Chapter 6 from The Technology of Property Rights
By Gregory B. Christainsen and Brian C. GothbergWe do not own this Earth, we simply borrow it from our childr Am I prepared to die to defend the whales? The answer is yes. I would consider it an honour to die in their defense.1
- Captain Paul Watson
Founding director, Greenpeace Founder,
Sea Shepherd Conservation Society
No cry of environmentalists has been as loud as ?Save the Whales!? Indeed, several stocks of whales were decimated in the early and middle parts of the twentieth century. Under the circumstances, it was quite plausible to regulate whaling. In what follows, it will be seen that certain advances in technology played a major role in depleting whale stocks, but that other technological developments may make possible some deregulation of whaling in the future.
Property Rights and Regulation for Wildlife
To help organize the discussion, we will first outline a theory of property rights and regulation for wildlife. Then we will note how the theory applies to whales. Following Anderson (1998) and Lueck (1991), the optimal regime of property rights and/or regulation for a creature depends on the pattern of land (or water) ownership and the creature?s territorial needs. If the only use for land were the provision of habitat for the creature, it would be efficient to define landownership rights that corresponded to the animal?s requirements. A single landowner could own an entire stock of wildlife, but if there are many possible uses for land, the ideal plot size may be smaller than the wildlife?s requirements. The wildlife might then range over an area that exceeds the domain of any single landowner.
An organized group of landowners might still play a role in governing access to the creature in such cases, but much depends on the transaction costs involved. At one extreme, it might be possible at relatively low cost to define and enforce property rights to individual members of the stock of wildlife at issue. If, at the same time, contracts between the wildlife owners and landowners can be negotiated and enforced without much difficulty, the wildlife regime need not involve much public regulation. If ownership of individual animals is feasible, but contracting with landowners is costly, it would be possible under the principle of eminent domain to give the creature the right of way to the territory in question.2
Even if it is not possible to have ownership of individual animals, landowners may be able at low cost to contract with one another to form an organization to sell hunting or viewing rights to animals (e.g., elk) that stray onto their collective property. Going one step further, a broker can act as an intermediary between wildlife consumers and a group of landowners. At the other extreme, the costs of domesticating animals and of contracting among multiple landowners might be so high that they exceed the value of the wildlife. In such cases, the wildlife might be left to exist as an open-access commons. Open access, however, can result in the wildlife stocks being depleted or even extinguished, so public regulation of hunting becomes appealing as a way to prevent the wildlife?s value from being dissipated.
Tradable harvesting quotas are attractive in the event that some hunting can be safely allowed, but establishing property rights to the stock itself is not feasible. Tradable quotas put a limit on the total amount of hunting, and they encourage high-cost, low-profit harvesters to sell their entitlements to lower-cost, higher-profit producers or to environmental groups who would retire the permits (as in Anderson and Leal 1997, 103).
Keeping these considerations in mind, we can appreciate the difficulties historically encountered with respect to whales. On the one hand, their territorial requirements are typically much greater in size than the water holdings of any person, private organization, or association of private organizations. On the other hand, it has rarely been possible to establish property rights to individual animals except after they have been harpooned. Whales therefore existed for many years as an open-access commons. Pressures to regulate whaling emerged, however, as some stocks of whales became severely depleted. Since the territorial requirements of whales typically exceed a single country?s jurisdiction, regulation became international in nature. The regulation has not had the unanimous approval of the nations involved, and the controversies that it has provoked have led some countries to secede from the regulatory management.
Early Commercial Whaling: The Impact of Technology under Open-Access Conditions
Commercial whaling became significant in the 1600s with the establishment of large whaling fleets by the English and the Dutch. As nearby whale populations began to be depleted, vessels ventured out into the Atlantic as far as Greenland (Jackson 1978).
In the 1700s, vessels from the American colonies also became common in the Atlantic. The United States in due course dominated the industry. By the mid-1800s, there were more than 700 American ships involved, with most of them sailing out of New England ports such as New Bedford and Nantucket. The technology for capture was primitive, and whales were harpooned from open boats (Starbuck 1964).
The industry changed in 1864 with the invention of a whaling cannon by a Norwegian, Svend Foyn. This cannon was capable of launching harpoons with an explosive charge. Prior to this, whalers had to focus on slower-moving species of whales such as the bowhead, sperm, gray, and humpback so that kills could be made with thrown harpoons. Foyn?s innovation, along with the subsequent evolution of faster, motor-powered boats, enabled whalers to go after swifter species such as the blue, sei, and fin whales (Tonnessen and Johnsen 1982).
With the advent of underwater sonar, helicopters, and weaponry of increasing firepower, twentieth-century whalers were able to harvest tremendous numbers of their prey. Compressors allowed whalers to pump pressurized air into harpooned whales that otherwise would have sunk, thereby making the recovery and processing of the rorquals much easier. Perhaps the decisive innovation was the invention in 1925 of the stern slipway for factory ships (Tonnessen and Johnsen 1982). This enabled whalers to haul animals on deck and process them without a land-based whaling station. Ships now flourished in the whale-rich pelagic areas of the Antarctic. By the 1930?31 whaling season, there were forty-one factory ships in operation, and they harvested more than 37,000 whales. A blue whale could subsequently be dismembered, butchered, and pressure-cooked to produce meals and oils in forty-five minutes (New Encyclopaedia Britannica 1991).
The Emergence of Regulation
As technological advances reduced the costs of whaling, whale populations dwindled and political discussions multiplied. Beginning in the 1920s, members of the whaling industry (more so than environmentalists) sought a formal mechanism to conserve whale stocks. The effort was made primarily out of considerations of self-interest, not quasi-religious concerns about animal rights. Indeed, the discussions were driven by two economic considerations: the desire to form a cartel to support the price of whale oil and the necessity of preventing overexploitation of the whales.
In 1931 representatives from several whaling nations met in Geneva under the auspices of the League of Nations and agreed to terminate the harvesting of right whales, so-called because their ample size and slow swimming speed made them the right whale to catch. An exception was made for harvests by indigenous peoples who wanted to hunt whales primarily to support subsistence consumption (Gambell 1993).
Toward the end of World War II, discussion s began again in earnest and climaxed in Washington, D.C., with the 1946 International Convention for the Regulation of Whaling (ICRW) (U.S. Department of State 1946). The parties to the ICRW also agreed to establish the International Whaling Commission (IWC), which began with fourteen member-countries.
The IWC was empowered to regulate the whaling industry, but was not given any authority to amend the ICRW itself. The IWC originally established a whaling limit for large cetaceans (e.g., those with members that are typically more than four meters [thirteen feet] long) through what were called blue whale units (BWUs). In terms of yielding whale oil, it was estimated that on average one blue whale is equal to 2 fin whales, 2.5 humpbacks, or 6 seis. A catch limit of 16,000 BWUs, which was estimated to be 46 percent of the harvest during the 1930?31 season, had already been agreed upon by the participating nations by 1945 (Tonnessen and Johnsen 1982).
This limit was, unfortunately, inconsistent with the conservation of whale stocks. Stocks continued to shrink. Falsification of catch data by the Soviet whaling fleet was another problem. To cite the most egregious deception, the Soviets reported the killing of 2,700 humpback whales in the Southern Hemisphere from the late 1940s to the early 1960s. The actual number hunted was closer to 48,000 (Clapham 1997, 114). Finally, in 1963, humpbacks were given complete protection south of the equator. Blue whales were largely protected in the area south of 40º south latitude. Complete protection for blue whales in the Southern Hemisphere was approved in 1967. In 1972, an International Observer Scheme was implemented whereby IWC inspectors were stationed at the whaling operations of member-states to confirm compliance with regulations.
From Regulation to a Moratorium
At the 1972 and 1973 annual meetings, the United States called for a moratorium on all commercial whaling. This proposal was voted down on each occasion, whereupon a growing number of environmental activists threatened to boycott goods from whaling nations (e.g., Norway, Iceland, Japan, and the Soviet Union). In 1974, Australia proposed that commercial whaling be stopped only in the case of whale stocks that had been badly depleted. Under this proposal, which was endorsed by the United States, whaling could continue with respect to other stocks of whales as long as it were done on a sustainable basis. The Scientific Committee of the IWC accepted the idea, and a so-called New Management Procedure (NMP) was implemented during 1975 and 1976 (Aron et al. 1999).
Under the NMP, scientific data had to be compiled on a regular basis regarding the sizes of the various whale stocks and their recent rate of growth. It is understood that the sizes of the various stocks cannot be estimated with precision. But most members of the Scientific Committee did not believe that the uncertainty surrounding the estimates was great enough to warrant a halt to all whaling.
Antiwhaling forces were nevertheless able to gather strength. These forces were fueled not only by allegations of serious data problems but also by an emerging animal rights movement and a commission-packing scheme. Animal rights activists led by Greenpeace packed the IWC by recruiting additional nonwhaling countries to become members (Spencer and Bollwerk 1991). The enlarged IWC then approved a moratorium on all commercial whaling in 1982, which became effective in 1986.
Canada seceded from the commission when the moratorium was passed; Iceland withdrew in 1992. In 1999 its parliament resolved that the country should resume commercial whaling. Norway registered a formal objection to the moratorium early on and resumed commercial whaling in 1993. In 1987, Japan submitted a proposal to kill 900 whales annually for research purposes. The IWC passed a nonbinding resolution to condemn the proposal, whereupon Japan countered with a proposal for a harvest of 300 whales. The IWC condemned the smaller harvest as well, but Japan decided to go ahead with it. A harvest has taken place every year since then.
Antiwhaling countries agreed to reconsider the moratorium in return for updated and comprehensive estimates of whale stocks. The Scientific Committee of the IWC was also asked to devise an improved management process, a gesture that suggested a possible resumption of commercial whaling if stocks seemed to be abundant. Under the Revised Management Procedure (RMP), which obtained the unanimous approval of the Scientific Committee in 1993, the objective would be to maintain each whale stock at between 54 and 72 percent of its historical level. A stock of about 60 percent of this level is typically estimated to produce the maximum sustainable yield of whales.
Antiwhalers and whalers alike have usually regarded the RMP?s approach as conservative (i.e., risk averse with respect to the conservation of whales) (Motluk 1996, 12), but the IWC resisted the actual implementation of the RMP. Instead, in 1994, without the approval of the Scientific Committee, it created a sanctuary extending south from 40º south latitude toward Antarctica. No commercial whaling is permitted in this vast area despite the fact that the Scientific Committee estimated (through the use of studies financed by the Japanese) that the area probably contains more than 750,000 minke whales. Philip Hammond, the chairman of the Scientific Committee, resigned because of the commission?s unwillingness to implement the RMP.
The IWC continues to resist any resumption of commercial whaling. The United Kingdom in particular has been quite candid in admitting that its support of the IWC?s policy no longer has any basis in science (Motluk 1996, 12). A U.S. whaling commissioner made a similar admission in 1991 (Aron et al. 1999, 24). There is simply a view that killing whales is wrong, with exceptions made for hunting by aboriginal peoples and for certain research purposes.
Recent years have seen the development of the Revised Management Scheme (RMS) (IWC 1999), which would supplement the RMP with sophisticated enforcement measures such as satellite monitoring of whaling vessels, onboard international observers, and most probably (it is still under discussion) DNA testing of whales and whale products.3 Again, however, the IWC has taken no steps to make the RMS a reality, with some commentators charging disingenuousness; member-countries of the IWC can appear to be flexible by going forward with the development of measures like the RMP and the RMS, but they actually have no intention of giving their approval to any commercial whaling (Aron et al. 1999).
Whale Populations and U.S. Law
In 1989, the IWC decided not to provide whale population statistics except for species/stocks that have been assessed in detail and for which there is statistical certainty. The available estimates are shown in table 6.1.
|Table 6.1 Estimates of Whale Populations|
|Species Location||Time Period||Population||95% Confidence Interval|
Eastern North Pacific
Beauford Seas Stock
Western North Atlantic
Central and eastern
|*Excludes Canadian east coast area. Subject to slight adjustment.
Source: International Whaling Commission (1999)
Under customary international law, each country has control over the whales within its jurisdiction, which now extends 200 miles from its coastline. Whaling is permitted on the high seas unless the country of registry (i.e., the flag under which a whaling vessel is flying) has specified otherwise.
The United States is one of the countries that, for the most part, now forbids whaling. The best known American legislation to protect animal and plant life is the Endangered Species Act, passed in 1973; the Marine Mammal Protection Act (MMPA) was passed during the previous year. The MMPA established a moratorium on the taking and importing of marine mammals, their parts, and products, even if the species in question is not endangered. Eastern Pacific gray whales, for example, are no longer deemed endangered by the U.S. government, but it is still generally illegal to hunt them. Violations of the MMPA may result in fines of up to $100,000 and one year?s imprisonment for individuals and up to $200,000 for organizations. Vessels may have to forfeit cargo as well.
Indigenous Alaskans are permitted to take whales and other marine mammals for subsistence purposes or for use in the manufacture and sale of native crafts. In 1998, the Clinton administration gave its approval to limited hunting of gray whales in coastal waters by the Makah Indians. The Makah reside in the state of Washington, not Alaska, and the whaling was approved for cultural, not subsistence, purposes (Northwest Indian Fisheries Commission 1998).
Recent Technological Developments and Whaling Restrictions
Because some whale stocks have clearly rebounded and people have developed new technologies that have lowered the costs of monitoring whales and whaling, the pendulum may start to swing back toward allowing a certain amount of commercial harvesting. Commercial trading in whale products may resume as well. Some of these developments can be seen in the IWC?s RMS and the current whaling plan in Norway. Recent technologies for tracking individual animals even raise the possibility of establishing complete property rights to whales.
The Revised Management Scheme
Under the IWC?s RMS, it has been proposed that whaling vessels be monitored via the twenty-four satellites of the U.S. Department of Defense?s global positioning system (GPS) or via ordinary radio communications. Vessels for factory-ship whaling or whaling boats that are at least twenty-two meters (seventy-two feet) long would have to be equipped for GPS monitoring. Shorter boats, such as those used by Norwegian whalers, would have to at least be able to communicate with authorities by means of shipboard radio.
The RMS is also noteworthy for its potential use of DNA technologies. Like humans and other animals that reproduce sexually, each whale has a unique genetic code that is revealed in tissue samples (Baker and Palumbi 1994; Cipriano and Palumbi 1999; Palsboll et al. 1997). Samples can be collected by a small dart on a tether to nick the surface of the whale and retrieve a tiny piece of tissue (Lambertsen 1987), by collecting streamers of skin that peel off whales as they bump against each other during social contact (Clapham et al. 1993), and by samples taken from dead whales after either hunting or natural death. As with human fingerprints, a database of many individuals can be built over time. If products are being sold from illegally hunted whales, their DNA can be checked against the entries in the database. Norway has already developed such a database.
Earthtrust, an environmental group based in Kailua, Hawaii, has developed a same-day field test for a whale species that uses a DNA polymerase primer, a chemical that highlights only the DNA characteristics that exist in a single whale stock. Using this approach, Earthtrust has been able to show the origin of meat sold in Japanese markets. Most of the sampled meat has been from (legal) Southern Hemisphere scientific hunting of minke whales, but Earthtrust has shown that some of the meat ostensibly taken from minkes has been from protected whale stocks or from dolphins (Earthtrust 1996, 1?2). The good news is that the extent to which protected whale stocks have been raided appears to have declined over time, perhaps in part because of the advent of DNA testing.
The IWC?s RMS also relies on the human eye to monitor the activities of whalers. The government of each whaling nation is supposed to appoint and pay for inspectors to watch over whalers who operate in its coastal waters. There are also provisions for the possible use of international observers appointed by the IWC.
The inspectors would collect tissue samples, record data on each whale, check vessels, and report on any alleged violations of national law or IWC regulations. They would have the right to contact authorities through the ship?s communications equipment. Vessels would, of course, be subject as well to surveillance by national authorities such as the U.S. Coast Guard, which has its own fleets of ships and C-130 aircraft.
Non-DNA Methods for Tracking Live, Individual Whales
There are a few non-DNA methods for monitoring individual whales in their natural surroundings, the oldest method being a visual one. Humpback and sperm whales, for example, have a pattern of irregularities on the trailing edge of their flukes?the lobes that extend horizontally on each side of their tails. These irregularities are unique to each whale. For decades, observers have been able to verify a whale?s identity by comparing pictures taken at different times.
This method is reliable, but it requires a clear photograph at each siting; the flipping of a whale?s tail in the air is too transitory an event for unaided comparison of flukes. As yet, there is no information technology available to automate the task of examining a photo against a catalog of flukes. But WhaleNet, a National Science Foundation?supported project based at Wheelock College (1999) in Boston, has produced a CD-ROM with fluke photographs that have been taken since 1976 of Gulf of Maine humpback whales. Although the examination of fluke irregularities has been the most common visual way of identifying individual animals, the dorsal fin of each killer whale also has unique characteristics (SeaWorld 1999).
Another method for identifying individual whales pertains to the sounds they emit. Whale songs show characteristics by species and have the potential in at least some cases for identifying individual animals; however, the relationship between singers and the entire population of whales is not yet known. This knowledge has implications not only for the tracking of individual whales but also estimates of herd size based on detected singing.
The most promising set of technologies for tracking individual whales consists of various types of tags that can be attached to them. The word tag may suggest to some people a passive device like a dog tag, but whale tags are actually small data collection and broadcasting units that send out signals by radio or sound waves.
Because radio waves are by far the dominant communications technology for whale tags, the tags are always placed on the dorsal (top) surface of the whale, preferably right behind the blowhole. Salt water is opaque to radio waves at the frequencies being used, so the tag needs to be in the open air to broadcast. A dorsal tag will routinely be out of the water when a whale is at the surface. Other sides of the whale are not above water as often or as long.
Dart tags are usually fired into a whale?s blubber to a depth of about ten centimeters (four inches) by using a small gun or crossbow. The instrumentation can be rigidly attached as part of the dart, or it can trail behind, tethered by a cable one to two meters (three to seven feet) long. Dermal as opposed to hypodermal tags are attached to the surface of a whale?s blubber with an epoxy. A tag is mounted by means of a long pole in an operation conducted from alongside a whale in a small boat. Because such a tag does not injure a whale and because epoxy is organically inert, this type of device can stay mounted for almost three years on average.
Most whale tags broadcast in VHF signals to satellites. As noted earlier, the opacity of salt water to radio waves creates problems for transmitting signals because a dorsal tag must be able to decipher when conditions are dry enough to attempt a broadcast. Each tag is thus equipped with a saltwater switch so it transmits only while exposed to air.
There are more than 7,000 tags and instruments for various purposes in use under the Argos network of low earth-orbiting satellites and ground receiving stations. On average, a particular Argos satellite is accessible to an earth- or animal-based instrument for eight to fifteen minutes as it flies over, depending on the location of the satellite in relation to the transmitter. During that time, the satellite uses measurements of the Doppler shift of the VHF signal to calculate the position of the transmitter. This requires two or more transmissions from the satellite tag. However, position estimates based on just two messages may not be accurate. Ideally, estimates should be based on at least three messages, in which case a whale?s position can be reliably established within one kilometer (0.62 mile).
Lotek Marine Technologies in St. John?s, Newfoundland, manufactures ordinary (nonsatellite) radio and acoustical (sound-transmitting) tags for tracking whales. The cost per tag ranges from US$250 to US$1,100, depending on the specific components involved. Production runs are typically for 20 tags. Runs of up to 100 tags sometimes occur. Lotek reports that large cost reductions would be possible even without further improvements in technology if production could be carried out on a larger scale.4
It is worth noting that transponders for the satellite monitoring of taxis and other motor vehicles now cost less than $80 each. The components of a satellite tag are more sophisticated than those in transponders, but tags could still be far cheaper than they are today if there were simply a bigger market for them.
Neither Lotek nor Telonics, a leading producer of satellite tags, was able to offer estimates on tag installation costs or the costs of processing data received. Professor Bruce Mate, Oregon State University, Fisheries Department, has tagged dozens of blue whales and reports that these costs are indeed formidable. The principal problem is that a boat and crew must be sent out to tag each animal. Time, equipment, and fuel are involved. The total cost of a satellite tag, the installation, and data processing for just six months can thus amount to thousands of dollars per animal. Insofar as high-quality tags can be shot into whales with guns, one can envision times when more exotic devices will be able to tag whales from longer and longer distances. It would then not be necessary to send a boat close to the whale; however, this possibility remains speculative.
The Economics of Whales Today
As noted, property rights are feasible only if the costs of monitoring wildlife are low in comparison to its value. Recent advances in technology have reduced the costs of monitoring whales. The value of whales has decreased in some respects while increasing in others. As suggested by the early regulations agreed to by the nations who participated in the International Convention for the Regulation of Whaling, a key product of harvesting efforts up to that point was whale oil. Petroleum- and vegetable-based oils, however, have since proven to be cheaper substitutes, and the market for whale oil has completely collapsed.5 If it could be shown conclusively that whale oil is superior to fish oil in staving off heart disease, the demand for the former could conceivably experience a revival, but whale meat is today the biggest generator of revenues for whalers.
Norway and the Faroe Islands harvest the most whales and constitute the biggest markets for whale meat, but the harvest in each case is usually fewer than 1,000 whales annually. In Norway, whaling boats with ten or fewer people are the norm. In the Faroe Islands, people in small vessels circle behind offshore schools (pods) of pilot whales and drive them toward land with stones. The whales beach themselves and are then killed with knives. If Japan resumed full-scale commercial whaling, including the possible use of factory ships, it would probably become the largest market for whale meat, but it currently ranks third.
Although minke whales are relatively small, they would be the ones most likely to be harvested on a larger scale if whaling were to become liberalized worldwide. One place where whaling could be very lucrative is the Antarctic. If the population of minke whales in the region is more than 750,000, several thousand whales per year could be harvested on a sustainable basis with the use of modern technology. The harvesting cost per whale could be reduced significantly compared with the situation in Norway.
Fin whales represent another possible source of profits. These whales are typically more than two and one-half times as long as minkes and thus offer much more meat and blubber. They are fast swimmers, but became a popular whale to try to harvest once there existed technology capable of catching up to them. They are found all over the world, and according to the IWC, there are probably now more than 50,000 of them in the North Atlantic alone.
Greenpeace, for one, has urged that the commercial exploitation of whales center on whale-watching tours. However, in the Barents Sea, where most Norwegian whaling occurs, whale-watching tours are not particularly attractive from a commercial point of view because so few people reside in or visit the area. There are just a handful of active tour companies, and they focus on sperm whales rather than minkes. In more populated and visited locales around the world, whale watching has indeed become big business. At this writing, there are more than 375 Internet sites on Yahoo! for whale-watching excursions. Companies typically charge $35 to $100 per passenger for day trips. These tour operators might also be asked to bear some of the costs of enforcing whaling regulations.6
Although whale watching has become big business, perhaps the most noteworthy way in which the value of whales has increased is simply the importance that people now attach to their existence. Polling data indicate that people all over the world want whale populations to survive (Freeman and Kellert 1994; Responsive Management 1998). Irrespective of their consumption value, people are often willing to support organizations that are dedicated to conserving them, especially in wealthier countries.
But the polling data also indicate that misinformation about whales abounds. A majority of the respondents say that they believe that all whale populations are endangered and therefore oppose all commercial whaling. However, if the respondents are told that several stocks of whales are not at all threatened with extinction, most say that a limited hunt should be allowed. In other words, the data indicate that if people are assured that a species is not endangered, the value that they attach to the preservation of additional animals falls off rather sharply.
Establishing New Rights to Whales
For 2001 the High North Alliance (2000) reported that Norway set a quota of 549 for the minke whale harvest in its coastal waters. The harvest involves thirty-six vessels. Individual vessels are each entitled to catch a limited number of whales annually. It should be emphasized that the entire whaling regime in Norway has not been set up to achieve efficiency in the sense of neoclassical economics, but to preserve a traditional way of life in coastal communities. Catch quotas are not tradable.
As noted, tradable quotas are appealing when it is not feasible to establish complete property rights, but some hunting can be allowed. On the other hand, freely tradable entitlements are sometimes seen as a threat to community traditions insofar as it is possible that well-capitalized outsiders would buy up scarce rights.
It would be possible to deal with such situations by vesting some whaling rights in communities rather than individuals. A community could still consider the trading of whaling rights with outsiders, but might choose not to trade if its social fabric would be thereby threatened. Tradable community development quotas (CDQs) already exist with respect to fishing rights for some Native American settlements in Alaska (De Alessi 1998, 46?47).
It would now be relatively easy in a logistical (but not a political) sense for the IWC to turn its RMP into a regime of individual transferable quotas (ITQs) and, if desired, CDQs. Each year the IWC could set catch limits for whale stocks. Whalers would have tradable shares in the total catch allowed for each stock.
The catch limit would change from time to time as new evidence emerged regarding the size of each stock. Each rights holder?s share would therefore not be a fixed number of whales, but would be a percentage of the total catch allowed. For example, a whaler with a 3 percent share of the harvest of northeast Atlantic minkes would be entitled to catch 27 whales per year if the total catch limit were 900 whales annually. The best examples of already-existing plans of this sort are the fisheries of New Zealand, especially those for orange roughy (Muse and Schelle 1988).
The technology for enforcing tradable quotas for whaling would be as follows: Each vessel would be required to have a satellite hookup or a basic radio transmitter and receiver for smaller, local vessels that would enable the authorities to know the location of each whaling boat at all times. Each vessel would be equipped with a black box to record when its cannon had been fired. Vessels would be checked when they came back to port. All catches would be documented. DNA samples would be collected from each whale taken. If whale meat or blubber were being sold outside the system, authorities could verify that the DNA in question did not match any of the entries in the system?s database. A small amount of whaling outside the quota system would undoubtedly occur, but it could be limited by the threat of large fines (as under current regulations).
The IWC?s RMP seeks to keep each whale stock at between 54 and 72 percent of its historical level, with 60 percent being approximately the level corresponding to the maximum sustainable yield (MSY) of whales. The total catch limit for each stock would depend on an estimate of the stock?s MSY.
The Possible Role of Bioeconomic Models
While a quota system could conserve whale stocks, it leaves open the question as to what the right size is for each stock. The stock level that would generate the maximum sustainable yield of whales is a biological, as opposed to an economic, concept. From an economic perspective, the MSY stock level is not necessarily optimal, because the value of a whale may change over time. A particular whale may be more valuable today than the same whale will be one year from now (or vice versa). If so, it is economically preferable to harvest the whale today even if such activity would cause a stock to fall below its MSY level.
Researchers have devised bioeconomic models (Clark 1973, 1976a, 1976b) to analyze in a dynamic context the characteristics of an optimal stock. Based on a bioeconomic model, one possible management strategy would be to estimate the intrinsic growth rate and other parameters of the model and determine the optimal size for each stock. Amundsen, Bjørndal, and Conrad (1995) thus estimated that it would be optimal for the North Atlantic stock of minke whales to have 52,000 to 82,000 adult animals. Harvesting quotas could then be established that are consistent with this amount. The desired stock, and in turn, the harvesting quotas could be adjusted as new parameter estimates were obtained. As the above estimate suggests, however, this approach still leaves the precise size of the optimal stock uncertain.
Tradable Shares in the Total Stock
A possible way to cope with this problem is to define tradable harvesting rights to the stock of whales itself and then let market forces discover the right number of animals (Alchian 1950; Hayek 1978). One could begin with a conservative (i.e., lower bound) estimate of the size of the stock. Rights to whales could be made proportional to historical catch data (insofar as they exist) or according to other criteria.7 The sum of the stock rights would correspond to the estimated size of the stock. As noted in the case of tradable harvesting quotas, people would have shares in the total stock, but not rights to a fixed number of whales. If people did not exercise harvesting rights in any particular year, the stock would grow, people would be entitled to take additional whales in the future, and the whale-value of their stock rights would increase.
As a simple illustration, suppose that the size of the stock of eastern Pacific gray whales were estimated to be 30,000 animals. If someone began with a 2 percent share of this stock, he would have harvesting rights to 600 whales. If he proceeded to kill 600 animals, he would no longer have any harvesting rights. However, if the intrinsic annual growth rate of the stock were estimated to be 3 percent, and if he did not harvest any whales during the year, he would then have harvesting rights to 618 (600 multiplied by 1.03) whales. Adjustments to the whale-value of the person?s stock rights would be necessary following periodic reevaluations of the total size of the stock. Implicit in any trading of stock rights would be market assessments of how the estimated size of the stock would change in the foreseeable future.
A basic, and probably decisive, argument against such a regime is the great uncertainty about the sizes of most whale stocks. In some cases, the outlines of a discrete stock are not even well defined. Stock estimates are also subject to large and, some would say, arbitrary revisions, and many years are required to undertake them. For those especially concerned about the longer-term viability of whale populations, an annual ceiling on the total catch allowed for each stock therefore would probably inspire more confidence, at least for the time being.
Ownership of Individual Animals
Further improvements in technology could eventually reduce tagging costs and make viable the commercial tracking of individual members of various whale stocks. In this eventuality, people could have tradable property rights to individual whales. People could then increase their individual stocks by tagging any calves traveling with their mature female whales.8 The whale-value of people?s stock rights would not depend on periodic estimates of the total stock size and its rate of growth.
A conceivable way to economize on tagging costs is to mark only a few members of a pod of whales. It is likely that unmarked members would still be nearby because of the nature of a pod. Some of the toothed species such as sperm, killer, and pilot whales do indeed travel in groups. Although this strategy would save on the tagging and tracking costs of the pod as a whole, it would leave untagged animals more vulnerable to poaching. Moreover, the baleen (toothless) whales seldom travel in groups.9
Additional Coasean Considerations
We have seen that a workable plan of tradable stock rights is probably still some time away. However, it is instructive to consider further the form that such a course of action might take as the relevant technology continues to improve. According to a simple version of the Coase (1960) theorem, if the costs of transacting were very low, it would not much matter for the allocation of resources how stock rights were initially assigned. Trading ensures that rights would be put to their highest-valued uses, whatever they might be. If particular whales have more value as a source of pizza toppings than as the subject of a tourist?s photo session, whale-watching companies would be encouraged to sell any rights that they might have to whalers. If, on the other hand, particular whales have great value simply as magnificent creatures whose existence is to be nurtured and cherished, conservation groups would tend to end up with the rights to those whales.
Reality is not always simple, however. Transaction costs are sometimes high. In particular, there is a free-rider problem with respect to the collection of donations to conservation groups. People may value their activities, but they may often refrain from making donations in the hope that others? donations will suffice to accomplish the group?s goals. The amount received in donations may then be suboptimal. The conservation groups could thus have difficulty in achieving their goals even if people really do value their activities more than commercial uses of the resources in question.
A major concern for any regime of tradable stock rights is to ensure that stock extinction does not occur. Conservation groups could conceivably buy up the stock rights of any whalers who were indeed intent on harvesting an endangered group of whales, but they would have a difficult time doing so if they could not collect large amounts of donations.
Among minke whales in the North Atlantic, there was no tendency for extinction to occur even in the years when the stock existed as an open-access commons (Amundsen et al. 1995). The stock of whales was driven below its optimal level, but the costs of locating and catching the remaining whales exceeded the revenues that could be thereby obtained. On the other hand, the case of the blue whale during the heyday of factory whaling in the Antarctic?in which the number of blue whales there was probably driven below a thousand?argues for more caution. To be sure, the blue whales also existed as an open-access commons, but if their population growth rate is low, bioeconomic models warn that a carelessly devised system of tradable stock rights would not guarantee their survival.
A way to deal with the possibility of extinction under a plan of tradable stock rights is to give significant numbers of rights at the outset to conservation trust organizations. An example of such an organization is the Center for Coastal Studies (CCS), a private nonprofit group in Provincetown, Massachusetts (http://www.ccs.org). This organization uses satellite and ordinary radio tags to monitor the status of humpback and North Atlantic right whales from the coast of Maine to the tip of Florida. If a whale becomes trapped in fish netting or buoy lines or is otherwise in trouble, CCS is authorized by the National Marine Fisheries Service to engage in a rescue mission. Such a mission typically involves disentangling the whale from the material in which it was trapped.
In keeping with the spirit of the Coase theorem, a CCS endowed with stock rights might occasionally have an incentive to sell the rights to one or two animals if their value for some other purpose were sufficiently high (and CCS could therefore get a very good price for them). However, it could legally sell rights to whales only if such a transaction would arguably result in a net enhancement of its ability to carry out its mission to conserve whale populations. For example, the proceeds of a sale might help finance the purchase of new monitoring or rescue equipment, so that giving up one or two whales from an abundant stock now could help save several others from an endangered stock at a later time.
Public trust organizations might be established to supplement private groups. Entire stocks of whales could be turned over to conservation trusts, making it possible to have some trading of rights to whales without the tagging of all the individual animals. It should be pointed out, however, that a conservation trust does not involve complete property rights if there are not tradable ownership rights to the organization itself. There is thus not a complete market for corporate control, and a certain amount of inefficiency may be endemic to the trust?s operation. A for-profit corporation that is poorly managed can, by contrast, be bought out by an entrepreneur who offers the prospect of improving its performance.
Summary and Conclusion
Changes in technology have interacted with the institutional environment for whaling in dramatic fashion over time. In the past, advances in technology resulted in the depletion of whale populations at a time when they existed as an open-access commons. It thus became plausible to regulate the whaling industry.
Unfortunately, the International Whaling Commission proved to be incompetent. First, it countenanced overwhaling. Now it mandates underwhaling. Some stocks of whales are now clearly abundant, but the IWC?s moratorium on commercial whaling continues. Recent advances in technology have helped to make possible a relaxation of restrictions on whaling, as seen in Norway?s management of sustainable whaling and in the proposed RMS of the IWC. But neither Norway?s regime nor the IWC?s provisions for a possible return to larger-scale commercial whaling involve tradable whaling rights.
An enforceable system of tradable rights is workable with the use of current technology. From a logistical perspective, a system of transferable quotas (ITQs or CDQs) could easily be made a part of an IWC-sponsored whaling plan. The available technologies for enforcing the rules of such a plan include GPS satellites and DNA testing.
From an economic perspective, existing IWC provisions under the RMP are excessively conservative insofar as they would attempt to keep whale stocks at a level that corresponds to each stock?s maximum sustainable yield of whales. MSY is a biological concept, not an economic one. As an alternative to an MSY regime, the economically optimal size of each whale stock could be estimated through the use of a bioeconomic model, and tradable quotas could be established that are consistent with these optima.
A more radical approach is to establish tradable stock rights and allow market forces to discover the appropriate level for each whale stock. Regulatory authorities would not control the total harvest of whales, but they would still have a role to play in adjusting the whale-value of people?s stock rights according to periodic estimates of the size of each whale stock and its intrinsic rate of growth. Although tradable stock rights could conceivably be established, estimating the size of each stock and its growth rate is problematic, so much so that the plan would be widely regarded as arbitrary. The uncertainty involved would also skew the decisions of profit-seeking whalers toward near-term exploitation of their harvesting rights.
It is still not feasible with current technology to have widespread ownership of live, individual whales on a commercial basis. Satellite tagging is still far too expensive in comparison to the commercial value of most whales, especially smaller species like the minke. There would be more commercial interest in various types of tagging if the market for whale oil had not collapsed.
Whole stocks of whales could be turned over to conservation trusts without the tagging of all the individual animals. These organizations could sell whaling rights as long as the revenues from such sales arguably enhanced their conservation efforts. Conservation trusts, however, do not involve complete property rights.
If a significant commercial demand for harvesting them remains, further advances in technology could indeed make it feasible one day for there to be widespread ownership of individual whales. Tags or other such devices will cost in real terms only a fraction of what they cost today. Installation costs will also decline if people no longer need to be right next to a whale in order to tag it. With widespread tagging of individual animals, the whale-value of people?s stock rights would not depend on periodic estimates of the size of each whale stock or its intrinsic rate of growth, just as it is not necessary to estimate the total population or growth rate of each cattle species in order to articulate people?s property rights to cattle.
If secure private property rights to individual whales could be established, the role of regulatory authorities could recede. Markets would determine outcomes. Whales would be like swimming cattle. Our story would be complete, except for an account of all the politics that would be necessary along the way.
1. Quoted in Watson (1993).
2. This point was not made by Lueck (1991) or Anderson (1998), but it is consistent with their theoretical framework.
3. Ray Gambell, secretary, International Whaling Commission, e-mail communication, July 14, 1999.
4. We are particularly indebted to Padraic O?Flaherty, Marine and Freshwater Application sales representative, Lotek, for providing us with information about the company in an e-mail dated September 3, 1999.
5. The sperm whale is most noteworthy here because of the large quantity of high-quality oil that can be had from its massive head. The sperm whale is also a source of ambergris, commonly referred to as Neptune?s treasure. This waxy substance appears to be a by-product of the animal?s digestive system and is prized by the perfume industry (Clapham 1997, 98). But it is difficult to assess the market for this substance in light of its illicit nature. Synthetic substitutes for it now exist.
6. Note that if a whale-watching organization were given the rights to a group of whales, there would be a possible free-rider problem if others might still be able to venture out and see them. The rights of the organization would thus, for example, have to include a stipulation that rival tour boat operators keep a certain distance from the whales.
7. Note that if people are aware in advance that rights are likely to be allocated on the basis of historical catch data, they have an incentive to hunt animals now in order to bolster their claims.
8. It should be noted that captive breeding and rearing of whales is rarely desirable at present because of the quantity of food that they require. According to Six Flags Marine World (Vallejo, California), which stages whale and dolphin shows, a killer whale consumes 100 to 150 pounds of fish per day. The monthly food bill for one whale is $2,000 to $3,000, as well as bills for veterinary care. Other expenses include the amortized costs of providing a tank and water filtration system for the animals.
9. In the case of pilot whales off the Faroe Islands, property rights could be assigned on a territorial basis. At present, whales can be harvested in any of twenty-two bays. However, it should be emphasized that whaling in the Faroe Islands is done on a subsistence basis. In such circumstances, communal management may be desirable as a way of pooling the risks to people?s food supply that are involved in the likelihood that the harvest in some years will be rather low.
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Reprinted by permission from Rowman & Littlefield