A report prepared for the Department for International Development (DFID) Project: ‘The Role of Fisheries in Poverty Alleviation and Growth: Past, Present and Future’

1. APPENDIX B
Policy Brief

2. INVESTIGATING THE LINKAGES
BETWEEN FISHERIES, POVERTY
AND GROWTH:
POLICY BRIEF
A report prepared for the
Department for International Development (DFID)
Project: ‘The Role of Fisheries in Poverty Alleviation
and Growth: Past, Present and Future’
DFID/PASS Contract: AG0213
June 2005

3. STUDY TEAM
Dr. Stephen Cunningham
Dr. Arthur E. Neiland
IDDRA Ltd
Portsmouth Technopole
Kingston Crescent
Portsmouth
Hants PO2 8FA
Tel: +44 (0)2392 658232
Fax: +44 (0)2392 658201
E-mail: cunningham@iddra.org, neiland@iddra.org
B-2

4. The Role of Fisheries in Economic Growth and Poverty Alleviation
Background
Fish resources represent natural capital and are a potential source of sustainable
wealth for many coastal and island developing countries. This wealth provides the
opportunity for such resources to make an ongoing contribution to economic growth
and poverty alleviation. The problem is to determine the policies which optimise this
contribution. The question of what to do with this wealth is fundamental to fisheries
exploitation and management, and policy-makers cannot avoid it. Frequently
however, this important policy question is not considered explicitly but is effectively
dealt with implicitly, if not unconsciously.
This policy brief discusses the way in which the wealth inherent in fish resources can
contribute to economic growth and poverty alleviation. It draws on a longer report,
which began by establishing a theoretical framework that was used to investigate
fisheries, growth and poverty world wide on the basis of eight case studies
(Bangladesh, Canada, India, Malawi, Mauritania, Morocco, the Pacific Islands –
Forum Fisheries Agency, and Thailand).
The analysis of these case studies demonstrates that fish resources are exploited in a
wide range of situations to achieve a wide range of goals. There is, therefore, no
unique solution to the problem of how best to manage such resources; a case-by-case
approach must inevitably be taken. But despite their differences, the case studies also
demonstrate that the fisheries problem is fundamentally economic in nature;
management which ignores this fact will not be successful.
This policy brief begins in section 1 by briefly exploring the general link between
poverty alleviation and economic growth. Section 2, drawing on theoretical
principles and on empirical evidence from the case studies, analyses the role
traditionally played by the fishery sector in poverty strategies, and in particular
discusses the limits of this traditional approach. Given the identified limitations of
this approach, section 3 suggests a new approach based on wealth generation.
Section 4 considers the link between wealth generation and poverty alleviation,
whilst section 5 discusses the needs in order to implement it successfully and the role
that might be played by DfID.
1. Relationship between economic growth and poverty alleviation
Despite efforts by the international community to address it, poverty remains a major
global problem with about half of the world’s population living on less than
US$2/day. The international development target is to halve the proportion of people
living in extreme poverty by 2015, but debate continues on how best to achieve this
goal.
B-3

5. From the viewpoint of natural resource exploitation and management, one important
change in thinking has been the renewed recognition of the role of economic growth
in development, with greater emphasis being placed on the distribution of benefits
(‘pro-poor growth’). Research into pro-poor growth continues, but consensus has
emerged in some key areas:
• Economic growth is essential for poverty reduction, and in principle growth
as such does not seem to affect inequality;
• Growth accompanied by progressive distributional change is better than
growth alone;
• Education, infrastructure and macro-economic stability seem to positively
affect both growth and distribution of income.
The pro-poor growth concept is of particular interest to DfID because it aligns
economic growth with changes in the well-being of the poor. Moreover, most
policies that increase growth also reduce poverty whilst many policies that reduce
poverty also increase growth.
Given the importance of economic growth to poverty alleviation, the question
naturally arises as to what Government can do to improve economic growth
performance. Both current theoretical thinking in economics and empirical evidence
suggest that government macroeconomic policy is an important determinant of
economic growth. Among the most important factors identified are:
• Free trade
• Stable prices
• Private enterprise
• A well-educated and healthy labour force
• Diversified exports without the dominance of a few primary products
Clearly, achieving these macroeconomic outcomes is beyond the scope of any single
sector of the economy. The key question is, therefore, how best can the fishery sector
best contribute to their achievement? A simple answer suggest itself (even if
achieving it may be difficult): by maximising its contribution to economic growth.
However, it must be recognised that economic growth is not the only macroeconomic
objective pursued by Governments. Fish resource wealth could be used to contribute
to economic growth but it also offers the opportunity to Government to contribute to
pro-poor goals more directly. Traditionally, it is the latter route which has been
taken. The next section considers the implications of this traditional approach.
2. The "traditional" approach
This section draws on theoretical work and the case studies to analyse the way in
which fisheries typically have been, and continue to be, managed. There are, of
course, a multitude of fisheries management models and of fisheries, so identifying
the "typical" model runs the risk of setting up a straw man. Nonetheless, there appear
to be sufficient elements in common between the various cases to make it meaningful
to talk of the "typical" case.
B-4

6. What are the principal features of this model, and what impact has it had?
1. The model emphasises the physical weight of fish caught. This is one reason
why fish stock assessment has been so important because of the need to work out
what physical weight of fish a fishery is capable of producing.
In the case of Bangladesh and India, an important policy aim remains to increase
production. Yet it is clear that in the case of marine capture fisheries, production has
natural limits. FAO data suggests that the large majority of the world' fisheries are
s
either fully or over-fished. And the Canadian case study clearly demonstrates the
long run limits of a production oriented policy.
2. In fisheries the notion of overexploitation has two key dimensions - economic in
which case they will be subject to overcapacity and biological in which case they
will be overfished (relative to some reference point, often the maximum sustainable
yield, MSY, once again a purely physical quantity). In the typical model, the notion
of overexploitation is understood only in its biological dimension, the terms
overexploitation and overfishing often being used interchangeably. From a policy
point of view, this vision has had, and continues to have, serious ramifications. It
leads to the conclusion that fisheries that are not overfished are not overexploited,
regardless of their economic condition, and worse that such fisheries are under-
developed in some sense. Policy is often then mistakenly directed towards their
development. This approach has led to many problems. To begin with, it means that
fisheries have typically not been managed until they have been exploited beyond
MSY, and because MSY is in practice a dynamic notion which is difficult to
estimate, they have often been well beyond MSY. Furthermore, because overcapacity
always occurs before overfishing, the economic problem has been made significantly
worse and is generally very difficult to resolve. Even in wealthy countries like
Canada, this approach has been hugely expensive. For developing countries, where
fisheries have the potential to contribute significantly to economic and social
welfare, the result has been not only to forego this contribution, but to create a
situation where valuable fish resources have become a drain on the economy through
over-investment.
3. The benefits from fish resources are perceived in terms of the fishing activity
itself, particularly but not only employment. In order to benefit from fish
resources, it is necessary to be a fisher (or part of a fisher household). One
consequence of this vision is that if fish resources are to be used to help the poor, it
will be a defined group of poor (i.e. those who happen to be, or can become fishers).
Another consequence is that to the extent the poor are helped, pressure to become
involved in the activity will increase and hence so will the pressure on the fish
stocks.
In many places, fish resources are used to provide livelihoods and employment of
last resort (or close to it). The poor are attracted to fisheries, as is evidenced for
instance by the Bangladesh case study. In India also the impression is given that
fishers are vulnerable to poverty, and because of the generally low incomes fishing is
seen as a lowly occupation. It is essential however to analyse why fishers are poor. It
B-5

7. is particularly important to bear in mind that such people are not poor because they
are fishers, rather they are fishers because they are poor AND because access to fish
resources remains free and open.
The Canadian case study shows clearly the risks that are run with a policy that seeks
to maximise production and employment. The social dependence on the cod fishery
became so great that management effectively became paralysed, even when it
became clear that drastic action was needed. In the end, managers had little choice
but to watch the stock collapse, at which point action became inevitable. Because the
Canadian economy is relatively wealthy, the costs associated with the collapse of the
fishery could be funded by transfer payments. Most developing countries would not
have this luxury.
4. The typical model places emphasis on technology. In the case of India for
instance, one aim of policy (in order to increase production) has been to encourage
the adoption of modern fishing technology.
This technology bias inevitably conflicts with objectives concerning employment
creation. India is far from unique in this respect. It appears to be a common feature
around the world of Governments announcing employment goals whilst encouraging
the development of capital (where capital is almost certainly going to replace labour,
given the natural resource constraint).
One consequence of the technological view of fisheries development is that there are
few, if any, examples of fisheries where the small-scale sector is integrated into the
broader fabric of the fishery. Instead, there is a kind of well-meaning "ghettoisation"
of the small-scale sector with analysis undertaken to isolate its key features.
Although there are many calls to improve the lot of small-scale fishers, little if any
work is underway to design management systems that enable such fishers to express
their comparative advantage by exchanging rights with other fishers (or in some
other way). Ideally, the choice of appropriate technology (large- or small-scale) is
something that should be the reserve of fishers and fishing companies. The role of
Government is to establish a management framework within which rational choices
can be made.
Instead, typical small-scale focussed management schemes involve co-management
or community-based management on a territorial basis, despite the fact that small-
scale fishers are hardly ever operating a spatial scale that means that they can
manage the fish resource, making them vulnerable to what happens elsewhere in the
fishery. Little thought also appears to have been given to the difficult question of
how territorial rights might evolve in the future, depending on the economic
performance of different actors in the fishery. The proposed definition of territorial
rights often appears fixed indefinitely, yet all fisheries are characterised by their
dynamics, of both fish and fishers.
5. Fishers have very poorly defined use rights. This situation is gradually changing
but only in a handful of countries that are considered to be in the forefront of
fisheries management. There are few examples of successful use right schemes in
B-6

8. developing countries. The result is that fishers in general and poor fishers in
particular are extremely vulnerable to events in other economic sectors (tourism,
urbanisation and so on).
6. The economic nature of the fishery is generally poorly understood. Economics is
usually associated with the collection of some "economic" data, such as the price of
fish, exports and employment. But the key issue of the resource rent is hardly ever
addressed. It may be looming relatively larger on the policy front, but application of
the concept remains at best limited, and in many cases it appears not to be
understood in policy circles. As a result, confusion remains over key policy
variables, such as fisher incomes and wealth from the fishery. Yet because of the
pervasive nature of resource rent, fisheries policy inevitably must include it but this
tends to be done on an implicit basis. Usually the decision is taken, by default, to
dissipate the resource rent. This dissipation may generate a number of activity-
related benefits, but these will be obtained at the expense of the long-term economic
growth contribution that the resources could have made.
7. As a corollary of much of what has been said, fisheries management is beset
with perverse effects that many policy-makers find difficult to understand. For
instance, where they go beyond the physical production model, the aim is often to
increase the value-added derived from fish resources. Such a strategy is logical for
any economic sector, yet it has perverse consequences for a fishery sector with
ineffective management (i.e. most of the world' fisheries). As value-added rises, so
s
will the profitability of fishing (from the fisher viewpoint). The result will be to
increase fishing effort, leading in most practical cases to increased overexploitation,
certainly from an economic viewpoint and most probably from a biological one too.
Similarly, technological progress, which is generally viewed positively, will have
perverse impacts in fishing because of its effect in reducing costs. One comes to the
conclusion that in fishing it might be best (or more accurately second-best) not to
increase value-added and not to encourage technological progress. The first-best
solution is to implement effective (in an economic sense) fisheries management, but
this is difficult to achieve.
These features of the "typical" model have a number of consequences. First, success
indicators are implemented that are appropriate to the model. Such indicators
include:
Production: the physical output is often taken as a key success indicator, and most
Ministries look to increase physical output year on year.
Employment: the number of jobs generated by the sector is often used as a key
success indicator. There is usually a failure however to distinguish between jobs per
se and sustainable jobs that the industry is capable of creating. As a result, there is a
widespread tendency to expand the number of jobs beyond the optimal level.
The Newfoundland cod fishery is eloquent in this regard. It was estimated that the
number of sustainable jobs was only 6,000 (and even then to provide sustainable
incomes only just above the poverty line) but Government used the fishery to provide
B-7

9. employment opportunities far in excess of this level – there were 34,000 fishers in
the inshore sector alone. In Morocco, the crew on purse-seine sardine vessels is far in
excess of the number required by the technology used. And in the FFA, Governments
are currently attempting to develop their domestic industry because of the local
employment that this will create.
Yet an over-expansion of the number of jobs is wealth destructive and increases risk
and vulnerability of the employees, the ultimate example being of course cod in
Newfoundland where the fishery finally collapsed, removing all employment
opportunities.
Exports: In almost all of the case study countries, fishing is an important contributor
to exports. The outstanding performance is in the case of tuna in the Pacific Islands
which represent around 72% of Samoan exports, and 95% of exports from the
Federated States of Micronesia.
Food security: the problem is generally seen in very narrow terms, sometimes in
terms of fishers consuming their catch, more generally in terms of local catch being
used to feed the domestic population. The fact that fish resources can make an
important indirect contribution to food security tends to be downplayed.
GDP contribution: the contribution of the fishery sector to GDP is usually very
small, although it may be important in particular cases, for instance in some of the
Pacific Islands, or if set in a regional or coastal context. In the FFA, fishing, and in
particular the tuna resource, is exceptionally important. The contribution of fishing to
GDP of Pacific Island countries averages 7%, and ranges from 1% in the case of
Papua New Guinea to 22% in the case of Kiribati.
Ironically, the potentially most important contribution to GDP, the resource rent, is
usually ignored.
Fiscal receipts: fiscal receipts may be seen as important, and are of course a way of
extracting some resource rent from the fishery. Under the "classic" model, such
receipts are usually associated with foreign fishers. Governments are prepared to
sacrifice them for domestic fishers and even for foreign fishers who land locally. The
best example is Morocco which ended a fisheries agreement with the EU that was
producing 150 million euros per annum. Domestic fishers were unable to replace this
contribution (although in large measure because the EU contribution did not
represent resource rent, but a subsidy).
Value added: Most Governments seek to develop value-added activities related to
their fish resources. Often they are prepared to trade-off resource rent in order to
encourage the development of other activities. Such trade-offs might involve
favouring domestic fishers over foreign ones, by charging the former lower access
fees, thereby reducing resource rents. Alternatively, it may involve foregoing rents in
order to encourage onshore processing activities.
B-8

10. FFA has tried both of these approaches with limited success. For example, the
Federated States of Micronesia invested a lot of money in the purchase of purse seine
vessels in the 1980s but the investment was not successful, due to a lack of know-
how and high costs (i.e. the foreign vessels had the comparative advantage).
Similarly, FFA members have granted concessions to foreign fishers to encourage
them to base their fishing operations locally, the aim being to create employment and
spin-off benefits. But this is a second-best strategy compared to negotiating increased
access fees, and has left the countries worse off than before.
Conclusion on "success" indicators: the common feature of these success
indicators is that in almost every case they involve increasing, or attempting to
increase, physical production levels. It should not really come as a great surprise
therefore that this has been one of the principal results of the model, leading to the
widespread state of overexploitation (economically and biologically) that
characterises the case study countries'and the world' fisheries.
, s,
A second consequence of the "typical" model is that by and large to benefit from fish
resources, and certainly their wealth, it is necessary to be a fisher. Coupled with a
general failure to restrict access, it again should not come as a surprise that excessive
levels of capacity are generated.
Overall then, the typical fisheries management model provides incentives both for
managers and fishers to overexploit fish resources. As a consequence, fisheries
around the world are characterised by failure (notwithstanding some identifiable
success stories).
In a classic paper, Hardin argued that fisheries were a prime example of the "tragedy
of the commons". The true tragedy of fishing, however, is that the vast inherent
resource wealth has served to deplete (and in some cases destroy) the very resources
that generate it. Resource wealth can be heaven or hell, depending on the fishery
management arrangements in place. The next section looks at the way in which a
wealth-based approach can generate an incentive structure that helps to resolve many
of the issues facing fisheries (whilst inevitably raising some others).
3. A wealth-based approach
The inherent wealth in fish resources is represented by the resource rent, a crucial
concept for the exploitation and management of capture fisheries. In the absence of
effective management, the resource rent is dissipated and serves to drive the
overexploitation of the fishery.
On the other hand, with an effective management system, the resource rent can either
be capitalised into the value of a use right, or can be extracted by the management
agency (or some combination of the two).
A wealth-based approach to exploitation and management puts resource rent at the
heart of the process. Decisions are taken about how to generate the wealth, how to
B-9

11. share it and how to use it. The success indicators and the management approach are
different to those of the classic approach.
Since the case study countries (in common with most other countries around the
world) base their fisheries policy on a version of the "typical model", they are far
more helpful on what is wrong with the current situation than they are about future
possibilities. Indeed one of the key lessons to emerge from the case studies is the
lack of economic information on fisheries, and in particular on the resource rents that
might be available.
Nonetheless, the case studies do demonstrate that the resource rent concept is coming
to play a more important role in the policy debate. Fisheries now feature in the
PSRPs of a number of countries. In Bangladesh, the aim is to increase their
productivity so as to enhance the incomes of the poor. The difficulty is to determine
the precise suite of policy measures that will enable such goals to be achieved. In
Mauritania, resource rent maximisation is explicitly mentioned in the PSRP, but
again the issue arises of how to achieve this. Mauritania seems to be some way
further down the path than many developing countries, because it is in the process of
developing fishery management plans and systems that will enable it to generate and
extract rents in the future. This progress may be indicative of the relatively large
importance of fish resources to the Mauritanian economy. In the case of the Pacific
Islands (FFA), a key objective of the island states is to extract a greater share of rents
through access agreements.
Developing a wealth-based approach to management requires the implementation of
a process. It is possible to identify the broad features of a successful management
process (although once again it must be stressed that there is no unique solution, each
case must be judged on its merits).
A first requirement is to decide on a set of fishery management units (FMUs). The
definition of these units will change over time in response to needs (for instance, an
FMU may initially cover all cephalopods, but may later evolve into separate units
for, say, octopus and squid). An FMU should be holistic, including all stakeholders
likely to affect the exploitation of the species included in the unit. The approach
would not distinguish small-scale fishers from others. All fishers are part of the
process.
There are some signs that change is gradually taking place. Malawi, Morocco and
Mauritania all report moves towards management based around fishery management
units.
Calculating the wealth potential: the definition of logical FMUs is essential to
wealth-based management because otherwise it is impossible to calculate resource
rents in a meaningful way (because different kinds of effort may exploit the species
opportunistically making it impossible to define an exploitation cost). Once an FMU
is defined, calculating resource rents will be possible under different management
scenarios.
B-10

12. Potential resource rents can be very large but, as evidenced by the case studies, there
are relatively few fisheries where such rents have been estimated. Ideally, a
bioeconomic model of the fishery should be developed in order to provide
reasonably accurate estimates. Such models can also be used to simulate the likely
impact of management decisions. In the absence of such models, some rules of
thumb exist that enable a first approximation to be made to the level of rents likely to
be available. As a rough guide, it is estimated that resource rents lie somewhere
between 30% and 60% of turnover in a fishery.
Consider for example the case of the Forum Fisheries Agency (FFA). The annual
value of tuna landings is around $2 billion. If the fisheries were well managed, the
above rule suggests that resource rents would be somewhere between $600 million
and $1.2 billion per annum (that is, between 3.5% and 7% of the GDP of the Pacific
Islands region, which is some $17 billion).
The fisheries are exploited mostly by foreign vessels who pay access fees to the
Pacific Island Governments. Such fees represent a way of extracting some of the
resource rent. Currently, they are around $60 million. The FFA is well aware that this
represents a very poor return but attempts to increase the amount have foundered for
a number of reasons. First, the Japanese vessels argue that they cannot afford to pay
more than 5% for their fishing rights, and have refused to enter into an agreement
with Papua New Guinea, which attempted to increase the rate to 6%. This refusal
may simply be a negotiating tactic, given that the States find it difficult to maintain a
cohesive stance when dealing with foreign fishers. It may also indicate that current
management is not optimal but that there is excessive effort in the fishery, resulting
in some rent being dissipated.
It should be noted that resource rent is not some fixed amount. It will vary over time
as a function of a range of parameters including the fish stock size, fish prices, input
prices (e.g. fuel), exchange rates and so on). This variability highlights the need for
the management authority to take a flexible approach.
Ideally the management framework will encourage fishers to operate in such a way
as to increase the level of potential rents, thereby increasing the potential
contribution of fish resources to the economy.
Management arrangements: the precise management arrangements will have to be
established. There is clearly no unique solution to this problem; it will depend on the
characteristics of the fishery and its management environment. It will also depend on
the objectives of the management authority.
Broadly speaking, the management authority has two options. First, it can create use
rights. Such rights may be specified in many different forms: licences, quantitative
rights, territorial rights, processing rights. Second, it can implement resource rent
royalties. Again these may come in many forms depending on the institutional
arrangements that exist or can be created.
B-11

13. Morocco has moved some way towards implementing individual catch quotas into its
cephalopod fisheries but results are so far mixed. Once again however the time
needed for such systems to bed down should not be under-estimated. In the case of
New Zealand, the system did not really have a positive impact until eight to ten years
after its initial implementation. It would be naïve to expect therefore an instantaneous
change in the fortunes of developing country fisheries where such systems are
implemented. Mauritania also is investigating using such systems, but the emphasis
is so far on developing a management structure that would enable such a system to
be controlled, so that the Government has the option of adopting it in the future if so
desired.
Resource rent sharing: the way in which resource rent is generated will depend
partly on the institutional arrangements as will its sharing. A common view is to
argue that the fish resource belongs to all citizens and that the State operates as
custodian. A logical corollary would be that the State should extract all resource
rents. However, a number of arguments can be put forward against this view. First,
the State is likely to find it impossible in practice to extract all rents. Second, if it
does so, it will remove all incentives for the fishing industry to improve the state of
the fishery since such improvements will increase rents which will then be taxed
away. In practice therefore some sharing between fishers and State is likely to be
required.
The share that is left to the fishers will be capitalised into the price of the use right.
Much of the gain will therefore go to the first generation of rights holders, but not all
of it. Subsequent generations can expect to gain as they improve the operation of the
fishery over time (for instance, with technical progress or as real fish prices
increase).
Resolving each of these issues (from FMUs through to rent shares) is best done
within the context of a fisheries management planning approach. The case studies
demonstrate that this approach is becoming more common (e.g. Mauritania and
Morocco) but it remains the exception. One advantage of the approach is that it
assists with good governance because it results in transparency and participation. As
the plan is developed, ideas and information are debated.
Improving fisheries to generate wealth is only one part of a strategy designed to
improve fish resources contribution to growth and poverty alleviation, and some may
argue that it is the easiest part to achieve (even if it is likely to take a long time).
The second part involves ensuring that the wealth is used in a way that benefits the
poor. This link raises many issues that go well beyond the fisheries sector. What can
be done?
B-12

14. 4. The link to poverty reduction
It seems important to ensure that programmes looking at generating wealth from
fisheries resources link with other macro-economic programmes looking at
governance, institutional development and poverty alleviation. Such programmes
might involve DfID (or other donor) support, or they may involve national policy-
making (or both). The main aim must be to develop a clear understanding in
Government of the contribution that fish resources are capable of making, and
establish objectives for fisheries management, supported by the right kind of success
indicators.
In most economies, fishing is not a major economic activity. It is unlikely therefore
that fishing can by itself resolve the poverty problem. The best that can be expected
is that the sector contribute to its resolution.
The two models discussed above offer two different visions of how the fishing sector
can contribute to social and economic welfare and by extension to the poverty
alleviation problem.
The first model sees the fish resource as an economic activity provider. In cases
where the fish resource may provide the livelihood of last resort, the fish resource
may be extremely important to poor people. The question must be asked however as
to why the fishing sector should be selected for this kind of use compared to other
economic sectors?
The second model proposes a different approach where the inherent wealth of the
fish resource is generated on a sustainable basis. A number of routes can be
identified through which this approach may contribute to poverty alleviation.
First, the share of rents going directly to the State can be used to fund activities of
particular importance to the poor. For instance, it could be used to fund infrastructure
investments, schools, hospitals etc.
Second, the share left to the industry may also be re-invested in the domestic
economy. The capital generated by the fishing industry will be no different to that
generated by any other industry and is likely to find its way into similar investments.
The key issue therefore will be for the Government to provide a macroeconomic
environment that encourages a process of domestic investment. Otherwise the fishing
capital may simply find its way overseas.
Third, if the problem of poverty alleviation is explicitly recognised, the Government
can take action in the way through the nature of the use right system to favour the
poor (or at least a subset of the poor). Most obviously, use rights could be allocated
directly to poor fishing households or groups. Alternatively, requirements may be
implemented to prevent the concentration of rights, for instance, it may be a
requirement that a rights-holder must be physically present in order to fish.
B-13

15. But identifying potential routes is one thing, ensuring successful outcomes is another.
A great many issues will arise. One suggested by the case studies is the problem of
rent capture by powerful groups. Not all fisheries are free and open access even at
present. In the Bangladesh case study, it is noted that some inland fisheries are
essentially closed access. The result, however, is that a few powerful landlords
capture most of the rents, whilst the fishers remain very poor. This result may in fact
be economically efficient (certainly more so than unrestricted access) but obvious
questions of equity arise. The challenge is to design policy in such a way that
resource rents are extracted and used equitably. This raises questions related to
use right design and transferability, fiscal policy and the use of fish resource rents. If
these questions cannot be answered adequately, it MAY be that free and open access
is the best policy for the poor, from a second best viewpoint, but great care would
have to be taken making such an argument (because of the well-known risks
associated with free and open access in terms of resource depletion and the
consequent vulnerability to which resource users are exposed).
Another difficulty is that where resource rents are collected by central Government,
they usually disappear into the Treasury (Mauritania, FFA, and Bangladesh for
example). As a consequence, it is difficult, if not impossible, to make a clear link
between the generation of fisheries wealth and poverty alleviation. Unless ear-
marked taxation (or more accurately rent extraction) is to be used, this problem will
persist, regardless of the amount of wealth generated by fish resources. Hence the
importance of linking fisheries policy with general governance and institutional
reform programmes being pursued by developing countries, for instance with DfID
support.
The question also arises as to whether the "poor" constitute a definable group, given
an objective of helping the poor. What is the relevant aggregation for social welfare?
The nation state, the community, the fisher. Which poor are we interested in? The
world poor, the national poor, the fisher poor, the community poor? Can we target
only one group? What are the dynamics? These are difficult questions to which there
is no general answer. One point that can be made about a wealth-generating approach
is that it provides the opportunity to help any of these aggregations, depending on
policy priorities. It is then up to policy makers to avail themselves of these
opportunities.
The implementation of a wealth-based model is bound therefore to raise questions of
social justice and equity, especially concerning the distribution of rights. These
questions are not simply about the poor versus the rich. They may also affect the
distribution between the poor themselves. For instance, a decision to favour poor
fishing households by allocating use rights to them may lead other groups of poor
people to query why fishing households should benefit disproportionately from
national fish resources.
A final problem that can be mentioned is the transition from the classic to the wealth
based model. Where fisheries are overexploited, their current resource rent potential
will be far below their maximum. It will be necessary to re-build the fish stock in
order to generate maximum wealth. In the process however fishers will lose. Making
B-14

16. the investment in the stock is likely therefore to be difficult, but is perhaps an ideal
candidate for development aid.
5. Needs for the new approach and elements of a DfID strategy
Moving from the classic model of fisheries exploitation and management towards a
new wealth-based alternative involves two broad steps. The first step is to improve
the management of the fishery so as to generate sustainable wealth from fish
resources. The second step is to ensure an equitable distribution and use of this
wealth, so as to generate growth in the economy at large, and to invest in those areas
of the economy (e.g. primary education, health, infrastructure) that appear
particularly likely to have a positive impact on the poor.
The first step requires that a new approach be taken to the management of many
fisheries. The break with the past is likely to be difficult to make, and developing
country governments are likely to benefit from support in a number of areas.
A major requirement will be for capacity-building. Candidate areas will vary from
case to case but are likely to include:
• Research: fisheries research has been, and continues to be, dominated by
biological issues, especially backward-looking stock assessment. There is
a need to move towards predictive models. There is also a need to develop
research in other areas, especially economics and bio-economic
modelling.
• Administration: despite the central importance of fisheries management,
many fisheries ministries have few staff trained and experienced in the
area. Organisation charts in many fisheries administrations are biased
towards issues such as training, industry development and so on.
• Industry: the industry itself is often poorly organised, and if it is to play
its role adequately can often benefit from capacity building. This need is
likely to be especially apparent if a co-management approach is to be
adopted, with some fishery management responsibilities devolved to the
fishers themselves.
Experience from successful countries (e.g. Australia, Iceland, New Zealand) shows
that the move towards wealth-based models is a lengthy process, measured in
decades rather than years. Support to the fishery management process, as a
specific part of capacity building, is likely to be useful to many developing countries.
Another dimension of capacity building assistance would be to explore different
management instruments and their impact. The range of tools available to
managers remains very small. There is a clear need to consider the development of
other mechanisms within the broad area of use right and green taxes
Developing country governments are likely to benefit from assistance developing
and implementing fishery management plans. Such assistance is likely to be
required over a number of years as the process develops. Typically a country will
begin with one or two plans, and gradually extend the process to other FMUs as
B-15

17. experience is gained. Because Ministries often have few staff devoted to fisheries
management, there is usually a dearth of people to implement plans, and assistance is
likely to be required both as a kind of technology transfer and in the form of
training.
Over recent years much international support has been given to high level initiatives
aimed at improving fisheries governance, for instance the FAO Code of Conduct for
Responsible Fisheries and the World Summit for Sustainable Development. What
seems most urgently needed now is fairly micro level assistance helping countries
to implement plans based around the wealth generation concept.
It will also be important to undertake micro-level studies of the impact of change.
The expectation is that wealth-based approaches will enhance the contribution of fish
resources to social and economic welfare. As with all change, however, there is a risk
that some will lose, even if the majority gain. There is a need to quantify these risks
and develop effective risk abatement strategies.
Moving beyond the generation of fish resource wealth to ensuring that it is used in a
way that benefits the poor requires support that transcends the fisheries sector. As
suggested above, an important requirement will be to link with other programmes
under way designed to improve macroeconomic governance and institutions. The
principal requirements seem to be to generate broad awareness of the potential
wealth of fish resources and the way in which this value could be and is used, and to
build political commitment to the equitable utilisation of such wealth.
Conclusion
The classic model has led by and large to failure, but may be seen to provide some
benefits to the poor in terms of activity. However, these activities are risky and
appear to increase the vulnerability of the poor.
The alternative model will allow the wealth of the fish resource to be generated but
will raise problems of its own. Generally however these problems are those of
success, rather than failure. The challenge is to ensure that the poor share in this
success, a challenge that both involves and goes beyond the fishing sector itself.
B-16