low groundfish landings are viable. Also, we excluded landings history and only used 2000 ex vessel revenues as a way of identifying who would buy and who would sell permits. The actual decisions are likely more complex, and any policy analysis would benefit from considering operating costs of various sizes of vessels, the financial health of individual vessels, or indications of buying/selling intention such as the survey on a buyback program conducted by the Fishermen's Marketing Association (Leipzig 2001).

Another limitation is that we limited the permit stacking to vessels within size classes. Especially on the outer margins of the revenue distribution, however, it is likely high performers in one class would consider buying permits from the next higher class, while it might be feasible for low performers to buy permits from the next lower size class. Depending on what fleet structure is desired after stacking, policy-makers may wish to consider imposing a priori constraints on the permit stacking, for example, by setting a size range within which permits can be traded. These and other considerations could be modeled in the GFR framework.

 

4.3 Other Policy Issues

The 2002 in-season shelf closure and the permit stacking scenario for the LE trawl sector are only two policy-relevant issues that can be examined using the GFR framework. The reduction scenarios considered in the GFR project are largely illustrative of the myriad effects associated with fleet restructurings, and that can be examined using this framework. There is, in principle, no limit to the type, number, and combinations of constraints that can be imposed on the databases to generate other scenarios. For example, another issue of considerable interest to West Coast fisheries is the proposal for a federally and/or industry funded vessel buyback before Congress (H.R. 1989). The Fishermen's Marketing Association (FMA) conducted a survey of vessel owners in the LE sector who were ready to leave the industry (Leipzig 2001). While our data set and the responses to the FMA survey are not linked, it would-in principle-be possible to use this and other information to analyze which communities would be affected by the buy-back.

There are two main ways in which the GFR project results and framework could be used to analyze a potential buyback. Firstly, the various numerical scenarios can be interpreted as potential outcomes of a buyback measure. On an aggregate level, the numerical results suggest how much money is needed to compensate vessels leaving the fleet under the various fleet reduction scenarios. Recall that the scenarios were silent on the mechanism by which a fleet reduction would be achieved, and only compared the before and after effects. A vessel buyback as proposed in H.R. 1989 is such a mechanism. Assuming that the estimates of the income redistributed to the remaining fleet are an indicator of how much vessels leaving would be willing to accept, then the coast-wide income impacts may serve as proxies for the size of the fleet reduction that can be achieved with a buyback between $37 and $75 million dollars (see Table 2). Similarly, the analysis provides a benchmark for estimating the number of vessels that might reasonably be expected to enter bids in a buyback. Given that the four GFR scenarios applied to all fleet sectors, whereas the buyback bill is targeted at reductions solely in the trawl sector, it is interesting to note that $50 million achieve-in our scenarios-the 50% target for the entire fleet. It is therefore reasonable to expect that that the buyback would succeed, and likely exceed, this target in the trawl sector.

Secondly, the GFR framework could also be used in the implementation of the trawl buyback program. By considering the actual vessels involved it would be possible for fisheries managers to use the information compiled in the GFR database and GIS to assess the geography of vessels submitting bids in the buyback program. This is also potentially useful for assessing any habitat impacts of the buyback. Furthermore, the removal of vessels from the fleet and therefore from the grounds is also likely to have competitive effects on vessels remaining in the fleet. In other words, the removal of trawl activity from the fishing grounds may lead to redistribution of fishing effort by other gear types, both from within and outside the groundfish fleet. Other considerations for structuring any buyback, such as past landings, permit diversity (and concomitant fishing opportunities) and economic viability could also be spatially integrated into the analysis.

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