An Economic Analysis of FRDC Investment in Population Dynamics and Stock Assessments – AFMA (Cluster 27)

Background

The sustainability of natural resources was the most important of the three programs defined in the FRDCs R&D Plan commencing in 2000. Improving methods of stock assessment was a key strategy in executing the sustainability program. The cluster of project investments under investigation here addressed resource assessment and sustainability across a range of Commonwealth fisheries.

An estimate of stock size is a fundamental requirement in predicting a fishery's production potential and subsequently in developing ecologically sustainable management practices. Knowledge that underpins stock assessment and sustainability includes understanding taxonomy, age structure and longevity, reproduction, habitats, feeding preferences, history of the fishery, catch rate, and species interactions. Assessment is becoming more and more ecosystem-based with environmental drivers being of importance (e.g. climate variability, river changes), as are the interconnectedness of species, by-product catches and the interactions between different fisheries management regimes.

FRDC do not fund stock assessment or monitoring per se. However, the improvement of assessment methods, particularly developing novel methods or making them more useful and robust, is an important priority for FRDC. Routine monitoring, assessment and management of Commonwealth fisheries are generally the responsibility of the Australian Fisheries Management Authority (AFMA).

The rationale for this investment is that wild fisheries need to be managed to avoid the tragedy of the commons. Management to ensure a sustainable catch usually takes the form of input and output controls. Output controls focus on the ‘take’ whereas input controls focus on the catch rate and gear type. Without government control, it is likely that the industry and the public would be worse off through an increased frequency of fisheries collapses and reduced industry profitability.

It is argued that governments intervene to manage fisheries in the public good and therefore research to strengthen fisheries management is also a public good. FRDC funding for this cluster of projects therefore has been derived mainly from government funding. In fact, FRDC receives around 65% of its total funding from government. Due to extractive use by industry and a responsibility to ensure resources (fish and habitats) are used sustainably, some money from industry levies has also been invested in this cluster.

Lessons Learnt for Future Investment

Lessons learnt from this analysis include:

• There was little integrated information available on the current processes, accuracies and costs of existing stock assessments to provide a baseline for measuring improvements. A standardised process for assembling such information could be helpful to FRDC in assessing proposals for improving stock assessments in future.
• The approach developed for this historical evaluation could be used by FRDC for ex ante assessments of proposals aiming to improve stock assessments. An additional variable on the probability of success of the proposed project would need to be added if the approach was to be used for that purpose.

 

 

Conclusions

Investment was made in a total of 29 projects within the cluster with the FRDC contribution approximating 51 % of the total costs involved.

Both private and public benefits have been identified as arising from the investment. On the basis of the six benefits identified, and equal weighting for each benefit, it could be concluded that public benefits to Australia could make up half of the total benefits.
If the subjective weightings are taken into account, then public benefits still make up 50% of the total benefits.

The benefits quantified have been valued in an economic framework of avoiding an industry loss from moving away from a sustainable fisheries status. To the extent that ecosystem malfunctioning and biodiversity loss may be damaged from overfishing, this approach does not value such public benefits. Hence the investment criteria estimated are probably significant underestimates of the total benefits from improved stock assessments.

Given the framework used and the assumptions made, the investment criteria estimated for the 29 projects in the cluster were positive with the total investment of $25 million (present value terms) estimating to return expected gross benefits of $116 million, yielding a expected net present value estimate of $91 million and a benefit-cost ratio of 4.7 (expressed in 2008/09 $ terms and using a 5% discount rate; benefits estimated over 30 years from the final year of investment).

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