Net Economic Effects of Achieving Maximum Sustainable Yield in Fisheries

Increasing the economic performance of marine capture fisheries is becoming an increasingly important management strategy, specifically using the maximum economic yield (MEY).  Critics of MEY state that reducing the level of fishing necessary to achieve the target MEY will result in a subsequent loss of economic activity elsewhere in the economy.  Using an input-output framework within a bioeconomic model, the net economic effects of achieving MEY were calculated for short- and long-term performances when moving towards MEY.  Overall losses were felt by the community in the short-term while achieving MEY, but achieving MEY was found to be beneficial to the larger society in the long-term. 

Norman-Lopez, A., Pascoe, S. 2011.  Net economic effects of achieving maximum sustain yield in fisheries. Marine Policy 35, 489–495. 

          Relying on economic instruments, key management strategies for fisheries are done by maximizing economic efficiency.  This is done through the maximum economic yield (MEY), as defined as “the sustainable catch or effort level for a commercial fishery that allows net economic returns to be maximized”. The short and long term effects of achieving MEY in four Australian fisheries is estimated using input-output modeling framework.

          Although MEY is a yield or specific level of output, it is also a concept which can be constructed in a multitude of ways.  Different than maximum sustainable yield (MSY), MEY requires both input and output simultaneously to determine economically optimal levels.  MSY can result in yields similar to MEY, but only one such combination of input and output can result in MEY.  MEY can vary depending upon catch, size, and effort but can be defined as the combination of both effort and output and the capitalization of both revenue and cost curves. 

          Most fisheries are characterized by a number of fishing systems for a large variety of catch and MEY suggests that fleet reductions in excess of 50% may be necessary to maximize economic profits.  Achieving MEY will most likely be accompanied by reduction in employment and the total income of the crew declining (dependent on the payment system), while the individualized income of the crew member will increase.  Fishing at MEY reduces the number of vessels on the ocean to maximize economic efficiency for the remaining vessel owners as well as increase wages of the remaining crew members.  In dependent fishing coastal communities, higher incomes will lead to an increased demand for products in the local area, thereby stimulating production, incomes, and employment. 

          There will also be indirect and direct effects on the intermediary and final demand sectors in the economy–goods and services (e.g.,  fuel, equipment) and other sectors higher up the economic chain (e.g., processors, retailers).  The extent of the impact will depend upon the dependency of these sectors on the domestic fishing industry as well as the level of catches of MEY.  The final demand sector, as represented by the purchase of goods and services by consumers, will be affected due to the loss of income from the displaced crew of the closed-down vessels. 

          The four Australian fisheries that were targeted to reduce overfishing while moving the fishery closer to the target of maximum sustainable yield were the eastern tuna and billfish fishery (ETBF), the southern and eastern scalefish and shark fishery (SESSF), the northern prawn fishery (NPF), and a sector named the gillnet, hook, and trap sector (GHTS).  The first three represent two-thirds of the total AU$288 million of all the Commonwealth managed fisheries. 

          The input-output methodology includes the notion that the production of output requires input and a multiplier effect will occur to ensure the buying and selling of multiple goods and services to maintain the fishing system.  Three different types of effects make up the multipliers: the initial (or direct) effect, the production-induced effect, and the consumption-induced effect.  The initial effect refers to the initial amount of dollars spent; the production-induced effect is the purchase of extra goods to supply the extra demand; the consumption-induced effect is the proportion of the extra income that will be re-spent on final goods and services within the local economy.

          As stated previously, the reduction of fishing effort to achieve MEY will heavily depend upon the existing level of fishing effort, capacity, and stocks.  Within the model, fishing fleets of the four fisheries were reduced 45–60%, as a means to reduce overfishing, maintain biological sustainability, and improve economic performance.  Initially, this reduced total income and input usage in the economy but the profitability and incomes of the fisheries will increase in the long run when MEY is achieved. The structural adjustment has lowered costs within NPF, ETBF, CTS, and GHTS by, respectively, 27%, 18%, 57%, and 18%, while catches and revenue decreased by, respectively, 15%, 39%, and 5%, while catches increased in ETBF by 3%.  Prices for the fish remained unchanged due to prices being driven by world markets and exchange rate fluctuations rather than on quantity of domestic landings. 

          The net economic impacts are estimated once evaluating the direct effect (wages and profits to the fishery) and the production number and consumption-induced effects.  As a long term benefit, the reduction in fleet size increased fishery profits in three of the four sectors, the exception being GHTS.  This is an exception due to prices for repair and maintenance, and individualized vessels, rather than the entire section, have an increased profit.  This larger loss of labor and reduced capacity explains the larger loss of consumption, a direct negative effect on the fishing community.  In the short term, there are overall net economic effects on moving towards MEY, except for ETBF.  However, in the long term, the expected rise in catches of MEY is expected to result in a positive national economic effect.

          The two main effects of achieving MEY include fleet reductions (an initial change in profits and wages) and changes in revenue.  This analysis, overall, ignores the economic effects on the community and little research has been done as to the effects on the displaced crew.  Achieving MEY is clearly a challenge in the short run, but poses benefits for the community economically and sustainably by increasing wages for individuals and making environments more resilient in the long term.