An introduction to the economics of fisheries management

Table of contents

W.C. MacKenzie
950 Sadler Crescent
Ottawa, Ontario
Canada K2B 5H7


This document has been prepared as part of FAO's Regular Programme activities, aimed at assisting fishery administrators and other persons responsible for the management of fisheries. It is one in a series of technical papers relating to the PRACTICES OF FISHERIES MANAGEMENT. The list of these papers is given at the end of this document.

Reprinted 1992

This document has been prepared as an aid in training courses in fishery management and development. It focusses primarily on the economic aspects of fishery management and particularly within the context of free market economies and in conditions where unemployment is not a severe problem. Emphasis is given to the regulation of fishing effort as a means for overcoming the economic efficiency that is associated with common property fisheries. The approach taken in the paper is valid and important for many situations, but it is not universally applicable. It must be recognized that the goal of optimizing social benefits from fishery development and management can be achieved in a variety of ways in accordance with each nation's individual value system. Issuance of the document does not imply the expression by FAO of any opinion whatsoever concerning the legal or constitutional status of any country, territory or sea area, concerning the delimitation of boundaries or concerning any country's policy making and administrative procedure.

Distribution :For bibliographic purposes this document should be cited as follows:
FAO Fisheries Department
FAO Regional Fisheries Officers
Directors of Fisheries
MacKenzie, W.C., 1983 An introduction to the economics of fisheries management. FAO Fish. Tech.Pap., (226):31 p.


ISBN 92-5-101270-9

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying or otherwise, without the prior permission of the copyright owner. Applications for such permission, with a statement of the purpose and extent of the reproduction, should be addressed to the Director, Publications Division, Food and Agriculture Organization of the United Nations, Viale delle Terme di Caracalla, 00100 Rome, Italy.


Fishery management relates to a total system made up of resources, industry and trade. There are important linkages between these components. In contrast with other resource industries, common property in fishery resources implies that there is no market mechanism through which access to these resources could be allocated among users. In many cases, governments have been forced to intervene, rightly or wrongly, to fill this vacuum. Economically, rational fishery management necessitates the transformation of common property through some kind of limited entry system designed to optimize net benefits from the fishery. Management planning involves the definition of goals and policy objectives and the development of strategies to assure attainment of policy objectives.


Acknowledgement of every source, personal and documentary, of knowledge and insight contributory to the content of this manual would be quite impossible: their number is beyond calculation. I should mention, however, that, among recent writings relating to the subject, I owe much to those of P. Copes, J.A. Crutchfield, G.R. Munro, H.A. Regier and A.D. Scott, and am indebted especially in the present instance to those of T. Panayotou, P.H. Pearse and J.-P. Troadec.

Useful comment on preliminary drafts of this work was received from the last named author, who commissioned it, and from others in the Fisheries Department of F.A.O., especially F.T. Christy, Jr. Preparation of the final version benefited also from oral discussion with those referred to and a number who participated in a seminar on this subject in Rome on 12 February 1982.

Needless to say, none of those referred to is to be blamed for the shortcomings and blemishes that remain. In that respect, the writer solely is culpable.

W.C. MacKenzie
(March 1982)



1.1   Preamble

A major theme of this paper is that fishery management relates to the total system, consisting of the resource base and the (harvesting and processing) industry and the trade by means of which the natural resources are utilized in the service of product markets. The central objective of management is optimization of the aggregate social benefit derived from these activities as a whole.

1.2  Component Structure

1.2.1   The Resource Base

The natural-resource base consists of the resource endowment, i.e. stocks of fish species, and the supporting natural environment or habitat. Protection of that habitat as well as conservation of the fish stocks therein is a primary responsibility of fishery management.

Fishery resources are finite, stocks are exhaustible and interrelationships among them are highly complex. Knowledge of stock magnitude, behaviour and response to fishing pressure therefore is imperative for intelligent management.

A peculiarity of fishery resources is that traditionally (with minor exceptions) they, as well as their aquatic habitat, have been common property. The extension of fishery-management jurisdictions (200-mile EEZs) by coastal states has transformed extensive tracts of these resources into national (from formerly international) common property. Because of differences in cost structure and social values, negotiations between countries for the allocation of shared resources present some of the most difficult problems for fishery management.

1.2.2   The Primary Fishing Industry

This division of the commercial fisheries consists of the enterprises (of all types and sizes) engaged in the harvesting of fishery resources. Organization varies greatly from place to place, depending on historical evolvement and on current economic and socio-political factors.

As a consequence of open and free access to the use of common-property resources, traditional in the fisheries of most parts of the world, which compels fishing enterprises to disregard collective interests in a progressively intensified competition for shares of a (naturally or administratively) limited catch, mature industries are prone to crises and impoverishment. Because of the resulting pressure to circumvent and/or emasculate fishery regulations, a secondary effect often is depletion of the natural resources, which compounds the problem. The small-scale or artisanal fisheries, which in many places are an occupation of last resort, tend especially (as a result of gross overcrowding) to be devastated by such crises.

The divergence between individual and collective interests is the cause of the inter-group conflicts that are a characteristic of the fisheries almost everywhere, e.g. conflicts between small-scale (inshore) and large-scale groups dependent on the same market and between domestic and foreign fishermen.

1.2.3  The Fish Processing Industry and the Fish Trade

The processing of fish in advanced forms (filleting, freezing, curing and canning) becomes an important industrial segment when fish must be stored and/or transported to distant markets. Storage is required when supply and demand are out of phase seasonally, i.e. when either production or consumption are concentrated in particular periods of each year. Peakedness in the catch is often inevitable but sometimes is due to poor organization or to the use of an inadequate, i.e. small-scale and relatively immobile, harvesting technology.

Economies of scale in fish processing are realized principally in business organization, i.e. in the bulk-purchase of supplies and consolidation of marketing, for example, rather than in the processing operation itself. Like artisanal fishing and in contrast with industrialized fishing, fish processing tends generally to be labour intensive.

The fish-processing industry and by extension the fish trade (marketing and distribution) sometimes reflect the fragmentation and dispersion of the fish harvesting industry. This can be a cause of excessive costs and, in the case of export trading, a source of weakness in competition with better organized rivals.

1.3  Linkages and Interdependence

1.3.1   Factor Supply

Since the fisheries are an open system, there are important linkages with sources for the supply of labour and capital. Capital requirements include funds for investment in capital assets (infrastructure, plant, vessels, gear, etc.) and for operation (payroll and inventory financing, etc.). Primary fishing enterprises especially often are unattractive to private sources of funding (banks and the like). Because of this, governments are induced to provide credit services for the fisheries. Unfortunately, intervention in this way by government tends to reinforce the inherent pressures toward over-expansion in the commercial fisheries.

On the other hand, the provision of public goods, e.g. scientific-research and extension services, harbour works and so on, which are accepted as a legitimate responsibility of government in most societies, is an essential underpinning of fishery development.

The commercial fisheries are linked with a wide variety of equipment-supply sources, the major such source being the shipbuilding industry and ancillary industries and services associated with it. Through these linkages, the development of a viable fisheries sector (in proportion to its size) may bring about a significant development in other sectors of the national economy.

1.3.2   Product Markets

The initiation, adaptation and expansion of fishery production is determined by opportunities for the sale of products. The demand for food products of the fisheries tends to be inelastic but is subject, to some extent, to manipulation.

A product market transmits, by means of prices, intensive demands for some species and rejection of others. Effective management of fishery-resource use in an ecological context, however, presumably would require balanced exploitation of the species stocks involved. Market signals, that is, fail as a guide for management decisions in this respect.


2.1  Introduction

2.1.1   The Involvement of the State

In contrast with other resource industries, common property in fishery resources implies that there is no market mechanism through which access to these resources could be allocated among users. More or less inadvertently, government has been drawn into the vacuum.

Governments have tended to adopt employment maximization in the fisheries as the primary objective of management and to concentrate effort on the resolution of conflict among vested interests. Since the former action contributes to the latter problem, this approach to fishery management is self-defeating. It leads, moreover, to intolerable complexity of regulation and unsustainable enforcement costs.

2.1.2   Development as Management

The necessity for fishery-resource conservation originates from the industrial, as distinguished from natural, predation of fish stocks. Since that predation is initiated by a demand for fishery products and is intensified by growth in such demand, it follows that fishery management involves the “management” of fishery development.

Supply management in fisheries (often important for successful export trading) presents extreme difficulties but opportunities exist (a) for relating catch quotas to the marketing outlook, and (b) for complementary use of aquacultural production. Movement in the direction of (a) may be politically difficult in some cases, because of a potentially adverse affect on elements of the small-scale fisheries and the communities they support.

2.2  Rational Fishery Management

2.2.1  The Transformation of Common Property

The socially wasteful propensity in the commercial fisheries and their proneness to crises and impoverishment are directly traceable to the institution of common property in fishery resources and open and costless access for resource users. Common property and open access, however, are not inevitable: the conversion of a national property to some form or forms of private property may at times be feasible.

The form suggested is that of a usufructuary right for fishery-resource users, i.e. the right to the use of a state property for individual fishing enterprises (persons, groups, communal organizations corporations, etc.). The right in some instances might pertain to an identifiable discrete stock, in other instances to a share in a total allowable catch (TAC), for example.

Such rights would be granted on a long-term basis and, to facilitate entry, adjustment and exit (except for provision against abuse, e.g. monopolization), they would be freely transferable. By motivating producers to operate at lowest private cost, this arrangement might be expected (a) to optimize net social benefits from the fishery harvest, and (b) to minimize state involvement in regulatory activity in the fisheries.

2.2.2   The Rationalization of Mature Fisheries

Application of the “ideal” approach just outlined, as an institutional innovation, is likely to encounter formidable obstacles in the real world, e.g. opposition from entrenched interests, social inertia and political sensitivity to the disruptive impact of change.

There are practical difficulties as well to be overcome, e.g. accommodation of all existing participants in a fishery, adjustment to variation and vagary in resource (stock) availability, adaptation to multispecies stocks (typical of tropical waters) and prevention of cheating (under-reporting of catches).

A regime of usufructuary or similar quasi-property rights in fisheries, therefore, may have limited applicability at present. Among alternatives, only a state (or a regulated private) monopoly might realize the benefits of such a programme or most of them.

A provisional approach would be a simple entry-control programme, which, under certain conditions, might be managed so as to minimize the potential for erosion of social benefits intrinsic in the struggle among fishing enterprises for resource shares. The collection of a royalty on fish landings would (a) dampen the tendency toward wasteful investment and practices, and (b) return to the public a proportion of the resource rent generated under closed entry.

2.3  Management Planning

2.3.1  Definition of Goals and Policy Objectives

Policy making for fisheries embraces not only industrial regulation, which is complex enough, but also trends and events in other areas of national policy that impinge on the fishing industry and the fish trade, e.g. foreign trade, public finance and social affairs. Integration of governmental planning across a wide front, therefore, is of great importance.

Planning and policy making, like the execution of policy, is essentially an activity of institutions (as opposed to individuals). The key role is that of the executive, i.e. the political head of bureau or agency who, however, requires the support of competant policy analysts as advisers. A common impediment to efficient performance of the analytical function, in developing countries more particularly, is the lack of an adequate knowledge base. A priority for establishment of the necessary research and data-gathering services is thus indicated.

Planning involves, among other things, (a) the setting of goals, i.e. articulation of society's aspirations, a basically political contribution to the policy-making process, (b) a restatement of those broad aims in operational terms for fishery-management and development purposes, and (c) definition of goal priorities or policy objectives. Recognition of conflicts among objectives and evaluation of the necessary compromises or trade-offs become imperative at this point.

2.3.2  Strategies, Tactics and Adaptation to Change

Few objectives have universal validity. Customarily, they differ from country to country and change over time, in accordance with (a) the prevailing value system, e.g. with respect to income distribution in society, and (b) the particular stage of development of a country's fisheries. In so far as possible, action in the present should not foreclose options for the future.

It is important too that the strategic phase of planning not be neglected. Strategies provide the guidelines without which tactical planning (the design of specific programmes) is liable to be misdirected and wasteful. Since they are intended to assure attainment of policy objectives, strategies must be devised to conform with the particular requirements and circumstances of a country's fisheries.

Equity and effectiveness in the execution of policy require (a) that the framework of rules and regulations be reasonably stable and predictable, (b) that such rules and regulations be the least necessary and interfere as little as possible with the economic interests of those affected, and (c) that they be applied with due flexibility. That policy makers and administrators be seen to be responsive to the needs of interested groups is an urgent requirement also. Appropriate channels therefore must be provided (a) for the receipt of client input to the planning process, and (b) for the evaluation of programme impacts.

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1.2Component Structure
1.2.1The Resource Base
1.2.2The Primary Fishing Industry
1.2.3The Fish Processing Industry and the Fish Trade
1.3Linkages and Interdependence
1.3.1Factor Supply
1.3.2Product Markets
2.1.1The Involvement of the State
2.1.2Development as Management
2.2Rational Fishery Management
2.2.1The Transformation of Common Property
2.2.2The Rationalization of Mature Fisheries
2.3Management Planning
2.3.1Definition of Goals and Policy Objectives
2.3.2Strategies, Tactics and Adaptation to Change
APPENDIX A :Selected Items of Equipment and Supply for Fish Harvesting and Processing
APPENDIX B :Fishery-Type Regulations, as Applied to the Primary Forest Industry
APPENDIX C :Reading List