An Economic Analysis of FRDC Investment in Impacts of Environmental and Other Factors on Fishing (Cluster 8)

Background

The fishing industry is often impacted on by both marine and terrestrial activities. The projects in this cluster are focused on understanding issues and finding solutions to a range of environmental factors that negatively and positively impact on the industry. This includes the impact of sediment, freshwater flows, acid sulfate soils, floodgates and dams on fish breeding and fish health.

Research in this area is important for improving the understanding of these issues in order to develop appropriate management solutions to reduce the impact of land-based activities and structures on fish populations. This improved knowledge has the potential to improve the understanding and relationships between potentially conflicting interest groups, such as farmers and fishers.

Lessons Learnt for Future Investment

The results demonstrate that the size of the return to investment is significantly influenced by the size of the industry being targeted (e.g. eels in Tasmania only a very small industry). However, it is in situations like this where environmental and biodiversity benefits can be important in ensuring an appropriate return to investment is achieved, especially where a species is threatened, as was the case with the short-finned eel in Tasmania.

Conclusions

Investment was made in a total of eleven projects within the cluster with the FRDC contribution approximating 36% of the total costs involved.

Both private and public benefits have been identified as arising from the investment. On the basis of the eight benefits identified, and equal weighting for each benefit, it could be concluded that public benefits to Australia could make up about one third of the total benefits. Four private industry benefits have been quantified, however as the public benefits have not been quantified the investment criteria estimated are probably an underestimate of the total benefits from the cluster.

Given the framework used and the assumptions made, the investment criteria estimated for the cluster were positive with the total investment of $15 million (present value terms) estimated to return an expected present value of benefits of $56 million, yielding an expected net present value estimate of $41 million and a benefit-cost ratio of 3.6 to 1 (expressed in 2008/09 $ terms and using a 5% discount rate, and with benefits estimated over 30 years from the final year of investment).

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