Transcript Document
Ragnar Arnason*
Fisheries Problems and Reforms
A presentation at The Fisheries Conference Tallinn, Estonia November 27, 2013 * Professor University of Iceland
Synopsis
1. The fisheries problem 2. Fisheries reforms 3. The CFP reforms 4. What can Estonia do?
The Fisheries Problem
Found in ocean fisheries all around the world
!
Appears generally as: 1. Excessive fishing effort and fleets 2. Depressed fish stocks and falling yield 3. Low incomes of fishers and fishing communities 4. High level of biological ...and social risk
The Fisheries Problem (…cont.)
Often accompanied by : • • • • • High level of fish discarding Low quality of landings Poor access to financial capital Distorted and often little technical progress Economic and social stagnation Very important Fisheries management (attempts at “fisheries reforms”) frequently makes the situation worse
!!
This state of affairs is caused by the
Common Property Problem (CPP)
!
The CPP implies absence of private property rights Markets cannot exist No market guidance toward the common good Overexploitation and waste
!
Common property
• Assets, resources, property held in common by a group of people – Held in common equal rights of use – The group can be small (2 people) or large ( nation) • Examples – Ozone layer, atmosphere, the environment, wild animals, fish stocks
Aristotle (Politics, book II. ca. 350 BC) “the greater the number of owners, the less the respect for common property. People are much more careful of their personal possessions than of those owned communally; they exercise care over common property only in so far as they are personally affected.” Garret Hardin (Science 1968) “ Tragedy of the Commons ” Under the CP-arrangement individual users are forced to overexploit. Otherwise they get nothing!
• The common property arrangement is a social organization • It is a man-made institution (nothing natural about it) • Other terms for common property fisheries – – – Common pool fisheries Open access fisheries Competitive fisheries
The common property problem
• • An error of social organization – Forces individual users to compete for available resources (wrong incentives) The CPP does is not caused by (1) Lack of understanding (2) Lack of (biological) data Even with perfect knowledge and data the problem would persist!
The common property problem is caused by lack of individual fishers’ rights in the fishery
!
Value, $
Analysis:
Common property fishery Costs Sustainable revenues (yield) Biomass MEY MSY CSY Sustainable biomass Effort
Nota Bene
1. It is the MEY-point (maximum economic yield ) that is socially optimal 2. MSY is
not
socially optimal 3. MEY – implies greater biomass than MSY – – is sustainable entails little risk of stock collapse – usually generates substantial profits (rents)
The Dynamic Fishery
100 Effort,
e
Z n 2
x
0 ) 50 0
x
0
e
0 1 Z n 1 x
x
x Competitive Optimal 2
The Empirical Evidence: Evolution of the global fishery
• Evidence from various FAO, World Bank, OECD and academic publications • Since the end of WW-II 1. Fishing fleets:
Huge increase
2. Net economic returns:
Decline
3. Fish stocks:
Drastic decline
4. Global ocean catches:
Stagnated
(even declined)
Global marine catches (m.mt.)
100,0 90,0 80,0 70,0 60,0
Million metric tonnes
50,0 40,0 30,0 20,0 10,0 Statistically significant declining trend since 1990 0,0 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
The Economics of Global Fishing
• Not only has there been a dramatic biological mismanagement of the global fishery, the economic mismanagement is even worse • • • The global landed value is about USD 90 b.
per year Profits are insignificant, perhaps USD 5 b . Subsidies are high, perhaps USD 10 b.
(EU, Japan, China)
Empirical evidence: The global fishery
(Sunken Billions; World Bank and FAO 2009; data 2004 ) 120.0
100.0
80.0
60.0
40.0
20.0
0.0
0.00
Potential profits 0.20
0.40
0.60
0.80
Fishing effort (index)
1.00
Optimal Actual profits 1.20
1.40
Actual
Global Fishery: Economic waste
(Sunken Billions, 2009)
Sustainable global fishery: Current
(2004)
and profit maximizing outcomes
Current Optimal Difference (optimal –current) Fishing effort Harvest Biomass Profits 13.9 m. GRT 85 m. mt 148 m. mt -5 b. USD 7.3 m. GRT 81 m. mt. 314 m. mt. 44 b. USD -6.6 m. GRT -4 m. mt. +165 m.mt. 49 b. USD 50 b. USD Global Development Assistance in 2004
II Fisheries Reforms
Fisheries reforms attempt to: Alleviate the ravages of the CPP Move the fishery toward the optimal point Nota bene This is human management!
- Get people to act in the collectively “best” manner Fishers act according to the Prevailing Fisheries Management Regime (FMR) i
Fishers act according to the Fisheries Management Regime
• • • The fisheries management regime (FMR): – The institutional framework under which the fishing activity operates • FMR may be set by (a) Social custom and tradition (b) The government (the fisheries authority) (c) The association of fishermen (d) Other means It may be explicit or implicit Fisheries reforms must alter the FMR!
FMR: Main components
Fisheries management system,
FMS
Monitoring, control & surveillance,
MCS
Fisheries judicial system,
FJS
• Links in the same chain!
• If one breaks the chain is useless!
Fisheries Management Systems: Classification Biological fisheries management Economic fisheries management
Only property rights work !
Direct Taxes Indirect Property rights
Key Property Rights in Fisheries
Sole ownership Rarely used Effective Territorial user rights TURFs Mainly sedentary species Effective if applicable Individual quotas IQs/ITQs Widely applicable; very common Effective if enforceable Community rights Fairly common Mixed evidence
Individual Transferable Quotas: ITQs
• The most widely applied rights-based fisheries management system in the world • Adopted as a major part of the FMS by at least 22 major fishing nations ─ New-Zealand, Australia, Mexico, USA, Canada, Greenland, Iceland, Holland, Norway, Denmark, Sweden, Estonia, Germany, UK, Portugal, Spain, Russia, Morocco, Namibia, South Africa, Chile, Peru, Falkland • Close to 25% of global catch taken under ITQs!
Outcomes of ITQs - General pattern around the world Economically very successful
!
(1) Reduction in fishing effort (immediate) (2) Fishing capital declines (but usually slowly) (3) Biomass recovers (slowly) (4) Unit price of landings quickly increases (often greatly) (5) Quotas become valuable (quickly!) (6) Enhanced resource stewardship by fishers (7) Discarding often reduced
Examples of ITQ success
• British Columbia trawl fishery – Great increase in profits, increased resource stewardship, stock and environmental improvements. • Icelandic demersal fisheries – Great increase in profits (30-50% of revenues), stock improvements, reduced discarding • • North Atlantic pelagic fisheries – Very good profits ( 30%) New Zealand fisheries – Very profitable. Stock stabilization,
Social impacts of fisheries reforms
• Reduces fishing effort • Alters fishing and fish processing behaviour • Leads to streamlined efficient operations Substantial social impacts (inevitable) Opposition – Fishing communities – Social conservationists
Who gains/who loses?
• Sensible reforms => net social gain (often substantial) Possible to make everyone better off (Hicks-Kaldor improvement) • • In reality not necessarily so In the short run – – Recipients of rights and retained fishers gain most Laid-off fishers and inhabitants of declining communities may lose • Social opposition In the long run most people gain (gdp & employment )
III.
CFP reforms
The CFP Fundamentally inappropriate !!
• Common fishing grounds – Exacerbates the CPP • National enforcement – Inappropriate incentives – Built in conflict of interest – Unequal treatment of violations The EU has been trying to deal with the resulting problems ever since !
Conduct of the policy has been bad
Stocks: Heavily overfished Harvests: Declining Fleets: Hugely excessive Profits: Very poor Subsidies: Very high Discards: High Overall assessment EU fisheries are the worst in the western world
!
(Norway, Iceland, Greenland, Canada, USA and Russia are much better)
The EU’s own assessment of the situation (Green paper on the reform of the CFP, 2009): The EU fisheries are characterized by: – Overfishing – – – – Overcapacity Heavy subsidies Low economic resilience Decline in the volume of fish caught Conclusion (in the Green paper) “The CFP is not achieving its objectives”
Evolution of catch volume
8 5
M. mt.
4 3 2 1 7 6 0 2000 2001 2002 2003 2004 2005 EU catch volume 2006 2007 Trend 2008 2009 2010 Statistically significant declining trend: -3% per year
The EU excels only in fisheries subsidies!
• • • • The highest capacity enhancing subsidies in the world !
Major detrimental impact on fisheries efficiency Really a negative reform Swamps the reforms (which are considerably weaker)
EU fisheries subsidies
(According to a recent study for the EU parliament (IP/B/PECH/IC/2013-146)) 4,5 4 3,5 3
B.
US$
2,5 2 1,5 1 0,5 0 Capacity enhancing subsidies (Billion US$ per year) EU Japan China Russia USA Indonesia
Subsidies per unit volume ofcatch
(US$/kg) 0,90 0,80 0,70 0,60 0,50
US$/kg
0,40 0,30 0,20 0,10 0,00 EU Japan China Russia USA Indonesia
Key initial proposals
(By the commission) 1. Maximum Sustainable Yield (MSY) 2. Multiannual quota plans 3. Transferable fishing concessions (ITQs) 4. Decentralization (regionalization) 5. Discard ban Advisability -/+ ++ + +/-
The actual decision
1. Maximum Sustainable Yield (MSY) 2. Multiannual quota plans 3. Transferable fishing concessions (ITQs) 4. Decentralization (regionalization) 5. Discard ban Yes Yes No Yes Yes So the most important reform was rejected!
IV Impacts on Estonia
Impacts are probably not very great
• • • Estonia already has a fairly efficient fisheries management regime (ITQs) The reforms adopted are not radical Potentially significant impacts: – Ban on discards (Are discards in Estonian fisheries significant?) – – Stock rebuilding toward MSY (Estonia’s national quotas) Withholding of subsidies if excessive fleets are not reduced (Does Estonia have significantly excessive fleets?) – New opportunities for structural funds ( Under the social dimension of the CFP)
What should Estonia do?
• • Do not wait for the EU Do your own fisheries reforms – Strengthen your ITQ system • Move away from gear/effort quotas if possible • • Strengthen property rights value of ITQs (duration, security) Improve the enforcement of quotas • Support ITQ market and ITQ price listing (..if necessary) – Promote business attitude in the fisheries sector • • • Encourage investment in quality, processing and marketing Avoid detrimental taxation Allow ITQs as financial collateral
• Fisheries reforms (cont.) – Be careful with vessel reduction/buy-back programs • • Can easily be counter productive Use funds generated to improve the fisheries – Press for sensible Baltic stock rebuilding programme • You have shared stocks – Press for sensible Baltic marine protection policy • Stocks, ecosystem, habitat
OECD report on Estonian fisheries (2009) Title page photograph Fake fish?