Credible Enforcement Policies Under Illegal Fishing: Does Individual Transferable Quotas Induce to Reduce the Gap Between Approved and Proposed Allowable Catches?

In general, approved Total Allowable Catches (TACs) are higher than proposed TACs by the scientific assessment and reported landings approved are higher than approved TAC. We build a simple enforcement agency’s behavior model that generates—as a rational behavior—those two facts. The model has two ingredients. First, there exists illegal fishing generated by an imperfect enforcement technology; second, the enforcement agency cannot commit on announced penalties. We show that lack of commitment increases the potential benefits for national enforcement agency of deviating from proposal (scientific optimal) quotas. Although the enforcement agency wants to announce a low quota target to induce a low level of illegal harvest, it will find optimal to revise the quota announced in order to reduce penalties and improve fishermen welfare. Therefore, agencies find it optimal to approve higher quotas than that proposed by the scientific advice. Our main result is to show that when full compliance is not possible, and national agencies cannot commit, the introduction of Individual Transferable Quotas increases the potential benefits for agencies of deviating from the optimal proposed TAC by the scientific advised.