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p. 12 of 20 BACK | NEXT I. Introduction II. The Context: Fisheries in the Asian and Pacific Region III. The Bank's Experience in the Fisheries Sector IV. The Issues: Challenges and Opportunities A. Economic Issues B. Environmental Issues C. Policy and Institutional Issues D. The Outlook V. The Recommended Strategy for the Bank

Policy on Fisheries : IV. The Issues: Challenges and Opportunities

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A. Economic Issues

Small-scale fishing has traditionally been a livelihood of last resort for the poor and the unemployed, and fishing communities are frequently among the poorest in many of the Bank's DMCs. The fisheries sector was therefore originally seen by many governments more as a source of employment and subsistence for the poor than as a lucrative investment. The important role of small-scale fisheries and aquaculture production in generating employment and increased incomes became generally better acknowledged as governments adopted poverty reduction as a social objective. As new technologies emerged, allowing large increases in productivity of both capture and culture fisheries, more governments recognized that fisheries could be an important growth sector. The rapid growth of demand for fish and fish products in recent years, both domestically and in export markets, resulted in fish prices increasing faster than prices of beef, pork, and chicken since 1975.¹³ As a result, fisheries investments became more attractive to both entrepreneurs and governments. As the fisheries sector gained importance in national economies, high prices, sustained demand, and generally open access to fisheries resources led to the problems of overfishing and overcapacity in the sector, resulting in resource depletion and economic inefficiencies.

Overfishing and Overcapacity

Notwithstanding the general concern over environmental degradation in recent years, fishery stocks and aquatic resources have been heavily overexploited. In many of the capture fisheries in the Pacific and Indian oceans, the rate of harvesting has exceeded the natural rate of renewal, resulting in biological overfishing. (Various concepts of overfishing are explained in Appendix 7.) FAO estimates¹⁴ that 69 percent of the world's marine stocks, for which data are available, are in need of urgent corrective conservation and management measures: 44 percent are fully to heavily exploited, 16 percent overexploited, 6 percent depleted, and 3 percent very slowly recovering from overfishing. More than 69 percent of the stocks of demersal and pelagic fish, crustaceans, and mollusks in various areas of the world's oceans need rehabilitation. A Strategy for International Fisheries Research study estimates that, worldwide, about 20 percent of all freshwater species are extinct, endangered, or vulnerable.¹⁵ natural rate of renewal, resulting in biological overfishing. (Various concepts of overfishing are explained in Appendix 7.) FAO estimates14 that 69 percent of the world's marine stocks, for which data are available, are in need of urgent corrective conservation and management measures: 44 percent are fully to heavily exploited, 16 percent overexploited, 6 percent depleted, and 3 percent very slowly recovering from overfishing. More than 69 percent of the stocks of demersal and pelagic fish, crustaceans, and mollusks in various areas of the world's oceans need rehabilitation. A Strategy for International Fisheries Research study estimates that, worldwide, about 20 percent of all freshwater species are extinct, endangered, or vulnerable.15

"Mining" the parent stock reduces renewal capacity and, therefore, biologically sustainable harvests. Excessive fishing may not result in a decrease in total production in the short run but in smaller fish caught or growth overfishing. Biological overexploitation of fishery resources leads to stock collapse or severe depletion. National and international efforts are needed to protect fish stocks under threat of overexploitation and to allow depleted stocks to recover. Resource enhancement through sea ranching or reseeding has been tried in some countries, but its environmental soundness and economic feasibility need to be carefully evaluated.

The problem of commercial overexploitation of fisheries resources has been compounded by excess capacity in the fishing fleets. ICLARM estimates that between 1970 and 1990, the gross registered tonnage (GRT) in fishing doubled from 13 to 26 million t. In 1992, there were 3.5 million fishing vessels in the world's waterways. In addition, there are millions of vessels that are not registered; these include small, undecked vessels used by small-scale fishers and not measured in tonnage.

Asia has the largest fishing fleet, 42 percent of the world's total GRT, and Oceania adds another 0.5 percent. In most DMCs, as in the rest of the world, current fisheries production can be achieved by fewer boats and fishers. The fishing fleet has twice the capacity needed to extract what the oceans can sustainably produce. The result is a vicious circle: as catches per vessel fall, profits plummet, and fishers overfish to maintain supplies, causing serious depletion of stocks and endangering long-term availability. With falling returns, the asset value of vessels goes down, compelling owners to continue fishing at uneconomic rates of return, incurring losses and damaging the resource base.

Postharvest Losses and Wasteful Fishing

A considerable quantity of fish is lost after being caught and before reaching the consumer. Under the conditions prevailing in most DMCs, spoilage can be rapid unless preventive actions are taken at capture and through the entire marketing chain. It is estimated that 15_20 percent of total fish supplies are lost because of insufficient care in handling and transport, poor processing, and bad packaging and storage. Ice, which is one of the cheapest and more effective ways of preservation, is not often used in remote areas or by the majority of inshore and coastal boats for reasons of tradition and/or lack of availability. Processing and refrigeration facilities are often plagued with operating problems. Fish drying, an effective preservation method suited to remote areas, is subject to various problems (shortage of salt, poor weather conditions, insect infestations, etc). Postharvest losses may be reduced by (i) assuring the supply of critical inputs, such as ice and salt for fish preservation; (ii) building sufficient postharvest facilities, such as cold storage and ice plants in strategic locations; and (iii) linking remote fishing villages to markets.

Another major source of wastage is in the bycatch and discards of nontarget or low-value species and undersized fish of target species.¹⁶ The global fisheries bycatch and discards are estimated in the range of 17.9 million t to 39.5 million t per year, with a mean estimate of 27 million t.¹⁷ The shrimp trawling industry is said to be discarding annually much more than the total volume of shrimp catch. Bycatch and discards threaten the maintenance of aquatic biodiversity and the long-term sustainability of fisheries. Improvement in the selectivity of fishing gear and fishing methods is critical in reducing the level of discards by avoiding juvenile fish and nontarget species. Research is needed to develop food products from bycatches, and markets for new products have to be found. Concerted international efforts are needed to ensure global bans on destructive fishing practices, e.g., use of drift nets, dynamite, poison, etc.

Sectoral Subsidies and Protection

Economic losses from fleet overcapacity and overinvestment and from wastage are supported in many instances by state subsidies that make fisheries appear artificially profitable. FAO estimates that annual economic losses in fisheries that are being compensated for by subsidies amount to more than $50 billion.¹⁸ Most DMCs have granted substantial assistance to the fisheries sector in an effort to increase production. Subsidies may include lower cost fuel, below-market interest rates for loans or outright grants for the construction of vessels or purchase of gear, and government construction of infrastructure used by the private sector rent free. Free access to fishery resources also constitutes a subsidy, as no private cost is incurred in using public resources. Protectionist measures include import restrictions and tariffs on imported fish and, in some cases, tariffs on vessels and other fishing inputs to protect allied industries.

Incentives in the form of subsidies and protection very often lead to overexploitation of fishery resources, lower harvests, and economic inefficiency. Subsidies lower the costs of fishing, which increases profits. In the long run, however, profits are dissipated with the entry of more fishers attracted by subsidies. With overfished resources, incentives that increase fishing efforts reduce average catch rates, further deplete the resource, and eventually reduce employment. Protection and subsidization of the sector engender inefficiencies and may ironically aggravate the pervasive poverty in the sector.

Fishery experts recognize that overinvestment and overexploitation undermine fisheries conservation and management efforts, threaten the long-term sustainability of fisheries, and in turn adversely affect the contribution that fisheries might make to food security. The main challenge in optimizing economic returns from the fisheries sector is to manage the supply side through (i) protecting the regenerative potential of natural stocks and instituting national resource management, (ii) maintaining a high quality genetic resource base for capture and culture fisheries, (iii) protecting the integrity of ecosystem functions in both natural and artificial production systems, and (iv) conserving biodiversity. While these biological interventions are necessary to manage the fish stocks (which has economic effects), the problem of overcapacity and overinvestment has to be addressed directly, and possibilities of fleet restructuring and reduction in effort need to be considered fully by governments.

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