Economic aspects and drivers
of IUU fishing: building a
framework
David Agnew and Colin Barnes
RRAG,
Imperial
College
OECD 19/4/04
1
Methodology
•
Concentrate on high seas/FOC IUU fishing
•
Identify economic and regulatory drivers that create opportunities and
incentives for IUU fishing
– Markets and trade
– International regulation/management
– National management
– Fishing activities
– Company/vessel operations
•
Identify ways of manipulating these drivers that impact more on IUU vessels
than legitimate vessels
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Basic incentive equation
IUU incentive ~ profit from IUU fishing
=
Benefit from IUU fishing – Cost of IUU fishing
•
•
We must attack both ends of this economic equation (cost and benefit)
We must find ways of doing this that do not impact on legitimate fishing
costs
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Basic costs – longliner for toothfish
•
•
•
•
•
$1.2M to buy
Operating costs $2M / year (incl crew)
Fishing opportunities – 200 days (4 trips) @ 4 t/day processed @ $8000/t for
IUU fish = $6.4M
Profit assuming vessel & 1 trip’s catch loss = $1.6M
Still in profit if only manage two trips
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Market control
•
Currently access to markets is equal for most fish species
•
Limiting access to markets (trade measures) should increase cost of fraud,
decrease benefit of IUU
•
Increase costs of legitimate fishers through obligation to engage in market
measures
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Product value
•
Incentive to engage in IUU where supplies restricted and demand high –
high value species. IUU leads to decreased legitimate supply and higher
prices. Even if there are market controls this may lead to higher prices for
IUU fish.
•
Target MCS resources at high value vulnerable stocks – increase cost to
IUU.
•
No increased cost to legitimate
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World economic outlook
•
Disparity between consumer and producer states fuels IUU (increased
benefits and decreased labour costs for IUU vessels, decreased health &
safety demands)
•
Alleviation of poverty should reduce pool of cheap labour, increasing costs
•
No (or little) impact on legitimate fishers who already conform to standards
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International regulation
•
Regulation currently disadvantages legitimate fishers, creating high costs
for them and low costs for IUU – competitive /economic disadvantage.
Costs of legitimate operations increasing through environmental concerns.
IUU catch may be taken into account setting legitimate TAC, further
reducing legitimate benefit and increasing costs.
•
Regulation of legitimate fishers is likely to increase, but the increased costs
may force them into loss-making activities increasing the incentive to
become IUU (eg cod bans in N. sea, blackfish landings can be
considerable).
•
Industry must be involved in identifying solutions, to avoid pushing
legitimate fishers to IUU. Increasing universal (maritime) costs (eliminating
FOCs, universal VMS/observers) would impact IUU vessels more than
legitimate vessels.
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International cooperation
•
•
Treatment of high seas waters in UNCLOS. 2 problems:
1. Poor implementation of obligations by some CPs (to CCAMLR,
UNCLOS/Straddling Stocks, Compliance agreement etc).
eg. most recent arrests of vessels by Australia and France have been
on CCAMLR CP vessels (Eternal; Lena, Volga; Viarsa 1, Lugalpesca, Maya
V). Draft lists of IUU vessels contained 8 CP and 7 NCP vessels).
difficulty of getting some CCAMLR CPs and Straddling Stocks
signatories to implement CDS.
•
2. Patchwork of RFOs & reliance on flag state responsibility leads to
regulatory/enforcement problems for RFOs. IUU vessels can increase
benefits by moving between N. hemisphere and S. hemisphere RFO areas
to avoid detection
•
Harmonising activities of RFOs – reciprocal agreements for activities
against IUU including global IUU lists. Wide-ranging agreements on nonflag state MCS activities would significantly increase costs (risk of arrest) of
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IUU. No effect on legitimate vessels.
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Vessel flag transfers & FOC
•
•
FOC flags require lower costs than other flags. Currently very easy (Dec
1999: San Rafael 1 (Belize) -> Anyo Maru 22 (Belize) -> Sil (Belize) -> Amur
(San Tome & Principe) June 2000).
Difficulty in acting on vessel under new flag/ownership. Eg. Strela reflagged
(Bolivia ->Russia) while at sea 20 days before arriving in Jakarta went on to
land IUU catch. Proceeds of sale of IUU fish went to previous owners. No
costs of IUU activity levied against IUU company on transfer to flag of
CCAMLR CP. Change of ownership/flag led to vessel not being on IUU list.
•
Eliminate possibility of rapid transfer of flags at sea and use of FOC would
considerably reduce opportunities for IUU and increase costs (through
easier prosecutions)
•
No impact on legitimate vessels
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National maritime policy
•
Creates opportunities for IUU vessels to contract nationals. Pool of IUU
active nationals and repeat offenders (Maya V arrests some repeat
offences).
•
Tightening up domestic laws (cf IPOA) will impact on IUU but should not
impact legitimate vessels.
OECD 19/4/04
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Limited opportunities/Overcapacity
•
Limited legal opportunities, coupled with overcapacity, will fuel IUU,
especially if it creates negative profit (loss making) for legal vessels. Poorly
restricted effort in national fisheries leads to overcapacity, financial losses
and declining stocks. These all affect legitimate fishers. IUU (in national
waters and outside national waters – capacity leakage) is then relatively
profitable. Vessel prices are also depressed because companies/banks
have to sell them.
•
Limited IUU opportunities forces IUU operators to sell vessels. Purchase by
legitimate operators is a financial gain to IUU companies.
•
Purchase of ex-IUU vessels by legitimate companies (and reflagging to
other states) should be prohibited. All ex-IUU vessels should be scrapped.
Measures will increase legitimate vessel costs but have even more effect on
IUU costs. Overcapacity should be avoided, and excess capacity scrapped
or sale allowed under very strict scrutiny.
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Restricted access
•
Restricted access/opportunity creates similar negative profit issues as
previous slide.
•
Resource allocation issues (allowing opportunity to states currently not
allowed that opportunity – in an RFO or other) will decrease legitimate
vessel benefits while reducing the benefits of IUU activities.
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Subsidies
•
Subsidies not initially available to IUU operators. But artificial support of the
cost of fishing (subsidised entry or exit) creates artificial profitability
(negative real profit) and contributes to overcapacity. Also reduces the cost
of IUU vessels (subsidised transfers).
•
Removal of subsidies and destruction of excess fishing capacity (prohibition
of export, leakage of capacity or sale at reduced prices) will significantly
increase IUU vessel costs.
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Control surveillance and
prosecutions
•
Increasing surveillance should increase IUU costs but might also displace it
into lower surveillance areas or into jurisdictions where penalties are not so
high. Financial penalties alone unlikely to be enough of a deterrent (see
previous costed example)
•
Uniform, targeted approach to surveillance and prosecutions, adopted by all
RFOs, would remove unevenness in approach and stop IUU reducing costs
by moving to low penalty environment. International cooperation,
prosecution in international courts.
•
Legitimate vessels unaffected.
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Juxtaposition of high seas and
EEZs
•
Possibility of escape behaviour decreases IUU costs.
•
Hot pursuit limited to hails. Agreements between EEZ states and flag states
to allow inspections on adjacent high seas, and for median line patroling,
would significantly increase IUU costs. International agreement on
inspections?
•
No cost to legitimate vessels
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Companies
•
Many IUU companies hold legitimate fishing licences. Costs are reduced
(don’t pay for licences from IUU vessels) and benefits increased (launder
IUU catch with legitimate catch to get higher price). Their size and
ownership complexity creates difficulties in tracing and prosecuting.
•
Companies caught engaged in IUU fishing should have all legitimate fishing
opportunities removed from them. Eg actions of Uruguay expelling
Navalmar SA (Viarsa 1 & Maya V). The restriction is demonstrating effective
company ownership etc. Company should be eliminated from operations in
any other state.
•
No impact on legitimate vessels.
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Conclusions
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Examination of drivers [markets, global economics international regulation,
national management, fishing opportunities, company and vessel
operations] allows identification of whether drivers affect benefits or costs of
IUU fishing.
•
Action to reverse the driver, removing the incentive to fish IUU, can then be
suggested. Solutions often affect the profitability of legitimate operations, so
legitimate operators must be included in their design and implementation.
•
Objective, consistent and statistically rigorous monitoring of IUU activity
must be undertaken to see which of our actions is having an effect.
•
The high seas are vulnerable. To protect them we are currently attempting a
closure of the last marine commons. Universal right of access without
responsibility (i.e. outwith obligations of UNCLOS/HMS) must be challenged
through international concerted effort and in the international courts.
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