3. ECONOMIC RENTS

As noted above, the two most important groups of species are the schooling pelagics (sardinellas, horse mackerels and sardines) and the cephalopods (octopus, squids, and cuttlefish). In addition, demersal stocks of the sparidae species and the hakes make significant contributions to the value of the regional catches (about US$ 85 and US$ 75 million respectively at the assumed prices). Under both price schedules, these four groups of species make up more than 75 percent of the total value of the catch in the subregion. They are, thus, the species that deserve the greatest amount of research.

As in most situations throughout the world, information on the status of the stocks is weak and needs to be improved. Nevertheless, the presently available information is sufficient to know that certain decisions and actions can be taken now, in order to improve the benefits to the coastal states. Of particular importance is the fact that several of the most valuable stocks have been fished to the point where a reduction in the amount of fishing effort would be desirable for both biological and economic reasons.

Assessment work has demonstrated the need to limit the effort exerted on the following stocks: shrimp (both in the artisanal fisheries in lagoons and the industrial fishing at sea - save certain exceptions), hakes, sea breams and cephalopods of the northern subtropical sector, apparently sardine in the southern part of its area of distributions and mackerel. In contrast, northern sardinella and horse mackerel stocks, and coastal and offshore demersal stocks in the Gulf of Guinea, taken as a whole, do not yet appear to be overfished (FAO, 1979a).

These estimates have been used, in Table 5, to derive a rough measure of the hypothetical economic rents that might be available from the cephalopod fishery in the area north of Cape Verde. It is necessary to emphasize the word, "hypothetical", both because of the method of deriving the estimates and because of the practical inability, at present, to extract such rents.

Fig. 4 - Estimated values of catches for price schedules A and B by countries and species groups

Source: Text Table 3.

Table 5

ESTIMATED RANGE OF HYPOTHETICAL ECONOMIC RENTS AVAILABLE FROM THE CEPHALOPOD FISHERY NORTH OF CAPE VERDE

				1976		1977
				Base		Base
A.	Estimated catches, 1976 & 1977, in thousand tons			180		162
B.	Estimated gross revenues, US$ 2 000 per ton, in millions		US$	360	US$	324
C.	Economic rents presently extracted, in millions		US$	23	US$	23
D.	Total fishing costs, excluding rents, in millions		US$	337	US$	301
E.	Total fishing costs, at Fmax, in millions		US$	236	US$	182
F.	Estimated maximum sustainable yield, in thousand tons		US$	198	US$	198
G.	Potential gross revenues, US$ 2 000 per ton, in millions		US$	396	US$	396
H.	Hypothetical economic rents, in millions		US$	160	US$	214
Sources and derivation:
	Row A:	CECAF 78/11, Table 9
	Row B:	Row A tines US$ 2 000
	Row C:	Table 8, below
	Row D:	Row B minus Row C
	Row E:	Row D divided by 1.43 (1976) and by 1.65 (1977)
	Row F:	CECAF 78/11, Table 10
	Row G:	Row F times US$ 2 000
	Row H:	Row G minus Row E

The major assumption made in deriving the estimates is that the total costs of fishing effort were equal to the total revenues from fishing, in either 1976 or 1977. This assumption is based on theoretical biological and economic models which, in turn, are based on a number of other assumptions including a high degree of mobility into and out of the fishery, constant and uniform prices, and constant and uniform costs per ton of vessel. Although the biological model appears to correlate fairly well with the observed values, the economic information is insufficient to evaluate the economic model. Thus, the range of hypothetical economic rents, of US$ 160-214 million/year, should be used only as an indicator that fairly large additional economic rents could probably be extracted. It should also be noted that the calculations are based on the reduction of effort to the point of maximum sustainable yield. Theoretically, larger economic rents would be available at event lower amounts of effort.

Two other problems with the method of derivation should also be mentioned. One is that the estimate of economic rents that are presently being extracted is undoubtedly too low. As noted in the discussion, the estimate does not include the costs to foreign vessels associated with the requirements for the landing of certain amounts of catches in Mauritania. If the rents presently being extracted were US$ 50 million - twice the assumed level - this would increase the Estimate of total hypothetical rents by about US$ 15-20 million.

The other problem is that the estimates make no allowance for revenues earned from the landings of other species than the cephalopods. Depending upon the prices and the yield curves for the other species, the hypothetical rents may be higher or lower than those calculated above.

Even if the hypothetical rents are real, there is little likelihood that they could be fully extracted under present conditions. The stocks of cephalopods in the area north of Cape Verde constitute only a part of the total supply of cephalopods available to the highly mobile fleets that fish for them. Additional large stocks are available in the northwest Atlantic and Northeast Pacific, as well as, apparently, in the area south of Cape Verde¹. The prices for access to a particular stock cannot be considered in isolation. As in the markets for any commodity, fishermen will seek access to supplies where the difference between their individual total costs and total revenues are maximized. Thus, if Mauritania raises the costs of access to too high a level, the fishermen will move to other areas where access costs are lower, even though returns per unit of effort may also be lower.

¹ Recent data indicate that high cuttlefish catches per unit of effort are occuring in an area off the costs of Guinea-Bissau and Republic of Guinea.

Furthermore, since the market for access rights is a new development, it is necessary to allow time for the adjustments to take place. Sudden large increases in the costs of access to a particular stock could be very disruptive with long term damages both to the coastal states and the foreign fishing states. Without a period of adjustment, an industry in a particular country might be forced out of business, thereby reducing the number of potential buyers of access rights in the future and constraining the market. If the coastal states were fully able to utilize the resources with their own capital and labor, the removal of foreign fishermen would not necessarily reduce the net benefits they can obtain from the resources. But where they cannot fully utilize the resources efficiently, their economic interests would be enhanced by permitting the adjustments to take place on a gradual basis and preserving the option of extracting economic revenues from foreigners.

This discussion of the extraction of economic rents should not be interpreted as meaning that net benefits to coastal states are only to be derived in terms of economic revenues from foreign fishermen. The discussion simply attempts to provide a rough estimate of the amount of economic rents that might be available. The use of international markets for the resources and for access to the resources is a device to calculate an economic measure of the value of rights to the resources. These rights can be exercised directly by the coastal states through the development of their own fishing industry of they can be leased to foreign fishermen in exchange for economic revenues or in exchange for other kinds of benefits including training of fishermen, processing facilities, grants-in-aid, etc. Whether the coastal states seek to extract net benefits by the development of their own fishing capacity or by collecting economic revenues from foreign fishermen, the calculations of hypothetical rents indicates that there are considerable benefits potentially available.

Finally, in the case of the cephalopods (as with all fisheries), the benefits cannot be extracted without incurring certain costs. Obviously, if the coastal state wishes to develop its own fishing capacity, these costs include the costs of fishing. But in addition, several other costs have to be taken into consideration for the management of either domestic or foreign fishermen. These include the costs of acquiring the information necessary for improved decisions, the costs of formulating and imposing the regulations and fees or taxes, and the costs of enforcement. Such costs, particularly those of enforcement, are not negligible and would mean that the potential net benefits to the coastal states would be lower than the hypothetical rents that have been calculated. There is no way of determining, at this time, the magnitude of these costs for the cephalopod fishery.

In addition to the cephalopods, there are other fisheries in the northern subregion of CECAF which are evidently subject to the application of excessive amounts of fishing effort. These include stocks of hakes, seabreams and shrimps. Although the information is not sufficient to make even hypothetical estimates of potential economic rents, it is evident that there is economic scarcity and that rights of access to the stocks have value. Thus, if the coastal states desire to do so, they can extract benefits from foreign fishermen through the imposition of taxes or licence fees, or through requirements for grants-in-aid. One approach to the extraction of maximum net benefits from foreign fishing is the empirical one of gradually increasing fees and taxes and observing the results.

With regard to the schooling pelagic species, there seem to be opportunities for increased catches of sardinellas and horse mackerels. For sardines, the most recent analysis suggests that the stocks in zone C (from 23° to 26°N) is being fished close to the point of its potential yield of about 510 000 t (FAO, 1979b). The other stocks in zones A and B (to the north of 26°N) do not appear to be exploited at the level of their maximum production. These, however, are provisonal conclusions. It is not even clear that stocks in the three zones are separate stocks.

In summary, it is clear that the economic value of the fishery resources in the northern subregion of CECAF is very high - perhaps higher than that of any area of the world of equal size. Gross revenues close to a billion dollars a year are being produced by the vessels of a small number of states. About three-quarters of the total value is being taken by states from outside the region (assuming that Spain should be considered as falling in this category).

This wealth now comes within the jurisdiction of half a dozen coastal states, with the greatest proportion occuring within the extended economic zones of Morocco, Mauritania and Senegal and with significant potential in the zones of Guinea-Bissau and the Republic of Guinea. These coastal states have the opportunity for acquiring large benefits from the use of the resources, either by extracting revenues from foreign fishermen, by developing their own fishing capacity or by doing both.

The magnitude of those benefits, however, cannot be satisfactorily estimated at present because of the critical absence of economic information. It is likely that the greatest increase in net benefits can be achieved from the cephalopod fishery, but high values are also apparent in several other fisheries as well. In all cases, the values can be expected to increase in the future as prices for fish products rise and as distant-water fishing countries experience increasing difficulties in gaining access to economic zones in other areas of the world.