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

24 Interpreting the Results

The fish stocks in Scottish waters are owned by everyone collectively and should be managed on behalf of the public. This study was instructed to embrace the philosophy that policy options should be evaluated in terms of their impact on the public and not just the commercial fishing sector. The purpose of this study is not to advocate a particular course of action. It is simply concerned with identifying who gains and who loses as a consequence of the proposals and calculating by how much. As such, this study is primarily producing estimates for others to use.

It is nonetheless appropriate briefly to address the context within which the results might be used and interpreted to help avoid their innocent or culpable misuse.

24.1 Reliability of the Estimates

Before discussing the issue of reliability, it is appropriate briefly to review the process and highlight areas of relative weakness. The first stage was a benchmarking exercise which presents an account of how Scottish inshore fisheries (to be consistent with IFG boundaries, defined as 0-6 NM) are currently prosecuted. Specifically, the benchmarking estimates inshore catches by species type, by gear type, by distance zone by IFG area.

As well as benchmarking the commercial fishing sector, the study also presented a detailed description of the diverse stakeholder groups whose income, employment and/or general well-being might be affected by the proposed restrictions.

As a predominantly desk study the reliability of the benchmark estimates is largely driven by the existing body of knowledge. The evidence base used to construct the benchmark estimates is patchy.

The most reliable estimates are probably those relating to the commercial fishing sector where data from VMS, Scotmap and the Gear Conflict Survey were used. These benchmark estimates were scrutinised for anomalies by every Fishery Office in Scotland. Whilst there are issues relating to non-response, particularly in relation to the Gear Conflict Survey, it is doubtful whether further research effort could be justified in terms of the improved precision of commercial fishery benchmarks.

The available secondary information on RSA in Scotland is extensive and probably robust enough to withstand the repackaging necessary to reflect the geography of the IFGs. The information on RD was more piecemeal and some benchmark estimates were influenced by expert opinion. However, because the activity itself is less significant the higher level of uncertainty surrounding the RD benchmark estimates was acceptable. With respect to other marine recreational activity, the existing body of knowledge was simply not capable of supporting a benchmark exercise, despite the potentially large number of participants. We note the possibility of the GPNUV capturing some recreational use values.

Given the benefit transfer process, there are issues around the estimates of the current Options Value and General Public Non-User Values. There are concerns about whether the estimates are robust enough to withstanding the manipulations required by the benchmark exercise (which estimates current magnitudes of OV and GPNUV for Scotland and the IFGs) and the subsequent analysis of the policy options.

It should be appreciated that building on the benchmarking, the policy analysis does two things. Firstly it has to decide whether the benchmark estimates (ie current magnitudes) are relevant. If we assume a status quo scenario of "stability" current magnitudes are completely ignored. They only become a candidate for inclusion if we assume a status quo scenario of "decline to zero". In fact, only the current magnitude estimates for RSA, OV for RSA and GPNUV are included in the "decline to zero" scenario. Thus, unreliable benchmark estimates never influence the "stability" scenarios and some (current magnitudes of RD and OV of RD) do not feature appear in the decline to zero scenarios.

Second the policy analysis has to estimate the sensitivity of the current magnitudes to changes in the marine ecosystem. We reached the following conclusions:

• Based on how RSA responded to declines in fish stock availability, it is reasoned to be highly sensitive to changes in fish stock availability (between 50% and 10% depending on the policy impact scenario).
• RD is less responsive and less significant, and only ever features in the stability scenarios). Its sensitivity is between 20% and 5% depending on the policy impact scenario).
• The OV for RSA and RD was assumed to be largely insensitive to changes in the marine environment it and drops out of the stability scenarios.
• The change in GPNUV was estimated by McVittie and Moran (2010)

The table below summarises.

		Policy Impact Scenarios
		Major Transformative Effect	Environmental Change not Fully Reversible	Limited Impact
Status quo scenarios	Continued Decline to zero	RSA + 50% of RSA OV of RSA GPNUV +£6.6m pa [64]	RSA + 25% of RSA OV of RSA GPNUV +£6.6m pa	RSA + 10% of RSA OV of RSA GPNUV +£6.6m pa
	Stability	50% of RSA 20% of RD £6.6m pa of GPNUV	25% of RSA 10% of RD £6.6m pa of GPNUV	10% of RSA 5% of RD £6.6m pa of GPNUV

Overall, apart from commercial fishing and to a lesser extent RSA, the unreliability of some of the benchmark estimates and estimates of their sensitivity is fully acknowledged. However, the implications for the reliability of the policy evaluation depend on how these 'less reliable' estimates are used and the extent to which they influence the final result.

24.2 The Range of Estimates

As stated previously any economic evaluation is based on comparison about what might happen with and without the policy initiative. This requires predictions about how the marine environment and stakeholders groups would respond to the proposed restrictions on mobile gear. The problem is that the NEV/ CBA and EIA results are sensitive to the assumptions one makes. A single set of results for a given IFG would be predicated on a particular status quo scenario a policy impact scenario as well as many assumptions about stakeholder and marine ecosystem response. A single set of results would have a spurious level of accuracy and probably should not be allowed to influence policy.

This study does not therefore seek to provide a single economic evaluation. Instead, the 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. 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.

Whilst a single set of results are probably irrelevant, an indicative set of results which embrace the extremes provides a more convincing insight. 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. Not expectedly, 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.

24.3 The Equivocal Results and their Implications

Results ranging across positive and negative values are generated for:

• Employment and NEV estimates relating to mobile restrictions applying to 0-1 NM and 0-3 NM for the North West IFG.
• Employment and NEV estimates relating to mobile restrictions applying to 0-1 NM and 0-3 NM for the Outer Hebrides.
• Employment estimates relating to mobile restrictions applying to 0-1 NM and 0-3 NM for MFNC where marginal negative employment estimates were generated for the LFOs.

Whilst the overall balance is heavily weighted towards positive values, there might still be some reluctance to implement mobile gear restrictions. This is because the costs imposed on the mobile sector are possibly less uncertain than the gains elsewhere. ^[65] There might be an understandable reluctance to trade jobs which exist now for jobs which, under some circumstances, might not be created in sufficient numbers to replace the jobs lost.

A case can be made for further research efforts to try and reduce this 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.

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 two areas as being worthy of further targeted research.

With respect to Scotland as a whole all the indicative results are positive. However, 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 restriction. Until further research reveals otherwise, the Scottish wide results should also be regarded as equivocal in terms of informing the case for introducing a Scotland wide restrictions on mobile gear.

24.4 The Results: South West, East Coast and MF& NC

Normally, we would expect that, over time, the Scottish population would be better off with a more productive marine environment which supports a greater biodiversity and biomass and delivers a greater flow of environmental service benefits. Indeed, it would be difficult to argue that Scotland as a whole would be better off if inshore marine biodiversity and biomass were to be further compromised.

Taking a broad overview, 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 ^[66] . This switching of gear type is expected to improve 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. Others might be better off because of improvements in their marine recreational activity. Others would be better off because of the income and employment created by the spending of participants in marine recreation. It would therefore be a major surprise if the policy evaluation were to result in negative values for either the jobs created across Scotland or the change in Scotland's NEV.

By the same reasoning, we expect that areas with high populations would not produce negative estimates. Thus, with respect to the South West and East Coast results, even the LFO cannot generate negative values for NEV or the change in employment. According to our categorisation, these two areas account for 92% of the Scottish population. If Scotland, as a whole would be better off, we can expect a similar result for these two areas. The MF& NC which accounts for about 5% has similar NEV results, but could conceivably deliver a small decrease in employment under the LFO assumptions.

24.5 Implications: South West and East Coast Results.

A significant excess of policy benefits over policy costs implies there is a current resource misallocation. If corrected, in the South West and East Coast IFG areas, we would expect the flow of benefits to exceed the costs (with any policy initiative there will always be some losers). Given this, even if the gainers were to fully compensate all the mobile operators, the gainers would still be better off. On the basis of the benefits exceeding losses, the 1 NM but particularly the 3 NM restriction, offers the potential to make everyone better off ^[67] . Moreover, if the losers are somehow more than fully compensated then everyone is actually better off.

Thus, one clear implication of the results is that the gear restriction is an opportunity to correct a resource misallocation and (potentially or actually) to improve the wellbeing of all stakeholders.

In passing, it should be appreciated that this excess of benefits over costs is the reason why societies as a whole generally welcome, say, new technology, despite the fact that new technology makes someone somewhere worse off. Essentially, societies embrace new technology because of the opportunity to make everyone better off, should it wish to do so. Since decision makers are tasked with managing fisheries in the public interest, they might be persuaded about the overall merit of a 1 NM or 3 NM restriction simply because (like new technology) it could make everyone better off and therefore be preferable to the status quo.

With respect to the employment issue, it is highly regrettable that some jobs, directly or indirectly, dependent on mobile gear will be lost. However, it would appear that, for the South West and East Coast, restricting mobile gear use creates, in the longer term, many more jobs than it loses. Thus, rather than creating employment, in some coastal areas the current deployment of mobile gear might be constraining economic and employment growth.

24.5.1 South West and East Coast: Defending the Status Quo ^[68]

There are four obvious defences that might be offered for not correcting the resource misallocation and maintaining the status quo. These are briefly addressed below.

24.5.1.1 Sympathy for the mobile segment

Since no-one likes to see anyone being made worse off, local politicians and officials might express concerns for the mobile sector's desire to earn a living and to continue with current practice. These feelings are understandable, well-meaning and may be deeply held; they will be shared by very many others.

Despite the excess of benefits over costs, a continued preference for the status quo arising simply from an innate sympathy for the mobile sector is an admission that, in this instance, inshore fisheries might not be managed in the wider public interest. ^[69]

24.5.1.2 Disadvantaging low income groups / fragile communities

The argument here is that whilst many more jobs might be created than lost, the jobs lost are in fragile coastal communities. The implicit suggestion is that a job lost in a coastal community is worth more than a job elsewhere. We examined the economic dependency of fishing communities and concluded that there was nothing exceptional about fishing communities that would require an exceptional response. Also, a significant proportion of the jobs created will be in coastal areas in creeling, hand diving, lining and servicing marine recreation. Employment in some communities regarded as fragile could expand rather than contract.

In a similar vein, it might be argued that the mobile gear restrictions disadvantage lower income and vulnerable groups (e.g. trawler and dredger crew) while improving the lives of creelers, hand-divers, local hoteliers or higher earning wildlife enthusiasts, divers and sea anglers. This could be factually correct though we were not asked to examine the income distribution dimension. However, it might be is better to introduce the gear restriction and use the resulting benefits to compensate trawler crews; thereby making everyone better off.

Against a background of high NPV and FTE estimates, a preference for the "business as usual" option would possibly constrain the economic development of coastal communities.

24.5.1.3 Uncertainty

A status quo defence could be based on uncertainty. A major source of uncertainty is about how the ecological system is going to respond to the 1 NM or 3 NM prohibition of mobile effort. Similarly, we cannot be entirely sure how the inshore ecosystem would develop if Marine Scotland continued to adopt a strategy of "business as usual".

Given this biological uncertainty, some might be tempted to suggest that we should wait until scientific advice better supports the case for gear restriction (i.e. "we first need to do the science"). It is relevant to know that, since societies prefer less risk of biodiversity loss, there is a cost associated with the on-going environmental risk inherent in the "waiting for science" option.

Biological uncertainty only matters where an excess of gains over losses is dependent on a positive transformation of the ecosystem. It is possible that a switch of fishing effort from mobile to static gear might, of itself , generate more gains than losses. In which case, there is no need to do the science. Inspection of the results for the "Commercial Fishing" sector reveals that there are a number of scenarios where this could happen ^[70] . In these scenarios, implementation of the gear restriction generates an immediate excess of gains over losses, plus the benefits from reduced environmental risk and the added bonus of a future flow of benefits predicated on the (uncertain) ecosystem transformation. Thus, biological uncertainty and the need for more science only become relevant if the excess of gains over losses is dependent on ecosystem change. The choice between implementing gear restrictions now or waiting and undertaking more science can be summarised in the payoff matrix below

Table 24.2 Pay-Off Matrix

	The system will transform	The system will not transform
Wait, undertake more science and then implement if appropriate	Science Costs incurred (-ve) On-going risk of status quo exploitation levels (-ve) Forego the excess of benefits over costs whilst waiting (-ve)	Science Costs incurred (-ve) On-going risk of status quo exploitation levels (-ve) Avoid the excess of costs over benefits whilst waiting (+ve)
Implement now	Science Costs avoided (+ve) On-going risk eliminated (+ve) Generate an excess of benefits over costs from year 1(+ve)	Science Costs avoided (+ve) On-going risk eliminated (+ve) Generate an excess of costs over benefits until realisation that the environment will not transform (-ve)

In scenarios where the gains over losses are dependent on ecosystem change and the system does transform , it is better to have implemented than to have waited for scientific knowledge to predict this outcome. ^[71] This is because we get the net gains sooner, plus an immediate reduction of environmental risk and there are no marine science costs. The "waiting for science" option would have been a policy error, which could have resulted in the further damage to the ecosystem which might have taken years to rectify. Thus, if the system does transform and the benefits are predicted to exceed the costs, implementation is always better than waiting.

In scenarios where the predicted gains over losses are dependent on ecosystem change and the system does not transform then the losses from imposing the gear restriction would exceed the gains. Implementation of the gear restriction would be a policy error to be corrected through removal of the restriction. On the positive side, by implementing we have saved the marine science costs ^[72] , plus the gear restriction would have removed a perceived environmental risk, albeit one whose (temporary) removal did not deliver the expected environmental transformation. Whether it would have been better to wait, or to implement, depends on the relative magnitude of the science costs, the environmental risk, the time period involved and the excess of costs over benefits. There are, however, other issues to be considered. Firstly, this discussion assumes that further scientific research is capable of delivering a conclusion that the marine ecosystem will not transform. The case for waiting is less convincing, if this capability does not exist. In other words, it might be better to implement, observe the outcome and then correct the policy error. On the other hand, the policy error might not be easily rectified in terms of recovering the previous status quo. Whilst status quo recovery is not conditional on ecosystem change, policy induced changes to the inshore mobile fleet segment might be irreversible.

Viewed overall, if we immediately implement the gear restriction the worst possible outcome is that there is a (temporary) excess of losses over gains, with the possibility that the previous status quo may not be fully recoverable. This is counterbalanced by reduced environmental risk and a saving on science costs. If we wait for scientific knowledge the worst possible outcome is that we have to wait longer for the net gains, we have incurred marine science costs, the results may be inconclusive and the ecosystem could have suffered further damage.

In circumstances where estimated employment gains are high, and, estimated benefits are a significantly higher order of magnitude than the expected value of costs (i.e. high NEV) it might not seem rational to wait five, ten or twenty years until marine science has advanced sufficiently to reduce the uncertainty about the inshore ecosystem response.

Another source of uncertainty relates to the accuracy of economic estimates. This was discussed above and we have identified the equivocal results where further targeted research might be helpful. We have also explained that the unreliable benchmark estimates (eg OV abd GPNUV) often have little significance for the analysis of policy, or can simply be ignored through appropriate scenario selection. Even when we assume the LFO, we still have positive values for the South West and East Coast. With respect to the South West and the East Coast, the existence of some uncertainty is, of itself, a weak justification for preferring business as usual. ^[73]

24.5.1.4 The Possibility of a Better Policy Measure

It could be argued that an IFG wide restriction is too crude to deal with the geographical and biological variability across large IFG areas such as the South West and East Coast. There might be other policy initiatives that could emerge from within the IFGs. These initiatives would have to be fully evaluated, in much the same way as this study has evaluated the 0-1 NM and 0-3 NM proposals.

The issues here are very similar to the question addressed above of whether we should wait and undertake more science before implementing the mobile gear restriction. In this case the question is whether we should delay implementation whilst waiting for other policy options to emerge and be evaluated. If we delay, we forego the additional NEV and jobs the gear restriction would deliver. On the other hand, another policy option might emerge which delivers even more NEV and jobs.

The obvious point to make is that a better policy might not emerge. Also, if a better policy does emerge it might not be mutually exclusive with an IFG wide restriction. Even if the policy was mutually exclusive the IFG wide restriction could be rescinded (just as it was in 1984).