Solving the Galapagos Economic Turmoil

By Leanne Veldhuis

Ecuador has some of the highest potential to become a leading economic force in South America. It has abundant resources in dozens of industries, including petroleum, textiles, tourism, agriculture such as coffee and cocoa, and of course, a booming fishing industry. However, because of a large-scale economic recession caused by a plunge in the petroleum trade, weather chaos caused by El Nino, and an overall slowing of international markets, Ecuador's economy is in desparate need of revival. According to John Price of InfoAmericas, "Ecuador's economy lost nearly two-thirds of its value relative to the US dollar in 1999"
(http://tendencias.infoamericas.com/article/2001/1001/1001_economic_outlook.htm). Consequently, Ecuador has become slack in enforcing many of its environmental conservation laws and has allowed more tourists and fishing around its prize economic gem, the Galapagos Islands. An article entitled “Galapagos Evolution and Conservation states that “The fishing industry is one of the prime culprits in the destruction and extinction of marine life… due to wide shark nets that suck in all forms of ocean life without prejudice… to the intended fisherman’s prey (http://www.thebestofecuador.com/evolution.htm).  In fact, the Galapagos suffers from extreme economic turmoil. Due to numerous conflicting interests between the fishermen, the Galapagos National Park, and Ecuador itself, there are frequent fishermen strikes, acts of violence against park rangers, and an seemingly hopeless economic situation for Ecuador's fishing industry. But, there is a solution. In order for an overall improvement in the lifestlye of the islanders to be effective, their approach to their economy must change. Individual transferable quotas are the best solution to make the Galapagos fishing industry both an industry that continues to be lucrative, as well as a safe industry that will not exhaust its own product.

Individual transferable quotas work as such:

Individual transferable quotas (ITQs) are an economic approach to dealing with industries that risk depletion of natural resources or produce like fishing. Here is an overview of how they work: ITQs work like stocks. At the beginning of the fishing season, the government decides on a certain amount of total fish that they will allow to be caught for that year. This quota is known as the "Total Allowable Catch" (or TAC). Fishermen then purchase the rights to fish a certain amount of this Total Allowable Catch quota. As a result, the fishermen can only fish the amount of fish for which they bought the rights to. The TAC changes from year to year, depending on the abundance of fish. Therefore, this gives fishermen as incentive not to over-fish, so that there will be more fish to catch next year. They basically define property rights and help to conserve the industry. In theory, this will wipe-out over-fishing since there is no incentive for it – fishermen can gain no profit from fishing in excess above their quota limit because the government will not purchase their fish since this would increase the TAC and cause inflation. It would be in the best interest of Ecuador to discourage fishing over the TAC limit so as to stabilize and strengthen the industry. (Organization for Economic Co-operation and Development (http://www.oecd.org/LongAbstract/0,2546,en_2649_34285_2078040_1_1_1_1,00.html).
ITQs are politically acceptable and advocate a type of “Free Market Environmentalism” according to the article “Individual Transferable Quotas in Theory and Practice” (http://www.ioes.hi.is/publications/books/b9902.html). ITQs have worked successfully in New Zealand, Australia, Maine, Iceland, Tasmania, California, and many other places.

The Seafood Industry Council says that in New Zealand, for example, the individual transferable quota system "lies behind New Zealand's reputation as the world's leader in sustainable fisheries management" (http://www.seafood.co.nz/business/mgmtsus/quota.asp). In New Zealand, the New Zealand Ministry of Fisheries sets an annual total allowable catch for each stock of fish. The idea is to enhance fish populations so that they can support as large a yield as possible; this yield also takes into account environmental, social, and economic factors, such as the current abundance of the fish populations and current economic strength of the country. To aid in preventing a black market of fish, enforcement occurs in a number of ways. There are detailed reports that track the flow of fish from a fishing vessel to a licensed fish exporter. All trades are registered under a program called "FishServe". In addition, there are satellite monitoring programs and an at-sea surveillance program. One complaint about ITQs is the tendency of large fishing firms to purchase most of the shares of quotas and buy a monopoly over the industry. This did not happen to any large extent in New Zealand. Its industry started with a few “big players” and small local fishermen, and it has remained the same today, except that the large companies have increased the size of their holdings from when the ITQ system was first implemented.  Afterall, according to a cover story article from the Property and Environment Research Center (PERC), “Whether tradable permits are being applied to fish, pollution, or other resource problems, the ability of firms to buy and sell quotas in a well-functioning market is necessary for achieving efficiency gains” (http://www.ifqsforfisheries.org/). Efficiency becomes a further possiblity “When fishermen have access to a guaranteed share of the catch, [because] they have an incentive to stop competing to catch as much as possible and start improving the quality of their catch” (http://www.ifqsforfisheries.org/). Furthermore, the Galapagos would benefit from an ITQ system because it would add another dimension to its economy, that of a sale AND lease market, since ITQs can be traded, leased, and sold like stocks. A Fisheries Act could limit the amount an individual person or company can own so that no one group can develop a monopoly. The job of regulating and implementing a similar system in the Galapagos can go to our International Commission Biopreserve.
   
One further example of successful ITQ systems (out of dozens of examples to choose from) comes from Australia. The town of Port Lincoln is arguably said to include “the highest number of millionaires per capita in the southern hemisphere” (Tierney). The reason? ITQs. In Port Lincoln, lobsters are the main seafood in the industry. Lobstering became very successful due to a system of quotas pioneered by Australia and nearby neighbor, New Zealand. The quota system is actually run partially by the fishermen themselves with government supervision. The government sets the limit on the total number of lobster traps they will allow. Licenses for the traps are designated to already working fishermen, and newcomers much purchase a license from a current fishermen. In this way, the number of fishermen is limited, and the fishermen are not subjected to spiraling competition but rather make it their goal to catch only the finest quality lobsters. Another very positive aspect of the Australia system is that “they pay for scientists to monitor the fishery, and they have imposed strict harvesting limits that allow lobsters to grow into sizable adults” (Tierney). This keeps the scientists happy too, and sets up a workable relationship between the scientists and the fishermen, one in which the scientists report on the current health of fish populations, and the fishermen adjust their catch accordingly. Furthermore, this private system of property rights “enable fishermen to avoid what ecologists call the tragedy of the commons: the destruction of a common resource because it is open to all” (Tierney).

   
ITQs can definitely work in the Galapagos Islands. The Organization for Economic Co-operation and Development (OECD) found that “ITQs work best in small, isolated fisheries where there is some social cohesion and where education and re-training programs are offered if necessary”
(http://www.oecd.org/LongAbstract/0,2546,en_2649_34285_2078040_1_1_1_1,00.html).
The ITQ system can easily be established. Initially, fishermen will be given an amount of quotas based on their catch from previous years. From that point on, the government will be in charge of allocating an environmentally safe number of Total Allowable Catches (TAC), and will also be in charge of enforcing the quota limits. The long-term benefits are impressive.

In order for ITQs to be successfully inplemented, several key areas of support must be utilized. According to the Charles Darwin Foundation, the following are
key issues:


• Work with local fishermen to help them organize and unify their cooperatives, to train them in product preparation, quality control, and marketing requirements and operations to guarantee appropriate supplies to the tourism industry, and to eliminate middlemen and buyers from the outside.
• The international community must support Ecuador's efforts with major financial and technical cooperation support,... because such an area of national and international importance can not be expected to be financed solely by its sovereign, owner country.
• Placing the management of the reserve under the authority of a single government agency and requiring the cooperation of other agencies to support and aid that single agency in the management and implementation of the reserve
• Strengthening that single agency with a specialized department or program aimed specifically to manage the Galapagos Marine Resources Reserve, which implies special new personnel with appropriate training and a specific, substantial budget."

(Our international commission will perform such duties.)


Therefore, not only would ITQs balance and help sustain the Galapagos economy in a safe and environmentally-sound fashion, but they also would heavily emphasize the need for education and conservation awareness. Education is key.  ITQs will help stabilize Ecuador’s economy because it will discourage a massive race of countless fishermen to catch as many fish as possible in order to survive economically. The fishing season will have an initial monetary basis upon which to base every fishermen’s income in the total economy. The fishermen don’t have to  determine their economic wealth by over-fishing; instead, they can purchase a sizable amount of quotas to fish.

Some solution is better than none. The current economic crisis in Ecuador has caused a ripple effect into the Galapagos islands. In order for the Galapagos to become a truly efficient group of islands with the best possible life for its people, its people must have stable jobs with long-term benefits. Fishing is one such area in need of reform. ITQs provide the outlet for scientists and fishermen to work together. The only way a long-term solution can be planned is if fishermen recognize the strong need to conserve and limit their desire to over-fish. Sometimes, less is more.

Sources
Tierney, John.   “A Tale of Two Fisheries.”  < http://www.californiafish.org/TaleTwoFisheries.htm >

(can view these websites for additional info)
http://www.ioes.hi.is/publications/books/b9902.html
http://www.oecd.org/home
http://www.environmentaldefense.org/documents/534_Oceans_building%20conservation.htm
http://www.seafood.co.nz/business/mgmtsus/quotas.asp
http://www.darwinfoundation.org/articles/aaas00009601.html
http://www.fao.org/DOCREP/005/Y2498E/y2498e0b.htm
http://www.atsea.org/issues/itqpaper.html   
http://www.orangeroughynz.com/qrns.html
http://www.colby.edu/personal/t/thtieten/fish-ice.html


ECUADOR ECONOMY 2004
http://www.immigration-usa.com/wfb2004/ecuador_economy.html


WEBSITE FOR: Special Law for Galapagos
http://www.darwinfoundation.org/articles/n5900049816.html

GENERAL GALAPAGOS ECONOMY WEBSITES
http://www.galapagos-ch.org
http://www.ecuaworld.com/links/eclnks1.htm
http://home.cc.umanitoba.ca/~benbow/galapagos.html
http://www.darwinfoundation.org


This last one:
http://www.goecuador.com/mindo/index_ed_marine.html
This one's about how fishing protests regarding restraints to fishermen in the marine reserve are hurting their income. If such political tensions continue, the Galapagos could be placed on the "Threatened Patrimonies" list and lose international funding. Basically, there is a major conflict between those who value Nature and recognize the need to preserve it, and those who are ignorant and think that Nature will always be able to renew itself.

The webpage of the Galapagos Conservation Trust
http://www.gct.org/
- Contains articles about illegal fishing. In the article “Fishermen Picket Galapagos National Park” fishermen called a strike in February 2004 to demand that certain fishing regulations be repealed. They even blocked access to Galapagos National Park offices and threatened with violence. Illegal fishing boats are frequently being arrested. The GNP patrol boat “Guadalupe River” has been especially effective in capturing fishermen and protecting the marine reserve. Imagine, then, how much more effective the GNP could patrol the waters if they had more funding, personnel, and equipment.

And then basically, the other main economic issue is the value of ecotourism to Ecuador. Without it, its economy would be almost nonexistent. Because ecotourism in the Galapagos is so vital to the Ecuadorian economy, this causes the government to waver from following environmental laws. An international commission providing aid and guidance to running the Galapagos would assist Ecuador in relieving its dependence on tourism income.

Ecotourism websites:
www.panos.org.uk/Docs/reports/Ecotourism.doc
http://www.gct.org/jan04_2a.html
http://www.darwinfoundation.org/articles/index.html

Also, the economic situation of Ecuador compared to the rest of South America In 2000 was actually one of best compared to other countries of similar size in
terms of exports and imports (Hemisphere Database).