Alaska's unexpected catch in catch-share
by Lee van der Voo / InvestigateWest
Henrich Kadake remembers when halibut was king in this mostly Native outpost on the remote coast of Kupreanof Island, a hundred miles south of Juneau. As he pilots his truck through the cluster of old wooden buildings on a rainy spring day, he points out the fish hatchery and the Kake Cannery complex, constructed from 1912 to 1940, now a national historic landmark. One of the world's most famous totem poles – taller than a 10-story building – stands on a bluff; it was carved in 1967 for the Alaska Purchase Centennial, then installed here after being displayed at the 1970 World's Fair in Japan.
The natural features that made this a good place for the Kake Tribe of Tlingit Indians to begin settling here in 1891 – including six salmon-bearing streams and marine habitat for halibut, clams and crab – are still present. But as Kadake knows all too well, in recent years, Kake has become a place that people leave.
Fishing has historically been the chief employer, but a federal program that was supposed to help preserve and enhance the local fishing economy has instead helped cause a severe decline. Over the last five years, the village's population has dropped by half, to 500, as people leave to seek work elsewhere. School enrollment slid from 210 to 97. The exodus has included six of Kadake's sisters, several of his children, his grandchildren and friends.
"That's the hardest time I ever had in my life – watching my own family move out of town," says Kadake, who was born here in 1944 and is now the hoodie-clad mayor as well as a board member of the tribal corporation, which is separate from the town's government.
Fifty miles southeast, another coastal town, Petersburg, whose 3,200 residents are predominantly white, shimmers with wealth. Petersburg has more than 600 boat slips and is home to one of the West's strongest fishing fleets. Fishermen haul in many millions of dollars worth of fish in a typical year, and the town is thriving: busy boat mechanics, gear stores, welders and shipwrights, three major seafood-processing plants, smaller custom seafood processors, a cold-storage facility that also buys fish from the boats, and fishing-friendly banks willing to give loans to all these businesses. Almost a third of Petersburg's residents have an average annual income above $100,000.
Much of Petersburg's prosperity over the years has come through hard work and professionalism, but well-intentioned federal fishery reform – called the Alaska Individual Fishing Quota Halibut and Sablefish Program – has spurred the divergence of the two towns. Before the program was implemented in 1995, the area was known for its frantic, unsustainable halibut fishing seasons, which were governed not by the amount of fish caught, but by the number of days a person could fish. Overseen by the National Marine Fisheries Service, the program awarded a permanent allotment of halibut fishing rights, based on historic catches, to a limited number of boat owners. Today, those with fishing rights, or quota, fish for longer seasons, giving them the flexibility to go out in safer weather and deliver fresh fish regularly rather than annually, in mountains that have to be frozen. Each quota-holder is allowed a certain percentage of the total catch, and every year, the feds assess the halibut population and determine what that total catch should be. The system works much like real estate; a quota share can be traded through brokers, and owing to the limited supply and other factors, its value continually climbs.
The quota program was intended to give longtime boat owners an equity stake in the fishery, as an incentive to keep fish populations healthy so that individual catches can remain robust, advancing both conservation and economic goals. In one sense, it has been hugely successful: The value of the halibut catch along Alaska's coast increased from $150 million in 1994 to $245 million in 2008, the last time it was assessed.
Individual fishing quota – IFQs – and other forms of "catch-share" have also been established in 14 other U.S. fisheries, encompassing dozens of species ranging from New England scallops to Pacific sole. Many conservation groups, including Environmental Defense Fund and the Pew Environment Group, and free-market think tanks support the system. Generally the programs are flexible and can be fine-tuned to deliver positive social outcomes while meeting economic, safety and some conservation goals. But some, like the Alaska halibut program, have had what Pew describes as "unintended consequences."
The quota for Kake fishermen was intended to remain here in the village, but there were no requirements to ensure that. Various economic hardships, along with Kake's sheer remoteness and relatively harsh winters, prompted many locals to sell their quota to fishermen in other towns to raise cash for necessities like home heating and groceries. Forty-two Kake fishermen owned halibut and sablefish quota when the program began, but last year, only nine did. Largely as a result of that, Kake's share of the catch dwindled from 277,256 pounds of halibut to 64,053 pounds.
Other Native fishing communities in Southeast Alaska – including Angoon, home of the Kootznoowoo Tlingit Tribe, and Hydaburg, home of the Haida Indians – have experienced similar outcomes. And the quota their fishermen sold were often bought by fishermen in prosperous Norwegian-ancestry towns like Petersburg, which, even in a down year like 2013, had more than 200 boats with quota that landed a total of more than 800,000 pounds of halibut. The amount of quota owned by Petersburg fishermen increased by more than 50 percent in the first 14 years of the program.
People around here don't tend to see this as a white vs. Native problem; it's typically perceived as the difference between extremely rural communities and those that are less so. But it's reminiscent of the fallout from the late-1800s Dawes Act in the Lower 48, which was intended to spur pride of ownership in Native communities by dividing millions of acres of tribal land into allotments for individual Natives. Many of those allottees were so desperate for cash, they sold their property to white people.
"In all the years I've been here," says Kadake, "our economy was based on fishing," until the catch-share program took hold. He still takes his boat out to get salmon, which are not managed with catch-shares, but even he has sold his halibut quota.
The economic decline in Kake began right around the time the catch-shares program did, as a dramatic spike in basic fuel prices drove up the costs of fishing and fish processing. Kake's cannery had closed in 1977 after several years of poor salmon runs, and a tribal-run cold-storage facility that bought fish from local boats operated only intermittently, struggling to fill the gap. By 2005, the cold storage was closed, and Kake's fishermen had to deliver their catch to buyers in Petersburg – 120 sea miles round-trip. The fuel bills hit them hard. The Kake Tribal Corporation and a partner reopened the cold storage in 2012, but it's still hampered by high electricity costs, because the town is powered by generators that run on diesel fuel brought in by barges.
Today, Kake is handicapped by electricity that's nearly 10 times as expensive as in Petersburg, unreliable landline and cell phone service, and the lack of a road connecting to anywhere. Everything is more expensive in Kake than in Petersburg, which is well-connected by Alaska standards, with commercial jet service. The cold-storage facility in Kake still isn't buying halibut, because there aren't enough local fishermen with access to halibut to make storing or processing it profitable.
That's why so many locals "had to take (their quota) and sell it, because you just weren't making any money at it," Kadake says.
Many of the quota-sellers in Kake had hoped to eventually buy back into the halibut fishery. But the price of quota shares shot up as they changed hands from one high bidder to the next. Today, an entry-level fisherman might have to pay hundreds of thousands of dollars to start a halibut business big enough to make a living on.
In Petersburg, the financial infrastructure makes it comparatively easy to buy quota. The local banks readily loan fishermen the money to do it, and the purchasers view it as a lifetime investment that's guaranteed to pay off. Petersburg fishermen are often so well off, "you look at the lawyers and doctors in our community and they are the blue-collar wage guys," says Glo Wollen, Petersburg's harbormaster. Roundtables encourage fishermen to sell quota shares only to other locals, and to manage them as a kind of retirement plan by selling small chunks slowly. Young, ambitious crewmen who invest in quota are viewed as the most desirable candidates for jobs on boats. "It's a pretty thoughtful process," says Wollen.
Fishing declines in places like Kake are accompanied by a profound sense of cultural loss. Young people are forced to grapple for a new way of life. Cultural traditions shift away from the sea to television and junk food, and addiction rates climb, says Linda Behnken, vice chair of the board of the Alaska Sustainable Fisheries Trust. "It's also a huge loss from a conservation standpoint," she says, because "the people that live in the communities ... are first to notice changes in the health of the resource."
In response, conservationists and other critics have pushed reforms to prevent consolidation of quota in prosperous towns. The government has made it easier for nonprofit institutions to buy and manage halibut and sablefish quota, an effort that nonprofits now pursue so they can in turn lease quota to fishermen in places like Kake at subsidized prices. The nonprofits can also loan money to fishermen who want to buy quota. The Alaska Sustainable Fisheries Trust is one trailblazer; it's currently capitalizing an investment fund called the Local Fish Fund that will steer money toward quota purchases in small rural communities.
Kate Bonzon, head of Environmental Defense Fund's catch-share "design center" – which helps shape programs elsewhere in the U.S., such as the snapper fishery in the Gulf of Mexico – says the programs can be flexible and tied to communities. "You can design them according to whatever goals you have," she adds, but "challenges that communities face may not just be tied to what's going on with the fishing management."
In other words, while reforms may help a community like Kake, no catch-share program, no matter how well designed, can cure the other problematic market forces Kake faces, like the high cost of fuel and power, and the lack of road access to more equitable and diverse markets.
Kadake, though, is optimistic, hoping that some kind of beneficial entity, perhaps the tribe, will step forward to buy community quota for Kake. He's also pushing an $80 million proposal to build both a road to Petersburg and a transmission line to bring in low-cost hydropower. The road and intertie could make fishing in Kake profitable again by lowering the cost of power for the cold-storage facility and making supply trips to Petersburg cheaper and easier. Lobbied by Kadake and others, the Alaska Legislature has promised $40 million, but there are obstacles, including the terrain, opponents who don't want a new road punching through the pristine landscape, and uncertainty about where the rest of the money might be found.
Kadake believes that if the local halibut economy is revived, it could save the whole community. "We are fighters and we're survivors," he says. "And we're coming back."
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