WORLD BANK AGRICULTURE AND RURAL DEVELOPMENT SEPTEMBER 2009 The Sunken Billions 83191 The Economic Justification for Fisheries Reform Global marine capture fisheries are an underperforming global asset. The Key messages for fisheries Sunken Billions study shows that the difference between the potential reformers and actual net economic benefits from marine fisheries is in the order of $50 billion per year – equivalent to more than half the value of 1) Reform requires commitment and the global seafood trade. engagement by political and economic decision-makers – not The cumulative economic loss to the global When fish stocks are fully exploited in the just fisheries authorities. economy over the last three decades is biological sense, the associated fisheries estimated to be in the order of two trillion are almost invariably performing below their 2) The reform process requires a dollars. In many countries the catching economic optimum. In some cases, long-term effort to manage the operations are buoyed up by subsidies, so fisheries may be biologically sustainable but political economy of change in a that the global fishery economy to the point still operate at an economic loss. The complex and dynamic sector. of landing (the harvest sub-sector), is in depletion in fish capital resulting from 3) Building broad-based consensus deficit. overexploitation is rarely reflected in the on reform vision and pathways is a reckoning of a nation’s overall capital and vital element of reform. Improved governance can recapture GDP growth. a substantial proportion of the $50 4) Effectively remove the open access billion annual loss For over three decades the world’s marine condition and strengthen fishing fish stocks have come under increasing rights for fishers and fishing With effective economic incentives, rather pressure from fishing, from loss of habitats communities to provide incentives than being a net drain on the global and from pollution. Rising sea temperatures for sustainability and good economy, sustainable fisheries can create and the increasing acidity of the oceans is stewardship. an economic surplus, be a driver of economic growth and a basis for livelihood placing further stress on already stressed 5) Social safety nets and creation of opportunities. ecosystems. Illegal fishing and unreported alternative livelihoods can be an catches undermine fishery science while important element of reform. The global marine catch has been stagnant some subsidies continue to support for over a decade (producing 85 million tons unsustainable fishing practices. 6) Review fiscal policies to phaze out in 2004, about the same quantity as in subsidies that increase fishing 1992), while the natural fish capital – the effort and fishing capacity and wealth of the oceans has declined (Fig.1). redirect public support to Most of the world’s most valuable fish Figure 1. Stagnant capture fishery supply - strengthen fisheries management stocks are either fully, or overexploited. The growing aquaculture production capability. 25 percent which remain under-exploited 7) Regular public reporting on the tend to comprise lower-value species, or 12 state of nation’s fish stocks and the fisheries for such stocks are the least their contribution to national wealth profitable. 10 6.0 promotes accountability and good Fish supply from capture fisheries The economic health of fisheries governance. Fish Supply from aquaculture Per capita supply (kg) Population (billions) 8 The focus on the declining biological health Population 8) Fisheries reforms can be of the world’s fisheries has tended to 6 integrated with poverty reduction obscure the even more critical economic programs and other instruments of 5.0 health of the fisheries. Economically, 4 economic and social reform. healthy fisheries are fundamental to 9) The fisheries sector can draw on achieving not only the restoration of fish 2 lessons from reforms in other stocks but also other accepted objectives source: FAO sectors, such as mining, forests, or for the fisheries sector, such as improved 0 4.0 land reform. livelihoods, exports, fish food security and 1980 1983 1986 1989 1992 1995 1998 2001 economic growth. www.worldbank.org/sunkenbillions www.worldbank.org/fish 2 2 PROFISH Declining productivity -- increasing Declining real value and share of The comprehensive reforms required preasures value imply political, social and economic Long before the fuel price increases of Over the last decade real landed fish costs. Fisheries reform is a long-term 2008, the economic health of the world’s prices have stagnated. The recent process and will require political will marine fisheries has been in decline. The increases in food and fuel price have founded on a consensus vision built build-up of redundant fishing fleet further depressed the fishery economy. through broad stakeholder dialogue. capacity, deployment of more powerful The value of the marine capture seafood First, a reduction in fishing effort would fishing technologies and increasing production at the point of harvest is some increase productivity, profitability, and pollution and habitat loss has depleted 20 percent of the $400 billion global food net economic benefits. Second, fish stocks worldwide. Despite this fish market. The growing market strength rebuilding fish stocks would lead to increased fishing effort, the global marine of processors and retailers and the growth increased sustainable yields and lower catch has been stagnant for over a of aquaculture (Fig. 1), which now fishing costs. decade, while the catch per fisher, or per accounts for some 50 percent of food fish fishing vessel has declined. In many production, have contributed to the At the same time, strengthened fishing cases the catching operations are buoyed downward pressure on producer prices. rights can provide fishers and fishing up by subsidies, so that the global fishery communities with incentives to harvest economy to the point of landing (the Reform of the fisheries sector can responsibly and efficiently. Phasing harvest sub-sector), is in deficit. Figure 2 generate economic growth and out subsidies will improve efficiency in shows how labor and fleet productivity alternative livelihoods many cases. Greater transparency in have declined even as fishing technology allocation of fish resources and greater Marine fisheries reform can recapture a public accountability for the health of has advanced. substantial proportion of the economic fish stocks will help private initiatives Half the fishing -- half the fuel losses. Rather than being a net drain on to certify sustainable fisheries. the global economy, sustainable fisheries If fish stocks were rebuilt, the current can create an economic surplus and be a Reforms will require investment in marine catch could be achieved with driver of economic growth, both in the good governance, including measures approximately half of the current global marine economy and other sectors. The to eliminate illegal fishing and reduce fishing effort. This illustrates the massive biological sustainability of fish stocks has subsidies and direct public support to overcapacity in the global fleet. The often occupied the centre stage of strengthen fisheries management excess fleets competing for the limited fish international efforts, for example, the Plan capability. resources results in stagnant productivity of Implementation of the WSSD makes The crisis in the world’s marine and economic inefficiency. specific reference to recovery of fish fisheries is not only a fisheries In response to the decline in physical stocks. However sustainable fisheries are problem, but one of the political productivity, the global fleet has attempted not only a problem of biology and ecology, economy of reform both in the to maintain profitability by reducing labor but one of managing political and developed and developing world. costs, through subsidies and by increased economic processes and replacing Fisheries reform requires broad-based investment in technology. Partly as a pernicious incentives with those which political will founded on a social result of the poor economic performance, foster improved governance and consensus. Building such a consensus real income levels of fishers remain responsible stewardship. may take time and require forging a depressed as the costs per unit of harvest common vision which endures have increased. changes of governments. Declining productivity, but increasing fishing fleet and fishing power The alternative to reform – business as usual – is a continued decline in Total vessels global fish wealth, harvest operations 3,500,000 140 which become increasingly inefficient, Capacity index (fishing power) growing poverty in fishery dependent Number of large vessels/ Total fleet capacity Catch per vessel communities, increased risks of fish Catch per vessel/ Catch per unit capaity 3,000,000 120 Catch/ capacity index stock collapses and compromised marine ecosystem. Business as usual 2,500,000 100 means increasing political pressure for subsidies; growing public expenditure 2,000,000 80 on fishery management and enforcement; and a sector which, 1,500,000 60 rather than being a net contributor to global wealth, is an increasing drain on 1,000,000 40 society. ____ 500,000 20 The estimate of $50 billion is a measure of the foregone economic rents. It is a mean from two models 0 - 1970 1980 1985 1990 1995 2000 2005 which considered the global marine fishery as a single bioeconomic unit. World Bank 2008. The Sunken Billions. The Economic Justification for Fisheries Reform. The World Bank. Washington D.C. The joint publication of The World Bank and FAO is available at: www.worldbank.org/sunkenbillions