In the introductory section of this paper, we stated our intention to evaluate this concession system in light of two potential benefits that Christy (1982) believes can be obtained from territorial use rights in fisheries, or TURFs. These are the potential for (1) increasing economic efficiency in resource use in the form of positive resource rents, and (2) improving the welfare of fishing communities.
Answering the second point is somewhat more problematic. While it is true that most communities use the income generated from the concession for salaries of municipal employees who presumably serve the community as a whole, fry gatherers, most of whom are part-time fishermen, are affected in two ways. First, as a group, fry gatherers receive a price for their catch which is lower than that which would have prevailed if no concessionaire existed, but this is offset by a reduction in their average costs because the reduced competition from other fry gatherers contributes to increased average catch per unit of effort. Fry gatherers are a heterogeneous group with different average gathering costs and those with higher opportunity costs will leave fry gathering for alternative employment elsewhere. The reduced levels of employment in fry gathering will be offset by increases in other sectors which absorbed the departing fry gatherers.
A very important point to be made is that this resulting equilibrium in the labour market will have no impact on prevailing low average incomes if there are but few productive employment opportunities in the rural economy in the vicinity of fry grounds (this assumes labour immobility limits employment opportunities to the rural economy). Open-access to the fry ground, however, would also not make anyone better off because all returns to labour that exceed the social opportunity cost of labour would be dissipated with the increased gathering effort by new entrants who would be attracted by the existence of these higher returns. Consequently, open access does not make anyone better off, but does make the municipality worse off. The only way to increase incomes from fry gathering in the long term is through employment generation in other sectors so that the social opportunity cost of labour is raised (see Smith, 1981a; and Panayotou, 1982 for further elaboration of this line of argument). As long as the open-access nature of fry gathering is maintained and resource rents are dissipated, this sector is precluded from raising the social opportunity cost and hence incomes of labour in the rural economy of which fry gathering is a part.
This conclusion leads to the second possible avenue for increasing incomes or benefits of fry gatherers through transfer payments in their favour. Most coastal fishing communities consist of fishing villages and non-fishing villages. To the extent that a municipality's primary sector is thus diversified, part or most of the income generated from a fishing activity by the concession fee can be used to benefit non-fishing households. The extent to which this occurs depends upon the decision of the municipal officials regarding transfer payments and allocation of the municipal budget, which is clearly in part a political decision involving equity considerations. One could argue, of course, that because fry gathering communities may benefit from municipal governance and services made possible by the concession fee, they are better off than when the resource rents were dissipated by open-access conditions. However, the income from the fry concession does not necessarily benefit fishing communities relative to other non-fishing communities, because it depends on the budget allocation decisions of the municipality.
The key issue here is ‘who is the owner of the resource’? In the milkfish fry TURF under Philippine law, the municipality is clearly the owner and thus earns the resource rents. The other participants in the system - concessionaires and fry gatherers - tend to earn only their social opportunity costs. Because of the recognition that gatherers do not benefit in any particular way from the concession system, it has been argued that the system should be abolished (Deanon, Ganaden and Llorca, 1974). Because these arguments are based on the unfounded assumption that concessionaires become rich under the system, they overlook the benefits to municipalities, however.
A second proposal occasionally put forward is to form fry gatherer cooperatives and allow them to operate the concession. During the mid to late 1970s, a cooperative did in fact manage the San Jose, Antique fry ground under a reduced concession fee set by the municipality. The higher prices received by fry gatherers who are members of the cooperative can be seen in Figure 3. These higher prices were made possible by the fact that the municipality in question ‘shared’ its ownership of the resource with the fry gatherers by accepting a concession fee lower than that which probably would have prevailed under public bidding (see Table 1). Unfortunately, this cooperative has now collapsed due to mismanagement problems. More recently, two other Antique fry grounds (Laua-an and Belison) have been awarded to concessionaire cooperatives. Both were awarded after public bidding against private bidders and both have borrowed the funds for their concession fee from the Kilusang Kabuhayan at Kuanlaran (KKK) livelihood programme of the national government.
Unfortunately, the expectations for these cooperatives may be too high. If a cooperative must competitively bid for the concession, there is nothing to predict that it will be any more successful than private concessionaires in increasing the welfare of the fry gatherers, because the resource rent will still accrue to the municipality as owner of the resource. The cooperative may be able to achieve certain cost savings, however, particularly if policing costs are less than those which would be incurred by a private concessionaire seeking to enforce his monopsony rights.
In conclusion, the concession system appears capable of generating increased resource rents, but will only result in increased welfare for fry gatherers if they can share the ownership of the resource with the municipalities. This ‘sharing’ could take the form of subsidized concession fees for gatherer cooperatives or of a higher proportion of the concession income being spent by the municipalities in fry gathering villages than in non-gathering villages.
