Framing Fish,Making Markets: The Construction of Individual Transferable Quotas (ITQs)

For sale: fish quota

If it so happened, one crisp and beautiful day in April, that you surfed into the site www.kysttorget.no and clicked on ‘For Sale: Miscellaneous’, you would, among the offers of flag poles, crab traps and used ice machines, find ads like this one:

The quota that is on offer, which would cost you in the order of NOK 1.0–1.3 million if you got the bid ¹ , is a right to fish a specific amount of a certain kind of fish. ‘9–10m’ is the length of the fishing vessel in relation to which the quota is defined. ‘gr 1’ is short for Group1, a basic category of fishing vessel defined within the management system for the coastal cod fishery in Norway. There are two such basic categories (Group1 and Group2), the first targeting full-time professional fishermen, the second reserved for part-timers. In 2005, the quota for a Group1 vessel of 9–10 meters would have been 65380 of ‘cod equivalents.’ ²

As the above suggests, the commodity we have before us is a complex thing. Every phrase in the ad, including the date at the start and the phone number at the end, is packed with significance. While you, the model reader of this chapter, have no problem with the numbers that frame the ad (date and phone number), you are not pre-equipped with the lexicon required to decode the meaning of its key concepts. We shall try to turn this quality of the tradable quota into our advantage. Still, we would not be surprised if you, at this point, see the quota and the cod as just another case of fishy objects. At the end of the chapter, however, you will learn to appreciate these things in all their intricate beauty.

Let us begin with the obvious. The ad indicates that a market for fish quotas exists. From the specifications in the ad (9–10m; gr 1; Nordland) and the rule systems these refer to, we understand that the fish quota is a legal construct. Without a formal apparatus to define and produce the fish quota as a stable bundle of entitlements, there could be no quota markets. It is through the legal definition and an extensive work of socio-technical framing that the quota becomes stabilized to such an extent that it can be treated as property.

As commodities go, fish quotas are not unique. Even if you start with the simplest and most natural item you can think of – say, a bale of cotton – you will quickly find that this must also undergo considerable amounts of framing before it is fit for the market (Caliskan, 2004). One reason why fish quotas are interesting is that they are emerging right now. Like CO₂ emission quotas or music in mp3 format, fish quotas did not exist 20 years ago. At that time, there would be no ads comparable to the one with which we started. Instead of having fishing measured in, and restricted by, specific quotas, there was reasonably open access to the fishing grounds. If you were registered as a fisherman and had access to an appropriate vessel, you could steam out, throw in your gear and hope for a lucky catch.

Something has happened to the fish and the fishermen. Twenty years ago, there was open access and fish were common property. The fisherman was a kind of hunter. Today, access has been closed. Fish, or at least fish quotas, have become property. The fishermen have turned into quota owners and property managers. In this chapter, we want to examine the trajectory that has transformed the fish and the fisherman. How is it possible for un-caught fish to become private property in a socially binding way? What kind of framing is capable of producing fish quotas as tradable objects? What ingredients – besides the fish – go into the stew and make property rights?

Cooking up quotas

In order to make a market for fish quotas, a number of different ingredients are needed. The proliferation of qualifications needed in our attempt to describe the object that featured in the internet advertisement above, demonstrates this. If the market is seen as stew, its production can reasonably be attributed to some sort of cook. Or can it?

In general, the notion of a cook fits well into the terminology of actor-network theory (ANT). Instead of playing into an understanding of the scientist-entrepreneur as a thinker, safely lodged in the world of ideas, the metaphor of the cook allows us to focus on the practical skills and materialities that science requires. Rather than the cleaned up surfaces of ready-made science, the cooking imagery brings us back to the messy process of science in the making. With the scientist as a cook and the laboratory as a kitchen, we keep up an interest in the raw materials used, how these are prepared, the devices it takes and the practical work undertaken, while not forgetting the heat from ovens, the accumulating stacks of dirty pots and pans, and the pressure from hungry customers. We also understand that a theoretical account of the process, rendered as a recipe in a glossy coffee-table book, is of limited help if the right ingredients, a well-equipped kitchen, and the appropriate skills are lacking.

The candidate for a cook that we could have in mind is indeed a kind of scientist, namely a resource economist. The recipe in question is known by the acronym ITQ, short for Individual Transferable Quotas. The object featured in the ad with which we started is exactly the intended outcome of an ITQ recipe. The question before us is whether economists held an orchestrating agency, if they somehow directed the chain of events that ended with our ad. Can we single out the resource economist as the cook behind the stew cum quota market?

We shall reveal up front that our answers to these questions will be in the negative. If you are an ITQ fan or, more generally, believe in the healing powers of economics, this may of course come as a disappointment. What is more problematic, at least from a writers’ perspective, is that this revelation threatens to suck the dramatic tension out of the story. Why would a tale about tradable fish quotas be of interest in a volume dedicated to the traffic between market theories and market practices if it turns out that such traffic is scarce? Our answer is to take advantage of the expectation, in part reinforced by this book, that there will be interaction between theories and the realities they describe. Instead of the first-order task of demonstrating that such interaction takes place, which within the covers of this volume approaches a commonplace, we move to the second-order task of mapping this interaction in more detail. What are the roles of economists and economic theories here? How do they play off against other agencies and devices? Under which circumstances will market models get to frame the phenomena they describe? In order to make good on these promises for our chapter, the first task is to show why the resource economists and the ITQ model were plausible candidates for the roles as recipe and cook, even if they turn out to be fit for the lesser tasks in our culinary story.

Inspired by neoclassical economic theory, the recurrent problems of managing fisheries are diagnosed in terms of overexploitation and dissipation of sizeable resource rents within resource economics. This is because the fisheries are (or used to be) common property and hence subject to market failures. Because no-one owns the fish, no-one cares (enough) for their health and survival. Hence, the fisheries commons has to be closed and property rights installed. This can be achieved in many ways. Within the ITQ model, the main device is an individual quota that can be bought and sold on the market. On the conditions that the quotas form stable and easily transferable property rights, this system will solve the problems of overexploitation and overcapacity.

So we have a cook and a recipe. Is there also a corresponding stew? Yes there is. Since its inception in the 1970s, the ITQ model has proliferated in the world of fisheries. As scientific products go, this one must be deemed a success. Not only has it flourished within certain academic arenas, supporting a hastily growing body of theoretical literature. It has also been put to work as an actual policy instrument. In their ‘global overview of marine fisheries’ of 2003, Garcia and Moreno (2003) cite an estimate that about 10 per cent of the world's marine catch was taken under ITQ systems, with more fisheries becoming subjected to ITQs systems every year. Francis Christy, credited with the first ITQ proposal in 1973, observed that his creation, 20-odd years later, was doing well: ‘The transition to property rights regimes in fisheries is occurring with a speed which, I think, is not fully appreciated. The process is inexorable’ (Christy, 1996: 288). The claim here is not just that ITQs are out there, but moreover that the credit for them belongs to resource economists. In a special issue of the Journal of Environmental Economics and Management, James Wilen asked: ‘What differences have we [resource economists] made?’ (Wilen, 2000: 306). While his answer is handsomely modest in general, he claims one feat: ‘the profession's most important policy achievement must surely be its influence on getting the ITQs on the agenda as a viable policy instrument’ (Wilen, 2000: 321).

In Wilen's account, the introduction of ITQs is a clear case of economic theory performing the economy. In Iceland, for instance, the ITQ system resulted from ‘… bold policy innovations in an economic setting in which fisheries were important…’ (Wilen, 2000: 322). This assertion is backed up by a footnote which presents an Icelandic economists and ITQ proponent as one of the ‘architects’ of the ‘Iceland program’. ³ Even though academic critics of the ITQ model are reluctant about the depth and success of the transformation, they certainly think that the economists and their models have played an important part in it (Helgason and Pálsson, 1998). ⁴

From a ‘performativist’ viewpoint, the ITQ model looks like the perfect exemplar. Just like the case of the strawberry market studied by Garcia-Parpet (2007), turned into the paradigmatic example of performativity by Callon (1998), it's all there: a textbook model, an invention of economics taking the leap into reality and theory guiding reality. Hence, economists are the constructors of market phenomena, and not just as their analysts.

A clear cut case? As it turns out, there are divergent interpretations of the ITQ case. Replying to the question whether the ITQ system in Iceland is a result of a grand design or of a historical accident, Matthíasson (2003: 16) leans towards the latter: ‘The history of the regulatory exercise clearly shows that ITQs are a last resort choice. Hence, the introduction of the ITQs can hardly be claimed to be the result of a grand design’. Even Arnason (1993: 206), although credited by Wilen as the ‘architect’ behind the Icelandic ITQ system, is opposed to the notion of ‘grand design’ here. ⁵

In the case of New Zealand, the importance of economic design seems clear. But even if we accept that, we are left with a number of questions with regard to the conditions for and qualifications of such an event. What exactly is the role of economists and economic models when a theoretical entity materializes and makes it in reality? How can we know that a phenomenon before us is playing out a script composed by economists? How can we distinguish between ‘strong’ performativity, where the script directs reality and its more ‘whiggish’ relatives, where the script is adjusted post hoc to account for the facts? ⁶

As we shall see, the Norwegian ITQ case is ideally suited to address these types of questions. In Norway, a master plan for the introduction of ITQs was actually constructed on the basis of economic theory. But in contrast to what happened in New Zealand and Iceland, this plan met heavy opposition, and the ITQ model was rejected as a formal policy. Nevertheless, this did not prevent quotas from being traded by fishermen, as demonstrated by the ad with which we began. Here, then, the model was rejected, while its practices were accepted. What can this tell us about performativity and about the interaction between economic theory and economic life?

When we set out shortly on our search for the trajectory that led to the ITQ market indicated by the ad above, we will keep the following question in the back of our minds: can the market in fish quotas be accounted for with – or without – reference to some master plan? We shall frame our examination as one concerning the role of the ITQ model as a market device. Can the ITQ model be considered among a number of different devices that can be mobilized and may play a role in framing and formatting the quota market?

Something not quite open getting not quite closed

A fundamental condition for the formation of a market is restricted access. As long as there is open access to fishing grounds, there will be no market in fish quotas. No fishermen would be able to sell a right to fish, if such a right was granted to all who might want it. Hence, the closure mechanisms that render the right to fish exclusive to some extent is the first ingredient that goes into the pot in which a market for tradable fish quotas is cooked. While closure mechanisms might be thought of as a sine qua non market device, we need to pay careful attention to the specifics of how such closing came about. For this ties in with how the quota could be further qualified on its path to being finalized as the commodity featured in the opening ad.

The day that the Norwegian fisheries commons shifted from being fairly open to becoming fairly closed is an event we can date quite precisely to Tuesday April 18th 1989. Until then, the Norwegian coastal cod was open to the extent that no market had formed with regard to access. It is correct to refer to the coastal fishing grounds of Norway as late as the 1980s as ‘a commons’ (or a nested system of commons), to the fishermen as ‘commoners’ and to the fish as ‘common property.’ Note that these labels should not be taken to imply the absence of culture and regulation, as in the usage made famous by Garrett Hardin (1968; see McCay and Acheson, 1987). The commons we write about here was not a social vacuum; it was a positively defined and cultured social space (Johnsen, 2004). When we insist on its openness, it is only in a specific and relative sense: the fishery commons was open in ways that made it impossible for a market in access rights to form.

This changed in 1989. The immediate background for the closure of the coastal cod fisheries of Norway on that crisp and cruel Tuesday was a resource crisis. In May 1988, ACFM ⁷ dramatically revised its assessment of the cod stock, concluding that it was in much worse shape than previously thought. Growth rates for young cod were found to be about half of those estimated the previous year. The overestimated growth rates had been used in the stock predictions that were underlying the scientific stock advice of 1987 on which the 1988 TAC (Total Allowable Catches) was based. The weak growth rates of the young cod were linked to a collapse of the capelin stock, an important prey species of the cod in the Barents Sea. Not only was the cod stock biomass much lower than expected but also the mortality rates produced by the fishery were much higher than had been previously considered. In fact the internationally agreed 1988 TAC of 530.000 tons (for Norway, Russia and third countries) was now expected to inflict almost twice the mortality on the stock compared to what had been anticipated when the TAC was decided in 1987. Consequently, the fishery scientists recommended that the fishery should be ‘reduced as far as possible’ for the remaining half of 1988 towards the level of 325.000–363.000 tons and also recommended the 1989 TAC to be in the range of 330.000–370.000 tons (ACFM, 1988).

While this recommendation was followed, it nevertheless marked the beginning of the crisis. In 1989, the low TAC combined unhappily with a rich fishery ⁸ , and the quota was quickly fished up. The traditional Lofoten fishery came to a full stop in mid April, at a time that used to be the peak of the season. The 1989 season had ended before a number of vessels even had started fishing.

The appearance of a fisheries Leviathan

In the story of April 18th, the ground zero of Norwegian fisheries, we encountered a number of strange entities, like ‘stock assessment,’ ‘fishing mortality’, ‘TAC’ and ‘ACFM.’ As we shall see, the creatures that now enter the scene comprise the underlying flock of measurement and intervention devices that made it possible to close the commons. They constitute part of the social machinery that allows property rights to stick to slippery fish. Since we are more interested here in the use of these instruments, than in their invention, we shall go easy on the details. ⁹

In our account of the closure, we encountered one agency that took the role of adviser (‘fishery scientists’ working in the Arctic Fisheries Working Group and ACFM, bodies within ICES), and another, conspicuously anonymous, that received and acted upon such advice. Let us start by revealing the identity of the latter, the Leviathan in action here: the Joint Norwegian-Russian Fishery Commission (JNRFC). This commission, comprised of bureaucrats, scientists and interest group representatives from the two countries, meet once a year to negotiate the regulation of shared fish stocks. One of the key issues for the commission is to decide the size of the TAC for the Northeast Arctic cod stock. An overly important part of the legal and political environment in which a commission like this functions, is the new oceans regime. This regime was negotiated in the 1970s, and became codified with the UN Convention of the Law of the Sea (UNCLOS) in 1983. A major principle of UNCLOS is the right and obligation of the coastal states to manage the living marine resources within 200 mile exclusive economic zones (EEZ). The JNRFC ¹⁰ was established in 1975–76 in conjunction with the setting up of EEZs by Norway and the USSR. Since the Northeast Arctic cod resides on both sides of the boundary between the Norwegian and Russian EEZs in the Barents Sea, it is considered a shared Norwegian-Russian resource (50-50 ownership, as reflected in the TAC distribution), and it is managed jointly.

How can we characterize the powers of this fisheries Leviathan? On the one hand, it is not difficult to find reasonable assessment criteria by which the Joint Commission is an utter failure. One such criterion would be an effective monitoring and control system, the absence of which is demonstrated by a sizable amount of illegal fishing. On the other hand, the Barents Sea, on a global scale, represents a kind of success: the marine ecosystem here has not been emptied out, as has happened in a number of other similar ecosystems around the world. In this context, it must also be pointed out that the Joint Commission has proved much more potent than its predecessor, NEAFC. The two Commissions belong to opposite sides of the regime shift. NEAFC was a creature of the Mare Liberum, a regime by which the fundamental practice for marine resources was open access. Within this legal framework, NEAFC carried the extremely difficult task of managing an open international commons with no effective mechanism to police against free-riders. If you're looking for a case where the logic of ‘the tragedy of the commons’ is played out as Hardin imagined, NEAFC would be an excellent choice (Underdal, 1980).

Compared to NEAFC, the Joint Commission, born of the new oceans regime, based its authority on firmer legal and political grounds. Within the EEZs, the political power, and the capacity of the two states to enforce it, could be mobilized directly behind the Commission's decisions. When the Lofoten fishery was closed in April 1989, this was directly related to the recent regime change. At this point, the notion of the coastal states as resource managers had become much more than a theory of international law. The appropriate institutional and organizational mechanisms – including the JNRFC – had been established. By the end of the 1980s, the role of the state as fishery manager had become so well-established that the closing of the Lofoten fishery could be successfully undertaken, despite the deep crisis and massive criticism that this triggered.

The mundane technical apparatus that allowed for the efficacy of the fishery Leviathans like the Joint Committee is quite simply a measuring device, a tool for fish counting. Invoking the metaphor of a well-known scientific instrument, we can call it a fish stock ‘macroscope’. Like the microscope, this is an instrument for making objects, which you cannot see with the naked eye, visible. In contrast to the microscope, though, the reason fish stocks are not directly observable is not that they are too small, like microbes, but that they are distributed over large areas, and are submerged at that. Fish stocks can become observable and be measured only with the installation of a network of standardized data collection procedures and the invention of statistical models that make sense of the data. The invention and institutionalization of a new such fish counting tool during the 1960s and 1970s contributed crucially to the effectiveness of the Joint Committee. With the stock assessment macroscope in place, the fisheries Leviathan could become powerful because he now could see and measure the object to be managed: the fish stock.

Virtual Population Analysis and Total Allowable Catch

Unlike trees in a forest, fish are hard to count, at least directly. In order to measure a fish resource, the stock must be modelled. The Virtual Population Analysis (VPA) has, since the 1970s, been a preferred assessment model for the purposes of fisheries resource management. VPA is an age structured model which operates by assessing the loss of individuals from each age class (or cohort) as it projects through time. By this model, the stock size in a year is the sum of individuals across cohorts present in the stock that year. Here is a stripped-down account of how this is accomplished. ¹¹

A basic ‘catch equation’ relates the cohort's loss of individuals in a year to catches by the fishery and to nature's toll. The VPA models the cohort projection as an exponential decrease, where the total mortality is divided between mortality due to fishing, denoted ‘fishery mortality’, and the mortality due to other causes, collectively summed up as ‘natural mortality’. In practical terms, data on landings is used as a proxy for the catches, while the natural mortality can be assessed by a number of different methods. Unfortunately, however, the number of unknowns is too large for the catch equations for each cohort progression step to be solved directly. In practice, this problem is handled by way of ‘tuning’ the VPA, ie, by way of calibration procedures drawing on other sources of information, typically abundance indices (Catches per Unit of Effort) from either standardized scientific surveys, or by information from the fishery (eg, from log books). While tuning narrows down the interpretive flexibility of the cohort matrixes, the results of the assessment exercises remain sensitive to modelling choices (Darby and Flatman, 1994). Fish counting by way of VPA is not an exact science, and is sometimes referred to as ‘guesstimation.’

The story of the development of VPA to assess fish stocks is a long-winded one. We skip over decades of hard work and go directly to the landmark achievement of Beverton and Holt (1957), which still holds a status as a sort of ‘principia mathematica’ for modelling exploited fish populations. Beverton and Holt brought a century of work into fruition by modelling the yield from a stock as a function of growth rates, natural mortality, and fishing mortality. In 1965, the modern VPA was born as Gulland turned Beverton and Holt's yield function into an explicit age structured model (Ulltang, 2002).

The VPA turned into a tremendous success. Within about 10 years it had become the dominant assessment method in the North Atlantic fisheries. One reason for this success is the way the VPA as a population assessment tool linked into a practical intervention mechanism: the VPA offers an analytical ground for the fish quota. We have, in other words, returned to the instrument with which we started: the Total Allowable Catches or TAC. As the historian Rozwadowski (2002: 188) puts it, the VPA fits the TAC as ‘hand in glove.’

Once the VPA has been used to estimate the present sizes of the individual cohorts, the underlying ‘catch equations’ of the VPA can, on the basis of some further estimations and assumptions, be turned into a forward looking mode. This transformation is necessary, of course, since a TAC as an intervention mechanism represents the part of the stock that will be removed by next year's fishery. In the predictive mode, the catch equations allow for the calculation of a set of relations between future catches (ie, TAC levels) and their expected effects on the stock. This is called a ‘catch prediction’. It is in this sense that the ‘TAC is at the end of the VPA calculation’ (Rozwadowski, 2002: 190). Hence, we should not be too surprised that the TACs became the dominant intervention mechanism within fisheries management during the 1970s, in the same decade as VPA became the dominant assessment tool. The VPA and the TAC fit each other as two parts of the same instrument. We call it the ‘TAC Machine’ (Holm and Nielsen, 2004).

The scientific advice, on which most of these TACs are decided on, is produced by way of VPA based assessment methodology. The scientific advice is based on data collection and modelling procedures with VPA-based TAC decision making in mind. Furthermore, allocation of fishing opportunities between nations and between fleets is grounded in TAC-VPA metrology. Surveillance and control efforts are focused on the enforcement of the TAC. In summary then, the TAC holds an integrating position in the whole system of modern fisheries resource management, including data collection, stock assessment, management decision making, allocation mechanisms, regulation procedures, and enforcement. The TAC Machine is the engine around which the fisheries management is constructed, and without which the annual management cycle would come to a standstill.

Returning to Lofoten

We are now in a better position to understand what happened on April 18, 1989. On this date, the share of the TAC allocated to the coastal cod fishery was fished up. As a consequence, the fishery was closed. Despite all appeals to the historical rights of the fishermen, despite Lofoten's position as the little people's sanctuary and despite the grossly unfair distributional consequences of the closure, the fisheries Leviathan had grown too strong to overturn, and it stood its ground. For the first time, the concern for the cod stock counted more than the concern for the fishermen exploiting it. And it was the TAC Machine that made all the difference.

For us, this is only the beginning of the story that ends with the market in fish quotas. The events of the 1989 season turned out to be a mind-shattering experience, effectively summarized and made available in the collective memory in form of the slogan ‘Never Again the 18th of April!’ The main problem of the 1989 season that the fishermen collectively agreed should be avoided in the future at all costs concerned the re-distributional consequences of a competitive fishery within a small but enforced TAC. Under a competitive system, the larger and more modern vessels would win out simply because they could start earlier. Being vulnerable to harsh winter conditions, the smaller vessels were, in effect, kept out of the competition. In order to avoid the unfairness of a mid-season stoppage, Individual Vessel Quotas were introduced from 1990.

Under IVQ, the coastal fleet was divided in two parts, Group1 and Group2, where Group1 vessels got individual vessel quotas and Group2 vessels continued within a competitive regime. The main criteria for allocating the vessels among the two groups were historical catch records and ‘cod dependency’. Group1 was intended for the vessels carrying full-time professional fishermen, and it was consequently allocated the major part of quota for the coastal cod fishery. If a vessel had landed more than a minimum quantity (depending on the vessel length) in at least one of the years 1987, 1988 or 1989, it would qualify for a Group1 vessel quota, obtaining a predefined length specific quota. The vessels not qualifying for Group1 could register for Group2 to compete for a relatively small joint quota. ¹²

With the definition of a Group1, and by that a limited number of fishing vessels with individual quota allocations, the formation of a market in access rights suddenly seems much closer at hand. The social production of an enforced TAC represents a real and substantial restriction to the fishery. Access had become a scarce and valuable asset. With the parcelling out of the TAC in the form of individual vessel quotas, an interest in finding ways of trading such quotas soon manifested itself. Returning to our cooking metaphor, we could say that by 1990, the basic ingredients for our stew, the quota market, were already simmering in the pot.

A recipe: ITQs are proposed…

A formal system for the market-based allocation of fish quotas was proposed in 1991 (Anon, 1991) and we shall refer to it as a model for Individual Transferable Quotas, or ITQs. The ITQ model is an invention of resource economics that can be located within the tradition of neoclassical economic theory. ¹³ While the development of the underlying thinking of this fishery management model can be traced back to the work of Gordon (1954) and Scott (1955) (see Squires et al., 1995), the first mature ITQ model was launched by Christy (1973) and Moloney and Pearse (1979). As the name ‘Individual Tradable Quota’ indicates, the quota intervention mechanism was designed to regulate fishing on the basis of scientific fish stock assessments introduced above, constitutes a starting point for the model (Gissurason, 2000). If implemented and enforced, the TAC would place a limit on the biomass harvested from the stock. The fundamental management objective of the TAC is to achieve optimal biological exploitation of the resource. The simplest way to implement the TAC is to allow free access and competitive fishing until the TAC is finished and then close the fishery – as splendidly exemplified by the ‘April 18th’ situation we discussed above. While this system, known as ‘Olympic fishing’, may solve one major problem, namely biological overexploitation, it creates a couple of new ones. Importantly, the system generates fleet overcapacity. The race for fish translates into a fish technological ‘arms race’: investments in newer and more effective equipment and bigger vessels, generating more and more surplus fishing capacity. From the perspective of society (or the ‘tax payer’, as economists prefer to put it) this is a waste. The resource rent is squandered on excessive fleet capacity. Moreover, overcapacity, in combination with the low profitability that it is the source of, makes fisheries management extremely difficult. This is because it generates political pressure to set TACs above scientific recommendations. In addition it invites fraud, eg, ‘black landings’ or ‘high-grading’ of catches.

It is here that the ITQs come in. Instead of the Olympic model, the manager can split the TAC up into small packages and allocate them (as gifts or by auction) to fishermen as individual quota rights, for example in the form of individual vessel quotas (IVQs). An IVQ system allows the fisherman to plan their fishery and hence to minimize costs while maximizing quality. They can fish when the prices are good, avoid bad weather, and so on. In the long run, they can invest in vessels that maximize their profit from the given quota. Instead of the overcapacity produced by Olympic competition, individual quotas would produce a better fit between harvest capacity and resource base.

An additional efficiency boosting advantage is obtained if the fishermen are allowed to trade the quotas. The fisherman, now a (rational) quota owner, will consider whether he will be better off doing the fishing himself, or selling the quota to someone else. If the market works according to theory, the quotas will flow to the most efficient fishermen because, all else being equal, they will be able to pay the best quota price.

When the Ministry of Fisheries presented its ITQ proposal in 1991, practical experience with the model was as important as its theoretical beauty. ¹⁴ Therefore, the proposal (known as the Green Paper) provided an overview of management systems elsewhere in the world. In the case of New Zealand, the ITQ model was evaluated as a success (Anon, 1991). The evaluation in the case of Iceland, the second ITQ pioneer, was less clear-cut, but ended up in the positive (Anon, 1991: 39). ¹⁵ One of the critical factors, said the Green Paper, was the extent to which the fishermen agreed to and wanted it: ‘The ITQ systems with the greatest success [have been implemented with] extensive consultations with the industry’ (Anon, 1991: 39).

As the Green Paper hinted at, but was in general was shy of bringing up, the introductions of ITQs have been intensely controversial wherever this has been attempted. ¹⁶ In Iceland, New Zealand, Australia, Canada, and South Africa, the battles continue to this day (Arnason, 2000; Helgason and Pálsson, 1997; Hersoug, 2002). In the US, the Congress put an embargo on ITQs in 1996. And as we shall see shortly, the Norwegian ITQ proposal suffered a similar fate.

… and rejected…

Despite the attempts to anchor the ITQ model in important and legitimate objectives for the industry, it was received with suspicion and fear. The Green Paper and the ITQ model quickly made traditional enemies forget their differences and mobilize a counter-attack. After a swift but intense battle, the ITQ proposal was ritually killed and buried with proud fanfare.

The Green Paper was sent on hearing in June 1991 and the ITQ proposal also led to intense activity in the Labour party that was in office and would continue on after the election. In February 1992, the National Council of Labour went against the proposal (Moldenæs, 1993), sealing its fate. When the Ministry issued the White Paper in June 1992, the proposal had been withdrawn with reference to the barrage of negative reviews from the industry.

While this summary somehow does not convey the intensity of the industry's near unanimous rejection of ITQs ¹⁷ , it identifies three of its main arguments against the model: quota concentration, centralization and the possibility of a European takeover. In conclusion, the ITQ model as a formal and explicit management system was rejected by an almost unanimous industry. Seen as a political object, it carried too much negative symbolic baggage. It contrasted too radically with the traditional political epistemology of the sector, which was anchored in the open-access commons, the fisherman as community carrier, and anti-capitalist rhetoric (Holm, 1995; Nilsen, 2002). When the Ministry, perhaps under the influence of the liberalist spirit of the times, suggested the ITQ model as a solution to the management problems, the sector quickly took cover in orthodoxy. The Government went with the flow and shifted its sponsorship from ITQs to reasonably unrestricted access within a total quota. This was also sanctioned by the Parliament, where only the right-wing parties stuck with the original proposal (Anon, 1992a).

… but quotas are traded anyway

Following unusually strong and consistent advice from the industry, the Parliament rejected the ITQ model, but it also wanted a return to the open access regime of yesteryear. The Parliament's wishes are not always carried through in practice, though. In the case of the coastal fisheries, the established IVQ regime was going to be gradually transformed into an ITQ system. Ironically, the fishermen, whose organizations were emphatically battling the ITQ model in the political arena, were quietly engaging in the practice of buying and selling quotas.

Formally, monetary quota transactions did not happen. The transfer of quotas from one fisherman to another depended on a decision from the fisheries authorities. When the conditions for approving the sale of the vessel were otherwise fulfilled, the authorities would normally permit the quota right to be transferred with the vessel. In practice, this made monetary transaction possible, as the price paid for the quota formed part of the price paid for the vessel. Sometimes, this would become very obvious, as when a vessel with quota were sold from one party to another one day, and the vessel without the quota was sold back the next – for a fraction of the price. Hence, a market was established and thrived during the 1990s – in spite of the absence of a formal recognition of it.

The bundling of the quota with the vessel and the absence of any official recognition of the quota transactions raises the question about the sense in which we can talk about a ‘quota market’. There is little doubt that a quota carried a price, which could be cashed in if need be. But while money no doubt changed hands, a question remains about the identity of the items these sums would buy: did the sale establish the buyer as a quota owner? Does the informal quota market feature transactions in property rights to fish? In the Norwegian context, these questions were framed within a controversy over the privatization of fishery resources. On the one hand, critics claimed that the quota market meant that the fish were increasingly owned and controlled by a small elite, and that the status of fish as a common resource was threatened. On the other hand, defenders of the system argued that the absence of legal recognition of quota transactions meant that there were no private property rights for fishery resources, and therefore that the fishery resources were still held in common.

There is of course some truth in both of these positions. The stew we have called a quota market was now boiling at full steam, and a number of different cooks were in contention, stirring things up. If the proof of the stew, like the proverbial pudding, is in the eating, let's wait until it has cooled down a little. Hopefully, this will have happened when we arrive at the concluding section below. For now, we will concentrate on one of the major ingredients, the device called a vessel quota.

A vessel quota is a quite complex and dynamic entity. As a legal entitlement fixed to a specific vessel and a vessel owner, it gives this pair access to a specific fishery. At the outset, the quota puts a cap on the size of the catch the vessel can take. The actual size of the catch that a quota can realize, though, is dependent on a number of things. Firstly, it is a reflection of the size of the TAC, which is set annually on the basis of scientific assessments. Secondly, it is a reflection of the size of the vessel, as measured by length. Thirdly, it is a reflection of the ‘availability’ of the fish.

This third point needs some further explanation. When fish are plenty and they are biting willingly, finishing a given quota will be relatively easy for most vessels. Sometimes, though, the fish are hard to catch. When this happens, many vessels will not be able fish their allocated quota and the TAC may not be finished up. While this might be ok with the fish, it is unacceptable for other interested parties, among them the processing industry, which will not receive the expected amount of raw materials. In response to this problem, the vessel quota is combined with a total quota so that the sum of the vessel quotas is larger than that of the total quota. This is called ‘overregulation’, implying that the vessels, on average, will not be able to finish their allocated quota. Under conditions of low availability and large overregulation, there is a return to the competitive fishing of yesteryear, and the efficient vessels with the better crews will have a great advantage. Since the size of a vessel is one important component in getting to the fish, low availability usually rewards the larger vessels over the smaller ones.

The conditions that had led to the closing of April 18th 1989 involved, as you may recall, a low TAC combined with good availability. By the mid-1990s, this shifted around to a situation characterized by a generous TAC and low availability. In comparison with the meticulously calculated and ‘fair’ distribution of vessel quotas, this meant a substantial redistribution of catch opportunities from smaller to larger vessels. While this happened within the short term flexible framework of overregulation, it also had long term structural effects. This could happen because the size of the quota followed the size of the vessel. By extending the vessel, or replacing a smaller vessel with a larger one, a fisherman could gain an advantage in the race for fish. The rewards on size, together with a government sponsored program, encouraged building and using a new ‘robust coastal vessel’ prototype. This resulted in extensive investments in newer and larger vessels, for which quotas could be sought by way of the informal quota market.

As all of this suggests, the vessel quota during the 1990s was a highly volatile entity. The entitlements it would carry were dependent not only on the size of the stock, but also on the vessel size, a parameter that the vessel owner could influence. The quota's sensitivity to traits in their natural and social environment would perhaps be of little concern if this was not combined with their mobility by market transaction. At this stage, then, the quota was a ‘mutable mobile’, the movement of which produced massive overflows in Norwegian fisheries. This became painfully clear when the availability of cod again improved at the turn of the century. With an ironic twist, the IVQ system in combination with the informal market had produced overcapacity instead of curtailing it. The time was ripe for reform.

Instead of a concerted reform process, the rebuilding of the quota system happened as an aggregate of several semi-independent events. Since we are particularly interested in the quota as a commodity, we will concentrate on only one of these events, namely the attempt to redesign the quota market so that it would help reduce the fishing capacity instead of boosting it. First, we should note that loosely coupled to this tentative at reform were a series of less conspicuous reforms to reduce the volatility of the quotas. One of these was the introduction of the so-called Finnmark model, by which the quota transfers were banned between size groups, so that larger vessels would not compete directly with smaller ones. Another was the decoupling of the quota size from the vessel size. If a quota was transferred from a smaller to a larger vessel, the quota allocation would remain the same. A third was the introduction of a mixed fisheries quota, by which the quota would be defined not only with regard to cod, but also including the two other main species targeted by the coastal fleet (haddock and saithe). Together, these reforms helped stabilize the quota, making it more immutable. On top of this came the introduction of a formal system for quota exchange.

Let us see how the appearance of the vessel quota reconstituted the fishermen as political as well as economic agents. The major political factor in Norwegian fisheries was the Fishermen's Association. Established in the 1920s, this organization became a value-rational political institution, focused not only on the narrow economic interest of the fishermen. The fishermen's organization turned itself into a defender and caretaker of the values of the good life on the coast, as embodied by the small-type coastal fishermen (Holm, 1995). Reflecting the common resource it lived by, the Fishermen's Association was, in principle, open. In practice, of course, it was more open to some than to others. This worked well as long as most people, at least when correctly gendered, could go the grade, from apprentice to fisherman, mate, and then skipper and vessel owner.

When the vessel quota system entered the picture in 1990, it had severe consequences for the Association. According to the qualification procedure for the IVQ system, which relied on catch records the previous three years, the skippers and owners of the most active vessels received most of the quotas. These people were precisely those who were the most likely to be in responsible positions within the Fishermen's Association. In this way, the Association had, as a matter of fact, suddenly become an association of quota owners. Gradually, it also changed its ideological position and its practical politics so as to fit such an identity (Holm, 2003; Holm et al., 1998). The first step in that direction was a shift in position with regard to the IVQ system. When the resources had returned, around 1995, and the time had come to change back to open access, the Association had already changed its stance. Thus when the Ministry proposed a system that would formalize quota transferability, described in the next section, the Association was among its most active supporters.

Formalizing a quota market

In March 2003, the Fisheries Minister proposed measures that would formalize a system of transferable quotas in the coastal cod fishery (Anon, 2003). While this was not a fully developed ITQ system, the new measures, which entered into force in January 2004, created a legal framework for a substantial part of the informal quota market. Instead of, or perhaps we should say in addition to, a half-hidden and under-managed practice, the quota market was now organized and made to work for explicit and politically sanctioned purposes.

The measures, which became known under the name of the Structural Quota system (SQ), constituted a programme for allowing both permanent and temporary quota transfers among vessels. A number of different conditions were specified for such quota transfers. For coastal vessels between 15 and 27.99 m, a quota can be transferred from one vessel to one or more other vessels on condition that:

Vessels below 15m are not (yet) allowed to participate in the system. Instead, there is a buy-back programme for this group. The quotas bought out and destroyed within this programme are redistributed among all of the vessels within the group.

All these restrictions contribute to the boundary conditions by which the market in fish quotas is defined. On the one side, the formalization of the market by way of such restrictions is part of the process that turns the quota into property and transforms fishermen into fish owners. On the other side, these specifications come about, at least partly, as an attempt to control the barrage of overflows produced in the informal and partly hidden market. The restrictions on how many quotas one vessel can have (max 3), is designed to prevent quota hoarding and the upsurge of ‘quota lords.’ The restriction on transfers between size groups is designed to prevent the big guys from eating the smaller guys. The restriction on transfers across county borders is designed to prevent geographical concentrations, and in particular the movement of quotas from the poorer and more fish dependent north to the richer south. It is in the struggle with these issues, all of which are intensely political and can be traced far back in the Norwegian fisheries discourse, that the quota becomes qualified and takes shape as a commodity.

The time has come for us to end our story. This does not mean that we have reached some kind of a natural cut-off point in the chain of events. The market for quotas continues to evolve and new chapters could have been added endlessly. We could have continued, for instance, by following up on the newest proposals from the Department of Fisheries and the newest regulations issued by the Directorate of Fisheries, representing the ongoing attempts to dam up the variety of overflows that are being incessantly produced within the ITQ frame. We could have explored the latest scientific evaluations of the economical efficiency of the IVQ/SQ system, its impact on fleet capacity, and its demographic effects on coastal societies. We would also have liked to investigate the interaction between the formal and informal market; whether the distinction between them is appropriate, how they complement – or compete with – each other and so forth. In particular, we would have taken pleasure in plunging into questions about when, how and to what extent quotas become property – for example the extent to which ownership of quotas means that the fish itself are privatized. Last but not least, this theme is interesting because it seems to have an almost unlimited capacity to stir up public controversy. Just as the market is not completed but evolving, so is our understanding of how it all works. But our allotted space is up and we need to wrap things up.

The art of quota cookery

Our narrative has been one of transformation and reconfiguration. At one point in time, the Norwegian coastal cod fishery did not contain a quota market. Then something happened. At the end of a series of events the sector had changed. The Norwegian coastal fishery now included a quota market, and things never would be the same again.

We have tried to explain how the quota market came about. Given the complexities of the story we are not sure whether we have succeeded. A number of different materials went into the stew and they combined in unexpected and volatile ways. Perhaps it would be appropriate to wrap it all up in the literary genre of a recipe?

While this rendering works as a recap of the story and may hence substitute for a conventional summary, it is difficult to take it seriously as a recipe. This is because the position of agency it assumes, an ITQ cook, is such an unlikely character. Or more precisely, it is a recipe designed primarily for reading and contemplation, not for replication in practice. Its proper place is within the glossy covers of a coffee-table book, not in the heat of the kitchen. The story shows that, even though an ‘ITQ cook’ may be a plausible character in the New Zealand case and, to some extent, for Iceland too, this is not so with regard to Norway and its coastal cod. If there is an agency that may have pretensions towards a cook-like position in our story, it is the character we have called the Fisheries Leviathan, the Joint Norwegian-Russian Fisheries Commission (JNRFC). On the basis of the scientific assessments provided by fisheries scientists and the politico-legal authority provided by Russia and Norway as coastal states under UNCLOS, the JNRFC annually serves up fishing opportunities certified as TACs. Pressing the last juice out of the culinary metaphor, we could say that the TAC is a pie that can easily be sliced up and shared out among hungry contenders. In this case, it makes sense to talk about a recipe (the rules for scaling and certifying the TAC) because it comes paired with a cook. In the case of ‘ITQs à la Lofoten’, neither side of such a pair was present. The closest we come to a recipe is the Green Paper from 1992. The closest we come to an ITQ cook was the Fisheries Ministry that had commissioned it. If the ITQ proposal had been accepted, we might have worthy candidates for both roles. It wasn't and we haven't.

Instead of a master plan, by which a pre-existing agency created order, the story of ITQs in Norway lends itself to be told in terms of a co-construction of agencies and of (market) devices. Note the plural. Instead of one Leviathan and a single master plan, several agencies and different devices were set in circulation. While we do not intend the following to comprise an exhaustive list of the co-constructions of this sort implied in our story, it will illustrate the diversity of mechanisms at work. It may also demonstrate the difficulty in keeping up a strict division between agency and device; between cook and recipe.

The first device on such a list must be the TAC Machine, constituting and being constituted by the coastal states as the empowered Leviathans of the new Oceans regime. The TAC Machine serves as a market device in more than one respect. It is by the operation of the TAC Machine that access to the fisheries is produced as a scarce resource. The TAC Machine also provides the metrology by which the quotas are singularized as commodities.

The second device is the entity produced and circulating within the TAC machine, the TAC itself, which, when sliced up and shared out as individual quotas (IQ) proved to be an extremely potent and volatile device. It came with the capacity to transform a range of agencies, as well as to introduce new ones. One example here is the changing role of the fish, which we have referred to under the constant term ‘availability’. As explained, the availability of fish, being dependent on a variety of environmental conditions (including weather conditions), interacted with the IVQ system with unpredictable but weighty consequences.

On a practical level, the IQs had immediate repercussions for the fishermen, including the planning of fishing operations, the investments in equipment and vessel, crew size and composition, etc. In addition, the market value of the quota itself gave the fishermen access to a new type of agency, namely as actors in a quota market. As we have seen, the introduction of transferable quotas also transformed the political agency of fishermen. Instead of coastal custodians – visitors in an open commons – they became resource owners, and as such they became motivated to protect their private gains. We witnessed this by the change in the makeup of the Fishermen's Association, transforming it from an institution dedicated to the values of coastal communities, into an instrument, a vessel for the vested interests of quota owners.

Together, the TAC Machine and the IQ transformed fishing from a way of life to a way of making a living. It goes almost without saying here that this process made the sector as such more manageable. By offering new and effective management options, the TAC and the IQ helped strengthen the agencies that were positioned as managers. To some extent, this was of course intentional. As the story demonstrates, however, the practical work of making the quotas fit for such a task proved to be quite difficult. For instance, the economists’ promise that individual quotas, particularly if these were set up as transferable commodities, would reduce overcapacity, proved overly optimistic. The way the quota system was set up probably contributed to building up capacity instead of reducing it. Turning this around required a lot of tinkering with the quota design, as well as linking it systematically to a buy-back program. In order to control the overflows, a new frame, the SQ system, had to be superimposed on the IQs. At the end of this story, we may think we begin to see the contours of a Leviathan, a manager in a position to monitor and control the sector by way of quota markets. But such a position, it would seem, is authorized by the market as much as it is the market's author. In our story, it is actually more appropriate to say that it was the stew that made the cook, rather than the other way around.

The analysis of the lengthy and complex construction of the Norwegian fisheries quota market contributes to a better understanding of the role and dynamics of market devices. It also allows tackling the role played by economists in this case, even if this aspect was not addressed at length in this chapter. To what extent and in what sense can the emergence of the ITQ market be ascribed to the activities of this particular profession? Because the ITQs represent the paradigmatic contribution of resource economists to fisheries management, the mere existence of an ITQ market suggests that this profession must have played a strong performative role. Such an inference is not without merit. Indeed, Wilen's account of the introduction of ITQs in New Zealand and in Iceland seemed quite persuasive in this respect (Wilen, 2000). What then, about the case we have examined here?

While the story about ITQs in Norway is clearly not one in which economists perform their model in a straightforward way, this does not mean that these agencies and devices did not play a role. The agency of economists is in little doubt with respect to the Green Paper and the first ITQ plan of 1992 and the strong rejection of the plan does not mean that economists did not have any role to play. Quite to the contrary, the allergic reaction to the ITQ model, at least in combination with the acceptance of the practice of buying and selling quotas suggests a more complex answer. Within the framework of Norwegian fisheries policy, where anti-capitalist rhetoric had been strong for well over a century, the market-oriented ITQ model did not go down well, even though it promised to work wonders. In this situation, the economists played the rather unpleasant role as anti-hero and as object of despise. In order for the ITQ model to fit in – under a different name – it had to be ‘ritually rejected’. Traces of such anti-heroism remain in the naming practice with respect to the quota market. Since the more accurate and conventional label ‘ITQ’ had so much negative political and cultural baggage, more clumsy ones, ‘structural quotas’ and ‘structuration’, have gained.

As time went by, however, and the practices of the quota market gained legitimacy, the economists were allowed to play a more substantial role. When the structural quota program was devised, economists emerged as self-evident experts and advisors since they are in command of the terminology and calculation tools needed to understand and control the market. This was forcefully demonstrated in January 2006 when a government task force was set to evaluate and redesign the SQ system (Anon, 2006). The only expert group within the task force was that of the economists. While the task force can hardly count as a cook (it is more like a committee of prospective cookbook authors), it seems safe to conclude that the quota market authorizes the economist as an important and legitimate expert as it settles in.

Economists were indeed among the cooks that prepared the stew we have called a quota market. But it took much longer than they expected, and it didn't turn out quite the way they wanted it to. Accounts (be they critical or self rewarding) that put too much emphasis on the direct role of resource economists in this transformation carry the risk of oversimplifying the story and even leading to inaccurate interpretations. In the Norwegian case at least, the contribution of economists, at some point criticized by other actors at stake, was inscribed in a wider movement they hardly mastered. They certainly were not alone in the kitchen.