4. PAYING FOR MCS

4.1 Alternative sources of finance for MCS
4.2 Development assistance
4.3 Reducing costs

4.1 Alternative sources of finance for MCS

In developing countries, MCS activities are typically financed from five alternative sources:

a) from the government’s recurrent, or investment budget (treasury);

b) through a fisheries sector fund into which registration fees, licence fees, royalties, fines, or revenue from fishing access agreements may be deposited;

c) by direct contributions from the fishing industry;

d) commercial loans and contracts; or

e) through development assistance.

• economies of scale and the multi-tasked nature of a single maritime surveillance agency can justify the high capital expenditure;
• other dedicated requirements which would also be necessary (e.g., for air/sea rescue, customs, immigration) if a dedicated fisheries maritime surveillance service was established;
• synergies in communications, technology, security, and coordination;
• shortages of skilled and highly specialized personnel at a national level; and
• the relatively unproductive peacetime role of a navy and air force which will exist even in the absence of a fishery protection role.

Sector revenues. Fishermen pay for MCS directly through a range of fees, taxes and other levies (e.g., fishing licence fees). They also pay for MCS through fines for violations. However, fishery protection will not pay for itself through revenues from fines. Experience from the Falkland Islands (approximately 160 large vessels operating in the 200-mile zone) shows that, providing the fishery protection operation is efficient, and the chances of being caught are high, and fines are set at a level which has deterrent value, then in the long-term fines may not amount to more than five percent of costs. In OECD countries, direct revenues, e.g., from licences and fines, rarely exceed the costs of MCS activities. Many developing countries operate ‘fisheries funds’ under the direct control of the fisheries authorities. Revenues from the industry are deposited and may be used to supplement or finance MCS expenditures and offer fisheries authorities some financial independence.

Direct contributions. Examples include the financing of VMS installation and operating charges by the fishing vessel operators. In Mozambique, one of the shrimp fishing companies has provided a trawler to patrol the grounds during the closed season. In Namibia, the industry pays a specific fee for observer services. A wide range of reports (logbooks, radio, sales, VMS) which may be required by the fisheries authorities are also financed by the industry.

Commercial loans and contracts. Mozambique is financing a VMS system using commercial credit arranged by the system supplier. Sierra Leone financed fishery protection provided by the private sector (early 1990s) by contracting for a share in revenues from licences and fines. However, revenue estimates were over-optimistic and failure to pay fines on a timely basis undermined the arrangement[28].

4.2 Development assistance

The South Pacific (FFA area) provides an example of how MCS costs are shared between coastal (developing) states, distant-water fishing nations and development assistance. Australia provides 400 hours of aerial surveillance per year (P3C Orion), New Zealand 270 hours (P3C Orion) and France/New Caledonia 30 hours (Falcon 200 Guardian).

Table 4.1: Costs of regional MCS activities in the South Pacific, FFA area. (US$1 000)

	Pacific Islands countries	Distant-water fishing nations	Development assistance*
VMS installation (capital investment)		5 000
Patrol vessels/aircraft (capital investment)			1 200
VMS operation	350	850
Aerial surveillance			5 000
Sea-going surveillance	3 000		3 000
Observer programme	1 000	250	250
Regional register	20	500
Data collection	600	400	40

Source: Estimates from Van Santen and Muller, 2000. *Mainly from EU, Australia and New Zealand.

Table 4.2: Examples of development assistance for MCS

Donor(s)	Recipient(s)	Nature
FAO/FISHCODE (NORAD)	South Asia, Southeast Asia, Indian Ocean	technical and legal advice, training, international cooperation
EU	SADC countries, COI countries, Yemen, Madagascar	Hardware, information systems, training, international coordination
Australia, New Zealand, EU, France	Pacific Islands Countries	VMS, patrol vessels, aerial surveillance
Germany	Mauritania	hardware, software, technical assistance, patrol vessels
Luxembourg, Canada	Sub-Regional Fisheries Commission countries	aerial surveillance, installations and technical assistance
UK/DFID	SADC, Sierra Leone	inshore patrol vessels (RIBs)
France	Indian Ocean, Senegal, Angola, Pacific Islands	wide spectrum of activities
Norway	Namibia, Mozambique	Training, technical assistance, patrol vessel
Japan	Yemen	patrol vessels
Sweden	Angola	technical assistance, information systems

Note: Examples only, list not exhaustive and excluding linkages with fishing access agreements.

4.3 Reducing costs

As surveillance patrols are the major MCS cost item, savings in patrol costs are a key focus and cost reduction is a major argument for sharing hardware and coordinating field operations between the various stakeholders involved in maritime surveillance (e.g., fisheries, navy, customs, and air/sea rescue). The savings can be achieved both by sharing and increasing the effectiveness of the patrol platforms:

• through use of VMS (in the longer-term, as VMS may actually increase costs in the short-term);
• through increased use of night boardings to maximize boardings per patrol day (weather and safety permitting);
• use of multiple RIBs in areas of fleet concentration, again to maximize boardings per patrol day (weather and safety permitting);
• possible reductions in escort duties i.e., if the vessel operator signs an ‘admission of violation’ it may be possible[29] to avoid escorting to port;
• use of corridors for entry and exit of foreign vessels from the EEZ and transiting of closed areas/EEZs, i.e., if VMS ‘non-fishing’ signatures are insufficiently robust for control purposes;
• reduction in patrols during times of bad weather when boardings are impossible; and
• chartering additional patrol vessels for ‘critical’ periods, e.g., a closed season, rather than investing in an additional patrol vessel.

A second major argument is whether to charter or purchase patrol vessels or surveillance aircraft.

Table 4.3: Charter, or purchase patrol platforms?

In favour of chartering	Against chartering
Avoids capital investment. Avoids senior officials spending time and effort to maintain and manage vessels and aircraft.	‘In-house’ or national capabilities may not be developed. However, this could be avoided by training components in the charter agreement.
Experience indicates that private companies may operate patrol platforms more cost-effectively than public institutions.	Recurrent costs may be relatively high. The market for patrol vessels is relatively limited (i.e., there may be few experienced companies which can charter suitable patrol vessels).
Allows the fisheries administrations to test various types and sizes of patrol vessels.	May not give adequate operational control over the patrol platform. May be difficult to use chartered platforms for non-fisheries tasks (e.g., related to national security).
The surveillance platform may only be required ‘part-time’.	If owned the patrol platform must be maintained and crewed on a full-time basis.

South Africa, Canada and Norway charter civilian aircraft for surveillance. Operating costs of chartered Norwegian patrol vessels are significantly less than those operated by the Coast Guard (even allowing for the different types of vessels as the cost differential is largely attributable to different personnel costs). Where government structures are weak, chartering offers a practical solution to surveillance. To defray costs and provide a community and government service, patrol craft may also be used to carry passengers to isolated outposts.