1. CONCEPTS, DEFINITIONS AND METHODOLOGY

1.1 Definitions, terminology and methodology
1.2 Determinants of costs

1.1 Definitions, terminology and methodology

1.1.1 MCS terminology

Monitoring, control and surveillance are integral functions of a fisheries management regime. Because of the close linkages between these functions and other fisheries management activities in terms of administration, budgets, capital assets and personnel, the costs of MCS are often difficult to identify. Definitions of MCS provide a basis for identifying costs which can be attributed to MCS activities. Several definitions of MCS are presented below.

Table 1.1: Alternative definitions or descriptions of MCS

Source	Monitoring	Control	Surveillance
FAO Expert Consultation, 1981	the continuous requirement for the measurement of fishing effort characteristics and resource yields	the regulatory conditions under which the exploitation of the resource may be conducted	the degree and types of observations required to maintain compliance with the regulatory controls imposed on fishing activities
CECAF, 1981[1]	the collection, measurement, and analysis of fishing activity on catch, species composition, effort, discards, and area of operation, inter alias, which is necessary for fisheries managers to arrive at management decisions	the specifications of the terms and conditions under which resources can be harvested, and normally contained in national legislation, and provides a basis for which management arrangements are enforced.	the checking and supervision of fishing activity to ensure national legislation and terms and of access and management measures are observed. This activity is critical to ensure that resources are not overexploited, poaching is minimized and management arrangements are implemented.
SADC Protocol	the follow-up of a fishery through collection, compilation, analysis, and reporting of information on fishing and related activities, including fish processing, fish trade and aquaculture	the establishment and enforcement of the legal and administrative measures under which living aquatic resources and aquatic ecosystems can be exploited	the checking and supervision of fishing activity to ensure compliance with control measures

While these definitions are broadly similar, there are some essential differences between the latter (SADC) definitions and those of FAO (1981) reflecting some change in the perception of the scope of MCS activities over a 20-year period. FAO (1981) defines ‘monitoring’[2] as a ‘requirement’ while SADC regards it as a set of ‘activities’. SADC defines control not merely as the stipulation of the regulatory conditions but includes enforcement activities. Similarly SADC considers surveillance as a checking and supervisory activity rather than as ‘observations’. For the purpose of this paper the broader SADC definitions are applied, e.g., expenditures on enforcement and crosschecking and are considered as cost elements in a suite of MCS activities. The focal function of MCS is considered to be ‘control’ or application of fishery regulations. Some clarification of other concepts and terms used in describing MCS activities is of value when examining the relationships between the costs and the perceived benefits of MCS.

Enforcement. To compel observance of the laws. Enforcement includes not only the process of recording violations of the fisheries laws, but also the legal processes and penalties applied. Thus the costs of court actions can be considered as part of the costs of MCS.

Compliance. To act in accordance with the regulations. The term ‘compliance’ is used to describe the extent to which fishermen adhere to the fisheries laws and can be considered as an indicator of effectiveness of the regulatory dimensions of the management regime. Estimates of compliance require an estimate of total violations[3] This can be made by inference from the results of control activities in relation to a particular violation for a given fishery, or by interviews with the fishermen. Both approaches have weaknesses. Extrapolation from recorded violations assumes that: (a) the targets of inspection/control were chosen at random; and (b) that all violations existing at the time of boarding/inspection were detected and recorded. For example, aerial surveillance is unable to detect many types of violations and such records may be difficult to use in calculation of compliance levels. A further problem in calculating compliance in terms of violations detected per inspection is the definition of an ‘inspection’. In some cases a cursory glance from an experienced inspector is sufficient, in other cases sampling, or weighing of the catch may be necessary. In other words, the ability of the control authorities to determine the level of compliance varies with the type of violation.

Detection. Act of discovering (a fisheries violation). It is not possible to detect all fisheries violations. Thus estimates of compliance are closely linked to the level of detection. Some violations, e.g., unauthorized discarding, may be extremely difficult to detect.

Deterrence. To discourage, or hinder. Two forms of deterrence are identified: penalties (e.g., fines, or confiscation of fishing gear); and peer pressure from the fishing community. Deterrence is a function of: (a) the perceived probability of being caught and paying a penalty; (b) the perceived level of the penalty; and (c) peer group pressure, (d) weighed against the perceived benefits accruing from the violation.

1.1.2 Terms used in specifying costs

To facilitate discussion of costs a number of terms require description.

Capital costs. The costs of fixed assets such as fisheries inspection offices, surveillance aircraft, or gauges for measuring fish, or nets. These assets usually have a useful life of at least five years. The costs of manpower development (training) and database development (e.g., a fishing vessel register) can also be considered as capital costs.

Recurrent, or operating costs. Costs associated with the day-to-day operation of the MCS system. These include salaries, costs of maintenance of the capital assets, communications, travel, fuel and energy.

Direct and indirect costs. Direct costs are those which can be clearly and directly attributed to an MCS activity, e.g., the salary of a fisheries inspector fully engaged in MCS duties, or the costs of fuel for the patrol vessel. If, for example, the patrol vessel is owned and operated by the navy, and the fisheries authorities pay only for the fuel, then the additional costs of operating the vessel during fisheries protection duties can be considered as indirect costs of MCS.

Attributing costs. In operational and administrative terms MCS activities are often closely linked to other activities of the fisheries authorities. For example, local fisheries officers may have multiple duties some of which are unrelated to MCS activities. Similarly, information collected through MCS activities may be used for both fish stock assessment and control of fishing activities. Determining the proportion of such costs to attribute to MCS depends essentially on the local knowledge of the fisheries administrators.

Sunk costs. ‘Sunk costs’ are costs which cannot be recovered. An example is where the navy is assigned a fisheries protection role. The navy’s existing investment in patrol vessels is a ‘sunk cost’, part of which may be attributed to the capital cost of MCS.

Opportunity cost. ‘Opportunity costs’ offer a means of addressing hidden costs of MCS. For example, if the MCS office occupies a prime waterfront site, and the office next door is rented from the port authority for US$1 000/month, then the ‘opportunity cost’ of the office space is US$1 000/month.

Marginal cost. A ‘marginal cost’ is the cost of one extra unit. For example, the recurrent cost of one additional patrol vessel may not be the same as a similar existing vessel, as the existing infrastructure, support staff and maintenance capabilities can be shared.

Shadow costs. ‘Shadow costs’ are indicators of likely costs. For example, if a fishing vessel is detained in port for a week, the cost of this detention to the fisherman can be estimated by using the (net) value of the average weekly catch of similar vessels, which may be available from market surveys and landings statistics at the port.

1.1.3 Methodology

The infinite range of MCS solutions reflects the specific challenges posed by each fishery and the particular legislative and administrative framework of each country. MCS costs thus vary widely. This initial report has three main purposes:

• to demonstrate the wide variation in MCS costs, reflecting the diversity of fishery governance regimes;
• to provide a basic classification of cost items to focus the fishery manager’s attention on the costs associated with MCS and the need for cost-effectiveness; and
• to focus attention on the problems posed by measurement of costs and benefits of MCS.

The information presented in this report is drawn from a number of sources, in particular: project proposals, national fisheries budgets, evaluations of MCS activity, and quotations for goods and services. Because of the numerous sources of cost information, much of which is from unpublished sources, citations are not always provided. The cost of certain capital assets, such as buildings which house MCS activities, varies considerably, even within a given country, and is considered a to be a purely local dimension of MCS characterized by a need in terms of suitable buildings rather than an MCS item with a particular cost. The costs of much of the capital equipment used for MCS also varies widely as a function of the level of technology used, so that the costs of state of the art computers, radar, or vessel tracking software may be several times the cost of entry level systems.

For these reasons the cost information presented is not readily comparable across time and countries.

Military, police, and coastguard capital assets are frequently deployed for fisheries protection. These assets include patrol vessels and aircraft, buildings, repair and training facilities, communications and intelligence systems. How should capital expenditures on military assets be reflected in an assessment of MCS costs?

The primary function of military assets such as patrol vessels, maritime surveillance aircraft, or maritime traffic intelligence systems is one of national security. Many of these assets will probably exist irrespective of the fisheries protection function carried out by the military. Consequently the capital costs may be regarded as ‘sunk’ costs and not included in an assessment of capital costs of MCS.

On the other hand a primary task of a coastguard is the enforcement of national legislation on fisheries, shipping, customs, and immigration. A coastguard asset is dedicated to control and enforcement of civil law and can be considered as a capital cost of fisheries protection. The capital cost can be pro-rated to reflect the proportion of the asset’s (or the coastguard’s) time which is used for fisheries protection.

The operating costs of the military and coastguard may also be pro-rated in terms of the time spent undertaking fisheries protection duties to give estimates of MCS recurrent costs. It is worth noting that some OECD countries charter civilian aircraft rather than make use of defence force aircraft when required to pay the military for fishery surveillance, reflecting the lower cost structure of the private sector.

1.2 Determinants of costs

MCS costs are clearly related to the nature of the MCS system. The structure and function of the MCS system is normally determined by four factors: (i) the physical and biological characteristics of the fisheries; (ii) the regulatory framework and management objectives, and more specifically the objects of control; (iii) the assignment of responsibilities for fishery protection among government ministries, or agencies; and (iv) the political/economic profile and relative importance of fisheries within the country.

Table 1.2: Examples of the diversity of key determinants of MCS system design

Characteristics	Examples
Scale of fishing grounds	Size of EEZ and continental shelf. Cape Verde - 734 265 km2; Gambia - 19 500 km2; Seychelles - 1.3 million km2; Congo - 41 km coastline; Indonesia - 17 000 islands, 81 000 km coastline, 6 million km2 EEZ & territorial sea.
Physical geography	Archipelago, indented coastline, isolation and availability logistic support for fishing fleet (Falklands, Mauritius); non-contiguous zones (South Africa, Malaysia, Angola)
Demography/nature of the fishing industry	Artisanal fishery (Djibouti), industrial fishery (Namibia), mixed industrial/artisanal (Thailand). Numbers of fishermen: Guinea-Bissau 2 100, Indonesia 4.5 million. Foreign fishing activities: Falklands, Myanmar.
Fishing ports	Few ports (Mauritania), Numerous ports/landing sites (Philippines)
Regulatory framework and fishery management regime	Input controls (Morocco - limited access); Output controls (Mozambique - shrimp; South Africa - pelagics); Legal status of fishing zones (Caspian Sea, South China Sea, high seas enclaves; international lakes and rivers, waters under dispute); Regional cooperation in MCS: Forum Fisheries Agency (South Pacific); Sub-Regional Fisheries Commission (West Africa)
Involvement of military	Namibia, Mozambique: low/negligible. Mauritania, Senegal, Yemen: significant
Economic importance of fisheries and value of fish products	Mozambique/Senegal » 50% of value of exports; Pacific Island nations dependence on tuna; Falkland Islands/Malvinas; High value products, e.g., abalone, caviar (US$200-1 000/kg)
Economic and political strength	Adequate budgetary resources (Brunei Darussalam); Weak government structures and political base (Somalia, Sierra Leone)
Other ocean uses and enforcement priorities	Offshore oil (Angola, Venezuela); Tourism (Maldives, Seychelles, Caribbean states); piracy (SE Asia); drugs and arms smuggling; immigration control.

The importance on fisheries to the island states of the South Pacific means that fisheries protection is discussed at the level of the heads of state ensuring a high degree of political commitment and budgetary support for MCS. Political instability undermines MCS. In Sierra Leone more than 50 percent of the industrial fishing activities are illegal. In Somalia the ransoming of detained foreign fishing vessels by warlords is more akin to piracy, than MCS. The need to ensure the security of offshore oil installations in northern Angola and the Persian Gulf means a high level of maritime patrols, which also help protect the fisheries.

Weak international jurisdiction and control over fisheries in high seas areas and disputed waters[4] can involve substantial political tensions and costs. Numerous Yemeni artisanal vessels were confiscated by Eritrea prior to settlement of their maritime jurisdiction. Disposal of arrested Taiwanese giant clam fishing vessels and crews incurred substantial costs for Papua New Guinea when owners abandoned the vessels, obliging PNG to fly the crews back to Taiwan (Province of China) at state expense. Control of high seas tuna fishing and fishing for Antarctic tooth fish and orange roughy + involve substantial costs for the international community.

The nature of the regulatory framework is fundamental in determining the structure of the MCS system and consequently the costs of MCS. The regulation sets the nature of the control task. While not developing countries, fundamental differences in approach between Norway and the EU (European Union) with regard to the same fisheries illustrate this point.

Box 1. Fundamental differences in Norwegian and EU approaches to fishery control

Both Norwegian and EU objectives of fishery conservation are consistent with international best practice, but there is a fundamental difference in philosophy and in strategic and practical approach. Norway recognizes that control measures which permit excessive fish mortalities are biologically, economically and morally inappropriate. Thus the focus of control is the catch, rather than quantities, or sizes of fish retained on board, or landed, i.e., Norwegian controls are directed essentially at the fishing activities rather than the outputs of fishing. It is prohibited to catch ‘illegal fish’ (e.g., juveniles) and there is a ‘no discards* rule’, which is fully supported by all sections of the industry including the fishermen. It is the act of catching (e.g., juvenile fish) which is illegal, effectively obliging fishermen to change fishing grounds if catches contain a high proportion of juveniles. Discards are seen as an unsustainable, morally unjustified, a signature of irrational resource stewardship, and all possible attempts are made to avoid discards, high grading, and similar practices. Fisheries which have significant discards are seen as ultimately uneconomic in terms of resource utilization. In Norway, there is a direct and potentially measurable relationship between controls and fishing mortality which is not the case in many fisheries. Under EU regulations it is prohibited to retain on board ‘illegal fish’ (e.g., juveniles). Thus in the EU the link between controls and fishing mortalities is indirect via landings, and the controls do not prohibit the catching (mortality) of juvenile fish. The indirect nature of this controls-to-resources link in the EU presents numerous methodological problems in assessing both the impact of controls and the state of the fish stocks. The EU argues, with some justification, that it is impossible, or too costly to prevent catching of juveniles The Norwegian regulations require that the authorities maintain a high level of relatively costly sea inspection to prevent fishing/mortality of juveniles, while the EU can rely on less costly shore inspections to prevent landings of juveniles. Thus the MCS costs are directly related to the nature of the regulations and basic control philosophy involved. * A similar rule is applied in Namibia.

The costs of control are closely linked to the objects of control, often directly related to the main MCS problem areas.

Table 1.3: Main MCS problem areas in SADC countries in 1996

State	Main MCS problem areas in SADC countries, 1996
Angola	Encroaching on artisanal areas, illegal foreign fishing, mis-reporting catches.
Mozambique	Shrimp closed season, gamba vessels entering shrimp grounds, mis-reporting catches.
Namibia	Hake area control, by-catch quota control, mis-reporting catches.
South Africa	Law and order, by-catch quota control, illegal foreign fishing, mis-reporting catches.
(U.R.)Tanzania	Dynamite fishing, environmental degradation, lack of EEZ regime, mis-reporting catches.

Protection of artisanal fishing grounds from encroachment by industrial vessels is particularly difficult to prevent without either VMS, or a substantial and costly presence by patrol vessels. Several objects of control remain outside the focus of conventional MCS, in particular the scope of conventional MCS often does not include the fish buyers and processors. However regulation of the entire fish food chain is becoming of increasing importance both to international trade and as a cost effective means of control. Regulatory agencies are requiring increasing precision in traceability of fish products, to ensure food safety[5], fulfil HACCP requirements, meet ‘rules of origin’ criteria, or make use of ecolabels and quality marks. In many fisheries there is an increasing concentration of fish products to fewer and fewer fish buyers, or processors, making them ideal control points for the flow of fish.

All the SADC countries listed in the above table have problems with mis-reporting of catches. This is largely as a result of use of ‘output controls’, e.g., catch, or landings quotas, which tend to be inherently more costly than input controls.

Table 1.4: A classification of generic fishery management measures/objects of control

Input measures/controls (relatively low cost)	Output measures/controls (relatively high cost)
vessel registration controls/buy back schemes	catch quotas (by vessel/company, or ITQ)
fishing licence controls (limited access)	landings taxes (on landings/exports)
technology controls (gear)	fish size limitations
area controls (protected zones)	purchase/sales records of processors
time controls (seasonal closures, days at sea)
Outside conventional MCS
traditional rights (TURFs)	income and company taxes
investment/credit controls/incentives/scrapping schemes	endangered species
financial controls (fuel/vessel taxes/subsidies)

Some OECD countries target processors focusing on the financial audit trail[6] based on the idea that if the major dealers in undeclared fish are eliminated, then violating fishermen will have no market for their fish. A substantial proportion of the costs of MCS in the USA is attributable to efforts to conserve[7] marine mammals and endangered species rather than directed at commercial fisheries. The growing economic importance of recreational fisheries and marine tourism (e.g., South Africa (the Republic of South Africa), Fiji, Maldives, Mauritius, Caribbean islands) also suggest an increasing MCS focus on non-commercial fisheries.