World fisheries production is continuing to grow as seafood consumption booms globally. Amid this expansion, concern is arising over the decrease and eventual depletion of fishery resources. Depletion of fish stocks is not a problem limited to bluefin tuna, for which reduction of the total allowable catch (TAC) was the target of a recent international decision that garnered wide attention in Japan. Stocks of fishery resources in the waters surrounding Japan are also falling below adequate levels. From the viewpoint of food safety and security, need is growing to ensure proper management of fishery resources. Resource management measures, by nature, do not provide a quick cure, thus long-term benefits need to be considered in their implementation. TAC reductions may cause losses to fishermen on a short-term basis. However, now is a golden opportunity to take action toward proper resource management as seafood-consumption habits are expanding globally and seafood prices are coming under strong upward pressure.
Changes in environment surrounding fisheries industry
The Food and Agriculture Organization of the United Nations (FAO) reports that world fisheries production, both in terms of capture and aquaculture, totaled 157.5 million tons in 2005, roughly 1.5 times the 1990 level. Of that total, 94.6 million tons were by capture, up 9% from 1990. Japan's capture fisheries production in 2005 was 4.2 million tons, down approximately 60% from 1990 level (due mainly to decreased catching of spotlined sardines). In 1992, China replaced Japan as the world's top capture fisheries producer.
World trade in fish and fish products has been expanding. In terms of value, Japan is the world's largest importer of fish and fish products, relying on imports for roughly half of its domestic consumption. According to the FAO, globally about 40% of fish and fish products were exported to other countries in 2005, with the European Union, Japan, and the United States as the three largest markets. While major importers are limited in number, there are many exporting countries, including China and Norway. Recently, Japanese trading houses' kaimake, or losing bidding competitions for fish to foreign buyers, has been a hot topic in fishery markets around the world. Kaimake is primarily attributable to relatively lower fish prices in Japan and does not mean that Japanese buyers are unable to secure sufficient fish for domestic consumption. Trade-weighted average tariff rates applied by the three major markets - the EU, Japan, and the U.S. - to fish and fish product imports are already very low (4% or below). However, liberalization of trade in fish and fish products is being discussed as part of the ongoing round of multilateral negotiations under the World Trade Organization (WTO) and this trade is expected to further expand in the coming years.
Globally, the status of fishery resources has been worsening. According to the FAO, 52% of fishery resources were "fully exploited," 25% either "overexploited or depleted," and the remaining 23% either "underexploited or moderately exploited" as of 2006. In 1974, 40% of the fishery resources remained "underexploited or moderately exploited" and 10% were "overexploited or depleted." This comparison illustrates a clear trend toward depletion. According to the Fisheries Agency, while Japan's surrounding waters host 52 species subdivided into 90 subpopulations, the stocks of nearly half of these resources (43 subpopulations) were rated as "low" on a three-point scale of high, medium, and low (see note).
Characteristics of fishery production and the role of resource management
One characteristic of fishery production is that it is dependent on economic, biological, and policy factors. For instance, the input of production factors - the size and engine power of the fishing vessel, the number of days fished - is determined in view of the level of fish prices (economic factors). And fishery resource stocks may decrease as a result of overfishing or fluctuate due to changes in the temperature of the ocean water and/or current (biological factors). Therefore, fishery industry productivity is influenced by the level of fishery resources. Development of physical infrastructure, such as construction of fishing ports capable of accommodating large vessels, is important in improving productivity. But such measures are only effective when there are ample stocks of fish resources. Effective resource management policy works to improve productivity by recovering and sustaining depleted fish resources.
The experiences of Japan and other countries show that "output control" management, which regulates the volume of catches, is more effective as a means to manage fish resources than restricting the size of ships or the types of fishing instruments. Using output control, a government sets an adequate TAC for each species and allocates the TAC to individual fishing operators. This method is considered effective in restoring resources because fishing quota allocation promotes well-planned, systematic fishing operations.
A fishing quota can be allocated in various ways. As an allocation framework, units to which a fishing quota is allocated may be individual fishermen, fishing associations, or fishing ships. There is also a system in which an allocated fishing quota may be transferred to other fishermen. Japan has yet to implement a clear-cut fishing quota comparable to those observed in other countries and Japanese fishermen are engaged in fishing virtually under free competition.
It should be noted that the increasingly watched subject of aquaculture is also influenced by fishery resources. In aquaculture, including the farming of fish captured in the wild, wild fish are used as feed. Thus, resource management is important to aquaculture operations, for which the presence of abundant natural fishery resources is a prerequisite.
Importance of economic analysis of fishery resource management
"Economic Analysis of Resource Management in the Fisheries Industry," a RIETI research project launched this fiscal year, aims to closely examine factors behind reduced domestic fisheries production and from an economic viewpoint study performance evaluation and institutional analysis concerning the management of fishery resources, aiming to contribute to ensuring sustainable use of fishery resources in Japan.
The project consists of two parts. The first concerns economic analysis, focusing on the production side. By considering fisheries industry productivity, it becomes possible to identify economically effective fishing quota allocation systems and present a desirable resource management system that duly considers the fairness of income distribution. Furthermore, by conducting institutional analysis that incorporates behavioral changes on the supply side resulting from the introduction of such a system, institutions can be evaluated and compared with greater precision.
The second part of the project is economic analysis focusing on the demand side. Labeling requirements and other relevant measures are extremely important as a mechanism, from the viewpoint of resource management, for eliminating harmful fishing practices (illegal, unreported, and unregulated [IUU] fishing). This part of the project will examine how this mechanism affects the demand for fish and fish products. Also a topic of analysis is how Japanese and overseas demand trends affect each country's fishery resources via the global market. With demand-side factors taken into account, market-wide economic impacts can be analyzed with greater precision.
Clarifying the economic impacts of fishery resource management systems should enable evaluation and comparison of various systems from an economic standpoint, and thus contribute to the creation of an effective system for Japan.
