(Not) Just for the Halibut: The Economics of a Popular Fish

Early in March, halibut will return everywhere to tables from Seattle to Manhattan. It will be excellent fish, pearly white, never frozen, fresh off the decks of Alaskan boats which hooked it deep in the North Pacific.

To get a taste, however, you may need to take a second mortgage. Prices at the local fishmonger will range from $30 to $40 a pound – five times the price of a decade ago. And you’ll pay even more for a modest restaurant filet with a light cream sauce on bed of linguini.

This is a supply-and-demand issue, but it’s also a case study of the complexities of managing a valuable public resource. A controversial strategy imposed in 1997 essentially privatized halibut, enriching a few fishermen at the expense of others, and was fiercely opposed by interest groups across the political spectrum.

And yet, 25 years into that experiment, it appears that halibut is a success story. To understand this, you start deep in the North Pacific, where halibut live. When hatched, they look like your generic aquarium fish, but within a few weeks, they morph into a misshapen bottom-dweller; the left eye “migrates” across to the right as the young fish turns on its side and spends the rest of its life on the ocean floor, peering upward in search of something smaller to eat.

If they’re successful, they grow slowly – ten years to reach maturity. And they keep growing. Adults can live 50 years, the lunkers weighing in at up to 500 pounds. I once watched fishermen carve up a 300-pounder on an Alaska dock while their kids played catch with its baseball-sized eyeball.

Aesthetics aside, fishermen learned long ago that halibut sells — mild-flavored with firm flesh and, if handled right, a long shelf life. Beginning in the late 19th century, the fishery consisted of a few dozen salty Swedes or Norwegians working from wood-hulled “schooners” reminiscent of Viking ships, based in Puget Sound or Alaska ports from Ketchikan to Kodiak. It was “miserable fishing,” one longtime Seattle fisherman once told me, requiring days bouncing on angry northern seas. “We got as little as 20 cents a pound. Only a few of us idiots would do it.”

That began to change in the 1980s, when Americans discovered seafood as a healthy alternative to meat and potatoes. Prices rose, making halibut fishing more profitable. The fish was free for the taking; anybody with a reasonably seaworthy boat and some longline gear could go fishing, and make money at it.

So they did. By 1990, that funky fleet of schooners had grown to hundreds, and eventually thousands of boats, all bent on hooking as much and as fast as they could. Halibut became a textbook example of the “tragedy of the commons,” the basic law of environmental economics that says: When a valuable common resource is free for the taking, there will be too many takers. Since individuals don’t own the fish, there is no incentive to conserve it. So everybody suffers, especially the resource itself. It’s been demonstrated repeatedly – with hunting, salmon fishing, whaling, grazing lands, water and increasingly air.

But halibut was an especially vivid example. To prevent all those fishermen from devastating the fishery, US and Canadian governments collaborated to limit the harvest. And the only way to do it was reduce fishing time. What had been a six-month fishing season was reduced to four, then two. By the 90s, it was down to just two 24-hour openings per year.

Those openings became a mad derby, reminiscent of 19th century gold rushes, with 20,000 fishermen jammed onto more than 5,000 boats, jockeying for the best fishing holes. By the end of that day, processors were overwhelmed with halibut. Fish would lie unprocessed for days or weeks. Quality went downhill, and halibut stocks shrunk.

Worse still, the derby cost lives. When a storm moved in on the appointed day, fishermen set out anyway; they couldn’t afford not to. People were washed overboard, conked by swinging gear, slashed by errant hooks. Every year, more names were added to the stone memorials at fishing docks up and down the coast.

Something had to give. After years of study, fisheries officials from Alaska, Canada and the Northwest devised “individual transferable quotas,” or “ITQs.” Based on previous catches, individual fishermen were assigned a percentage of the allowable halibut catch. They could fish it whenever they liked, depending on markets and weather conditions. Or they could sell their quota to another fisherman.

Critics cried foul. Fishermen who wouldn’t qualify for significant quotas felt cheated. Alaska senators, who usually extol the virtues of private enterprise, warned that ownership of Alaska’s fish would gravitate toward Seattle fishermen. Greenpeace and other environmental groups howled at giving away ownership of a public resource worth millions. And the critics were quite right.

But it’s worked. Assured of a share of the catch, ITQ fishermen now work at their own pace, taking their time to produce a high-quality fish. It’s become a gourmet market, with gourmet prices. That 20-cents-a-pound soon grew to $2, then $5. This year, fishermen expect to get nearly $9 at the docks, so a middling 30-pound halibut will earn them $270 at the docks.

And when storms brew up, they don’t fish. After years of double-digit fatalities in Alaska waters, the state recently went 17 months without a single death.

More than 90 percent of halibut is caught in the Gulf of Alaska and Bering Sea, much of it by Seattle-based fishermen with ITQs. But Washington commercial, sports and tribal fishermen have also benefitted. ITQs applied only to commercial fishers, not sportsmen. Puget Sound anglers, who used to get a few days in the spring to chase halibut, now can fish much of the spring and summer.

So why the ridiculous price? Too much demand, not enough fish. Early this month some 200 US and Canadian fishermen, scientists and bureaucrats gathered at the Empress Hotel in Victoria to assess things and set the year’s seasons and quotas based on statistics from last year’s catch and from test fisheries.

Here’s the problem: It takes about 10 years for halibut to reach harvestable size. Halibut reproduction flattened somewhat between 2005 and 2012 – the fish that are being targeted in the 2020s. Biologists say this has to do with ocean conditions – warming waters, changing food supplies, or whatever. They believe stocks are rebuilding, but the ocean remains a black box, so they can’t say for sure what’s happening out there.

As a result, commercial halibut quotas up and down the coast have been reduced by nearly half – from 50 million pounds a year in the 1990s to 30 million in the 2020s. And, remarkably, quota fishermen have supported those reductions. Each will catch fewer fish, but ITQs mean they will get the same share of the pie, and will get a better price at the docks.

The system has worked so well that it has been applied to other ocean fisheries – cod, sablefish, crab, pollock and more.

There are, of course, problems. The market price for ITQs has ranged as high as $60 a pound, enriching quota-owners while freezing out new fishermen. And while the rules prohibit absentee owners, there are stories of owners who live most of the year in Hawaii, hire people to maintain and run their boats and merely show up briefly when the boat is working.

Meanwhile, as Greenpeace warned years ago, taxpayers who actually own the fishery get only a fraction of the profits – not nearly enough to cover the costs of management.
So goes the Invisible Hand. But it will likely be that $40-a-pound price, not equity issues, that will deter consumers at the seafood counter.