An Economic Analysis of FRDC Investment in Population Dynamics and Stock Assessments – NSW Fisheries (Cluster 30)

Background

The sustainability of natural resources was the largest of three programs defined in the FRDCs R&D Plan commencing in 2000. Improving the assessment methodology of stocks and improving the management of those stocks was a key strategy in executing the sustainability program. The cluster of project investments under investigation here addressed resource assessment and sustainability across a small number of species in NSW fisheries.

An estimate of stock size is a fundamental requirement in predicting both a species’ and 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, association with habitat and oceanographic conditions), 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 the relevant NSW fisheries are generally the responsibility of the NSW Department of Primary Industries (now part of the Department of Industry and Investment).

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, unsustainable resource use and industry becoming unprofitable.

It is argued that governments 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

The two higher cost of the four projects in this cluster have resulted in little to no benefits at this stage, at least in an economic sense. This is because the projects were funded at a time when it was anticipated that the targeted industries (longfinned eels and sea urchins) would be growing significantly in a commercial sense. Such growth has not occurred to date, and does not appear likely, at least in the short-term. This demonstrates the inherent risk in funding R&D, where decisions are made (appropriately) to fund research to ensure the sustainability of species that may soon be subject to a large increase in demand, and therefore are at risk of unsustainable harvesting. It is noted that in the future these projects may have some value if the industries do grow as the scientific knowledge will still be highly relevant. In addition, these projects have produced ecological knowledge that has the potential to be of great value in terms of non-commercial values of species.

Conclusions

Investment was made in a total of four projects within the cluster with the FRDC contribution approximating 38% of the total costs involved.

Both private and public benefits have been identified as arising from the investment. On the basis of the five benefits identified, and equal weighting for each benefit, it could be concluded that public benefits to Australia could make up 60% of the total benefits. The benefits quantified have been valued in an economic framework of an industry loss avoided by moving away from a sustainable fisheries status in the case of eels; and for increasing the probability of species returning to a sustainable status in the case of two other species. 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 cluster were positive with the total investment of $5.8 million (present value terms) estimated to return an expected present value of benefits of $7.2 million, yielding an expected net present value estimate of $1.4 million and a benefit-cost ratio of 1.2 to 1 (expressed in 2008/09 $ terms and using a 5% discount rate; benefits estimated over 30 years from final year of investment).

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