Management Of The Scottish Inshore Fisheries; Assessing The Options For Change

EXECUTIVE SUMMARY

Introduction

It is generally accepted that fish stocks in Scottish waters are a national resource ^[1] and should be managed on behalf of all stakeholders. Despite the inherent complexity of the task, an economic evaluation of fisheries policy options must therefore endeavour to capture all stakeholder interests.

This study was tasked with evaluating a 0-1 nautical mile ( NM) and a 0-3 NM restriction on the use of mobile gear. These two policy options will affect the wellbeing of very different stakeholders in multidimensional and complex ways. Initially the impact of mobile gear restrictions will be experienced in the commercial fishing sector. Those affected in this sector will include mobile and static gear operators and crew, the upstream and downstream links in the supply chain, and the local economies which benefit from the spending of all those involved in the commercial fisheries sector.

A significant proportion of the general public also needs to be included because they may have altruistic concerns for the marine environment (which here is termed General Public Non-User Value ( GPNUV)). There are also marine recreational interests to be considered, among which there is probably a spectrum of sensitivity to changes in fish stocks. At one end, there are sea anglers and, to a lesser extent, marine divers whose recreational experience involves direct interaction with fish stocks. For others, such as ornithologists and marine wildlife tourists and charterers their enjoyment and participation is sensitive largely to changes in fish predator populations. At the other end of the spectrum, might be sea kayakers, sailors and informal visitors to coastal areas. For these participants, whilst the prospect of interaction with sea birds or sea mammals is not a necessary ingredient of their recreational experience, the increased probability of sightings might enhance their experience and possibly boost activity levels. Unfortunately existing knowledge and available data did not enable the analysis of marine recreation to extend beyond those who interact directly with fish stocks (ie anglers and divers). In some respects, Recreational Sea Angling ( RSA) and Recreational Diving ( RD) are proxy for all marine recreational activity.

This study embraces stakeholders by using both Net Economic Value / Cost Benefit Analysis ( NEV/ CBA) and Economic Impact Assessment ( EIA) to provide an evaluation of the two policy options. In doing so, NEV/ CBA and EIA estimates are produced separately for Scotland, the 6 Scottish Inshore Fishery Groups ( IFGs) and Shetland.

The study was also required to satisfy the following subsidiary and complementary objectives: ^[2]

• An assessment of the economic dependency on the fishing sector in Scottish coastal communities.
• An evaluation of alternative creel management regimes.

Approach

Any economic evaluation is based on comparison about what might happen with and without the policy initiative. This requires practitioners to make predictions about how the marine environment and stakeholders groups would respond to the proposed restrictions on mobile gear. These predictions are based on existing knowledge but inevitably require assumptions and informed judgements. Since the NEV/ CBA and EIA results are sensitive to the assumptions, it would be inappropriate for this study to seek to provide single definitive estimates. Instead, this study has developed a model which allows informed users to vary the assumptions and parameters for themselves, and thereby explore how these changes impact the results.

It is hoped that this approach will enlighten and provide greater equality in the opportunity to engage in debate about these inshore policy options. For example, the study provides estimates relating to illustrative scenarios where the restrictions on mobile gear produce a change in the marine environment and scenarios where they do not. This enables those involved in the debate to see whether transformation of the marine environment is a necessary condition for delivering additional jobs, or generating an excess flow of policy benefits over policy costs.

Process

There were a number of key steps in building and running the model. Whilst there is good data on landings there is more uncertainty about where landed fish are caught. Using data from Marine Scotland's Scotmap exercise and the Vessel Monitoring System, benchmark information was produced for zones 0-1 NM, 1-3 NM, 3-6 NM and 6-12 NM. This was done for Scotland, each IFG area and Shetland. These benchmarks were scrutinised for anomalies by every Fishery Office in Scotland. The benchmark tables provide a highly detailed account of commercial fishing inside Scottish territorial waters.

One of the potential benefits of the 0-1 NM or 0-3 NM restrictions on mobile gear is the reduction in the incidence of gear conflict. The quantification of these benefits required detailed information on gear conflict incidence, the gears involved and the costs involved. This required a survey of fishery operators across Scotland.

The benchmark estimates for RSA, RD and the general public were derived from an assessment of the literature, and in the case of diving, interviews with key personnel and charter operators.

Having established the baseline for all the key stakeholder groups, the study then estimated what might happen to the baseline estimates without the policy (the status quo scenarios) and what might happen with a 0-1 NM or 0-3 NM restriction (the policy impact scenarios). The model produces results for two status quo scenarios and three policy impact scenarios.

The impacts on commercial fishing were developed by making informed judgements about how mobile operators would respond, and the knock on effects on both the static sector and stakeholders outside the management area (displacement). The model enables these judgements to be altered. The consequences for the recreational sector and the general public were estimated using benefit transfer.

Presenting the Model Results

In presenting the results, this study provides a set of four indicative NEV/ CBA estimates and four indicative EIA estimates. These are presented for both the 0-1 NM and the 0-3 NM restriction. The four indicative estimates correspond to four combinations of assumptions. The Least Favourable Outcome ( LFO) is generated by combining the assumptions which would produce the least number of jobs in the EIA evaluation and the lowest NEV estimates for the NEV/ CBA evaluation. The Most Favourable Outcome ( MFO) combines the assumptions that would produce most jobs and the highest NEV estimates. The other two indicative results are based on combining less extreme assumptions.

The economic impact is presented as the change in Full Time Equivalents ( FTE s) immediately, in 10 and in 20 years.

In the report, for each of the four indicative NEV/ CBA estimates, five NEV estimates are provided. These relate to different time horizons and whether the estimates include the public's GPNUV and/or recreational Options Values ( OV). In this Executive Summary only one NEV estimate is provided. This particular estimate excludes any benefits or costs arising after 20 years, includes OV but only 50% of GPNUV.

The Results for Scotland

EIA for Scotland (0-1 NM )

		Economic Impact ( FTE 's)
		YR 1	YR 10	YR 20
Least Favourable	Commercial Fishing	-340	-103	-90
	Recreational Sector	3	53	105
	Total	-337	-51	15
Most Favourable	Fishing	-128	122	148
	Recreational Sector	21	1342	1342
	Total	-106	1464	1490
Typical A	Fishing	-227	-14	-1
	Recreational Sector	11	252	252
	Total	-216	238	251
Typical B	Fishing	-227	-106	-80
	Recreational Sector	5	545	1089
	Total	-221	438	1009

The above table informs us that even with a combination of the most pessimistic assumptions, with a 0-1 NM restriction on mobile gear there would be a small positive impact (15 jobs) across Scotland. Using the most optimistic assumptions there is a net gain of 1,490 jobs.

NEV Results (£m) for Scotland (0-1 NM ) over 20 Years

		NEV Including Options Value & 0.5 of GPNUVs
Least Favourable	Commercial Fishing	-£60
	Recreational Sector	£154
	All	£105
Most Favourable	Fishing	-£56
	Recreation	£1,380
	All	£1,324
Typical A	Fishing	-£57
	Recreation	£187
	All	£130
Typical B	Fishing	-£60
	Recreation	£1,303
	All	£1,243

A positive NEV informs us that the discounted value of the flow of benefits exceeds the discounted value of the flow of costs. From the above table, the LFO suggest an excess of £105m, whilst the MFO projects an NEV of £1.3bn.

EIA Results for Scotland (0-3 NM)

		Economic Impact ( FTE's)
		YR 1	YR 10	YR 20
Least Favourable	Commercial Fishing	-340	-103	-90
	Recreational Sector	3	95	189
	Total	-337	-9	99
Most Favourable	Commercial Fishing	-128	96	109
	Recreational Sector	21	2598	2598
	Total	-106	2694	2707
Typical A	Commercial Fishing	-227	-14	-1
	Recreational Sector	11	461	461
	Total	-216	447	460
Typical B	Commercial Fishing	-227	-132	-119
	Recreational Sector	5	1068	2136
	Total	-221	936	2017

The Tables above strongly suggest that the 0-3 NM restriction would deliver both more jobs than the 0-1 NM restriction. The LFO would produce 99 more jobs across Scotland whilst the MFO would produce 2,707 more jobs.

NEV Results (£m) for Scotland (0-3 NM ) over 20 Years

		NEV Including Options Value & 0.5 of GPNUVs
Least Favourable	Commercial Fishing	-£56
	Recreational Sector	£190
	All	£134
Most Favourable	Commercial Fishing	-£53
	Recreational Sector	£1,553
	All	£1,500
Typical A	Commercial Fishing	-£53
	Recreational Sector	£231
	All	£179
Typical B	Commercial Fishing	-£57
	Recreational Sector	£0
	All	£1,348

In the Table above, the LFO suggest an NEV of £134m. The MFO projects an NEV of £1.5bn over 20 years. As with the economic impact results, the 0-3 NM restriction is predicted to deliver a better return than the 0-1 NM restriction.

The results suggest that Scotland as a whole would be better off rather than worse off with a more diverse and productive marine environment. The proposed restrictions on mobile gear mean that Nephrops and scallops will still be caught within 0-1 NM or 0-3 NM, albeit in smaller quantities using more labour intensive static gear and hand-diving ^[3] . Changing the way we harvest Nephrops and scallops in near shore areas is expected to generate some improvement in environmental quality and deliver more economic benefits to broader sections of the population. Some sections of the population would be better off simply knowing that parts of the marine environment are protected and improving ( GPNUV). Others might be better off because of improvements in their marine recreational activity and, as they spend more, this increases the income and employment of those supplying marine recreational services.

However, the case for Scotland wide restrictions is not compelling. This is because, as explained below, the analysis predicts that the North West and Outer Hebrides could conceivably deliver negative contributions to employment and NEV. A Scottish wide restriction on mobile gear that included these areas might therefore deliver less employment gains and a lower NEV contribution than more selective restrictions. Until further research reveals otherwise, the Scottish wide results should also be regarded as equivocal in terms of the case for a Scotland wide restrictions on mobile gear.

The Results for the IFG's and Shetland

In practise the estimated benefits and costs, and jobs created (or lost) are not evenly spread across Scotland's IFGs. In IFG areas such as the South West IFG area and the East Coast IFG areas mobile gear restrictions are estimated to have highly beneficial impacts on jobs and NEV. In some other areas the case for introducing mobile gear restrictions would be harder to argue on the basis of the scenario estimates.

In the main report, tables comparable to the four Scottish tables (see above) are presented for each IFG (i.e. NEV/ CBA and EIA tables for both the 0-1 NM and the 0-3 NM restriction). The Table below extracts the year 20 employment estimates for the six IFGs and Shetland. The sensitivity of the results to changes in assumptions is very evident.

Economic Impact All IFGs 0-3 NM

		FTE's Year 20
		South West	North West	Outer Hebrides	MF& NC	Orkney	East Coast	Shetland
Least Favourable	Commercial Fishing	-58	-56	-30	-27	5	3	72
	Recreational Sector	122	9	13	20	7	62	5
	Total	64	-47	-16	-7	11	65	77
Most Favourable	Commercial Fishing	-7	-17	-11	1	5	34	65
	Recreational Sector	1692	127	181	268	75	850	75
	Total	1686	109	170	269	80	883	140
Typical A	Commercial Fishing	-49	-42	-23	-13	4	15	65
	Recreational Sector	299	23	32	48	15	151	13
	Total	251	-19	8	35	19	166	77
Typical B	Commercial Fishing	-49	-50	-26	-31	3	6	64
	Recreational Sector	1392	103	148	220	61	699	63
	Total	1343	53	122	189	64	705	128

From the Table above, the South West, East Coast, Orkney and Shetland IFG areas are estimated to experience an increase in employment, even if the conditions described by the LFO prevailed. The South West IFG and the East Coast IFG offer the greatest potential in terms of job creation. This is because these two areas account for 44.6% and 47.4% respectively of the Scottish population ^[4] . The expansion of the marine recreational sector could thus create large numbers of jobs in these areas. The Moray Firth and North Coast ( MF& NC) IFG accounts for (5.8%), and whilst its commercial fishery would probably lose jobs, there is the possibility of job creation in marine recreation.

Areas with small populations such as Outer Hebrides (0.5% of Scottish population), and the North West (0.8%) might suffer from loss of employment in commercial fishing but might not attract large numbers of participants in marine recreation. The structure of Orkney's and Shetland's commercial fisheries means their commercial fisheries do not suffer a net loss of employment but in the case of Shetland the estimated gains in the recreational sector are modest. Orkney is estimated to gain recreational employment from RD.

The Table below presents the comparative NEV results for each of the IFGs and Shetland.

NEV Results (£m) for all IFGs (0-3 NM ) over 20 Years

		NEV Including Options Value & 0.5 of GPNUVs
		South West	North West	Outer Hebrides	MF& NC	Orkney	East Coast	Shetland
Least Favourable	Commercial Fishing	-£23	-£7	-£6	-£9	-£1	-£7	-£2
	Recreational Sector	£85	£3	£3	£13	£2	£80	£2
	All	£63	-£4	-£3	£4	£1	£73	£1
Most Favourable	Commercial Fishing	-£7	-£17	-£11	£1	£5	£34	£0
	Recreational Sector	£690	£35	£30	£97	£10	£614	£17
	All	£683	£18	£20	£98	£15	£648	£17
Typical A	Commercial Fishing	-£49	-£42	-£23	-£13	£4	£15	£1
	Recreational Sector	£131	£39	£23	£22	-£1	£67	£4
	All	£82	-£2	£0	£9	£3	£82	£5
Typical B	Commercial Fishing	-£49	-£50	-£26	-£31	£3	£6	-£2
	Recreational Sector	£0	£0	£0	£0	£0	£0	£0
	All	£248	£11	£11	£82	£10	£612	£10

From the illustrative estimates presented in the Table above, all areas apart from the North West and Outer Hebrides generate an excess of benefits over costs, even under the LFO scenario. In the case of the South West, and East there is a substantial excess of benefits over costs and to a lesser extent in the MF& NC IFG. In the case of Orkney and Shetland the excess of benefits over costs are relatively modest.

Implications of the Results

A single set of results would have a spurious level of accuracy and probably should not be allowed to influence policy. This report therefore has chosen to present indicative sets of results for Scotland as a whole and for each IFG area. Significantly, the indicative results for each IFG are bookended by the MFO and LFO outcomes. This has produced a wide range with some MFOs being a factor of 10 times the LFO. Rather than being a cause for concern, the wide range should be a re-assurance that the evaluation process has captured the uncertainty associated of an economic evaluation which is reliant on informed judgements about the future.

The problem with presenting the analysis for each IFG as an indicative set of results is that the implications for policy can be equivocal if the range of results straddles positive and negative estimates. The North West, Outer Hebrides, MF& NC delivered negative LFO estimates for NEV or Employment or both. In the case of Orkney and Shetland, the estimates for employment and NEV are all positive but only marginally positive and have a relatively narrow range. Before being used to inform policy it would probably be sensible to also regard these areas as being worthy of further targeted research aimed at reducing uncertainty, particularly around the LFO estimates which create the unease. This research should focus on the stakeholder groups which have the greatest impact on the results and be targeted on the key assumptions and parameters which relate to them.

With respect to the South West and East Coast IFG areas, even the LFO cannot generate negative values for NEV or the change in employment.

In these two IFG areas, the significant excess of policy benefits over policy costs implies there is a current resource misallocation. Thus, one clear implication of the South West and East Coast results is that the gear restriction is an opportunity to correct a resource misallocation. If corrected, we would expect that, over time, the flow of economic benefits would exceed the economic costs (regrettably, with any policy initiative there will always be some losers). With respect to the employment issue, it is indeed highly unfortunate that some jobs, directly or indirectly, dependent on mobile gear would be lost. However, it would appear that, for the South West and East Coast areas, based on the range of modelled assumptions, restricting mobile gear use would create many more jobs than it loses. Thus, rather than creating employment in the South West and East Coast, the current deployment of mobile gear might be constraining economic and employment growth.