What is Good Fisheries Management?Gunnar KnappProfessor of EconomicsInstitute of Social and Economic ResearchUniversity of Alaska Anchorage

Presented atBC Seafood Alliance Summit IVVancouver, British ColumbiaNovember 1, 2005

CONCLUSIONS

Good fisheries management:Cares about the economic health of the seafood industryUnderstands how fisheries management affects costs and value throughout the seafood industry.Creates conditions that allow an economically healthy seafood industry to developThese are not the only conditions for good fisheries management--but they are essential conditions for good fisheries management.

The Alaska Department of Fish and Game describes Alaskas salmon management as a story of success.

But is Alaskas salmon management reallya story of success?Is successful fisheries management only about having abundant and healthy resources?

Can Alaska salmon management be a story of success whenthe value of Alaskas salmon harvests has fallen by more than half since the 1980s?

Can Alaska salmon management be a story of success whenthe value of Alaska salmon limited entry permits has plummeted?

Can Alaska salmon management be a story of success whenthe Governor declares salmon dependent areas aneconomic disaster area?Western Alaska fisheries declared economic disaster area for fifth time in six years.

Headline in Anchorage Daily News, August 24, 2002.

Can Alaska salmon management be a story of success whenpress articles ask if our salmon fleet is bound for extinction?

People used to be proud to be a gill netter. People now ask you what you do, and you dont want to tell them. They ask you why you are an idiot.

Source: Interviews with Cook Inlet salmon fishermen conducted by the University of Alaska Anchorage Institute of Social and Economic Research, 2003.

Can Alaska salmon management be a story of success whenmany fishermen have lost pride in what they do?

Having healthy and abundant fisheries resourcesis not all that matters.

It also matters how much value we derivefrom our fisheries resources.

It also matters whether we havean economically healthy seafood industry.

Conclusion #1:

Good fisheries management cares about the economic health of the seafood industry.

An economically healthy seafood industry is not the only goal of fisheries managementbut it should be a major goal of fisheries management anywhere that commercial fishing is a major part of how fish resources are used.

New Zealands fisheries managersunderstand that the value matters:

Our goal is tomaximize the valueNew Zealanders obtain fromthe sustainable use of fisheries resources and protection of the aquatic environment.

Source: New Zealand Ministry of Fisheries Annual Report 2004/2005www.fish.govt.nz/information/05annual/mof-annual-report-2005.pdf

How does fisheries management affectthe economic health of the seafood industry?If fisheries managers kept Alaskas salmon resources healthy, didnt they do their job?Wasnt the decline in salmon values caused by competition from farmed salmon?

How can fishery managers be responsible for fish prices?

The economic health of the seafood industry depends upon the net value we derive from seafood production.It depends not only on production but also on prices and costs.Net Value = Production x Prices Costs

A traditional perspective is that fisheries managers job is to ensure production (healthy resources supporting sustainable harvests)but that prices and costs are someone elses concern. Beyond managers responsibility or controlNATUREFISHERIES MANAGEMENTMARKETSTECHNOLOGYNet Value = Production x Prices Costs

The reality is that fisheries management directly affects prices and costsat all levels of the seafood industry. Beyond managers responsibility or controlNATUREFISHERIES MANAGEMENTMARKETSTECHNOLOGYNet Value = Harvests x Prices Costs

Fisheries management directly affects prices and costsat all levels of the seafood industry in many ways:by affecting when fish are harvested and processedby affecting how fish are harvested and processedby affecting incentives of harvesters and processorsto keep costs lowto keep fish quality highto invest in harvesting and processingto invest in marketing and product development

By affecting when fish are harvested,fisheries management affects:Whether fishing boats, tenders and processing plants can be used efficientlyWhether fishing, tendering, processing and transportation capacity is sufficient to allow production of high-valued products (like fresh fish) or whether fish have to be processed into lower-valued products (like canned and frozen fish)Whether fish can be delivered when the market wants themWhether buyers can count on reliable and continuous supplyWhen fish are harvested critically affects costs and prices at all levels of the seafood industry.

By affecting how fish are harvested,fisheries management affects:How fish are handled from the time they leave the water to the time they reach the processing plantWhether it is possible to deliver live fish to the processing plant (like fish farmers do)The quality of fish products that reach the final consumerand what they will pay for themWhether fish harvesting can be traceableHow fish are harvested critically affects costs and prices at all levels of the seafood industry.

Bruising as fish are caught in and removed from gillnetsHow these Alaska Bristol Bay salmon are harvestedwhich is mandated by fisheries managementdirectly and significantly limits their potential market value.

Fisheries management directly affects incentivesat every level of the seafood industry:to keep costs lowto keep fish quality and value highto invest in harvesting, processing, and marketing

If fisheries management creates a race for fishrather than providing for secure access rights to fish

fishermen and processors have no choice but to focus on catching and processing fish fastrather than on catching and processing fish in ways that keep costs low and quality and value high.

Alaska fisheries management created a race for fish in Alaskas Bristol Bay salmon fishery.

These fishermen are focused on catching fish as fast as possiblerather than on keeping costs low.

This was always crazy.

It is really crazy when fuel prices are at record levels.Photograph by Bart Eaton

Fisheries management puts these Alaska Bristol Bay fishermen in a race for fish. They have no choice but to focus on catching fish fast rather than handling them well.

If fisheries management leaves fishermen and processors uncertain about whether they will have consistent and reliable access to fish resources, they will not make the investments in harvesting, processing and marketing that are vital to an economically healthy seafood industry.

Fishing and processing is inherently risky because of natural risk (low run years) and market risk (low prices).

If management creates additional political risk, it canmake long-term investments impossible to justify.

Conclusion #2:

Good fisheries management understands how fisheries management affects costs and value throughout the seafood industry.

How can fisheries management lower costs and increase value?Traditional perspective:Ignore effects of management on costs and pricesTry to micro-manage for lower costs and higher pricesCreate conditions which allow the seafood industry to reduce costs and increase value This approach is an improvementThis approach is far more likely to succeed

Clear and secure rights to fish create conditions which allow the seafood industry to reduce costs and increase prices They create incentives to protect fish resourcesThey create incentives to reduce costsThey create incentives to increase value

There are many approaches to creating clear and secure rights to fish. Individual quotasBC and Alaska halibut and sablefishAssignment of fishing rights to harvesting cooperativesAlaska Bering Sea pollock fisheryAssignment of fishing rights to community organizationsAlaska Community Development Quota program

Most fisheries that have adopted clear and secureaccess rights are doing well. BC and Alaska halibut and sablefishAlaska Bering Sea pollock fisheryAlaska CDQ fisheries

BC and Alaska salmonMany fisheries that have not adopted clear and secureaccess rights are NOT doing well.

New Zealands adoption of quota management for all major fisheries has led to an economically healthy seafood industry.

The quota management systemhas enabled New Zealand to tackle over-fishing, improveefficiency, increase the value obtained from fisheries andaddress concerns about Maori fishing rights. Fisheriesmanagement is underpinned by good science and goodcooperation between the Ministry and the fishing sector.

Source: New Zealand Ministry of Fisheries Annual Report 2004/2005www.fish.govt.nz/information/05annual/mof-annual-report-2005.pdf

Conclusion #3:

Good fisheries management creates conditions that allow an economically healthy seafood industry to develop.

Am I saying that fisheries management should only care about industry and profits?

What about jobs? What about rural communities?What about people?

An economically healthy seafood industryIs an essential goal for good fisheries managementbut it is not the only goal of fisheries management.

I believe that good fishery management also requiresfair and equitable allocation of fish in ways that benefit people and communities.

Clear and secure rights to fisheries can be a powerful mechanism for benefiting rural people and communitiesas they have been with Alaskas Community Development Quota (CDQ) program.

Sustainable, profitable fisheries are more likely to deliver long-term benefits to rural communities, including aboriginal communities, than unsustainable, uneconomic fisheries.

--BC Seafood Alliance, What Do We Want From BCs Commercial Fisheries? The Case for Reform (May 2005)