Fishing vessels - economic link: business and regulatory impact assessment

10. Sensitivity Analysis

Sensitivity analysis was undertaken to test the modelling outputs in the case of four additional potential situations to understand the possible range of costs and benefits. These were all modelled based on the Central Scenario (2), with further details on these noted in the methodology section of the appendix:

• Assumed less inputs to the downstream and upstream calculations due to the reduction of other variable inputs.
• Assumed that the GVA multiplier for the fish processing industry is reduced due to higher costs than their competition abroad; this affected the downstream and upstream benefits.
• Assumed a lower proportion of landed fish is processed in Scotland for both pelagic and demersal stocks, but the price differential cost to fishers is kept constant.
• Assumed a lower price for new pelagic fish in Scotland due to the difficulty in finding a suitable market for the new fish. This cost is applied both to the non-landing compliant fleet and the landing compliant fleet, and has subsequent effects on the downstream and upstream benefits.

All the ranges used in the sensitivity analysis are arbitrary and do not represent modelled or expected changes.

The results of the sensitivity analysis indicate that under Scenario 2 the scheme would still bring a benefit to Scotland’s economy but it could be substantially lower, with the loss of processing over halving the benefit in the third year. Meanwhile increasing the inputs to processors, lowering the GVA for processors or lowering the price for newly landed pelagic stocks have a smaller effect and all remain net positive for Scotland in year 3 of the scheme. It is important to note that these assumptions are not expected but are possible risks and are used to understand what would happen if circumstances change.

Figures in Table 9 below are presented as a GVA change to the economy of Scotland and only for year 3 of the project. The sensitivity analysis has only been presented for year 3 due to the fixed changes applied to the model having a disproportionate effect in the first two years, i.e. it is unlikely that the same price reduction would be seen in the first year where the landings target is a lot lower than the third year when the scheme is fully operational. The year 3 figure is comparable to the year 3 figure in the cost benefit tables above, i.e. £9.6 million overall benefit under the central scenario by year 3.