Sea change? –

2016-05-25 11.17.13

Halibut litter the deck of Saltwater Safari’s MV Legend on a military appreciation fishing day out of Seward/Craig Medred photo

News analysis

Could what Alaskans often view as the big, bad, faraway federal government be poised to lead northern fisheries management back to where the founders of the 49th state wanted to take it?

Their original goal was simple – create opportunities “for the maximum benefit of (the) people,” as the Alaska Constitution put it.

The National Oceanic and Atmospheric Administration (NOAA) hasn’t exactly suggested shifting existing management that far, but a study from the agency’s Alaska Fisheries Science Center reports economists are close to developing an economic model that would “benefit policy discussions regarding saltwater sport fisheries, such as the upcoming review of the Pacific halibut allocation between the charter and commercial
sectors planned for 2021 by the NPFMC.”

The NPFMC is the North Pacific Fisheries Management Council, a commercial-fishing dominated entity that sets fishing regulations for the U.S. government’s  “exclusive economic zone (EEZ)” from three- to 200-miles off Alaska’s coast.

The Council “family,” as the 15 members of the Council and the bureaucrats who work with them sometimes refer to themselves, at the start of the decade limited the number of charter boats allowed to fish halibut anywhere in Alaska in an effort to reduce competition with commercial fishermen in the EEZ.

That and other restrictions forced almost 10 percent of the charters out of the business between 2011 and 2012, and reduced the economic output of the fishery by more than 43 percent – or slightly more than $107 million, according to a new NOAA study.

The value of the fishery did rebound in the years that followed, increasing in value from $140.7 million per year in 2012 to $166.1 million in 2013 and $165.7 million in 2014.

But the industry’s economic output was essentially capped by what the Council called a “catch sharing plan.” The sharing reduced the charter harvest of halibut by almost 2 million pounds. The “share” part of the plan, the Council said, was intended to force charters to share the burden of conservation with halibut stocks in decline around the Pacific Rim.

Arguing many of the proposed changes in the plan would devastate small, mom-and-pop charter businesses, the industry lobbied both NOAA and the Council to study the economic consequences before imposing new restrictions.

Both refused. Officials of the National Marine Fisheries Service (NMFS) – NOAA’s fisheries management arm – at the time said the charter industry was too hard to study, but economists Dan Lew and Chang Seugn at the Fisheries Center this year completed a study of the fallout from the changes, and it concluded the charter businesses were right about the consequences.

Council regulations devastated a small but highly valuable industry taking a minimal bite out of the allowable harvest of North Pacific halibut. It is in the “concluding remarks” at the end of that study that Lew and Seung suggest the Council, which operates under NOAA oversight, might want to revisit this issue in 2021.

As a simple economic matter, the 1.9 million halibut taken away from the charter businesses and given to commercial fishermen were worth about $12 million to the latter at the dock in 2012.

Dock price, or what is usually called “ex-vessel value,” is the lowest measure of the value of fish which create jobs and produce incomes as they are processed in various forms in Alaska.

Studies by the McDowell Group, a respected economics firm, indicate the value of Alaska halibut and blackcod more than doubles the economic output of the commercial fishery as the fish are processed in-state, but even at the McDowell rate, the value of the commercial catch of 1.9 million pounds to the Alaska economy increases to only about $28 million. 

Lew and Seung reported the loss of the same amount of quota in the charter industry cost the Alaska economy $107.3 million between 2011 and 2012, and it continued to cost the Alaska economy $81.9 million to $82.3 million per year in the years that followed.

In simple terms, the Council took $54 million to almost $80 million per year out of the Alaska economy to satisfy the desires of the commercial fishing lobby.

Power politics

When the Council acted at the start of the decade, the commercial-fishing dominated entity had almost unlimited power to manage fisheries however it saw fit.

Legal efforts by the charter businesses to block the changes slowed them, but they still moved forward. Big, powerful commercial fishing interests ran roughshod over small, disorganized recreational fishing businesses in Alaska as they had all around the country since the passage of the Magnuson-Stevens Fisheries Conservation Act in 1976.

The Magnuson-Stevens Act was enacted to push foreign fishing fleets far from U.S. shores and help restore overfished offshore resources. It largely worked on both accounts, at least in Alaska.

The offshore fisheries changed “from being almost exclusively foreign prior
to 1976, to being almost entirely joint venture by the mid-1980s, and to fully domestic by 1990,” notes University of Alaska Fairbanks economic Keith Criddle.

Recreational fisheries – small players in a big game in the ’70s – were largely overlooked in the law authored by the late Sens. Warren Magnuson, D-Wash., and Ted Stevens, R-Alaska.

“Magnuson-Stevens…has never properly addressed the importance of recreational fishing and this has led to shortened or even canceled seasons, reduced bag limits, and unnecessary restrictions,” charged Keep America Fishing. “Management strategies are in desperate need of an update and more emphasis needs to be put on recreational fishing.”

An advocacy group, Keep America was founded by the American Sportfishing Association in 2012 as part of an attempt to leverage a greater voice for recreational anglers in the management of the country’s offshore fisheries.

They got it at the start of the new year when President Donald Trump signed into law the Modern Fish Act.

“If you fish in federally-managed saltwater, odds are you’ve been frustrated by shortened seasons, reduced bag limits, and unwarranted restrictions,” Keep America Fishing trumpeted.

“Signed into law on the last day of 2018, the Modern Fish Act will address these issues by creating a comprehensive package of regulations specifically aimed at adapting a federal system focused solely on commercial fishing to now meet the needs of the nation’s 11 million saltwater anglers.

“Keep America Fishing will work to ensure that NOAA Fisheries follows through with the Act’s requirements.”

Alaska halibut charter anglers have witnessed all three of the aforementioned restrictions. Bag limits have been reduced; fishing has been eliminated on some days of the week; and a once two-fish limit has been restricted to a large fish and a so-called “chicken halibut” of 26 inches or less in length.

The Council’s various actions to limit halibut sportfishing in Alaska sparked considerable controversy when first introduced, but the Council managed to somewhat mute the pushback by what one former Alaska Department of Fish and Game officials described as a policy of “divide and conquer.”

While charter anglers – many if not most of whom are non-resident visitors to Alaska – were sharply restricted, non-charter anglers – most of whom are Alaskans – were not.

Given that some in the latter group view the charter industry less as a productive part of the Alaska economy and more as competition for the fish, the Council’s plan to stick it to the business segment of the recreational fishery actually attracted support from some Alaskans.

And that a few of those people happened to be on the Council staff certainly didn’t hurt when the biggest players in the offshore fishing business decided to go after the littlest player.

Bang for the buck

The Lew-Heung study notes “the saltwater recreational charter fishing sector is small relative to the commercial seafood sector, which has been estimated to contribute $4.4 billion (total output) to Alaska’s economy during 2015. In contrast, during the same period (2015) the charter fishing sector is estimated to have had a total output of about $166 million, which
is about 4 percent of the contribution made by the commercial sector.”

But when measured in terms of economic output per pound of fish flesh, the sport sector is a heavyweight. It’s 4 percent contribution is produced on less than 1 percent of the total commercial harvest although it’s halibut share is bigger.

“Over our study period,” Lew and Seung wrote, “the proportion of total combined recreational and commercial harvest attributable to the recreational sector for Pacific halibut was between 10 and 20 percent.”

The value of the non-charter recreational harvest was not calculated in their study. Lew and Seung noted another statewide study reported the total value of marine sport fisheries in Alaska at $483 million in 2011 dollars, but underreported the charter value of the fisheries to the tune of about $40 million.

The studies are hard to compare because the statewide study included all species of marine fish caught by anglers who fish rockfish, cod and other species along with halibut and salmon. The latter two are, however, the big money fish and account for most of the charter-industry revenue.

Tourist aren’t flocking to Alaska to catch cod.

The International Pacific Halibut Commission says the Alaska halibut charter industry will this year catch about 12 percent of the statewide quota. Adjusting for inflation in a fishery that has now long been capped by the Council, the Lew-Seung study would suggest that 12 percent share should produce something in the neighborhood of $185 million in economic output.

The McDowell Group estimated the first wholesale value of the 80 percent of halibut caught by commercial fishermen was $194.1 million in 2011 and had fallen to $128.9 million by 2013, significantly less than the charter shares appears to be worth to the Alaska economy.

Even if one doubles the commercial number to calculate total economic output, it is clear the big value per pound is in the charter business. The reasons why are obvious. The sport fishery generates considerably more revenue per pound of fish because it is grossly inefficient when compared to the commercial fishery.

Inefficiency to generate in-state revenue from fisheries was an Alaska goal at Statehood, and laws to mandate inefficiency in the state’s commercial fisheries remain in place today.

Bristol Bay drift gillnetters were limited to boats with a length of 32-feet to limit their efficiency prior to Statehood, and the limit has remained in place since. 

More than that, one of the very first acts of the new state after its creation was to eliminate fish traps, the far and away most efficient form of salmon harvest.

Outside control of most of those traps fueled the drive for Statehood, and sparked the decision by the authors of the state Constitution to declare that all “fish, wildlife, and waters” in the new state would be managed for “common use.”

Thirteen years after Statehood, Alaska voters did amend the Constitution to allow “preferences among beneficial uses” of those resources. The language was intended to allow the state to establish a system of limited entry in the commercial fisheries, but limited entry was not mentioned.

Neither did voters change the Constitutional requirement that the state resources be managed for the “maximum benefit of its people.”

The clear intent at the time of Statehood and through the Constitutional amendment in 1972 was to keep as much of the value of the fisheries in-state as possible. But that isn’t what happened.

Limited entry precipitated the idea the “maximum benefit” to Alaskans accrued when commercial fishermen were financially successful, and commercial fishermen proceeded to take over the state’s fishery resources both in state waters and the federal waters offshore.

The idea of managing “common use” resources for the maximum benefit of the state as whole – a goal that can be measured in capitalist economies – quickly faded away.

A new day?

When Lew and Seung now suggest the NPFMC undertake an economic review of the allocation of halibut to the traditional, commercial sector of the fishery and the charter sector, they are simply recognizing evolution.

Charter businesses have been able to create economically profitable though inherently inefficient operations because the world has changed. Charters did what Alaska has tried to do since Statehood without the need for state-mandated restrictions.

But they did it in a new and different way, and change is never easy.

Therein rests a problem facing not only Alaska’s halibut fishery going forward, but some other Alaska fisheries as well.

In an ever-more populated world, the value of the opportunity for some city dude to catch a wild halibut or salmon is only going to keep going up while the value of the commodity itself – be it a halibut filet or a salmon steak – is destined to stabilize and likely creep downward in real dollars as technology alters markets.

Technology is an economic reality that cannot be ignored. It has a life of its own.

Net-pen salmon farmers who were bit players when Alaska banned net pens in 1989 in favor of open-ocean farming of salmon now own more than 70 percent of the salmon market with seemingly ever more and environmentally cleaner operation being unveiled almost every month. 

Were that enough of an economic issue, the production of white-fleshed, flatfish appears poised to begin creeping upward as well.

Add to this the rise of the sportfishing lobby and the fisheries management issues facing NOAA get very interesting going forward, especially in Alaska where the regulatory structure for halibut appears to have been clearly structured to benefit resident anglers over non-resident anglers.

The Council in Alaska didn’t restrict recreational fishing nearly as much as it tried to restrict interstate trade. As part of that divide-and-conquer strategy, the Council admitted it was avoiding restrictions on Alaska’s Joe Everyfisherman in favor of restrictions on the taxis that take non-resident anglers to the fish.

The plan has worked up to this point. How it dovetails with the Modern Fishing Act remains to be seen. States can in state waters discriminate between residents and non-residents.

The state of Alaska now has a law restricting dipnetting – a more efficient means of catching salmon than rod and reel – to residents only. How much such discrimination federal managers can get away with has never been debated.

It has been suggested that if the feds take over management of salmon in the federal waters of Cook Inlet – something the commercial fishermen of the United Cook Inlet Drifters Association (UCIDA) have been trying to force them to do – the Inlet dipnet fishery might need to be opened to non-residents (or eliminated) to comply with the equal protection standards of the U.S. Constitution.

Many commercial fishermen, meanwhile, have expressed fears the Modern Fish Act could cut into their harvests by granting recreational fishermen more of a say in the allocation of marine resources.

Some sport interests have also made it clear they intend to use the act to change the way marine fisheries have been prosecuted for decades.

“Once Congress says yes and the president blesses it with a signature, you really are not done because then the law needs to be implemented,” Center for Sportfishing Policy president Jeff Angers told Trade Only Today, a website for the marine industry. “To just pass a law and leave it to the bureaucrats to implement it is akin to buying a Porsche and parking it in a bad neighborhood. You have to actively be involved in the process, or you might find your Porsche up on blocks and stripped.”

NOAA may find itself under considerable pressure to change how it does business, but there have long been hints of the possibility of change there in the form of the half-dozen economists on the staff of the National Oceanic and Atmospheric Administration’s Alaska Fisheries Science Center.

For comparison sake, the Alaska Department of Fish and Game has none. The Alaska Board of Fisheries largely regulates the state’s valuable salmon fisheries with little thought as to where and how salmon harvests produce the biggest, economic return to the state.

NOAA economists have, in the past, largely focused their efforts on climate change and its possible implications for industrial-scale harvests such as the $1.3 billion pollock fishery that operates largely out-of-sight in the Bering Sea off Alaska’s coast.

Much of the reason for that in the North Pacific was simple. In terms of total economic value, the sport fisheries were and are little but chicken feed to everyone except the largely mom-and-pop, Alaska-based, small businesses that try to make a living off sportfish charter and guide businesses.

But times change, and sometimes the squawking chickens make so much noise they cannot be ignored. It would be foolish to believe the Science Center took a look at the economic value of the halibut charter fishery by accident.

The 2012–2014 surveys were conducted as censuses of all active charter businesses in Alaska; there were 650 active charter businesses in the 2012 survey, 592 in the 2013 survey, and 572 in the 2014 survey. In contrast, the 2016 survey was administered to a stratified random sample of eligible charter businesses rather than to all eligible charter businesses to reduce survey fatigue among the target population, given that the survey had been conducted several times in previous years.

Overall, the results suggest a statistically significant reduction
in the economic contribution of the charter sector between 2011
and 2012. This reduction in economic contribution likely reflects
the 9% decrease in the number of active saltwater charter businesses in 2012 compared to 2011 (Powers and Sigurdsson, 2016).
In addition, significant management changes in the charter recreational halibut fishery may have also contributed to the 2011–
2012 decrease (to our knowledge, there were no significant
changes in Pacific salmon management in Alaska during the same
period). Starting in 2007, more stringent halibut harvest restrictions were imposed on saltwater charter anglers, first in Area 2C,
then in 2014 in Area 3A too. Specifically, in Area 2C the number
and size of fish that could be harvested on recreational charter
vessels changed from two fish per day of any size (prior to 2007)
to two fish with one having a size limit (2007–2008), to one fish
of any size (2009–2010), and eventually to one fish with a size
limit (2011-current) (Lew and Larson, 2015). The most restrictive
harvest restrictions occurred in 2011, when charter anglers in
Area 2C were limited to one halibut no longer than 37 inches
(which translates into a fish weighing about 23 lbs). Therefore,
charter anglers were only able to bring home smaller halibut.
Since total output in 2011 was highest among years studied, this
may seem counterintuitive except that charter anglers often book
their next trip months, if not a full year, in advance

Of the years studied here, the total
output (sales) from the Alaska saltwater charter fishing industry
in Alaska was found to be (statistically) largest in 2011 and lowest
in the next year, 2012. The total output increased in 2013, which
was a statistically significant increase from 2012, and then
remained at a statistically similar level in 2015.


While several possible reasons for the economic contribution
trends are discussed, most relating to fishing regulations related
to Pacific halibut, a more rigorous analysis is needed that more
formally analyses the structure of economic decision-making in
the charter sector to be able to say more definitively what the role
of regulations are given the potential for confounding factors of
broader socioeconomic conditions, input markets, other political
decisions, biomass changes and stock availability of targeted species, and angler preferences. Future research to better understand
the role these factors have on the economic impact of the charter
sector in Southern Alaska would benefit policy discussions regarding saltwater sport fisheries, such as the upcoming review of
the Pacific halibut allocation between the charter and commercial
sectors planned for 2021 by the NPFMC (see https://www.npfmc.
org/research-priorities-3/). For this review, the Southern Alaska
SAM model and jackknife approach developed here provide the
basic tools necessary for generating point estimates and standard
errors of the economic impact of allocation changes for the charter sector. However, a presently absent but necessary piece needed
to operationalize such an economic impact analysis is the link between different Pacific halibut allocation amounts and their
effects on charter businesses’ labour decisions, costs, and revenues, which represent the “shocks” that propagate economic
impacts. Under the CSP, halibut allocations to the recreational
charter sector translate into harvest restrictions on charter boat
fishing, which currently take the form of limits on crew harvest,
daily, and annual limits for charter client anglers, and restrictions
on when charter fishing trips for halibut can occur (IPHC, 2018).
These charter-specific regulations are not tied to specific allocation levels, but are determined by the NPFMC in a public process
described in the CSP (78 Federal Register 75844). To the extent a
decrease in the halibut allocation to the charter sector occurs that
triggers more restrictive regulations on charter anglers and businesses, charter businesses may have heterogeneous responses,
with some shifting effort away from Pacific halibut to focus on
other species, changing the length or type of fishing trips they offer, or exiting the sector altogether. The economic impacts can
then be measured to the extent these effects can be translated into
shocks used in the Southern Alaska SAM model. Some research
to understand the role fishing regulations have on anglers’ valuation of saltwater charter fishing trips has been done that found
recreational fishing values are sensitive to harvest regulations
(Lew and Larson, 2015), but additional research is needed to be
able to forecast changes in charter fishing trip demand and the
consequent effects on the charter industry.
The approach followed in this study for estimating standard
errors of the economic contributions differed from existing studies (English, 2000; Seung and Lew, 2013; Lew and Seung, 2014)
by utilizing a jackknife resampling approach to account for the
input variance rather than bootstrapping. This was simple and
straightforward to apply, begging the question why more economic impact and economic contribution studies do not apply
similar methods to generate estimates of the variance of their estimates. Estimating the variance of economic impacts or contributions allows for statistical testing of hypotheses central to policy
decisions, such as whether an economic impact associated with a
policy intervention is statistically significant or not, whether the
economic impact of one policy intervention exceeds that of another, or whether the economic contribution of one industry is
statistically greater than another. Relying on point estimates of
economic impacts and contributions in policy analyses runs the
risk of arriving at the wrong conclusions because the analyses are
made with incomplete information. Thus, in cases where there
are known sources of variation in the inputs to economic impact
models, measuring the variance of impact measures should be of
central importance; the jackknife approach presented here provides a feasible way to procure this information.
One caveat related to the specific approach presented here is
worth noting—even though the jackknife approach is computationally less intensive than the bootstrap, it may lead to inconsistent estimates in cases where the input data are not “smooth”
(Efron and Tibshirani, 1994). In this case, the jackknife was convenient because of its consistency with how standard errors of
population-level inputs (costs and revenues) were generated with
the underlying data imputation (K-nearest neighbour) approach.
However, the large number of expenditure categories and presence of item non-response indicate there could be gains from
bootstrapping standard errors. Future research could examine
how to apply a bootstrapping-based approach in both the data
imputation process and regional economic modelling.
And finally, this study used a single-region model—a SAM
model for the Southern Alaska economy. However, several recent
studies (Kim et al., 2017; Seung and Lew, 2017) have shown the
importance of accounting for linkages between multiple regional
economies when modelling economic impacts and contributions
from recreational fishing activities, particularly for regions that
are closely linked economically. The economic contribution of
the charter sector is likely not limited to Southern Alaska because
the Alaska economy is strongly interconnected with the economies of other US regions, importing large amounts of goods and
services and factors of production from these regions. Thus, a
multi-regional SAM modelling framework is likely to capture the
full economic contribution of the Alaska charter sector transpiring in other US regions, and thus represents a useful direction for
further extensions of this work.



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