Subsidies weaken the sustainability

of global fisheries while increasing

inequality among fishers

U. Rashid Sumaila

Fisheries Economics Research Unit

Sea Around Us project

The University of British Columbia

Vancouver, Canada

r.sumaila@fisheries.ubc.ca

UNCTAD and ComSec AHEM on Trade in Sustainable Fisheries, Sep 29 – Oct 1, 2015

Outline of talk

• How important are fisheries to us?

• Opportunities and challenges facing ocean

fisheries worldwide;

• Fisheries subsidies;

• Suggestions for subsidies reform.

How important are fisheries to us?

• Food and nutritional security;

• Economic security;

• Social security;

• Recreational values;

• Cultural and spiritual values;

• Ecosystem function and service.

L.Teh

D. Varkey

Food and nutritional security

• Annual ocean fish catch is ~80 million t;

• Fish is a good source of protein, micro-

nutrients, minerals and essential fatty acids;

• Provides 3 billion people up to 15% of

dietary animal protein;

• For low-income food-deficit countries, the

contribution of fish to total animal intake is

nearly 20%.

FAO, State of World Fisheries and Aquaculture (2014)

Gross revenues from marine

capture fisheries worldwide

are estimated at between US$

80 and 85 billion annually

(World Bank, 2009, Sumaila et

al. 2012);

Total impact throughout the

global economy is between

US$ 220 and 235 billion in

2003 (Dyck & Sumaila, 2010).

Economic security

Social security through jobs

0

10

20

30

40

50

60

70

80

90

100

India

Chin

a

Indonesia

Bangla

desh

Vie

tnam

Phili

ppin

es

Pakis

tan

Myanm

ar

Nig

eria

Thaila

nd

Em

plo

ym

en

t (m

illio

n jo

bs)

TotalIndirect

Direct

260 million people worldwide

involved in marine fisheries, including

direct and indirect sector

Top 10 countries providing marine employment

Teh and Sumaila (2011)

Opportunities and challenges to

global fisheries?

Climate change impacts

↑ Sea temperature;

↑ acidification;

Δ ocean current

pattern;

Δ salinity;

retreat of sea ice;

↑ coastal hypoxic

& oxygen min.

zone;

↑ sea level.

Physical/Chemical

changes in the

ocean

• Physiology;

• Growth; &

• Body size. INDIVIDUAL

• Distribution;

• Abundance; &

• Recruitment.

POPULATION

• Species composition;

• Invasion/extinction. COMMUNITY

• Productivity; &

• Species interaction. ECOSYSTEM

Biological / ecological

changes in the ocean

Cheung, Watson & Pauly (2012): Nature

What are fisheries subsidies

• A subsidy is a “financial contribution [direct

or indirect] from the public sector that grants

private benefits to the fishery sector (World

Bank 2009).

Economic justification

for subsidies

• Externalities:

– occurs when producing or consuming a

good causes an impact on third parties

not directly related to the transaction

• Positive externality → provide subsidies;

• Negative externality → impose taxes.

30/09/2015 Global fisheries subsidies 11

Categorizing subsidies

• Beneficial subsidies (‘investment’

programs in fish stocks);

• Capacity-enhancing (harmful) subsidies

(‘disinvestment’ programs in fish stocks);

• Ambiguous subsidies (programs may

benefit or harm fish stocks).

Khan et al. (2006); Sumaila et al. (2013)

30/09/2015 12

Subsidies are substantial

Capacity-enhancing subsidies 83% of total USD 35 billion

Subsidies to developed country fisheries at 65%.

Sumaila et al. (2013)

30/09/2015 Global fisheries subsidies 13

Subsidies by type → fuel

subsidies = more than 20%.

Sumaila et al. (2013)

30/09/2015 Global fisheries subsidies 14

Subsidies are made for

inequality

Teh & Sumaila, 2011; Sumaila et al. (2013)

-

50

100

150

200

250

300

Beneficial Capacity enhancing Ambiguous

Developing countries

Developed

Su

bs

idy p

er

fish

ery

wo

rke

r (U

SD

00

0)

Approximately 12% of all fishing subsidies go to the small-scale sector

Fisheries mangt.

MPAs Fishery R&D Fuel subsidies

Fisher assistance

0

10

20

30

40

50

60

70

80

90

Sub

sid

ies

(20

14

US

$ m

illio

n)

Small-scale fisheries total = US$ 22 million

Industrial fisheries total = US$ 191 million

Mexican fisheries subsidies

Schuhbauer & Sumaila (in prep.)

Subsidies and overfishing

*Effective effort indexed on 2000 based on average 2.42% increase annually

Effo

rt (

GW

or

wat

ts x

10

9)

Cat

ch (

mill

ion

to

nn

es)

Year

5

10

15

20

25

10

20

30

40

50

60

70

80

90

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

Catch

FAO Fisheries Statistics

Subsidies and overfishing

*Effective effort indexed on 2000 based on average 2.42% increase annually

Effo

rt (

GW

or

wat

ts x

10

9)

Cat

ch (

mill

ion

to

nn

es)

Year

5

10

15

20

25

10

20

30

40

50

60

70

80

90

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

Catch

Effective effort*

Watson et al. (2013)

Impact on food & nutritional security

Srinivasan, Sumaila et al. (2010)

Potential catch loss by region of the world

Impact on economic security

Sumaila et al. (2012): PLoS One

Pe

rce

nt

80

60

40

20

0 0.02 0 -0.02 -0.01 0.01

Pre-tax profit share of sales for 1000 fishing companies

30/09/2015 Global fisheries subsidies 20

Push reform at several levels

• National level;

• Regional level;

• Global level.

National effort: Indonesia

15%

3%

100%

0

50

100

150

200

250

Beneficial Capacityenhancing

AmbiguousSubsid

ies (

US

$

mill

ion) Small-scale

Large-scale

Schuhbauer & Sumaila (in prep.)

Core group of countries adopts

fisheries subsidies disciplines

• Examples:

– TPP may include disciplines on subsidies to over-

fished stocks and IUU vessels;

– The ACP group of countries;

– The TTIP countries (EU and USA).

Establish multilateral disciplines

built step-wise and ‘bottom up’ to fill

remaining ambition gap

• A group of countries, perhaps in

partnership with Intergovernmental

Organisations and NGOs, could stimulate

collective action with bottom-up voluntary

commitments to subsidy reform.

Establish multilateral disciplines

built on areas of agreement in WTO

negotiations

• Chair report 2011, areas of more

agreement = subsidies to IUU vessels,

transfer of vessels, access agreements;

• Key gap: Subsidies to over-fished stocks

arguably should have been listed.

Align incentives by focusing

international subsidy negotiations

on international stocks

• WTO negotiations cover subsidies to both EEZ

and High Seas; shared and not-shared stocks;

• Re-start the WTO negotiations giving a higher

priority to subsidies that affect international stocks;

• Build evidence around impact of domestic

subsidies on domestic fish stocks in key countries;

• Lobby domestically and provide incentives

internationally for domestic reform.

Conclusions

• Build political will by tackling short-term

socioeconomic & political considerations

– ‘switching’ of ‘bad’ to ‘good’ subsidies

• Develop a cadre of local opinion leaders

within countries who really see the

benefits of eliminating harmful subsidies;

• Encourage national and regional efforts

that can develop into a multilateral

agreement.

Thanks for your attention

Thanks to UNCTAD & COMSEC

for the invitation