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5.1 Requirements of the Sponsor

Any sector study needs a starting point. The team of consultants needs to know the requirements of the sponsor of the Study so they can select certain material for presentation and analysis and reject other material as being irrelevant.

One of the first jobs of the team leader, therefore, is to establish the approach which the sponsor wishes the consultants to take.

5.2 The Contribution of the Fisheries Sector to Economic Welfare

The recommendation in this Guide is that the contribution of the sector to economic welfare should be an underlying principle governing the process of selection of material, although, as noted under 2.1, other aspects of the sector may be important.

A sector study identifies the features of the fish industry which make the most contribution to economic, or material, welfare and to ways in which this contribution can be increased. Such an increase will be achieved if more output can be obtained from current inputs or if current output can be produced using fewer inputs, so releasing them for use, when possible, elsewhere in the economy.

The adoption of this principle means that information selected for review and analysis describes features which are of economic importance; sector studies point to aspects of the sector which are likely to have an impact on the lives of many people. Subject to the views of the sponsor, issues approached might be, for example, overfishing in the Exclusive Economic Zone (EEZ), post-harvest wastage, or institutional capacity. Information selected on each issue will be focused on how the contribution of the sector to economic welfare will be improved.

In contrast, a sector study team will avoid issues which are not of significant economic importance. It would be a mistake, for example, to devote attention to inefficient but relatively small public sector enterprises while giving insufficient attention to issues relating to the environmental management of a large coastal aquaculture industry.

Determining what information is necessary for the proper stocktaking and diagnosis relating to the selected issues is, more than anything, a matter of experience. In dealing with artisanal overfishing, for example, it may be appropriate for the team to seek information on the social status of fisherfolk, ease of entry and exit from the sector, health and educational facilities available to fisherfolk, other employment opportunities, and the attitudes of fisherfolkto certain issues. It would not be appropriate, however, for the team to attempt the collection of information for a feasibility study on the establishment of a co-management system.

5.3 Contribution of the Fisheries Sector to Gross National Product

Governments usually express the main economic objective in terms of the required increase in Gross National Product (GNP) or Gross Domestic Product (GDP), with a preference for GNP because it includes earnings remitted from abroad and excludes earnings sent abroad. If, from one year to another, there is an increase in GNP-or GDP-the working assumption usually is that society's resources are being used more efficiently.

In the fisheries sector-and, indeed, in most natural resource-bases sectors-this may not be so. The measure captures the value of goods and services generated by the sector and short-term increased landings may add to these. Additional fishing effort, however, may diminish the stock of the country's natural capital, represented by the fish stocks, resulting in longer-term damage to the capacity of the sector to contribute to GNP. Because most fisheries are over-exploited, this will very often be the case.

Economists believe that when this type of situation and other environmental externalities are taken into account, GNP statistics significantly overstate increases in economic welfare.

It follows that a sector study team should be especially careful to identify and make assessments, as far as is practicable, of all externalities originating within the sector, as well as those originating outside it and having an adverse effect on it.

One useful result from fully taking externalities into account is that any apparent contradiction between“fisheries management” and“fisheries development” disappears as the entire impact on fisheries resources of fishing operations is included as a cost.

This issue is referred to in greater detail in section 6.3.

5.4 Value Added and Economic Benefits

It is a mistake in a sector study to assume there is always net economic benefit from a relatively high value added4. For example, the contribution of the fisheries sector to total value added is relatively high in some countries where large numbers of people are employed in the sector. It may not be the case, however, that the net economic benefits generated by the sector are necessarily high. On the contrary, they could be low, or even negative, if the sector has attracted an excessive amount of capital and labour. Where this situation occurs, there would be net economic gains if capital and labour were withdrawn from the sector. In time, these gains would feed back into improved growth statistics.

4 Value added is the difference between total revenue of a business and the cost of bought-in materials, services and components. It thus measures the value the business has added to these purchased inputs by its processes of production. One way to calculate GDP (and therefore GNP) is to sum the value added in an economy.

A sector study team should be aware that high levels of employment and earnings in the fisheries sector are not necessarily beneficial to an economy and be prepared to make its analysis accordingly.

5.5 Considerations Other Than Economic Welfare in the Selection of Information

It was stated above that the contribution of the sector to economic welfare should be the underlying principle in a sector study. It should not, however, define the entire scope of a study. Many governments regard the fisheries sector as providing other services to society, apart from making a contribution to economic growth.

The concern which many governments place on the creation of rural employment has been referred to above. The role of the sector in providing food may be an important concern to some governments (although, with regard to this issue, see sections 6.17 and 6.18) and some may see the sector as having a strategic role, especially if the industry is located in border or remote areas. A range of social factors may play an important role in policy formulation and, therefore, have to be considered in the sector study. For example, the fisheries sector may provide employment for a particular religious or cultural group, or it may be an important source of female income and employment.

As stated in the outset to this section (5.1 above), one of the first jobs of a sector study team is to establish the sponsor's concern so they may be appropriately reflected in the study.

5.6 Summary-Criteria for the Selection of Information and Analysis

Information should be selected having regard to issues concerned with the contribution of the sector to national economic wellbeing.

An important measure of the economic significance of the sector is its contribution to GNP or GDP. The externalities present, however, may mean that this measure overstates the sector's contribution to economic welfare. A sector study, therefore, should take care that externalities are taken fully into account.

The team should be aware that high value added in a sector is not beneficial to an economy if an excessive amount of capital and labour are employed in the sector.

The team should be aware of the government's concerns which are not directly related to the net economic benefits generated by the sector and incorporate them into the study.

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