FISH

Illegal Catch Share Programs:

Learning from Iceland’s Mistake
Fact Sheet • April 2010

Iceland’s Fishing Woes

T he North Atlantic island nation of Iceland has historically been closely tied to the
fishing industry. Years of experience have taught local fishermen many valuable
lessons affecting their livelihoods. In particular, many Icelandic citizens are outraged
by an unfair fishery management practice that the government is now trying to reverse:
catch share systems that privatize access to fish.

The privatization of Iceland’s fisheries in the 1980s and
1990s provided a get-rich-quick outlet for a select few,
while it marginalized existing small-scale fishermen and
left out future fishermen and the public entirely. The
system, called Individual Transferable Quotas (ITQs),
undermined both fishing communities and the national
economy.
The anticipated theoretical benefits of ITQs, including
resource stewardship, fell far short of expectations. Over
time, this privatized system failed to provide for a strong
cod fishery and has had far-reaching legal, economic and
social implications.
In the current system, access to fish is controlled by private
hands, despite being a public resource. The Icelandic gov-
ernment is reviewing how to reclaim public control over
who is permitted to fish. Unfortunately, once a govern-
ment gives this access to private entities, it is challenging
and expensive to reacquire it. The Icelandic system needs
to change, and the world needs to learn from Iceland’s
critical mistake.
Iceland’s Fishing Industry Profile
Highly productive fishing grounds surround Iceland, both
within and outside its 200-mile marine Exclusive Economic
Zone (EEZ). Iceland is one of the world’s top 20 fishing
nations, measured by both volume and value. The principal
focus of the industry is catching and processing fish that
live on the ocean bottom: primarily cod, but also haddock,
pollock and redfish.1

Catching, processing, distributing and selling fish are

major sources of employment in Icelandic coastal com-
munities. The export of fish products weighs considerably
in the nation’s foreign currency earnings. In 2007, Icelan-
dic fish products represented 42 percent of merchandise
exports, roughly 28 percent of total exports and 7 percent
of gross domestic product (GDP).2 Foreign currency earn-
ings are particularly important when the local currency
is weak, as is the present case with Iceland. The fishing
sector is regarded as an important economic stabilizer for
the nation.3

Privatized Catch Shares

In the 1980s and 1990s, Iceland began to implement
fishery privatization and market liberalization.4 The Fisher-
ies Management Act was passed during this period, which
shifted the management of all commercially important fish
species to operate according to the privatized catch share
program known as ITQ. Under this system, an annual
catch limit termed the Total Allowable Catch (TAC) is set on
the basis of a biological assessment of how abundant a fish
stock is. The TAC is then divided into fixed-quota alloca-
tions among fishing vessels, relative to their percentage-
based ITQ holding. The resulting portion is referred to as
their “catch share.”
Limited restrictions exist to protect small operators from
industry consolidation and foreign ownership, but they are
The Lucky Few and Those Who Are Left
not very effective. In fact, as of June 2008, the 15 larg-
Behind est quota holdings are from fishery companies owning 66
At the start of the system, catch share allocations were percent of the total.5 Feudal metaphors are often used to
based on a vessel’s catch history during arbitrarily chosen describe the current political economy of fishing in Iceland
years. Existing vessel owners were “grandfathered” into — for instance, large catch share holders are referred to
the system, ensuring them sole allotment of very valuable as “sea-lords” because they dictate who gets to fish and
catch shares, for free and essentially forever. This transfer of control the quantities and quota leasing rates. 6
control from public to private hands was an act of privati-
zation.
Resource Rent
Although the fish stocks of Iceland are a publicly owned
Consolidation resource, quota “holders” initially paid nothing to the pub-
Following privatization, anyone wanting to fish was forced lic for the exclusive use granted them under the privatized
to pay private individuals or firms for their quota. They had catch share system. In an attempt to alleviate public ten-
to buy or rent catch shares from those vessel owners that sions created by the unfair redistribution of wealth under
received some at the start of the program or from entities the system, a catch fee was introduced starting at 6 percent
that had bought catch shares from someone else. Once ac- on September 1, 2004, which gradually increased to 9.5
cess to the fish resource became a privatized, tradable and percent by Sept.1 2009.7 This resource rent (payment to
essentially perpetual privilege, the opportunity to catch fish the public for utilizing their property) is paid in addition to
had become a private financial instrument, rather than a other fees to cover management costs for science and for
valuable public asset. enforcement of the management system.
Public Opinion
Public support for resource rent consistently receives a
two-thirds majority in opinion polls. Some proponents
have based their support of the catch fee on considerations
of social equity, while other advocates have pointed out
that higher resource rent fees will make the fishing industry
more accessible and attractive to young entrepreneurs by
lowering the price of fishing rights and thus reducing the
capital requirement for new entrants.8
Legal Challenges
Iceland’s ITQ system has been challenged repeatedly in
court. From 1998 to 2001, Iceland’s courts saw several le-
gal challenges to the privatized catch share system — some
won, some lost. Ultimately, fishermen took their case to
the United Nations Human Rights Committee (the Com-
mittee) alleging that privatization violated the International
Covenant on Civil and Political Rights because the system
forced fishermen without quotas to pay money to a privi-
leged group of citizens, the “holders” of quota, in order to
pursue their occupation.
In October 2007, the Committee sided with the fisher-
men and ruled that Iceland’s privatized catch share market
violated international law. In its written decision, the Com-
mittee reasoned that, although Iceland’s Fisheries Manage-
ment Act stated that the fishing banks around Iceland were
the common property of the people of the nation (as is also
the case in the United States), the privatized catch share
market transformed the right to use and exploit this public
property into individual property. The Committee found
that:
“…the property entitlement privilege accorded perma-
nently to the original quota owners…is not based on
reasonable grounds.”9
The Committee argued that allocated quotas no longer
used by their original holders should revert to the State for
allocation to new quota holders in accordance with fair
and equitable criteria. Although Iceland failed to imme-
diately change its policy to comply with the decision, in
2009, the newly elected Icelandic government committed
to review the country’s fishery management system. It has
announced that it is considering reforms.
Proven New Approach: Cap-Rent-Recycle
A Cap-Rent-Recycle catch share model (see Cap-Rent-Re-
cycle fact sheet10) is a solution that is being considered. In
such a system, the government retains management control
over the public’s fish, places a cap on catch levels and
rents catch shares on a fixed-term basis to eligible entities
such as independent fishermen, communities and firms,
and then invests the revenue in better management prac-
tices. This approach has been very successful in Namibia,
one of the world’s top 10 fishing nations (see Namibia fact
sheet11).
The Icelandic government is considering this solution but
must first regain control of the privatized catch shares. To
do this they are considering buying back (or reclaiming
without payment), all of their catch shares at 5 percent per
year over 20 years. The country could then implement a
Cap-Rent-Recycle approach, while holding some quota off
the market to allocate to vulnerable coastal communities.
This hybrid arrangement would be more equitable, and
it would also be a source of revenue for the beleaguered
Icelandic economy.

Such an approach would also help the United States avoid

lengthy, costly legal battles, as well as policy changes simi-
lar to those experienced in Iceland. Since the United States
ratified the International Covenant on Civil and Political
Rights in June 1992, it should respect this legal authority
and declare the use of catch history as the basis of initial
quota allocation illegal under international law.

The Icelandic people have learned the hard way about the
general peril to their society from privatization of access
to public fish resources. The United States would be wise
to learn from Iceland’s mistake and adopt a fair resource-
allocation system.

Endnotes
1 Icelandic Ministry of Fisheries and Agriculture, “Icelandic Fisheries
Impacts - Exports” Icelandic Ministry of Fisheries and Agriculture
Web site, http://www.fisheries.is/economy/fisheries-impacts/export/,
accessed January 2010.
2 Icelandic Ministry of Fisheries and Agriculture, “Icelandic Fisheries
Impacts” Icelandic Ministry of Fisheries and Agriculture Web site, 9 United Nations, Human Rtights Committee, International Covenant
http://www.fisheries.is/economy/fisheries-impacts/accessed, January on Civil and Political Rights, (91st session) Communication No.
2010. 1306/2004. CCPR/C/91/D/1306/2004. December 2007, at 20.
3 Icelandic Ministry of Fisheries and Agriculture, “Icelandic Fisheries 10 Food & Water Watch, “Fish - Ocean Policy and Fair Fish”, Food &
Impacts - Employment” Icelandic Ministry of Fisheries and Agricul- Water Watch Web site, http://www.foodandwaterwatch.org/fish/
ture Web site, http://www.fisheries.is/economy/fisheries-impacts/ oceans-policy/cap-rent-recycle-common-sense-on-catch-shares, ac-
employment/, accessed, January 2010. cessed January 2010.
4 The Central Bank of Iceland, The Economy of Iceland - 2008, at 11 Food & Water Watch, “Fish - Ocean Policy and Fair Fish”, Food &
18; The Central Bank of Iceland Web site, http://www.sedlabanki. Water Watch Web site, http://www.foodandwaterwatch.org/fish/
is/?PageID=237, accessed, January 2010. oceans-policy/fair-fisheries-management-in-namibia, accessed Janu-
5 Ibid. at 28 ary 2010.
6 Elnar Eythorsson, “Individual Transferable Quotas. Feudalism at Sea;
Iceland’s experience with ITQs is an eye-opener to the problems and
prospects of fisheries management by quotas”, Samudra April 1999
Vol. 22. 1999, at 30.
7 Icelandic Ministry of Fisheries and Agriculture, “Icelandic Fisheries For more information:
Management – Individual Transferable Quotas”, Icelandic Minis- web: www.foodandwaterwatch.org
try of Fisheries and Agriculture Web site, http://www.fisheries.is/
email: info@fwwatch.org
management/fisheries-management/individual-transferable-quotas/,
accessed, January 2010. phone: (202) 683-2500 (DC) • (415) 293-9900 (CA)
8 Thorolfur Matthiason, “Rent Collection, Rent Distribution, and Cost
Recovery: An Analysis of Iceland’s ITQ Catch Fee Experiment”, Copyright © April 2010 Food & Water Watch
Marine Resource Economics, Vol. 23, at 106.