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Financing Fisheries Reform


Why do so many overexploited fisheries fail to tap into proven fishery management reforms that can benefit both fish and fishermen? We believe that one of the main reasons for this lack of action is the perceived financial risk of making a management change. However, such risk aversion can be overcome with innovative financing mechanisms, such as insurance and loans, which can motivate fisheries reform.

To demonstrate how these innovative financing mechanisms could work, SFG has developed mathematical models that simulate their effects in four fisheries that exemplify problems common to many parts of the world.

Gulf of Mexico shrimp fishery: Although recent catch levels of shrimp have been sustainable, a primary concern in this fishery is the prevalence of by-catch, or species that are incidentally caught and killed by the shrimp trawling gear. The fishery has the potential attain a sustainability certification (such as the Marine Stewardship Council label) if it reduces by-catch and increases fuel efficiency – changes that would lead to both economic and environmental benefits. However, these modifications can be very costly. Loans to support the transition could provide enough incentive for fishers to switch to new equipment, leading to higher profits and reduced ecological impacts.

Galapagos Islands lobster fishery: As with many fisheries, the primary gear used to capture lobster in the Galapagos is harmful to the long-term sustainability of the fishery: spear fishing leads to high mortality of juveniles and reproductive females, and doesn’t allow for fishers to sell the product live for higher prices. Alternative gears (including harvesting by hand) exist that could mitigate these problems, but have not been widely adopted due to the financial risk of gear transition. An investment by a business or NGO may be able to alleviate this financial hurdle, for example by providing tanks where live lobster can be held and subsequently sold for a greater profit. This new infrastructure can provide three-way benefits: fishers gain from higher prices, the lobster population is relieved of destructive spear fishing practices, and the investor reaps a profit.

Peru-Chile anchoveta fishery: Transboundary fisheries, like the anchoveta that travel between the territorial waters of Peru and Chile, are often overharvested due to the tendency of both countries to catch as much as they can while the fish are in their territory. In cases where fishing nations have difficulty cooperating over shared stocks, an alternative method for reducing fishing pressure is to establish a no-take marine protected area (MPA) along the border of their territorial seas. To overcome possible short-tem losses due to decreased fishing, a third-party investor could compensate fishers for losses and levy taxes on any gains.

Indonesia blue swimming crab fishery: The Indonesia blue swimming crab fishery suffers from overexploitation, a common symptom of open access management. In the absence of effective management mechanisms, industry-led reform provides an alternative approach to achieve economic and ecological sustainability. Under this approach, fishery stakeholders (like retailers, wholesalers, processors, and fishers) come together to exercise market power, such as a processor-mandated minimum size limit. Fishermen receive higher prices for adhering to these standards, and processors are paid back in the future via higher yields due to rebuilding. An association of processors and exporters has already begun to implement this approach by setting a minimum size limit and a ban on egg-bearing females for the blue swimming crab that they handle.

This work was supported by the David and Lucile Packard Foundation and the Waitt Foundation.