Capturing economic benefits from the Pacific’s tuna resources / by Francisco Blaha

The annual tuna fisheries catch in the western and central Pacific Ocean (WCPO) averaged 2.7 million metric tons, valued at $6.1 billion over 2011–2015. Of this, around 1.6 million metric tons worth $3.1 billion was taken in exclusive economic zones (EEZs) of the Pacific Island Forum Fisheries Agency (FFA) members.

A key economic challenge that Pacific Island Countries face at both the national and regional levels, as they develop and implement management policies for the Pacific tuna fisheries, is to maximize their share of economic benefits flowing from the exploitation of the tuna resource.

In this FFA Policy Brief (that I quote below) originally published as part of a collection of four externally contributed articles in the July Pacific Economic Monitor of the Asian Development Bank, FFA's Chris Reid, Alice McDonald and Leonard Rodwell conclude their report noting that Agency member nations are continuing to develop and implement policies at the regional and subregional levels in order to implement rights-based management systems to allow them to take control of the WCPO tuna fisheries, set limits that achieve their objectives, and allocate rights among the participating coastal states.

Taking control of the fisheries

FFA members’ commitment to take control of the WCPO tuna fisheries is explicitly laid out in the roadmap as follows: “The long-held Pacific Island Countries (PICs) commitment to Zone based management provides the key to taking control of the major fisheries. FFA members commit to vigorously assert a system of national rights, within a cooperative framework of binding limits that will be managed under formal Harvest Strategies, including through equitable and responsible reduction where necessary.”

In essence, taking control of the WCPO tuna fisheries involves four broad strategies:

  1. establishing rights-based management systems;
  2. ensuring that the total level of rights allocated under the rights based management system, and hence fishing activity, is binding and meets both biological and economic objectives;
  3. allocating shares of limited rights to participants; and
  4. ensuring that fishing activities in areas that fall outside of the jurisdiction of the management system are also constrained.

To do this requires cooperation at the regional and subregional levels.

FFA members continue to develop regional and subregional arrangements establishing rights-based management systems for the WCPO tuna fisheries. These systems are based on creating limits to the level of fishing activity across the EEZs of participating coastal states through, for example, catch or effort limits. Shares are then allocated to these states. This approach is in contrast to

Flag state-based limits (common in other international fisheries) where allocations are based on historical catch shares. A zone based approach means that coastal states, which hold the rights to the fishery, determine not only who can fish in their waters but also how much they can catch. Under a flag-based system, coastal states only have control over who can enter their waters with catch rights being allocated to the flag states. To be successful, the management system should cover a significant proportion of the fishery concerned and impose limits on fishing activities. If vessels can easily shift their fishing activity elsewhere or the rights created are freely available to any vessel that seeks them, the system will fail.

To date, the Parties to the Nauru Agreement (PNA) have led the way in taking control of the Pacifi c’s fisheries resources through the establishment of a rights-based management system for the purse seine fishery that lies within its members’ EEZs. This system, an outstanding global example of coastal states taking control of a fishery based on highly migratory stocks, is known as the purse seine vessel day scheme (PS VDS). The scheme limits fishing activity through an agreed total allowable effort (TAE) limit across participants’ EEZs. The TAE is then distributed among the parties according to an agreed formula based on catch history and relative biomass.

The establishment of the VDS has seen a dramatic increase in the returns that its members are able to achieve from allocating access rights to their EEZs. Access fees paid by foreign vessel operators have increased from an average of less than $1,500 per day prior to the implementation of the VDS in 2008 (Havice 2013) to a minimum of $8,000 per day since 2015, with some VDS participants achieving average returns per VDS day in excess of $11,000 in 2016.

The ability of VDS participants to attract investment to their domestic fisheries sector has also increased dramatically with the number of investment proposals increasing significantly in recent years. The PNA is also implementing the longline VDS (PNA LL VDS), a similar scheme for the longline fishery within LL VDS participants’ EEZs.

Less well known, and at an earlier stage of development, is the Tokelau Arrangement (TKA) under which participants aim to take control of the south Pacific longline fishery. The TKA uses a similar regional cooperation approach to establish a rights-based management system, setting a limit across all participants’ EEZs and allocating shares to participants.

The Tokelau Arrangement for the south Pacific longline fishery

For a number of years, Pacific fisheries ministers have called for urgent action to address the depletion of the south Pacific albacore stock, which makes up around 55%–60% of the catch taken in the southern longline fishery. Despite efforts to implement tighter management through the Western and Central Pacific Fisheries Commission (WPCFC), effort in the southern longline fishery has continued to grow, depleting stocks of albacore tuna such that catch rates are often below economically viable levels for many Pacific island domestic vessels.

Between 2008 and 2010, the number of hooks set in the southern longline fishery increased by nearly 50% . However, increases in resulting catch rates were only around half those for effort. Further, average catch rates over the most recent 5-year period (2011–2015) were around 22% lower than in 2006–2010.

Since 2011, persistently low catch rates have resulted in poor economic conditions for the southern longline fishery and forced Pacific island vessels to tie up for extended periods or to exit the fishery. Eleven FFA members, within whose waters over half of the south Pacific albacore catch is taken, decided to implement albacore catch limits and an associated zone-based management arrangement across their EEZs.

The TKA took effect in December 2014 with the objective of promoting optimal utilization, conservation, and management of stocks, by developing management approaches that maximize economic returns from sustainable harvesting of the resource, and increasing TKA participants’ control of the fishery. The TKA allows for the expansion of its membership to include other coastal states in the region, such as American and French territories which are not FFA members.

The TKA commits participants to limit the catch of albacore within their EEZs to individual zone limits, and develop measures to regulate catch and manage the zone-based limits. Participants are now in the process of developing a catch management scheme that fulfills these commitments and enables them to make the best use of agreed catch limits through such mechanisms as multijurisdictional harvest control rules, tools for transferability and reciprocal licensing, and flexible national implementation.

While the albacore stock is currently biologically healthy, if recent effort levels are maintained the size of the stock will continue to decline as will catch rates, with economic consequences for coastal states and their fleets. Declining catch rates reduce the viability of domestic fleets, and the ability of PICs to levy access fees on foreign vessels.

Participants to the TKA have agreed to an interim target reference point (TRP) for the south Pacific albacore stock aimed at achieving both sustainability of the stock and the economic viability for the fishery. To inform TKA participants and the broader FFA and WCPFC membership, the Secretariat of the Pacific Community (SPC) and the FFA Secretariat undertook a series of analyses examining biological and economic outcomes under a number of potential TRPs (see, for example, SPC 2015 and Pilling et al 2015).

In summary, these analyses indicated that:

  1. Maintaining current effort levels would result in the albacore stock size and catch per unit of effort (CPUE) continuing to decline, with CPUE in 2033 being around 14% lower than current levels.
  2. There was a significant risk (20%) that the limit reference point (LRP) for albacore agreed by the WCPFC (20% of SBF = 0, that is, a stock 20% of the size that it would be in the absence of fishing) would be breached.
  3. The use of maximum sustainable yield as a long-term target for south Pacific albacore is seen as implying a high risk of the stock falling below the agreed LRP. The CPUE was estimated to fall a further 65% by 2033.
  4. Achieving maximum economic yield, where economic yield was defined as rents earned from the fishery, required effort reductions of over 75%. This would result in the CPUE increasing by around 50% by 2033 and there being no risk that the albacore LRP would be breached. However, this would be associated with declines in catch in the order of 60%.
  5. Effort reductions in the order of 25% are required just to ensure that CPUE in 2033 remains around current levels.
  6. Effort reductions in the order of 40%–50% are required to return CPUE to levels prevailing prior to the rapid expansion of effort after 2008. At the reduced effort levels, profitability will increase significantly, ensuring the viability of domestic fleets and increasing returns to coastal states from the sale of access rights.

Based on these outcomes, FFA members recommended that a TRP for albacore be set at 45% of the size that the stock would be in the absence of fishing. This recommendation was based on the estimated changes to catch rates, which they view as the primary driver of profitability in the fishery. It was further noted that the proposed TRP should bring about a CPUE increase in the order of 15% from 2013 levels, which FFA members saw as essential to raising profitability and contributing to the development of domestic fisheries. It was also noted that a 45% TRP would return the stock to the 2007–2008 level (FFA 2015).

A major issue discussed at the WCPFC Harvest Strategy Workshop was the uncertainty regarding the path through which the TRP would be achieved (particularly the time frame over which the reductions would take place, and the burden of reduction for each fleet). These issues were cited as primary reasons why a number of WCPFC members could not accept the proposed TRP (Cartwright 2015).

Nonetheless, TKA participants have adopted this as an interim TRP, pending further developments. A crucial issue will be managing catch within participants’ EEZs to a total allowable catch that achieves the interim TRP. Given the magnitude of required catch reductions, and the need to ensure that any reductions are not simply offset by increases elsewhere, these are likely to take time. However, TKA participants, as part of their policy deliberations, are now considering the biological and economic implications of alternative management interventions that will achieve the interim TRP, and have tasked SPC and FFA to undertake analysis on this issue.

Leveraging control and maximizing the value of allocated rights

Creating, limiting, and allocating rights in highly migratory multijurisdictional fisheries such as the tuna fisheries of the WCPO require a high level of regional cooperation and shared policy development. However, once these are in place, owners need to ensure that there are effective national policies for the management of those rights.

Participants to the VDS continue to develop strategies to maximize returns from the sale of vessel days to foreign companies. Some mechanisms being used include tendering and pooling VDS days from a number of participants, and purchasers of these days can use them anywhere within the participants’ EEZs.

Currently, the main focus of FFA members is on maximizing the returns from selling access rights to foreign fleets, or a combination of this and promoting domestic fisheries development. Some FFA members see the provision of access rights to companies involved in the domestic fisheries sector at concessional rates as a means for achieving the latter.

The tradeoff between the potential additional government revenue that could be obtained from selling the days at the market rate, and additional economic benefits that companies involved in the domestic fisheries sector could generate (compared with operators that simply fish in the EEZ and have little interaction with the local economy) need to be considered.

Some FFA members have been developing processes for setting concessional prices for companies involved in the domestic fishery sector that explicitly consider this tradeoff . In seeking to develop these processes, the need to implement a structured approach to the management of national rights was evident.

To assist in this, the FFA Secretariat has recently embarked on developing a guide for the management of national fisheries rights allocated through regional or subregional rights-based management systems using an asset management framework. This guide will deal with a range of issues, including objectives, policies, strategies, and processes.

Conclusion

FFA members are continuing to develop and implement policies at the regional and subregional levels in order to implement rights based management systems to allow them to take control of theWCPO tuna fisheries, set limits that achieve their objectives, and allocate rights among the participating coastal states. FFA members are also developing policies at the national level to enhance the management of their allocated rights, and ensure that they are able to extract maximum benefits from rights that they have created under regional rights-based management arrangements.