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

4 NEV/ CBA ANALYSIS OF RESTRICTING MOBILE GEAR: AN OVERVIEW

This framework seeks to provide a monetary measure of the public's preferences for alternative uses of its scarce resources. The next relevant question is how does one measure the strength of preference and therefore changes in wellbeing? In economics, the strength of an individual's preference is usually measured in terms of their Willingness to Pay ( WTP) . The rationale for using this type of monetary measure is based on a simple proposition. Namely, that the more positively (or negatively) individuals are affected by a change the more of their finite income and wealth they will be WTP in order to secure (or prevent) the change.

This approach to assigning value is not only relatively straightforward but has the considerable advantage that it can be applied to a very diverse range of goods and services.

4.1 Defining Economic Benefits and Costs

In economics the term, 'goods and services' embraces anything that people value. This is broader than just physical items which they might buy in the market place. As explained earlier, the flow of goods and services from the inshore environment includes items, such as fish, which have market prices, but also includes other things the marine environment provides, but which have no market price (e.g. sea angling, marine wildlife observation). The term goods and services will also include flows that generate well-being in the absence of any direct use. An example of a non-use value is the benefit that some derive from simply knowing that the Scottish inshore marine environment is being enhanced.

It follows that the flow of goods and services might embrace things that are non-quantifiable in money terms, either because estimation would be prohibitively expensive, or because economic science is not capable of the quantification.

In short, the term goods and services from the Scottish inshore ecosystem means anything which enhances public wellbeing as it increases and diminishes wellbeing as it decreases.

Following the above, the value of something (e.g. annual fish output, sea angling) is simply what we are willing to pay it. In economics, the Gross Economic Value ( GEV) of allocating resources to produce something is simply the sum of individuals' WTP for it. Thus, the GEV of sea angling is the aggregate WTP of sea anglers, or, the GEV to society of the Scottish catch from commercial fishing is the collective amount we are willing to pay for the catch.

Unfortunately exclusive focus on the WTP for output produced (i.e. GEV) ignores the resources used to produce the catch. From society's perspective, these resources could (most probably) have been used to produce something else for which there is also a WTP ^[31] . The value of this foregone alternative is known as Opportunity Cost .

The more relevant concept of Net Economic Value ( NEV) is obtained by subtracting from GEV, th e opportunity costs of the resources used. In applied economic work it is normal, and reasonable, to assume that the market value of resources used (e.g. energy, labour, raw materials) reflects society's opportunity costs. Therefore the market value of the fuel, labour, equipment is assumed to reflect society's opportunity cost of the resources used.

Other things being equal, NEV will increase (decrease) when GEV increases (decreases). Using the same reasoning NEV will decrease (increase) when opportunity costs increases (decreases).

Generally increases in NEV are desirable and decreases undesirable. Therefore Economic Benefits are things that increase NEV, whilst Economic Costs are things that decrease NEV. We can therefore define Economic Benefits and Economic costs as follows:

Economic Benefits are :

A. Any increase in the flow of goods and services we enjoy and are willing to pay for.

B. Any reductions in opportunity costs. This means reductions in the value of goods and services we forego.

Economic Costs are:

A. Any increases in opportunity costs. This means increases in the value of goods and services we forego.

B. Any reductions in the flow of goods and services we are willing to pay for.

We first explain the economic costs to society which are either reductions in the flow of goods and services, or increases in opportunity costs.

4.2 The Principal Economic Costs

• Society would lose the output of Nephrops and scallops caught by mobile gear within the prohibited area as vessels retire, convert to static gear or divert their effort outside 1 NM or 3 NM. (Decreased flow of goods and services).
• There would be one off costs associated with using resources to convert some vessels to static gear. (Increased opportunity cost).
• There would be recurrent costs associated with increased running costs of those vessels continuing to use mobile gear but fishing outside 1 NM or 3 NM (Increased opportunity cost)
• The costs associated with the increased benthic mortality and habitat damage occurring outside 1 NM or 3 NM as a result of mobile vessels diverting effort outside 1 NM or 3 NM. (Decreased flow of goods and services).

The full range of possible economic costs is explained in the table below:

Table 4.2. The Economic Costs of Limiting Trawling within 1 mile and within 3 miles

Cost	Indicator	Key Valuation Variables	Estimation Issues
Less mobile caught Nephrops and scallops from within 1 mile and within 3 miles. (decreased flow of goods and services)	Lost output of vessels retiring, diverting outside 3 and outside 1 mile or converting to static gear	Value of reduced catch per vessel Number of mobile vessels fishing within 1 mile and within 3 miles	Can be estimated quite readily using available market data
Increased capital cost within 1 mile and within 3 miles (increased opportunity cost)	Costs of converting to static gear	One-Off Conversion costs per vessel Number of vessels converting	Can be estimated quite readily using available market data. Needs to be converted to annual equivalent.
Increased costs of fishing 1 mile to 12 and 3 to 12 miles. (increased opportunity cost)	Increased running costs of vessels diverted outside the I mile or 3 mile area	Increased costs per vessel Number of vessels diverting	Can be estimated quite readily using available market data. Not accurate but probably relatively small.
Costs imposed on statics inside 1 mile or inside 3 miles. (decreased flow of goods and services)	Increasing competition for sea bed territory from vessels converted to static gear	Current incidence of territorial conflict between static operators Proportionate increase in creels Proportionate increase in sea bed availability.	There is some territorial conflict between static operators, but presently this does not seem to be a serious issue. Such conflict might even decrease, depending on the balance between more creels and the increased territory available to creels.
Costs imposed on mobile operators outside 1 mile and outside 3 miles. (decreased flow of goods and services)	Decreased catches of existing vessels fishing outside 1 mile and outside 3 resulting from mobiles diverting to outside 1 or 3 miles.	Proportionate increase in vessels in 1 to 12 and 3 to 12 miles Judgements about catch and effort relationship.	Magnitude depends on the depends on the numbers diverting and those converting to creels Difficult to estimate because of unknown existing effort.
Reduced marine recreation outside 1 mile and outside 3 miles resulting from the environmental damage caused by mobile vessels diverting outside 1 mile and 3 miles ( decreased flow of goods and services)	Decreased marine based recreation outside 1 or 3 miles.	Number of vessels switching in the long run to fish outside 1 mile and 3 miles Impact on marine habitat and benthic mortality outside 1 mile and 3 miles Changes in fish stocks available to direct users (anglers and divers) whose activity is located outside 1 mile and 3 miles Changes in fish predator populations outside 1 mile and 3 miles Changes in predator populations which impacts on other marine based users (bird watching, wildlife tourism etc).	In the long run, because of shellfish stock improvements inside 1 mile and 3 mile, the increase in mobile effort outside 1 mile and 3 mile could be minimal. Although there might be deleterious effects outside 1 mile and 3 miles, most marine based recreation takes place very close to the shore. Information is only available for sea angling and to a much lesser extent, diving. Overall, this dimension is not worth serious research effort.
The environmental damage caused by mobile vessels diverting outside 1 mile and 3 miles reduces the benefits non-users obtain from simply knowing that the inshore ecosystem is protected - (General Public Non-User Value. ( GPNUV)) (decreased flow of goods and services)	Number of individuals who are not indifferent to the status of inshore marine environment for its own sake	Number of vessels switching in the long run to fish outside 1 mile and 3 miles Impact on marine habitat and benthic mortality outside 1 mile and 3 miles WTP of non-users to prevent the likely change in the marine environment outside 1 mile and 3 miles.	Primary research on WTP is not feasible. Unlike user values, GPNUV is probably not very sensitive to relatively small one-off changes in the marine environment. Some allowance might need to be made to accommodate this.
Loss of workers' satisfaction bonus for labour leaving fishing and having to take up less satisfying or well-paying occupations. (decreased flow of goods and services)	Labour in fishing may be able to obtain higher earnings by switching occupation, but prefer fishing. The income sacrifice reflects a 'workers satisfaction bonus' (WSB).	Number of individuals involuntarily exiting fishing	If fishing employment decreases, this could be a benefit. (Increased flow of goods and services). Only relevant if large reductions in employment arise
Some members of the general public may feel worse off simply knowing that mobile gear is no longer used within one or three miles. (General Public Non-User Value of activity, rather than marine environment itself) (decreased flow of goods and services)	% of general public with (other than commercial operators) with vicarious concerns for mobile gear operators within 1 mile and within 3 miles	WTP of general public individuals to prevent the inshore gear restriction for GPNUV	Not a traditional or long-standing feature of the inshore area Mobile gear will still be used No evidence of GPNUV for mobile gear use. Indeed, regarded by some as a destructive form of fishing
Some members of the general public may feel worse off simply knowing that future generations will not be able to use mobile gear within three miles. (bequest value of activity)	% of general public with (other than commercial operators) with vicarious concerns for future generations' use of mobile gear operators within 1 mile and within 3 miles	WTP of these individuals to prevent the inshore gear restriction because of Bequest Value	If GPNUV of the activity (see above) is not worth estimating neither is Bequest Value

Preliminary conclusion:

The increase in economic costs is likely to be restricted to reductions in mobile caught Nephrops and scallops and increases in capital and running costs. These can be estimated using value of landings and monetary costs. It will be difficult to estimate precisely how many vessels will convert to creels, retire or migrate. Undoubtedly, estimates of the total economic costs will be sensitive to assumptions about how mobile vessels would respond. As stated previously, normally, this would be explored through a sensitivity analysis. However, an analysis of the sensitivity in economic costs to assumptions is only worthwhile undertaking if the cost and benefit increases are of similar orders of magnitude The study goes beyond this by producing a model where users of the model can vary the assumptions themselves, produce their own sensitivity analysis and explore whether the balance of estimated costs and benefits is altered significantly by tweaking the model's assumptions.

4.3 Costs and Displacement Issues ^[32]

With respect to displacement, a key issue is the proportion of Nephrop trawlers wholly or partly fishing within 0-3 NM who would continue to use mobile gear but would now be displaced to fish outside 3 NM. This displacement imposes costs on fishers operating outside 3 NM, and simply shifts the impact of mobile gear on the marine environment beyond the near shore. The individual trawler operator's decision on whether to continue trawling will be influenced by a number of factors.

The safety of vessels and crew is an issue. Many smaller trawlers would not be able to cope with the sea conditions they would regularly encounter fishing exclusively outside 3 NM. Consequently, they would have to spend more days in port, with the real prospect of not being able to cover their overheads. We were informed by MS Fishery Officers that in some areas, such as Moray Firth and the North Coast IFG, a significant proportion of operators would have to either upgrade their vessel, fish inside 3 NM using creels or retire from fishing. Fishery operators indicated that many older operators would rather retire from fishing than use creels. Though, it should be noted that if they retire there is the prospect that a proportion of their shellfish entitlement would eventually become attached to vessels using static gear.

Another consideration is access to the territory beyond 3 NM. In some IFG areas, operators would have to steam quite large distances to get beyond 3 NM of the nearest landfall. This is particularly the case on the west coast of Scotland with its topography of long sea lochs and a patchwork of islands which trawlers would have to steam past because the islands are within 3 NM of the coast. In these areas operators' choices are; to relocate to another west coast port offering easier access to water beyond 3 NM, to switch to creels, or to retire. If they retire a proportion of their shellfish entitlement will become attached to vessels using creels.

The spatial distribution of stocks is also important. Many trawlers will be fishing partly or exclusively inside 3 NM because that is where they catch the most Nephrops. The assumption that trawlers would simply fish outside 3 NM presupposes that there would be Nephrops to catch and the value of landing would cover the operators' costs. If trawlers are forced off their preferred location their business may not be viable. In which case they must convert to something else (perhaps creels) or retire from fishing.

The assumptions we made about the proportion switching locations were informed by interviews conducted with Fishery Officers from every Fishery Office in Scotland. As stated previously, if these assumptions are felt to be inappropriate, users of the model can vary the assumptions themselves and observe the consequences.

4.3.1 Estimating Displacement Effects: Nephrops

Estimating the magnitude of the displacement effects was problematic. The issues are clarified if we initially consider nephrops and focus on two extreme scenarios. At one extreme, we could assume all nephrop trawlers currently fishing inside 3 NM either convert to creels, or retire with their licence entitlement subsequently being attached to a vessel using static gear fishing inside 3 NM. With this scenario, there would be no displacement impacts in the areas beyond 3 NM.

It should also be appreciated that, with this scenario, there would be sufficient territory inside 3 NM to accommodate all those vessels switching to static gear. This is because, as previously outlined, vessels using mobile gear require a larger area of sea bed than the equivalent sized creelers. Thus, if 50 mobile vessels switch to static gear they must release territory which could accommodate more than 50 additional static vessels. Also, compared with an equivalent creeler, the higher annual Nephrop mortality of a trawler means that the conversion of 50 trawlers into 50 creelers should enhance Nephrop stocks inside 3 NM. Both the catch per unit of effort of static vessels and the average size of Nephrops landed by all static vessels should increase. It is therefore conceivable that, if 50 trawlers were withdrawn from within 3 NM, more that 50 additional static vessels could be accommodated with no reduction in the average value of static vessel landings. ^[33] Provided that the starting position was not characterised by excessive fishing effort, the net addition to the number of vessels fishing the area would be a welcome development.

In terms of benefits and costs, in this particular scenario we would lose the 0-3 NM catches of trawlers. Total landings of Nephrops within 0-3 NM would probably decrease, but the value of landing would fall by less, because landings would now comprise larger and live Nephrops. Inside 0-3 NM, benefits would be realised in the form of less gear conflict and less territorial congestion, plus the benefits predicated on the change in the marine environment. Outside 0-3 NM, there would be no displacement effects.

Indeed, in this extreme scenario, given the spare capacity that would be released inside 3 NM, there might even be a transfer of fishing effort from outside to inside 3 NM. In other words, there could be a reversal of the expected displacement effects. This positive feedback flow might arise because some creelers currently operating outside 3 NM might move inshore to take advantage of the increased availability of territory and the Nephrop stock enhancement inside 3 NM. Also some Nephrop trawlers operating outside 3 NM may convert to creels with a view to exploiting the territory released inside 3 NM. Finally; the shellfish entitlement of retiring operators who worked outside 3 NM might become attached to static vessels fishing inside 3 NM. Thus, in this extreme scenario the restriction on mobile activity might reduce Nephrop mortality, gear conflict and territorial congestion across a broad swathe of the inshore area. In conclusion, if trawlers convert, displacement is not an issue and each trawler converting generates positive feedback effects producing positive displacement effects.

At the other extreme, there is a scenario where all the existing Nephrop trawlers working inside 3 NM switch their activity to outside 3 NM limit. If this happens, there will be costs imposed on fishers operating outside 3 NM. These costs would arise through decreases in their catch per unit of effort, increased gear conflict and more territorial congestion. There would also be impacts on the marine environment outside 3 NM. These additional costs should be taken into account and, relative to the magnitude of benefits, they could be significant.

It is worth noting however, this 100% displacement of trawler activity cannot be an equilibrium position because, inside 3 NM, catch per unit of effort and the average size of Nephrops would be increasing whilst gear conflict and territorial congestion would be falling. The opposite would be happening outside 3 NM. It is highly likely that in due course static effort will increase within 3 NM. With a fixed number of licences having shellfish entitlement, this will have to come from part-time fishers converting to full-time activity, or shellfish entitlement attached to trawlers gradually migrating to creelers. Over the longer term, the displacement costs associated with trawlers moving location might be lower than one would expect, because over time the incentive to convert will be increasing. As explained above, as more trawling effort migrates to using creels, then outside 3 NM there is the prospect of positive rather than negative displacement effects.

In conclusion, if trawlers convert we do not have to worry about displacement but instead we should recognise positive displacement effects. On the other hand, if trawlers move outside 3 NM there are displacement costs. However, over time these could be less than expected because of improvements in the relative attraction of fishing inside 3 NM.

Given the above consideration, in the absence of primary research, there is no basis on which to estimate displacement costs. On balance this will probably underestimate the costs of the two policy options, the extent of that underestimation being positively related to the proportion of trawlers moving rather than converting or retiring. Over time, because of the positive feedback effects, the proportion of trawlers converting should increase. In addition in some areas constraints such as safety issues, topography and stock availability could prevent many trawlers moving outside 3 NM. It is therefore conceivable that displacement cost associated with Nephrops might not be significant.

4.3.2 Estimating Displacement Effects: Crabs and Lobsters

In the case of Nephrops, trawlers and creelers are targeting the same species. Consequently, the removal of trawling effort from within 0-3 NM confers significant gains on static gear targeting Nephrops. Along large areas of the easy coast of Scotland static gear is predominantly targeting crabs and lobsters which trawlers and dredgers do not target.

There would be some benefits to crab and lobster fishers from the removal of trawlers and dredgers but they are less significant and are delivered by more indirect routes. The benefits to the crab and lobster operators will be less gear conflict, less territorial congestion and some increase in landings of crabs and lobsters. Landings will increase because trawlers and dredgers by-catch includes crabs. Also, the environmental impact of mobile gear, particularly dredgers, possibly adversely affects crab and lobster stocks.

In the case of crabs and lobsters, the benefits from curtailing mobile effort with 0-3 NM are less obvious. Thus, if any trawlers or dredgers did convert to static gear targeting, nephrops crabs and lobsters inside 3 NM there would be minimal improvement in the relative attraction of fishing inside 3 NM. Thus a bigger proportion of mobile effort will simply be displaced outside 3 NM. In conclusion we would expect the costs associated with displacement effects to be larger in the crab and lobster fisheries.

4.3.3 Other Displacement Effects

The displacement discussed above relates to what happens within the commercial fishing sector. One of the benefits from curtailing mobile effort is a reduction in environmental damage within the 0-1 NM or 0-3 NM zone. If the entire fleet converts to static gear, there would be no increase in damage beyond 3 NM. If a proportion of the trawling fleet switches location the environmental damage will follow that proportion.

As can be seen from the map in Section 3.5.2, the IFG area 3-6 NM is very much more than twice the 0-3 NM zone. This is because the IFG boundaries provided by Marine Scotland are based on straight lines linking points 6nm from significant headlands. The 0-1 NM and 0-3 NM zones provided by MS are based on lines drawn 1 NM and 3 NM from the coastline and not just headlands. The displaced mobile effort is therefore spread over a much larger area. To the extent that environmental damage is function of the frequency of disturbance, the reduction in the density of fishing effort might facilitate better habitat recovery before the next disturbance. Nonetheless, there will be some displaced damage. The issue is addressed in applied work by downgrading estimates of benefits to the general public ( GPNUV) (see Section 22).

4.4 The Principal Economic Benefits

• Society would gain the marketed output of Nephrops, shellfish and scallops caught by static gear or diving. This is of much higher quality and is more highly valued by society as reflected in higher prices. (Increased flow of goods and services which exceeds opportunity cost)
• In due course, there may be a commercial demersal fishery producing an output which is more highly valued than the costs of catching it (Increased flow of goods and services which exceeds opportunity cost)
• Increased Consumers Surplus of those engaged in marine recreational activity. This is the additional user benefits through increased personal enjoyment and the improved mental and physical health of participants (increased flow of goods and services). As discussed previously there is a spectrum of sensitivity to changes is fish populations. As discussed later, existing knowledge and available data does not presently enable the analysis of marine recreation to extend beyond those who interact directly with fish stocks (sea anglers and divers). In this context sea angling and diving should be considered as a proxy for all marine recreation interests.
• Societal benefits from increased marine recreation such as reductions in anti-social behaviour in some coastal communities, improved productivity of participants, reduced demands on health care budgets. (Decrease in opportunity costs)
• Insurance role of biodiversity (Reduced risk because of enhanced biodiversity) (Increased flow of goods and services)
• Increased Non-user benefits in the form of GPNUV . This is the benefit some obtain from simply knowing that many marine species could be restored and protected. (Increased flow of goods and services)
• Non-user benefits some obtain from knowing that the Inshore Marine biodiversity has been restored protected and can be appreciated by future generations. ( Bequest Value of Inshore Marine Ecosystem). (Increased flow of goods and services)

The economic benefits are more diverse and complex than the economic costs. In the Table below economic benefits have been categorised according to the following sectors:

A. Commercial Fishing.

B. Recreational Sector

C. Informal Visitors to Coastal Areas

D. The General Public

Table 4.3 The Economic Benefits of Limiting Trawling within 1 mile and within 3 miles

A. Benefits Associated With Commercial Fishing
	Benefit	Indicator	Key Valuation Variables	Estimation Issues
A1	1. Additional output (Nephrops and scallops) within 1 NM and within 3 NM from conversion to static gear. (increased flow of goods and services)	Output of vessels converted to static gear	Value of catch per vessel. Number of vessels converting.	WTP can be estimated from the market value of the catch. Prices per kg will be higher because of quality
A2	2. Additional output within 1 mile and within 3 miles from exploitable sea bed released from mobile exploitation. (increased flow of goods and services)	Output of enabled vessel expansion	Proportionate increase in exploitable sea bed area	Estimation of additional vessels output valued at market prices
A3	3. Additional output of vessels diverted outside 1 or outside 3 miles. (increased flow of goods and services)	Output of diverted vessels	Value of catch per vessel 1 to 12 and 3 to 12 mile zone. Number of vessels diverting.	Can be estimated quite readily using market data
A4	4. Resources released by vessels retiring. (decreased opportunity cost)	Resources released from fishing	Number of vessels retired from fishing	Given the fixed number of licences, the retirement of one vessel transfers the licence to another. There is no net reduction in resource use
A5	5. Increased catch of fin fish immediately outside 1 and outside 3 miles (increased flow of goods and services)	Additional demersal landings	Value of demersal landings	Past landings will need to be used as a guide to the future. Potentially large values with large margins of error
A6	6. Reduced gear conflict (decreased opportunity cost)	Less gear and time being lost by static and mobile operators	Monetary value of costs of gear conflict	Estimates by operators

Note: The benefits and costs of the commercial sector are either increases in revenue to operators or decreases in operators' costs. It therefore follows that changes in profit levels are synonymous with the balance of economic benefits and economic costs. Thus, an increase (decrease) in profits means an increase (decrease) in net benefits to society. This is not a contentious issue in the CBA framework.

B Benefits From Enhancement Of Marine Recreation
	Benefit	Indicator	Key Valuation Variables	Estimation Issues
B1	Benefits to sea anglers and divers: Personal enjoyment Improved mental and physical health of participants (increased flow of goods and services)	Expansion of recreational sea angling.	Increased number of anglers and divers Increased frequency of participation Number of activity days WTP per activity day	Good knowledge of angling activity levels, but not diving Primary research on WTP is not feasible. Values from elsewhere will need to be transferred to the inshore context Possibly high values with large margins of error
B2	Societal benefits from increased sea angling and diving: Reductions in anti-social behaviour in some inshore communities. Improved productivity of participants. Reduced demands on health care budgets. (increased flow of goods and services)	Expansion of recreational sea angling and diving	Increased number of anglers and divers. Increased frequency of participation Number of activity days	Primary research is not feasible Values from elsewhere are not available, therefore non-quantifiable None the less an important element of many public policies and high level Scottish Government objectives
B3	Benefits to the scientific community from sea angling and diving (increased flow of goods and services)	Development of methods for diver observations and use of rod and line to survey fish populations in inshore water	Confirmation of this role from Marine Scotland Science and the Academic Community	Non-quantifiable benefit

C. Benefits To Informal Visitors From Enhancement Of Coastal Visitor Experience.
Benefit	Indicator	Key Valuation Variables	Estimation Issues
Benefit from more enjoyable coastal visits through marine wildlife observation, as well as higher and more diverse levels of marine activity (such as more diverse commercial fishing, more divers, more anglers, more charter vessels)	Increase in visitor satisfaction through, marine wildlife tourism and more vibrant coastal communities etc.	Increased number of visits and quality of visits increased number of visits	Primary research required

D. Benefits To The General Public
	Benefit	Indicator	Key Valuation Variables	Estimation Issues
D1	Non-user benefit that some of the general public obtain from simply knowing that inshore sea angling / diving is restored and protected. ( GPNUV of the activity). (increased flow of goods and services)	Number of non-anglers who are not indifferent to the amount of sea angling/diving activity in the inshore area	WTP of non-anglers/divers to restore sea angling/diving.	Primary research is not feasible. Values from elsewhere are not available, therefore non-quantifiable. Possibly not significant. Indeed angling can be perceived as a cruel activity.
D2	Non-user benefit that some of the general public obtain from simply knowing that future generations will be able to enjoy sea angling. (bequest value of the activity) (increased flow of goods and services)	Number of individuals who are not indifferent to the sea angling/diving being available for future generations	WTP to restore sea angling/diving for the benefit of future generations.	If the GPNUV for the activity is not significant the bequest value will also not be significant
D3	Insurance role of biodiversity (reduced risk because of enhanced biodiversity) (increased flow of goods and services)	Number of risk-averse individuals	WTP to reduce the risk of ecosystem collapse	Primary research on WTP is not feasible. Values from elsewhere are not available, therefore non-quantifiable Potentially large values with large margins of error
D4	Benefits some obtain from knowing that the inshore ecosystem is restored and protected and can be appreciated by future generations (bequest value of inshore ecosystem). (increased flow of goods and services)	Number of individuals who are not indifferent to inshore biodiversity being available for future generations	WTP to reduce the risk of ecosystem collapse and restore biodiversity for future generations.	Primary research on WTP is not feasible. Values from elsewhere are not available, therefore non-quantifiable Potentially large values with large margins of error
D5	Benefits some obtain from simply knowing that the inshore ecosystem is restored and protected ( GPNUV of inshore ecosystem) (increased flow of goods and services)	Number of individuals who are not indifferent to inshore biodiversity for its own sake	WTP to reduce the risk of ecosystem collapse and restore biodiversity for its own sake.	Primary research on WTP is not feasible. Values from elsewhere will need to be transferred to the inshore context. Estimates probably capture D3 and D4 Possibly very high values with large margins of errors.

The NEV to society associated with the commercial sector approximate to changes in profits. More contentiously it can be argued that there is also benefit from generating jobs if there is no other source of employment. Homarus (2010), for example, added the wage bill on to the profits to provide a "value". In our view in some areas with high unemployment the opportunity cost of labour could be less than the wages of the fishermen. In the short term NEV of commercial fishing could be larger than simply the profit. Treasury guidelines do not provide for such adjustments. For this project, if appropriate, we will use a shadow wage rate.

The benefits associated with recreation, coastal visitors and the general (non-user) public are more complicated and diffuse and cannot generally be estimated using readily available market data. Indeed, their estimation is difficult. Despite, this they are obviously no less important than commercial fishermen's costs and revenue, and an economic evaluation that failed to address these would be in breach of UK (and US) guidelines on the conduct of economic evaluations. Their inclusion in this study here reflects standard practice. It is their exclusion which would be contentious.

The balance of costs and benefits will vary over time as stocks recover and business initiatives (and migration) bring down unemployment. Discounted Cash Flow techniques will be used to identify the Net Present Values. The discount rate we used was 3.5% and, in the main scenarios, the planning horizon was modest 20 years; though we also model the results using an infinite time horizon to fully reflect the potential for sustained and ongoing environmental benefits.

4.5 Benefits, Licensing and Latent Effort

It was previously explained that if 50 trawlers were replaced by an equivalent number of creelers, then the nephrop catch per unit of effort should increase along with the average length of Nephrops being landed. This is because compared with a creeler of the same length a Nephrop trawler has a higher annual catch and lands smaller Nephrops. It is therefore possible that, if 50 trawlers vacated an area, the area could accommodate an additional, say, 75 creel vessels without any reduction in the profitability of existing vessels. This means that the introduction of the 0-3 NM could result in increased employment in the catching sector. In addition, since there are more vessels than previously the fall in area's total value of Nephrops landings would not be as large, especially given the higher prices for creel caught Nephrops.

Whilst the additional vessels might be easily accommodated, the licensing system might not enable this. Since the number of licences with shellfish entitlement is fixed, the 25 additional vessels might not be forthcoming and the local benefit flow would be that much less. On the other hand, if 25 more vessels fish the area, there would be fewer vessels fishing elsewhere. Unless there was excessive effort elsewhere, the increase in the local flow of benefits would be at the expense of benefits elsewhere.

There is currently some slack in the system since some shellfishing entitlement is attached to vessels which are fished on a part-time basis. If catch per unit of effort does increase, and gear conflicts and territorial congestion are reduced, then a proportion of the part-time fleet may switch to full-time working. This might arise because the existing operators choose to increase their effort, or the increased value of their licence might persuade part-timers to sell licenses to potential full-time operators. The Table below presents the number of part time fishermen for each of Scotland's fisheries administrative ports.

Table Number of full and part-time fishermen by admin port ^[34]

Admin Port	Full	Part	Total	% PT
Shetland	233	205	438	47
Aberdeen	81	47	127	37
Orkney	257	121	379	32
Anstruther	116	48	164	29
Eyemouth	133	48	181	26
Buckie	166	49	215	23
Fraserburgh	657	134	791	17
Stornoway	323	64	403	16
Mallaig	263	41	337	12
Campbeltown	260	38	298	13
Ullapool	205	24	229	10
Ayr	512	54	566	9
Lochinver	20	2	23	7
Peterhead	372	28	400	7
Oban	240	8	248	3
Kinlochbervie	41	0	42	0
Wick/Scrabster	147	0	147	0
Grand total	4025	909	4987	18

The number of licenses with shellfish entitlement attached to vessels operating part-time is unknown. From the Table above, 18% of the catching sector works on a part-time basis. The Marine Analytical Unit of MS has examined this issue and has reported that the situation varies around the country. This variation is reflected in the above table. On the west coast, trawlers and static gear are often targeting the same species (Nephrops). Diverting trawlers away from near shore areas in the west would improve the profitability of static gear operating within 0-3 NM. However, there are relatively few part-timers in the west.

On the east coast there is more latent capacity in the form of part-time effort. However, on the east coast, crabs and lobsters, which are not targeted by trawlers and dredgers, are relatively more important. In the east coast the diversion of trawling would not have such a beneficial impact on static gear fishery and the incentive for part-timers to convert is not as strong.

In conclusion, the benefit flow is constrained by the licensing system and the spatial mismatch between the location of latent effort and strong incentive effects to convert to full-time working. This issue is explicitly addressed in Section 23.