 |
Inequality And
The Distribution Of ITQs |
| |
We need to keep in mind that some,
if not all, of the 'giant' companies are owned by a large number
of share-holders. One could argue, therefore, that the concentration
of ITQs described above really masks a more egalitarian distribution
of access and ownership. However, this is not necessarily the case.
Unfortunately, very little research appears to have been undertaken
in this field. What data there is, indicates that the distribution
of share-holdings in the public companies involved (almenningshlutafélög)
is very positively skewed, with a few large shareholders controlling
the majority of the shares and a large number of small shareholders
with the rest.18 Moreover, it seems that some of the biggest 'giant'
ITQ holders also own shares in other fishing companies. It is also
probable that other individuals or companies simultaneously own
shares in several different ITQ-holding companies (Icelandic banks
and oil companies, in particular, seem to own shares in many different
fishing companies). As a result, an analysis of the distribution
of fishing rights at the level of shareholders might even reveal
a greater degree of concentration and distributional inequality
than is indicated by our present study, even though the total number
of shareholders of fishing companies surpasses the total number
of ITQ holding operators. Finally, it is important to note that
regardless of whether an analysis of share-holders will reveal a
more egalitarian distribution of fishing rights, it is nonetheless
true that through the ITQ system a relatively small group of managers
have acquired immense powers in their hands. They are the ones who
control access to the resource, how the resource is used, what happens
to the products, and how the benefits are distributed. These managers
effectively control the fate of whole communities in Iceland that
increasingly depend on one or two large ITQ holding companies for
employment and economic existence in general. This dependency has
grown more acute concurrent with the ongoing concentration of fishing
rights. |
| |
Almost all of the significant changes
that have taken place in the distribution of ITQs, particularly
after 1990, were the result of exchange -- that is, the buying and
selling of ITQs. According to orthodox economic theory, exchange
is a mutually beneficial act undertaken by two (or more) autonomous
agents. In this conception, the small operators who sell their ITQs
and leave the system do this willingly because they perceive such
a move to be profitable to them. However, invariably, the matter
is not so simple. Markets do not exist in a social vacuum, and as
a result there are a great many external factors that influence
and direct the motives and nature of exchange in any situation.
With regard to the radical decrease in the numbers of small operators
in the Icelandic ITQ system, we have been told of cases where owners
of small boats sold their ITQs for a windfall profit and left the
system (such practice is generally castigated by fishermen and cited
by the opponents of the ITQ system as indicative of its inherent
immorality). It is much more common, however, to hear of cases where
smaller operators considered themselves to be forced into selling
their ITQs. The reasons given by these former ITQ holders, many
of which cite the devaluation of their ITQ shares as the source
of their predicament, are significant to any explanation of the
distributional trends we have observed in the foregoing sections. |
| |
In the Icelandic ITQ system the actual
amount of fish a boat owner is allowed to catch each year (the catch-quota),
depends both on the size of the ITQ share and on the size of the
total allowable catch set by the Ministry of Fisheries for that
particular year. Consequently, if the total allowable catch is reduced,
ITQ shares effectively become devalued -- that is, all operators
in the industry suffer cuts to the amount of fish they are permitted
to catch, even though their actual ITQ share remains constant. This
aspect of the ITQ system is highly relevant for the distributional
developments. Following bleak estimates of the fish stocks in Icelandic
waters by marine biologists, the Ministry of Fisheries has made
recurrent cuts to the total allowable catch since 1988. As a result,
many small companies found themselves increasingly left with insufficient
catch-quotas to keep their boats active throughout the fishing year.
To give some indication of the extent of these devaluations, a boat
owner who controlled an ITQ share in cod of 0.1% (the upper limit
of a 'dwarf') was entitled to approximately 254 tons of cod in 1987,
200 tons in 1991 but only 106 tons in 1994. |
| |
Obviously, larger companies were also
affected by these cuts, but such operators seem to have had more
success in adapting to the situation. Indeed, as we have seen, while
many small companies were forced to sell their ITQ shares and leave
the system as ITQ holders, the larger companies reacted by buying
up this new supply of permanent fishing rights. From their point
of view this is money well spent, given that the stocks eventually
recover, resulting in higher total allowable catches. In that event
ITQ shares would engender much higher catch-quotas, and would consequently
become significantly more valuable. A major factor in the apparent
success of the larger companies in accumulating fishing rights is
their ready access to capital through the Icelandic banking system,
something that is less available to the smaller operators. The larger
operators are generally vertically integrated businesses that own
two or more vessels. Their approach to 'business' and ITQs is very
different to that of the smaller operators. To the owners of the
larger companies, the system provides new opportunities to maximise
profits and, consequently, they tend to support ITQ management.
In contrast, the smaller operators tend to perceive the ITQ system
as an irritation and obstacle to their traditional way of fishing.
These producers attempt to adjust the system to their way of doing
things, fishing their ITQs whilst waiting for the system to be abolished
and something more akin to the 'old way' to be reinstated. As it
has turned out, however, with the ITQ system legally entrenched
for an indefinite term, this seems unlikely to occur. Moreover,
because of the recent devaluation of ITQ shares, it has been increasingly
difficult for the small-scale operators to continue fishing as they
used to -- their ITQ shares simply do not yield enough tons any
more to sustain the fishing operation throughout the year. This
situation is concurrent with a growing trend whereby the larger
companies have increasingly been sending their trawlers to fish
in international waters. In these cases, the larger companies do
not 'need' all of their ITQ shares, as they can keep their vessels
in action without them. This state of affairs has given rise to
radically new relations of production in the Icelandic fisheries. |
|
Previous
Chapter 