Highgrading in quota-regulated fisheries: Evidence from the Icelandic cod fishery

Abstract

A model with nonlinear discarding costs is developed for a fishery with an individual transferable quota (ITQ) program. The model shows that limited hold capacity and ITQs provide incentives to discard fish. The model is applied to the Icelandic ITQ-regulated cod fishery to test for highgrading and to predict the discarded quantities of different grades of fish. The results indicate that vessels are involved in highgrading, but there is no evidence of quota price-induced highgrading. The predicted total discarded quantities are 4.7% and 2.7% of total landings for gillnet and longline vessels, respectively. These correspond well with official biometric estimates. © 2009 Agricultural and Applied Economics Association.