The Issue
In recent years there has been a growing
interest in the widespread use of subsidies in the
fisheries sector.
Many fishery managers see sustainability of
fisheries and aquaculture as undermined when
governments grant subsidies. It is commonly held
that subsidies distort the conditions of trade in
fish and fish products, favouring nations that
provide subsidies over those that do not. And, also
it is said that subsidies speed up the development
of overcapacity and consequently threaten the
continued well being of wild fish stocks. But
little factual information on effects is available;
few in-depth studies have been carried out. Some of
the controversy is no more than an extension of the
differences in the manner in which countries use
subsidies as a tool in their respective
macro-economic policies. But, the controversy over
the importance and usefulness of subsidies in
fisheries is fuelled also by the fact that there is
no universally accepted definition of exactly what
government actions (or inaction) are to be
considered as subsidies.
The term subsidies1 can be broadly
applied to a wide range of government
interventions, or to the absence of correcting
interventions, that reduce costs and/or increase
revenues of producing and marketing of fish and
fish products in the short-, medium- or long-terms.
"Government interventions" include financial
transfers or the provision of goods or services at
a cost below market prices. "The absence of
correcting interventions" includes failure by
government to impose measures that correct for
external costs associated with fishing.
In general, where the incentive for fishers
remains one of catching available fish before
others are able to do so, most subsidies appear to
cause effort and fleet capacity to expand more than
it would otherwise have done, which increases the
pressure to overfish. And, overfishing leads
ultimately to falling catches of fish through stock
depletion, and perhaps even to a collapse of the
stocks. Elimination of subsidies in badly managed
fisheries is therefore highly desirable for reasons
of conservation. However, in conditions where
perfect control of effort prevails, subsidies will
probably result in increased profits rather than in
increased fishing effort.
The causal link between subsidies and
overfishing should not be taken for granted.
Overfishing and subsidies may both be symptoms of
poor management of the fisheries rather than there
necessarily being a causal link between them. A
subsidy may also have a positive impact on the
aquatic ecosystem, reduce overcapacity (e.g. a
well-designed vessel decommissioning programme) and
may enhance the sustainability of the resource,
depending on the purpose for which it is granted,
the circumstances in which is given and whether
unintended impacts have been avoided.
Possible solutions
The decision over how to use of subsidies in
fisheries rests ultimately with national
governments. Apart from disciplines imposed by WTO
agreements there are no international instruments
that address this issue. While some countries argue
in favour of developing an international
understanding on the use of subsidies in fisheries,
it is not yet clear what the nature of the
agreement would be or in which fora it would be
negotiated.
It is essential for governments, when
considering the impact of any particular subsidy on
sustainable resource use, to determine whether the
subsidy actually causes the impact it is believed
to have. This means tracing the effect of the
subsidy on costs and revenues, then tracing the
effect of the resulting profits on changes in
fishing effort, and finally establishing the impact
of the changes in effort on the biomass of the
target stock or stocks.
Subsidies may feature as part of a social
support package for poor fishing communities. While
recognising the legitimacy of social support in
certain circumstances, these subsidies should be
designed in a way that minimises the detrimental
effects on efficiency and on the sustainability of
the fisheries resources on which the communities
depend.
Recent Action
A recent FAO review of published
literature shows that there are almost no
documented studies of the effect that subsidies to
the fisheries sector have either on wild fish
stocks or on trade in fish and fish products. In
the 1990's some authors attempted to estimate the
value of subsidies worldwide. Recent work indicates
a reduction in the use of subsidies worldwide; one
notable example is the sharp reduction in the use
of subsidies in the fisheries sector by Norway
during the 1990s.
In November 2000 the FAO convened an Expert
Consultation on Economic Incentives and Responsible
Fisheries as part of its efforts to advance an
understanding of the impact of subsidies on the
sustainability of fisheries resources and on
trade.
Other international organizations have been
studying the impact of subsidies on the fisheries
sector. The Organisation for Economic Co-operation
and Development's (OECD) Fisheries Committee, the
WTO's Committee on Trade and Environment, the UN
Environmental Programme and the World Bank have all
been considering the issue in the recent past.
Outlook
Further reductions in the use of subsidies are
likely. As subsidies are often a symptom of
ineffective fisheries management, it is likely that
reductions in the use of fisheries subsidies will
coincide with a general improvement in management
of fisheries.
1 The FAO Expert Consultation on Economic
Incentives and Responsible Fisheries (Rome, 28
November - 1 December 2000), defined four sets of
subsidies. The first set is the most restrictive in
content, including only governmental transfers with
short run effects. The second set adds other types
of government interventions to governmental
transfers. The third set is enlarged and the forth
set is the most comprehensive. It is used in this
note.
|
