Our results show that, by and large, fishing the high seas is artificially propped up by an estimated $4.2 billion in government subsidies (more than twice the value of the most optimistic estimate of economic profit before subsidies are taken into account). The economic benefits vary enormously between fisheries, countries, and distance from port. On aggregate, current high-seas fishing by vessels from China, Taiwan, and Russia would not be profitable without subsidies. This is globally significant since these three countries alone account for 51% of the total high-seas catch. Other countries exhibit annual profits ranging from negligible to $250 million, which were increased substantially by subsidies (for example, Japan, Korea, Spain, and the United States). Surface fisheries for pelagic species such as tuna were profitable, whereas most other fisheries barely broke even, and squid jigging (mostly concerning Chinese and Taiwanese fleets) and deep-sea bottom trawling were generally unprofitable without subsidies. Some national fisheries in specific regions were unprofitable even after government subsidies are taken into account.
The lack of profitability for China and Taiwan may be related to massive overcapacity. After realizing the declining returns from their domestic fishing, China embarked on a vessel construction program in the 1990s destined to “distant-water fishing,” which continued through the 2000s, when China declared its interest in developing high-seas fisheries (10), although GFW data suggest a recent sharp decline in its fishing fleet. Japan, on the other hand, has undertaken well-documented vessel-scrapping programs to decrease the overcapacity of its large-scale tuna longline fleet (11). Scrapping means that vessels are decommissioned and dismantled, which results in effective reduction of the fleet.
How is it possible that some countries continue to fish in certain high-seas regions while exhibiting an apparent economic loss? For this behavior to be incentive-compatible, there must be a net benefit for individual companies to continue operating in the high seas. The most obvious reason is underreporting the catch, which would result in an underestimate of fishing revenue and profits. The data used in our analysis are reconstructed catch data that attempt to correct for underreporting (12, 13). Some analysts have criticized catch reconstructions on a methodological basis, suggesting high uncertainty about the reliability of the reconstructions and claiming that FAO’s annual catch reports are “the only validated source of global fisheries landings” (14), but see (15). Reconstructed data suggest catches perhaps 30% larger than those reported by FAO (13), which makes our estimates of fishing revenue and profits larger than they would be had we used FAO’s raw data. However, global catch reconstructions mainly address unreported catches within countries’ EEZs. The data for industrially caught tuna and other large pelagic fishes were largely on the basis of officially reported data provided by the various tuna Regional Fisheries Management Organizations to which major discards were added before spatial allocation (16). Therefore, catches for some high-seas areas may still be underreported.
Overall, we conjecture that fishing the high seas could become rational for the most unprofitable fisheries due to a combination of factors including the following: (i) currently available catch data continue to underrepresent real catches, (ii) vessels fish only part of the time in the high seas and make most of the economic benefit from fishing in EEZs, (iii) government subsidies not accounted for in this analysis, (iv) reduced costs because of unfair wages or forced labor, and (v) reduced costs because of transshipment at sea. There may be additional market factors that are fishery-specific, that is, squid fishing by Chinese vessels in South America. Our results suggest that this fishery is unprofitable, but over 100 Chinese squid jiggers amass in January at the limit of Argentina’s EEZ to catch small Illex squid, before Argentina opens the season inside its EEZ. The low stock size and high demand for squid may allow Chinese companies fishing early in the season to charge higher prices than those used in our analysis (17). To these factors, we could add geostrategic reasons, where countries may fish in some regions as part of their long-term foreign policy strategy, regardless of the economic benefit. Examples of this strategy have been documented for Chinese and Russian fleets fishing in Antarctica (18, 19).
Previous studies showed that total government subsidies equaled 30 to 40% of the global landed value of catch (20), but this study allows us to compare subsidies to the actual profits in the absence of subsidies, specifically for fishing in the high seas. Even under the lowest estimates of high-seas fishing costs, subsidies more than double the net economic benefit of fishing in the high seas. For some fishing fleets, subsidies make the difference between negative and positive profits, but for a few countries, subsidies are extremely large (especially Japan and Spain) and appear to play a central role in economic outcomes. Some of the Japanese and Spanish fishing fleets do not appear to require subsidies to be profitable, yet they collect the highest sums globally. To the extent that government subsidies enhance fishing activity (for example, through fuel or other subsidies that affect the marginal cost of fishing) (20, 21), they artificially boost the bottom line of fishing companies, perhaps at the expense of sustainability of the underlying resource stocks.
Forced labor or modern slavery is a key cost-reducing factor in long-distance fishing, which manifests itself both at sea (using forced labor) and on land (using child slavery) (22–24). In some countries, high-seas fisheries are profitable only after assuming government subsidies and low labor costs (mainly for China and Taiwan). Thus, it seems possible that unfair labor compensation, or no compensation at all, allows seemingly unprofitable fisheries to be economically viable. High-seas fishing has also been linked to illegal activities (that is, smuggling of drugs, weapons, and wildlife) by transnational organized criminal groups that use flags and ports of convenience, poor regulation of transshipments, and offshore shell companies and tax havens (25, 26). These illegal activities may also justify the rationality of some of the fishing in the high seas.
Refueling and transshipment at sea also reduces the costs of fishing in the high seas because it allows fishing vessels to continue fishing for months or years without having to return to port (27). Without bunkers and reefers, fishing in the high seas would be far less profitable, especially for China, which showed the largest number of encounters with reefers for transshipment. These results also show how chronically unprofitable some fisheries are, such as Chinese squid jigging, which appears to be profitable only through the provision of subsidies, the use of transshipment, and low compensation for labor.
A caveat of our analysis is that GFW data are not able to detect all fishing vessels because some of them do not carry or will simply deactivate AIS or VMS. However, including more vessels in our analyses would only further increase the estimated costs of fishing the high seas and reduce the per-vessel subsidies. Comparing our data with the best available estimates of the number of active vessels per country, gear type, and Regional Fisheries Management Organization, we estimated the proportion of the fleet detected by satellites, and calculated scaling factors to correct for underobserved fishing effort (see the Supplementary Materials). This calculation assumes that the vessels not in the GFW data are as active as and behave similarly to those in the data set. If this assumption does not hold, and undetected vessels are less active and/or fish more inside EEZs than on the high seas, then our scaled estimates may overestimate high-seas effort. For many of the major fleets, including China’s longline and purse seine fleet in the Western Central Pacific, we observed >90% of the active fishing vessels, resulting in small correction factors to account for vessels we could not track (table S3). However, a number of fleets have notably bad coverage, including Taiwan’s small-scale longline fleet in the Western Central Pacific (40%) and China’s squid fleet operating in the South Atlantic (48%). In aggregate, scaling up for undetected vessels augments effort by 20%.
Labor costs are the largest source of uncertainty in our analysis, accounting for 68% of the uncertainty around our estimate of total profits. Wages and labor compensation schemes are highly variable across fleets and nations, and violations of human rights and modern slave labor have been documented in some high-seas and distant-water fleets. We address this uncertainty by providing conservative upper and lower bound estimates of labor costs for each country. Nevertheless, unfair wages or unpaid labor could further decrease our lower bound of costs and increase profitability for some fleets. For example, if crew wages were 20% lower than our current low bound estimate, our highest estimate of total profits would increase by 26%. Fuel costs account for the remaining uncertainty (32%), which is determined by the assumed fuel consumption factor of each vessel (see Materials and Methods). Last, we used the global average price of fuel, which may not reflect regional price variability. While this may affect our results (for example, a 10% change in fuel price would result in a 7% change in our estimate of total costs), tracing the origin of the fuel each vessel uses and the price it pays for it would require strong assumptions and is further complicated by the common practice of refueling while at sea.
For our calculation of fishing profits, we use the landed value of the reconstructed catch for 2014, which is the latest year for which both global FAO statistics and global reconstructed data are available (15, 28, 29). To estimate costs, we use effort data from 2016 (the year for which we have the most complete AIS and VMS databases) combined with 2014 global average fuel prices. Using data 2 years apart might result in some discrepancies, but we believe that high-seas fishing effort in 2016 is a good proxy for effort in 2014. Evidence to support this claim is the small short-run price elasticity of fuel demand of the large-scale industrial fishing fleet (9). Assuming that the spatial distribution of effort has remained constant, we used the estimate of elasticity (−0.06) to adjust fishing effort in response to higher fuel prices in 2014.
Fishing profits are likely to vary over time as factors such as fuel price, fish price, climate, and fish stocks fluctuate. While our analysis is for a single year, the slight increase in high-seas catch and revenue, coupled with the high and constant price of fuel between 2010 and 2014, suggests that our estimate of profits is likely to be representative of, or slightly higher than, the average state during the first half of this decade. In addition, we have likely underestimated the costs of fishing in the high seas because our calculations do not include capital investments. For example, the capital invested in Japan’s distant-water fisheries in 2014 (the only country for which this information is available) corresponds to around 40% of total annual expenditures, which would decrease the country’s profits (before subsidies) from $177 million to virtually zero. However, since 2014, fuel prices have decreased by ~50% and we estimate that total profits may have increased (before subsidies) by up to $720 million. If current fuel prices remain stable, the second half of this decade may be considerably more profitable for high-seas fisheries, and their dependency on government subsidies may be reduced. As more recent effort, catch, and costs data become available, we will be able to better assess the temporal dynamics of the economics of fishing the high seas.
Satellite data and machine learning technology have opened up a new era of transparency that allows us to evaluate quantitatively what we previously could only speculate about. This study opens a window into the economic profitability of high seas fishing across spatial scales, countries, and fisheries, which can be updated in near real time going forward. Our results show that, in many locations, the current level of fishing pressure is not economically rational, despite the overall profitability of major pelagic fisheries such as tuna fishing. Potential food security arguments in favor of continued or ramped-up high-seas fishing seem misguided because high-seas fisheries mainly target catches of high-value species such as tuna, squid, and deep-sea fishes, which are primarily destined for markets in high-income countries (30).
Our findings provide economic evidence that supports growing calls for substantial reforms of high-seas fisheries to align conservation and economic potential. These reforms could include combinations of better fisheries management including capacity reduction, marine reserves, and innovative financing (31), but our most direct finding is that subsidy reform could substantially alter fishing behavior in the high seas. Strong fishery management reform could act as a kind of substitute, even in the presence of subsidies, provided strong catch limits were adhered to. In a similar manner, several authors have suggested that closure of large areas, and even all of the high seas, could both achieve conservation goals and increase the economic benefits of fishing migratory species, particularly when they are overfished (1, 32). The uncertainties in our analysis highlight the need for increased monitoring and transparency in fisheries, particularly regarding labor practices. The additional evidence presented here can serve as a starting point for targeting policies in the most efficient manner, as the United Nations starts discussions in 2018 to negotiate a new agreement for the conservation of biodiversity in the high seas (33).
All tables and aditional data is here