Statewide Turnover Rates

During the period 1975-1994, 14,064 permanent limited entry permits were issued in 46 fisheries. Not all of these permits, however, were available for transfer. AS 16.43.250 required that CFEC develop hardship ranking systems to allocate permits ("point systems"), and determine at which point levels a person would experience only minor economic hardship if excluded from the fishery. Permanent permits issued to persons classified at minor economic hardship levels were to be nontransferable. By the end of 1994, 12,399 permits had been issued as fully transferable.1 and 1,665 permits issued as nontransferable.

During this same time span there were 20,611 permanent transfers. Original permit holders transferred 8,776 permits, indicating approximately 70.4% of all transferable permits had changed hands at least once (8,776 out of 12,461 permits) by the end of 1994. The average number of transfers per average number of transferable permits was 9.5% (20,611 total transfers / 216,328 total permit-years = transfer rate = 9.5%).

Two types of annual transfer rates are shown in Table 1. The first type is the ratio of the permits transferred for the first time (i.e. from initial issuees) to the number of transferable permits. This ratio would be expected to decline over time if no new permits were issued because each year there would be fewer permits held by initial issuees left to transfer. This transfer ratio has declined from .08 to .02 over the 1975-1994 time period. The ratio of transfers from initial issuees to transferable permit years is .04 for the entire time period.

The second type of annual transfer rate reported in Table 1 is the ratio of transfers to available transferable permits which provides one measure of the annual turnover rate for transferable permits. This ratio varied between 0.07 and 0.13 over the 1975-1994 time period, and averaged 0.10 for all years combined.2 As can be seen in Table 1, this transfer ratio dropped below the all-years average in 1989 and has remained relatively low through 1994. The 1993 and 1994 ratios of 0.07 indicate the lowest turnover rates recorded over the time period.

Even though the number of permanent transfers has declined in recent years, the number of permanent permits in that same time period has increased. The reasons for this decline in permit "turnover rates" is unclear; however, it may be partially due to several factors which may have increased the uncertainty about future returns in some fisheries and thereby increased the uncertainty about underlying permit values.

Turnover Ratios by Fishery 1975-1994

Fisheries were divided into groups in Table 2 based upon the year in which each was limited. Summary transfer rates are provided for each group. The first group consists of the original 19 salmon fisheries for which permanent permits were first issued in 1975, the second group consists of the six Arctic-Yukon-Kuskokwim (AYK) salmon fisheries limited in 1976, and the third group includes the four herring fisheries which were limited in 1977-1978. A fourth group includes the hand troll fishery, the Prince William Sound (PWS) and Kodiak herring fisheries, and the Southeast crab and sablefish fisheries which were limited during the 1980-1987 time period. The final group consists of six Westward herring fisheries which were limited during 1988-1991.

Two measures of average annual transfer rates for individual fisheries are shown in Table 2. The first transfer rate is calculated by dividing the cumulative total transfers from initial issuees over the time period by transferable permit-year counts. The fisheries limited in the years 1980-1987 have the highest rates of transfers from initial issuees but this rate is expected to decline over time because each year there will be fewer initial issuees remaining in the fishery.

The second transfer rate is calculated by dividing all permanent transfers over the time period by total transferable permit-year counts. The permit-year count represents a summation over all years of the number of transferable permits existing at the end of each year. These rates are comparable to the all- years statewide summary rates presented in Table 1.

For the second type of turnover rate (ratio of transfers to transferable permit-years), the transfer rates vary considerably by fishery. The transfer rates for about two-thirds of the fisheries are 0.10 or greater when averaged across all years. Some of the fisheries with lower annual average rates are: all of the AYK fisheries except for Norton Sound herring gill net, the Chignik and the Peninsula/Aleutian seine, the Southeast herring seine, and the Southeast king crab pot fisheries.

The annual transfer rate within a fishery may vary considerably from year to year. This is demonstrated in Appendix B where the number of transferable permits, number of transfers, and the transfer rates for each year are presented for individual fisheries. The yearly number of permanent transfers has been relatively low in many fisheries since 1989.

TABLE 1. Statewide Transfer Data on Permanent Permits, by year, 1975 - 1994

TABLE 2. Transfer Ratios by Fishery, 1975-1994, All Years Combined