The basic issue is relatively simple to express, although not necessarily to resolve. Both research personnel and institutional resources are scarce. Like other scarce economic resources, their efficient allocation provides the opportunity to increase social welfare. The major problem is how to ensure that such resources are efficiently allocated. This section focuses on an approach or. mechanism through which research prioritisation may be more effectively achieved. This issue is discussed much more extensively in Cunningham and Holland (1997).
Benyon et al. (1998, Table 8.1, p.127) identify priority setting as the most important element in improving the cost effectiveness and efficiency of research expenditure. In second place, they rank making services more user-oriented. However the latter is considered likely to have negative distributional consequences whereas priority setting is potentially positive, depending on policies adopted in particular circumstances.
2.1 The need for an economic surplus approach
A number of methods exist for prioritisation. (For a review see Fox (1987).) Among the most commonly utilised are congruence, scoring, and benefit-cost analysis. Many of these methods have been developed, or have found application, in the case of agriculture. It is important to recognise, however, that the problems facing capture fisheries, and extensive aquaculture (especially the searanching kind of activity), are different to those facing agriculture. By far the most important difference is that whereas in agriculture the principal focus of research is on increasing output, in fisheries output faces a more-or-less immovable natural constraint.
The root causes of many of the problems facing the fisheries sector are to be found first, in free and open access systems and second, in a concentration on physical production as a measure of success both of policy and of research. As the limits to global fish production have been reached, the point has become increasingly obvious that the benefits from fishery exploitation and from fishery research are to be found in increasing the net value, and not the quantity of production.
In order to be able to increase net value, it is necessary to identify those factors which comprise it. The value of fisheries output comprises three elements: consumer surplus, producer surplus and resource rent. The following three paragraphs discuss the ideas underlying these concepts but since economists have spent centuries refining them it will be appreciated that only the barest of outlines can be presented.
When purchasing any product or service, most consumers would be prepared to pay a higher price than they in fact pay. The difference between the price they are prepared to pay and the price they do pay is called "consumer surplus". The sum of consumer surplus across all consumers of the good is a measure of the value to consumers of the item purchased.
In a similar vein, most producers would be prepared to supply the good at a price below the current market price. The difference between the minimum price that they would accept and the price that they receive is called "producer surplus". The sum of producer surplus across all producers measures the value to producers of the item produced.
Finally, a fish resource has an inherent value in the sense that if it were privately owned people would be prepared to pay some amount to use it. This amount is called the “resource rent”, and is similar to the rent paid by the user to the owner for the use of a house. Because in free and open access fisheries nobody collects the resource rent, it is added to the profits of the users of the resource and is the main factor inciting overexploitation and overcapitalisation.
The combination of consumer surplus, producer surplus and resource rent is called economic surplus. In aiming to increase the value of production, policy-makers must necessarily focus on economic surplus. Sustainable economic surplus measures the contribution that the fishery is capable of making to economic and social welfare. It is analogous to the contribution made by other natural resources, such as oil fields or ore-deposits, with the added advantage that it is based on a renewable resource.
The maximisation of social welfare (economic surplus) is a conventional economic goal in resource allocation. It focuses on the efficiency with which resources are used. However, policy makers may pursue other goals, such as to improve the distribution of wealth across society (equity goals) or ensure the long term sustainability of resource systems for use by future generations (sustainability goals). The existence of multiple goals complicates fisheries management requiring managers to trade-off between conflicting goals. It is important to recognise, however, that the ability to achieve these other goals depends on realising the wealth-creating potential of the fishery. Management systems which have tended to ignore the economic surplus associated with the resource in pursuit of other goals have generally performed poorly.
In heavily overexploited fisheries, it is common to find that all three elements of economic surplus are well below their potential levels so that the contribution that fisheries exploitation makes to economic and social welfare is much less than it could have been. First, in free and open access fisheries (and also in poorly-managed fisheries) resource rent will be pushed to zero. Second, if equilibrium output falls as fishing effort expands beyond the maximum sustainable yield (MSY) then both consumer and producer surplus will also fall - in other words, the perverse situation is reached that the more fishing effort expands, the less both consumers and producers derive from it.
Because of the key role played by economic surplus in fisheries exploitation, it is proposed here that research prioritisation should, at least initially, use an economic-surplus approach. This conclusion is reinforced by the broadly-agreed view that research is an ineffective method of achieving nonefficiency goals compared to other measures that are available. As Alston et al. (1995, p. 81) note, "research is a very blunt instrument for the pursuits of objectives other than economic efficiency". If, therefore, research expenditure is to be targeted at income or wealth distribution goals, other methods of achieving such an aim should be evaluated alongside research.
2.2 Advantages of an economic surplus approach
An economic surplus approach has a number of advantages. First, it may help to correct some common misperceptions of the economic role that fisheries can play.
For instance, the idea is frequently encountered that benefits from fishing are principally related to the activity of fishing. This idea leads to views that in order to ensure that everyone benefits from fish resources, conditions of access must be open. As a result, the fisheries sector frequently plays the role of employer of last resort. However, as is also becoming frequent, the result tends to be an overexploitation of the resource base resulting in fewer long-term jobs - i.e. sustainability must be defined not only with respect to the fish resource but also to the jobs that depend upon it.
Economic surplus requires instead looking at the value of the resource base. Correctly managed, the resource base can furnish a sustainable supply of capital to a community (defined at the level appropriate to the resource under consideration). The community can then invest this capital to the benefit of all citizens and hence all can benefit without necessarily having to be fishers. This approach requires that the sustainable wealth of the resource is first generated and then equitably distributed.
A second advantage of economic surplus is that it provides a common standard against which to compare very different kinds of research so that, for instance, the potential value of cross-cutting research can be estimated, something which can be difficult under other systems. It is forward-looking, focussing on the expected value, rather than the quantity, of output. This may help to correct the concentration on physical production, which has cbaracterised the assessment of fishery performance in many countries. It may also play a role in ensuring that policy-makers and researchers have a similar (if not the same) view of what the researchable problem is about. Tabor and Faber (1998) argue that in agriculture a key problem is that researchers tend to start their analysis of a problem with the natural resource whereas policymakers tend to begin from the social consequences. The result is that solutions developed by scientists may have limited appeal to policy-makers and problems identified by policymakers may be considered to require little research by scientists. It seems unlikely that this problem of perspective can ever be fully resolved but at least economic surplus would give some commonality.
A third, very important, advantage of economic surplus is that it takes into consideration unpriced resources, that is resources for which markets do not exist. The problem of unpriced resources shows the strength of an approach based on economic surplus compared to, say, congruence methods. The fact that a resource is not traded in a market and hence has no price does not mean that it is of no value. One has only to think of the value of fresh air to realise this. For various reasons, markets may be missing or imperfect for important resources - in the case of fishing the most obvious example is usually the fish stock itself, but the same is generally also true of many supporting resources such as mangroves, coral reefs, seagrass beds, mudflats, beaches and so on. A congruence-based approach which concentrates on the value, or worse quantity, of output will miss some important aspects of resource use because it will not be able to take into account unpriced resources. An economic surplus approach on the other hand can include such resources along with those traded in markets. Various techniques exist to estimate the potential economic surplus of unpriced resources and hence to improve the allocation of research funds to different programme areas.
Even in agriculture, where markets are much more generally present than in the case of fisheries, the use of congruence-based methods has arguably led to too much research on increasing the physical output of different commodities and too little on important unpriced resources, such as the capacity of the environment to assimilate agricultural waste. In fisheries, the failure to use an economic-surplus approach is likely to result in even more serious distortions in research expenditure, and thence in policy.
2.3 The benefits of research in economic surplus terms
In order to identify what research should do, it is essential to clarify what it is possible for research to do. Some of the disappointment with the progress of fisheries research seems based on unrealistic expectations as to what such research could be expected to achieve. In particular, there seems to be a tendency to try to use research as a substitute for policy where difficult decisions are required.
In terms of economic surplus, the main contribution of research lies in the more efficient utilisation of scarce resources, in four main ways:
First, research can help to capture potential resource rents. The kind of research that is likely to be relevant in this context is policy-related, in particular the consideration of management instruments and compliance with regulations. Changes in consumer and producer surplus will also have to be considered. Second, the more classic kind of research involves enhancing potential resource rent. Rent enhancement comes either through research-induced cost reductions or revenue increases. However, such research will only be beneficial if management systems are adequate. This kind of research will also affect consumer and producer surplus.
Third, research may help to ensure the sustainability of the economic surplus. Relevant research could include for instance preventing habitat degradation, understanding environmental variability and so on.
Fourth, research could play a role in ensuring a preferred distribution of economic surplus. However, the surplus has to be captured before it can be distributed and mechanisms exist for achieving such goals other than biasing research expenditure.
2.4 Prioritisation as a process
It is important to recognise also that research prioritisation is a process. In this process, it would seem appropriate to borrow from the satisfying principles which are common in the management of large companies. That is, rather than trying to define and achieve some elusive "optimum", it may be preferable approach the optimum by defining and achieving a satisfactory outcome during each round, and gradually refining the definition of "satisfactory".
A number of desirable features of a prioritisation process can be identified. First, it should be transparent with details of the prioritisation mechanism published, so that the various stakeholders, including researchers themselves, can identify with the process. Second, the process should have continuity, with progress reviewed and priorities revised regularly. Third, the process should be cumulative, with each prioritisation exercise, and hence each research funding round, building on previous results.
The prioritisation process needs to be on-going. Prioritisation should not be seen as a one-off event to be undertaken every X years. Rather it must remain sensitive to changes in both research and policy. Major changes in either area may alter research needs and priorities, and the system must be able to respond to this.
2.5 Scope of the prioritisation process
An important decision is where in the research/policy system the prioritisation mechanism should be placed. The answer will depend on the precise institutional arrangements existing in different contexts, but it is clearly important that the mechanism is located at a high enough level in the system. In many cases this means that it should be located at ministry level.
Prioritisation will be required at a number of levels. At the ministry level, one approach would be to organise research priorities on a fishery basis. Each fishery could be assessed according to its economic surplus potential, and the research budget allocated proportionately. This approach may be difficult at first because information will probably be lacking. In some cases, there may not even be agreement on the correct definition of various fisheries in the country. One external benefit of adopting an economic surplus approach to research prioritisation will be the generation of information enabling a more precise definition of fishery management units and an evaluation of the economic importance of each unit. This information can be expected to improve gradually over time and should be of great interest to policymakers. Information is not the only difficulty however. There will also be a need to distinguish between research and policy factors underlying the failure to extract potential economic surplus. A difficult subjective assessment will be needed as to whether the ministry has enough information to develop policies in the case of a particular fishery.
Once budgets have been allocated to fisheries, important research topics can be identified. In keeping with the overall thrust suggested here, the key issue will be to identify problems which are preventing the fishery from making the impact in terms of economic surplus of which it is capable. Finally, at the project level, project proposals should be evaluated using the same economic surplus criterion (see section 2.6 below).
Cross-cutting issues can be identified at both topic and project levels.
A decision will have to be made concerning the proportion of the research budget which is to be prioritised. There are a number. of reasons why it might be wise not to attempt to prioritise the whole budget. First, in the case of some speculative research, it may be very difficult, if not impossible, to derive a realistic estimate of its expected impact on economic surplus. Such research may aim simply to find out if .something can be done, without necessarily worrying about the potential benefits of doing it. If the research is successful, others may or may not see economic or social benefits from applying it. Care must be taken not to over-prioritise the research system so as not to eliminate such curiosity-driven research, which may be extremely important in generating researchable issues in the future. A second reason for maintaining some non-prioritised research is as a control on the prioritisation system. Prioritisation is not a costless exercise and in evaluating such systems, comparison with the results obtained from non-prioritised research will provide an important test. Depending on the results obtained, a greater or smaller proportion of research might be prioritised in the future.
2.6 Role of researchers in the prioritisation process
Another question that must be addressed is the role that researchers play in the prioritisation process. In many cases, the role seems too great since research prioritisation exercises often begin (and end) with an audit of the problems as perceived by the researchers and the research institute. Allowing researchers to set priorities has some advantages (e.g. the researchers tend to be close to the problem and can identify research needs) but it probably has more disadvantages. Unless it is part of a clear framework, it makes it difficult to achieve a coherent overall strategy. It also tends to mean that similar (or the same) research programmes continue over very long periods and significant changes in the direction of research become very difficult, if not impossible, to achieve.
In submitting research proposals, researchers should be asked to indicate the expected contribution of the research to sustainable economic surplus. They should also assess the probability of research success, both in deriving useful results and in seeing them implemented. in policy. Great care needs to be taken however as to how this is done. Obliging researchers to evaluate their own research in economic terms will of course provide an incentive to exaggerate the likely benefits and minimise the likely costs. Project evaluation will have to deal with this issue, but at least the evaluators will know where the researchers expect to make their contribution and the realism and importance can be assessed. There will also be an issue of credibility for the researchers themselves, particularly concerning future funding exercises.
It must be recognised that the power of the status quo will make it difficult to alter, at least quickly, the way in which research priorities are set. Research planning rarely, if ever, starts with a blank sheet. Research institutes exist with their staff. They have programmes underway, with budgets linked to these programmes. Past decisions will dictate which researchers are currently employed and the kind of work that they are doing. For these reasons, care will have to be taken to ensure that prioritisation does not simply become an exercise to justify continued work on existing themes. On the other hand, care must also be taken if large-scale changes in research priorities are to be introduced since there may well be negative consequences for both current and future research (in the latter case via the impact that increased uncertainty might have on future recruitment to the profession). The problem is the more serious, the longer a research institute or programme has been running and will be especially acute where budgets are limited or declining since the introduction of new areas of research will necessarily imply the suspension of others. Some re-training may be possible but there is clearly no guarantee that the existing researcher profile will be adequate for whatever new conditions exist.
It would be naive to think, therefore, that research programmes could be quickly changed in a fundamental way. Continuity must be allowed for. It is for this reason that it will probably take ten years or more for the results of a major change of emphasis to appear. The inertia tends to be such that full-scale research prioritisation may not be required, merely ideas of changes in direction. Before committing itself to carrying out a full prioritisation exercise, an institution (research institute, funding body or even government) needs to be clear about its.ability to change things in accordance with the prioritisation findings. Otherwise it could easily become a very negative exercise simply demonstrating that what is currently being done is incorrectly focussed but that nothing much can,be done about it, demotivating researchers and undermining confidence in the research process.
2.8 The importance of efficient fishery management
The main argument of this section is that, due to the characteristics of fisheries, research prioritisation should be developed around the principle of economic surplus. It must be recognised, however, that such an approach can only increase the potential benefits from research.
If the sustainable economic surplus potential of the world's fisheries, .and the benefits from fisheries research, are to be realised, then efficient fisheries management is essential. The failure to develop such management systems has resulted in a situation where the resource rent dimension of economic surplus has driven more and more of the world's fisheries to overexploitation. Successful fishery research, especially of the cost-cutting variety, will simply make this problem worse in poorly-managed fisheries.
