What is Good Fisheries Management?

1. What is Good Fisheries Management? Gunnar Knapp Professor of Economics Institute of Social and Economic Research University of Alaska Anchorage Presented at BC Seafood Alliance Summit IV Vancouver, British Columbia November 1, 2005

2. CONCLUSIONSGood fisheries management: • Cares about the economic health of the seafood industry • Understands how fisheries management affects costs and value throughout the seafood industry. • Creates conditions that allow an economically healthy seafood industry to develop These are not the only conditions for good fisheries management--but they are essential conditions for good fisheries management.

3. The Alaska Department of Fish and Game describes Alaska’s salmon management as “a story of success.”

4. But is Alaska’s salmon management really“a story of success”? Is successful fisheries management only about having abundant and healthy resources?

5. Can Alaska salmon management be a “story of success” whenthe value of Alaska’s salmon harvests has fallen by more than half since the 1980s?

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

7. Can Alaska salmon management be a “story of success” whenthe Governor declares salmon dependent areas an“economic disaster area”? “Western Alaska fisheries declared economic disaster area for fifth time in six years.”Headline in Anchorage Daily News, August 24, 2002.

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

9. “People used to be proud to be a gill netter. People now ask you what you do, and you don’t 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?

10. 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.

11. 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 management—but it should be a major goal of fisheries management anywhere that commercial fishing is a major part of how fish resources are used.

12. New Zealand’s 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

13. How does fisheries management affectthe economic health of the seafood industry? Wasn’t the decline in salmon values caused by competition from farmed salmon? How can fishery managers be responsible for fish prices? If fisheries managers kept Alaska’s salmon resources healthy, didn’t they do their job?

14. 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

15. A traditional perspective is that fisheries managers’ job is to ensure production (healthy resources supporting sustainable harvests)—but that prices and costs are someone else’s concern. Beyond managers’ responsibility or control FISHERIES MANAGEMENT NATURE MARKETS TECHNOLOGY Net Value = Production x Prices – Costs

16. The reality is that fisheries management directly affects prices and costsat all levels of the seafood industry. Beyond managers’ responsibility or control FISHERIES MANAGEMENT NATURE MARKETS TECHNOLOGY Net Value = Harvests x Prices – Costs

17. Fisheries management directly affects prices and costsat all levels of the seafood industry in many ways: • by affecting when fish are harvested and processed • by affecting how fish are harvested and processed • by affecting incentives of harvesters and processors • to keep costs low • to keep fish quality high • to invest in harvesting and processing • to invest in marketing and product development

18. By affecting when fish are harvested,fisheries management affects: • Whether fishing boats, tenders and processing plants can be used efficiently • Whether 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 them • Whether buyers can count on reliable and continuous supply When fish are harvested critically affects costs and prices at all levels of the seafood industry.

19. 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 plant • Whether it is possible to deliver live fish to the processing plant (like fish farmers do) • The quality of fish products that reach the final consumer—and what they will pay for them • Whether fish harvesting can be “traceable” How fish are harvested critically affects costs and prices at all levels of the seafood industry.

20. How these Alaska Bristol Bay salmon are harvested—which is mandated by fisheries management—directly and significantly limits their potential market value. Bruising as fish are caught in and removed from gillnets

21. Fisheries management directly affects incentivesat every level of the seafood industry: • to keep costs low • to keep fish quality and value high • to invest in harvesting, processing, and marketing

22. If fisheries management creates a “race for fish”—rather than providing for secure access rights to fish—fishermen and processors have no choice but to focus on catching and processing fish fast—rather than on catching and processing fish in ways that keep costs low and quality and value high.

23. Alaska fisheries management created a race for fish in Alaska’s Bristol Bay salmon fishery.These fishermen are focused on catching fish as fast as possible—rather than on keeping costs low.This was always crazy.It is really crazy when fuel prices are at record levels. Photograph by Bart Eaton

24. 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.

25. 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.

26. Conclusion #2:Good fisheries management understands how fisheries management affects costs and value throughout the seafood industry.

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

28. 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 resources • They create incentives to reduce costs • They create incentives to increase value

29. There are many approaches to creating clear and secure rights to fish. • Individual quotas • BC and Alaska halibut and sablefish • Assignment of fishing rights to harvesting cooperatives • Alaska Bering Sea pollock fishery • Assignment of fishing rights to community organizations • Alaska Community Development Quota program

30. Most fisheries that have adopted clear and secureaccess rights are doing well. • BC and Alaska halibut and sablefish • Alaska Bering Sea pollock fishery • Alaska CDQ fisheries • BC and Alaska salmon Many fisheries that have not adopted clear and secureaccess rights are NOT doing well.

31. New Zealand’s 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

32. Conclusion #3:Good fisheries management creates conditions that allow an economically healthy seafood industry to develop.

33. Am I saying that fisheries management should only care about industry and profits?What about jobs? What about rural communities?What about people?

34. An economically healthy seafood industryIs an essential goal for good fisheries management—but 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 communities—as they have been with Alaska’s Community Development Quota (CDQ) program.

35. “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 BC’s Commercial Fisheries? The Case for Reform” (May 2005)