The Push to Reform Fisheries Subsidies
It’s no secret that the health of our oceans is in a deleterious state. A variety of factors are at the root of our oceans’ decline: pollution, climate change, and overfishing, and the cumulative effects of each of them amplify the damage done.
Concern about overfishing has entered public consciousness more broadly over the past few years, and remedies emerged as a topic of debate among global entities in recent months. Countries are trying to create solutions that restore stocks, yet consider countries’ economies, local livelihoods, and food security. 260 million people depend directly or indirectly on marine fisheries, and their livelihoods and health hinge on sustainable and equitable fisheries management (Let’s talk trade by WTO, S4 Ep2). It’s essential for effective reforms to address a core driver of overfishing – fisheries subsidies, financial payments that make the industrial fishing fleets of today possible.
What Are Fisheries Subsidies?
Fisheries subsidies are, as defined by experts from the University of British Columbia, “financial payments from public entities to the fishing sector, which help the sector make more profit than it would otherwise” (Sumaila et al., 2016). Originating in the 1930s and 40s, they were designed to encourage investment in the fisheries sector, develop the industry, support regional fishing communities, build infrastructure (ports, etc.) and help fishermen achieve early retirement. Technological advancements in boat building, gear design, and fish storage, catalyzed by war, enabled fleets to remain on the water for longer and catch increasing numbers of fish per trip, dramatically raising countries’ fishery capacities (Cox & Sumaila, 2010).
Various types of subsidies are issued within the fishing sector. The first kind, beneficial subsidies, promote investment in natural capital assets with the goal of reaching a social optimum. Resources are used so as to have a maximum benefit to the whole of society. These subsidies do this by enhancing fish stock growth, monitoring catch rates, and more (Sumaila et al., 2016). As their name indicates, they tend to have a neutral or positive impact on fish stocks.
The next type of subsidy, ambiguous subsidies, have a much more uncertain impact; they may cause disinvestment or investment in a fishery resource, and may enhance or destroy resources – their outcomes are unclear and case-by-case. These are fisher assistance programs, vessel buyback programs, and fishery community development programs for rural areas (Sumaila et al., 2016).
The third major type of fishery subsidy is the culprit for significant depletion in fish stocks. These are capacity-enhancement subsidies, and they take the form of funding for boat construction, modernization, renewal, and fuel subsidies. They often raise fisheries sector profits by increasing revenue or reducing costs, creating incentives for fishery participation and effort (Sumaila et al., 2016). This induces a cycle of over-capitalization that has depleted fisheries resources, causing exploitation of natural capital assets to a point where resource exploitation exceeds the Maximum Sustainable Yield (MSY). This means that fish are being harvested past the point where their populations can regenerate and maintain near-constant or increasing levels in the long term. When harvests exceed the MSY, fish populations enter a state of decline (Maunder, 2008).
Global fisheries subsidies amount to over $35 billion annually, a number that could be higher due to a lack of transparency in reporting. $22 billion in subsidies of the $35 billion supporting fisheries globally are classified as harmful, immediately revealing the magnitude of these negative effects (Sumaila et al., 2019). Such a huge amount of money being used to support destructive practices has contributed to over 50% of assessed fish stocks being overfished (Let’s talk trade by WTO, S4 Ep2). Though overfishing is arguably the most severe and detrimental result of harmful fisheries subsidies, several additional impacts follow.
Impact of Fisheries Subsidies
Subsidies have various economic and resource impacts that depend on a variety of factors, such as the type and level of enforcement of the fisheries management regime in place in the fishery, the state of the fish stock, and the type of subsidy (Hannesson, 2001; OECD, 2006; Porter, 2002). Unfortunately, harmful subsidies account for almost 2/3 of global fisheries subsidies, creating a cascade of negative ecological consequences. Though the main issue caused by fisheries subsidies is overfishing due to overcapacity and artificially low costs, habitat damage, climate change, and equity issues have emerged as negative byproducts of this system.
Habitat damage is tightly linked to the fishing practice used (which is tied to gear advancements and capacity-building encouraged by subsidies), and bottom trawling is one of the most destructive practices there is. High seas bottom trawlers are little regulated, compete with one another for the highest catch numbers, stay at sea longer, and cause massive amounts of ecological damage. These bottom trawler fleets drag huge nets across the seafloor, catching everything in their path and destroying delicate deep-sea species and habitats. Deep-sea species are particularly vulnerable to exploitation because of their low regeneration rates, and it’s hard to argue that this loss of biological diversity actually has a worthy economic return (Sumaila et al., 2010). Without fisheries subsidies, most of the world’s bottom trawl fleets would be losing money and no longer be out catching fish.
As it is currently, bottom trawlers in the high seas provide a miniscule percentage of global fish catch – so they are hardly key for food security. Harmful subsidies are keeping this destructive practice afloat, mainly in the form of fuel subsidies that make staying out at sea cheaper and have a negative externality of increased carbon emissions (Sumaila et al., 2010).
In addition to ecological issues like habitat damage and carbon emissions, subsidies cause equity disparities between countries. Distant-water fleets are responsible for most of the large-scale fishing campaigns in the Exclusive Economic Zones of developing coastal states, and these fleets have no incentive to conserve these local ecosystems because they are not their own. They use harmful, extractive practices to catch as much as possible without thought of lasting environmental impact. These developing countries often lack the capacity to enforce their boundaries to prevent encroachment, so damaging activities continue to their detriment (Bailey & Sumaila, 2015; Smith, 2019; McCauley et al., 2018).
Additional equity issues exist between large, industrial fleets and small-scale fisheries. 90% of capacity-enhancing subsidies are funneled to large-scale fisheries, giving them a huge competitive advantage over the small-scale fisheries that more directly support local livelihoods and often use less destructive practices (Schuhbauer et al., 2017). On average, a person engaging in large-scale fishing receives four times the amount of money than small-scale fishers (Schuhbauer et al., 2017). According to the FAO, between 85% and 98% of 3.2 million marine fishing vessels are small-scale. The impact of fewer fisheries subsidies for small-scale fisheries and the communities they support is understudied, but this disparity undoubtedly has major developmental, economic, and social consequences. One social consequence of this is the gender disparity created, because women hold more roles in underfunded small-scale fisheries than in the heavily subsidized male-dominated global fishing operations (Harper et al., 2020).
Clearly the way the current fishery subsidy system operates is unsustainable and has brought on negative consequences for the oceans and society. The lost potential value from declining stocks is estimated to be $83 million annually – meaning that the current system isn’t even maximizing profit potentials (Cisneros-Montemayor et al., 2020). There is a strong need for fishery subsidy reform, and many benefits will arise from taking action.
The Push to Reform Fisheries Subsidies
UN Sustainable Development Goal 14.6 outlines the need to reform fisheries subsidies, and it calls on countries to “prohibit certain forms of fisheries subsidies which contribute to overcapacity and overfishing, eliminate subsidies that contribute to illegal, unreported and unregulated fishing and refrain from introducing new such subsidies, recognizing that appropriate and effective special and differential treatment for developing and least developed countries should be an integral part of the World Trade Organization fisheries subsidies negotiation.” Creating sustainable and equitable fisheries will have positive spillover effects and create progress towards meeting UN SDGs 1, 2, and 8: to reduce poverty, provide nutritious food, and secure livelihoods, respectively (Cisneros-Montemayor et al., 2020).
Reforming fisheries subsidies will have countless ecological benefits. Studies have shown that if we reduce fishing pressure, the ocean will have enhanced biodiversity and carbon storage. Not only that, but the delicate interlinkages of marine food webs can also continue to exist, supporting immensely productive systems that provide sustenance for millions, people and animals alike (Martin, Ballance, & Groves 2016).
To restore these marine systems, fishing practices themselves need to become less impactful. Bycatch (the accidental catch of various other animals when targeting a specific fish) is a huge problem and destructive fishing practices destroy fragile habitats, especially in the deep sea. Gear improvements that focus on minimizing ecological impacts, monitoring fishing activities more effectively, enforcing fishing regulations, and implementing more sustainable practices will all curb fisheries’ negative effects.
This is an opportunity for innovation of all kinds – political, technological, financial, and more. Setting negative ecological and social benefits aside, many fishing practices have been shown to lack economic viability without subsidies (Arnason, Kelleher, & Willmann, 2009). Shifting subsidies can change the market to be more flexible, sustainable, and self-reliant.
Norway is one example of a successful case of fishery subsidy reform. The country experienced a resource crisis in the 1980s – fisheries were barely profitable, fleets had excess capacity, were granted high subsidies, and stocks were collapsing. The government made four major shifts: they reduced subsidies to the fishery sector, made fisheries closed access, implemented market-based management tools and enforced a licensing regime. This made the fishing sector less impactful and pushed the sector to diversify and not rely on homogeneous, fragile sources of income (Cox & Sumaila, 2010).
A system change is clearly needed and has been shown to work. We have the chance to address a whole swath of social and environmental issues that stem from negative subsidies by using creativity, collaboration, and both pre-existing and newly generated knowledge. Instead of financially supporting the destruction of our oceans, governments can support meaningful changes that ensure abundance in our fisheries for future generations.
Efforts to Reform Problematic Subsidies
The push to reform fisheries subsidies to reduce overfishing began about 20 years after these subsidies were first widely implemented. Countries first became aware of the issue in the mid-1960s when an Organization for Economic Cooperation and Development (OECD) report implored member countries to restrain their subsidy provisions, be more transparent about where subsidies were going, and investigate their connections to overfishing (Cox & Sumaila, 2010). World Wildlife Fund and other international environmental NGOs energized the movement to make a change, and at the World Trade Organization’s (WTO) 2001 Ministerial Conference, the issue was at the forefront of negotiations. Here, the WTO made efforts to “clarify and improve WTO disciplines on fisheries subsidies, taking into account the importance of this sector to developing countries” (Cox & Sumaila, 2010). Subsequent global conventions and conferences revisited the issue without the tangible success of an international guideline for reforms – until now.
In June 2022, at the end of the WTO’s 12 Ministerial Conference, the WTO settled on a fisheries subsidies agreement. It is designed to limit harmful subsidies by prohibiting those that enable illegal, unreported, or unregulated fishing (IUU), end subsidies that support fishing overfished stocks, and end subsidies for fishing unmanaged stocks on the high seas. The agreement asks countries to exercise due restraint when subsidizing vessels that don’t fly their flag (in an effort to limit IUU fishing) and boats that fish stocks with unassessed conservation status. It applies only to subsidies that support marine wild-caught fisheries and fishing-related activities at sea like transshipment and fuel provisioning, but not to aquaculture and inland fisheries (Pew Charitable Trusts, 2023).
The agreement also addresses transparency gaps in subsidy reporting and requires countries to provide the WTO with detailed information about their subsidy programs, like their goal, form, amount, the duration of funding, the type of fishing being subsidized, the health of the fish stock, what conservation measures are in place, what the resultant catch data is, etc (Pew Charitable Trusts, 2023). Not only does the agreement address some major issues, but it is also linked to the dispute settlement, so it is enforceable, and as a living document it can be amended (Pew Charitable Trusts, 2023). The amendment process will ensure that the agreement remains relevant for tackling future problems that may arise as countries and technology continue to advance.
Due to issues of equity that inevitably arise when discussing fisheries subsidies, there are special considerations for countries considering ‘developing’ and ‘least developed’ woven into the agreement. These countries have a two-year grace period before they will be required to comply with the WTO’s dispute settlement proceedings. Through the ‘Fish Fund’ that it builds, a finance mechanism, these countries will be granted with access to necessary technical assistance and capacity building resources to implement the agreement (Let’s talk trade by WTO, S4 Ep2).
Though the agreement has not yet taken effect, as two-thirds of WTO members must accept for it to do so, it is an important step forward. It is the first WTO agreement that addresses environmental issues, which creates a precedent for the WTO to continue forward with additional agreements that center around sustainability. It frees fiscal space so money can be allocated towards positive, sustainable subsidies instead (Let’s talk trade by WTO, S4 Ep2). It is tangible change in a time when such change is so desperately needed to ensure the recovery of our oceans to they may be healthy for present and future generations.
Conclusion
Fishery subsidy regulations have come a long way from when fisheries subsidies were first implemented in the 1940s and there was little awareness about the drastic impact they could have on fish stocks. The WTO’s new fisheries subsidies agreement represents incredible progress towards rebuilding our oceans’ fish stocks and opens the door for the WTO to implement more global environmental agreements. Only time and extensive monitoring will tell if the fisheries agreement will be enough to help marine ecosystems rebound, but it shows that collaboration and years of effort from governments and NGOs can facilitate meaningful international change in environmental regulations.
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