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Managing A Bear Market In Fish

close view of a summer flounder in an aquarium setting
Summer flounder. Photo courtesy the Maritime Aquarium at Norwalk.

What’s the difference between stocks when you’re talking about equities and when you’re talking about fish?

Equity markets always recover after a crash. Fish populations are less of a sure thing.

New Jersey officials are carping over a plan to severely cut the state’s catch of summer flounder, also known as fluke. In February the Atlantic States Marine Fisheries Commission (ASMFC) voted to scale back the recreational fishing quota for fluke by 30 percent, following a 10 percent cut in 2016. A similar quota cut for commercial fisherman went into effect in January.

If you’re not from the area, telling anglers on the Jersey Shore – or across the water on Long Island – that they can’t pursue their passion for fluke is something like telling a bass fisherman in Georgia that he ought to go work on his duck decoys instead. This cutback is a big deal to a lot of people.

As you might expect, states throughout the summer flounder’s range have protested quota reductions, but New Jersey went further and filed a formal appeal. The state’s Department of Environmental Protection cited “numerous process, data, policy and regulatory issues.” State officials claimed the reduced quota would hobble recreational fishing, which contributes $1.5 billion annually to the state economy. In addition, U.S. Reps. Frank Pallone, Jr., a Democrat, and Frank LoBiondo, a Republican, have jointly introduced legislation to prevent the summer flounder quotas for 2017 and 2018 from taking effect in their state, arguing that New Jersey’s cuts are greater than the requirements for other states in the region. If passed, Pallone and LoBiondo’s legislation would require a new assessment from ASMFC’s parent agency, the National Oceanic and Atmospheric Administration, before it could issue new quotas.

Federal officials and their supporters have countered these objections with statistics showing that the summer flounder stock declined approximately 22 percent between 2010 and 2015. There has been dispute over what has caused the drop in numbers; some blame illegal fishing, others suspect climate change, and other observers admit we simply don’t know. But the ASMFC’s action presupposes that in order to preserve summer flounder populations for the future, it is necessary to scale back fishing in the present, regardless of why the population has diminished.

The history books are full of species that were mismanaged into oblivion. Flocks of passenger pigeons once darkened the skies like storm clouds over big East Coast cities such as Philadelphia and New York. But the species was hunted out of existence, pushed past its point of no return in the early 20th century. In East Coast waters, right whales are barely hanging on, though they have been protected from hunting since 1935. And Atlantic cod stocks are still severely depleted after years of concerted efforts to revive them.

So while summer flounder remain relatively abundant, at least in some places, fisheries managers are right to focus on the big picture and to try to take moderate preventative steps now to avoid having to take more drastic steps later. It won’t help the flounder in the long run if their management becomes politicized and subject to the economic needs of New Jersey (or other states in their range).

On the other hand, anglers may have a point when they observe that the larger the fluke, the more likely it is to be female. Patrick Sullivan, chair of the Department of Natural Resources at Cornell University, told The Wall Street Journal that female flounder generally grow to twice the size of their male counterparts. Simply increasing the minimum size for keeping a caught summer flounder therefore also increases the odds that the fish will come out of the breeding stock that needs to be nurtured if the population is to rebound.

When we manage big game animals, officials are aware of such concerns and may implement limits on age and gender, as well as overall numbers, in order to preserve the animals most necessary for breeding. Unfortunately for both anglers and the fish, it is apparently impossible to determine the gender of a summer flounder without dissecting it. So simply telling boat captains and their passengers that they can only keep a certain number of males or females will not work.

Perhaps a proxy would be to manage the fish in size ranges. We might allow anglers to keep fish between, say, 15 and 18 inches and those over 24 or 26 inches. The big mamas (as the odds will favor their being female) will at least have had ample opportunity to breed by the time they reach that size, while the haul of smaller fish would contain a higher proportion of males. Coupled with a moderate overall creel limit, this might take some of the sting out of the enforcement of tougher quotas by reducing the number of fish that must be tossed back while increasing the likely reproductive value of those that are.

This is just my idea. As any regular reader of this blog knows, I am not much of a fisherman. But I do know that if you want your stocks to recover, the worst thing to do is to liquidate your holdings at the bottom of a crash. That’s true no matter what kind of stocks we’re talking about.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s book, Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us” and Chapter 4, “The Family Business."

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