Sustainability and wealth creation, but no consensus: Recent decades in Iceland's ITQ-managed fisheries

This paper describes the main developments, issues, and disputes surrounding Iceland's fisheries and the individual transferable quota (ITQ) system governing them. The path to the ITQ system in Iceland started in 1979 in some pelagic fisheries. A substantial step was made in demersal fisheries when moving toward an individual vessel quota (IVQ) system in 1984. The biggest milestone in management was reached in 1990 when a comprehensive ITQ system was introduced that covered most Icelandic fisheries. Overfishing was a problem in the early days of the ITQ system. The path to sustainable fisheries was long and gradual, and now, most fish stocks are sustainably managed. There is clear evidence that the current fishing rights holders in Icelandic fisheries have demonstrated environmental stewardship because they have not opposed reductions in the total allowable catch (TAC) of important species. The economic performance of the industry has improved, and both the fishing and processing parts of Iceland's fisheries are now very profitable, and the fishing component is paying significant resource rent taxes. The industry has changed considerably, fishing rights have been consolidated, primary fish markets have been liberalized, and vertically integrated firms dominate the Icelandic fishing industry. Fishing rights (permanent quota shares) are very valuable, so entering the industry for new participants is difficult. The Icelandic ITQ system is now and has always been very controversial and under heavy political debate and scrutiny.