Under the European Union’s Common Fisheries Policy, countries are allocated quotas for the amounts of fish that their fishermen can catch in various areas of the sea. In most European nations, governments control the allocation of fishing rights under these quotas. When a fisherman dies or retires, his quota goes into a pool to be reallocated. In the United Kingdom, however, fishermen can buy, sell, or lease their quotas. It turns out that this has had beneficial side effects for fish conservation.

Because many fishermen would like to catch more fish than their quotas permit, there is always a temptation to exceed quota limits. If a British fisherman thinks that he is more efficient than another fisherman, he can buy or lease the other fisherman’s quota. If he is right, he earns higher profits than he would by overfishing and trying to sell his excess catch (which fishermen call “black fish”) illegally in the black market.

Indeed, many British fishermen might be pleased if the European Union were to cut quotas in a further effort to repopulate stocks of fish. Their current incomes might fall, but the market value of their quota would rise. The values of the quotas are already relatively high. When a tragic accident led to the sinking of a fishing boat off the coast of Scotland, the deceased owner’s quotas sold for about $10 million.

How does the existence of a market for quotas help keep the stocks of fish off the shores of Europe from dwindling?