A numerical comparison of fish quota
values and standard resource rent
calculations using New Zealand’s
commercial fish resource
Paper for 13th Meeting of the London group on
Environmental Accounting Brussels, 29 September - 3
October 2008 Jane Harkness and Luke Aki
Presentation
Jane Harkness – Statistics New Zealand
Introduction
• Asset accounts in monetary terms
• Methodology determined by data
availability
• Market value approach
• Residual value approach
Summary of results
Figure 1: Fish Stock Valuations
$(000)
4500
4000
3500
3000
2500
2000
1500
1000
500
0
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Residual value method
market price method
The Quota Management System
• Began in 1986
– In 1986 the QMS managed 27 species
– In 2007 the QMS managed 96 species
The Fisheries Management Areas
• Species are
managed in Quota
Management Areas,
618 in 2007
• 10 Fisheries
Management Areas
FMAs
hoki HOK
has one
QMA
cardinal fish
CDL has 10
The Fish Monetary Stock Account
• Asset value of New Zealand’s
commercial fish resource
Exclusions
•
•
•
•
Recreational catch
Customary fishing
Aquaculture
Non QMS species
Management Mechanisms
• Quota represents shares for a species
in a Quota Management Area
• Total Allowable Commercial Catch
TACC is set annually
• The Quota holding generates an Annual
Catch Entitlement ACE (after 2001)
Methodology, Fish Monetary Stock
Account
• Quota x TACC
• Where Quota information is absent
ACE trades used as approximation of
resource rent RR
• Quota x TACC + NPV
• Assumptions
Data & Methods
• Ministry of Fisheries administer the
QMS and assist in interpretation of data
• Data supply
– Supplied by FishServe
– Trades of Quota and ACE must be
registered
– TACC, catch also supplied
Issues
• Choice of discount rate
• Reliability of price information
• Comparability of alternate methods for
estimating resource rent
Residual value estimates of the fish stock
• where market price information is not
available
• Asset value is estimated based on the
NPV of the implied resource rents
Estimating a resource rent
• R = TR - (IC+CE+CFC+NIT+NP)
• NP = i * K
• Where
R resource rent
TR total revenue
IC intermediate consumption
CE compensation of employees
CFC consumption of fixed capital
NIT net taxes on production
NP normal profit
i the rate of return on capital
K the value of fixed capital stock
Excluding QMS transactions from income
and expenditure
• ITQ are classified as intangible nonproduced assets
• Trades are capital transactions
• ACE sales/purchases classified as rent
Differences in scope
• Residual valuation covers fishing and
aquaculture
• Market valuation covers species
managed under the QMS
Fishing and fish processing
• High levels of integration
• Fish processing is included in Other
food manufacturing
• Can all assets be identified and
measured
Where is the quota held
Quota Shareholding for Selected Species1 by Industrial Classification2
ANZSIC division
A Agriculture, Forestry and Fishing
C Manufacturing
F Wholesale Trade
Percent
2
23
1
L Property and Business Services
46
M Government Administration and Defence
24
unallocated
1 hake, hoki, ling, orange roughy, oreo, scampi, snapper, squid
2 Australian and New Zealand Standard Industrial Classification (ANZSIC) 1996 version 4.1
3
Units may
• Own quota but no longer engaged in
fishing
• Own quota with an associated company
classified to fishing
• Own quota and engaged in fishing but
classified to fish processing
Accounting or economic valuations
•
•
•
•
Fixed assets
Historic or book value asset prices
Or
Current replacement cost
Figure 2: Modified fish stock valuations
$(000)
4500
4000
3500
3000
2500
2000
1500
1000
500
0
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Residual value method (modified)
market value method
Residual value method (original)
Expected or actual catch
• Expected volumes and prices
• Or
• Actual harvest experience
questions
• Discount rate in actual years
• Cost recovery or resource rent
• Residual method operation and theory