A pre-Statehood fish trap along the Kenai Peninsula shore/University of Alaska Fairbanks archives

The benefits and the cost

Twenty-five-years ago economist Steve Colt wrote an “economic history” of “Salmon Fish Traps in Alaska” that ended with this line:

“It may be time for Alaskans to reconsider the fish trap.”

Colt’s suggestion at that time was based purely on the economics of a then-imploding salmon industry.

As he observed, “the ex-vessel value of salmon declined from a 1988 peak of $781 million to $362 million in 1996 despite a 50 percent increase in harvest volume. Starting from a zero-profit equilibrium, these downward price shocks have induced full-blown ‘natural disasters’ in coastal Alaska, complete with federal aid.”

The state’s political leaders, who control the production of Alaska salmon in more ways than they control the production of any other state-owned resource, should have listened to Colt’s suggestion.

Why? Consider this:

The 1988 harvest of 99.4 million salmon weighing 528.5 million pounds that Colt referenced would have the value of nearly $2.1 billion in 2024 currency, according to the official inflation calculator of the U.S. Bureau of Labor Statistics.  

The state will be lucky if this year’s salmon harvest, which is expected to be significantly larger than that of 1988, comes to within a fifth of that value.

 The 2023 harvest of nearly two and half times as many salmon – 230.2 million, according to the Alaska Department of Fish and Game – weighing 919.7 million pounds was worth less than $400 million. 

With the state this year projecting a harvest of 135.7 million – 59 percent of the harvest of last year – and the prices paid to commercial fishermen not looking all that much better, the value of the catch could well fall short of $300 million.

Thankfully, prices have gone up slightly so the value should top $236 million, which would be 59 percent of last year’s value. An increase is further expected because the harvest prediction has pink and chum salmon, the two lowest-value species, comprising only 60 percent of the harvest this year.

Together, those two species accounted for 85 percent of the 2023 harvest, but only 47 percent of the value. A greater percentage of more valuable sockeye and coho salmon in the 2024 catch should do more to increase value than the slightly better prices expected to be paid to fishermen this year.

Return with us now….

Still, one can consider Alaska’s post-pandemic salmon fishery something of a return to 1996 sans the 50 percent increase in harvest that helped keep the industry afloat that year.

Colt at that time observed that “the long-term data also show that Alaska salmon fishermen have been consistently rescued from their own declining physical productivity by rising real prices.”

In the years to follow,  the rising real prices ended but those same fishermen were rescued from their declining physical productivity by rising volumes of salmon. The 1996 harvest of 175.4 million salmon increased to a peak harvest of a stunning 280.3 million salmon in 2013 and has remained above 200 million in every odd-numbered year since.

Catches in odd-numbered years are significantly higher than in even-numbered years because of the distinct production differences between odd-year and even-year pink salmon.

Genetically different fish of the same species, the major thing odd-year and even-year pinks share in common is their low value.

They were worth 38 cents per pound last year, according to state data, or about $1.18 per fish given their average weight of 3.1 pounds. This made every pink salmon worth about a pound of coho salmon or a fifth of a pound of the Chinook salmon Alaskans call kings.

Sadly, the Chinook harvest is now tiny and the National Oceanic and Atmospheric Administration is considering whether the species should be placed on the endangered species list.

Alaskans should be thankful the state doesn’t have the kind of production control over the oil industry that it does over the fishing industry or Alaska would likely be broke rather than sitting on a Permanent Fund now valued at more than $78 billion. 

The problem in the salmon fishery is that the state manages solely for volume and jobs with no consideration for value, which was the main point Colt tried to make 25 years ago.

Traps, he argued, would significantly raise the value of the fish by lowering the cost of catching them.

“I estimate the economic rents generated by the Alaska salmon traps as they were actually deployed and find that they saved roughly $4 million in 1967 dollars per year, or about 12 percent of the ex-vessel value of the catch. I also find strong evidence that the fishermen operating from boats earned zero profits
throughout the 20th century. Thus the State’s ban on fish traps did allow 6,000 additional people to enter the fishery, but did nothing to boost average earnings.”

Economic rent is something like profit but not the same. In this case, it refers to the amount of money to be gained above and beyond the market value of the fish in a wholly free market.

That $4 million in 1967 dollars translates into about $38 million dollars today, but it would likely be greater given how markets have changed since 1967 with the shift to and later dominance of farmed salmon.

But we’ll get back to that later because first there needs to be a discussion of those jobs Colt mentioned.

Science of the Total Environment/Friederike Ziegler and Ray Hilborn

Soviet-style economics

Prior to the 1990s, wild salmon dominated the world market and Alaska was the biggest producer of fish. And long prior to that, Alaska politicians made a Statehood decision to tamper with the economy to create more fishing jobs by banning traps in favor of less efficient nets and hooks.

The years that followed did not go particularly well, however.

With the waters in the North Pacific Ocean cooling, the production of wild salmon fell, and that in combination with competition between a now bigger poll of Alaska fishermen chasing a smaller supply of salmon, problems arose with overfishing.

By the start of the 1970s, Alaska was witnessing the smallest salmon catches in state or territorial history, and the Alaska Department of Fish and Game sharply curtailed harvests to try to fix that problem.

By the start of the 1980s, the state managed to fix things with yet more government-driven economic tampering.

Alaska voters in 1972 were asked to approve an amendment to the state Constitution to permit the Legislature to cap the number of commercial salmon fishermen allowed to harvest fish in the 49th state.

It passed by an overwhelming margin, and in 1973, then-Alaska Gov. Bill Egan signed into law what had come to be called “Limited Entry” legislation.

Two years later, Alaska voters, who were then still paying income taxes, approved $28 million in bonds for hatcheries to start a state program to farm the sea. Voters would by 1980 have backed that program to the tune of $80 million (the equivalent of $304 million in 2024), according to a state history.

And by 1983, the state Division of Fisheries Rehabilitation and Enhancement (FRED) would be able to brag that it was well on its way to meeting a long-term goal of producing “nearly 143 million fish for harvest annually, of which 51 million are to be produced by enhancement and rehabilitation techniques. Included within this harvest of 51 million are 25 million chum, 8 million sockeye, 1.5 million coho, and 300,000 Chinook salmon; the remainder will be made up of pink salmon.”

The state would never reach the hatchery goals for high-value Chinook and sockeye. The hatcheries would, likewise, fall short of the chum goal and only a few times meet the coho goal.

But they would prove hugely successful in producing pink salmon, the lowest-value Alaska salmon.

Thus, as the 1980s drew to a close, the FRED Division could boast of “phenomenal biological success” in having “grown from the first return of pink salmon in 1976 of 30,000 fish statewide to a total return in 1989 of over 36 million” salmon of all species, more than 90 percent of them pinks.

The production of hatchery pink salmon would just keep increasing in the years to follow, but it would be dwarfed by an explosion in the production of larger, far-more-valuable Atlantic salmon grown in increasingly efficient farms in Norway, Chile, Canada, the Faroe Islands and elsewhere.

Able to see the competition coming from these fish, the state again elected to tamper with the economy by in 1989 voting to ban salmon farming in Alaska. The hope was that the growth of the farming business could be limited by blocking the farmers from moving into the most productive stretch of North American coastline for salmon farming. 

The plan didn’t work. The farming business kept growing and is still growing with salmon farms now popping up on land as well as in sheltered, cold-water bays and coves around the globe.

The data-tracking website Statista reported the 2023 production of farmed salmon at 2.87 million metric tonnes. The North Pacific Anadromous Fish Commission (NPAFC) reported a near-record harvest of approximately 1.1 million metric tonnes of wild-caught salmon thanks in large part to a Russian catch of more than 471,000 metric tonnes. 

The Russian catch, like the Alaska catch, is boosted by hatchery production and is heavily weighted toward pink salmon. Alaska last year produced approximately 417,000 metric tonnes of salmon or about 10 percent of the global supply. 

Once the dominant force in the global salmon market, Alaska is now a bit player in an increasingly competitive and efficient market, and it is handicapped both by inefficient, government-mandated harvest techniques and a catch dominated by the government-encouraged production of low-value salmon.

As a business model, Alaska has become something of the Soviet Union of the fishing business. As most are aware, the Soviet Union – once a global power – imploded in 1991 amid demands for economic reforms to modify the government’s “planning system to enable it to increase the quantity and the quality of consumer goods,” as Brazilian economist Numa Mazat has described the situation.

“But even if Soviet Welfare State did really improve during the period, it was not sufficient. Furthermore, the attempts to produce a broader range of products and enhance their quality were not successful and it was necessary to increase dramatically the imports of consumer goods.”

Everything is, as has been observed, eventually driven by economics.

The game changer

The economics in salmon markets were radically altered by farmed fish not because those fish taste better than wild fish, but because fish are, in general, so perishable.

“Seafood has a reputation as a wonder food, and for good reason,” Consumer Reports notes. “It’s high in protein, often low in saturated fat, and the best way to get large amounts of heart-healthy omega-3 fatty acids…but seafood is prone to fast spoilage.”

Fish start to deteriorate as soon as they are killed. Their flesh does not benefit from “aging” as does that of cattle.

This rapid deterioration wasn’t so important when most Alaska salmon were going into cans. The flavor difference between fish canned fresh and those near the point of needing to be thrown away is not great.

But when it comes to the sale of fresh and frozen salmon, the freshness of the product makes a bigger difference in taste than the salmon’s provenance, and in this case, farmed fish have an inherent advantage over wild-caught fish in that the former can be moved almost directly from the pens into a processing plant.

Alaska salmon sometimes took days to get from the boats into the processing plants and even in the best case it still takes hours. Salmon processors, for their part, have responded to this farm-driven change in the market by encouraging Alaska fishermen to add refrigeration to their boats and by offering bonuses for bled and chilled fish which deteriorate more slowly than warm, blood-filled fish.

Pride of Bristol Bay now claims to “offer premium grade salmon handled with the utmost care. As we catch the salmon, we remove them from our nets using slides/trampolines to reduce bruising.

“A crew member bleeds each fish by hand, and then they are placed in refrigerated holds of 33 degrees circulating seawater. Our handling practices are designed to preserve our catch’s quality and pure nature. Guaranteeing unblemished, rich-tasting, firm wild sockeye.

“In fact, every 10 hours, we offload our fish onto larger boats to be transported to the processing plant into a larger crab boat for immediate tender. Once at the processor, it is quickly filleted, flash-frozen, and vacuum-sealed to capture the ‘direct from the boat’ flavor.”

Fish traps could improve on this even more, however, by allowing salmon to be held live until a processing plant was ready for them. Traps would also, in cases such as that in Cook Inlet, allow commercial fishermen to selectively harvest the desired species when multiple species return.

Commercial set gillnet fishermen in the Inlet are now shut down because of their bycatch of Kenai River king salmon, an issue setnetters long ignored. Their intransigence allowed bycatch to become a fishery-killing issue as the returns of the Kenai’s once world-famous, late-run kings dramatically declined due to poor ocean survival.

The late-run return has fallen short of the minimum spawning goal for the past four years and is lagging again this year. The setnet fishery doesn’t target these salmon, but invariably catches some of them because they travel among the hundreds of thousands of sockeye salmon the fishery does target.

Some of these kings can be released from the nets unharmed if they’re spotted soon enough and the netter wishes to do so. But the fish are prone to entanglement and drowning in the nets, and some setnetters want to keep them to sell because they are the state’s, pound-for-pound, most valuable salmon.

Fish traps would allow fishermen to catch both sockeyes and kings, release the kings to continue to the river, and hold the sockeye to maintain a steady, as-needed supply of fish to a processing facility as the salmon farmers do.

Traps were once a common way of fishing in the Inlet. In 1931, there were 77 of them in operation.

 A history published by Alaska Fish & Wildlife News, a state publication, in 2014 accuses them of being one of the “major contributors of salmon over-harvest in Cook Inlet during the 1940s.”

But the story’s claim that “traps were responsible for catching so many fish, that by the late 1940s, they had decimated most of the salmon run” is nothing but a regurgitation of propaganda used to stir up the Alaska Statehood movement.

The real problem with the traps was that most were owned by monied interests outside of Alaska, something that did not sit well with Alaskans.

After Statehood, the traps were legally banned. That law was repealed in 1974, but only so it could be rewritten to permit “the operation of small hand-driven fish traps of the type ordinarily used on rivers of the state that are otherwise legally operated in or above the mouth of a stream or river.”

Alaska commercial fishermen – a significant number of whom believe Alaska voters gave them ownership of the salmon when they voted to amend the Constitution to allow limited entry in the fisheries – have long vilified traps as evil and pushed the aforementioned view that the traps “decimated” salmon runs even though traps are no more difficult to regulate than the state’s existing net fisheries while offering more flexibility in harvest and providing a higher-quality product for the consumer.

Their reappearance in Alaska in the next 25 years, however, seems as unlikely as it was 25 years ago when Colt floated the question as to whether it was “time for Alaskans to reconsider the fish trap.”

The huge stumbling block to efficient reform is limited entry. It created a powerful and entitled interest group, and because the state allowed the permits issued free to fishermen in the 1970s to be freely traded from then on, the stage was set for a market in permits.

“At the end of 2010,” the Commercial Fisheries Entry Commission overseeing the permit reported, “there were 13,595 transferable permits, and original permit holders had transferred 11,729 permits, indicating that approximately 82.7 percent of all transferable permits had changed hands at least once.”

By now, it is likely that well over 90 percent of the permits have changed hands at least once. A few have been passed along from retiring fishermen to their children, but most have been bought by new fishermen or existing fishermen looking to get into new fisheries.

Though the limited entry law made it clear no ownership of the salmon resource came along with the permits, there are now many permit holders who believe that if anything is done to devalue those permits, or any effort is made to eliminate them, the state owes them compensation for their “investment” in a permit.

It is hard to argue with this view, too, given that the state set up a system designed to encourage people to sell and buy permits. All of which makes changing the way the fisheries operate in Alaska now very difficult, although some efforts are being made.

The Commission conducted a “Cook Inlet Set Gillnet Optimum Numbers” study in response to the Legislature’s interest in reducing the number of licensed set netters “to create a more economically viable and sustainable set net fishery, and to allow more fish for in-river users.”

The problem is that plan the Legislature has been discussing to buy back permits stipulates that the program “will not have an adverse effect on the state treasury” before going on to say that the permits will be bought back at $260,000 each.

The anticipated cost of such a buy-back program is $52 million.

Where that money would come from is unclear. Backers of the legislation have suggested nongovernmental agencies or distressed fisheries grants from the National Oceanic and Atmospheric Administration (NOAA).

It’s questionable, however, as to whether NOAA would go along with $260,000 per permit grants when the permits are at this time trading on the open market at prices ranging from $15,000 for a permit alone up to $90,000 for “three permits, two (state) shore leases” and an 18 aluminum skiff with a Yamaha engine, a trailer and fishing gear. 

NOAA has been involved in past permit buyback programs in Alaska, but in those cases loaned the money to make the buy backs happen. The loans were repaid by assessments on the catches of the fishermen who remained in business with less competition after what NOAA termed a “fishing capacity reduction program.” 

Setnetters, however, have made it clear they don’t want to be responsible for covering the cost of a buyback program as seiners did in Southeast Alaska. And the suggestion that non-commercial fishermen, who many commercial fishermen believe have been slowly but steadily stealing fish that belong to the commercial fishery, has not gone well given all the bad blood in the water.

The Alaska Board of Fisheries has for decades been engaged in mediating bitter, political “fish wars” fought over the allocation of Inlet salmon between commercial, personal-use dipnet, sport and subsistence fisheries with almost everything thing they’re getting a raw deal.

There is no end in sight to these wars, either, with the state’s maneuvering room restricted by the limited entry. Twenty-five years from the battles are likely to still be raging at which point someone may be moved to finally ask a question different but equally as explosive as that which Colt asked in 1999:

Was limited entry the worst mistake Alaska voters ever made?