Rent-Seeking in the U.S. Atlantic Sea Scallop Fishery
By Steven F. EdwardsABSTRACT
Rent-seeking in the U.S. Atlantic sea scallop fishery involves political allocation of access to sea scallop resources. Four phases are identified. U.S. fishing interests lobbied the State Department and Congress for four decades to exclude foreign fishermen from coastal resources, including Canadian scallopers from Georges Bank in the Northwest Atlantic. Northeast fishermen were at a crossroad in 1977 when the FCMA was implemented. Instead of advocating property rights to capture rents, however, they lobbied for open access and invested heavily in fishing capital. Industry marginal profit in the sea scallop fishery became negative by 1982 when catch restrictions were finally implemented. By 1994 fleet size and effort had increased ten-fold, and average vessel profit was negative.
At industry's request, limited entry and individual vessel effort quotas were introduced in 1994, but an asymmetric distribution of potential rents has blocked transferability. Only 5 percent of the estimated 147 firms together own 27 percent of the permits. The ratio of potential annual profit is as high as $1.5 million to $150 thousand among firms.
Rent-seeking is now divided between making effort quotas transferable and a formative zoning policy that grants exclusive uses of the ocean floor. The latter policy requires competition with environmental groups that lobby for marine sanctuaries.
Keywords: rent-seeking, marine fisheries, property rights