What’s going to happen with the Common Fishery Policy (CFP)
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Department of Food and Resource Economics What’s going to happen with the Common Fishery Policy (CFP) Reform discard policy? - impacts of a discard ban Peder Andersen , Jesper L. Andersen, Ayoe Hoff and Simon Mardle Department of Food and Resource Economics Faculty of SCIENCE University of Copenhagen IIFET Conference 2014, Brisbane, Australia Slide#1 Department of Food and Resource Economics Introduction • • • • The European Common Fisheries Policy Reform includes a new landings obligation (i.e. discards regulations) that is likely to have the greatest impact on fisheries and fleets of any recent regulation This has the potential to result in a step change in fishing behaviour. However, there is a distinct lack of data or empirical knowledge available to inform the effects on fleets There is much research on the economics of discards (and operational impacts), e.g. the knowledge of what is rational behaviour regarding discarding Vs incentives driven by policy not to discard (and biological assessment also) In this paper: o we consider what fisheries economics theory tells us as well as exploring gaps in our knowledge regarding a discard ban o we use an empirical example of the North Sea demersal fisheries to consider implications further IIFET Conference 2014, Brisbane, Australia Dias 2 Department of Food and Resource Economics ”Discards” in peer reviewed papers 80 70 60 50 UN resolution 50/25, 51/36 adopting policies, applying measures, collecting and exchanging data and developing fishing techniques to reduce bycatches and fish discards 40 30 20 Green paper: Reform of the common fisheries policy 10 0 1980 1985 1990 1995 2000 2005 2010 Annual number of ISI peer-reviewed records including the words “discards” and “fisheries” in either title, abstract or keywords. Scopus Database, accessed 04/02/2014. IIFET Conference 2014, Brisbane, Australia Dias 3 Department of Food and Resource Economics Discards and regulation The Common Fisheries Policy (CFP) reform is introducing a ban on discards. From 2015 to 2019 in a phased approach, it will become mandatory for fishermen to land all catch caught. Pelagic fisheries will start with a discard ban in 2015, demersal fisheries in 2016 and across all Total Allowable Catch (TAC) species by 2019. There is little data or empirical knowledge available to inform the likely impacts, but some data exists from surveys and trials. Will this regulation lead to “optimal” use of resources or more of the same? • • Management Plans are being devised to enable the policy There are additional tools in the ‘toolkit’ (e.g. Exemptions, quota uplift, quota transfer, better coordination etc) Economics has the potential to help evaluate changing behaviour, changing profitability of fleets, improving management, and increasing transparency, maybe even increasing compliance(?). IIFET Conference 2014, Brisbane, Australia Dias 4 Department of Food and Resource Economics Some questions... What is the aim of regulation - ideology or sustainability or best economic outcome in using resources? What’s driving it - campaigning, convergence, science,...? Why the sudden interest in socio-economic discards research from Govts and EU– why not 5 years ago with the green paper? What about the ecosystem – is there an assumption that reducing fishing effort is always good? Maybe not for all: • "When the seagulls follow the trawler, it's because they think sardines will be thrown into the sea” (Cantona, 1995) Fishermen might ask: what’s the cost to us vs the overall benefit? How “brave” is it to introduce a policy based on little empirical evidence? What is the net cost and where is the benefit? Is such a policy consistent with MSY (ensuring supply of food) in the long run? Relative stability -> catch composition -> quota allocation? Fishermen trapped in lack of quota (what happens to price of quota? What are the market incentives and innovative solutions...?) IIFET Conference 2014, Brisbane, Australia Dias 5 Department of Food and Resource Economics Economic theory There is much written on the economics of discards. • The knowledge of what is rational behaviour regarding discarding versus incentives driven by policy not to discard. • The fundamental idea of costs (incl penalty) outweighing benefits or as is typically considered whenever “the (opportunity) cost of retaining and landing fish exceeds its market value” However, there are gaps in the literature and few (if any) discard bans have been implemented on such a scale. One view might be to accept that the discards policy is a hard constraint but to acknowledge that in reality the achievement of this will not be done immediately but over time. There’s a trade-off between accepting that some discards could be acceptable (under certain conditions) and the impact on stocks. Where’s the ‘fairness’ in this and how is it enforced? IIFET Conference 2014, Brisbane, Australia Dias 6 Department of Food and Resource Economics Fisherman’s decision as to land or discard In the EU (e.g. North Sea), quotas dominate although effort management through days at sea restrictions are in place (e.g. cod recovery plan). Where effort management is restrictive then quotas are not binding (e.g. North Sea TR2 vessels targeting Nephrops). However, simply reducing effort where stocks are in fair shape will not maintain the viability of fleets in the long-term. (Subsidies are not discussed here!) The fisher asks a pretty simple question, “Am I allowed to land the fish and is the fish marketable?” What solutions are available to minimise discards? IIFET Conference 2014, Brisbane, Australia Dias 7 Department of Food and Resource Economics The decision making process (Pascoe, 1997) IIFET Conference 2014, Brisbane, Australia Dias 8 The decision process Discards result for a number of reasons and enable some sort of planning in the fisher’s decision to discard (e.g. highgrading): • Fish < legal minimum landing size • Fish have no or low market value • Lack of quota • Catch composition rules limiting percentage In • • • • all cases, better selectivity will reduce discards: Spatial aspect – area fished Technical aspect – gear used (incl changing gear, e.g. trawl to traps) Temporal aspect – time of year fished Market (quota) aspect – ensure catch composition matches quota In addition, reducing fishing effort and therefore the amount of fishing gear in use overall will reduce total discards. Will the management plan provide fishers with similar fishing opportunities? Department of Food and Resource Economics Practical implementation In the “new world”, the aim is that landings equal catch whereas in the “old world” landings equals catch minus discards. There is the potential to discard under defined exemptions but basically the premise is that unwanted catch is landed, it may be • • • • landed and sold (if quota allows), landed and surrendered (for fishmeal), discarded at sea (under exemption) or illegally discarded. What are the likely rules? E.g. Scottish conservation credits: • • • using more selective fishing nets and other gear observing temporary closures, or seasonal closures CCTV scheme and observer programmes to monitor vessels on agreed trials and UK (with DK & DE) cod catch-quota program with up to 30% quota uplift and additional days: a) all caught fish are recorded and all cod caught count against quota b) all cod caught shall be retained on board and landed c) once a vessel’s cod quota is reached it must stop all fishing practices that can catch cod. IIFET Conference 2014, Brisbane, Australia Dias 10 Department of Food and Resource Economics Empirical analysis Models and data are important for doing applied economic analyses of a discard ban. The FishRent model is an example of a model which can be used for analysing and evaluating what is useful and what might happen. For example considering changing behaviour: • Selectivity – what incentives can be promoted to improve selectivity (e.g. Scottish case of conservation credits) • Substitution – given increasing regulation and constraints, how can vessels become more efficient? Is there any empirical evidence of this? • Economic viability of fleets • Learning across fleets and fisheries • Investment decisions and disinvestment (management costs) IIFET Conference 2014, Brisbane, Australia Dias 11 General structure of FISHRENT Policy box Economic box Objectives Profit maximization Management measures Investments (entry, exit) (TAC, effort, ITQ, tax, ) Effort allocation Biological box Production box Recruitment, growth Effort Yield Fishing technology Species interaction Discard, illigal landings Theoretical model of Clark (1980) Towards a Predictive Model for the Economic Regulation of Commercial Fisheries. Can. J. of Fish. and Aq. Sci., 1980, 37(7): 1111-1129. Harvest (h) for vessel (i) is the product of a constant catchability coefficent (q), standardised vessel effort (E) and fish biomass (x): βπ = ππΈπ π₯ In a model without discards the model doesn’t differentiate between landings and catch but in reality landings will almost always equal catch minus discards (or unwanted catch) as harvest contributes directly to revenue. Therefore, we assume that discards (d) are greater than zero. In the simplest case for modelling discards explicitly, catchability can be defined differently for landings and discards: ππ = ππ πΈπ π₯ ππ = ππ πΈπ π₯ The profitability of a vessel can be calculated as in Clark’s model: ππ = ππ π₯, πΈπ = πππΈπ π₯ − ππ πΈπ = (ππ ππ πΈπ π₯ + ππ ππ πΈπ π₯) − ππ πΈπ were price, p, is different for landed and discarded quantity. Max profit: ππ π = ππ ππ π₯ + ππ ππ πΈπ = π′π πΈπ Questions that result Q: Is the stock level under open access < or = or > the stock level under a discard ban? If we assume that the cost of handling discards is proportional to the amount of discards then we can define a “discard” cost function πππ (ππ ) = ππ ππ Therefore, marginal revenue (MR) can be defined as, ππ π = ππ ππ π₯ + (ππ − ππ )ππ πΈπ Observations: If ππ < ππ then the cost of discarding outweighs catching unwanted fish thus resulting in reduced effort, also resulting in a higher equilibrium stock level If ππ > ππ then the cost of discarding incentivises catching unwanted fish thus resulting in increased effort, also resulting in a lower equilibrium stock level. Questions cont. Changing technology and discarding. The catch of unwanted fish can be controlled through the level of technology investment and effort applied. Therefore it can be approximated that it is a function of cost of effort, ππ = ππ (ππ πΈπ ) It can be assumed that catchability of discards will follow the same trend as catchability of landings. πππ <0 πππ Taking an example of investing in a wider mesh size then less discarded fish are caught. • If cost per vessel goes up then effort goes down • Moreover, if cost of effort per vessel goes up then catchability of discards goes down Optimal fishery (simple static case) Consider the optimal case π max ππ (π₯, πΈπ ) π π πΉ(π₯) = ππ₯ πΈπ π Results in, π − λ ππ₯ = ππ′ πΈπ = ππ − λπ ππ π₯ + ππ − λπ ππ π₯ where λπ are shadow prices. The shadow prices for landable fish (λπ ) and discards (λπ ) differ. In an optimal regulated fishery this means that the tax on landable fish differs from the tax on discardable fish. If pd < cd + λd then stock with a discard ban will be > stock without a discard ban. Moreover, if stock with discard ban is < stock at MSY then landings with discard ban will be > landings without discard ban Also, if stock with discard ban is > stock at MSY then landings with discard ban will < than landings without discard ban Some simulations: Fishrent runs • Simulations • Baseline 2011 • TAC MAX • Scenario to model discard ban explicitly: • • • • • • TAC MIN 0% discards 30% TAC uplift No quota trade Species must contribute >2% share to fleet catch to impact effort Scenario to model discard ban with 10% exemption: • • • • • TAC MIN 10% discards 30% TAC uplift No quota trade Species must contribute >2% share to fleet catch to impact effort Fishrent results biology Biomass: Baseline Biomass: Discards 0% with 30% TAC uplift 3,000,000 2,500,000 2,500,000 2,000,000 2,000,000 Haddock Norway pout Plaice 1,500,000 Saithe Sandeel 1,000,000 Cod Biomass (tonnes) Biomass (tonnes) Cod Haddock 1,500,000 Norway pout Plaice Saithe 1,000,000 Sandeel Sole Sprat 500,000 Sole 500,000 Sprat Whiting - Whiting - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Year Year Average biomass difference across 25 years 160% 140% 120% 100% 80% 60% 40% 20% 0% Baseline 0% discards with 30% TAC uplift 10% discards with 30% TAC uplift Fishrent fleet activity Vessels: Baseline Average vessels difference across 25 years 350 DEU_DTS_VL1824 300 #Vessels 250 200 150 120% DEU_DTS_VL2440 100% DEU_DTS_VL40XX 80% DNK_DTS_VL1218 60% DNK_DTS_VL1824 40% DNK_DTS_VL2440 20% DNK_PGP_VL1218 0% FRA_DTS_VL1824 FRA_DTS_VL40XX 100 GBR_DTS_VL1218 GBR_DTS_VL1824 50 GBR_DTS_VL2440 - GBR_DTS_VL40XX 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Year 350 DEU_DTS_VL1824 DEU_DTS_VL2440 DEU_DTS_VL40XX 250 DNK_DTS_VL1218 #Vessels DNK_DTS_VL1824 200 0% discards with 30% TAC uplift 10% discards with 30% TAC uplift Average seadays difference across 25 years Vessels: 0% discards with 30% TAC uplift 300 Baseline NLD_DTS_VL1824 200% 180% 160% 140% 120% 100% 80% 60% 40% 20% 0% DNK_DTS_VL2440 DNK_PGP_VL1218 150 FRA_DTS_VL1824 FRA_DTS_VL40XX 100 GBR_DTS_VL1218 GBR_DTS_VL1824 50 GBR_DTS_VL2440 - GBR_DTS_VL40XX 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Year NLD_DTS_VL1824 Baseline 0% discards with 30% TAC uplift 10% discards with 30% TAC uplift DEU_DTS_VL1824 DEU_DTS_VL2440 DEU_DTS_VL40XX DNK_DTS_VL1218 DNK_DTS_VL1824 DNK_DTS_VL2440 DNK_PGP_VL1218 FRA_DTS_VL1824 FRA_DTS_VL40XX GBR_DTS_VL1218 GBR_DTS_VL1824 GBR_DTS_VL2440 GBR_DTS_VL40XX NLD_DTS_VL1824 NLD_DTS_VL2440 Total revenue (mEUR) 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 year 25 year1 year 25 Total profit (mEUR) year1 Scenario: Discards 0% with TAC uplift 30% NLD_DTS_VL2440 NLD_DTS_VL1824 GBR_DTS_VL40XX GBR_DTS_VL2440 GBR_DTS_VL1824 GBR_DTS_VL1218 FRA_DTS_VL40XX FRA_DTS_VL1824 DNK_PGP_VL1218 DNK_DTS_VL2440 DNK_DTS_VL1824 Scenario: Baseline DNK_DTS_VL1218 DEU_DTS_VL40XX DEU_DTS_VL2440 DEU_DTS_VL1824 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 -5,000 DEU_DTS_VL1824 DEU_DTS_VL2440 DEU_DTS_VL40XX DNK_DTS_VL1218 DNK_DTS_VL1824 DNK_DTS_VL2440 DNK_PGP_VL1218 FRA_DTS_VL1824 FRA_DTS_VL40XX GBR_DTS_VL1218 GBR_DTS_VL1824 GBR_DTS_VL2440 GBR_DTS_VL40XX NLD_DTS_VL1824 NLD_DTS_VL2440 140,000 120,000 100,000 80,000 60,000 40,000 20,000 - Total profit (mEUR) DEU_DTS_VL1824 DEU_DTS_VL2440 DEU_DTS_VL40XX DNK_DTS_VL1218 DNK_DTS_VL1824 DNK_DTS_VL2440 DNK_PGP_VL1218 FRA_DTS_VL1824 FRA_DTS_VL40XX GBR_DTS_VL1218 GBR_DTS_VL1824 GBR_DTS_VL2440 GBR_DTS_VL40XX NLD_DTS_VL1824 NLD_DTS_VL2440 Total revenue (mEUR) Fishrent results economics Scenario: Baseline year 1 year 25 Scenario: Discards 0% with TAC uplift 30% 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 year 1 year 25 Fishrent average vessel viability Revenue per vessel: Baseline Revenue per vessel: 0% discards with 30% TAC uplift 6,000 18,000 DEU_DTS_VL1824 DEU_DTS_VL1824 16,000 DEU_DTS_VL2440 5,000 DNK_DTS_VL1218 DNK_DTS_VL1824 DNK_DTS_VL2440 3,000 DNK_PGP_VL1218 FRA_DTS_VL1824 2,000 GBR_DTS_VL1824 DNK_DTS_VL1824 10,000 DNK_DTS_VL2440 8,000 DNK_PGP_VL1218 FRA_DTS_VL1824 NLD_DTS_VL1824 Year Profit per vessel: Baseline NLD_DTS_VL2440 Profit per vessel: 0% discards with 30% TAC uplift 7,000 DEU_DTS_VL1824 500 400 DEU_DTS_VL1824 6,000 DEU_DTS_VL2440 DNK_DTS_VL1218 DEU_DTS_VL2440 DNK_DTS_VL1218 5,000 DNK_DTS_VL1824 DNK_DTS_VL2440 300 DNK_PGP_VL1218 FRA_DTS_VL1824 200 DNK_DTS_VL1824 Profit (EUR) Profit (EUR) GBR_DTS_VL40XX 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 NLD_DTS_VL2440 600 DNK_DTS_VL2440 4,000 DNK_PGP_VL1218 3,000 FRA_DTS_VL1824 GBR_DTS_VL1218 GBR_DTS_VL1824 100 GBR_DTS_VL1218 2,000 GBR_DTS_VL1824 GBR_DTS_VL2440 GBR_DTS_VL40XX 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 -100 GBR_DTS_VL2440 - NLD_DTS_VL1824 Year GBR_DTS_VL1824 2,000 GBR_DTS_VL40XX 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 GBR_DTS_VL1218 4,000 GBR_DTS_VL2440 - DNK_DTS_VL1218 6,000 GBR_DTS_VL1218 1,000 DEU_DTS_VL40XX 12,000 Revenue (EUR) Revenue (EUR) 4,000 DEU_DTS_VL2440 14,000 DEU_DTS_VL40XX NLD_DTS_VL1824 NLD_DTS_VL2440 Year GBR_DTS_VL2440 1,000 GBR_DTS_VL40XX NLD_DTS_VL1824 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Year NLD_DTS_VL2440 Observations • Implementing a relatively strict discard approach of 0% discards with 30% TAC uplift • • • • • • • This takes account of estimated loss in single species discarding This results in the likelihood of significantly less vessels and significantly less effort This is due to choke species dominating whether a fleet can participate in the fishery Catch composition is critical and will undoubtedly change to align better to catch opportunity • This may be through re-allocation of quota at source • Or perhaps through the market (buying and selling quota) Estimated biomass of key species is better under the discard ban as predicted There may be opportunity to trade-off the short term impact on fleets with Average landings (tonnes) per year slightly less improvement to stocks 600,000 • This trade-off would slow both the 500,000 reduction in fleets and the 400,000 improvement in stock levels 300,000 Total landings (and revenue) is greater 200,000 across 25 years, implying supply is 100,000 relatively sure (see chart) Baseline 0% discards with 30% TAC 10% discards with 30% TAC uplift uplift Discussion • • Warming – 2 area example: productive area now Vs productive area in the future – re-allocation of fleet effort Can economic indicators be used directly in management of discards? • • • • • • • • Much has been written on economic indicators but stock assessment still drives policy. With such a fleet focussed policy is economics set to play a more dominant role in management? Will the economic data collected for fleets need to be improved Much is written about adding value to catch and changing markets – fleets will have to adapt Will total catch go down? This is likely given simulations however still not clear in the direction of policy Single species vs multi species – the biology must improve too – is it only discard data that’s missing? There are likely to be penalties of not meeting regulation: currently when landings exceeds quota this is imposed on the vessel -> region -> nation, with reduced quota in the following year Enforcement and compliance have not been addressed • Technologies, methods, etc. Conclusions A discard ban matters: - catches and economic consequences (can go both ways) - environmental impacts (birds, seals, ecosystem services…) The Management Plan is critical (still yet to be defined for North Sea demersal fisheries) If the discard ban is rigorously introduced fleets will be bound by choke species – catch composition will be ‘uncovered’ Empirical analyses using the FishRent Model will give the answers for a number of fisheries (part of a EU Horizon 2020 project). Q. Will the discard ban provide an approach to reducing capacity and managing fisheries that ITQs cannot in Europe – mostly as relative stability must be maintained Acknowledgements This work was undertaken as part of the EU co-funded 7th Framework Project ‘Socio-economic effects of management measures of the future CFP (SocioEc)’ THANK YOU!
