Recently published, a new collection of research designed to inform decision makers, including governments and investors, on effective ocean and coastal resource management strategies to maximize economic, conservation and societal benefits.
The research demonstrates how governance and management reform can reduce poverty while achieving economic gains, increasing food production, replenishing fish and conserving ocean health for future generations. This is especially true in the case of wild capture fisheries.
I would be presenting some of the research in the blog, but is always better to go to the source (as good scientist I’m) but if you want a digest, then stay here ☺
Country-Level Costs vs. Benefits of Improved Fishery Management
This came out in May, and is supported by a “stars” filled group of fisheries scientists… most analyses of fisheries often demonstrate the potential biological, economic, and social benefits of fisheries recovery, but few studies have incorporated the costs associated with the design and implementation of the management systems needed to achieve recovery.
Using available data and anecdotes they suggest that the current cost of fishery management may be quite substantial and that additional costs arising from major upgrades in management could be prohibitive in some countries. Their analysis focused on OC (Output Controls) and CS (Catch Shares - Quotas) Scenarios of Management measure and compared them a Business as Usual Scenario
A careful analysis comparing the country-level benefits of fishery management improvements to the additional costs of doing so has never been undertaken. Therefore, a study focusing on the current and incremental costs of fishery management upgrades could have important implications for policy design to efficiently rebuild global fisheries.
This analysis has three objectives. The first is to estimate the current cost of managing fisheries in the top fishing countries of the world. The second is to estimate, for a range of alternative management approaches, the concomitant change in cost, also at the country level. Finally, they combine these cost estimates with recent estimates of the economic benefits of fishery recovery to arrive at a cost-benefit calculation of improved fishery management around the world.
This comparison determines if the expected economic benefits of a suite of fishery management reforms are greater than the management costs associated with those reforms. The analysis is decidedly practical: our goal is to derive ballpark estimates of these values to ultimately inform the question of whether the potential benefits can justify the likely increase in management costs.
Methodology
There are five major steps to completing this analysis. First, they estimate the cost of managing fisheries for all major fishing countries in the world and standardize by the cost per metric tonne (MT). This step is accomplished by developing a cost database including as many countries as possible and then imputing cost, based on the available data, for countries with limited data. They then focus on the 25 countries with largest fish catch.
Second, They categorize the landings in each country by management type. The third and fourth steps are developing and implementing a model of incremental management cost parameterized with cost data, fishery management data, and a survey of global fishery management experts to estimate the future costs of alternative management interventions using.
Finally, using projected profits in the year 2050 associated with different management interventions, they compare the economic benefits of management reform with the estimated costs associated with the new management in each country.
Results
They find substantial variation in current management costs across countries (approximately an order of magnitude difference in management cost per MT) and that incremental costs of upgrading fishery management can be quite substantial (in some countries, this could involve a doubling or tripling of management cost). Despite these results, our overall finding is that in every country examined, the benefits of reform substantially outweigh the incremental costs in management. This result holds across a wide range of assumptions and is consistent with empirical data, new case studies, and ad hoc interviews conducted with fishery managers in countries that have already undergone these welfare-improving transitions.
OC and CS Scenarios Compared to BAU, 2050
Figures below shows the incremental cost vs. the incremental benefit of fishery management reform, where each country is represented by a single point. The size of the point indicates the size of the fishing sector in that country measured in total harvest (in MT) for 2012. Therefore, larger dots represent counties with higher annual landings in 2012. The top panels provide results for CS vs. BAU and the bottom panels provide results for OC vs. BAU.
Difference between future profits and management costs: CS Scenario and OC Scenario compared to BAU. Benefit-cost-ratios are capped at 10 in the figures on the right.
Difference between future profits and management costs: CS Scenario and OC Scenario compared to BAU. Benefit-cost-ratios are capped at 10 in the figures on the right.
Three results immediately pop out. The first is that when considering reforming all fisheries in a country to some form of CS, we find that the cumulative benefits always exceed the costs (all dots are above the 1:1 line on the top left panel and all benefit cost ratios exceed 1.0 on the top right panel). Indeed, the benefit cost ratios range from just over 1.0 up to 82 or more, averaging at about 29. The global benefit cost ratio average for catch share management is 34. These results are at the country level and do not necessarily imply that the benefits of switching to catch share management will outweigh the costs in each fishery. Instead, this result compares the aggregate benefits of moving to CS against the aggregate costs of doing so.
The second result is that the large fishing countries tend to also have the largest benefit cost ratios – it turns out that the larger a country’s catch, the more it stands to gain from aggressive fishery management reforms.
The third result is that while the numerical results are somewhat muted when moving from BAU to OC, most countries would still benefit from such a shift. The global cost of managing all fisheries in our database under catch share management in 2050 is about USD 11.09 billion, which is not quite double the global cost of BAU (USD 6.21 billion) and 2012 current global management costs (USD 5.76 billion).
Discussion
Two interpretations emerge from this study: First, while adopting effective catch shares is likely to entail the largest incremental increases in management cost, it is also likely to lead to even more significant increases in economic rent or profit. In fact, expert opinion suggests that depending on how well fisheries are already managed, the cost of switching to catch share management might even lower costs relative to BAU, which would further strengthen our main results. If some of that increase in profit can be captured to pay for the change in management cost (indeed, only a small fraction of it would be required in most countries), then the policy reform would be win-win.
A key question that comes up when considering management costs is who should pay. It has been argued because the fishing industry benefits from management services, it should pay the costs associated with that management. Generally, taxpayers end up paying for these services, which are in turn provided by the government.
Importantly, the benefits depicted in these results do not reflect individual fisheries, but the generalized benefits at the national level. Specific fisheries might benefit differently from management changes, and effective catch shares will surely require careful design tailored to each fishery.
In addition, while this study suggests that those directly employed by the fishing industry could experience an increase in profits with a shift from less effective management to catch shares, and to a lesser extent, strong output controls, it does not investigate the implications of management reform down the supply chain. The value of this sector could potentially decrease with management that requires decreases in harvests. More research is needed to determine the economic implications of improved management on other related sectors.
The finding that adopting OC is still beneficial, but not as beneficial as adopting CS, is not too surprising, particularly given our assumption that securing long-run economic profit is still possible under OC. While output controls alone can be effectively implemented to regulate catch and achieve conservation objectives, there is a strong theoretical argument that they cannot ensure significant long-run profits, because rents will be dissipated by excessive effort on unregulated margins.
Thus, they regard the OC scenario as an intermediate case between open access and fully rent-capturing catch shares. As such, the profit upside from OC will always be lower than the profit upside from CS. While it is also true that our results suggest lower management costs under OC (than CS), they are not sufficiently low to make OC more attractive than CS.
Future work
There are a number of ways in which this study could be built upon to further examine the relationship between costs and fisheries management. First, while this study focused on the annual cost of management after management reform has been implemented, studies and interviews indicate that transition costs can be significant. During the transition period, the reform is designed and planned. This stage can be labor intensive and take a substantial amount of time, thus incurring significant fixed costs. In addition, it may require expensive research efforts to guide reform design. Including this expense would capture a more comprehensive cost of fisheries management.
Second, future studies could expand on this work by developing a more precise model for determining changes in management cost, for example by incorporating complexities in rules and regulations such as bycatch regulations, limits on days at sea, gear restrictions, and required reporting and analysis likely to influence the costs of administration, research, and enforcement services.
Finally, while the country-level approach used in the current study is useful for making decisions at the national level, a fishery level-approach might provide key insights for managers working on the reform of individual fisheries. This approach would require fishery-level data on the cost associated with management attributes specific to fishery type. Importantly, improved data on the cost of managing fisheries at both the country and fishery level would facilitate more precise analyses.
Conclusion
The research highlighted here demonstrates that when governments implement and enforce strong policies and regulations to manage their fisheries sustainably, the benefits are mutually reinforcing: fish production increases; economic profits rise; and fish stocks recover and rebuild. The path to sustainable fisheries will require not only reform by government, but also accompanying practices such as an improved business environment, increased transparency, and sound science and careful monitoring. Collectively, these practices create a synergy that helps enable the transition to sustainable fisheries management.
One of the remaining challenges is determining how best to finance the comprehensive costs of reform, particularly during the transition period. We believe there are emerging opportunities for all sectors to contribute to the transition to sustainable management, from the private sector and public finance playing an innovative role in financing the transition, to the research community providing critical and timely data as well as innovative technologies that can enable smart policy decisions.
The rewards of sustainable management have never been higher—and the costs of inaction have never been more clear—in unlocking the underlying potential of global fisheries.