Money in the Water: Global Subsidy Reform & the Fishing Industry

By Cora Sorenson

Due to overexploitation marine fish populations are in decline around the world. This has both severe global environmental as well as social impacts: weakened ocean ecosystems, depleted fish stocks, and the decline of artisanal coastal fishing communities. Furthermore, it puts large-scale fishing economies at risk by threatening the long-term viability of a resource shared by all.

The world’s marine fisheries have been gradually declining since 1996[1]. The Food and Agriculture Organization (FAO) estimates that as much as 85% of global marine stocks are now fully-exploited, meaning that stocks have been fished to their maximum capacity, and cannot provide further catch[2].

Overexploitation is produced by many factors, including destructive fishing practices, excessive by-catch and discards, and a lack of regulation, compliance, and enforcement standards[3]. It is clear that these factors work in tandem, and no single solution will solve the problem. However, one of the most significant contributors to global overexploitation is government fisheries subsidies.

It is imperative that subsidies are reformed at the international level if we are to maintain sustainable fish production. Unless the World Trade Organization (WTO) requires governments to redirect subsidies to sustainable resource management processes, this important food resource will continue to perish, and with it, local economies and the health of our oceans.

When near-coastal fish stocks are depleted, the fishing industry is forced to fish in waters that are deeper and farther off-coast. This requires more powerful fleets with larger engines and deeper trawling capacity. This is where subsidies come in: financing the construction of larger boats, the purchase of bigger engines, and the modernization of fuel equipment, in order to capture the greatest amount of fish possible.

According to the WTO, governments provide between $14-$26.5 billion annually in fishing subsidies[4]. The European Union, Japan, and the United States are the largest subsidizing countries, with developing countries also increasing subsidies in an attempt to compete.

The fishing industry will tout these subsidies as necessary to keep pace with growing demand for fish around the world. However, sixty percent of global fisheries subsidies, equivalent to $16 U.S. billion, promote unsustainable fishing practices[5]. Larger fleet harvests often catch many non-target fish, decreasing biodiversity and producing dangerous consequences up and down the marine food chain. In addition, larger catches remove mature reproductive fish from the sea, compromising the ability of the population to reproduce[6].

Subsidies produce not only ecological, but also social impacts. They significantly compromise small fishermen and local coastal fishing communities who, lacking the capacity to finance large operations, are inadequately equipped to compete in the market.

Depleting fish stocks also poses serious economic risks. Both developed and developing countries rely on fisheries to provide jobs and income. In the United States alone, the fishing industry supports one million jobs and adds more than $70 billion to the American economy[7].

It is not necessary to eliminate subsidies, but instead to improve and redirect financial support to practices that can meet demand without compromising supply.

There are economic incentives for such reform. The World Bank projects that marine fisheries have the capacity to provide $50 billion in additional economic benefits per year, if managed sustainably[8]. Rebuilding overfished stocks in the U.S. would generate an additional $32 million per year[9].

While the WTO has expressed commitment to phasing out harmful fisheries subsidies since 2005(through the Negotiating Group on Rules), far more is necessary.

The WTO first needs to establish global benchmarks for sustainable and healthy fish stocks. These will then become the foundation for prohibiting subsidies that lead to fishing overcapacity. Governments can be held accountable to WTO standards for sustainable targets and should be permitted to grant subsidies only when funding is linked to hitting those targets and when fleet size matches existing fish stocks. The WTO should require governments to disclose national fisheries subsidies in order to increase transparency around their use. Furthermore, in order to help alleviate the trade distortions produced by subsidy variations between developed and developing countries, the WTO should provide technical assistance and capacity building for developing countries.

Lastly, the WTO can require that that a portion of subsidies be redirected to support innovative rights based management (RBM) strategies, including catch share programs. Catch shares establish a catch limit, and then divide shares of that total between individual fishermen, or fishery associations. This ensures that fishermen can fish with greater autonomy and less competition. RBM strategies including catch share programs can help to decrease the destructive competition that leads to overexploitation of fish stocks[10].

The European Union’s Common Fisheries Policy (CFP) can provide a roadmap for WTO reforms. CFP is a set of regulations for conserving fish resources and managing fishing fleets in the EU. It sets limits on maximum catches to manage this common resource and prevent stocks from collapsing[11]. EU policy shows that conservation management is possible.

Sustainable fish stocks ensure not only the environmental health of the sea, but also the economic well being of those whose lives depend on it. Marine fisheries are an essential protein source for people around the world, and a critical component of our global economy for both developed and developing countries. As a common pool resource, marine fish stocks require active long-term management by international regulatory institutions to ensure the environmental capacity to support continued, long-term economic gain. It is imperative that the WTO establish regulations for the allocation of subsidies, so that governments finance their fishing sectors in ways that guarantee the long-term sustainability of a resource upon which their economies depend.

 

[1] World Wildlife Federation. (2011, November). Briefing: Reforming Fisheries Subsidies. http://d2ouvy59p0dg6k.cloudfront.net/downloads/wwf_briefing_on_subsidies_reform_.pdf

[2] Food and Agriculture Organization. (2012). The State of the World Fisheries and Aquaculture (SOFIA). Rome. http://www.fao.org/docrep/016/i2727e/i2727e00.htm.

[3] WWF, (2011, November).

[4] World Trade Organization. (2014). Introduction to fisheries subsidies in the WTO. http://www.wto.org/english/tratop_e/rulesneg_e/fish_e/fish_intro_e.htm

[5] WWF, (2011, November).

[6] The Fisheries Secretariat. (2014, December 8). Subsidies. http://www.fishsec.org/the-issue/subsidies/harmful-subsidies/

[7] National Oceanic and Atmospheric Association. (2011, December 13). State of the Coast: Economy. http://stateofthecoast.noaa.gov/com_fishing/welcome.html

[8] World Bank (2009) The Sunken Billions: Economic Justification for Fisheries Reform. Washington DC: World Bank http://go.worldbank.org/MGUTHSY7U0

[9] State of World Fisheries and Aquaculture (SOFIA)(2014). World Review of Fisheries and Aquaculture. http://www.fao.org/3/a-i3720e/i3720e01.pdf

[10] PERCtv. (2011, May 13). Saving Ocean Fisheries (Video file). Retrieved from http://perc.org/blog/lessons-learned-rights-based-fisheries-management

[11] European Commission. (2014, February). Facts and Figures on the Common Fisheries Policy. http://ec.europa.eu/fisheries/cfp/index_en.htm

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