Many reforms and changes which support conservation also result in higher profits and revenue streams for the involved businesses. This makes fisheries a potentially attractive investment arena for many commercial investors, once reform projects are properly structured and agreed upon between conservationists and the involved businesses. As commercial investors and social investors become more involved in the field of fisheries, the scale of the impacts that can be achieved is expected to expand.
Foundations in the field are now looking to support this transition from fisheries conservation as a purely philanthropic investment to a blended conservation and business investment by encouraging non-profits, social change leaders and business entrepreneurs to create innovatively structured projects that can both build value for private investors and improve the speed and scale of fisheries conservation impacts.
The report contains a section on the Cape Cod Commercial Hook Fishermen's Association's Cape Cod Fisheries Trust.
Paul Parker had spent more than a decade working closely with local small-scale fishermen as head of the Cape Cod Commercial Hook Fishermen’s Association when a sweeping change to fisheries management in the region threatened to put them out of business if they didn’t act quickly.
A longtime fisherman who has a background in biology and environmental management, Parker saw the pressure that transitioning to quota shares would put on family-run fishing operations. In 2005, Parker formed the Cape Cod Fisheries Trust (CCFT) to prepare for the impending transition to quota shares in scallop (2007) and groundfish (2010). He has subsequently raised a diverse multi-million- dollar portfolio that includes both debt and grant capital from a range of philanthropic, commercial, and local government sources. This diverse funding has allowed him the flexibility to manage the risks and uncertain cash flows associated with buying quota so that he can successfully re-lease them to local fishermen, keeping Cape Cod communities afloat.Fishermen Face Challenging Transition
New England’s groundfish stocks, which include haddock, cod, flounder, white hake, halibut, and pollock, have been fished beyond their limit in the Georges Bank off the coast of Cape Cod. Since the 1990s, fishery regulations attempt- ed to protect populations by setting limits on the number of daily trips and days at sea. Opportunistic fishing operations adapted by pursuing larger hauls in shorter amounts of time, causing the regulations to backfire. In addition, fishing practices such as dragging negatively impacted the seafloor and compromised critical fish habitats, straining already depleted populations. And many fishermen were not properly incentivized to minimize by-catch so much valuable fish was wasted, dead and thrown overboard.
In response, regulators instituted a new quota share system. A set number of fishing permits allow only a certain volume of fish to be caught annually. While the system has environmental benefits, it had unintended negative consequences for small-scale fishermen. Permits can be traded and sold for cash, so when demand increases, prices escalate rapidly. Cod permits alone increased in value by 20 percent every year from 2003 to 2007. The economics are similar to the way taxicab medallions work in New York City: limited supply, high price. A single permit that cost less than $200,000 would be a bargain. For fishermen with only a few thousand dollars in their bank accounts, staying in the profession suddenly seemed impossible. Large fishing companies with capital reserves were in far better positions to buy permits.
Before the new program launched, there was speculation that the fishery system would be changed but few were certain about the timing or the guidelines that would be used. While outside observers commonly regarded the Cape Cod Commercial Hook Fishermen’s Association as one of the leading detractors of quota shares due to their community concerns in the 1990’s, Parker saw the writing on the wall and prepared to make lemonade out of lemons. Knowing that the change to quota shares would have adverse impacts on the Cape Cod fishermen if no community entity purchased and held quota in perpetuity, Parker and CCCHFA took action.
Parker created the Cape Cod Fisheries Trust to fill that gap and prevent those negative impacts. The Trust is owned by the Cape Cod Commercial Hook Fishermen’s Association and managed by a local community development corporation. Parker stepped down as executive director of the Association to lead the Trust. While the quota system was still very speculative, Parker decided to buy permits opportunistically and then lease them to local small-scale fishermen who otherwise couldn’t afford them. This would allow him to capture quota at relatively low prices early on, but it also carried significant risks for the association if the quota program was not implemented in a timely or fair way.
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