The Pacific Possible: A World Bank Tuna Fisheries Report / by Francisco Blaha

A new World Bank report (released for public comment last week at the annual Forum Fisheries Committee Meeting in Port Vila) says better management of tuna fisheries can help Pacific Island countries gain as much as US$344 million per year in additional sustainable revenues and create 7,500 to 15,000 jobs by 2040.

 His future is in that tuna

His future is in that tuna

While I’m always bit cautious of this type of long term projections (how do we numerically account for the key drivers of fisheries non sustainability: greed and selfishness?), it is a good read with well researched content, lots of economics (is the World Bank after all), and very well referenced to many of my friends and colleagues. You can download it here (130 pages)

I will only reference the summary here:

Pacific Island countries are endowed with valuable tuna resources. The stocks of four tuna species in the Western and Central Pacific Ocean (WCPO) – a region that includes the Pacific Island countries (PICs) and extends south below New Zealand and north to the Bering Sea to cover some 8 percent of the global ocean - collectively form the basis of one of the world’s largest and most valuable fisheries. This fishery supplies roughly 60 percent of the world’s tuna from what are some of the last healthy tuna stocks. PIC waters alone cover half of the WCPO region and supply some 34 percent of the world’s tuna catch each year, with an estimated delivered value to processors on the order of US$3.4 billion in recent years. From this endowment PICs received net economic benefits on the order of US$500 million in 2013, the majority of which came from the purse seine fishery in the waters of countries near the equator. While not distributed evenly, these benefits have been significant for some PICs, for example with public revenues estimated to be equivalent to 36 percent of GDP in Tuvalu, 32 percent in Kiribati, and 10 percent in FSM, and constituting a much higher proportion of the total public budget (e.g. 63 percent in Kiribati in 2012).

These resources will need to make bigger economic contributions to help avoid a ‘low-growth future’ in the region. Despite this tremendous natural endowment, the rate of economic growth in many (though not all) PICs has generally been low over the last decade, and if this trend were to continue over the next 25 years, with only Fiji and Palau’s gross domestic product GDP per capita growing at a rate higher than two percent annually, many PICs will fall significantly behind other countries, with per capita GDP levels only moderately higher than at present. One of the few opportunities to avoid this ‘low-growth future’ is utilization of the region’s tuna resources.

This report describes a scenario for the year 2040 where this might plausibly happen. The report aims to look forward over the next 25 years, to suggest some viable answers to the questions: in a plausible best case scenario, how much more could the WCPO tuna resources contribute to Pacific Island countries’ economies by the year 2040, and what policy decisions would be required from the countries? In complement, what would be the impacts and benefits in terms of employment and food security of these policy decisions? Building upon the 2010 Future of Fisheries report and subsequent Regional Roadmap for Sustainable Pacific Fisheries endorsed by Forum Leaders in 2015, the report develops a best-case scenario for the tuna fisheries in the year 2040, identifying the potential additional economic contributions to PICs, and proposing further detail on likely policy decisions that would need to be taken. The report does not aim to provide predictions or forecasts of the future, but rather a plausible story based on recent trends and expected future directions that can communicate risks and opportunities to inform policy-making – and thereby provide a better understanding of the policy choices in the upcoming decades and highlight present-day developments.

 Illustration of the WCPO Purse Seine Tuna Fishery Value Chain in 2013 & Net Economic Benefits to Pacific Island Countries

Illustration of the WCPO Purse Seine Tuna Fishery Value Chain in 2013 & Net Economic Benefits to Pacific Island Countries

As a starting point, some of the recent trends in the fisheries have been summarized, including:

  • The purse seine fishing ‘revolution’ and the explosion in these fishing vessels and their catch. Purse seine fishing to produce canned tuna has grown exponentially in the WCPO since 1980, with 34 vessels catching roughly 100,000 metric tons of tuna that year, increasing to a steady state of some 180 to 220 vessels operating from 1990 to 2006, to 344 vessels catching over 2 million tons in 2014. Fifty-two new purse seine vessels have been built since 2010 and registered to fish in the WCPO. This fleet has grown more efficient over time (notably in the technology used for fish aggregating devices) and its composition has changed. While always largely a foreign fleet, the number of Pacific Island-based vessels is growing (notably in Papua New Guinea), combined catches by Indonesian and the Philippines vessels more than doubled between 1997 and 2014, over half of all purse seine vessels operating in the region that have been built since 2010 are from China, and during this same time catches by vessels from Japan, Korea, the United States and China, Taiwan have been relatively constant.
  • Stagnation and possibly senescence in the longline fisheries. Productivity and profitability in the southern albacore longline fishery has declined, even as fishing increased sharply in 2008 with the rise of the PIC albacore fleet, which caught as much as 50 to 60 percent of albacore in 2014, and more recently the rise of the Chinese fleet. Catch rates have decreased steadily since 2009, hitting a low in 2011 for the period since 2002, with only marginal improvements since, even as new (and reportedly subsidized) vessels enter the fishery. Similarly, the trend in catches from the tropical longline fishery (much of which occurs in waters outside the jurisdiction of PICs) supplying sashimi markets has been flat. Over the period from 2003 – 2013, the catch rates for bigeye peaked in 2008 and have generally declined since (i.e. kg caught per hundred hooks on a longline), while yellowfin catch rates consistently declined from 2010 to 2013. In general, these two fisheries have provided relatively little economic benefits for PICs, which have typically captured an estimated 3 percent of the value of the catch delivered to processors, largely via access fees (though locally based longline vessels have provided higher benefits to PICs such as Fiji, Samoa, etc.).
  • Establishment of a regional governing body for the tuna fisheries. The Western and Central Pacific Fisheries Commission was established in 2004 as the body recognized under international law to govern the WCPO tuna stocks, and includes both PICs and foreign fishing nations, generally taking decisions based on consensus. However, given the diversity of actors in the Commission, consensus has been elusive in many cases – particularly on issues surrounding the distribution among members of the costs that would be imposed by proposed fish stock conservation measures, and some PIC representatives have expressed frustration when key decisions on conservation and management measures have not been taken. PIC representatives have cited the pace of decision making at the Commission as a rationale for pursuing sub-regional agreements and governance arrangements, such as the vessel day scheme implemented under the Palau Arrangement, and the recent Tokelau Arrangement.
  • A new model of cooperation by a sub-regional coalition of PICs to manage purse seine fishing access. The eight Parties to the Nauru Agreement (PNA) and Tokelau established a ‘vessel day scheme’ (VDS) to limit purse seine fishing access to their waters and allow transferability and greater flexibility in access terms. As a result, access fees are estimated to have increased by at least a multiple of four between 2009 and 2015. An estimated 13 percent of the delivered value of the total purse seine catch was captured by PICs via access fees in 2014. While these countrie have generally held the limit on purse seine access through the VDS, throughout the WCPO catch and effort continue to grow. Current information suggests that fishing effort and catch have grown more in the waters outside of the PNA countries, notably in the waters of Indonesia and the Philippines as well as some high seas pockets in 2014. Following the model of the purse seine vessel day scheme, similar arrangements have been introduced for the longline fisheries. In 2015 the same countries began a VDS for the tropical longline fishery, and in late 2014 ten countries signed the Tokelau Arrangement to implement a similar scheme for access to the southern albacore long-line fishery in their waters.
  • Failures of state-led efforts to capture more of the tuna value chains in the Pacific Islands. Most of the Government-led enterprises created in the 1980s or 1990s are no longer operating, but a number of private-led companies are currently processing catch in PNG, the Solomon Islands, Fiji and to a lesser extent RMI. In total the WCPO tuna fisheries value chains likely employ less than 0.5 percent of the region’s current labor force. Less than 10 percent of the WCPO purse seine catch is processed locally, and Bangkok remains the world’s largest tuna canner (despite increasing labor costs and several PICs’ trade preference with the EU market).
  • Overall, a relatively steady global market for tuna products. In terms of canned tuna supplied by the purse seine fishery and southern longline fishery, the three main markets in the European Union, U.S. and Japan are considered as ‘mature’ with relatively flat growth trends. The price of skipjack in Bangkok has declined significantly in recent years, attributed to the growth (or ‘glut’) in supply – largely from increasing catch volumes in the WCPO. The sashimi market supplied by the tropical longline fishery was pioneered by Japan but has since become global with the remainder destined for the U.S., Korea, China, the European Union and Taiwan, China.
  • Decline of the WCPO bigeye tuna stock, while fishing on other stocks approaches limits recommended by scientists. The size of the region’s bigeye stock has shown a steady decline since the 1970s, reaching overfished status in the last five years. At the same time, the growth of purse seining has taken a larger share of the bigeye catch, accounting for 41 percent of the WCPO bigeye catch in 2014. The other three WCPO tuna stocks: albacore, skipjack and yellowfin, remain relatively healthy but approaching limits. While these stocks are not currently considered overfished, they cannot likely continue to support the growth in fishing effort and catch seen in the past, according to current scientific assessments.
 Illustration of WCPO Long-Line Tuna Fishery Value Chains in 2013 and Estimated Net Economic Benefits to Pacific Island Countries

Illustration of WCPO Long-Line Tuna Fishery Value Chains in 2013 and Estimated Net Economic Benefits to Pacific Island Countries

Against the backdrop of these trends, a number of key external forces are expected to drive the performance of WCPO tuna fisheries over the next 25 years, including climate change, markets and the economy, science and technology, demographic changes and external governance. Expected changes include:

  • Climate change. Modeling conducted to date by the Secretariat of the Pacific Community (SPC) on two of the region’s four tuna stocks, skipjack and bigeye, suggest that in twenty years the sizes of the stocks will not be affected by climate change, but the distribution of the stocks may begin to shift towards the central and eastern Pacific.
  • Markets and the economy. Globally, the supply of tuna is approaching natural limits with little further increase expected, and likely to remain highly dependent on the WCPO region. In aggregate, demand for tuna may see a modest increase given flat supply and population growth, though with little change for canned tuna where declining mature markets may be balanced by emerging new ones. A slow increase in price for both canned and fresh tuna may be expected, but the same may also be said for fishing costs as crude oil prices are projected to double in real terms by 2040.
  • Science and technology. Fishing technology is expected to continue to change in order to enhance efficiency (this is already ongoing in the purse seine fleet, and eventually would be in the longline fleet with the return of economic incentives), as well as product quality. Fisheries monitoring and surveillance technology can be expected to advance to significantly reduce enforcement costs, including expanded satellite tracking of vessels, use of unmanned aircraft systems for patrols and electronic fishing catch and effort monitoring.
  • Demographic change. The overall population of the Pacific Island countries is expected to grow by some 50 percent over the next twenty years, together with rapid urbanization. In 2040 coastal fisheries production would be expected to remain largely stagnant (as it likely has since at least 2005), with concerns from SPC that a food fish gap could open in some PICs.
  • External governance. The trade preferences that several PICs currently enjoy with the European Union can be expected to erode in comparison to other producers, further reducing the ability of regional tuna processors to compete in the global marketplace. At the same time, foreign fishing subsidies for tuna fleets can be expected to continue in some form in a number of cases. The Western and Central Pacific Fisheries Commission can be expected to slowly take regulatory measures to conserve bigeye stocks, which would affect PICs.

Taking into account past trends and expected external drivers of performance, the following potential scenario can be described for the region’s tuna fisheries in 2040, dependent upon implementation of the policy decisions outlined in the Regional Roadmap for Sustainable Pacific FisheriesBy 2040, subregional coalitions of PICs are entrenched around the three tuna fisheries – purse seine, tropical longline and southern longline, with norms of transparency and trust established, as well as flexible formulas to distribute the returns on access in order to accommodate spatial shifts in the stocks as impacts from climate change are felt. Countries continue to see greater benefits from cooperation to manage the tuna stocks as shared natural capital assets, and many count upon their annual returns for stability funds and public investment. Working together, these coalitions set targets for maintaining minimum sizes of the four tuna stocks as a basis for firm catch limits from the waters under their jurisdiction, based on regular assessments from the world’s top tuna biologists at SPC. The coalition of countries around the equator – comprised largely of PNA members - operates a well-functioning organization governed by a permanent board of global experts from within the region, with a secretariat of professional staff from strong education and training programs within the region, built over recent years with public revenues from the fisheries.

Similarly, the Tokelau Arrangement’s successor is governed by a permanent board with a well-staffed secretariat. Staff in both organizations are highly skilled and focus on managing registries of tuna catch quota, monitoring trends in use and synthesizing key biological, ecological and economic research for the board, as well as managing quota auctions. The Pacific Islands Forum Fisheries Agency (FFA) provides monitoring and surveillance support, among other services, to the coalitions, and is recognized as a world leader in cutting-edge surveillance technology.

Seeing a future constraint on returns and potential external influence from the WCPFC, PNA members moved quickly in 2017 - 2018 to invest in research and development for by-catch reduction, and to implement an innovative fish aggregating device (FAD) licensing scheme to spur industry investment – particularly given projected eastward shifts in distribution of the stock. The combination of technology advances and some initially painful catch reductions, coordinated with similar action through the longline VDS, placed the bigeye stock on a slow recovery path, with biomass eventually and steadily increasing towards 40 percent of unfished levels. Albacore, skipjack and yellowfin stocks continue to remain healthy in 2040, with a slightly stricter target reference point to provide some reserve should climate change make it necessary. These stocks provide the world’s last healthy tuna stocks and have become an even more international fishery system, as global demand for tuna products has remained steady with Asian and Middle Eastern markets becoming more mature.

Inclusion of Indonesia in the purse seine and tropical longline arrangements, and the Philippines in the former, enhanced the total allowable catch limits for both and placed most of the world’s skipjack under robust management. Strong restrictions for fishing on the high seas, linked to access to national waters, was recognized in 2020 by the WCPFC, and even with shifting stocks, high seas fishing is minimal. Some three quarters of the southern albacore longline fishery operates on rules set through successors to the Tokelau Arrangement, with profitability on an upward trend.

As an example, gradually over the years PNA members enhanced the flexibility of fishing vessel day trading among them while increasing durability of allocations – with some countries moving slowly in order to give domestic fleets time to adjust and improve efficiency (and thereby maintain contributions to local value added). Vessel days with longer duration were progressively issued to companies for higher returns (e.g. for a five-year duration instead of one year), or in some cases in consideration of local investment.

Continued trials in pooling with successful results, as well as improved auction designs, led to an agreement whereby the PNA members directed the secretariat to pool all access rights, allocated via auctions, with revenues distributed to parties via the agreed formula. Several parties opt to continue to invest access revenues in processing clusters, reducing the total fishing effort allowed and their distribution accordingly.

After years of investment in effort adjustments at the individual vessel level, the parties made sufficient preparations for a transition of rules towards a quota-system. Secondary markets for quota developed, regulated by the parties and enhancing overall fleet efficiency. Increased efficiency of fishing operations, together with the enhanced visibility and reduced risk for firms, led to significant investment in technology for higher quality products, generating value throughout the supply chain. As a result of healthy fish stocks and a well-functioning access market, revenues are between 50 percent higher and double 2015 levels in real terms (after management costs and concessions for domestic processing are subtracted).

Building off of healthy stocks and efficiently-regulated access, the PNA countries (plus Indonesia and the Philippines) have created a trading company that controls much of supply to processors and in some cases direct to retailers, supported by freezing/storage facilities in key hubs throughout the region. A number of PICs have well-developed vessel support systems that provide services to the fleets. Utilizing the pooled access regime, several countries exchange revenue distributions for allocations to secure access for coastal tuna fisheries developed through nearshore FAD networks to help ensure sufficient flow of food fish. This process began in the 2020s in advance of continued stagnation in coastal fisheries. Some countries have established dedicated coastal community funds with tuna revenues, to invest in reef restoration and key infrastructure and social goods. Additionally, countries with relatively large populations near ports or transshipment hubs, e.g. PNG and Solomon Islands, trial measures to support greater retention and local sale of purse seine by-catch (not including bigeye).

As a result of the policy strategies and decisions pursued under the Regional Roadmap for Sustainable Pacific Fisheries, public revenues are some US$177 to 345 million per year higher for PICs in real terms, after concessions for onshore investment and investments in administration, monitoring and surveillance are subtracted. A number of countries have increased local value added by a combined US$88 million per year in real terms, due to processing clusters and vessel service hubs (though many processing facilities operate under capacity and at a loss given erosion of European trade preferences). These efforts have created some 7,500 to 15,000 additional jobs in the region for processing, without including the additional employment from service hubs. Over time an Oceanic Tuna Export Company (OTEC) could develop and generate significant profits shared, as well as employment at storage facilities throughout the region.

The policy strategies leading to this potential scenario in 2040 can be summarized as:

  1. Regional cooperation around a shared resource, eventually expanded to include key resource owners like Indonesia and the Philippines,
  2. Hard fishing effort and catch limits that maintain valuable natural capital assets in the water (and help constrain supply and hence increase price), with proactive efforts and up-front investments to rebuild the bigeye stock before further declines,
  3. Flexible access and eventually output rights for fleets, that enhance the value of the fisheries without increasing production, and provide a tool for interested PICs to lever greater foreign investment in processing,
  4. Significant investment in skills and capacity to develop the world’s top tuna managers, and
  5. Inclusion of coastal communities in the fisheries where feasible, through dedicated access and inshore FAD networks, as well as targeted investments maintain food security with coastal fish supplies stagnating and growing populations.