Chapter 13, 28 th February 2011 Management of Resources An overview

1. Chapter 13, 28th February 2011 Management of Resources An overview

2. MANAGEMENT OF RESOURCES OVERVIEW • DEVELOPMENT OF THE MANAGEMENT SYSTEM • FISHERIES AND THE FISHING FLEET • STRUCTURE OF THE MANAGEMENT SYSTEM • MORE SPECIFIC ELEMENTS OF THE FISHERIES MANAGEMENT SYSTEM • FISHERIES WHICH FALL OUTSIDE THE SCOPE OF THE ITQ SYSTEM • CONTROL AND ENFORCEMENT

3. DEVELOPMENT OF THE MANAGEMENT SYSTEM • Management system based on scientific recommendation and catch limitation, developed for the fisheries - a learning process • Effort limitations had proved unsuccessful • Introduction of individual vessel quotas in 1984 for the most important species • Effort option between 1985 and 1990 - catches of the most important species were still exceeding scientific advice and the total allowable catch • Comprehensive legislation in 1990, the Fisheries Management Act • Integration of all but the smallest vessels into a single management system of individual transferable vessel quotas (ITQ).

4. FISHERIES AND THE FISHING FLEET The fisheries • Icelandic fishing vessels have in recent years caught between 1.4 and 2.1 million tons of fish in the oceans around the island and in the High Seas - between 1.7 % and 2,5% of the total catch of wild fish in the world’s oceans • Icelandic domestic fisheries target over 30 species of fish. The key species targeted are cod, haddock, saithe, catfish, redfish, Greenland halibut, dab, long rough dab, plaice, lemon sole, witch, tusk, ling, monkfish, herring, capelin, blue whiting and mackerel • Fisheries from local stocks within the Icelandic EEZ and fisheries from shared stocks that to some extent take place in international waters • Only a few of the species caught in Icelandic waters are caught in fisheries targeting only one species (include the pelagic fisheries), with very little by-catch • Other fisheries, particularly demersal, may be classified as more mixed fisheries

5. FISHERIES AND THE FISHING FLEET The fishing fleet • The Icelandic fishing fleet is equipped with some of the most sophisticated technological equipment available • A simple categorization of the fleet among the different fisheries types is difficult as many vessels change gear depending on fish availability in relation to season, quota status of individual companies, fish availability both in nature and on the quota exchange market, as well as market price • Demersal fisheries take place all around Iceland. They use a variety of gear and boats of all sizes. The pelagic fisheries targeting capelin, herring, blue whiting and mackerel are almost exclusively carried out by larger vessels

6. FISHERIES AND THE FISHING FLEET No management of fleet capacity • An issue that requires specific attention in the accession negotiations • The size of the Icelandic fleet is not controlled by public authorities. In fact, the Icelandic Supreme Court has ruled that all seaworthy fishing vessels in Iceland shall be granted commercial fishing licenses upon request • Direct rules on the capacity of fishing vessels are of little significance in the Icelandic fisheries management system, which is based primarily on ITQs. They are intended to reduce the capacity of the fleet and help ensure that it is always optimal and cost efficient in relation to the productive capacity of fishing stocks • The Icelandic Maritime Administration is responsible for vessel inspections. It issues seaworthiness certificates and maintains a vessel registry of all Icelandic fishing vessels • Several important rules in the fisheries management framework, where the size and capacity of vessels is of significance

7. STRUCTURE OF THE MANAGEMENT SYSTEM Quota share and catch quota • The catch limitation system is the cornerstone of the Icelandic fisheries management system. The system is intended to limit the total catch and to prevent more fishing from the fish stocks than the authorities allow at any given time • The allocation of quota shares for each species included in the ITQ system was originally made, with some exceptions, by calculating a quota share based on fishing experience • The quota share, given in percentage, in individual species forms the basis for the annual catch quota given in kilograms or tonnes • The Minister for Fisheries and Agriculture determines, by issuing a regulation, the total allowable catch (TAC) for each species for each fishing year • The fishing year is not the calendar year but from 1 September until 31 August. The calendar year applies, however, to fisheries from shared stocks • Vessels which do not hold quota shares are not allocated catch quotas. Quotas from other vessels may still be transferred to them in accordance with relevant rules, enabling them to pursue fishing for the species transferred to them

8. STRUCTURE OF THE MANAGEMENT SYSTEM Separate quota regime for the smallest vessels • There is a separate quota regime for small vessels with a capacity of less than 15 tonnes • With the 1990 legislation, small vessel operators were allowed to choose between the general quota regime and effort restrictions • Only a few years later, small vessels had become quite effective and their catches in excess of their allocations became unacceptable • Individual vessel quotas were imposed on small vessels, in incremental steps, with the final step being taken in 2004

9. STRUCTURE OF THE MANAGEMENT SYSTEM “Costal fisheries” • Amendments to the Fisheries Management Act, which took effect in the summer of 2009, permitted jigging (hand line fishing) outside the ITQ system by small boats from June to August 2009 - a temporary provision • In 2010 the coastal fisheries where permanently integrated into the Fisheries Management Act • 6.000 tonnes of ground fish is divided into 4 designated areas of landings and is divided between the 4 summer months • Fishing is only allowed on Mondays-Thursdays and every fishing trip can last 14 hours and the total allowable catch for each and every fishing trip is 650 kg cod-equivalent • When the TAC for each month in every designated area is reached, the fishery is closed. The only applicable fishing gear is hand line and only 4 sets of hand line winces can be applied. Every vessel is also subject to VMS monitoring and electronic surveillance • The volume taken aside for this purpose is subtracted from the set TAC levels for different species, before it is allocated to vessels on the basis of their quota share

10. STRUCTURE OF THE MANAGEMENT SYSTEM Fishing for personal consumptionandrecreational fishing • Fishing for personal consumption is authorised without special permits. Such fishing may only be pursued with a deep-sea rod and hand line without an automatic jigger • Any catch obtained may only be used for personal consumption and may not be sold, nor used for financial gain by any other means • Parties operating in the tourist sector, who intend to use for such operations boats for recreational fishing, must apply to the Directorate of Fisheries for special permits for each boat to be used for such purpose • Boats granted such permits may only pursue fishing with hand lines without automatic jigger • There are two types of permits for recreational tourist fishing: a. Permits to fish a specific number of fish subject to quotas on each hand line or fishing rod each day; this catch is not included in the catch quota of the boat concerned b. Permits for fishing, limited by the catch quota or hook-and-line quota of the boat concerned

11. STRUCTURE OF THE MANAGEMENT SYSTEM • It is the Minister of Fisheries and Agriculture that determines the annual TAC of every species subject to quota regulation • A scientific assessment of the state of the fish stocks, and the condition of the ecosystem, constitutes the main basis for determining the TAC each year • According to the Fisheries Management Act, quota shares and catch quotas must always be attached to vessels which fulfil certain conditions, including being registered in the Icelandic vessel registry • Fishing of those species not subject to limits on total catch is unrestricted to all Icelandic vessels holding commercial fishing licenses

12. STRUCTURE OF THE MANAGEMENT SYSTEM Quota transfers • Quota shares and catch quota can be transferred between vessels which fulfil the set conditions • Transfer of quota shares and catch quota is, according to law, subject to a number of conditions and restrictions and is not valid until the Directorate of Fisheries has examined the transfer and confirmed that it complies with relevant rules and legislation • Conditions include that individual fishing enterprises may not control more than the equivalent of 12% of the value of the total quotas allocated for all species, and 12% to 35% for individual species • Same rules apply to the transfer of quota shares and hook-and-line quota shares, except that hook-and-line quota shares can only be transferred to vessels of less than 15 GT if the vessels are part of the small vessel ITQ system • Transferability of quota shares and catch quotas has the objective of facilitating necessary rationalisation in the fishing sector and thus promoting profitability • Transfer of quota shares enhances alignment between the fishing fleet capacity and the yield potential of fish stocks

13. STRUCTURE OF THE MANAGEMENT SYSTEM Fishing licenses – management of fishing authorization • No one can pursue commercial fishing in Icelandic waters without having a general fishing license • Fishing licenses must always be attached to vessels • There are two basic types of fishing licenses in the Icelandic fisheries management system; licenses for fishing in the general catch quota scheme, and licenses for hook-and-line fishing for smaller boats • Special permits are issued for “coastal fisheries” and tourist recreational fishing • Commercial fishing licenses may only be granted to fishing vessels holding certificates of seaworthiness, which are registered in the fleet registry of the Icelandic Maritime Administration

14. STRUCTURE OF THE MANAGEMENT SYSTEM Fishing licenses – management of fishing authorization • Their owners and operators must also fulfil the requirements to pursue fishing in Icelandic waters, as provided for in the Act on Investment by Foreign Parties in Industrial Operations and the Act on Fishing and Processing by Foreign Vessels in Iceland's Exclusive Fishing Zone • Vessel operators who fulfil the required conditions can obtain such licenses and need not have them transferred from other operators/vessels • Other types of permits, such as Danish seine and permits for inshore shrimp, amongst others, are issued under special regulations and require a general fishing license as well • All fishing by foreign vessels is prohibited in Iceland’s Exclusive Fishing Zone, except by vessels which have obtained special permits on the basis of agreements concluded by Iceland with other states

15. STRUCTURE OF THE MANAGEMENT SYSTEM Fishing fee • The allocation of quotas is subject to a fishing fee • The fishing fee is calculated by deducting from the catch value of the period 1 May to 30 April, from the previous year, the total calculated wage cost, fuel cost and other costs to determine the margin • A specific percentage (currently 9.5%) of the margin is the basis for the fishing fee for the next fishing year and is levied on allocations for the new fishing year • The fishing fee thus varies from year to year, since it is based, firstly, on vessel aggregated operators’ performance and, secondly, on allocated catch quotas for each fishing year

16. STRUCTURE OF THE MANAGEMENT SYSTEM Weighing and recording of catches • An issue that requires specific attention in the accession negotiations • All landed catch is to be weighed by an accredited scale operator and recorded in the database of the Directorate of Fisheries at the port of landing • The Directorate of Fisheries publishes the information on its web site, where it is accessible to all • Masters of fishing vessels, who are issued commercial fishing licenses, shall keep electronic log-books of catch statistics provided to them by the Directorate of Fisheries • Information from log-books is used for scientific purposes by the Marine Research Institute and for inspection purposes by the Directorate of Fisheries and the Icelandic Coast Guard

17. STRUCTURE OF THE MANAGEMENT SYSTEM Discard ban • An issue that requires specific attention in the accession negotiations • It is obligatory, according to Icelandic law, to collect and land all catches caught in the vessels fishing gear • Discarding catch overboard is prohibited and such conduct is subject to penalties • The Marine Research Institute, in cooperation with the Directorate of Fisheries, has conducted systematic discarding measurements in Icelandic fisheries since 2001. The results indicate insignificant discards by the fleet or around 1.1% for cod and 3.5% for haddock • Various measures have been introduced to reduce incentives to discard and misreport

18. STRUCTURE OF THE MANAGEMENT SYSTEM Area based management - measures for protecting small fish and the ecosystem • Area based management has been used for decades in the Icelandic fisheries management system • Large areas are closed for fishing in Icelandic waters, some of them temporarily and others permanently • Icelandic vessels are prohibited from using a bottom trawl in Iceland’s Exclusive Fishing Zone, except in specific fishing areas and during fishing seasons, as specified in the Act on Fishing in Iceland’s Exclusive Fishing Zone. Authorisation for this fishing is based on the vessel’s size and power index • Access to fishing in the Icelandic fishing jurisdiction is also limited by area closures and seasonal closures, which are determined by regulations, particularly in rearing grounds for juvenile fish and cod spawning areas • Regions where fishing is prohibited, except with specially adapted fishing gear, such as bottom trawls with juvenile fish excluders • Additionally, in some areas the use of bottom fishing gear is totally prohibited to protect vulnerable marine ecosystems such as cold water corals and hydrothermal vents

19. MORE SPECIFIC ELEMENTS OF THE FISHERIES MANAGEMENT SYSTEM Preferential treatment of long-line fisheries • Special preferential treatment is given to long-line vessels which bait their line onshore and land their catches daily • Vessels can land up to 20% beyond their annual quota allocations of cod, haddock and catfish, but are subject to restrictions on the total quantity that is allocated for this purpose • These extra allocations generally favour the smallest vessels • The volume taken aside for this purpose is subtracted from the set TAC levels for different species before it is allocated to vessels on the basis of their quota share

20. MORE SPECIFIC ELEMENTS OF THE FISHERIES MANAGEMENT SYSTEM Regional instruments and shock absorbers • Minister of Fisheries and Agriculture has the mandate to allocate up to 12 thousand tons of cod equivalent quotas to use for special purposes • These discretionary quotas are used for special allocations when local stocks collapse, causing a severe hit to a limited group of vessels specialised in such local fisheries • These quotas are also used to compensate, to some extent, communities which have lost quota rights; where total catch has decreased; or there has been a reduction in the fisheries industry in the area in question • The volume taken aside for this purpose is subtracted from the set TAC levels for different species before it is allocated to vessels on the basis of their quota share

21. FISHERIES WHICH FALL OUTSIDE THE SCOPE OF THE ITQ SYSTEM Lumpfish fishing • Arrangements for lumpfish fishing in Iceland provide for a total of 482 lumpfish harvesting rights, restricted to boats of less than 15 GT • This means that newcomers cannot commence fishing without purchasing rights from another right holder. Licenses may be transferred between boats, and in such case the size limit increases by 2.5 GT in each instance • As a result, the number of lumpfish licenses has gradually decreased in recent years • Holders of lumpfish rights can obtain lumpfish fishing licenses each year, which are managed on a regional basis, by days at sea and maximum number of nets

22. FISHERIES WHICH FALL OUTSIDE THE SCOPE OF THE ITQ SYSTEM • Atlantic argentine is a species which is not managed by quotas • Fishing for this specific species is managed by a regulation and the allocation of special fishing licenses • Licenses are withdrawn when the total catch has reached the recommended maximum fishing level • Fishing of species not subject to limits on total catch is unrestricted to all Icelandic vessels holding commercial fishing licenses • According to law it is illegal to start a fishing trip without having a catch quota for all species likely to be caught in the fishing gear used

23. CONTROL AND ENFORCEMENT • Effective control is an inseparable part of responsible fisheries management and ensures that the catches in Iceland are in conformity with the TAC every fishing year • The Directorate of Fisheries is responsible for the implementation of laws and regulations regarding fisheries management in Iceland, and for control and enforcement in the field of fisheries operation • Administrative sanctions, in the form of fishing license suspensions, are used in cases where vessel operators or crew, or others acting on their behalf, have violated the provisions of the fisheries management legislation • Levy is imposed for catches in excess of quotas at the end of the fishing year • All decisions by the Directorate of Fisheries and the Ministry of Fisheries and Agriculture may be referred to the courts, but such referrals do not postpone the legal effect of the decision in question • In more serious cases, violations are subject to fines or even imprisonment, regardless of whether they are committed intentionally or through negligence