The Sunken Billions: The Economic Justification for Fisheries Reform

Monday, 09 March 2009

The Sunken Billions: The Economic Justification for Fisheries Reform shows the difference between the potential and actual net economic benefi ts from marine fisheries is about $50 billion per year, or some $2 trillion over the last three decades.

If fish stocks were rebuilt, the current marine catch could be achieved with approximately half of the current global fishing effort. This illustrates the massive overcapacity of the global fleet. The excess competition for the limited fish resources results in declining productivity, economic inefficiency, and depressed fisher incomes.

The focus on the deteriorating biological health of world fisheries has tended to obscure their equally critical economic health. Achieving sustainable fisheries presents challenges not only of biology and ecology, but also of managing political and economic processes and replacing pernicious incentives with those that foster improved governance and responsible stewardship.

Improved governance of marine fisheries could regain a substantial part of this annual economic loss and contribute to economic growth. Fisheries governance reform is a longterm process requiring political will and consensus vision, built through broad stakeholder dialogue. Reforms will require investment in good governance, including strengthening marine tenure systems and reducing illegal fi shing and harmful subsidies.

Realizing the potential economic benefi ts of fisheries means reducing fishing effort and capacity. To offset the associated social adjustment costs, successful reforms should provide for social safety nets and alternative economic opportunities for affected communities.

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Paperback: 124 pages
Authors: Kieran Kelleher , Rolf Willmann , Ragnar Arnason
Publisher: World Bank Publications (February 25, 2009)
Language: English
ISBN-10: 0821377906
ISBN-13: 978-0821377901

CONTENTS
Boxes, Figures, and Tables vii
Acknowledgments xi
About the Authors xiii
Acronyms and Abbreviations xv
Executive Summary xvii
1. Global Trends in Fisheries 1
Introduction 1
The Deteriorating State of the Marine Fishery Resources 2
Profile and Trends in Global Fisheries Production 5
Trade and Fish Consumption 5
2. The Economic Performance of World Marine Capture Fisheries 9
Value of Production and Global Fish Prices 9
Fishing Costs and Productivity 12
Fishing Effort and Fishing Fleets 18
Subsidies 23
The Costs of Fishery Management 24
3. Estimate of Net Economic Loss in the Global Marine Fishery 27
Background 27
Use of the Terms Net Benefits and Economic Rents 29
Description of the Aggregate Model 31
Model Parameters and Data 32
4. Results 41
Main Results 41
Evidence from Global Studies 42
Evidence from Case Studies 42
Links to the Broader Economy 44
Sensitivity Analysis and Confidence Intervals 46
5. The Way Forward 49
Fisheries Reform Makes Economic Sense 49
Rebuilding Global Fish Capital 50
Summary: The Way Forward 55
Appendix One: The Concept of Economic Rent in Fisheries 57
Appendix Two: Model and Model Estimation 61
Appendix Three: Stochastic Specifications and Confidence Intervals 69
Appendix Four: Supplementary Data 77
References 85
Index 95

BOOK DESCRIPTION
Economic losses in marine fisheries resulting from poor management, inefficiencies, and overfishing add up to US$50 billion per year. Taken over the last three decades, these losses total over US$2 trillion, a figure roughly equivalent to the GDP of Italy.

The Sunken Billions: The Economic Justification for Fisheries Reform argues that well-managed marine fisheries could turn most of these losses into sustainable economic benefits for millions of fishers and coastal communities.

According to this book, the bulk of losses occur in two main ways. First, depleted fish stocks mean that there are fewer fish to catch, and therefore the cost of finding and catching them is greater than it might be. Second, fleet overcapacity means that the economic benefits of fishing are dissipated due to redundant investment and operating costs. The book stresses that the figure of US$50 billion represents a conservative estimate, as it excludes losses to recreational fisheries and marine tourism as well as losses due to illegal fishing..

The Sunken Billions argues that strengthened fishing rights can provide fishers and fishing communities with incentives to operate in an economically efficient and socially responsible manner. Phasing out subsidies that enhance redundant fishing capacity and harvesting effort will improve efficiency. Greater transparency in allocation of fish resources and greater public accountability for fisheries management and health of fish stocks will help eco-labeling initiatives to certify sustainable fisheries.

ABOUT THE AUTHORS
Ragnar Arnason is a leading fisheries economist and a professor in the Economics Faculty at the University of Iceland. He is an expert on the economics of individual transferable quotas (ITQs) used to manage fisheries. ITQs are sometimes considered to be the basis for the economic success of Iceland’s fisheries.

He has been an advisor to several developing countries on fisheries management issues. He developed the bioeconomic model used to estimate the $50 billion annual loss of potential economic benefits in the global ocean fishery.

Kieran Kelleher is the Fisheries Team Leader in the World Bank’s Agriculture and Rural Development Department. He is the manager of the World Bank’s Global Partnership on Fisheries—PROFISH—which supported The Sunken Billions study. The partnership includes developing countries, leading bilateral donors to the fisheries sector, and technical institutions such as FAO.

With a background in biology and economics, he has spent most of his career in developing countries and worked as a fisherman, fish farmer, fisheries scientist, and economic advisor on fisheries to governments. He is the author of global studies on discards, on aquaculture, and on fisheries enforcement.

Rolf Willmann is a Senior Fisheries Planning Officer in FAO’s Fisheries and Aquaculture Department.

He focuses on policy and management issues in marine capture fisheries, especially on the implementation of the Code of Conduct for Responsible Fisheries. He has led the development of the FAO Ecolabeling Guidelines for Marine Capture Fisheries and undertaken numerous assessments of the economics of capture fisheries in developing countries, with a particular focus on small-scale fisheries and poverty issues.

He was the secretary of the Global Conference on Small-Scale Fisheries held in Bangkok in 2008 (http://www.4ssf.org/index.htm).

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