1. Economic Incentives to improve
trawl fisheries management
By Robert Lee
FAO Fishery Industry Officer
FAO Regional Office for Asia and the
Pacific

2. Many years of work yet the resources
continue fished to their limits or
overfished.
True or False?
Why is this so?
What role do Economic
Incentives play?

3. Contents
• Incentives and Disincentive
• Fishing Fleets and Subsidies
• Drivers
• Different types of subsidies
• Policies ?
• How can we make them work in our favor
• Some case studies, What worked and
what didn’t
• Conclusions

4. Incentive Disincentive
Something
that
ENCOURAGES
a person to
determination
or action
Something
that causes a
person to
decide NOT to
do something

5. Incentive / Disincentive ????
• Depends on who gives and who receives
• Who’s objective? Can work both ways….
• May require negotiation or not
• Usually agreed before an action (written )
• May or may not be given on completion of
the agreed action/s
• Requires verification on completion
• May be in cash or in kind
• Who pays – When does it stop? How much?

7. Subsidy intensity by region
ratio of subsidy to value of catch 2003
A bottom-up re-estimation of global fisheries subsidies. Sumaila. U.R., Khan.A., Dyck A.J., Watson. R., Munro G., Tydemers. P., Pauly. D.,
18/08/2010

8. Fuel subsidies study in the Asia Pacific Region
Globally Fuel Subsidies (Sumalia, Teh, Watson, Tyedmers, Pauly 2008)
Developed countries = 3 – 7 billion USD
Developing countries=1.17 – 1.5 billion USD
In 2000, countries with fuel subsidies
China Philippines India Samoa
S. Korea Samoa Indonesia Tonga
Australia Solomon Is. Malaysia Japan
Sri Lanka Thailand Taiwan Vanuatu
Bangladesh
What does the picture look like today? How many countries give fuel subsidies?
Lack of studies……….

9. Fishing Fleet
• Global fishing Vessels 4.360.000
• Asia fishing vessels 3.180.000 (73%)
% change # vessels 2007 -2010

10. •Increased
fuel prices
•Inflation
•Macro
economics
•Stagnation
in growth
Fishers
complain
•Decrease
interest
rates
•Subsidies
•Energy
efficiency
•Loans
•Repairs
•Produce
more fuels
Reduce
costs and
increase
efficiency
Situation
Policy
Response
Beneficial Subsidies
Effort increasing
subsidies
Ambiguous Subsidies
Result

11. Beneficial subsidies
Desired Effects & Objective Method/Approach
Reduce fishing effort and Improved
food security
Subsidies to promote conversion from fishing to
aquaculture and Buy Out
Better Fisheries management
MCS, Stock Assessment, Habitat and Stock
enhancement, Research and Development
In technologies in capture and processing, Subsidy
to use non destructive fishing gears. Development
of Marine Protected Areas and Artificial Reefs.
Funds to combat IUU
Promote culture and aboriginal people
Subsidy / incentive to carry on indigenous fisheries
management systems
Improved processing
Subsidies for Good corporate responsibility, reduce
GHG and improve efficiency savings
Reduced GHG from sector Alternative and less polluting fuels and technology
Export revenue generation Promote Certification schemes,

12. Fuel subsidies that increase capacity
Desired Effects / Objectives Impact Result
Stimulate slowing economy
Reduce transport and production costs
Maintain export competitively
Reduce or maintain cost to consumers.
Expansion of territorial presence
Gain political mileage
Gain a trade advantage
Increase food security
Fuel Subsidy leading to
Over capacity Over effort Over subsidy,
Increase fuel consumption and Undermine fuel
optimization efforts and slow uptake of new
technologies (LIFE)
Fishing port construction and renovation
programmes support the sector with cheap
mooring making fishing less expensive
Price and marketing support, processing and
storage infrastructure programs, leading to
Over capitalization in processing driving
demand leading to over capacity
Tax exemptions and cheap loans, insurance
support, duty free inputs, support programs.
Financial gains invested in more production
(boats and gears)

13. Anonymous subsidies
Intervention Positive Negative
Emergency rehabilitation
programmes after disasters
Stabilize food security, kick
start exports, reduce
dependence on food aid,
restart livelihoods
Can lead to over capacity
(new boats and gears),
should be accompanied by
management plans
Vessel and licenses buy back
- scrapping of vessels
Reduce fishing capacity
rapidly
Effort Transfer, anticipation
= > effort. Creep back if not
controlled
Assistance programs to
temporarily stop fishing –
unemployment insurance,
retraining, social security etc
Reduce effort, improve
stocks, maintain social
standards of fisher
communities
Subsidy dependence, remain
in fishery. Raise fish prices,
reduce costs of fishing.
Requires management plans
Provide sea safety
equipment and
modernization of vessels to
reduce injury and death
Make fishing safer, new
cadre of younger fishers,
make fishing more socially
acceptable and professional
< Fishing costs and > fishing
effort if no management in
place
Assistance programmes to
SSF.
May enhance poverty
alleviation and food security
May drive over capacity in
coastal areas, in migration to
fishing

14. Incentive vs. Disincentive
Incentive Disincentive
Catch report = low fees Catch report = ++ Taxes
Reduce effort = > Fish Reduce fish = < Income
Fuel Subsidy = > Stimulus
National Economy
Fuel Subsidy = <
Expenses on Fuel savings
Easy Loans = viable
vessels / increase effort
High interest = < viable
vessels / reduced effort
Effectively participate in
fisheries management
= ?????
Possible loss of income
and investment = No
clear incentive ?????

15. Trawl Fisheries
• Fuel consumption driven by
–vessels size and fishing technique. Fuel >
40% of the total operating costs. (EU and
Thailand)
–Trawlers consuming the largest amount
of fuel per fishing day of all fishing types
–Small scale fleets, economically much
less dependent on fuel price.
–Trawlers consume more but have a
higher CPUE and fuel consumption per Kg
–Economically very sensitive to fuel price

16. Asia pacific Economic Cooperation -2000
Study Into the Nature and Extent of Subsidies in the
Fisheries Sector of APEC Members Economies
Committee on Trade and Investment
“The possible negative effects of some kinds of transfers can be
reduced or minimized when transfer policies and resource
management polices are coherent.” Therefore, there is an
issue regarding the efficiency of the subsidy programs”.

17. Synopsis
• Incentive for Fisheries Management
• Mostly capacity enhancing - 
• Fuel subsidy or cuts = greatest impact on trawlers
• Incentives vs. disincentive
• Proper use of incentive = Proper results
• More analyses (vessels and value chain)
• There is money = in 2003 there was an estimated 2.7 Billion

18. Subsidy Estimates 2003 (US$ 000's))
Country Beneficial
Capacity
Enhancing
Ambiguous Total
Indonesia 178,772 787,647 23,279 989,698
Philippines 286,038 609,893 22,895 918,826
Thailand 30,470 497,333 24,796 552,599
Vietnam 283,229 414,184 0.00 697,413
Papua New Guinea 216,373 427,468 18,174 662,015
Totals 994,882 2,736,525 89,144 3,820,551
A bottom-up re-estimation of global fisheries subsidies. Sumaila. U.R., Khan.A., Dyck A.J., Watson. R., Munro G., Tydemers. P., Pauly. D., 18/08/2010

19. Case Studies

20. Case 1. Grenada
• Objective
– Develop the pelagic long line fishery safely
• Strategy
– Provide subsidy –duty free equipment and
fuel once a year at Xmas
– Subsidy conditional on updated fishing
license
– Fishing license only issued with valid safety
certificate
• Measures
– Yearly inspections, Training, VMS/VSD

22. Case 2. New Zealand Sanford Ltd.
• Objectives
– Sustainable fishing
– Profitable, environmentally responsible
• Strategy
– Maintain MSC certification and maintain ISO status
– Energy efficiency and sustainable development policies
– Reduce emissions and GHG
• Measures
– Reduce incidental catches of birds and mammals and
impacts on sensitive areas.
– Use of fish offal to produce oil to reduce fuel costs
– Recycle waste from processing and fishing operations
– Corporate – Treatment of workers, good corporate
citizenship – clean up and awareness raising

24. Case 3. Asia/Pacific Region
• Objective
– Ministerial policy increase production of B100 bio fuel.
– Large surplus 370 000 tonnes
– Replace more costly diesel in fishing vessels with B100
– Prevent the price of B100 falling due to large inventory
– New stocks expected March – April 2013
• Strategy
– Provide cheaper fuel to fleet at subsidized price
– No clear if any conditions will be applied
• Measures – Not clear
– Improved monitoring, catch declarations, improved safety
compliance, cost of conversion to energy efficient options
– Will require monitoring system. Political reality

25. What can be done?

26. Policy
• Energy and incentive policy congruent with
Fisheries Management Plans. What are these?
• Formulate Fisheries Energy Policies and have
clear objectives
– Reduce emissions, consumption, Increase
efficiency (Kw./Kg) and provide incentives
• Holistic view link other subsidy policy (Loans,
Guarantees, Price support, tax exemptions,
infrastructure, etc).
• Link Economic and environmental policies
• Value Chain studies

27. Management
• Level and time bound subsidy/incentive
related to status of stocks
• Use subsidies/incentive for R and D, VMS,
energy efficient technologies
• Integrate safety at sea and fisheries
management
• Use subsidies as incentive to comply with
Regulations – requires monitoring systems.
Who?
• Use subsidy for fisher groups to conduct MCS
in protected and sensitive zones

28. Technology
• Make sure installations for new
alternatives do not compromise safety –
e.g. biogas
• Technical and economic studies of fuel and
value chain fishery subsidy viability.
• Calculate impacts of Ambiguous subsidies
• Use Cost of Conversion as subsidy to new
technology, emission reducing fuels,
optimization and LIFE
• Monitoring and evaluation of measures

29. Conclusions
• Subsidies / incentives can have negative and
positive impacts on fisheries management
• Subsidies and incentives should result in
environmental sustainability.
• Energy policies and fisheries policies need to be
integrated for maximum benefit and coherence.
• Sustainable development is good business.
(Energy, living resources, recycling, efficiency)
• Politics should not endanger responsible
resource management

30. So, why have the
resources continued to be
depleted after decades of
fisheries management?

31. Possible answers
• Economic incentives that are inadequate or
inappropriate , that do not reflect the real costs and
become disincentives.
• Expecting that people will do the right thing to protect
the environment
• Spending billions in capacity enhancing subsidies
• Fisheries managers have no economic incentives to
offer protection and conservation of resources.
• Little effective dialogue so because of lack of
something to exchange – in spite of money available

33. What incentives can you suggest for
trawl fisheries?
• Reduce capacity (Number of vessels or time
fishing)
• > viable vessels
• > production
• Effectively participate in fisheries management
• Reduce bycatch thru BRD, mesh, technical
• Temporal and spatial closures
• Reduce fuel consumption and GHG

34. What are the incentives??
Cannot know until we do the analysis of
the operations and the value chain
Or its just guess work

35. Thanks

36. Reference materials
• Fuel price increase, subsidies, overcapacity and resource
sustainability -
http://icesjms.oxfordjournals.org/content/65/6/832.full.pdf+
html
• World Energy Outlook 2012 -
http://www.iea.org/publications/freepublications/publication
/English.pdf
• Intermediate technology and alternative energy systems for
small scale fisheries -
http://www.apfic.org/archive/symposia/1980/53.pdf
• Study into the Nature and Extent of Subsidies in the Fisheries
Sector of APEC Member Economies, 2000 -
http://publications.apec.org/publication-detail.php?
pub_id=668

37. Reference materials
• Safety at sea as an integral part of fisheries management -
http://www.fao.org/docrep/003/X9656E/X9656E00.HTM
• Futures contracts of crude oil NYNEX –
http://quotes.ino.com/exchanges/contracts.html?r=NYMEX_CL
• International centre for Trade and Sustainable Development -
Tackling Perverse Subsidies in Agriculture, Fisheries and Energy
http://ictsd.org/downloads/2012/06/tackling-perverse-subsidies-
in-agriculture-fisheries-and-energy.pdf

38. Thanks for your attention