Economics Q&A: Can economics provide answers to the crisis of collapsing stocks in global fishing?

The UK is one of many countries that now face a dilemma when it comes to fish stocks and their sustainability. In the UK we now consume over 385,000 tons of fish per year whilst on a global scale only 10% of large fish stocks that existed in the 1950s are still present today; this include both cod and tuna. Stock depletion has become a larger issue because of the increases in fishing technology – especially in long-line fishing which is the main technique used in Japan.

As a result many of the once inaccessible fish reserves have become economically viable to fish as boats are more fuel efficient and require less labour. In a fully functioning market the decline in supply of the product would cause an increase in price and act as a disincentive for consumers to purchase the product meaning that the industry would reach a sustainable equilibrium. In this case however there has been a deep market failure resulting from the tragedy of the commons. The sea, and its fish, is a common resource either on a global scale or on a national scale within a country’s own territorial waters. There are very few established property rights over the sea meaning that rational economic agents have an incentive to plunder the seas resources causing the falling fish stock levels.

An instance where stock depletion looks to have produced permanent damage is to the cod population in Newfoundland where cod fishing had been the prominent source of income for the area since the 1500s with an annual catch of 250,000 tons. The area entered its boom phase in terms of catch in the 1950s when technology advanced enough for large foreign trawlers to come from as far as Great Britain and Asia. During this period catches rose to an annual 800,000 tons per annum putting huge amounts of pressure on the cod population. By 1975 the reserve was insufficient to yield a catch of 300,000 tons and yet despite this it wasn’t until a year later that the Canadian government stopped foreign fishing vessels from coming within 200 nautical miles in order to protect the stock. This reduced catches to around 100,000 tons until in the 1980s Canadian investors started to invest in the domestic fishing fleet causing annual catches to rise to their previous level. Not only was the volume of the fishing fleet key in the destruction of Newfoundland cod but also the type of methods used had a large impact. The trawlers targeted spawning grounds and so caught young and undeveloped cod before they could reproduce to disastrous effect. In 1992 a full ban was put on all fishing activities in order to preserve a fish stock that had dwindled to just 1700 tons. 30,000 people lost their jobs as a result and still today there has been no sign of recovery of the numbers of cod and other fish in the region.

Aside from the environmental aspects there are also numerous economic consequences involved with overfishing including the loss of profits and jobs, a fall in exports and an increased demand for fishes produced in fish farms which are highly unsustainable as they are fed with fish caught from the oceans. In effect this is not creating more fish but only transferring the type of fish we consume from one species to a more desirable one in an inefficient manner.
There are a number of policy interventions that can be used in order to avoid the problems seen in Newfoundland.

Perhaps one of the best of these is to use quotas to limit the catches of fishing fleets globally. These are currently being used in many MEDC countries but have been ineffective because, for the most part, they have been given out for free and at a level that is above the current level of output meaning there is no downward pressure on catch sizes. In the EU Common Fishing Policy (CFP) is a system whereby every member state is allocated a maximum quota for each type of fish and this is then divided up between each vessel. There are strict punishments if a boat comes in with more than its designated allowance but this has problematic consequences when it comes to implementation.

In the EU if a boat has more than its allowance it will dump the excess catch overboard before it enters the port to unload. Annually an estimated 138,000 tons of fish is thrown away due to the inflexibility of the CFP system.

For quotas to work well there must first be an international agreement as to what the limit is otherwise the fishing industry will relocate to areas where there is no regulation on catch sizes. Secondly accurate data must be used in order to establish a sustainable sized catch and agreements must be made as to how it’s allocated. Also if the quotas were made tradable then fishing would locate to where it’s most efficient. This would be where fish is plentiful and accessible whilst other costs such and fuel and labour are also low. The flexibility of setting up the scheme in this way would eliminate the problem of ‘catch dumping’ as seen in the EU at current.

Another option that could be used in conjunction with quotas is to strengthen property rights over the sea and the fish contained within it. This could be done in one of two ways; either by extending territorial waters to include all oceans or by assigning control of international water over to the UN or similar governing body. This would then offer an incentive to the economic agents to manage the resource sustainably in order to maximise long term profits. I would suggest the latter option as extending territories would have to be done on the basis of propinquity meaning that landlocked countries lose out and the end result is unequal.

The problem has been caused by advances in technology allowing access to fish no matter where they are in the world’s oceans but a possible solution might be found in further improving the technology. If nets were changed so that they no longer scoured the ocean bed then the all important spawning grounds would be left intact allowing fish to breath. Also if fisherman were forced to use nets with larger holes in them young fish would be able to escape rather than being killed and thrown away anyway.

While these policy approaches would provide relief for fish stocks in the medium to short term the best way to save fish stocks would be to alter the underlying demand for fish.

The majority of fishing that takes place is not for any sort of fish but for high value fish for those consumers who are prepared to pay extortionate prices for them. As a result much of the extra catch is thrown away which is an extremely wasteful practice. Because of this I believe the best long term reform would be to increase education about endangered fish stocks so that consumers know the consequences of eating certain species. Documentary films such as ‘End of the Line’ has already made a difference with many fish and chip shops offering alternatives to cod and supermarkets now making an effort to identify sustainably caught fish. If consumers are convinced to consume a wider variety of fish then the intense pressure on certain species would be eliminated as would the dumping of unwanted catches.

Researched and written by Oscar Hardy