Friday, January 30, 2009

Fish Farming and Property Rights

Wednesday's Chronicle had an interesting article on fish farms. A proposal to establish large mesh cages in the Gulf of Mexico is being considered by the Gulf of Mexico Fishery Management Council, a federal agency that manages fisheries in the Gulf. Currently, about 84% of the nation's seafood is imported, and about 40% of that comes from fish farms. The current plan calls for the production of 64 million pounds of seafood per year, which is about half of the annual commercial catch off the Texas coast.

While all of this might sound good, there are some detractors. And not surprisingly, environmentalists lead the list.

But the plan has raised concerns from environmental and fishing interests about how to protect the Gulf’s wild fish stock and waters from disease, pollution and other threats that have troubled fish farms in other countries.

What’s more, some of the plan’s critics contend that the Gulf of Mexico Fishery Management Council, which is responsible for the Gulf’s fish population, shouldn’t act before Congress establishes federal regulations for the emerging industry.

In other words, critics want to put the industry in handcuffs from day one. In this era of regulate everything that moves, a large part of the population can't imagine anything occurring without the oversight, control, and blessings of Congress. I suppose that in some sick, perverted way this is understandable given the dandy job Congress did in creating the economic crisis, and the even more impressive job it has done in "solving" that crisis.

For decades, the nation's fisheries have been regulated and controlled by the federal government. Because the oceans are "common property", fish populations were depleted because each individual had an incentive to maximize today's catch. This is the "tragedy of the commons"--when a value is owned communally, nobody takes care of it and protects its long-term value. The value is quickly used up or falls into disrepair. Privatizing any communal property eliminates this problem because the owner has an interest in preserving the value over the long term.

I rarely say this, but Congress does have a legitimate role to play in this issue. However, that role does not involve regulations--it involves establishing property rights.

The oceans are much like a wild berry patch or orchard. The plants produce fruit with no effort from man, but the individual who picks the fruit--or catches the fish--owns the product of his labor. But he does not own the source of that fruit. However, if he begins to prune the plants, provide them fertilizer and water, and take other actions to increase their productivity, he has given more value to those plants and has a rightful claim of ownership. The same applies to the oceans.

The individual who increases the productivity of the oceans has a moral right to the products of his efforts--he has a moral right to the increased value he has created. Congress must establish objective criteria by which this right is recognized and protected.

In the case of a fish farm, this is relatively easy. The farmer who places a mesh cage in the ocean, fills it with fish, and raises those fish to maturity has a right to those fish. He has a rightful claim to the area of the ocean he is utilizing--he has given that area greater value than it previously held. There are certainly other issues to be considered and addressed, such as the status of an area that is abandoned, how property rights need to be claimed and documented, etc.

This is essentially the process by which property rights were assigned in the west. The Homestead Act established the criteria that had to be met in order for an individual to claim ownership of the land-- he had to make improvements and occupy the land for a specific period of time.

Congressional regulation of fish farms will likely stop them in their tracks. The controls and mandates imposed will significantly drive up the costs for what is already a risky endeavor, if they are even allowed to proceed. By the time Congress is finished appeasing the myriad envrionmental groups and other special interests, the regulations will likely be so immense that no rational person would consider the project further. Which means, either a reliable source of seafood will never be developed, or the price of the final product will be significantly higher in cost than it would be without Congressional interference.

The entrepreneurs considering this project have a moral right to act on their own judgment without the meddling of Congress. Congress has no moral justification for erecting arbitrary barriers or telling them how to run their business. Sadly, I have no hope that Congress will do the right thing and stay out of the way. Congress will probably destroy a fledgling industry before it ever gets started. And they will do so in the name of protecting the public.

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