At present, fisheries are characterised by small stocks, excess capacity and low profitability. It is possible, however, to achieve a sustainable fishery through a policy that departs from economic behaviour. This is attained by providing incentives that cause the fishermen’s economic decisions to work in favour of a sustainable development
Managing fisheries with individual quotas implies that each fisherman gets the right to a share of the Swedish catch quota or effort quota. These quotas can then be traded among the fishermen. Quota trading will lead to a reduction of excess capacity if some of the fishermen decide to sell out in order to leave the fishery. In this case, they will get an economic compensation for leaving the overcapitalised fishery. Individual quotas will also provide an incentive for stock enhancing measures since large stocks will increase the value of the quota.
The report draws on experiences from countries where individual quotas are used as a part of fisheries management. The most evident effect of individual quotas is an adjustment of the fishing capacity to the biological limitations, which implies a reduction of the fleet for a fishery with excess capacity. Quota trading may cause a concentration of quota holdings to a limited number of market participants. If this is not in line with other policy goals, it is possible to restrict part of the trade in order to achieve those goals. Individual quotas do not solve all management problems in fisheries, but for many issues they cause the economic incentives to be in line with society’s interests.