Optimal Design and Management of a Commercial Fishing Cooperative for the San Miguel Island Red Abalone Fishery

A 2009-2010 Group Project Proposal

By

Josh Uecker Ariel Jacobs

Heather Hodges Dan Ovando Kristen Bor

Faculty Advisor:

Christopher Costello

Donald Bren School of Environmental Science and Management, University of California Santa Barbara

May 2009

2

Table of Contents

Abstract…………………………………………………………………………………………...3 Executive Summary………………………...……………………….…………………………...4 Project Objectives……………………………………………………………...…….…………..6 Significance…………………………………….…………………………………………....…...6 Background Information……………………………………………………………….………..6 Approach…………………………………………………………………………………….…..13 Deliverables………………………………………………………………………………….…..14 Contact Information………………………………………………..…………..………….……15 Stakeholders……………………………………………………………………………………..16 Acknowledgements……………………………………………………………………………...16 Appendix I: References…………………………………………………………………...…….17 Appendix II: Project Timeline………………………………………………………………….20 Appendix III: Budget…………………………………………………………………………...21 Appendix IV: Management Plan…………………………..………………………………......22

3

Abstract The open-access nature of commercial fisheries worldwide has contributed to the poor management and subsequent decline or collapse of many once thriving stocks. However, catch-share management systems, in which fishery participants receive designated rights to the resource, have been demonstrated to remedy the mismanagement symptomatic of open-access fisheries. Sessile species such as abalone have proven to be especially prone to shortcomings of open access resources; as a result of chronic overharvesting a commercial moratorium on the take of California red abalone (Haliotis rufescens) was enacted in 1997. The red abalone population at San Miguel Island (SMI) is believed to be healthy and stable, leading the California Fish and Game Commission to consider reopening the California red abalone fishery on a demonstration basis at this location. In response to this opportunity, our client the California Abalone Association (CAA) has proposed a design for a commercial abalone cooperative, which would utilize catch-share management principles by dividing the catch and profits, as well as responsibility for stewardship of the resource, among the cooperative members, in order to incentivize the harvest of the SMI abalone resource in a sustainable fashion. The CAA requires assistance in assessing the economic and environmental viability of this proposed cooperative. Customization of design is the key to the success a catch-share management strategy; as such this project will evaluate the impacts of cooperative structure and environmental variables on the economic performance of the fishery over time. Through this process, we will deliver a set of recommendations for the design of the cooperative, tailored to the specific needs of the CAA intended to maximize the economic and ecological viability of this commercial fishery. By doing so, this project will support the development of a local sustainable fishing cooperative while furthering the study of catch-share management.

4

Executive Summary

The history of global marine fisheries has been one of ever-increasing effort, resulting in shrinking stocks and growing economic costs (Hilborn et al. 2005, Pauly et al. 2005, Pauly et al. 2002). This can be attributed largely to the open access nature of many commercial fisheries, which incentivizes individuals to capture as many fish as quickly as possible before the harvest is brought in by a competitor, in a process often referred to as the race to fish (Costello et al. 2008). The most widely used fisheries management tool has been the setting of a open access total allowable catch (TAC) for a given species, which is often based on maximum sustainable yield (MSY) (Lugwig et al. 1993). Although theoretically sound, this management technique has failed to prevent the decline of stocks due to data-poor stock assessments, inadequate enforcement, and lack of incentives for sustainable management (Pauly et al. 2005). This pattern was demonstrated by Myers and Worm (2003), who showed that commercial fishing practices have resulted in an 80% decline of fish stocks within 15 years of their industrialized exploitation. This has led to depletion of many stocks and targeting of new, lower trophic level species as well as habitat destruction and economic collapse (Essington et al. 2006, Pauly et al. 1998, U.S. Commission on Ocean Policy 2004).

However, recent studies such as those by Hilborn et al. (2005) and Costello et al. (2008) have shown that by examining individual fisheries rather than the global industry as a whole, many instances of viable and sustainable fishing management can be found. Fisheries such as those for the Pacific halibut and the Australian abalone for example have demonstrated commercial success and ecological sustainability (Hilborn et al. 2005). A common trait between these successful fisheries has been the use of dedicated fishing rights, often referred to as catch-share management, to alleviate the race to fish. Historically, this principle has been used for centuries by small island communities, but its success is increasingly being demonstrated in commercial fisheries (Costello et al. 2008, Johannes 1981). As illustrated by Costello et al. (2008), fisheries which utilize catch share principles, such as individual transferable quotas (ITQs), are far less likely to experience stock collapse, compared to equivalent open access fisheries. A variety of these catch-share management plans have been developed, including ITQs, territorial use rights for fishing (TURFs), and community based fishing cooperatives. Our project will focus the establishment of a fishing cooperative that brings together fishermen and managers in order to maintain a fishery in a ecologically and economically sustainable fashion (Sen and Nielson 1996).

A variety of cooperative management fisheries have been established in the US and abroad (Townsend & Shotton 2008). Cooperative design can improve fisheries efficiency, as well as regulatory compliance, by providing incentives for sustainable management by conferring cooperative members with a designated share of the catch and the profits (Deacon & Costello 2008, Criddle & Macinko 2000). The Pacific whiting conservation cooperative was the first of its kind established in the Northwest and has been a model for other cooperative fishery designs and implementations (Kitts & Edwards 2003). Another US cooperative was established in the Chignik region of Alaska for the sockeye salmon fishery. Although this cooperative was shut down due to legal issues, during its time there was evidence that it was proving to be successful (Deacon & Costello 2008). It is the hope of the California Abalone Association (CAA) that a cooperative structure is appropriate for the potential opening of the red abalone fishery on San Miguel Island, California.

Abalone fisheries have proven to be especially susceptible to the overfishing and mismanagement characteristic of open-access fisheries (Prince 2008). In response to declining stocks, in California a moratorium was placed on the commercial harvest of red abalone (Haliotis

5

rufescens) in 1997. However, since the closure of the fishery some abalone stocks are now showing signs of recovery (California Department of Fish and Game 2005). In response to this, the California Fish and Game Commission is considering opening a red abalone fishery at San Miguel Island (SMI) in Southern California. In light of this possibility, our client, the California Abalone Association (CAA), an organization composed of former commercial abalone fishermen, has developed a design for a co-managed commercial fishing cooperative. Given recent studies that have shown the economic and ecological benefits of cooperative fishing structure over traditional fisheries design, the CAA believes a similar approach may be appropriate for a red abalone fishery at SMI. They believe a cooperative will help to address some of the factors responsible for the collapse of the fishery, which included problems with environmental variability, overharvesting, and data poor stock assessments. Under a cooperative operating structure, science and enforcement will be bettered by combining the efforts of the fishermen and regulators. This cooperative could serve to provide an economic boost to local abalone fishermen and provide a working example of a sustainable fishing cooperative off the coast of California. Although the CAA has developed an initial operating plan for a cooperative, they seek additional recommendations for the development of an operating structure that would maximize economic returns while maintaining a sustainable red abalone stock.

The purpose of our study is to evaluate the economic viability of the CAA’s proposed cooperative design and offer recommendations for revising and enhancing the cooperative design based on the results of our research. Our group will provide recommendations for cooperative design by drawing on case studies of the success and failures of comparable cooperatives that have been enacted worldwide. In addition, we will assess the parameters that influence the economic and ecological viability of the fishery including: data collection methods and availability, ecosystem health, abalone population, and allocated TAC. Through market research, we will also develop an assessment of global and local market price by using historic, present, and projected prices for abalone. These parameters are needed in order to produce a stream of costs and revenues and to determine the baseline conditions necessary for a successful self-funded abalone cooperative. This baseline will offer an indication of whether or not a self-funded cooperative can operate under the conditions available to the proposed SMI commercial abalone fishery.

The group will utilize the aforementioned parameters to develop a dynamic bio-economic cost benefit analysis (CBA) model. This model will be used to evaluate the interactions of these parameters on the economic and environmental state of the cooperative over time, and how changes in the individual parameters will impact the success and sustainability of the cooperative. The results of this model will be used to develop a recommended set of management guidelines for the cooperative. Furthermore, a user-friendly toolkit will be created that can be utilized by the CAA to make decisions under the various scenarios that might be encountered during various stages of the cooperative’s progression. This process will help fill a current knowledge gap for the CAA, and provide valuable insight in the design and use of catch-share systems. By assessing the economic viability of this cooperative, our group can help demonstrate the potential of these collaborative forms of management to benefit both fishermen and fish alike. In this way this project stands to both support the development of a sustainable fishery while furthering the science of catch-share fisheries management.

6

Project Objectives Our client, the California Abalone Association (CAA), a group of former commercial abalone fishermen, has been a key player in the development of a management plan for the proposed San Miguel Island (SMI) red abalone fishing cooperative. The CAA has requested assistance in assessing the economic and environmental viability of the proposed cooperative, as well as recommendations for revising and enhancing the cooperative design in order to maximize profits, while ensuring the long-term sustainability of the abalone population at SMI. To accomplish these goals, our objectives will be to:

I. Evaluate the CAA’s proposed cooperative design, and provide any necessary management recommendations based on our analysis and case studies of the implementation, use, and efficacy of similar existing fishing cooperatives

II. Determine and assess additional parameters influential to the success of the fishery such as data collection methods and availability, ecosystem health, abalone population, and catch limits

III. Examine the streams of cost and revenue to the cooperative and evaluate the catch level necessary for the cooperative to be profitable

IV. Develop a bio-economic cost benefit analysis model in order to evaluate the interactions of these parameters on the economic state of the cooperative over time

V. Develop a comprehensive report on the economic viability of a self-funded SMI commercial abalone fishing cooperative

Project Significance If the California Department of Fish Game opens an abalone fishery at SMI, a properly designed and implemented commercial cooperative fishery would:

Provide local abalone fishermen with a source of income Support local restaurant owners and the local food movement Provide an example to fishery managers worldwide in the design and implementation of a

catch-share based management strategy for a sessile invertebrate Demonstrate the potential for co-managed fishing cooperatives to be both sustainable and

profitable, and in doing so help shape future fisheries management policies. Background Information Management and State o f Global Marine Fisher ies

The history of global marine fisheries has been one of ever-increasing effort, resulting in shrinking stocks and growing economic costs (Hilborn et al. 2005, Pauly et al. 2005, Pauly et al. 2002). The public nature of ocean fisheries creates misaligned economic incentives. While it is in the best interest of global fisheries to operate in a sustainable fashion, for individual people or nations, the natural course of action is to capture as much fish as possible before a rival fleet harvests the catch (Costello et al. 2008). This intense competition, symptomatic of open-access fisheries, results in the “race to fish”, in which participants in the fishery continually increase fishing effort in order to maximize their catch, resulting in ecological damage and inefficient methods and levels of harvest

7

(Costello et al. 2008, Hilborn et al. 2005). Beginning largely with the signing of the United Nations’ Convention on Law of the Sea

(UNCLOS) in 1982, a number of management methods have been put in to practice across the globe in an effort to curb the overexploitation of oceanic fisheries. Standard fisheries management approaches focus on maximizing the catch of a single species, often through the use of a total allowable catch (TAC), often guided by the maximum sustained yield (MSY) (Pikitch et al. 2004, (Ludwig et al. 1993). This MSY principle is based on the practice of fishing the population down to the level that results in the greatest reproductive yield in the following year (Fujita et al. 1998). Although sound in theory, in reality MSY-based management is often not sustainable or effective, as fisheries population data is often poor and governments and fisheries scientists have been unable or unwilling to set or enforce levels of catch in accordance with MSY principles (Larkin 1977). While these MSY based efforts have functioned to slow fishing efforts some, the majority of global fisheries have continued to decline as stocks are chronically overharvested (Pauly et al. 2005). The net result of commercial fishing in this MSY method has been a decline in global fisheries stock, damage to marine ecosystems, and increased fishing efforts yielding decreasing catch (Jackson et al. 2001, Pauly et al. 2002, Zeller & Pauly 2005). In their research, Myers and Worm (2003), found that modern commercial fishing practices resulted in an 80% decline of fish stocks within 15 years of industrialized exploitation. Subsequently, the total population of large predatory species has dropped by nearly 90% (Myers & Worm 2003). Over time, global fishing fleets have begun targeting increasingly lower trophic levels of organisms (Pauly et al. 1998). Whether this is indicative of fisheries moving down food webs due to overharvesting of top predators (fishing down food webs) or simply increased targeting of lower trophic level organisms (fishing through food webs) is a matter of debate (Essington et al. 2006, Pauly et al. 1998). Either way, what is clear is that fishing fleets have continued to target new groups of organisms, further increasing the human impact on the marine environment. Numerous studies and reviews have documented the subsequent decline in global fish stocks and the impacts of this overfishing on the marine environment (Gewin 2004, Jackson et al. 2001, Pauly et al. 2002). Habitat has been destroyed, ecosystems restructured, non-target species lost, and stocks depleted (U.S. Commission on Ocean Policy 2004). This has left historic productive fishing grounds either over-exploited or abandoned (Myers & Worm 2003). Examples of specific fisheries collapses stemming from this mismanagement include the Pacific salmon, the California sardine, and Peruvian anchoveta (Ludwig et al. 1993). There have been many alternative methods developed in an effort to better manage fish stocks. Marine protected areas (MPAs), ecosystem based management, adaptive management and the precautionary approach are all tools that have been utilized in fisheries management. However, in general none of these have resolved the problem of the race to fish (Lubchenco et al. 2003, Hilborn et al. 2004).

Chronic overfishing has resulted in fisheries experiencing a “pulsing” effect where catch diminishes and jobs are lost until new technology or a new stock revitalizes the industry, encouraging more fishermen to enter into the market. As stated by Ludwig et al. (1993), this pattern is kept alive through subsidies, therefore delaying the realization that open access management is often severely flawed. The extent of these subsidies has been estimated as $14-20 billion per year globally, often paid not by participants in the industry but rather in taxpayer dollars (Hilborn et al. 2005, World Bank 1998). The extent of these subsidies reflects the economic inefficiency of current global fisheries. These subsidies have kept fisheries industries growing, despite the fact that for many stocks, fishing effort is already at levels far higher than is economically efficient (Hilborn et al. 2005). This process has served to further amplify the pressures exerted on global marine fish stocks.

8

Catch-Share Fisher ies Management

While examining global fisheries as a whole paints a bleak picture of the health of ocean fish stocks, recent studies such as those by Hilborn et al. (2005) and Costello et al. (2008) have shown that by examining individual fisheries rather than the global industry as a whole, many instances of successful and sustainable fishing management can be found. Fisheries such as those for the Pacific halibut and the Australian abalone for example have enjoyed great success and stability (Hilborn et al. 2005). A common trait between these successful fisheries has been the use of designated fishing rights to alleviate the race for fish. This approach has been successfully used for centuries, particularly in island communities where families are granted exclusive fishing rights to fishing grounds in a practice called marine tenure (Grafton et al. 2006). These catch-share systems have been shown to slow or even reverse the stock collapses endemic to open access fisheries (Costello et al. 2008).

Effective fisheries management should consider the lessons learned from these cases of sustainable management, in order to better understand what factors create a successful fishery. Under catch-share management, fishermen are guaranteed some percentage of the season’s catch or effort, and are considered shareholders in the fishery. By providing designated rights to the resource, if properly customized to meet the needs of the particular fishery in question catch-share systems eliminate the race to fish and its associated detrimental impacts (Beddington et al. 2007). Under catch-share principles, fishermen have incentive to support conservation measures, as the value of their share increases if the fishery is in good health (Fujita & Bonzon 2005). This leads to greater economic efficiency, improved and safer fishing practices, and increased stewardship of the resource (Criddle & Macinko 2000).

There are many ways a catch-share type system can be instituted. One such method of catch-share management utilizes spatial allocation to divide fishing grounds into units called territorial use rights for fishing (TURFs). Under TURF management, each fisherman or group of fishermen is granted exclusive access to a specified fishing area. Within an individual’s TURF, there are often harvest and gear restrictions to compliment spatial management and to prevent overharvesting. This is particularly important when fishing for mobile species that may travel in between adjacent TURFs (Holland 2004). The use of individual transferable quotas (ITQs) is another type of catch-share management. Under ITQ management, fishermen are allocated a percentage of the season’s catch and are guaranteed a harvest corresponding to this percentage (Fujita 1998). The harvest associated with each share fluctuates annually with changes in the TAC that are deemed necessary by fisheries scientists (Criddle & Macinko 2000). Initial allocation methods vary between fisheries. Often fishermen with the largest historic landings will initially be allocated a larger percentage of the TAC. However, a key characteristic of ITQs are that shares are transferable between fishermen, so those who wish to exit the fishery can sell their shares to either existing permit holders or those looking to enter the fishery (Buck 1995). Costello et al. (2008) found that in 2003, the percentage of ITQ fisheries that were collapsed was less than half of the total percentage of traditional fisheries that were collapsed. A third type of innovate management utilizing catch-shares is the formation of a fishing cooperative. Cooperative management represents a co-management agreement between fishermen and the government to regarding the operation of the fishery (Sen & Nielsen 1996). There are many ways that a cooperative can be designed, but generally, the government or management authority sets a form of catch limit for the season, and it becomes the responsibility of the cooperative to decide how to allocate the shares amongst its members. Cooperatives, using fishing profits, often

9

self-fund the research, enforcement, and monitoring costs, reducing the burden placed on the government (Criddle & Macinko 2000). It is this form of cooperative management that will be the focus of this study.

Case Studies o f Cooperat ive Fisher ies Management Case studies of the use of cooperatives in fishery management can be found throughout the world in countries such as New Zealand, Japan, Mexico, Chile, and the United States (Townsend & Shotton 2008). Within the U.S., the Pacific whiting, Alaska pollock, and Chignik salmon cooperatives are the most successful and well- known examples of fishery co-management. The Pacific whiting conservation cooperative (PWCC) was the first harvest cooperative established in the Northwest and provided a model for subsequent Alaskan cooperatives (Kitts & Edwards 2003). Prior to 1997, the Pacific whiting fishery was characterized by tensions between shore-based and at-sea sectors that had escalated into a race-for-fish, causing increased bycatch, decreased productivity, and a shortened season. A political battle over total allowable catch (TAC) allocation and rights of access ensued, which pitted inshore and offshore fishery sectors against one another. While ITQ programs may have helped deal with this conflict, the reauthorization of the Magnuson- Stevens Fishery Conservation and Management Act in 1996 included a moratorium on the issuance of ITQs (Sylvia et al. 2008). One alternative however was a voluntary cooperative arrangement that would mimic many of the benefits of ITQ programs, but was exempted from the Sherman Antitrust Act of 1890 by the Fishermen’s Cooperative Marketing Act of 1934 (Criddle 2008). The benefits of the PWCC were improved economic efficiency, reduced bycatch, and increased product quality, recovery rates, and season length (Sylvia et al. 2008). The PWCC proved so successful that it became the model for the design of the American Fisheries Act, which authorized the development of the Bering Sea Pollock Conservation Cooperative (PCC) in 1998. Formation of the PCC led to the removal of the most inefficient boats from the harvest fleet, and significantly decreased fishing effort, resulting in an increase in the value obtained from each ton of pollock harvested (Sylvia et al. 2008). In 2002, a sockeye salmon fishery cooperative was established in the Chignik region of Alaska. However in early 2005 the Alaska Supreme Court shut down the cooperative because it was found to violate Alaska’s limited entry law. The bulk of the evidence resulting from the brief Chignik cooperative is consistent with Deacon et al.’s (2008) economic theory of fishing cooperatives. Fewer boats were deployed at Chignik during the cooperative’s existence, fishing seasons became significantly longer, and cooperative member’s efforts focused purely on fishing “inside” the bay, hence territoriality was established. In addition, there are indications that Chignik sockeye prices rose in response to the cooperative’s success in increasing the quality of fish sold to consumers (Deacon et al. 2008).

The PWCC, the PCC, and the Chignik salmon cooperative are all excellent examples of how cooperative fishery management can deliver both economic and ecological benefits (Deacon et al. 2008). There are many other examples of cooperatives being both economically and ecologically successful; however there are also case studies of cooperative management failures (Peterson 1980, Sabella 1980, Uchida and Baba 2008). Catch-share systems are not inherently a complete solution to the global fisheries problem. Customization of cooperative design is key to successful management, and more research should be conducted to determine the factors that contribute to both the successes and failures of fishing cooperatives and catch-share management strategies (Costello 2009).

10

The Cali fornia Abalone Industry The California abalone fishery is a model example of the discussed failures of traditional fisheries management. The fishery was closed until 1942 and reopened during World War II in order to increase wartime food production (CA DFG 2001). Regulations were implemented to control harvest and effort, including size and daily catch limits, as well as a seasonal TAC. Red abalone landings increased from 1942 until 1967, but by 1967, intense fishing pressure caused the population to decline, resulting in a gradual decrease in landings until 1982. In the years after 1982, landings numbers stabilized as fishing efforts for red abalone expanded to the new grounds of San Miguel, the northern-most Channel Island. Even with this expansion in fishing grounds however, the statewide red abalone catch in 1996 was 87 tons, a mere 10% of the historical peak catch in the 1960s (Karpov et al. 1999). The poor state of the population led to a commercial moratorium on abalone in 1997. The closure of the fishery was a tragedy for both fishermen and fisheries managers all along the California coast. The history of the California abalone fishery demonstrates that regulations were ineffective at managing the fishery and preventing the collapse of California abalone populations. The management structure and subsequent economic incentives in place at the time resulted in poor resource allocation and data collection. The abalone fishery was managed as a multi-species fishery, consisting of red, pink, black, green, and white abalone, and landings for individual abalone species were not considered. This leads to two problems. First, management used the total combined species landings as an indicator of stock health (CA DFG 2001). Therefore, as red abalone started to decline, fishermen began to land pink abalone, and the overall catch remained relatively constant, masking the trends in individual species abundance (Karpov et al. 1999). Secondly, abalone population dynamics occur at very small scales, on the order of 10-100 meters. Each species of abalone consists of many “micro-stocks,” each of which reach sexual maturity at different stages and have different larval dispersal patterns. As a result, a statewide TAC that is set even for a single species of abalone is unreliable. Instead, management needs to be tailored to the biology and ecology of each of these individual “micro-stocks” (Prince 2003). A second factor contributing to the failed management of California abalone was that management efforts were based on an egg-per-recruit model, which assumes that successful recruitment occurs every year (Karpov et al. 1999). However, this assumption is inaccurate for abalone. Abalone require a minimum population density for successful spawning, and intense fishing pressure, coupled with unfavorable environmental conditions, can lead to population densities that are well below this minimum threshold (CA DFG 2005). A five-year study of red abalone recruitment on Santa Rosa Island showed that significant successful recruitment occurred only once during a five-year study period (Tegner et al. 1989). This misunderstanding of the true nature of California abalone population dynamics resulted in a size limit and harvest restrictions per trip that could not ensure the sustainability of the stock. As abalone management lacked any protocols for dealing with additional stressors like diseases (such as Withering Syndrome), pollution, or oscillations in temperature during El Nino years, this management structure placed the population in further danger of depletion. In addition, management efforts depended on catch per unit effort (CPUE) data as an indicator of stock health, assuming that greater catch per unit effort signifies higher fish abundance. CPUE relies on the assumption that stocks are mobile. Therefore CPUE is not an appropriate management tool for sessile species such as abalone. Improvements in technology such as GPS to locate fishing grounds increased efficiency, rendering CPUE data useless for monitoring stock trends. (Karpov et al. 1999).

11

Finally, conservation efforts were undermined by the rising value of abalone in the market. As landings decreased, ex-vessel prices were increasing, and foreign demand was on the rise. As a result, political pressure to keep the fishery open was mounting (Karpov et al. 1999). Despite this increase in market value, the commercial landing tax was limited to a mere $0.03 per kilogram until the 1990s when an additional enhancement and restoration tax was instated, raising the total landing tax to $0.43 per kilogram. Unfortunately the increased revenue was used to restock abalone habitats with juveniles reared at aquaculture facilities, rather than for improving data collection and stock assessment methods. Juvenile restocking efforts had a success rate of less than 1% (Karpov et al. 1999). These factors, combined with increased poaching and a relatively unmonitored recreational fishery, led to further decline in the stocks (CA DFG 2005). These factors such as inaccurate stock assessments, expanding market pressures, disease and overfishing resulted directly in the closure of the California abalone industry, and are also indicative of the broader shortcomings of open access fisheries. Without having vested interest in the sustainability of the stock, stakeholders had little incentive to demand accurate stock data or more precautionary management. While CPUE for the industry as a whole was declining, the high price commanded by abalone still led individual fishermen to enter the market so as to obtain some of the potential profits. Taxes were used towards restocking efforts rather than improving overall management practices, since there existed little incentive to invest capital in a management system in which fishermen had no actual stake. Since the moratorium however, many California abalone populations have displayed some evidence of recovery. In particular, surveys and stock assessments have shown the abalone population at San Miguel Island to be both healthy and stable with abundances likely to be able to support a sustainable fishery (CA DFG 2005). In response, the California Fish and Game Commission is currently considering opening a small-scale commercial red abalone fishery at San Miguel Island.

Cali fornia Abalone Cooperat ive In examining the previous management failures of the California abalone industry, and

lessons learned at great expense in other fisheries, clearly a new method is needed if the abalone fishery is to be reopened. The recent body of work demonstrating the efficacy of catch-share systems in solving the historic shortcomings of open-access fisheries has led the CAA to propose a cooperative design as the management structure of a new California abalone industry. The CAA cooperative is a novel method through which a catch-share system can be shaped and administered to create a management system tailored to the needs and specific concerns of the San Miguel Island (SMI) abalone fishery. If implemented, it will serve as an example of the implementation and potential of a catch-share based fishery cooperative. The cooperative will also help to address some of the factors responsible for the collapse of the fishery, such as inaccurate stock assessments and the problems of poaching, by incentivizing fishermen to contribute to data collection and enforcement. The fishery cooperative will place an emphasis on data collection and record keeping in order to maintain valid and useful stock assessments. These assessments, specific to the “micro-stock” existing on SMI, are vital for an ecologically sustainable catch limits capable of fluctuating with changing stock sizes (Prince 2003). Poaching and black market trade of abalone are major issues that will also be addressed by the CAA cooperative. Lax governmental oversight, improperly regulated markets, high profit margins, and ease of access have created conditions ideal for abalone poaching at both large and small scales (Raemaekers and Britz 2009; Daniels and Floren 1998). Prince (2003) argues that involving abalone fishermen in the data collection and management process is the key to overcoming these issues. By establishing a fishing cooperative in which the members have communal rights and access to the fish stock will create and enhance a sense of

12

stewardship among fishers. This will reduce overexploitation and invoke self-regulation, thus reducing the poaching problem and enhancing the fishery’s capability for success. With careful and informed decision making the abalone cooperative has the potential to address the issues responsible for the initial fishery collapse and to operate in a sustainable manner.

Design o f the CAA Cooperat ive Under the Abalone Recovery and Management Plan (ARMP), Alternative 8 allows the

California Fish and Game Commission to consider a lift on the moratorium for abalone fisheries in specific locations that have partially recovered prior to achieving Recovery Criterion 3 ( which requires that 3/4 of the recovery areas have achieved a specified density) as defined in the ARMP (CDFG 2005). Red abalone at SMI qualify for Alternative 8 using a reduced density criterion that shows a viable abalone population with a broad size range exists at SMI. In addition, the abalone at SMI, although patchy in population density, are thought to be healthy and stable, further supporting its qualification for a local lifting of the moratorium under Alternative 8 (CAA 2009). However, the California Fish and Game Commission will not consider opening the SMI red abalone fishery unless certain guidelines are followed that address concerns such as the Total Allowable Catch (TAC), allocation between the recreational and commercial fisheries, as well as regulatory and enforcement measures that ensure the ecological viability of the stock is retained (CDFG 2005). Given these parameters the CAA developed a plan that is supported in the California Marine Life Management Act’s (CMLMA) Restricted Access Policy (Fish and Game Commission 1999). The Restricted Access Policy recommends using restricted access as a management tool to end the “race for fish” by matching the level of effort to the health of the resource, giving participants a stake in the long-term sustainability of the fishery, providing social and economic benefits over the life of the fishery, and shared enforcement/management between the participants and the Department of Fish and Game (Fish and Game Commission 1999). In order for these benefits to occur a major fleet size reduction is likely to be required. This can be achieved through the implementation of a community-based fishermen harvesting and marketing cooperative as defined by the guidelines of the Fishermen’s Collective Marketing Act (FCMA). The CAA has developed an operating structure for the California Abalone Cooperative. The mission of the plan states that “The California Abalone Cooperative places the health and habitat of the abalone resource above all other considerations and will co-manage an abalone fishery while recognizing the link between stewardship of the resource above all other considerations and will co-manage an abalone fishery while recognizing the link between stewardship of the resource and a successful cooperative (CAA 2009).” In pursuance of their mission statement the California Abalone Cooperative has set both economic and ecological goals deemed inherent to their success. Through their cooperative design they intend to enhance the abalone resource while still maintaining economic profits to their participants, reduce management and enforcement costs, and improve relations between the fishermen, authorities, and community. Especially essential to fulfillment of their goals, the California Abalone Cooperative intends to achieve comprehensive sustainable fishery management at a lower cost than traditional management by pooling their catches and profits (CAA 2009). This process has been shown to be effective in other fishing cooperatives (Deacon & Costello 2008). Their profitability depends on the Total Allowable Catch (TAC) allocated to the fishery by the Commission. This TAC would then be further divided among members of the California Abalone Cooperative. Their initial intention is for each participant to receive an equal share of the TAC. An initial estimation of net income for the first year, based on a TAC of 8,300 abalone, 35 participants, and a market price of $100/abalone, suggests the California Abalone Cooperative will result in approximately $15,257.14 per participant and $399,500 in coop working capital (CAA 2009).

13

Research Needs o f the CAA Co-Op While catch-share systems have been demonstrated to alleviate the inefficiencies of open-access fisheries, more information and case studies are needed to evaluate the specific parameters influential to the success of individual catch-share management systems. As of yet, no clear guidelines for the development of a successful cooperative exist. As such, in developing a particular cooperative, innovative methods must be developed that ensure that the catch-share system to be adopted is best suited for the specific fishery in question.

The CAA has developed a strong framework for their cooperative. However it remains unclear as to whether the current proposed cooperative structure is in fact optimal for economic performance. As discussed previously, many case studies of successes and failures of catch-share management systems exist worldwide. Our group will develop recommendations for the proposed cooperative based on examples from existing fisheries and tailored to the specific needs of the CAA. These recommendations will then be used in conjunction with existing data on the ecosystem health and abalone stock at SMI, in order to develop a predictive model of the interactions of these variables on the economic performance of the cooperative. Models such as this have been used in numerous other instances in order to demonstrate the potential benefits of a management plan.

This process will help fill a current knowledge gap both for the CAA and in the design and use of catch-share systems. Extensive work is being conducted on assessing the dynamics of the red abalone population at SMI. In addition, the CAA has invested tremendous amounts of time, effort and funds into assessing the structure and needs of the proposed cooperative. However, how these factors will influence the economic performance of the cooperative over time is unknown. By coupling information on the SMI abalone population and the design and needs of the cooperative, our group will develop recommendations for a management system that will yield optimal economic returns for the fishery over time. By having access to quantitative costs and benefits of different management designs for the cooperative, the CAA will be able to make better-informed decisions regarding the management of the fishery. This as yet unknown information will provide vital aid to the CAA in seeking approval from the California Fish and Game Commission for their proposed fishery, as well as help ensure the success of the abalone fishery at SMI should it be instated. From a broader perspective, the work being done by the CAA represents an exciting new frontier in fisheries management, in which fishermen, managers and researchers collaborate together to develop a sustainable industry. By assessing the economic viability of this cooperative, our group can help demonstrate the potential of these collaborative forms of management to benefit both fishermen and fish alike. In this way this project stands to both support the development of a sustainable fishery while furthering the science of catch-share fisheries management. Approach This project will research current scientific literature, as well as existing policies and practices concerning cooperative based fisheries management schemes. We will apply our gained knowledge to the CAA’s proposed abalone cooperative design. Additionally, market structure and cooperative operating costs will be assessed, so that a minimum catch needed for the fishery to be profitable may be determined. Using the information garnered from the literature review, cooperative design analysis, and economic evaluation, the group will develop a dynamic bio-economic cost-benefit analysis (CBA) model to evaluate the ecologic and economic effects of various cooperative-operating options. Our proposed research timeline will be as follows.

14

I. Review scientific literature and existing fisheries, policies, programs, and legal documents in order to:

Compare the qualitative and quantitative failures and successes of relevant cooperative fisheries management case studies and specifically examine revenue, net profits, and losses

Thoroughly assess the design, operating structure, and implementation of past and present cooperative fisheries and explore how these parameters influence the success of cooperatives

Examine potential legal and socio-economic problems with implementation and enforcement of a California abalone fishery cooperative

Examine the recreational fishery component and its potential impact on the overall economic viability for the commercial fishery

II. Data Collection Cost Analysis The project will require a review of the CAA’s proposed San Miguel Island abalone cooperative management plan. A key step in determining the potential success of the cooperative is determining the costs associated with the harvest, monitoring, enforcement, and general operation of the fishing cooperative. We will calculate costs to the cooperative under a variety of management options using data provided by the CAA, as well as information found in the literature. This data will then be utilized in order to determine the minimum catch level and revenue required in order for the cooperative to be self-funding and viable. Market Research In addition to costs, we will evaluate the economic benefits of the fishing cooperative. This will be accomplished by estimating global and local market prices through research of the historic, present, and projected prices of wild abalone. We will also consult with local restaurants and seafood merchants in order to estimate the future local demand for SMI red abalone. III. Analysis and Recommendations We will use information compiled from the CAA and the relevant literature in order to create a bio-economic CBA model which will examine the interactions of various parameters on the economic and environmental state of the cooperative over time. Using this model, we will provide an assessment of the economic viability of the cooperative design proposed by the CAA. We will also endeavor to develop data on the costs and benefits of alternative management options for the cooperative, with the goal of maximizing economic benefit while maintaining ecological sustainability. Initial parameter values and constraints used to drive the model will be based on information gained from study of relevant literature, the CAA’s cooperative plan, and through consultation with experts in the field. We will then examine how these parameters affect the economic and ecological state of the fishery over time. Parameters affecting the viability of the cooperative in our model may include

Cooperative design and associated management costs Market price for local abalone Data collection methods and availability Abalone catch limitations Ecosystem health and response to harvesting

15

The results of this model will yield an evaluation of the economic potential of the proposed cooperative, as well as provide recommended management options given the economic and environmental states likely to be faced by the fishery. Deliverables This project will result in an assessment of the economic viability of the CAA’s proposed abalone cooperative, as well as provide management recommendations based on the results of our research on fishing cooperative design and the state of the red abalone population at SMI, with the goal of maximizing profits and ensuring the long-term sustainability of the abalone stock. We will condense our findings into a user-friendly toolkit to be utilized by the CAA for decision-making throughout the various stages of the cooperative’s proposal and potential implementation. A final report, presentation, and project brief summarizing our results will be given at the culmination of the project in Spring 2010. Contact Information Faculty Advisor: Dr. Chris Costello costello@bren.ucsb.edu Project members: Heather Hodges hhodges@bren.ucsb.edu Josh Uecker juecker@bren.ucsb.edu Ariel Jacobs ajacobs@bren.ucsb.edu Dan Ovando dovando@bren.ucsb.edu Kristen Bor kbor@bren.ucsb.edu Client, The California Abalone Association: Chris Voss vossfam@west.net Alicia Bonnett fluidblue1@verizon.net Faculty reviewer: Dr. Hunter Lenihan lenihan@bren.ucsb.edu External reviewers: Dr. Bob Deacon deacon@econ.ucsb.edu UCSB Department of Economics Chuck Cook ccook@tnc.org Marine Science Institute/The Nature Conservancy Other information: Project E-mail abalone@bren.ucsb.edu Project Website http://www.bren.ucsb.edu/~abalone

16

Stakeholders Additional interested parties include local abalone fishermen, California Department of Fish and Game, California Fish and Game Commission, local restaurant owners, and marine non-governmental organizations. Acknowledgements The members of our group would like to thank the James S. Bower Foundation as well as the Sustainable Fisheries Group for their generous contributions to our project. We would also like to express our appreciation to Dr. Chris Costello, Chris Voss, Alicia Bonnette and the members of the California Abalone Association, Dr. Bob Deacon, Dr. Hunter Lenihan, Chuck Cook, John Ugoretz, Dr. Christina Tague, Sarah Valencia, Tal Ben-Horin and Jono Wilson for their invaluable assistance in the development of our proposal.

17

Appendix I: References Baticados, D.B. 2004. Fishing cooperatives' participation in managing nearshore resources: the case

in Capiz, central Philippines. Fisheries Research. 67(1): 81-91. Beddington, J.R., Agnew, D.J., Clark, C.W. 2007. Current problems in the management of marine fisheries. Science. 316: 1713-1716. Buck, E.H. 1995. Individual Transferable Quotas in Fishery management. CRC Report for Congress. 95-849 ENR. California Department of Fish and Game. 2001. California’s living marine resources: a status report.

Sacramento, California: the Resources Agency. California Department of Fish and Game. 2004. Marine Life Protection Act. Fish and Game Code.

Sections 2850-2863. California Department of Fish and Game. 2005. Alternative 8. Abalone Recovery and

Management Plan. Appendix A. California Department of Fish and Game. 2005. Abalone Recovery and Management

Plan. Sacramento, California: The Resources Agency. California Abalone Association. 2009. Market Red Abalone Fishery Operating Guidelines.

Sections 1-6. Costello, C., Gaines, S.D., Lynham, J. 2008. Can catch-shares prevent fisheries collapse?. Science.

321: 1678-1681 Criddle, K.R., Macinko, S. 2000. A requiem for the IFQ in US fisheries? Marine Policy. 24: 461-469. Criddle, K.R. 2008. The legal context of United States fisheries management and the evolution of

rights-based management in Alaska. FAO Fisheries Technical Paper. 504: 369-381. Daniels, R. and R. Floren. 1998. Poaching pressures on northern California’s abalone fishery.

Journal of Shellfish Research. 17(3): 859-862. Deacon, R.T., Parker, D.P., Costello, C. 2008. Improving efficiency by assigning harvest rights to

fishery cooperatives: evidence from the Chignik salmon co-op. Arizona Law Review. 50(2): 479.

Essington, T.E., Beaudreau A.H., Wiedenmann J. 2006. Fishing through marine food webs. PNAS. 103(9): 3171:3175. Fish and Game Commission. 1999. Restricted Access Policy. California Marine Life Management

Act.

18

Fujita, R.M., Foran, T., Zevos, I. 1998. Innovative approaches for fostering conservation in marine fisheries. Ecological Applications. 8(1): 139-150.

Grafton, R.Q., Arnason, R., Bjorndal, T., Campbell, D., Campbell, H.F., Clark, C.W., Connor, R.,

Dupong, D.P., Hannesson, R., Hilborn, R., Kirkley, J.E., Kompas, T., Lane, D.E., Munro, G.R., Pascoe, S., Squires, D., Steinshamn, S.I., Turris, B.R., Weninger, Q. 2006. Incentive based approaches to sustainable fisheries. Canadian Journal of Fisheries and Aquatic Sciences. 63: 699-710.

Gewin, V. 2004. Troubled waters: The future of global fisheries. PLoS Biology. 2(4): 0422-0427. Hilborn, R., Stokes, K., Maguire, J., Smith, T., Botsford, L., Mangel, M., Orensanz, J., Parma, A.,

Rice, J., Bell, J., Cochrane, K., Garcia, S., Hall, S., Kirkwood, G.P., Sainsbury, K., Stefansson, G., Walters, C. 2004. When can marine reserves improve fisheries management? Ocean and Coastal Management. 47: 197-205.

Hilborn, R., Parrish, JK., Litle, K. 2005. Fishing rights or fishing wrongs?. Reviews in Fish Biology

and Fisheries. 15: 191-199. Holland, D.S. Spatial fishery rights and marine zoning: a discussion with reference to management of marine resources in New England. Marine Resource Economics. 19: 21-40. Jackson, J.B.C., Kirby, M.X., Berger, W.H., Bjorndal, K.A., Botsford, L.W., Bourque, B.J., Bradbury,

R.H., Cooke, R., Erlandson, J., Estes, J.A., Hughes, T.P., Kidwell, S., Lange, C.B., Lenihan, H.S., Pandoff, J.M., Peterson, C.H., Steneck, R.S., Tegner, M.J., Warner, R.R. 2001. Historical overfishing and the recent collapse of coastal ecosystems. Science. 293: 629-638.

Johannes R.E. 1981 Words of the Lagoon: Fishing and Marine Lore in the Palau District of

Micronesia. University of California Press, Berkeley. Karpov K.A., Haaker P.L., Taniguchi I.K., and Rogers-Bennett L. 2000. Serial depletion and the

collapse of the California abalone (Haliotis spp.) fishery. In: Campbell A. (ed.). Workshop on rebuilding abalone stocks in British Columbia. Canadian Special Publication of Fisheries and Aquatic Sciences. 130. p 11-24.

Kitts, A.W. and Edwards, S.F. 2003. Cooperatives in US fisheries: realizing the potential of the

fishermen's collective marketing act. Marine Policy. 27(5): 357-366. Larkin, P. 1977. An epitaph for the concept of maximum sustainable yield. Transactions of the

American Fisheries Society. 106(1). Ludwig, D., Hilborn, R., Waters, C. 1993. Uncertainty, Resource Exploitation, and Conservation:

Lessons from History. Science. 260(5104): 17-36. Myers, R., Worm, B. 2003. Rapid worldwide depletion of predatory fish communities. Nature. 423:

280-283.

19

Pauly, D., Christensen, V., Dalsgaard, J., Froese, R., Torres, F. Jr. 1998. Fishing down marine food webs. Science. 279(5352): 860-863.

Pauly, D., Christensen, V., Guenette, S., Pitcher TJ., Sumaila UR., Walters, CJ., Watson, R., Zeller,

D. 2002. Towards sustainability in world fisheries. Nature. 418: 689-695. Pauly, D., Watson, R., Alder, J. 2005. Global trends in world fisheries: impacts on marine

ecosystems and food security. Philosophical Transactions of the Royal Society B. 360: 5-12. Petterson, J.S. 1980. Fishing cooperatives and political power: a Mexican example. Anthropological

Quarterly. 53(1): 64-74. Pikitch, E.K., Santora, C., Babcock, E.A., Bakun, A., Bonfil, R., Conover, D.O., Dayton, P.,

Doukakis, P., Fluharty, D., Heneman, B., Houde, E.D., Link, J., Livingston, P.A., Mangel, M., McAllister, M.K., Pope, J., Sainsbury, K.J. 2004. Ecosystem-Based Fishery Management. Science. 305: 246-247.

Prince, J.D. 2003. The barefoot ecologist goes fishing. Fish and Fisheries. 4, pp. 359-371 Raemaekers, S.J.-P.N. and P.J. Britz. 2009. Profile of the illegal abalone fishery (Haliotis

midae) in the Eastern Cape Province, South Africa: Organized pillage and management failure. Fisheries Research. 97: 183-195.

Sabella, J.C. 1980. Jose Olaya: analysis of a Peruvian fishing cooperative that failed. Anthropological

Quarterly. 56-63. Sen, S., Nielson, J.R. 1996. Fisheries co-management: a comparative analysis. Marine Policy. 20(5):

405-418. Sylvia, G., Mann, H.M., Pugmire, C. 2008. Achievements of the Pacific whiting conservation

cooperative: rational collaboration in a sea of irrational competition. FAO Fisheries Technical Paper. 504: 425-440.

Tenger, M.J., DeMartini, J.D., Karpov, K.A. Population biology of red abalone in southern

California and management of the red and pink abalone fisheries. Fisheries Bulletin. 87: 313-339.

Townsend, R. and Shotton, R. 2008. Fisheries self-governance: new directions in fisheries

management. FAO Fisheries Technical Paper. 504: 1-20. Uchida, H., and Baba, O. 2008. Fishery management and the pooling arrangement in the Sakuraebi

Fishery in Japan. Case studies in fisheries self-governance, FAO Fisheries Technical Paper. 504: 175-189.

U.S. Commission on Ocean Policy. 2004. Scientific Consensus Statement on Marine Ecosystem-

Based Management. Living Near and Making a Living from the Nation’s Coasts and Oceans. Appendix C.

20

Wilen, J., Richardson, E., Anchorage A. 2003. The pollock conservation cooperative. Paper prepared for: Workshop on Cooperatives in Fisheries Management, Anchorage, Alaska.

World Bank. 1998. Subsidies in world fisheries: A reexamination. World Bank

Technical Paper Number 406. Washington, D.C. Zeller, D., Pauly, D. 2005. Good news, bad news: global fisheries discards are declining, but so are

total catches. Fish and Fisheries. 6: 156-159. Appendix II: Project Timeline Spring 2009

Conduct initial research and gather background information Write proposal Design and construct website

Summer 2009

Conduct extensive research on cooperative design and implementation Fall 2009

Review CAA’s proposed cooperative design Create and run bio-economic model Conduct market research on the price and demand for wild abalone Analyze and interpret data and model results Synthesize parameters for cooperative design and provide preliminary recommendations to

the CAA

Spring 2010 Create toolkit for the CAA and provide management recommendations based on bio-

economic model results Project Defense presentations Final Report Project Brief Project Poster Final Presentation

Below is a general timeline for the project.

Apr May June Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr09 09 09 09 09 09 09 09 09 10 10 10 10

Initial researchFinal Proposal approvalWebsite ConstructionFishery Cooperative ResearchCreate and Run Bioeconomic modelConduct market researchPreliminary Recommendations to CAAAnalyze and interpret model resultsFinal Report WritingFinal Project Report Review and EditingCreate toolkitProject DefenseProject Presentation

Task

21

Appendix III: Budget Our primary funding of $1500 is from the Bower Foundation. We also have an additional grant of $5000 from the Sustainable Fisheries Group. A. Expenditures

Expense Amount Summer Internships $4000 Cooperative Fishery Symposium $200 Printing* $200 Final poster production $250 Field Trip(s) $800 Telephone/Voicemail $157 Presentation expenses $50 Photocopies/copy card $113 Conference attendance/miscellaneous $650 Administrative Supplies $20 Business Cards $60

TOTAL $6500

* Indicates fixed costs. B. Budget Justification Of the initial $1500 allocation, $200 is automatically set aside as a fixed cost for printing fees. The remaining $1300 will be divided between poster and presentation expenses ($250 and $50 respectively), and the remaining $1000 will be used towards various communications and administrative expenses that are likely to be incurred over the course of the project. Approximately $4000 of the $5000 grant from the Sustainable Fisheries Fund will be allocated towards summer internships for two to three group members. The remaining $1000 will be used towards hosting a Cooperative Fishery Symposium ($200) and funding a field trip to San Miguel Island ($800). The symposium will allow our group to bring together experts from diverse fields as well as various stakeholders of the red abalone fishery in order to provide our group with an unparalleled chance to facilitate innovative and productive discussions. The field trip will provide us with a chance to observe abalone in the field and interact with abalone fishermen.

22

Appendix IV: Management Plan Group Structure and Management Group members and their roles are described in the table below. Name Role Duties Kristen Bor Project Manager Schedule meetings, set meeting agenda, take

minutes, send weekly reminders of meeting times and assignments

Heather Hodges Data Manager Maintains group’s shared online information, organizes files within Bren directory, software manager

Josh Uecker Web Manager Initiates and maintains group website Ariel Jacobs Financial Manager Maintains and tracks group budget,

responsible for reimbursements Dan Ovando Director of Communications Initiates conversation with necessary contacts,

via email and telephone Other Logistical Information Meeting Structure: Every week the group will meet with advisor, Chris Costello. It is likely that there will be additional group meetings (without Chris) throughout the week. The project manager will be scheduling all meetings on Corporate Time. Dates and times of meetings are to be determined on a case-by-case basis. Group member role rotation: The various roles that were assigned will last through the end of Spring quarter and will continue into the Fall and Winter quarters, pending everyone being content with their role. The roles are flexible however, and can be rotated at the end of Spring quarter if desired. Systems to ensure deadlines are met: Each group member keeps track of all deadlines in their date books/calendars. The project manager will send reminders the week of due dates to ensure that everyone is aware of deadlines. Deliverables and associated due dates will be established at each meeting. Conflict Resolution Process: All work will be divided so everyone has equal responsibility, and everyone will know what is expected of them. In the case of a conflict, we will attempt to work through the problem through open conversation before bringing it to the attention of our advisor. Procedures for Documenting, Cataloging, and Archiving Information: The project manager will run weekly meetings, taking minutes at all meetings. The data manger will add the minutes to the group’s shared information database. Other documents will also be added to the shared database, and a system for naming documents has been established. Guidelines for interacting with faculty advisors, external advisors, clients, customers, or consultants:

The Director of Communications will be the first point of contact for the outside necessary contacts.

23

We will update our client via phone, email, and in person meetings. In person meetings with the client will occur once per month. We also will be in attendance at the CAA’s monthly member meetings. The final product of this project will be delivered as both a hard copy and an electronic copy, unless they request otherwise.

Our project progress will be discussed with our advisor in weekly meetings. The maximum turnaround time for our advisor to review our work is one week.

Our advisor will assign grades based on whether each person is contributing equally to the project.