Project number: 2003-059
Project Status:
Completed
Budget expenditure: $238,924.00
Principal Investigator: Tom Kompas
Organisation: Department of Agriculture, Fisheries and Forestry (DAFF) ABARES
Project start/end date: 29 Jun 2003 - 1 May 2008
Contact:
FRDC
TAGS
Productivity
Fishing Effort
Fisheries Management
Economic

Need

Australian fisheries are based on a variety of private uses of resources that are communally owned. The separation of management and use from ownership means that there is a role for regular reporting of the performance of those fisheries. In this context, the use of appropriate indicators to report on how a fishery has performed is an essential part of ensuring the accountability of management. An important component of the management model that has been implemented for Commonwealth fisheries is the public accountability of AFMA.

The reporting of progress against AFMA’s economic efficiency objective has been poor. Information presented in the AFMA annual report has generally been limited to a discussion of changes in the gross value of production in Commonwealth fisheries — this provides little, if any, indication of changes in economic efficiency. The only other regularly published information relevant to the economic performance of Commonwealth fisheries is contained in the Australian Fisheries Survey Report, published annually by ABARE. For selected Commonwealth fisheries, these surveys provide information about the financial performance of the fishing fleet and estimates of the net economic returns from management. While net return estimates are a useful starting point for examining economic efficiency in a fishery, they do not account for the impact of exogenous factors such as changes in input and output prices, movements in exchange rates and variations in environmental factors.

There is a need for the development of suite of robust indicators of economic efficiency movements that can be effectively applied across Commonwealth fisheries. Once developed these indicators will provide a basis for reporting progress against the economic efficiency objective and, perhaps more importantly, provide fisheries managers with information to guide the development of economically efficient management policies. Management regimes, through controlling the total level of harvests (by whatever means) and contributing to the incentive structure that fishers operate within will determine whether a fishery is economically efficient.

This research is consistent with the Key Research Area 1.1 (b) identified in the AFMA Strategic Research Plan 1999-2004. It is also consistent with the Resources Sustainability: Status of fish stocks, environment and industry program of the Fisheries Resources Research Fund.

Objectives

1. Develop a clear definition of economic efficiency in fisheries management.
2. Identify a suite of indicators that AFMA requires to report against the ‘economic efficiency’ objective.
3. Make a recommendation of, and report on, the most appropriate sub-set of indicators that provide a measure of economic efficiency in Commonwealth fisheries.
4. Comment on the likely responses of the indicators to a range of management decisions.
5. Develop a strategy for identifying and reporting against economic efficiency movements in relation to Commonwealth fisheries.

Final report

ISBN: 978-1-921448-00-3
Author: Tom Kompas
Final Report • 2009-09-07 • 9.41 MB
2003-059-DLD.pdf

Summary

Given the problems with open access resources and the effectiveness of modern fishing technology, there are few fisheries, if any, which will not be both biologically over-exploited and unprofitable unless they are managed effectively. For a fishery to be economically efficient requires setting correct management targets which are enforced effectively and delivered in a least-cost and incentive-compatible manner. An efficient outcome is important because it protects fish stocks and guarantees sustainability, and because it ensures resources will be correctly allocated to the fishery. That is, the cost of fishing at a given harvest level is minimised. Inefficient fisheries suffer low profits and excessive boat capital or fishing capacity, with the outcome of ‘too many boats chasing too few fish’.
 
Part of the solution to over-fishing and unprofitable fisheries is to adopt the right target level of effort, or catch, in the fishery. The correct target maximises profits regardless of changes in prices and the costs of fishing.
 
Another important part of the solution is to use an instrument that gives industry a stake in protecting the future of the fishery to achieve the target. In other words, maximising economic efficiency requires catch and effort levels to be set appropriately and industry to have an effective property right to the harvest which removes the incentive for a wasteful and inefficient ‘race to fish’.
 
This report is part of a Fisheries Research Development Corporation (FRDC) project on the Development of methods and information to support the assessment of economic performance in Commonwealth fisheries. The project included two workshops and a number of presentations at the Australian Fisheries Management Authority (AFMA), the Australian Bureau of Agricultural and Resource Economics (ABARE), resource assessment groups (RAGs) and fisheries management meetings, along with specific implementation of efficiency measures in the northern prawn fishery, south east trawl fishery and the eastern tuna and billfish fishery. The northern prawn fishery has subsequently adopted maximum economic yield (MEY) as its target, and AFMA has now moved to provide economic efficiency measures, including MEY and other productivity indicators, for all of its fisheries where possible.

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