2. METHODOLOGY: SELECTION OF INDICATORS AND DATA USED

Management authority regulations (on fishing schedules, licenses, taxes, etc.) are normally binding upon specific fleet groups. That is why a correct fleet segmentation is essential in the construction of the indicators; otherwise they would prove useless. The vessel categories should be flexible enough to cover the whole of the fishing fleet operating in the Mediterranean Sea. At the same time, however, they should be precise enough to yield operative (meaningful) answers to the management units.

A further consideration in this study was to maintain compatibility with the concepts being used by the SAC of the GFCM. It was therefore decided to adopt the concept of `Operating Unit' as provisionally defined at the working meeting called by the Chairman of the SAC. For the pilot study area of the Alboran Sea, the further specification of `Local Operating Units' (LOUs) covers those Operating Units linked to specific ports.

Results of previous studies were taken into account in developing the economic indicators used for this pilot study. Recommendations of the advisory group composed of different experts from each national administration set up after the GFCM Working Party on Fishery Statistics and Economics (WPFES) meeting in 1998 were also taken into consideration. The advisory group determined that adequate information existed for only 16 variables that could be used to construct indicators. Consequently, contrary to the rather more ambitious approach originally planned for this study, the group suggested the elaboration of relatively few indicators. It was nevertheless felt that the number of indicators should be wide enough to answer the questions commonly faced by managers and decision-makers. In some countries it is difficult to obtain systematic information for all the underlying variables, and for this reason information requirements have been simplified as much as possible, with sampling providing a substitute procedure where methodologically possible.

Figure 1 below lists the indicators developed for this study, along with their acronyms and the data required for their elaboration.

Figure 1. Indicators

Indicators represent either general information about a country or information on the performance of a kind of vessel in a specific area, termed a Local Operating Unit (LOU).

2.1 National indicators

For the purposes of calculating national indicators, the landings value (LV) and the employment (E) value shown are the sum of LV and E of all the different operational units. Some of the global indicators as well as some of the data permitting their elaboration may be found in statistical sources from FAO or other United Nations bodies. National indicators include the following:

• Apparent Consumption shows the gross consumption of fishing products per inhabitant of each country. It can be expressed either as weight of consumed fish per inhabitant (WAC) or as expense per inhabitant (VAC).
• Fish Commercial Balance (CB), shows whether exports or imports of fishing products are higher in a given country.
• Ratio Fish Employment (RFE), indicates the ratio of employment created directly by the fishing industry in a country.
• Fish Coverage Rate (CR), shows the rate of apparent consumption covered by the national production.
• Extraversion Rate (DR), shows to what extent the fishing sector of a country depends upon foreign trade, both for imports and exports.
• Fish Contribution to the GNP (FCG), shows the importance of fishing production in the Gross National Product.
• Ratio Harvesting Value (RHV), shows the importance of fishing in comparison to aquaculture in terms of income.
• Ratio Harvesting Weight (RHW), shows the importance of fishing in comparison to aquaculture in terms of production weight.

2.2 Local operating unit indicators

The following indicators refer to particular data for each LOU. Subscripts refer to fleet (f) and port (p), allowing decisions-makers access to data for each fleet segment and port. A further subscript representing the time unit (t), for instance years, may also be added. Thus, physical productivity would be expressed as follows:

FP_f,p,t

where f stands for fleet segment, p for port and t for year.

These indicators derive from processing of information shown in the first column of Figure 1 using the methodology appearing in the third column. The indicators for LOU are as follows:

• Vessel Physical Productivity (VFP), shows the average production of each vessel in terms of weight of landings.
• Capacity Physical Productivity (CFP), indicates average production in terms of weight of landings for each capacity unit (GT) of the vessels.
• Power Physical Productivity (PFP), shows the average production in terms of weight of landings for each power unit (HP) of the vessels.
• Per vessel Hour Physical Productivity (HFP), indicates the average production in terms of weight of landings for each full fishing hour. The total fishing time (T) results from multiplying the number of fishing hours by working days and then by the number of working days in one year (TD).
• Capacity Productivity (PGT), shows average production in terms of market value in the first sale for each capacity unit installed (GT) in the vessels.
• Vessel Productivity (PV), shows average production in terms of market value at first sale for each vessel.
• Power Productivity (PP), shows the average production in terms of market value at first sale for each power unit (HP) of the vessels.
• Per Vessel Hour Productivity (PVH), shows the average production in terms of market value at first sale for each fishing hour.
• Man Physical Productivity (MFP), shows the average production in terms of weight of landings for each man employed.
• Man Productivity (MP) shows average production in terms of value at first sale for each man used.
• Average Wage (AW) indicates the average salary obtained by each man employed.
• Landing Prices (LP) represents the average market price of landings.
• Invested Capital (IC) shows the current value of the whole of the vessels. Invested capital is very difficult to measure in the Mediterranean Sea. A recommended method will be explained below.
• Salary Cost (SC) indicates the fisher's income. This indicator tends to underestimate actual figures, since fishers usually keep a small part of landings as salary in kind. In artisanal fisheries, an individual's earnings depend on status as a crew member (salary) or owner (salary plus profits). For the purpose of economic analysis, a distinction should be maintained between the various forms of income.
• Opportunity Cost (OP) shows the yields that the owner could obtain should he invest his money in National Debt instead of investing in his business. This means that the owner is relinquishing that potential income. There is a profit in its economic sense when the yields of the invested capital surpass the opportunity cost.
• Gross Estimated Profit (GEP) indicates the total profits obtained by the whole of the vessel owners, once the operating costs have been deducted. Such costs include: Salary Cost (SC), Opportunity Cost (OP), Costs related to Fishing (CDxTD) and Yearly Fixed Costs (YFC). How to calculate CD and YFC is explained below.
• Net Estimated Profit (NEP) shows the total earnings obtained by the whole of the owners, once the depreciation cost has been deducted from the GEP. This cost is calculated following the criterion that the service life of a vessel is 10 years. In fact, the service life of vessels is normally longer, but in that subsequent period repair costs equal the value of a new vessel.
• Profit Rate (PR) indicates the percent ratio of yearly net profits plus the opportunity cost in relation with the investment. It should be borne in mind that this figure does not include the additional earnings obtained by the owner as an employee in artisanal fisheries.
• Gross Added Value (GAV) expresses the Added Value that the segment in question contributes to the National Economy. This includes: salaries, profits, opportunity cost and depreciations.

The various types of indicators, whether national or LOU, can be sorted into the following categories:

Table 1. Indicator categories

There are difficulties involved with obtaining accurate information for the construction of some of these indicators, particularly with regard to invested capital and some of the production costs.

There are several methods for calculating the Investment Capital (IV) indicator, nearly all of which have drawbacks.

1. Ignore the capital devaluation and consider only its purchase value. Should that be the case, the real value is overestimated.
2. Deduct a certain amount of money from the purchase value according to the vessel's age. Should that be the case, vessel upgrades are underestimated. A long service life of a vessel, probably through several renovations, would make the final figure quite lower as compared to the real one.
3. Take the insured value as a KI indicator. In the Mediterranean Sea, there are considerable differences between the ensured value and the real value for a number of reasons. Since the whole of the capital is not insured, this method is not very useful.
4. Assume that the current value of the Invested Capital is half of the purchase cost of the whole fleet. This is a simple mathematical method that brings us closer to the real value, and works well if the vessels' age distribution is homogeneous.
5. Assess the current price assigned to the vessel and the vessel's tackle by the owner, in case he had to sell it or purchase it in the same condition

In this study, the last-mentioned method was adopted as providing the best indication of the total value of investments.

Costs assessment raises some other problems. According to their nature and importance, costs have been divided into wide categories comprising: salary costs (SC), opportunity costs (OP), daily costs related to fishing (CD), and yearly costs related to the vessel's maintenance. The yearly costs related to the vessel's maintenance are defined as follows:

• (CD) Costs related to the number of fishing days. In other words, these costs are fuel and food (salary costs have not been included in CD). These costs arise from each fishing day.
• (YFC)Yearly fixed costs. These include dockage, insurance and license fees. They also include the maintenance cost to keep the vessel in working condition. It is regarded as a fixed cost for each vessel in every segment.

In all cases, the information must be obtained by means of sampling of LOUs (see next section). A survey carried out in the area of the Alboran Sea yielded some rather heterogeneous data that have been added to these cost categories.

The estimated profits (IC) indicator derived in this study may have been flawed by an underestimation of sales. The IC value is very relative and is bound not to remain constant in time. It has to be carefully considered when comparing two geographical areas or two operational units having different socio-economic structures. Significant differences may be found between the two areas or units if, for example, the stated sales level is different.

Finally, another variable that is difficult to define is employment. There is a high rate of part-time employment, in which a person over the course of a year combines a job in the fishing sector with another job in agriculture or the tourism industry. Sometimes, several people may hold the same position in a year if rotation is high (for instance in purse seine fishing). For the purposes of this study, an employment unit represents a one-year full-time job performed by one person.

² During a preliminary meeting held at FAO headquarters a number of possible definitions for an "Operational Unit" were discussed. The members at this meeting eventually agreed upon a definition, which seemed to be compatible with all disciplines concerned with fisheries management. It was reviewed at a follow-up meeting held in Barcelona (January 2000, 25-27) and the following definition was suggested: "For the sake of managing fishing effort within a Management Unit, an operational unit is the group of fishing vessels practising the same type of fishing operation, targeting the same species or group of species and presenting similar economic structure. The grouping of fishing vessels should not be understand as fixed over time but be function of the management objectives to be reached"

³ Examples include such indicators as `Net Operating Income' from Sean Pascoe (1999, p. 18) or `Estimated Capital Value' from AER (1999) Some also derive from the workshop held in Kuala Lumpur (Malasia) from 15 to 18 December 1997 (FAO, Fisheries Technical Paper, n. 377).

⁴ Management Unit (MU) is understood as a geographical division established by the CFCM in the Mediterranean Sea and defined by a maritime area where fishing activities are being carried out. Operating Unit (OU) is a fleet segment which operates within a management unit and which is composed of vessels that have similar characteristics, employ similar fishing techniques, and catch the same species. Every OU is composed of several Local Operational Units (LOUs) associated with particular ports or local fishing areas.

⁵ In economics, any investment tends to have a profit equal to zero, understanding that this profit is additional income which exceeds the average capital earnings in a given economy. These earnings tend to equal the opportunity cost. A sector with profits will attract investments from other economic activities with no profits.

⁶ The rationale behind this option is the following. Assume that ships have an age limit of 10 years. As a result of wear suffered by the vessel's structure, the value of the vessels decreases by 10% every year. Accordingly, one-year-old vessels keep 90% of their original value, two-year-old vessels 80%, etc. If the vessels of a given fleet have a normal distribution, each generation will represent 10% of the total. At a given moment in time, the average value of the whole fleet is 50% of the value it would have had if it was composed of new vessels exclusively.