Remote Electronic Monitoring (REM): business and regulatory impact assessment - draft

Business and Regulatory Impact Assessment

Title of Proposal

Remote Electronic Monitoring (REM) on scallop dredge vessels in Scottish waters and Scottish scallop dredge vessels wherever they fish.

Purpose and intended effect

Background

In accordance with articles 4(b) and 6 of the Regulation of Scallop Fishing (Scotland) Order 2017 (SSI 2017/127)^[38] (The 2017 Order), around 20 British registered fishing vessels which dredge for King Scallops financed the on-board installation of an REM system so that they can deploy 10 dredges per side in the 6-12 nautical mile area within the Scottish zone. The Scottish Government uses the REM data generated to validate that the number of dredges deployed do not exceed statutory limits by use of:

(i) spatial data (i.e. where and when a vessel is fishing); and

(ii) imagery from cameras (to monitor the number of dredges deployed).

Following the installation by the original 20 vessels the wider Scottish scallop dredge sector acknowledged the value of using REM in demonstrating responsible fishing practices, optimising co-existence with other marine users and improved spatial data of their fishing activities. Positive dialogue with the Scottish Government led to the majority of the active Scottish sector adopting fully funded^[39] REM systems (including vessel positioning system (VPS), winch sensors and camera imagery) on a voluntary basis. This programme of work was initially hampered by the pandemic, with the majority of installations taking place 2021 - 2023.

The Scottish Government’s Fisheries Management Strategy^[40] 2020-2030 (FFM) sets out our policy initiatives to protect the environment, and support a strong, sustainable and resilient fishing industry. A key part of the Strategy is to improve accountability and confidence in seafood products and fishing operations, supported by a robust compliance regime, by using existing and emerging technology, including REM, to deliver compliance and improve our knowledge base, ensuring that our decisions are grounded in the best available scientific advice and that we fish within sustainable limits. As part of that commitment, legislation is being introduced that will mandate the use of REM on all scallop dredge vessels fishing for any species of scallop in Scottish waters (creating a level playing field) and for Scottish vessels within that category wherever they operate.

Scallop dredge vessels operational in the Scottish zone in 2022 comprised 68% Scottish registered vessels, 32% other UK registered vessels, and no vessels from beyond the UK. These proportions are fairly consistent from 2018-2022.

The UK had 237 active scallop dredge vessels in 2021 with an average estimated operating profit as seen in the Seafish Economic data^[41] of approximately £41,700 per vessel in expected 2023 prices.^[42] The estimated operating profit for the fleet was therefore £9.9 million in 2021 in expected 2023 prices. Provisional data for 2022 suggests that the operating profit has fallen to £30,300 per vessel in expected 2023 prices with the fleet losing 8 vessels also. Profits for the UK Scallop dredge fleet have been flat or decreasing over the last decade as seen in the Seafish Economic data with costs rising faster than the value of catch. This has resulted in a long term decrease in the number of vessels in the sector.

Analysis of the scallop fleet’s profitability using Seafish data^[43] shows substantial variability in profitability each year. Taking a 5 year average of scallop profits from 2017-2021 (the last year of complete data) indicates an average net profit of £10,700 for the under 15 metre fleet and £33,900 for the over 15 metre fleet in expected 2023 prices.

Landings by Scottish registered vessels represented 59% of total UK scallop and queen scallop landings by weight and 58% by value in 2022.

Objective

To deliver confidence and accountability in the activities of fishing vessels at-sea, to ensure compliance with key legislation, such as that governing Marine Protected Areas (MPAs) and gear restrictions, and to enhance the reputation of Scottish fisheries and their management.

This could be achieved by introducing measures that prohibit any vessel undertaking scallop dredge operations in the Scottish zone unless a functional REM device is installed on-board and prohibiting Scottish scallop dredge vessels from undertaking scallop dredge operations without a functional REM system installed on board, regardless of fishing location. Following introduction of the policy, REM data – including positional data, winch sensor data, electronic monitoring images and video – will be provided to, and reviewed by, Scottish Ministers to ensure that gear restrictions and spatial management measures are respected.

High-quality monitoring across the scallop dredge fleet will provide high resolution spatial data and will strengthen accountability, producing the evidence base required to ensure dredging activity is compliant with legislative rules and regulations.

1) To deter non-compliance with fisheries and environmental protection legislation and enhance the Scottish Government’s enforcement capabilities by increasing the data available to assess scallop dredge vessel compliance. The REM camera function in particular provides an effective enforcement solution by monitoring compliance with legislative rules and regulations when vessels are at sea, specifically:

• to validate that the number of dredges deployed at sea do not exceed statutory limits; and,
• to function as a corroborative tool to prove (or disprove) fishing activity on location, for example when in close proximity to a restricted area, ensuring compliance with marine protection legislation.

2) Widening the use of REM will support and enhance the reputation of Scottish seafood, by providing a demonstration of compliance by scallop dredge vessels and offering confidence and accountability to consumers and retailers that dredging is being undertaken in accordance with the rules set.

3) Generate high resolution spatial data to provide a greater insight into where fishing operations take place and improve the evidence base on which decisions are taken by the Scottish Government and other relevant public authorities.

REM also supports the delivery of two of the National Performance outcomes contained within the Scottish Government’s National Performance Framework. These are:

Economy – we have a globally competitive, entrepreneurial, inclusive and sustainable economy, and Environment – we value, enjoy, protect and enhance our environment.

It does this by ensuring the fishing industry remains competitive in an international context by enhancing the sustainability and transparency of fishing operations, by ensuring that legislation intended to protect the marine environment and fish stocks is complied with, and by enhancing the evidence base from which the Scottish Government makes decisions regarding the marine environment.

Rationale for Government intervention

The scallop dredge method of fishing for scallops can have a significant effect on the seabed if the method is not managed effectively, and large negative impacts on protected marine features if fishing is undertaken in certain areas. There are spatial management measures in place to restrict where scallop dredge activity can take place but there are challenges in enforcing those restrictions due to evidential gaps (ie. the requirement to prove that fishing activity has taken place). The Marine Directorate of the Scottish Government fully investigates all reports of suspected illegal scallop dredging, based on the extent that the evidence allows and appropriate action is taken where necessary. REM will improve the Scottish Government’s control and enforcement tools, providing enforcement officers with the ability to independently monitor at sea operations, and with data to prove or disprove any allegations of illegal fishing.

The mere presence of a fishing vessel in a MPA does not, in and of itself, mean a law has been broken. Vessels may transit through and may fish these areas, providing they do not undertake activities, including certain fishing activities, which are prohibited within the MPA in question (by virtue of management measures contained in a Marine Conservation Order applying to that MPA), which can include certain fishing activities, and that they comply with any restrictions which apply within the MPA, for example, that gear of specified kinds is lashed and stowed.

Different activities are prohibited and regulated in different MPAs^[44] and so activity which is illegal in one, on the basis that it is prohibited within an MPA, might be legal in another. Existing legislation (Marine Conservation Orders) prohibits the deployment or use of scallop dredge gear within specified locations, either for all or part of the year. Within certain MPAs there are limited exemptions to prohibitions on deploying fishing gear, for example, in certain MPAs, certain types of gear can be deployed for scientific research purposes where a permit has been issued by the Scottish Ministers. This section is not intended to provide a comprehensive account of the legal framework regulating sea fishing activity within MPAs. For more detailed information, see information on MPAs on gov.scot.^[45] REM will deliver confidence that fishers are complying with the rules and regulations which are in place to govern scallop dredging activity, and to supplement existing enforcement tools. This has the further co-benefit of supporting the industry in proving it is complying with the law and operating a clean fishery, helping to counteract much of the negative press this sector has received.

The vast majority of the active Scottish scallop dredge fleet already carry REM systems. Most currently do so on a voluntary basis, although there is currently no requirement to have the system turned on where REM systems are being carried voluntarily. The REM legislation will mandate that active REM systems must be installed and operated on all scallop dredge vessels fishing for any species of scallop in the Scottish zone and on all such Scottish vessels wherever they operate.

UK vessels and vessels fishing in UK waters with a length of 12 meters or greater are required (subject to limited exemptions) to have a functioning satellite tracker (VMS) installed on-board^[46] which transmits the boats’ positional data to a satellite and then sends it to a national or international body that monitors vessels’ position, course, speed and other parameters. In general VMS pings are received every 2 hours. The EU also operates a VMS regime in relation to EU vessels and for vessels fishing in EU waters. In comparison, REM systems can report vessel positions at 10 second intervals. The availability of REM data for all scallop dredge vessels in Scottish waters, and Scottish scallop dredge vessels wherever they fish, will therefore be an improvement on the 2 hourly VMS reports and provide spatially rich data of all fishing activity. Such data is valuable in a range of circumstances, in particular it will provide a more detailed profile of Scotland’s scallop fishery, to aid and improve management measures, and improving the evidence base on which decisions are taken by the Scottish Government (for example the provision of scientific advice and in a marine planning context). In addition it will assist fishers in providing factual evidence of their activities during marine planning processes and has the potential to generate market benefits through the likes of accreditation schemes.

With the above objectives in mind, intervention through legislation is assessed to be the most effective method of effectively delivering mandatory REM requirements, and REM is assessed as being the most effective method of delivering the objectives identified.

Consultation

Within Government

Consultation has been undertaken with officials within the Marine Directorate of the Scottish Government, including policy, compliance and science experts and marine analysts/economists.

Within the UK we have also engaged with DEFRA, the Marine Management Organisation (MMO), the Welsh Government and Northern Irland Executive on overlapping areas of interest. In an international context we have engaged with the EU, Norway and other Coastal State partners on our REM policies.

Under the terms of the Trade and Cooperation Agreement between the UK and EU, a formal notification will be made to the Specialised Committee on Fisheries.

Public Consultation

A full public consultation^[47] on the use of REM took place from 15 March to 7 June 2022. The consultation sought views on the implementation, impact and general principles of the use of REM in the pelagic sector.

Responses to the consultation were mixed between individuals and organisations, and between environmental / conservation groups and fisheries organisations and have proved helpful in providing stakeholder views on a number of key questions. In total the consultation received 48 valid responses.

We published our analysis report^[48] of the responses to the REM consultation in August 2023.

Specific feedback received as part of the consultation has been used to shape the policy further, including (but not limited to) the following topics:

• Consistent REM monitoring and enforcement

Some respondents asked for consistency of REM monitoring and enforcement across fisheries administrations, with data sharing arrangements in place as necessary.

The Scottish Government officials have been considering relevant matters, including REM interoperability with officials from DEFRA, the Marine Management Organisation (MMO), the Welsh Government and the Northern Ireland Executive

• Number of cameras required A number of respondents suggested that the number of digital cameras required on a scallop dredge boat could usefully be increased to realise the full benefits of REM. For example additional cameras to monitor catch composition and discards. The Scottish Government response recognised this ambition but was clear that it had to be tempered with realistic expectations of what the technology can currently deliver, along with what and how data can be analysed considering different working environments onboard fishing vessels. The technical specifications which Scottish Ministers will publish under the REM legislation specify what needs to be captured in the field of view of the digital camera(s) forming part of an REM system and requires each vessel to carry a minimum of one digital camera. In practice and based on experience gained through the voluntary REM scheme, the vast majority of vessels will be required to carry two digital cameras in order to meet the field of view requirements of the scallops REM system technical specifications.

The Scottish Government published its response report^[49] on the REM consultation in August 2023.

Business

Views on REM were sought as part of the National Discussion Paper on Future Fisheries Management (FFM)^[50], which was published in March 2019. Businesses were also able to respond to the specific REM consultation held in 2022.

During the voluntary rollout of REM to the active Scottish scallop dredge fleet, the Scottish Scallop Sector Working Group (SSSWG) acted as a consultative forum to inform future policy development and discuss national issues facing the sector. The group represented scallop interests in Scotland. Membership (with dredge, dive and processing interests) included fishing association representatives, frontline fishers/businesses and Regional Inshore Fisheries Groups. SSSWG was disbanded in 2023 whilst the Fisheries Management and Conservation (FMAC) group was brought into a more strategic space to help delivery of the FFM Strategy and the key policies and actions within it. FMAC now operates as a ‘hub and spoke’ model, supplemented by a number of technical and issue specific subgroups, including a scallop sub group which has been engaged on REM developments.

We have engaged with developers of REM systems to ensure that current REM technology is capable of meeting the ‘technical specification’ minimum standards which the SSI will require REM systems installed on board scallop dredge boats to meet.

Options

Option 1: Do nothing

This would maintain the current monitoring arrangements for the Scottish scallop fishery. A number of vessels (group 1 below) fishing for king scallops in parts of the Scottish zone would be required to have an REM system (comprising fully functioning cameras, winch sensors and a VPS device onboard) in order to benefit from the dispensation provided in the 2017 Order (to use 10 dredges per side in the 6-12 nautical mile zone), however for the majority of vessels uptake would be voluntary.

Option 2: Introduction of legislative requirement for REM on relevant scallop boats

This option involves introducing legislation which requires REM systems to be installed and operated onboard all scallop dredge vessels fishing for any species of scallop within the Scottish zone and all Scottish fishing boats that deploy scallop dredges outwith the Scottish zone for this purpose. Affected vessels will be required to have a system comprising fully a functioning camera (or, depending on the vessel size and layout, cameras), winch sensors and a Vessel Positioning System (VPS) device onboard.

Sectors and groups affected

The following sectors have been identified as groups who will be affected by the proposal:

• Scottish scallop fishing industry - vessels that do not already have REM installed or are not mandated to operate it.
• Wider UK and International scallop fishing industry operating in Scottish waters.
• REM suppliers.
• Engineers (i.e. those that install and maintain REM systems).
• Internal Scottish Government, in particular Marine Directorate enforcement officers and spatial data analysts.
• Courts and the Crown Office and Procurator Fiscal Service – if criminal prosecutions are pursued.

Benefits

Option 1: Do nothing

Fishing vessels would be able to continue to dredge for scallops in the Scottish zone as per the existing Scottish sea fisheries legislation with no new restrictions.

Option 2: Introduction of legislative requirement for REM on all scallop dredge vessels fishing in Scottish waters and all Scottish scallop dredge vessels fishing outwith Scottish waters

At a basic level, the REM technology on scallop dredge vessels operating in the Scottish zone will:

• provide high spatial resolution positional data to identify where/when a vessel is fishing;
• provide video footage to verify the number of dredges deployed and to act as a corroborative tool in determining when fishing activity is being carried out; and
• provide the duration (time taken and distance covered) of tows.

Data that identifies where, when and for how long a vessel is fishing will provide a more detailed profile of Scotland’s scallop fishery, to aid and improve management measures, to act as a tool to deter and detect any non-compliant activity, improve the evidence base on which decisions are taken by the Scottish Government and relevant public authorities (for example the provision of scientific advice and in a marine spatial planning context) and help sustain this important industry for coastal communities.

Scotland’s marine environment is increasingly in demand, by a variety of sectors who want to utilise the resource. REM data will help address the challenges this poses by enhancing the fisheries evidence base and enabling improved interaction between the fishing industry and other marine users. The data can be used by fishers to effectively demonstrate their activities during marine planning processes or to derive market benefits through the likes of accreditation schemes, which could in turn improve the competitiveness of the product. This confidence in sustainability has also been noted in the significant price premium that MSC certification can convey (5-25% for different fish^{[51],[52],[53]}) with REM expected to help build the scallop fleet’s credentials with a possible increase in value to fishers as a result. While these price changes are difficult to quantify, even a small consistent price increase could see a significant change. With every 1% increase in the price of scallops benefitting Scottish fishers to the tune of around £332,000 based on the total value of landings in 2022^[54], similar to the higher expected costs of the REM system.

The risk based review of camera footage validates that a vessel is not exceeding prescribed dredge numbers in inshore waters and is also a corroborative tool to prove (or disprove) fishing activity on location, providing confidence and accountability in their operations. This could enhance the scallop industry’s abilities to demonstrate accountability in our fishing practices, to deliver confidence that fishers are complying with the rules and regulations which are in place governing scallop dredging, and to supplement our existing enforcement tools used as part of our world-class compliance system. Over time, with further development of tools such as machine learning (ML), REM could be used in place of existing methods allowing efficiencies in fisheries compliance activities. These compliance benefits have not been monetised given the use of REM has, up until this point, not been widespread.

REM technology offers a range of scientific benefits such as providing enhanced spatial information and thus enabling an improved understanding of the interactions between the scallop fishing industry and other marine users. If used on a large scale, and as more tools are developed and implemented such as ML, REM data streams can be integrated with existing data collection programmes to support stock assessments, with data derived for one purpose often having utility to support other scientific research interests. The benefit of this additional data and the resulting benefit of enhanced scientific research and advice has not been monetised due to the fact that, up until now, the use of REM has not been widespread and the fact that there is a lack of international examples to draw on.

Summary of Benefits

Non-Monetised – Option 1: Do nothing

1. No additional cost pressures for the fishing industry

Non-Monetised – Option 2: REM

1. Enhanced spatial data on the location of scallop fishing effort to inform the scientific evidence base for decision making, with possible future stock assessment improvements as technology advances.

2. Potential reduction in damage to protected areas due to increased compliance – leading to improved biodiversity.

3. Helping establish the tools and train AI through collected data to further improve the capabilities of REM.

4. Fishing accountability and increased consumer confidence improved reputation for Scottish catch, potential improvement in competitiveness of the product and improved access to markets. Monetised benefit is estimated to be £332,000 for every 1% increase in price.

Costs

Option 1: Do nothing

This option requires maintaining available compliance tools at existing levels and will, therefore, provide no additional means with which to address reports made to the Scottish Government of suspected illegal scallop dredging in MPAs or other closed areas.

In recent years markets and consumers have become increasingly focussed on sustainability, traceability and accountability. This confidence in sustainability has also been noted in the significant price premium that MSC certification can convey (5-25% for different fish^{[55],[56],[57]}). By maintaining the current monitoring arrangements, the product could potentially become less attractive to consumers and could potentially result in lower prices or, in the extreme, loss of markets if other scallop fleets adopt and demonstrate higher accreditation through REM. For every 1% decrease in the price of scallops the cost to Scottish fishers is estimated to be around £332,000 based on the total value of landings in 2022^[58]. As Option 1 is the baseline case no cost has been monetised for this, instead these are identified as possible risks.

Option 2: Introduction of legislative requirement for REM on all scallop dredge vessels fishing in Scottish waters and all Scottish scallop dredge vessels fishing outwith Scottish waters

Voluntary REM installations on active Scottish registered scallop dredge vessels benefited from contributions from the European Maritime and Fisheries Fund, the installations were initially hampered by the pandemic, with the majority taking place 2021 - 2023. Those adopting REM on this basis also benefitted from contributions for maintenance and license fees for the first year after installation.

The purchase and installation of any new or replacement REM systems, as well as any other ongoing costs for Scottish vessels will be expected to be borne by the fishers.

Owners of non-Scottish vessels that wish to continue to operate in the Scottish zone will need to procure an REM system which meets the technical specifications which Scottish Ministers will publish under the REM legislation and will need to liaise with their fisheries administration about their eligibility for any funding opportunities available from their relevant authority.

Estimated costs of the REM system for a scallop vessel (2023 prices)

• Initial system cost: £2,380 - £6,180
• Initial installation: £520 - £1,650
• Annual software license: £310 - £420
• Sim card with annual data package: £50 - £90
• Annual maintenance: £0 - £310 (excluding labor)

Summary of costs

• Annual cost Year 1 and replacement years: £3,250 - £8,320
• Annual cost Year 2 onwards: £360 - £810

Notes: Figures were deflated to expected 2023 prices from 2022 prices using the Treasury’s GDP deflator^[59].

Cost figures were estimated from Scottish scallop vessels who have already adopted REM and estimates provided by businesses looking to enter the sector.

Figures may not correctly sum to total annual costs due to rounding.

Payment of these costs

Costs can be broadly split into three categories: 1) the initial upfront cost of hardware (system and installation), 2) the cost of data transfer and system software / licences, 3) the ongoing maintenance of hardware and replacement of kit. It should be noted that these are estimates only.

There were 76 Scottish registered vessels and 36 vessels registered in the rest of the UK active in the Scottish zone in 2022. These vessels are split into three main groups for the purposes of estimating the cost.

Group 1 are 16 vessels who are estimated to be currently active of the original 20 who installed the REM system to comply with the 2017 Order. These vessels are likely to maintain their existing onboard REM system due to the benefit of deploying extra dredges from their early adoption. As such, while they would be impacted by this regulation they are not likely to change their behaviour due to having a monetary benefit to continue. It is assumed that the REM present on these vessels is sufficient to meet the new legislation requirements with only minor costs and so no additional monetised cost is expected.

Group 2 are those vessels who have installed the REM system voluntarily but who may have chosen to stop running the system at a future point. This is expected to be over 90% of the Scottish dredge scallop fleet who have not installed REM following the 2017 Order coming into force, estimated to be 52 vessels in 2022. The cost to these vessels is expected to be the cost of maintaining the system and purchasing replacement systems as many of these vessels may not have run the system if it were not made mandatory. The total maintenance cost for this group in the first year is estimated to range between £18,720 - £42,120 for the 52 vessels, with the system renewal cost (comparable to the first year purchasing costs) estimated to range between £169,000 - £432,640 for the 52 vessels.

Group 3 are those vessels who have not yet installed REM at all but who, under this option, would be mandated to operate an REM system. This is expected to be under 10% of the Scottish dredge scallop fleet with this group also including other UK vessels which are assumed to have not purchased the system yet. This group is estimated to be 44 vessels in 2022. The cost to these vessels is expected to be the cost of first purchase, maintenance and subsequent system renewal. The purchase and future renewal costs for this group is estimated to range between £143,000 - £366,080 per annum, with the maintenance costs estimated to range between £15,840 - £35,640 per annum.

All of the system costs listed above are expected to be borne by the industry, however, non-Scottish vessels in the UK fleet will wish to liaise with their fisheries administration to confirm if any grant funding may be available.

Industry estimates of the lifespan of the system is estimated to be on average 5 years, although systems can last longer or shorter depending on the quality of maintenance. For the purposes of the analysis, a full system repurchase is expected every 5 years, with a renewal expected in year 5 and 10 of the scheme for group 2 and a renewal in year 6 for those who newly purchase a system in group 3.

Public sector costs: Enforcement costs

To supplement existing Marine Directorate enforcement activity, the REM system will be able to detect non-compliance (while its very presence may deter it in the first instance), and Marine Directorate will deal with any detected non-compliance appropriately and proportionately if it occurs.

While there are additional costs associated with expanding the team reviewing REM data these are to be balanced internally from the other compliance efforts so there will be no overall additional cost, this is achieved through taking a risk based approach on resourcing different compliance and detection activities. There may be some minimal costs associated with purchasing specialised software for analysis or server storage for downloaded data, these costs are expected to be absorbed through existing budgets and are estimated to range between £4,000 and £30,000 per annum.

Public sector costs: Science costs

Cost associated with scientific analysis of spatial data generated through this policy are expected to be balanced internally with current resources. There may be future costs associated with the storage and management of retained data which will be reviewed periodically.

Data Transfer costs

The technical specifications which Scottish Ministers will publish for REM systems for scallop dredge vessels will require REM systems to automatically transmit VPS and winch sensor data to a data storage system when the scallop dredge vessel is within range of, has access to or is connected to a means of transmission. In many cases this will be when the vessel is within range of the mobile phone network, however, some scallop dredge vessels have satellite packages and may opt to transmit the VPS and winch sensor data that way.

The transfer of camera data and the potential costs involved will depend on the REM system that a fishers has on their vessel. The technical specifications permit REM systems to be installed which:

• automatically transmit all the camera data to the data storage system. This could be via the mobile phone network, or, subject to the technology onboard the vessel, through onboard satellite packages; and
• store the camera footage on the control box or storage box. Analysts then remotely select recorded camera data on the control box which is automatically transmitted to the data storage system when the vessel is next within range of, has access to or is connected to a means of transmission. This transmission could be via the mobile phone network, or, subject to the technology onboard the vessel, through onboard satellite packages.

The cost to the vessels of transferring the data to the data storage system will range depending on the functionality of their REM device (in relation to transfer of camera data), access to Wi-Fi, the vessel’s own data package, or if the vessel has to buy a new data package. Figures from vessels who have already implemented REM suggest that the cost for this could range from £4-7 per month, with an annual cost of £50-£90 as outlined. The current sim only packages^[60] are off the shelf therefore if fishers were to upgrade to unlimited packages in order to automatically upload camera data, the cost could range from £16-£44 per month, with an annual cost of £200-£530. However, as uploading camera data is expected to cost businesses more relative to storing data on the control box, it is not expected that businesses will choose this option unless it fits with their existing data package and business practices and it is anticipated that the cost differential between these two types of data transfer could lead to a preference for systems incurring data costs at the lower end of the estimated range.

Vessels that opt to transfer data via onboard satellite are not anticipated to incur additional costs due to the low amount of data being transmitted.

Summary of Costs

Non-Monetised – Option 1: Do nothing

1. No direct additional costs for the fishing industry or the public purse.

2. Indirect costs through continued non-compliant activities going undetected such as damaging marine protected areas.

3. Possible loss of competitive position and reduction in price received in future.

Non-Monetised – Option 2: REM

1. Nothing.

Monetised – Option 1: Do nothing

1. Nothing

Monetised – Option 2: REM

1. Cost of REM systems per vessel ranges between £3,250-£8,320 in the first year and sixth and between £360-£810 each other year.

Aggregate costs:

For those 52 vessels in group 2 who already have an REM system installed voluntarily, the total annual cost for this group is estimated to range between £18,720 - £42,120, with the system renewal cost estimated to range between £169,000 - £432,640 in years 5 and 10.

For those 44 vessels in group 3 who would have to purchase a new system, the total purchase and renewal costs for this group are estimated to range between £143,000 - £366,080 per annum, with the total maintenance costs estimated to range between £15,840 - £35,640 per annum.

2. Enforcement system costs ranging from £4,000-£30,000 in total per annum.

3. Data transfer costs are embedded into the annual maintenance costs and are not presented separately.

Regulatory and EU Alignment Impacts

Intra-UK trade

No impact. There is no expected impact on intra-UK trade as this will only impact the act of fishing in Scottish waters and not have any effect on downstream purchases or sales.

International Trade

No impact. There is no expected impact on international trade from this regulatory change. The regulation change would not proscribe any new requirements on the end product, in this case the landed scallops, and thus would have no impact on the ability to states and businesses to trade in this product on the Scottish market.

EU Alignment

The EU is taking steps to consider a role for REM in certain fisheries in the future as part of their wider review of the control and enforcement regulation^[61] . The SSI will advance the standards shared with the EU, creating a temporary period of divergence while it progresses its own development of REM. We have undertaken engagement and consultation with the EU on this REM policy and development of the SSI and are also seeking to share learning from its development internationally including with the EU.

Scottish Firms Impact Test

The Scottish Scallop Sector Working Group (SSSWG), whose membership included fishing association representatives, frontline fishers/businesses and Regional Inshore Fisheries Groups, were fully consulted throughout the development of this policy (until the group was disbanded in 2023 and replaced with an FMAC scallop group) and their views which reflected dredge, dive and processing interests were vital in its co-development. A number of Scottish businesses have already chosen to have an REM system installed on their vessels.

Analysis of the scallop fleet’s profitability using Seafish data^[62] shows substantial variability in profitability each year. Taking a 5 year average of scallop profits from 2017-2021 (the last year of complete data) indicates an average net profit of £10,700 for the under 15 metre fleet and £33,900 for the over 15 metre fleet in 2023 prices. The average annual cost over the first 5 years of REM for scallop vessels is estimated to be £940 for the under 15 metre vessels and £2,320 for the over 15 metre vessels when considering a single purchase year and 4 maintenance years. This would represent 9% of the profit from an under 15 metre vessel and 7% of the profit from an over 15 metre vessel.

However, there may be a significant variance in profits for these vessels, particularly given the variability in average profits year on year. As a result some businesses may be more impacted than the average in a particular year.

Finally, the average annual cost of the system is smaller than a 1% change in the price of scallops, REM is estimated to be up to £2,320 per vessel compared with an average of £3,240 change per vessel for a 1% price change in scallops in 2022. As such it is expected that these businesses would be able to absorb the annual cost.

Competition Assessment

Many vessels in the Scottish registered scallop fleet are nomadic in their fishing patterns, catching between 65-75% of its tonnage outside of Scottish waters in 2018-2022. As such the Scottish fleet may experience higher costs when operating outside of the Scottish zone compared with other vessels which would not be subject to REM requirements. However, as the costs are expected to be less than 1% of a vessels revenue and between 7-9% of a vessels profits it is not expected this would result in a loss of competitiveness for the Scottish registered scallop fleet. Additionally, nomadic scalloper vessels from the rest of the UK are expected to look to continue to access the Scottish zone and thus will experience the same fixed costs as the Scottish fleet when fishing in the Scottish zone. As the REM requirements under the REM legislation will apply to all fishing boats carrying out scallop dredge operations in the Scottish zone, they are not anticipated to have any major impact on the ability of operators to compete against each other.

With the reputation of Scottish scallops expected to increase as a result of demonstrating compliance with sea fisheries legislation such as marine protected areas (bringing these products more in line with public demand), this is anticipated to make the competitiveness of these products more favourable compared with substitute goods.

In recent years companies developing REM solutions to meet the challenges of monitoring diverse global fisheries have increased. In general, REM systems can be customizable and configurable to meet the diverse requirements of individual fisheries. The REM legislation (as with the 2017 Order) establishes the minimum standard which REM systems need to meet, enabling competitions between suppliers.

Consumer Assessment

The consumer in this is considered to be those who purchase the fish from the scallop dredge fleet. As noted in the Scottish Firms Impact Test the recurring costs of the system that fishers have to pay is less than a 1% price difference for scallops. As a result, it is not expected that there will be any noticeable extra cost borne by the consumers with the exception of where scallops are marketed under a special accreditation scheme. In this case it is expected that the additional price would be available for those who wish to buy more sustainably caught scallops, while alternatives would still be available on the market.

Consumers could also be considered the scallop vessel owners – the impacts on this group of people are considered throughout this BRIA.

Competition Filter Questions

Will the proposal directly limit the number or range of suppliers? E.g. will it award exclusive rights to a supplier or create closed procurement or licensing programmes?

No. Any supplier with the capabilities to supply REM systems which meet the technical specifications for REM systems for scallop dredge vessels (which will be published by the Scottish Ministers) will be able to do so.

Will the proposal indirectly limit the number or range of suppliers? E.g. will it raise costs to smaller entrants relative to larger existing suppliers?

Limited / No Impact. The proposal is not anticipated to limit the ability of any supplier to provide REM systems, regardless of size or existing business provision.

Scale should not affect the competitiveness of larger suppliers over smaller. The only consideration will be whether an REM system meets the minimum standards set out in the technical specifications.

Will the proposal limit the ability of suppliers to compete? e.g. will it reduce the channels suppliers can use or geographic area they can operate in?

Limited / No Impact. Introduction of REM will not directly affect firms’ routes to market or the geographical markets they can sell into.

Will the proposal reduce suppliers' incentives to compete vigorously? e.g. will it encourage or enable the exchange of information on prices, costs, sales or outputs between suppliers?

No. Introduction of REM is not expected to reduce suppliers’ incentives to compete vigorously.

Test run of business forms

No business forms have yet been produced, however, we will undertake a test run to ensure ease of use once forms are ready.

Digital Impact Test

Digital Impact Test Filter Questions

Does the measure take account of changing digital technologies and markets?

Yes. This measure is working with industry to move to a new and increasingly mature digital technology through remote electronic monitoring with the possibility of increased use of artificial intelligence to review the footage. Drafting of the SSI and the accompanying technical specifications has taken account of the need to future proof the requirements to allow for future digital developments.

Will the measure be applicable in a digital/online context?

Yes. REM data will be uploaded, accessed, and processed digitally.

Is there a possibility the measures could be circumvented by digital / online

transactions?

No. There are no transactions in this process.

Alternatively will the measure only be applicable in a digital context and therefore

may have an adverse impact on traditional or offline businesses?

No. The REM process contains a mix of traditional offline processes e.g. the installation and operation of physical hardware and digital processes (the capture, transmission, storage and analysis of digital REM data).

If the measure can be applied in an offline and online environment will this in

itself have any adverse impact on incumbent operators?

No. REM systems are likely to be supplied and operated by a mix of existing suppliers, and new suppliers, with no restrictions in place as long as the technical and operational requirements of the legislation are met.

Legal Aid Impact Test

Individual vessel masters could require access to legal aid if prosecuted for an offence under the REM SSI

Enforcement, sanctions and monitoring

This policy will provide a new, enhanced method of enforcing compliance with existing legislation regulating sea fishing activity. Penalties will be applied in instances of non-compliance in line with existing sea fisheries offences.

Where a breach of fisheries regulations has been detected, it will be reported as appropriate to the prosecuting authorities. This can result in either a Fixed Penalty Notice of up to £10,000, or a fine of up to £50,000 on summary conviction, or a fine on conviction on indictment.

The Scottish Government will review the data recorded by REM systems in order to check compliance with legislation regulating sea fishing activity. The frequency of review will be risk based.

The Scottish Government will remain the relevant competent authority with responsibility for scientific studies, compliance, monitoring and enforcement of the requirement to have a compliant REM system on board.

Implementation and delivery plan

The new scallop dredge vessel REM requirements will be introduced through secondary legislation.

The consultation on REM, ran between March 2022-June 2022.^[63] The consultation analysis report and the Scottish Government response report was published on 14 August 2023.^[64][65]

Preparation of draft legislation

The REM legislation will be laid in draft before the Scottish Parliament on 22 March 2024.

The REM requirements for scallop dredge vessels will come in to force on 17 June 2024.

Post-implementation Review

The intention is to maintain regular scrutiny of the policy.

Summary and recommendation

The Scottish Government recommends Option 2. Introducing new measures that require any vessel deploying scallop dredge gear in the Scottish zone to fish for any species of scallop, and any Scottish vessels deploying scallop dredge gear for that purpose wherever they are fishing, to have a fully functional REM device installed on-board and operational.

Table 1 – Summary of costs and benefits

Option 1

Total benefit per annum - economic, environmental, social: Non-Monetised

• Fishing vessels would be able to continue dredge fishing for scallops in the Scottish zone as per the existing Scottish fisheries legislation.

Total cost per annum - economic, environmental, social, policy and administrative: Non-Monetised

• No direct additional costs for the fishing industry or public purse.
• In-direct costs through continued non-compliant activities going undetected such as damaging marine protected areas.
• Possible loss of competitive position and reduction in price received in future.

Option 2

Total benefit per annum - economic, environmental, social : Non-Monetised

• Scientific benefits including enhanced spatial data on the location of scallop fishing effort and enabling improved interaction between the fishing industry and other marine users.
• Potential reduction in damage to protected areas due to increased compliance. The use of REM is anticipated to deter and detect non compliant activity – leading to improved health of fish stocks, in turn improving catch yields and future economic gains. Helping establish the tools and train AI through collected data to further improve the capabilities of REM.
• Fishing accountability and increased consumer confidence Improved reputation for Scottish catch, potential improvement in competitiveness of the product and improved access to markets. Monetised benefit is estimated to be £332,000 for every 1% increase in price.

Total benefit per annum - economic, environmental, social: Monetised

• There is no figure for total monetised benefits for REM due to the uncertainty in this new scheme.

Total cost per annum - economic, environmental, social, policy and administrative: Non-Monetised

• There are no major non-monetised costs presented.

Total cost per annum - economic, environmental, social, policy and administrative: Monetised

• Cost of REM systems per vessel ranges between £3,250-£8,320 in the first and sixth year and between £360-£810 each other year.
• For those 52 vessels in group 2 who already have the system voluntarily installed, the total annual cost for this group is estimated to range between £18,720 - £42,120, with the total system renewal cost estimated to range between £169,000 - £432,640 in years 5 and 10.
• For those 44 vessels in group 3 who would have to purchase a new system, the total purchase and renewal costs for this group are estimated to range between £143,000 - £366,080 per annum, with the total maintenance costs estimated to range between £15,840 - £35,640 per annum.
• Enforcement system costs ranging from £4,000-£30,000 in total per annum.
• Data transfer costs are embedded into the annual maintenance costs and are not presented separately.

Summary of monetised costs of each option

Option 1

• Year 1: £0
• Year 2: £0
• Year 3: £0
• 10 Year total: £0

Option 2 – Minimum of range

• Year 1: £165,720
• Year 2: £37,256
• Year 3: £35,996
• 10 Year total: £921,487

Option 2 – Maximum of range

• Year 1: £438,200
• Year 2: £104,116
• Year 3: £100,595
• 10 Year total: £2,459,644

Note: Figures have had a 3.5% discount rate applied in line with the Treasury Green Book.

Declaration and publication

I have read the Business and Regulatory Impact Assessment and I am satisfied that (a) it represents a fair and reasonable view of the expected costs, benefits and impact of the policy, and (b) that the benefits justify the costs. I am satisfied that business impact has been assessed with the support of businesses in Scotland.

Signed: Mairi Gougeon

Cabinet Secretary for Rural Affairs, Land Reform and Islands

Date: 20.03.2024

Scottish Government Contact point: inshore@gov.scot