Community-based Sectors for the New England Groundfish Fishery

discussed earlier these price projections are likely conservative since they assume landings equal
overall target TACs.
The expected annual gain in revenues under sector management is estimated by subtracting the
projected annual revenues without sectors management from projected revenues under sector
management (Table 9a-d). The analysis assumes that, without sector management, the sector
members will continue to catch the same percentage of the different groundfish target TACs that
they caught during the 2004 and 2005 fishing years. Estimates are provided for both Portland
Sectors A and B based on two different sector allocation formulas (e.g. FY01-05 and FY96-01
basis years). The annual gain in net revenues for the sector is calculated by subtracting from the
increase in annual gross revenue, the variable operating costs (estimated at 38% of the increased
gross revenues) 12 , the ongoing costs of sector management (assumed to be $150,000), and the
loan to repay sector establishment costs (assumed to be $200,000). These net gains do not
account for additional labor costs associated with landing additional catch (only costs such as
fuel, oil, ice, water and provisions). Thus the gains in net revenues represent additional income
that would be divided between boat/permit owners, captains and crew. Presumably this will be on
the same basis as normal crew share which may vary from vessel to vessel.
The analysis suggests that sector management can provide substantial gains in net revenues to
sector vessels and that these gains far outweigh the costs of establishing and operating a sector.
Sector A is projected to increase net revenues by $4.6 million with the FY01-05 allocation and by
$4.2 million with the FY96-01 allocation. This assumes sector A vessels pay a landing tax of 1%
on groundfish and monkfish landings. The smaller Sector B is projected to increase net revenues
by $2.8 million with the FY01-05 allocation and by $2.0 million with the FY96-01 allocation.
This assumes sector vessels pay a landing tax of 1.1% on groundfish and monkfish landings. The
landings tax would be sufficient to cover the $150 thousand annual operating cost and to pay off a
$200 thousand loan for establishment of the sector in 5 or 7 years (depending on allocation
formula) assuming a 7.5% interest rate. The landings tax for the Portland sectors is much smaller
than that required for the Port Clyde sector simply because of the larger size and revenues of the
sector.
If the landings tax was continued indefinitely at 1% for Sector A or 1.1% for Sector B, the sector
entity would begin to build capital which could be used to pay dividends to sector members or to
purchase additional permits. The asset calculations in Tables 9a-d assume that the landing tax
surplus and 7.5% interest on assets is simply accumulated by the sector entity. Note that the
column titled interest and management fees becomes negative in later years once interest on the
sector’s asset base exceeds the management costs.
12 The estimate of variable operating costs as a percent of revenue is based on observer data collected from
observed trawler trips. For each trip the ratio of the sum of fuel, oil, food, water, ice, and supplies to the
revenues generated by the trip was calculated. A weighted average of this ratio (weighted by revenue) was
calculated to equal 25% of gross revenues.
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