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This article provides an estimate of resource rent creation and its distribution in Icelandic fisheries, which have been administered by an individual transferable quota (ITQ) management system for almost three decades. This study examined the period from 1997 to 2017. Little rent was produced in the first years; however, since 2008, rent has been significant, averaging 380 million USD per year, which is around 17% of the export value of the fishing industry. Approximately 20% of the rent went to the public due to a special fishing fee and through corporate taxes. The remainder was evenly split between those who originally acquired their fishing rights by grandfathering but have cashed in their windfall gains and traded their quotas, hereinafter referred to as quota sellers, and the companies working in the fishing industry, each receiving around 40% of the rent. [ABSTRACT FROM AUTHOR]

Trade in freely granted individual rights has been speculated to gradually reduce the political feasibility of reallocation, as the initial recipients who enjoy windfall profits are replaced by rights holders who purchased their rights and would unfairly become loss-making if the rights were subsequently reallocated. This hypothesis, sometimes referred to as a Transitional Gains Trap, may be relevant when evaluating alternative methods of allocating rights. This paper presents a potential indicator for investigating the Transitional Gains Trap in grandfathered individual transferable quota fisheries, based on the cumulative amount invested in quota after allowing for offsetting windfall profits, relative to the total value of all quota. The indicator ranges between 0% and 100%, with higher values indicating more net investment and a greater threat of a Transitional Gains Trap. Illustrative calculations for Iceland's ITQ system, introduced in 1991, yield a value of 29% by 2016, suggesting that the Transitional Gains Trap is not a major constraint, although the results vary by species and are sensitive to assumptions. Finally, the indicator is shown to decrease over time under certain conditions, implying that the potential relevance of the Transitional Gains Trap is context-specific. [ABSTRACT FROM AUTHOR]

This paper describes the main developments, issues, and disputes surrounding Iceland's fisheries and the individual transferable quota (ITQ) system governing them. The path to the ITQ system in Iceland started in 1979 in some pelagic fisheries. A substantial step was made in demersal fisheries when moving toward an individual vessel quota (IVQ) system in 1984. The biggest milestone in management was reached in 1990 when a comprehensive ITQ system was introduced that covered most Icelandic fisheries. Overfishing was a problem in the early days of the ITQ system. The path to sustainable fisheries was long and gradual, and now, most fish stocks are sustainably managed. There is clear evidence that the current fishing rights holders in Icelandic fisheries have demonstrated environmental stewardship because they have not opposed reductions in the total allowable catch (TAC) of important species. The economic performance of the industry has improved, and both the fishing and processing parts of Iceland's fisheries are now very profitable, and the fishing component is paying significant resource rent taxes. The industry has changed considerably, fishing rights have been consolidated, primary fish markets have been liberalized, and vertically integrated firms dominate the Icelandic fishing industry. Fishing rights (permanent quota shares) are very valuable, so entering the industry for new participants is difficult. The Icelandic ITQ system is now and has always been very controversial and under heavy political debate and scrutiny. [ABSTRACT FROM AUTHOR]