FACILITATED DISCUSSION: A SUMMARY

OPENING DISCUSSIONS

53. Having heard about some of the issues in the USA regarding capacity and efforts to reduce capacity, the discussion shifted to the purpose of the expert consultation; namely, for the participants to:

identify and outline innovative strategies and mechanisms for convincing stakeholders to reduce overcapacity and subsequently avoid the regeneration of overcapacity.

54. Beginning with a brief, general roundtable discussion about potential barriers to implementing capacity reduction (CR) programs, the following issues (in alphabetical order) were mentioned as potentially creating barriers to the adoption and implementation of capacity reduction programs.

54.1. Awareness and recognition - and the difficult balance between capacity and long term problems of overcapacity as well as of the fact that benefits from capacity reduction programs will not likely be immediately measurable;

54.2. Balances of power and distributional issues - and how these may occur within fleets, between various parts of fleets, as well as between different stakeholder groups;

54.3. Development - and how coastal states have the right to fish and how this may affect having fishing vessels, even when overcapacity may already exist;

54.4. Displacement - and the movement and impacts of fishers when capacity is shifted out of one fishery but not necessarily removed from fishing;

54.5. Employment - and using fisheries as an alternative livelihood of last resort;

54.6. Financing - and who should pay or, at least, contribute to capacity reduction programs and of how good financial conditions may inhibit stakeholders’ interest in undertaking capacity reduction strategies even when overcapacity exists.

54.7. Food security - and using fisheries as food source of last resort;

54.8. Globalization - and how market forces are reaching further and creating new incentives and pressures on previously isolated resources before local societies are prepared to deal with these forces; market forces, technological change and innovation, predicting change and continuous adaptation,

54.9. Governance and institutions - and how informal systems may perform better but have less formal legitimacy than official processes and how different stakeholder groups may make use of existing institutional arrangements to achieve their particular objectives;

54.10. Information and education - and about the real and perceived outcomes, objectives, and goals that different user groups may have; how different cultures may accept or reject capacity reduction programs; and about trust and accountability;

54.11. International cooperation - and the need to share knowledge, outcomes, and benefits about efforts to reduce overcapacity;

54.12. Limitations - and the fact wild capture fisheries are not capable of providing food, employment, and income for all who want to use them;

54.13. Management and management systems - and how existing regulations may influence, cause or change fishing behavior, and how to harness technology so that it increases productivity of the fleet while also supporting capacity reduction;

54.14. Objectives and Perceptions - and how much fish different user groups actually caught versus what they should be allowed to catch as well as the disputes that conflicting objectives may create;

54.15. Politics - and how management decisions may be influenced or changed by politics;

54.16. Range of a fishery and the numbers of participants - and how potentially enormous numbers of participants who may be individually operating at low levels but having significant cumulative impacts; and

54.17. Serendipity and Total Chance - and how the adoption of capacity reduction programs may simply depend on a combination of factors that cannot be controlled or predicted.

55. Without prioritizing these, the discussion shifted to a common theme that linked all of these issues - information and education of all stakeholders who would be involved in some way with the design, adoption, and implementation of capacity reduction programs.

OPENING DISCUSSIONS: A SIMPLE SITUATION

56. To assist the participants in focussing on the most basic issues regarding capacity reduction programs, the discussion was directed to consider a very simple, hypothetical situation of overcapacity in a high capital-to-labor ratio fishery^[8]. The hypothetical fishery involved a single and not highly variable - but overfished - stock. It was being harvested by a single homogeneous fleet. And, it occurred within a single jurisdiction, to which access was limited.

57. One of the first points of discussion was that - because capacity reduction will probably involve changes to people’s livelihoods, lifestyles, and lives - discussions about overcapacity and capacity reduction will create significant uncertainty and concern for those who may be affected. Thus, it is absolutely critical to provide and share unbiased information, guidance, and education about the effects of overcapacity, the effects of various capacity reduction programs, and the longer term impacts of reducing capacity.

58. For example, many local efforts to address overcapacity in a fishery often can be slowed or blocked by the objective of trying to maintain local employment - or by concerns about potential losses of employment. At the national level, broader objectives of resource and overall employment may make capacity reduction programs less difficult to implement, simply because concern about particular local employment issues may not be as strong. However, even at the national level fishery management authorities have been reluctant to deal with overcapacity due to the issue of having to put people out of their current fishing jobs. (It was also noted that in some countries there may be differences in the balance of power amongst different stakeholder groups that may need to be taken into account.)

60. There was strong belief that a co-management approach is likely to produce a more positive and durable outcome. As a result, the group believed that it is useful to present the problem of overcapacity in a particular fishery to the fishers in ways that allow them to see how, if action is taken, it can improve their personal situations as well as the condition of the fishery.

62. It is also important to understand the particular situation, the particular people and fishery who are facing a situation of overcapacity. Formally, this can be described as “needs identification and assessment”. Informally, it means learning as much as possible about the issues and critical human problems facing the fishers. This process of working with fishers and others to make decisions about the actions to be taken also helps all stakeholders to better understand the implications of not taking action.

63. The main issues raised in this discussion are listed in Table 1. Based on these issues, the group identified the essential elements and steps for sharing information and knowledge; namely, that it is important to:

• get consensus on the issue - which will involve learning about, identifying, and sharing information about different stakeholders’ needs and concerns in relation to reducing overcapacity;
• determine and measure the different components of an overcapacity problem;
• establish the goals and objectives of the capacity reduction program - as part of determining the possible options for achieving these outcomes; and
• identify the appropriate pathways for influencing policy makers and for undertaking a process to reduce overcapacity and prevent its reappearance.

64. In this way, fishers and the people in a fishery management authority can work together to implement a specific capacity reduction plan.

65. The participants noted, however, that in just about any fishery, it is not possible to convince everybody about the benefits of reducing overcapacity. In the end, there will be some fishermen who will benefit, and some who will lose. Thus, it is also important to work to reduce the losses to as few participants as possible.

66. At the conclusion of the discussion regarding information and education, the group designed a possible communication pathway for sharing information with stakeholders about overcapacity and different capacity reduction strategies, options, and impacts (Figure 2).

Figure 2. Communication pathway

Table 1. Information and educational issues associated with capacity reduction programs

CONTINUING DISCUSSIONS

69. The discussions next focused on a series of topics that may need consideration when trying to generate interest and support for capacity reduction programs.

70. These topics included:

• social concerns and issues;
• politics and political issues, including the political environment(s) in which the program is being developed, adopted and implemented;
• legal issues;
• financial issues;
• management and managerial issues, ranging from training to inspiration; and
• economics.

71. Again, the discussions focused on the purpose of the expert consultation; namely, how these different elements might influence the design of capacity reduction options, facilitate or prevent the adoption and subsequent implementation of capacity reduction programs, and avoid the regeneration of overcapacity.

72. The following sections reflect the ideas and outcomes that provided the basis for the general recommendations and guidance of the expert consultation.

Social Concerns/Issues

73. The expert consultation agreed that social concerns can create potentially significant barriers to designing, adopting, and implement capacity reduction programs. Thus, it is critical to include and address the following in the design of any particular capacity reduction package. (See also Table 2.)

73.1. Employment displacement and the degree of related opportunity costs - The extent to which new or alternative jobs or few other means of earning income are readily available will influence concerns about short and long term hardship, if not poverty, for fishers and the extended community.

73.2. Social heterogeneity and/or cultural resistance - Both a diverse community or one in which there is resistance to change, there will be difficulties in building consensus. If there is considerable social heterogeneity amongst the participants in the fishery, the development and design of a capacity reduction program will have to be more sensitive to different groups concerns and needs. Similarly, if there is cultural resistance to not being able to fish and/or a desire to maintain fishing as a way of life, then it will be more challenging to try to convince fishers of the need to reduce overcapacity and to have fewer fishers.^[9] As a result, it is important to consider overcapacity and capacity reduction in the full context of the objectives and goals of the management of the particular fishery.

73.3. Knowledge-based perceptions - There may be many incorrect perceptions about what capacity reduction programs can and cannot do and the impacts that they may or may not have. Thus, education is a key element for overcoming uncertainty and creating program support.

73.4. Historical or traditional rights - If there are long-standing traditions of fishing, these may be difficult to overcome, regardless of the current legal or fisheries governance system. Again these are sensitive and important matters to incorporate into the design of a capacity reduction program and to consider when working with the stakeholders to build consensus.

73.5. Fear of Change - Uncertainty about social change and about destabilizing a community can create enormous barriers to being able to address overcapacity. Education, information sharing, and listening and responding to these concerns is critical to build trust, confidence, and the success of a capacity reduction program.

73.6. Upstream and down-stream effects - Capacity reduction programs will probably have impacts on related sectors. The perceived, if not the actual, magnitude of these distributional impacts can create barriers to the adoption and implementation of capacity reduction programs.

73.7. Mistrust and concerns about social justice - There will be so-called “winners” and “losers” as the result of a capacity reduction program, and this will likely create resistance to such programs. This may be especially true if there are concerns about social inequalities, discrimination, and/or changes in balances of power.

Social Concerns: Potential/partial solutions

74. Table 2 lists some of the potential means to overcome potential social barriers or issues within the design of a capacity reduction program.

75. The specific design of any particular capacity reduction program and the particular solutions to social concerns will likely reflect the particular situation being addressed. However, there will likely be similar types of solutions, such as those addressing:

• employment and displacement;
• training in other marketable skills;
• sharing knowledge and building consensus;
• respecting traditions and historical participation; and
• understanding change, uncertainty, and distributional impacts.

78. More specifically, the suggested solutions included:

• the development and use of alternative skills through training and other programs;
• the provision of income and other supports during the transitional period;
• outreach and communication about capacity reduction programs and their impacts, including potential distributional impacts;
• transparency and discussions about the implications of capacity reduction programs and how to manage these impacts;
• working together with affected communities to design of capacity reduction and support programs; and
• working with affected communities to set up new development alternatives and specific economic activities for displaced fishers.

79. One of the significant outcomes of this discussion was the consensus about the energy and commitment needed to make these sorts of programs successful.

Table 2. Social concerns associated with capacity reduction programs

Table 3. Potential means of addressing social concerns in the design of a capacity reduction program

Legal Concerns/Issues

82. The expert consultation examined the sorts of legal issues and concerns that might arise when trying to design, adopt, and implement capacity reduction programs. Described in Table 4, the following six categories of issues were discussed as creating potential barriers.

82.1. The definition(s) of rights - Issues relating to the definition of access or other property rights, historical rights, takings, and constitutional rights may all affect what may or may not be considered as options for capacity reduction programs. These considerations will vary from State to State and from jurisdiction to jurisdiction.

82.2. The ability to actually formulate capacity reduction programs - There may be practical limits on the power or abilities of a fisheries management agency to design or implement a capacity reduction program. There may be existing legislation that limits the types of options that could be suggested and designed. Similarly, other legislation for other purposes may have to be considered, taken into account, or even specifically addressed and, thus, influence the options for capacity reduction program or the details of a particular program’s design. Examples may include endangered species legislation, labor legislation, and financial legislation.

82.3. The ability to enforce capacity reduction programs - The problems of monitoring, control, and surveillance are not new ones. However, in implementing capacity reduction programs, having adequate enforcement is critical, especially when it may take several years to see the benefits of supporting and participating in capacity reduction rules. Efforts to reduce illegal fishing are similarly important.

82.4. Various judicial or other legal dispute resolution issues - Judicial and other dispute resolution systems are essential to achieving due process, but they can also hamper the implementation of capacity reduction programs. There is a need to ensure that the participants in these systems are fully briefed and understand what is to many, the relatively new issue area of fisheries and fisheries management. Without this information, for example, the penalties and other punishments may not reflect the seriousness of the problems they are meant to address. It is also important to design capacity reduction programs in ways that do not allow a few participants to stall their implementation to the detriment of all other participants.

82.5. Existing regulatory mechanisms - Even when there is interest and will to simplifying rules and regulations, driving change in a bureaucracy can be difficult. Complex legal frameworks and the time to write or change existing rules and regulations can slow or even stop the adoption of a capacity reduction program. If there is a poor legal framework, it may need to be strengthened or otherwise clarified before capacity reduction strategies can be considered. Similarly, if there is a lot of bureaucracy, existing regulatory mechanisms and methods may make it difficult to introduce new, different or innovative programs.

82.6. Informal arrangements or other relationships - It is normal that informal arrangements or other relationships between members of different sectors exist. If various constituent groups have objectives that are different from those of a capacity reduction plan, the groups may call upon these informal relationships to achieve their respective objectives, potentially creating conflicts or creating barriers to the adoption or implementation of a capacity reduction program.

Table 4. Legal concerns associated with capacity reduction programs

Legal Concerns: Potential/partial solutions

83. The expert consultation listed various practical options to try to overcome some of the legal issues that they identified. As with other areas of concern, knowledge building, information sharing, consensus building and transparency were priority actions as part of addressing legal issues.

84. Knowledge building, information sharing and constituency building may involve the building of consensus with stakeholders who are part of the legislative processes at both local and national levels. This is especially true if there is a need to amend or to write new legislation.

Table 5. Potential means of addressing legal concerns in the design of a capacity reduction program

Financial Concerns/Issues

87. During this part of the expert consultation, the group focused on financial concerns and did not focus on social or economic costs. As a group, the expert consultation did not discuss the various incentive adjusting management tools that are also available for reducing and preventing the reappearance of overcapacity.

88. Instead, the discussion primarily covered the five financial issue areas below that are only relevant to buy-back programs and not a broader range of financial issues that may arise generally as part of capacity reduction (Table 6).

88.1. Information - Information gathering, especially the cost of research, was seen as a potentially significant barrier to providing full information about capacity reduction programs. However, it was noted that capacity reduction programs could be implemented with a minimum of research.

88.2. Management and program costs - Capacity reduction programs require more than a one-time, direct cost of a buyout. Thus, even with buyout programs, it is important to include the subsequent costs of running the management program that follows a buyout. In addition to such direct costs, it is important to clearly document the transfer and use of funds for capacity reduction, so that all stakeholders can clearly account for monies raised and spent.

88.3. Buy-back hurdles - There are several categories of financial issues regarding the distributional consequences of capacity reduction programs, especially those including buyouts as part of the program. Perhaps the biggest concern is the question of who pays. The financial concerns listed in Table 6 regarding the funding of buybacks as part of capacity reduction programs are very much linked to financial distributional concerns.

88.4. Distributional consequences - While some participants may want the government to fund or offer other financial assistance, the principle of “user pays” is one that civil society is frequently using when talking about natural resources. Thus, if remaining participants benefit from capacity reduction programs, they may also be the ones who help to fund the adjustment process. In other situations, donor organizations, seeking to provide the community at large with the benefits of capacity reduction, may consider paying for the temporary benefits achieved through buyout programs. For the participants who exit a fishery, it is important to assist their transition to new activities and livelihoods.

88.5. Competition for funds - Even in countries where funding is not a barrier in itself, budget priorities, within fisheries administrations and at broader government levels, may not consider the funding of buyout programs as a high priority. In countries where funding issues are extremely serious, buyouts may be not be considered a main concern when compared to other matters. If the fishing industry is going to fund its own buyout program, then the current financial position of the participants will have a significant influence on the ability to self-finance this part of a capacity reduction program.

Table 6. Financial concerns associated with capacity reduction programs

Financial Concerns: Potential/partial solutions

89. Many of the solutions to financial concerns that were offered by the expert consultation were linked to the notion of transparent and accountable comparisons of costs and benefits.

90. The ideas of coordinating capacity reduction research as a cost saving, setting priority areas for further capacity-related research, considering various capacity reduction approaches, and evaluating the costs of doing nothing are all related to the notion of providing the best possible policy advice as the basis on which to make capacity reduction decisions.

92. This is essential when competing for funds and/or trying to secure donor funding to implement the program. However, even the most balanced benefit cost analyses may not be able to overcome historical issues or precedence and the influence of these on the feasibility of different options for capacity reduction tools that are applicable in a country.

93. It is also crucial to know the costs of doing nothing new, particularly because existing management program costs may continue to escalate over time when there is overcapacity. In addition, because reducing capacity can frequently mean a reduction in the participants in a fishery, it may be necessary to secure some form of income compensation for them as part of the reality of getting the capacity reduction program adopted.

Table 7. Potential means of addressing financial concerns in the design of a capacity reduction program

Political Concerns/Issues

94. In addressing the matter of political concerns, the expert consultation focussed on the six issue areas listed in Table 8 and described below.

94.1. Ideas and the decision-making framework - Participatory processes, from local to multi-national, were deemed to create more durable solutions in the long term, but potentially more difficult to set up and implement in the near term. However, with increasingly global markets these days, fisheries may provide an entrée to additional international activities. In working to build amicable working relationships with policy makers and politicians, it may also be essential to work with party agendas and various spheres of influence.

94.2. Defining the decision-making framework and process - The politics of setting up and implementing capacity reduction programs may make it essential to understand who or which administrative entities may have the power to run the program and who or which entities should run the program. Thus, it is important to be aware of the balances of power amongst different politicians, policy makers, administrative agencies and agency staff.

94.3. Representatives’ political objective and mandates - The challenges of overcoming problems such as those associated with capacity reduction programs are difficult ones that may not be political priorities, politically expedient or timely. Elections, party issues, and political will are issues that can work to create political support for capacity reduction programs, but these issues can also result in the postponement of political support until more opportune times.

94.4. Different costs - The financial and social costs of capacity reduction programs, especially in the short term, are likely to create political discomfort unless capacity reduction programs are designed to include ways of addressing these issues.

94.5. Information and understanding - Many potentially significant political concerns associated with capacity reduction programs will reflect the current widespread lack of understanding about the impacts and issues of addressing overcapacity. Constituents’ incomplete knowledge, perceptions and fears about change will also likely create areas of concern for politicians if there is little or no guidance offered about the impacts, changes, and benefits of addressing overcapacity as part of justifying the need for capacity reduction programs.

94.6. Decision-making mechanisms - Political concerns generated by the idea of capacity reduction programs can range from situations that are quite normal - such as public hearings- to situations that are difficult, such as demonstrations and consultations run by the party in power.

Table 8. Political concerns associated with capacity reduction programs

Political Concerns: Potential/partial solutions

95. The discussion of potential or partial solutions to political concerns focused on the need to know how to capture the power of various political objectives and processes without creating significant additional problems for politicians (Table 9).

96. The basis of the decision-making framework is the definition of roles and responsibilities, especially for the design and implementation of a capacity reduction program. This may involve setting up regional or more local fisheries management authorities or a framework that allows the industry to regulate itself, either in part or fully.

97. Similarly, a key part of defining the decision-making process is to identify the beneficiaries of capacity reduction programs - such as civil society, fishers, other users of the marine environment - and to involve these groups in the decision-making processes of capacity reduction. A related possible solution that can be part of the decision-making mechanism is to provide financial and other support resources during the transition period to those directly affected. It is also important for the design of a capacity reduction program to provide possible solutions to address potential unemployment.

98. If industry and other constituencies are supportive of a capacity reduction program, this can help to overcome concerns that politicians may have about achieving their political objectives and mandates. In some cases, it may be more powerful or successful to ensure that industry is on-side and informed than to work on the political side of things. However, in other cases, the political sector and angle may be stronger and be able to over-ride pressure groups.

99. The different costs of overcapacity - to society at large, to fishers, to future generations - as well as the immediate costs to the fishing industry, consumers and other sectors need to be clearly explained as part of the process of recognizing and reducing political fears about capacity reduction programs.

100. Politicians’ understanding and knowledge of the complexities of capacity reduction programs can be greatly enhance if both the costs of doing nothing and the elements and costs of the long term problems of overcapacity are fully and clearly explained. This knowledge sharing process should include an explanation of all the various angles and elements of capacity reduction programs, including clear information about the so-called “winner”, “losers”, and what will happen to them.

Table 9. Potential means of addressing political concerns in the design of a capacity reduction program

Management Concerns/Issues

101. In many ways, the management concerns listed by the expert consultation reflect the enormous changes occurring in the field of fisheries management. Indeed, it is not only information and analytical requirements are expanding far beyond what was previously sufficient for managing fisheries. Institutional, policy, and management issues are also changing rapidly.

102. Table 10 shows just some of the management-related issues that were identified as potential barriers to the introduction and implementation of capacity reduction programs, including the following.

102.1. Information and analytical requirements - Information and analysis that supports fisheries management is increasingly necessary. This is especially important because the incentives that cause participants’ behavior are counter-intuitive and not like those in agriculture or other businesses.

102.2. Institutional impediments - Fisheries management is undergoing enormous changes in the roles that different stakeholders play. The role of industry in the management process is changing as fisheries managers and others try to determine who has management authority and for what decisions. Even the growing number of agencies with different elements of jurisdiction over the marine environment and its use creates potential barriers to the introduction and implementation of capacity reduction programs.

102.3. Legal impediments - As discussed in the previous section, legal impediments can allow or prevent the use of certain capacity reduction management strategies, potentially constraining management options.

102.4. Knowledge levels of managers, policy makers - As in any discipline, change creates challenges and requires continuous improvement. Uninformed managers and policy makers can thus create significant challenges to the introduction of comparatively new approaches to addressing overcapacity. Similarly, administrators may not be as aware of market realities and incentives that fishers may face on a daily bases.

102.5. Compliance - Weaknesses in enforcement as well as the lack of enforcement capabilities can pose significant barriers to capacity reduction programs, especially if the reduction programs rely on incentive blocking measures and fail to motivate participants to enforce themselves. Cost recovery in management is a relatively new concept that is not applied in many fisheries, thereby further requiring fisheries managers to match enforcement forces with existing budget realities.

102.6. Reluctance to involve stakeholder participation - Many management authorities are still trying to find a useful level of public input into the fisheries management process. User participation, roles, and responsibilities are not yet clearly resolved.

102.7. Entrenched management biases - There are both potential human and mechanical biases that may pose barriers to fisheries management. Personal backgrounds, biases, interests and incomplete understanding of management options can limit the use of innovative management approaches to addressing overcapacity. In addition, the lack of managers with social science and people management skills can seriously limit the ability of management authorities to manage fishers, i.e. the people who fish. Similarly, the belief that rules or regulations without taking human concerns into account can limit capacity reduction program options. Even the notion that fisheries management is the management of people, not fish, is a relatively new concept that is not necessarily well accepted by managers around the world and thus poses a potential barrier to dealing with the human issues of overcapacity.

102.8. Distributional effects - Both the actual and the perceived distributional effects of overcapacity and capacity reduction programs can create enormous barriers to the introduction and implementation of capacity reduction programs.

102.9. Multiple management objectives - Multiple, and typically conflicting, management objectives can be found in fisheries legislation and in the objectives that fisheries managers may have. This type of barrier to the introduction and implementation of capacity reduction programs is made even more difficult because of the need, the desire, and the willingness, to take hard decisions about fishers and their activities.

Table 10. Management concerns associated with capacity reduction programs

Management Concerns: Potential/partial solutions

103. Setting aside discussions about the various types of incentive blocking and incentive adjusting management approaches that can be used to try to address overcapacity, the expert consultation listed a variety of potential solutions (Table 11) to help solve some of the management concerns listed in Table 10.

104. To meet information and analytical requirements, it is important to have structured and prioritized research programs that freely and transparently share information and data. In addition, it is increasingly important to use socio-bio-economic models that reflect the real complexities and human elements of capacity reduction programs.

105. In terms of compliance, it is important to reduce the incentives that currently encourage fishers to overcapitalize. In addition, the use of standardized mechanisms for conflict resolution as well as current technologies for enforcement will help to alleviate management concerns.

106. To overcome legal impediments, it may be necessary to obtain legislation or regulations that require fisheries managers to eliminate overcapacity in fisheries. This may only require minor changes or improvements to laws and regulatory frameworks, or it may involve more significant political interventions.

107. Institutional barriers are difficult to overcome, but with the identification of key people in fisheries management institutions around the world, networks to share information and to drive changes will develop. In addition, as the use of tools such as conflict resolution techniques become more familiar, it will become increasingly possible to implement them as part of the process of addressing overcapacity. This will also help overcome reluctance to using consensus building strategies, joint management commissions, and stakeholder involvement as normal management tools.

108. Awareness building and knowledge sharing are key elements to overcoming ongoing education and training needs for fisheries managers and policy makers. The introduction of additional management, social, and economic skills into agencies as well as the diffusion of practical experiences amongst fisheries managers can also help to keep them and policy makers up to date.

109. It is no simple task to address the concerns created by the distributional effects of any fisheries regulations, and addressing the distributional impacts of capacity reduction programs is no different. A policy of open, transparent assessment and explanation of how the different capacity reduction options create and deal with these impacts is critical. In addition, it is important to address transitional management impacts, such as through the provision of interim financial aid or other opportunities.

110. The matter of resolving multiple management objectives is similarly complex. It is important to work on possible ways in which to meet multiple objectives, but it may not be reasonable to expect that these differences can be perfectly resolved. Thus, the use of mechanisms for conflict resolution as well as determining different user groups’ preferences and priorities will allow different groups to make trade-offs.

111. Entrenched management biases may take time to resolve, but greater use of stakeholder participation in setting fisheries management objectives, co-management or collaborative management, and locally-based management will help. In addition, these sorts of strategies will help to become more multi-disciplinary and inclusive.

Table 11. Potential means of addressing management concerns in the design of a capacity reduction program

Management Options

112. Fisheries management systems and tools can be generalized into two categories:

• those called “incentive blocking”, and
• those called “incentive adjusting”.

113. All of the tools in these categories can be used as part of an overall capacity reduction program. However, it is essential to know how they respectively differ, both in the short term and in the long term, because they create different incentives for fishers and change fishers’ behavior. Table 12 lists some of the intended and potential side effects of these approaches.

Table 12. Potential capacity reduction effects of “incentive blocking” tools

Table 13. Potential capacity reduction effects of “ incentive adjusting” tools

Economics

114. Economic arguments, per se, tend to focus on efficiency too much, and do not take into account the other aspects. The design of a capacity reduction program needs to balance different objectives, to make trade-offs, and to be aware of what those adaptations mean with respect to both the entire program package and the rest of the economy.

115. Initially, attention was devoted to the issue of “what might be implied by economic concerns?” After considerable discussion, the group focused on the economic issues or potential impacts that might need to be addressed in designing and implementing a capacity reduction program. Broadly speaking, these include issues such as:

• economic efficiency,
• allocation and cumulative impacts of capacity reduction programs,
• distributional impacts, and
• the use of economically efficient solutions to overcapacity.

Economic Efficiency

116. Generally, efficiency in economics is concerned with the allocation of resources such that the maximum net benefits are achieved in the marketplace. Importantly, this concept of efficiency has been extended to include non-market values as well; e.g., the existence value of a pristine environment or of a stock of marine mammals.

117. Including these non-market values does reduce the level of harvest from what would otherwise be considered to be the optimal level of harvest in a commercial and/or recreational fishery. It also can address values that could be increased by correcting market failures that occur in regulated open access fisheries.

118. Capacity reduction programs can be economically efficient if they create incentives that eliminate overcapacity by causing fishermen to behave as if property rights exist for the in situ resource. This is because stronger property rights programs - where the access rights are clearly defined and enforceable - are preferred to weaker property rights programs because they give fishermen a greater market incentive to conserve capital, labor, and the fish stock.

Allocation and Cumulative Impacts of Capacity Reduction Programs

119. Significant displacement effects will result with the implementation of a capacity reduction program. These allocative impacts will depend upon how the capacity reduction program is implemented. If capacity reduction programs are designed solely to increase efficiency, the least efficient producers are likely to be displaced. Alternatively, if other management objectives such as preserving or protecting artisanal fishermen or maximizing employment are also desired, then production levels of the more efficient producers may have to be reduced.

120. The initial allocation and the selection of the implicit owners of the marine resource will determine who will be the “winners” and “losers”. The identification of “winners” and “losers” goes beyond just those directly involved in the fishery. Individuals who supply goods and services to or receive goods and services from fishermen will also be affected by a change in the size and location of the fishing fleet that results from capacity reduction program.

Distributional Effects

122. Capacity reduction programs will have distributional effects.

123. Individuals will have already been made worse off by managers allowing overcapacity to develop in a fishery. If the fishermen who are removed from the fishery along with their capital investment can be absorbed into another industry in the local economy, then they and the nation should be better off. That is, more goods and services will be provided to final consumers and less environmental harm will be generated by the fishing industry. This is what is described as a Pareto Optimal solution: at least one person is made better off, and no one is made worse off by the change in the management program.

124. If there is no alternative employment for the fisherman that pays at least as well as fishing (i.e., if the opportunity costs of fishermen are zero) and there is no other use for his fishing vessel (i.e., if his capital is immalleable), then the displaced individuals will not be able to contribute to the local economy at the same level.

125. On the other hand, if those who receive the benefit from the capacity reduction program more than offset the costs to those who have to leave the fishery, then a second best solution has been achieved. In such a situation, the nation is better off even though there are those who are worse off individually. In this case, the issue becomes one of redistributing income from those who received the benefits to those who bear the costs. Such methods may include market mechanisms or transfer payments.

126. Achieving pareto optimal solutions is only possible if there is perfect competition, no technological externalities, and no market failure connected with uncertainty. It is unlikely - even with market adjusting management regimes - that truly pareto optimal solutions will result. This means that there will be so-called “winners” and “losers”.

127. Under the second-best scenario, the alternative strategy adopted satisfies at least one of the standard Pareto efficient conditions. The remaining efficiency conditions, while not fulfilled, do not prevent an improvement in the allocation of capital, labor, and the stock of fish for the nation.

128. An additional discussion considered including the concept of “Superfairness”.^[10] In very simple terms, “Superfairness” characterizes a distribution in which each category of participants prefers its own share to the share received by another group. No participant group envies another and, thus, this also relates to an equitable distribution. Another way of describing the superfairness concept is when one uses the “I cut the pieces of cake and you choose first” rule used to divide a cake between two persons.

Using Economic Efficiency Analyses to Compare Capacity Reduction Programs

131. Basically, the economic impacts of the different capacity reduction program options can be evaluated using quantitative and/or qualitative bioeconomic analysis.

132. Models of fisheries can be put together to correspond to the fish stock dynamics, the fishing fleets’ dynamics, the vessels’ operating costs, and the markets’ analysis. If empirical data is not available, expert opinion or theoretical constructs can be used to parameterize the model to determine expected directions of change in the fishery caused by the adoption of capacity reduction programs. When empirical data is available, the magnitude of the change in direction can also be determined.

133. These models are simplifications of real world processes and, thus, will not perfectly predict changes in the behavior of fishermen. However, they will give an indication about the impacts of different capacity reduction programs and provide managers and decision-makers with guidance. In addition, models can be made more complex, with better estimates made if more empirical data is collected and analyzed.

Economically Efficiency and Capacity Reduction Programs

134. Economically efficient solutions tend to be those that maximize social net benefits which include non-market values by stakeholders in or concerned with the fishery. However, it may be necessary to introduce additional, secondary considerations for a particular capacity reduction program even those these could reduce the net benefits of the economically efficient solution.

135. For example, if there are concerns about maintaining a minimum level of employment in a fishery, managers may decide to maintain fish harvesting capacity above the economically optimal level. While this will not be the best result for the conservation of capital and the fish stock, it could meet management objectives that are important to the management organization.

Complications and Trade-offs

136. It may also be necessary to consider the role of fisheries in relation to both the local and the national economy

137. If it is a major component of the national economy, then the effects will likely be felt nation-wide. As a result, changes that might be beneficial to one group of stakeholders might have substantial negative impacts on other stakeholders and on the economy in general. This would require that any analysis of the impacts of capacity reduction programs as well as the capacity reduction programs themselves on the entire economy. In this situation, if the economy can absorb the displaced labor and capital investment relatively quickly, the proper incentive adjusting^[11] capacity management program could generate substantial net benefits to the national economy and generally improve the availability of goods and services available to the final consumer. In contrast, an incentive blocking^[12] capacity management program that would preserve the status quo management in a fishery might eventually lead to a substantial loss in net benefits to the final consumer.

138. The effects of capacity reduction programs may be substantially greater on local communities than on the national economy, especially if the fishing industry is a small component of the national economy. Additionally, if the fishery is a small part of the national economy, the impacts of an incentive blocking capacity reduction program might minimize the short run costs of eliminating overcapacity and not result in substantial impacts on final consumers. Similarly, the improvement in net benefits from an incentive adjusting capacity reduction program might not be felt by the final consumers, particularly if other market inefficiencies in the processing and wholesale sectors exist.

139. The impacts of capacity reduction programs on fish stocks and the environment will depend on the scale of the fisheries and on the level of the overcapacity in the fishery.

140. In categorical form, the list of impacts considered by the group (Table 14) are issues that are part of any fishery management decision and the design of any regulatory strategy, i.e. how the program will affect:

• economic (in)efficiency;
• impacts on overall income of the community;
• (non-)compliance issues;
• the relative effectiveness or ineffectiveness of incentive blocking programs;
• the need for administration;
• the likelihood of having over-capitalization;
• input substitution possibilities;
• effects on market structure and development;
• issues related to data reporting;
• the potential to increase illegal fishing;
• the problems of supporting sustainable fisheries and stocks;
• increased costs of production;
• capital stuffing or stacking;
• vessel safety;
• the lack of alternative investment opportunities;
• economic justification of subsidies;
• the redistribution of income;
• derby-fishing, environmental damage, product quality and product storage costs; and
• self-management.

Table 14. Concerns about some of the side effects of incentive blocking programs

141. And, as for any fishery management situation, the range of these impacts will differ depending on the design of each capacity reduction program. The impacts will also depend on whether the overcapacity is in fleets that are large-, medium-, or small-scale commercial fisheries or whether the participants are subsistence and artisanal fishermen.

142. Finally, macroeconomic changes in a national economy can affect a fishery and cause different effects on overcapacity and capacity reduction programs.^[13] Examples of this include:

• increases in fuel or other input prices used to harvest fish;
• changes in interest rates used to finance capital investment in the fishery; and
• shifts in demand for seafood - whether caused by studies describing the health effects of fish, mercury levels in top predator species, or changes in disposable per capita income.

143. These macroeconomic changes can lead to increases or reductions in both excess and overcapacity. Managers need to be aware of the distinction between the two forms of capacity to ensure that they do not undertake capacity reduction programs for fisheries that will eventually correct themselves or ignore potentially disastrous effects from unchecked overcapacity developing in the fishery.

Concluding Ideas

144. The expert consultation concluded this discussion by noting that implementing a capacity reduction program is more complicated for more complicated fisheries and that the scale of the fishery must be taken into consideration. Thus, any capacity reduction program must be situation- or case-specific.