Friday, June 1, 2012

Give a Man a Fish - The Case For a Property Rights Approach to Fisheries Management

.. The serious long-term threat posed by overfishing has received comparatively little attention.... Some policy makers and environmental advocacy groups are beginning to realize that the solution lies not in further government regulation, but in investing fishermen with property rights....

The oceans are an important source of food and income for people around the world. In 2007, proteins from fish accounted for 15.7 percent of the total global animal protein supply. In 2008, an estimated 44.9 million people were directly engaged in the fishing industry (both marine capture and aquaculture). However, the world’s fish stocks are not limitless, and are being depleted rapidly.

Two principal factors are at work. First, the billions of dollars in subsidies bestowed on the fishing industry by many governments makes overfishing profitable, even as per capita fishing yields decline. Second, the absence of property rights over fish in most countries means that there is no incentive for any party to husband this resource. In fact, the absence of property rights, combined with subsidies, creates a perverse incentive to deplete this scarce resource.

Attempts to prevent overfishing by promulgating regulations (which are often at odds with subsidies) have proved both ineffective and impossible to enforce. As long as the incentives are skewed by bad government policy, many fishermen will continue to work around regulations or simply neglect to report some of their catches—a practice known as “black” fishing that is all too prevalent. Ending subsidies and extending genuine property rights to fisheries will help solve these problems.
The authors note "A 2009 World Bank/FAO study found: In economic terms, some 60 percent of the world’s marine fish stocks were ‘underperforming assets’ in 1974, the year when the Food and Agriculture Organization (FAO) initiated its reports on the state of the world’s marine fish stocks. By 2004, more than 75 percent of the fish stocks were underperforming, at an estimated annual loss of $50 billion to the global economy. "  The report estimates, “this cumulative global loss of potential economic benefits is on the order of $2 trillion.”
“Bad subsidies” come in a number of forms, including fuel subsidies, vessel buyback programs, rural fishers’ community development programs, and many others. Fuel subsidies are particularly damaging, because fuel costs are a significant component of overall fishing costs, as much as 60 percent for some Hong Kong commercial fisheries.13 Deep-sea fishing, which is very fuel-intensive, is therefore made much more affordable. Environmentally, deep-sea fishing is especially difficult to manage, because it targets migrating fish that travel through international waters and therefore do not fall under the jurisdiction or protection of any particular country or regional authority. According to the Fisheries Centre, $13.9 billion of bad subsidies are doled out every year, $8.5 billion of which are fuel subsidies.
Taking all subsidies together, governments underwrite fishing fleets to the tune of $30 to $34 billion a year. The worst offenders are Japan and the European Union, whose Common Fisheries Program has been a disaster for both British fish and British fishermen. Yet the problem is worldwide in scope.
Deep sea fishing subsidies are particularly perverse. The deep sea fishing industry receives subsidies worth more than $152 million a year globally, with most of the subsidies and fleets coming from Japan, Russia, South Korea, and Spain.19 Without those subsidies, the global industry would operate at an annual loss of $50 million at its current size,20 because it uses such huge quantities of fuel to operate. It is in the deep seas that the effect of overfishing has been most keenly felt.

by Iain Murray and Roger Abbott
Competitive Enterprise Institute (CEI)
Report 187, May 17, 2012 

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