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Report of the


La Jolla, United States of America, 15-18 April 1998

Rome, 1998


This is the final version of the report of the FAO Technical Working Group on the Management of Fishing Capacity, La Jolla, United States of America, 15 to 18 April 1998.


Participants at the meeting
All FAO Member Nations and Associate Members
Other interested Nations and national and
international organizations
FAO Fisheries Department
FAO Regional Fishery Officers

Report of the FAO Technical Working Group on the Management of Fishing Capacity. La Jolla, United States of America, 15-18 April 1998.
FAO Fisheries Report. No. 586. Rome, FAO. 1998.


The Technical Working Group on the Management of Fishing Capacity reviewed the various issues related to measurement and monitoring; management and reduction methods; broader policy and institutional considerations; as well as specific high seas aspects. The Technical Working Group (TWG) emphasized the timeliness of this meeting and stressed the crucial need for countries and the international community at large to urgently take steps to address and prevent overcapacity (overcapitalisation) as recommended by the Code of Conduct for Responsible Fisheries which the FAO Conference adopted in 1995. The TWG produced a wide consensus on the need: to develop more appropriate measurement methods and monitoring mechanisms, including fishing vessel registry; to give far greater emphasis to fleet monitoring and the assessment of fleet dynamics; to adopt policies which clearly specify access conditions; to give a greater priority to management methods aiming at adjusting rather than blocking the pervasive tendency for overfishing and overinvestment resulting from open access conditions; to reassess and strengthened management methods used and implementation procedure, in recognition that the applicability of available management methods would nevertheless remain situation specific; and to approach the reduction of fishing capacity with care, avoiding spillover effects and carefully controlling the induced effects of scrapping programmes. The TWG provided guidance and made a number of recommendations to better address and tackle these issues within national jurisdictions. The TWG also recognized that the high seas may be confronted with an even greater overcapitalization problem than EEZ fisheries due to the prevalence of rather open access conditions and the fact that there are at present no internationally agreed measure to cause states to control fishing capacity. It recommended that the 1995 UN Agreement and the FAO Compliance Agreement be urgently ratified. The TWG further suggested that complementary measures would be required, aiming in particular at: improving monitoring mechanisms for high seas fleets; strengthening and empowering regional fishery organizations; creating new organizations to ensure full coverage of the resource concerned; controlling the disposal (‘dumping’) of excess national capacity in general, and of older vessels to developing countries in particular; and at addressing the growing importance of flags of convenience. Finally, the TWG felt that much more research work and institutional building efforts were still required at both national and international levels to improve present capacities to properly address the many issues pertaining to the effective control and reduction of fishing capacity.






Latest situation of major marine resources including high seas stocks

Definition of fishing capacity and its underlying economics

Measurement of capacity

Control of capacity

High seas



Measurement and monitoring of fishing capacity



Incentive blocking/adjusting control measures and reduction of fishing capacity

Incentive blocking control methods

Incentive adjusting control methods

Reduction of fishing capacity

Control of fishing capacity for high seas fisheries

Broader policy and institutional considerations

Policy framework

Institutional requirements


International aspects


Monitoring and information sharing


International policy initiatives

National initiatives

Follow-up of the TWG meeting

Annex A: Note relative to the thematic report on measurement

Annex B: Incentives blocking control methods: special considerations for developing countries

Annex 1: List of participants

Annex 2: Agenda of the meeting

Annex 3: List of documents presented by FAO at the TWG

Annex 4: Initial definition of key terms


1. The meeting of the Technical Working Group (TWG) on the Management of Fishing Capacity was held in La Jolla, USA, from 15 to 18 April 1998. The Governments of the United States and of Japan provided financial and technical support for the organization of the TWG.

2. The meeting was attended by 35 experts invited by FAO and supported by a technical secretariat. The list of participants is attached as Annex 1.


3. Dr. Dick Neal, Deputy Director of the Southwest Fisheries Science Center, NMFS, welcomed the participants to the Center, emphasizing the timeliness of the subject and wishing the meeting success.

4. Mr. Ulf Wijkstrom of FAO opened the meeting of the Technical Working Group (TWG) on the Management of Fishing Capacity on behalf of Mr. M. Hayashi, Assistant Director-General of FAO.

5. Dr. Rich Marasco, the Chair of the TWG stated that definitions, and their implications for fisheries managers must be considered. He then invited Dr. Dominique Gréboval, Technical Secretary of the TWG, to introduce the agenda (Annex 2) and to describe in more detail how the meeting would be conducted.

6. Dr. Gréboval enumerated the documents that FAO was submitting to the meeting1. He then explained the agenda in some detail. The TWG would spend about a day reviewing the issues linked to fishing capacity (the report of this review is given in Section 1 of this report). This would be followed by an in-depth group analysis of alternative approaches to dealing with the issues (Section 2 of report). Finally experts would consider elements of an international plan of action on fishing capacity (Section 3 of report).


Latest situation of major marine resources including high seas stocks

7. Dr. Serge Garcia gave a brief presentation of the latest situation of major marine resources including high sea stocks. Dr. Garcia highlighted the fact that with the exception of the Mediterranean and the Indian Ocean average yearly landings have now stagnated. While it seems possible that pollution might be contributing to the continued growth in the production of the Mediterranean, there is no good explanation for the continued expansion of marine fish landings in the Indian Ocean. Dr. Garcia emphasized that a review of the state of commercially exploited stocks reveals that the number of mature stocks is not expanding. An increase in the number of mature stocks is expected to occur as production peaks, if management of fisheries is successful. Instead the number of overfished and depleted stocks is increasing, an indication of the failure of management. There is little new information available on high-sea stocks other than tunas. In addressing the situation of tuna resources Dr. Garcia indicated that, with the exception of skipjack and yellowfin, tuna resources are fully exploited and some overexploited. Dr. Garcia concluded that there was an overall need for better management of fishery resources and better control of capacity.

8. Subsequently it was pointed out that the capacity of the long-line fleet exploiting tunas in temperate waters needs to be cut by 20 to 30 % immediately in order for capacity to match the available stocks. The point was made that the introduction of Fish Aggregating Devises (FAD) in the purse-seine fishery for yellowfin and skipjack in tropical waters increased the capacity of that fishery. While stocks of the target species may not be under immediate threat, the by-catch of juvenile big-eye may imply an increase in the effective capacity of the longline fleet exploiting this species.

Definition of fishing capacity and its underlying economics


9. Professor Gordon Munro introduced the subject. In support of his presentation Professor Munro distributed a handout: "Proposal for working definitions of key terms to be adopted by the technical working group" in which eleven concepts including fishing capacity are defined2. Professor Munro presented the definitions as proposals and stressed the need for the TWG to agree on definitions that would be workable for fishery managers.

10. The following definition was proposed for fishing capacity: "The ability of a stock of inputs (capital) to produce output (measured as either effort or catch). Fishing capacity is the ability of a vessel or fleet of vessels to catch fish".

11. The following definition was proposed for optimal (fishing) capacity: "The desired stock of inputs that will produce a desired level of outputs (e.g., a set of target fishing mortality rates for the species being harvested) and will best achieve the objectives of a fishery management plan (e.g., minimizing costs). Current optimal capacity may differ from long run optimal capacity, particularly if the fishery resource is currently depleted and the management strategy is to rebuild this depleted resource."

12. In presenting the underlying dynamics of fishing capacity Prof. Munro stated that these consisted essentially of the underlying economics. He stressed that fishing capacity is mobile, some of it globally. Generally it is not malleable, that is, it is not easy to transform the capital (in this case the vessel) to some non-fishery use. As scrapping a vessel basically destroys the capital, vessels which for some reason cannot continue in a fishery are generally sold to others. This contributes to the formation of excess fishing capacity, globally, which in turn impedes conservation of stocks. Prof. Munro furthermore stressed that the build-up of excess capacity is the rational response of fishers to a perverse incentive system. The system is perverse from society’s point of view. Therefore fishery administrations have basically two ways to deal with the problem: change the incentives, or block them; that is, prevent fishermen from acting as the incentives direct them to do.


The discussion concentrated on definitions.

13. Underlying dynamics. The TWG appeared to generally agree with the description of the underlying dynamics, but noted that in developing economies the issue of excess capacity (in the form of excess capital) has developed as a consequence of increased demand for local fish made possible through easy access to markets in industrialized economies.

14. Definitions. The proposed definition of "optimal capacity" generated considerable discussion. Many participants were not convinced by the definition proposed in the handout. There were those who maintained that, as proposed, the concept of "optimal fishing capacity" would make the optimum capacity too dependent on government policy – as opposed to resource conservation and economic efficiency. It was suggested that it would be beneficial to define two fishing capacity reference points. One would be the level of capacity required to harvest the catch that corresponds with MSY. The second would be the level of capacity that generates maximum economic benefits (value added) at correct (shadow) prices. The advocates of this approach felt this would be useful as governments would then have the possibility to know what the costs would be of introducing considerations of equity, and other social concerns.

15. However, some participants felt that this definition did not sufficiently reflect possible government objectives (equity considerations; regional needs, etc) and advocated the use of a social benefit function. Others wondered whether such a definition would serve its purpose as it might lead to different numbers for optimal fishing capacity – as a reflection of government policies – in otherwise similar fisheries. Other participants expressed the point of view that it is perfectly reasonable for different fisheries to have different objectives and therefore somewhat different definitions of "optimum".

16. It was pointed out that there are two kinds of "optimum capacity": the transient optimum capacity that would gradually change until a "long-term" optimum capacity would be reached. Even though it may not be possible to agree exactly on the "long-term" optimum, it may be possible to agree on the need to move in the right direction.

17. The interventions of several participants highlighted the possibility of considering capacity corresponding to MSY as an upper bound for capacity. Capacity could then be bounded from below by calculating the capacity associated with maximum economic efficiency. "Optimal" capacity would lie somewhere between these two reference points depending on social objectives.

Chairman’s summary

18. In summing up Dr. Marasco concluded that the TWG appeared to converge towards the view that the determination of optimum capacity need to consider both the productivity of stocks and maximum economic efficiency perspectives. These could form the bounds for "optimal" capacity, which may not have a precise, generic definition.

Measurement of capacity


19. Dr. Dale Squires introduced the subject. He affirmed that if we have problems defining capacity, we would of course also have problems in measuring capacity utilization.

20. Capacity is potential output and there are basically two ways of measuring it: a physical, engineering approach, and the economic approach. In the former, measurement would be achieved by using the technological relationship between the physical attributes of the vessel and output to give the maximum potential output. In the second the measurement would be based on cost minimization.

21. Dr. Squires then described three concrete methods3 for measuring capacity and capacity utilization: (i) peak-to-peak; (ii) stochastic frontier output, and, (iii) Data Envelopment Analysis (DEA). The first of these methods is least demanding in terms of data and therefore has widespread application. The economic approach requires cost data that is often difficult to obtain. DEA is a mathematical programming technique that can accommodate any number of constraints on capacity. The DEA approach can be used to evaluate capacity in either the physical-engineering approach or the economic approach.


22. The discussion focussed on two general questions: (i) how to define capacity and (ii) and how to develop accurate measures of capacity? Many issues were raised and most addressed.

23. Definition of capacity. It was emphasized that the definition selected must be easily understandable by those expected to take political action. For this to be so, it was believed that it is useful if a physical measure is used, as indeed is now most frequently the case. The DEA method lends itself to providing such physical measures. It was also believed to be most important that the measure of capacity would not demand data that would – in most instances – not be available. Data gathering, particularly of economic data, is expensive and labour intensive. Therefore, Dr. Squires advocated the use of the DEA method.

24. How to develop accurate measures of capacity? Here a number of questions were raised. First, how would the measure be able to handle the many-faceted aspects of capacity (vessel, gear, etc). The DEA method can handle this problem by converting all capital to one measure (through aggregator functions). Second, how could the stochastic nature of fisheries be accounted for? There is at the moment no good approach to handling this aspect using the DEA method so it may at this time be necessary to resort to simulation models. Third, how would one deal with the multi-product issue? Again the DEA method provides a method for dealing also with this complication. Fourth, how would subsidies be handled? If an economic measurement were to be used, it would be essential first to increase the value of any capital stock with the value of the subsidy provided in its acquisition. Fifth, how does the measure factor in the situation of the stocks being exploited?

Chairman’s summary

25. The Chairman noted that there are various ways of measuring capacity and that the method used will be determined by the availability of data. He emphasized the view that it is important that the measure used come up with a number, against which progress in reduction of capacity, and therefore, the success of management, could be measured.

Control of capacity


26. Professor Jon Sutinen introduced the subject. He reminded the group about the need to control fishing capacity in order to prevent non-sustainable use of fishery resources and to improve the value of the resource. He then referred the audience to what the Code of Conduct for Responsible Fisheries has to say about the control of capacity in paragraphs 7.2.2 and 7.3.6 of the Code.

27. Amongst the incentive blocking measures4 Prof. Sutinen discussed the advantages and disadvantages of limited entry, gear and vessel restrictions, vessel catch limits, and individual effort quotas. In situations where capacity has to be reduced the usefulness of the various methods vary. In limited entry schemes it is possible to introduce a charge for licenses, to introduce fractional licenses (requiring the holder of a fraction to buy a fraction from another holder in order to obtain one license, thereby reducing the total number of license holders) and to implement buy-back programmes. It is also commonly recognized that individual effort quotas are ineffective methods for the control of capacity, as they are subject to capital stuffing.

28. Amongst the incentive adjusting measures Prof. Sutinen briefly reviewed individual catch quotas (ITQs), taxes, and group fishing rights (TURFs, CDQs, community-based and co-management). While ITQs are self-adjusting with regard to capacity they are not always practical to implement. There is not much of an empirical record on taxes, so their effectiveness is difficult to evaluate.

29. Prof. Sutinen continued by stating that while it is obvious that the usefulness of the various methods depend on the national context, there may be some combinations of methods and fishery contexts that could be ruled out entirely. In addition to the varying socio-economic and political context the choice of methods would also be influenced by variability in stock-size and whether the fishery is multi-species or not. Managers must also confront the question of what their targets should be with respect to control and/or reduction of capacity. Over what time frame should a given level of reduction occur?

30. Prof. Sutinen finished by saying that for the TWG it was essential that its recommendations on control of capacity be detailed, precise and operational.


31. During the ensuing discussions the TWG continued to review positive and negative aspects of the various methods of control. Discussions covered TACs, taxes/licenses/royalties, buy-back schemes, ITQs, group-rights.

32. TACs. There was agreement that TACs used in isolation in virtually all situations are an invitation to disaster, that is, to speedy growth of fishing capacity

33. Taxes. It was reported that in the past export taxes on cephalopod fisheries in Mauritania had worked as a method to hold back capacity growth and that this had included the control of small-scale fisheries, which normally are difficult to control. The attempt to impose taxes on small-scale fishermen in an Asian country caused protests, not only amongst fishermen but also amongst consumers who expected the tax to be passed on in the form of higher prices. In another tropical fishery the authorities abandoned taxes because it was considered better to have reasonable information on the levels of production than a poorly collected tax. It was suggested, however, that the possibility of extracting the tax from the consumer should be investigated. In two OECD countries the taxes have been accepted as an approach to recover management costs.

34. Licenses have proven not to be effective in Mexico, as there was a lack of capability to monitor and control that vessels actually fishing had a license. It was pointed out that in international fisheries a limited license scheme would be necessary and could only function well if an international register of high seas fishing vessels were established. Vessels without a license and not appearing in the register should not be permitted to fish in the licensed area. It would be necessary to figure out incentives that promote cooperation in this area.

35. Royalties have hardly been used as such in the fishing industry. The exception is New Zealand prior to implementation of cost recovery for management costs. However, it is a method used for recovering rents in natural resource extraction activities and may have a reason for existing also in fisheries.

36. Buy-back schemes. Most participants considered as useful those buy-back schemes that were implemented in such a manner that (i) the purchased fishing capacity was effectively destroyed, and (ii) they are tied to an incentive adjusting mechanism. However, again, in developing countries this is an avenue that is usually not possible for lack of public funds. In this context, it was pointed out that industry-financed buy-backs (against expectations of future increased revenues) should be explored.

37. ITQs. It was pointed out that the reduction of capacity expected from the introduction of an ITQ system is not always as rapid as expected. Buy-back schemes can speed up the process. It was also pointed out that transferable quotas could also be given to the processing industry. Such an approach may be useful in order to control effort in commercial, small-scale fisheries. The problem of the use of ITQs in fisheries on shared stocks was considered. It was concluded that in effect it should not present a problem, but that possibly in the boarder zone there may develop what in effect is an area of open access. In fact, ITQs can provide an incentive for negotiations to arrive at a solution of any differences of view regarding access rights. It was pointed out that managers must consider the appropriate mix of taxes and ITQs.

38. Group rights. It was remarked that in several countries community based, and co-management systems are being introduced or reintroduced with some success. For them to be effective it is essential that the group can exclude outsiders from intruding, that is, that the group right is enforced. It was pointed out that in Japan there is not only community-based management, but also co-management. The latter is applied in the off-shore and long-distance fisheries.

High Seas


39. Dr. Christopher Newton introduced the subject. He described recent developments in high sea fisheries and included a discussion of some possible implications of a ratification of the compliance agreement and/or the UN agreement on straddling and highly migratory stocks.

40. In the course of the 23-year period the share of distant water catches5 has declined from 16 % of the total in 1972 to 4% in 1995. There are several factors explaining this development, the extension of EEZs being the major one. In addition the contribution to this catch made by East European countries and the former Soviet Union has virtually disappeared, while that of other countries has remained stable, with the exception of Japan, where the distant water catch has declined. Over the last decade the share of tuna in the high seas catch has doubled both in volume to about 40 % and in landed value to more than 80 %. The result is that non-tuna species caught by distant water fishing fleets now account for less than 3 % of world landings and only about 1 % of total landed value.

41. It should be noted that landings of tuna are probably underreported. This is the evident conclusion from a comparison of the number of vessels carrying Flags of Convenience (FOC) and the quantities that the corresponding flag states report as distant water catches. Also, non-flagged vessels are unlikely to report their catches. And given the apparent rapid increase in the vessels carrying FOCs, and the existence of non-flagged vessels, this problem will grow.

42. The shipyard orderbooks for 1997 indicate a sharp increase in the number of vessels being constructed, particularly those over 75 m in length. This is a sharp break with the trend observed for preceding years. And it should be noted that today a new vessel is considered to have about three times the fishing capacity of a vessel of similar size constructed 25 years ago.

43. As the general consensus is that in fact fishing capacity should be reduced, a very large part of the older fleet should be scrapped in order to make room for new and modern vessels. Dr. Newton suggested a figure between 41 % and 47 % to remove present overcapacity. It may be unrealistic to presume that the fleet capable of high seas fisheries will slowly fade away because of age, as even the old vessels change hands. Also it seems likely that these vessels in fact exploit resources also within the 200 mile zone.

44. Dr. Newton noted that the UN agreement, when in force, will develop a fleet register but that it will not be public. Thus, it is not a great help in enforcement. The provisions under the Compliance agreement on the other hand are that the register to be established at FAO will be open to those who have signed the agreement. If member states were to introduce a policy of being very restrictive with removing vessels carrying their flag from the register, those vessels which nevertheless decided to fly a flag of convenience, would in fact have double nationality and become stateless and subject to arrest by any nation. However, this may not prove sufficient to deal with the problem of flags of convenience and novel ways should be sought to deal with this issue.


45. The subsequent discussion addressed the question of technology change and the resulting growth in capacity, as well as the problems in high seas fisheries.

46. Technology change. It was agreed that technology change was dramatic. An example of 2.8 % per year for a US fishery was quoted. This of course would render licensing schemes in isolation ineffective as a method to control capacity. It was also agreed that there is no reason to either try to stop technology growth or expect that such a policy would be feasible. The motivation for fishermen to use latest technology is very high, as the boats using the best technology generally will have the best results. There are many other benefits from modern technology: for example, increased fuel efficiency, improved refrigeration resulting in better product quality and improved safety. Thus, it is necessary to control capacity – and not only on the high seas – taking technology growth into consideration.

47. High sea fisheries. The opinion was expressed that as monitoring and surveillance of fishing zones improve it will become apparent that a fair proportion of what is now reported as distant water tuna catch in fact is catch that should be reported by the adjacent state, that is the fish is caught within the EEZ and not on the high sea.



48. Mr. Matteo Milazzo introduced the subject. He presented the conclusions of his recent study6 of the subject and then elaborated on the manner in which he has arrived at those conclusions.

49. The main conclusions are: (i) that worldwide annual subsidies to the fisheries sector in the mid-1990’s are of the order of US $ 15 to 20 billion. Most of these subsidies result in a reduction of production costs in the harvesting sector. The reduction in costs are of the order of 20 to 25 % for the world as a whole; (ii) about 75 % of the subsidies are granted by OECD countries and China; (iii) countries which give subsidies to agriculture also generally subsidize fisheries; (iv) the main effect of subsidies is that they exacerbate and accelerate the development of overcapacity.

50. Mr. Milazzo’s starting point for the study was work done in FAO for the 1992 UNCED conference and work presented in 1993 as the special chapter of the FAO publication "State of Food and Agriculture". The initial focus of this research was on examining subsidies as a type of government measure that confers unfair trade advantages. It became apparent during the investigation that subsidies could have significant resource use implications.

51. Mr. Milazzo used the concept and categories of the 1994 GATT trade agreement to categorize subsidies in fisheries. The GATT categories included: (i) financial transfers, both current and potential; (ii) foregone government revenue; (iii) provision of services/goods other than normal government provided infrastructure. In doing so he found he had to add new categories: cross-sectoral subsidies (e.g., to shipbuilding) and fishery related infrastructure (e.g., harbours) particularly in third world countries. Also, the use of a public, non-priced resource needed consideration. Based on the resolution of a trade dispute, in which it was concluded that non-payment of stumpage fees constituted an unfair trade advantage, Mr. Milazzo has concluded that an inadequate charge of user fees by fishermen can be considered as a subsidy in the context of international trade.

52. Mr. Milazzo ended his presentation by urging the TWG to consider recommendations that would diminish the use of subsidies in fisheries.


53. The discussion focused on the following aspects of the subsidy issue: (i) what is a subsidy and what is not a subsidy; (ii) what is the motivation for subsidies; (iii) what are the effects of subsidies; (iv) which subsidies are justified; and, (v) what is the likely future of subsidies in fisheries.

54. What is a subsidy and what is not? The discussion concerned the concept of considering the non-charge of a user fee – an example of foregone government revenue - as subsidy and the inclusion of the provision of public infrastructure as a subsidy.

55. It was argued that where access is open the fact of not imposing a tax (which would represent a kind of user fee) will not constitute an advantage as, in any case, the fishery will reach an equilibrium where zero rent is derived. Where access is regulated the non-imposition of a tax may be considered a subsidy, as rents will be generated. Also from a trade point of view, it was thought ill-advised to consider the absence of a tax, or user fee, as a subsidy, as governments would retain the right to set the tax, and it would not be practical to consider the country which imposed the lower tax rate as conferring a subsidy.

56. It was argued by some members that in fact fishing harbors constitute normal government infrastructure and should not be considered as a subsidy.

57. What is the motivation for subsidies? Three main points were made in this discussion. First, it was recognized that subsidies are given because the fishery sector demands them from politicians and policy makers. Once given they tend to be thought of as "entitlements" which are difficult to revoke. Second, official justifications are many: in developing countries the need to generate income in hard currencies; to maintain employment; because agriculture receives it; to make possible the effective use of a resource available also to other countries. Third, there are normally many dispersed and fragmented government authorities involved and they each have their own and different reasons for providing subsidies. The fishery administration is just one amongst many agencies involved. Fourth, and perhaps most important, the increase in fishing capacity is rarely the motivation. The aim is rather to improve use of other natural resources, to achieve social objectives – including human safety.

58. What are the effects of subsidies? The discussion showed that the effects of subsidies are many. Their effect on fishing capacity is one aspect.

59. Which subsidies are useful? The TWG discussed this aspect for some time. Mr. Milazzo indicated that his study was done considering subsidies as categorized by the GATT agreement and from the point of view of whether or not they expand capacity. In this context some subsidies – those at times referred to as Conservation Subsidies – can be useful. One example of these would be adequately administered buy-back programs.

60. A few participants felt that qualifying subsidies as bad because they expand capacity is too restrictive. It would be necessary to identify the total effects of the subsidies. It was suggested that it would be necessary to complement the trade criteria with other criteria before labeling subsidies as either good or bad.

61. What is the likely future of subsidies in fisheries? Some participants felt that subsidies may disappear as old fleets are scrapped and property rights based management progressively expands. Others doubted that old fleets (needing to be subsidized) would disappear rapidly or that a rights based system would significantly decrease fishers tendency to demand subsidies.


62. Group work was undertaken on four topics. These are: (i) measurement and monitoring of fishing capacity; (ii) incentive blocking and adjusting control methods and the reduction of fishing capacity; (iii) the control of fishing capacity for the high seas and (iv) broader policy issues and institutional requirements. The four thematic reports prepared on this basis are presented below. The thematic reports reflects group discussion and include a number of suggestions and recommendations made in this context. For the most part, these suggestions and recommendations were further discussed when the TWG as a whole brainstormed on ‘elements of a plan of action’, as reported under Section 4 of this overall report. In order to carefully reflect the work of the TWG, no attempts has been made to consolidate the opinions and recommendations expressed by the Groups, as reported under Section 2, which introduce and complete many of the opinions and recommendations expressed by the TWG as a whole, as reported in Section 3.

Measurement and monitoring of fishing capacity

63. Group work on the measurement and monitoring of fishing capacity was facilitated by Dr Steve Cunningham and resulted in the following thematic report.


Issues related to measurement of actual, "optimal", and excess fishing capacity

64. One needs to know how to measure capacity in order to know whether there is a problem with respect to the amount of fishing capacity. However, before determining measures of actual, "optimal", and excess capacity, it is necessary to define these concepts in an unambiguous and operational manner. Definitions proposed in a document presented to the Plenary on the first day of the meeting, entitled "Proposal for Working Definitions of Key Terms to be Adopted by the Technical Working Group" (Annex 4), were considered and it was determined that these definitions should be refined. Considerable discussion ensued prior to agreement on the following definitions:

Fishing capacity is the maximum amount of fish over a period of time (year, season) that can be produced by a fishing fleet if fully utilized, given the biomass and age structure of the fish stock and the present state of the technology. Fishing capacity is the ability of a vessel or fleet of vessels to catch fish, i.e. Yc = Y(Ec, S)

65. Thus, capacity is the amount of fish that can be taken if fishing were to take part on a full time basis. This means that (instantaneous) capacity changes with stock size. The advantages of formulating the definition in units of catch (amount of fish) were considered to be that (a) it is consistent with economic production theory, (b) it makes more sense to the fishing industry, (c) it facilitates aggregation between fleets and between the harvesting and processing sectors, (d) it makes it easier to deal with complexities due to fisheries interactions (e.g., when the catch of one fishery is a bycatch of another), (e) it is more appropriate to artisanal fisheries because these fisheries involve rapid changes in inputs, in the form of numbers of participants rather than capital (thus these fisheries may have overcapacity but are not necessarily overcapitalized), and (f) it makes it easier to determine optimal capacity for fluctuating stocks. The proposed definition is functionally equivalent to the definition used by Gréboval and Munro (1998), who defined capacity as the power to generate fishing effort per unit of time.

66. After considerable discussion about the term "optimal capacity", the Group chose to define "target" capacity rather than "optimal" capacity, in deference to the wide diversity of objectives that might be chosen by policymakers to ensure sustainability of fisheries and meet other needs. Thus, definitions of "optimal" may be local and specific. The definition agreed upon for target capacity is:

Target fishing capacity is the maximum amount of fish over a period of time (year, season) that can be produced by a fishing fleet if fully utilized while satisfying fishery management objectives designed to ensure sustainable fisheries, i.e. YT = Y (ET’ S)

It follows that excess capacity (i.e. overcapacity) is the difference between current fishing capacity and target fishing capacity;

i.e. Excess capacity (%) Yc - YT x 100 %


where, for all of these definitions:

67. To appropriately set the target capacity, it is necessary to specify a target biomass. However, it was recognized that the long range target may be difficult to estimate at any point in time, partly because future target capacity will generally be defined on the basis of present-day performance; thus, the most important objective is to develop a capacity management strategy that ensures that fleet capacity is moving in the right direction. It is important to be able to determine the magnitude of the difference between current and target capacity in order to determine severity of problem, and the appropriate step size to reduce capacity in the future. As the fishing fleet moves along the adjustment path towards a preliminary estimate of a target, accumulation of knowledge and a better indication of changes in technology and other factors may result in continual updating of the ultimate target. One way to approach the problem is to start with a TAC (either current or a long-term projection), and determine how many of each vessel type it would take to catch this TAC, then compare this to current fleet sizes. The maximum that a given fleet could potentially catch divided by the target TAC is a measure of excess capacity. It was recommended that YT should be evaluated at both Sc and ST. These calculations can be performed on a fleet-by-fleet basis.

68. If there is a need to define optimal capacity, it can be better defined in terms of a range rather than a specific quantity or metric. As suggested by the Plenary, optimal can be specified relative to outer boundaries. According to paragraph 7 of Annex II of the Straddling Stocks Agreement, the minimum standard for a biological reference point should be the fishing mortality rate that generates MSY. Thus, the capacity which generates a level of fishing effort which puts stock beyond the FMSY limit is an upper bound on optimal or target capacity. It would be useful to be able to define the maximum fleet size corresponding to this limit fishing mortality rate. The following definition for "limit" capacity conforms with the direction in which international law is developing:

Limit capacity is the maximum amount of fish that can be produced on a sustainable basis by a fully-utilized fleet. Thus, the limit capacity corresponds to MSY.

69. The Group also agreed that it is essential to:

Most practical alternative approaches

70. The Group suggested that the most practical alternatives for measuring capacity are Data Envelopment Analysis (DEA) and peak-to-peak analysis, both of which are briefly described in the following paragraphs.

71. DEA is a mathematical programming method to determine optimal solutions given a set of constraining relations. The advantages of this method are that it can estimate capacity under constraints including TACs, bycatch, regional and/or size distributions of vessels, restrictions on fishing time, and socio-economic concerns such as minimum employment levels. DEA can be used to identify operating units (individual vessels or vessel size classes) which can be decommissioned. By rearranging observations in terms of some criterion, such as capacity by region and vessel size class, the number of operating units could be determined by adding the capacities of each operating unit until the total reaches the target. DEA readily accommodates multiple outputs (e.g., species, market categories), and multiple types of inputs such as capital and labour). DEA can also determine the maximum potential level of effort and its utilization rate. The analysis accepts virtually all data possibilities, ranging from the most parsimonious (catch levels, number of trips, and vessel numbers) to the most complete (a full suite of cost data), where the most complete data improve the analysis. With cost data, DEA can be used to estimate the least-cost (cost minimizing) number of vessels and fleet configuration. It can also measure capacity relative to any desired biomass or TAC. The method is limited by its deterministic specification; i.e. it does not account for the stochastic nature of fishing.

72. The peak-to-peak method defines capacity by estimating the observed relationship between catch and fleet size. Periods with the highest ratio of catch to the capital stock provide measures of full capacity (maximum attainable output). Estimates of maximum attainable output for the most recent years are obtained by extrapolating the most recent output-capital peak and multiplying by the capital stock in the selected recent years. Combined industrial capacity is ideally measured as the value-added (or revenue) weighted share of detailed industry or fishery specific capacity measures. Capacity output is compared to actual output levels in different time periods to give measures of capacity utilization. Catch levels in all years are adjusted for productivity levels. The approach is called peak-to-peak because the periods of full utilization, called peaks, are used as the primary reference points for the capacity index. In practice, a peak year is often identified on the basis of having a yield per producing unit that is significantly higher than both the preceding and following years. The peak-to-peak method requires data on landings and vessel numbers and some identification of a technological time trend. Minimum fleet sizes (number of vessels) that correspond to different levels of capacity can be calculated. The method is most seriously limited by the problem that vessel tonnage or numbers are only a rough measure of capital stock, the analysis ignores other economic inputs, and it ignores differences across gear types (which can change over time).

73. The Group recommended that standard software should be made available for applying both of these techniques.

Data requirements

74. The Group felt it essential that adequate data collection efforts be implemented to ensure that there is information on numbers of vessels, vessel characteristics, and landings. It would be pointless to undertake capacity control programs without an understanding of what needs to be controlled. Currently the state of data collection and monitoring efforts for fisheries management world-wide is grossly inadequate.

75. The Group recommended that data requirements be divided into two groups; those data essential to developing preliminary estimates of current capacity relative to target capacity (Level I), and those data needed to define precise estimates (Level II). The minimum requirements to calculate maximum potential output by fishing fleet are: CPUE, Tmax (maximum days per time period that the fleet could fish), and information on the biomass of the resource.

Level I: In order to compute preliminary estimates of current capacity, it is necessary to at least have estimates of vessel numbers and the main vessel characteristics determining fishing power (e.g., GRT, length, hold capacity, gear type and dimensions, with the importance of each of these varying depending on the fishery); basic relevant characteristics of fishing operations (e.g., seasonality, number of fisheries in which vessels operate); landings; and at least a qualitative indication of trends in CPUE or other information that can give at least a rough index of MSY. There are many rules of thumb for estimating MSY. Optimal capacity can frequently be inferred by examining the historical record -- it is often easy to determine that it has been surpassed.

Level II: In order to perform precise analyses, all sources of uncertainty need to be taken into account. The data required to perform precise analyses also include information on the sources of uncertainty relevant for projecting future and target capacity (and therefore in estimating excess capacity), including information on:

Difficulties of application in selected situations

76. The Group believes that most potential difficulties can be accommodated in the DEA formulation; e.g., multiple fleets and fluctuation in abundance, both year to year and within a year or season. The latter result in peak load problems, particularly for species that are only available for a short period of the year (or only available in a certain high-priced form such as fish roe for a short period of the year). It is necessary to consider whether the proposed definitions deal adequately with the peak load problem.

77. The Group considered the implications of a multispecies/ecosystem approach. Should capacity be defined in terms of single fishery or a fleet that may operate in several fisheries? The answer is both. Stock-by-stock, fleet-by-fleet, and region-by-region approaches are all needed. In fact it may be useful to have a multi-tiered approach that defines capacity with respect to individual stocks first, then moves on to multistocks. It is possible to have overcapacity in one fishery, but not to have overcapacity overall if several fisheries are considered in aggregate. The question is where to draw the line; how to define "latent capacity".

78. The Group also stressed the need to recognize that estimates of overcapacity may be confounded by age structure effects (e.g., both yield per recruit and price aspects), and other relevant factors. Even more important is the need to recognize the multiple input problem. In some cases the number of fishing vessels may be the best indicator of the amount of fishing capacity; in others it may be labour. Which input (e.g., either labour or vessel numbers) is binding? In artisanal fisheries, capacity is essentially related to labour.

79. Finally, because of fleet mobility, there is a need to consider capacity on a fleet basis and possibly also a regional basis, as well as a species or stock basis.


Indicators (simple and practical measures of capacity)

80. The Group discussed simple indicators of capacity and overcapacity that can be used with limited data. The basic elements of such indicators are the number of vessels in each fleet fishing a stock, the mean catch rates for each fleet, and the amount of time actually spent fishing by each fleet relative to the maximum possible if there were no constraints on fleets. These practical measures of capacity can be expressed in terms of (i) a species-based indicator, (ii) a vessel-based indicator for a single fishery/stock, and (iii) a fleet-based measure for each stock/fishery. Details of the measures are provided in Annex A.

81. The measure of potential catch by each fleet under current stock conditions is the product of number of vessels and mean catch rate, scaled up to a full-time equivalent based on the ratio of maximum time available to the actual time fished. The potential catch in the fishery is the sum of potential catches of the stock by all fleets. This can be compared to the TAC to give an indication of overcapacity by the current fleet. An advantage of this measure is that it corresponds to the economic notion of capacity as the quantity of output that can be produced by a given set of inputs in a period of time. A disadvantage is that it does not account for the "latency problem," i.e., vessels not currently present in the fleet, which could enter easily when conditions change.

82. Another measure is based on vessels needed to take the TAC. This is calculated using the same information, and results in a minimum number of vessels for each fleet type, each of which could take the entire TAC by itself. This calculation can also be made for all fleets in the fishery as a whole, by defining all variables for the fleet as a whole.

83. These measures are extremely simple rules of thumb, but should be capable of indicating the presence of overcapacity in current fisheries. Adjustments to these measures to account for fleets fishing multiple stocks, and to account for target conditions rather than current conditions, were also considered (see Annex A).

Basic system for monitoring and assessment

84. The aim of a basic system for monitoring and assessment is to collect the basic data described under Level I as detailed above; viz: estimates of vessel numbers and the main vessel characteristics determining fishing power (e.g., GRT, length, hold capacity, gear type and dimensions, with the importance of each of these varying depending on the fishery); basic relevant characteristics of fishing operations (e.g., seasonality, number of fisheries in which vessels operate); landings; and at least a qualitative indication of trends in CPUE or other information that can give at least a rough index of MSY.

Advanced system for monitoring and assessment

85. The aim of an advanced system for monitoring and assessment is to collect the basic data described under Level II above. This includes information on vessels and vessel characteristics; gear type and size; biological characteristics of stocks including biomass, age/size structure, and uncertainty in stock assessments; numbers of participants and skill levels; costs and earnings surveys; information on employment, subsidies, fishing operations relative to fish distribution, response of the fishing industry to management, and the existence and adequacy of access controls.

86. The Group stressed that assessments of capacity (current and long-range target) should be conducted routinely, in much the same way that fish stock assessments are currently conducted in several States. The primary requirement is a permitting system that allows managers to keep track of the number and basic characteristics of vessels. In addition, there is a need for landings and at least a qualitative indication of trends in CPUE. National and international registries of fishing vessels are essential, with the need being greatest for vessels which are internationally mobile (i.e. those that can fish in distant waters). However, there can be large aggregate amounts of capacity, even in small tonnage classes. Thus, national and international registries of fishing vessels and boats should be as comprehensive as possible.

87. The Group also recommended that FAO should co-ordinate through regional bodies to collect capacity information. This proposal should be made to the FAO meeting of Regional Fishery Organizations in Rome in February 1999. In addition to a comprehensive database, data processing and analytical capabilities should be provided, along with appropriate resources to maintain databases and conduct analyses. There is also a need for establishing co-operative arrangements with the industry to facilitate data collection and analysis of capacity problems. An effective MCS (monitoring, control and surveillance) system is essential.

Unresolved issues and research priorities

88. The Group identified the following unresolved issues and research priorities:

Incentive blocking/adjusting control measures and reduction of fishing capacity

89. Group work on incentive blocking control measures was facilitated by Dr Christopher Newton. Group work on incentive adjusting control measures and on the reduction of fishing capacity was facilitated by Dr Ragnar Arnason. It resulted in the following thematic reports.

Incentive blocking control methods


90. Whereas incentive blocking methods are frequently seen as problematical, there are many fisheries in both developed and developing countries where they offer a viable (and often the only alternative) to managing capacity. The Group considered that generally the shortcomings associated with incentive blocking mechanisms are well known and mostly the result of poor administration. From the experiences gained with such forms of control, measures can be and are used successfully in certain circumstances.

91. The problem associated of output controls in terms of their ability to self regulate in terms of capacity management, including reduction is acknowledged. Major incentive blocking methods are reviewed below. Considerations more specific to the case of developing countries are provided in Annex B.

92. TAC’s

93. License Limitation

94. Buy-Back

95. Technological Concerns

96. Vessel Catch Limits

97. Individual Effort Quotas

98. Recommendations for Research

Incentive adjusting control methods

99. The control methods considered include:

100. These methods are considered to be ‘incentive adjusting’ because they tend to improve or tighten the connection between those person(s) making fishery management and capacity decisions and the persons bearing the full consequences of those decisions. If the consequences are entirely borne by the decision-maker, there are no external effects of the decision and the decision-maker tends to act in the social interest when serving his/her self-interest. For example, a tax on fish caught can fully internalize the cost imposed on others of reducing the resource stock. A community-based management system effectively reduces the distance between management and capacity decisions and those bearing the consequences of those decisions.

101. It is important to realize that the different incentive adjusting control methods have widely different implications in terms of wealth generation and, in particular, its distribution. Individual quotas, for instance, generally imply an immediate increase in the wealth of the quota recipients. Taxes, on the other hand, imply a reduction in the wealth of fishing industry participants.

102. Fisheries decisions can be classified into macro and micro. Macro (fishery-wide) decisions include the following:

103. Micro (vessel level) decisions include:

104. Capacity decisions can be macro (e.g., fleet size, number of licenses) and micro (size and power of a vessel).

Potential for control of fishing capacity

105. The Group considered the extent to which each of the above methods can control fishing capacity. The Group concluded that individual catch quotas and taxes on landings have very good potential for controlling fishing capacity in the fishery to which they are applied. Group fishing rights, including group catch quotas, have the potential to control fishing capacity but the actual outcomes are uncertain. This is because this set of methods has not been widely studied; i.e., there is no body of theoretical or empirical evidence with which to predict the ability of group fishing rights to control capacity. The Group concluded that effort quotas do not have the potential to effectively control fishing capacity and, if used, should be viewed only as a transitory measure.

Conditions of applicability

106. Next the Group considered the technical conditions under which the control methods are applicable, and the key requirements for the effective implementation of the methods for controlling capacity. In general, the applicability depends on the costs (difficulty) of implementing a control method. These costs include enforcement, monitoring, research and administration. Enforcement costs are expected to vary the most across the various methods.

107. The accompanying graph illustrates the costs and benefits of a given control method. The economic benefits of a method will increase as compliance with the regulations increases, the net social benefits (exclusive of enforcement costs) reaching a maximum at 100% compliance. Enforcement costs increase as more compliance is achieved, also reaching a maximum at 100% compliance. A control method will yield positive net social benefits (net of enforcement costs) at some intermediate level of compliance.

108. A specific control method may be more costly to enforce in some fisheries than in others. This is illustrated in the graph with an example of a fishery with a high cost of enforcement.

109. The economic benefits (exclusive of enforcement costs) are expected to be generally high for individual quotas and tax control methods. However, for some fisheries (e.g., tropical artisanal fisheries), the costs of enforcement will be very high, with the result that the social benefits net of enforcement costs will be low (and perhaps negative). Therefore, for such a fishery a control method with lower economic benefits (exclusive of enforcement costs) and lower enforcement costs would be preferred to individual quotas or taxes.

110. Achieving high compliance will be more difficult (costly) where:

111. In general, individual catch quotas and taxes require substantial and sophisticated resources to achieve high compliance. Other things equal, individual effort quotas may require even more resources and be more costly to enforce than individual catch quotas.

112. For individual quotas, the cost of implementing is higher, and the resulting net economic benefits lower, in fisheries with multispecies, inflexible inputs (e.g., an imperfect labour market, non-malleable capital), where setting an appropriate TAC is difficult or impossible (e.g., shrimp), and quota market imperfections.

113. Group quotas (e.g., a quota assigned to producers organization) are expected to perform similarly to individual quotas, except not as well, because of problems expected in collective decision-making (see research issues, below).

114. Taxes on landings are not applicable when they cannot be enforced (collected), e.g., where there are a large number of landing & selling points (unless they are well organized), and poorly defined jurisdictional boundaries.

115. Taxes on effort or other inputs (e.g., vessels) also are not applicable if there is no enforcement and tax collection ability, may be more difficult than taxes on landings. If taxes are feasible, the Group expressed a preference for a tax on landings because taxing effort (inputs) leads to distortions through substitution of other inputs. A further complexity is that a dynamic tax is needed, yet legislatures usually reserve the right to tax (but could achieve the same under a different name, e.g., price controls).

116. Individual effort quotas are not applicable with a large number of landing sites and participants. Effort quotas do not necessarily control capacity, since each participant has the incentive to invest in capacity. In fact, effort quotas alone may exacerbate the capacity problem (see OECD 1997). They may be appropriate where substitution of other inputs is relatively inflexible, e.g., lobster pot limits.

117. Community-based management methods have proven to be effective in some cases (e.g., Senegal); however, they are not expected to perform well where there is no institution-building capability, can’t restrict membership, no ability to enforce rights and rules. Furthermore, community-based management, as defined here, may apply any method for governing capacity decisions within the community. Community-based management is attractive because of the improved proximity of the decision-makers to the consequences. However, there is a wide scope of potential of decisions and outcomes. If transaction costs are not too great, they may be fully efficient. If transaction costs are too high, the outcomes may be undesirable. Community-based methods need further study (see below).

Major research issues related to incentive adjusting methods

Community-based management

118. Community management of fisheries constitutes an interesting alternative to centralized fisheries management and the institution of particular fisheries management systems from above. However, before the benefits of this approach can be judged it is necessary to specify more precisely what is contained in the concept of community management, delineate the community decision making process and the sharing of management and enforcement responsibilities between the community and regional or national fisheries authority.

119. The Group felt that there is an urgent need to carry out research in the area of community management of fisheries. Among other things, such research should explore the likely management outcomes of particular types of community management arrangements, the sorts strategic games that are likely to characterize the interactions of the members of the communities, and institutional structures conducive to optimal decisions from the perspective of the communities as a whole.

Fisheries management by taxation

120. Theoretically it is possible to reduce excessive fishing capacity and generate fisheries rents by applying the appropriate fisheries taxation regimes. However, there are many unresolved issues concerning this fisheries management method. Among other things, the Group found that there was an urgent need to explore the dynamic adjustment of fishing effort, capacity and industry profitability following the introduction of a taxation regime, especially on a previously overcapitalized fishery.

Difficulties setting TAC and individual quotas

121. Setting an appropriate TAC in some fisheries is difficult, if not impossible. In tropical multispecies fisheries, the underlying science is insufficient to support setting a TAC. In some short-lived shrimp fisheries, which may have no significant stock-recruitment relationship, limiting total catch is not necessary for conservation. Further research is needed on the desirability and feasibility of using individual quotas in such fisheries.

Further Policy considerations

122. The Group considered several related policy issues and made the following suggestions on this basis:

Reduction of fishing capacity


123. With the incentives governing the fishermen having been corrected, the existence of excess capacity should not stand as threat to the resource. Since the presence of excess capacity will reduce the profits of the ITQ holders, now and in the future, the ITQ holders will have an incentive to divest themselves of the excess capacity. In other words, with the market failures removed, the market system should serve to correct automatically the excess capacity problem.

124. It was observed that in some ITQ fisheries the removal of capacity from the fisheries seemed to proceed slowly. This should come as no surprise, nor should it be a cause for concern. If the capital is highly non-malleable, it should be expected that the capital stock would decline only slowly.

125. What is a serious problem, however, is the fact that the capital displaced from an ITQ fishery may find its way into other fisheries, which are not well managed - the "spillover" or "Beggar My Neighbour’s Fishery" problem. One suggestion for dealing with this problem is to introduce a once and for all buyback scheme for the ITQ fishery. The purpose is not to reduce capacity in the ITQ fishery, but rather to prevent the capacity from spilling over into other fisheries. It should be noted that the issue of buybacks in general will be discussed in greater detail at a later point in the report.

126. The point was made at several times during the discussion that one must be concerned with non-malleable "human" capital, as well as non-malleable physical capital. This lead to an extensive, albeit inconclusive, discussion of retraining schemes.


127. Taxes, by changing incentives, should also lead to an automatic reduction in capacity. It was emphasized, however, that it will prove to be very difficult to introduce taxes in a fishery already suffering from overfishing. Taxes can be useful in preventing the emergence of excess capacity in a developing fishery.

Community Based Fisheries Management Schemes

128. These schemes should lead to a reduction in capacity for much the same reasons, and by the same mechanisms, to be found in ITQ schemes. The comments on buybacks and ITQ schemes would then apply to this case as well.

129. How effective they will prove to be is uncertain. This is simply reflection of the uncertainty which the Group had originally about the efficacy of such schemes as incentive adjusting devices.

Buyback and Stacking Programs

130. The Group subsumed stacking programs under the heading of industry financed buyback programs. The Group was generally negative about the effects of buyback programs, with some exceptions. They tend to lead to an immediate reduction in capacity while providing an incentive for further investment in capacity for those remaining in the fishery.

131. To the extent that buyback schemes are used, they should on efficiency grounds, be industry financed wherever possible. With respect to a given fishery, the authorities should attempt to ensure that the vessels are not replaced, either directly, or indirectly. Direct replacement is obvious. Indirect replacement would involve enhancing the harvest capacity of the remaining vessels.

Effects of Seepage

132. The effects of seepage, or spillover both nationally and internationally, can be very serious. It is easy to show that the reduction of capacity in one fishery, which then spills over into one or more other fisheries can end up by making the world at large worse off. This can occur if the capacity is being removed from well managed fisheries and reallocated to mismanaged fisheries.

133. In taking a world perspective, it is necessary to distinguish between capacity reduction and capacity diversion. Capacity diversion, as well as increasing capacity, can lead to a distortion of fleet configuration.

134. The issue needs to be further investigated. It was suggested that consideration be given to establishing National Registers and an International Register. A requirement might be established to the effect that export of capacity from one country to another country with manifestly mismanaged fisheries should not be sanctioned.

Complementary Management Measures

135. During the transitional period in implementing an incentive adjusting scheme, direct complementary controls may be required, such as closures, and effort restrictions. Without such safeguards, the scheme (e.g., ITQs) may collapse, and the beneficial effects promised by the scheme for capacity reduction be entirely lost.

136. If an incentive adjusting fishery management scheme is to effective in reducing capacity, it is essential that the participants have as full information as possible. If this is not the case, the investment errors can easily arise. Therefore, fisheries authorities must be encouraged to disseminate information relevant to the fisheries to the participants.

Control of fishing capacity for high seas fisheries

137. Group work on the control of fishing capacity for high seas fisheries was facilitated respectively by Dr Christopher Newton. It resulted in the following thematic report.

General issues and current status:

138. The issue of overcapacity on the high seas is considered to fall into two major categories, tuna and non tuna, with more than 80% of the value of the high seas catch being tuna or tuna related species. While the issue of non-tuna fisheries is important, the focus of attention was given to the issue of high seas tuna fisheries. That said, much of this report of readily applicable to other high seas fisheries.

139. Due to the lack of control and compliance mechanisms, the world’s high seas fisheries exhibit many of the features of free and open access fisheries. This situation will continue unless substantial action is taken.

140. The unauthorized and frequently illegal operations of flag of convenience (FOC) and non-party (to regional fisheries bodies) vessels are major contributors to the current overcapacity problem on the high seas. As high as 20% of the current Mediterranean bluefin catch is being taken by FOC vessels.

141. The non-malleability of capacity associated with vessels capable of fishing on the high seas, and the use of this area as an area of ‘last resort’ will likely continue to place pressure on high seas stocks.

142. A number of developing coastal states have policies for developing national capacity and increased real participation in tuna fisheries. This will displace some of the current activity by fishing states in the zones of coastal states, and could increase the high seas overcapacity problem.

143. Whilst there are some problems with southern and Atlantic bluefin tuna, Atlantic swordfish and possibly bigeye, tuna stocks are in generally good health but are at or close to full exploitation. Skipjack could still be under exploited. This situation could be an advantage in terms of attempts to control and reduce capacity, and should be acted on before additional capacity is constructed or displaced from coastal zones. A fleet build-up driven by rising tuna prices has already commenced in the IATTC and ICCAT areas.

144. There are suggestions of considerable levels of overcapacity in the tuna fishery (including the high seas). A review of the state of world tuna and tuna-like species has indicated that a reduction of 30% in the world-wide longline fleet is required. ICCAT has recommended that effort be capped, and that mortality rates be maintained or reduced for many species of Atlantic tuna species. Capacity and catches are also expanding dramatically in the Mediterranean bluefin fishery, and in order to achieve a recommended catch reduction of 25%, a reduction in capacity by at least the same amount would be essential.

145. Considerable interaction exists between:

146. Almost all of the high seas tuna fisheries of the world are covered by existing or planned Article 64 bodies, including ICCAT, IATTC, IOTC, CCSBT and the emerging Arrangement that will cover the tuna fisheries of the Western and Central Pacific.

Possibility for control using existing international agreements

147. The Law of the Sea Convention contains numerous general statements relevant to the control of fishing capacity, and a number of these have been enhanced with the development of the UN Implementation Agreement (UNIA)7 and the FAO Compliance Agreement8 and the FAO Code of Conduct for Responsible Fisheries.

148. ICCAT has reported some success in the use of trade related measures to control the landings (and hence capacity) of Atlantic Bluefin tuna by non-members not complying with management measures. Under reporting of catches has been up to 30-40% of the total catch. It was noted that this method may be useful to enforce compliance by states that do not comply with the regulations of relevant fisheries management bodies.

149. There is considerable scope and potential benefit for existing regional fisheries management bodies and other relevant parties to meeting on an ad-hoc basis to discuss fishing capacity issues. Such an ad-hoc meeting could discuss a mechanism for the development and exchange of vessel databases, current and planned capabilities to tackle the monitoring and reduction of fishing capacity, and overall trends in world tuna fisheries.

Limitations, constraints and impact of non compliance

150. Displaced capacity from one area of high seas to another can lead to a transfer of the problem, with significant conservation and management implications. This could be exacerbated where effective conservation and management measures are not in place in the high seas area into which the effort is displaced.

151. The considerable capacity on the high seas operating under flags of convenience and flags of non-parties is difficult or impossible to control under current regional fisheries management arrangements, unless those states enter into serious collaboration with regional bodies.

152. Existing regional fisheries management bodies are restricted in their capability to restrict capacity due to the nature of their governing convention, political considerations and type of decision-making procedure (consensus, without agreed dispute settlement mechanisms).

153. Current objectives of major regional tuna management bodies (IATTC and ICCAT) in terms of achieving maximum sustainable yields have the potential to be undermined if the issue of capacity is not addressed, including the issue of allocation.

154. There is a particular danger in terms of overcapacity in relation to high valued tuna species, such as bluefin and bigeye.

Conditions for the improvement of capacity control and reduction

155. The entry into force of the UN Implementing Agreement is a major positive development for the effective management and reduction of fishing capacity on the High Seas. The Agreement contains detailed guidelines to assist with the development and implementation of measures to control capacity, including MCS measures and boarding and inspection procedures. States are encouraged to ratify the Agreement as soon as possible.

156. Improved data on the physical and other characteristics of the overall tuna fleet are required as a priority. Full and transparent exchange of this information between regional fisheries bodies is required. Such information is required under the FAO Compliance Agreement.

157. The availability of timely and accurate limit reference points and other relevant biological data are essential to the setting of target reference points and associated levels of capacity.

158. Considering the present situation, it is most desirable that current overall tuna fishing capacity be at least capped at the current level, and that capacity be matched to target reference points. Such points will take into account various economic and social goals, and should be set within biological reference points. This action will inevitably lead to substantial reductions in capacity and catches for some species in some heavily fished areas, as fleets are adjusted.

159. Management measures to achieve these reductions in capacity will include the division of rights to take fish on the high seas between parties with a real interest in those fisheries. It is noted that this division is already in practise in some regional fisheries management bodies. TAC’s are a key requirement in terms of capacity matching but require augmentation with other measures, including limited entry.

160. For agreements and decisions on capacity reduction to be effective, they must be legally binding on parties, and a mechanism is required to ensure that such reductions are physically effected and maintained.

161. The advent and application of vessel monitoring systems (VMS) to the high seas and associated coastal zones has the potential to assist in the control of fishing and compliance with agreements to reduce or maintain agreed levels of capacity. Other compliance mechanisms will be needed, including a comprehensive high seas MCS capability.

Major research needs

162. Data on the effective effort (technological coefficients) of the high seas tuna fleet need to be developed.

163. An understanding of the impacts of supplies of major tuna categories world-wide on price, and the likely implications on fishing capacity. This research to include examination of fleet capacity and mobility world-wide, and should be updated on a regular basis.


164. The following recommendations were made by the Group regarding the control of fishing capacity applied to the high seas:

Broader policy and institutional considerations

165. Group work on broader policy and institutional considerations for the control of fishing capacity was facilitated by Dr William Emerson and resulted in the following thematic report.

166. The Group considered policy issues and institutional requirement at both national and international levels. It made a number of recommendations on this basis.

Policy framework

Major policy issues related to the management of capacity on a national basis

167. The Group recommended that countries should develop national fisheries policies and action plans seeking to balance fleet capacity (e.g., fishing effort) with available resources on a sustainable basis.

168. It was felt that an essential first step in the management of capacity was the development of responsible policies and consequent management plans.

169. The Group recommended that limit reference points and target reference points should be developed. Limit reference points will be set according to resource sustainability measures. The target reference point will seek to maximize the net social benefits from the fishery over time. It is furthermore recognized that there is a continuum between these two points that may be an appropriate target for capacity measures.

170. It was felt that the appropriate target reference point was that which would maximize economic rent. However, it was also understood that government social policies are legitimate and may mean that other levels were appropriate. However, a limit reference point based on biological grounds was considered essential. It was also felt that in some cases developing countries gave undue emphasis to large scale operations at the expense of small scale, possibly more efficient operations and that such reference points would help them in the development of capacity programs.

171. The Group strongly felt that Governments should be urged to reduce and eliminate subsidies that promote levels of capacity beyond the target reference point. It was however recognized that certain forms of government intervention, i.e. permanent cessation schemes, could be useful in efforts to reduce capacity.

172. There was considerable discussion on subsidies. From some developing countries context, it was noted that fisheries often represented a relatively small share of GNP, but subsidies had a very important role when viewed from a regional development context. It was suggested that subsidies should be shifted from conventional capital to promote resource conservation, human skills and institutional development.

173. It was also suggested that this would be a good transitional strategy to shift subsidies from ‘bad’ subsidies to ‘good’ subsidies. However, the use of any subsidies should be included as part of the pre-arranged policy or action program. It was also suggested that a regular review of fishery subsidies would be advantageous. Such a review would encompass both the type, extent and impact of subsidies.

174. It was also noted that some broader social programs may have substantial positive effects on the reduction of capacity through the retraining of fishermen.

175. The Group recommended that countries should implement an access policy to define who may participate in a fishery and to spell out the rights and obligations of these participants.

176. This recommendation was linked to the first overarching recommendation that governments should develop national policies. It was considered that any allocation policy would have to take into account those national objectives of fisheries policy and wider policies. These could include social objectives for example regional employment. It would be necessary to manage the allocation of capacity on a national level and understand that although the total amount of capacity may not be in excess, its impact would depend on which areas/fisheries it was operating in. It was also felt that countries should also pursue the management/regulation of capacity with respect to fisheries management.

Major policy issues related to the management of capacity on an international basis

177. The Group stressed the need to encourage non-members of regional fisheries organizations to cooperate and to become members. This should involve the development of a registration scheme for vessels fishing in the region and consider the use of sanctions including trade measures if adopted in accordance with WTO criteria.

178. Considerable discussion was held on this issue. It was felt that incentives should be provided for non-members to participate in relevant regional fisheries organizations that they have a real interest in. It was noted that there were two reasons why countries might not join a regional management body. First, countries do not join because they do not want to be subject to management arrangements. Second, the high payments required to participate in these organizations may discourage membership of some countries. It was suggested that a fund to allow the participation of smaller countries could be considered. However, this suggestion met with some reservations, as it was felt that countries there were already members may ‘pull out’ in order to receive this payment.

179. The issue of participation of countries in regional management bodies that do not have a real interest in the fisheries in the region was also raised.

180. It was felt that the high seas capacity needed reduction and that a registration program would allow the monitoring of capacity.

181. Concern was expressed regarding the potential for vessels flying flags of convenience to undermine conservation goals.

182. The Group stressed the need for governments to promptly ratify the FAO Compliance Agreement and the UNIA

183. This issue arose following discussions of the need to balance national requirements with international requirements. Some countries have taken the initiative to reduce capacity, but mechanisms to reduce capacity of other high seas fishing nations that also exploit the resource are still required. An interesting issue discussed was to what extent agreements reached in regional management bodies were binding under international law.

184. The Group considered essential, within the context of regional fisheries agreements, to encourage management regimes that will result in capacity levels that are in balance with the available resources on a sustainable basis

Institutional requirements

Issues relating to institutional requirements at the national level

185. The Group recommended that countries should establish a register of fishing vessels including gear and vessel characteristics

186. It was considered that this recommendation was essential to provide the baseline information necessary to provide information on capacity levels. The actual data to be recorded on the vessel register was subject to some conjecture, and it was decided that to be too prescriptive at this stage, without the benefit of the findings from the working group looking at measurement would be premature. In this context the role of technological innovation and its impact on fishing capacity was recognized.

187. It was noted that some countries and international organizations have already established vessel registries. It was suggested that for such an information base to provide information on effective versus nominal capacity it may require data on effort and fishing patterns. This led to a recommendation that:

188. The Group recommended that, in order to undertake fleet assessments, countries should collect on a regular basis economic, technical and other information as appropriate to measure capacity and to understand the factors determining the dynamics of entry and exit.

189. The Group stressed the need to strengthen the technical research capabilities of countries also with respect to the measurement and analysis of capacity and resource assessment in relation to management objectives. In particular, there is a need to standardize methodologies and data requirements to measure capacity. This should look specifically at how to calculate effort in small-scale fisheries, recognizing that data requirements and methodologies in this area may differ from other types of fisheries.

190. It was also pointed out that a clear distinction should be made between small scale vessels in developing countries and fisheries in developed countries. Gear was likely to be a more appropriate measure of capacity in the case of these small scale fisheries as the number of boats did not have much influence on catching capacity. It was felt that it was necessary to standardize gear/effort relationships.

191. It was also felt that there may be an important role for the FAO and other international organizations to enhance the building of human capacity through the running of workshops aiming to train representatives in research and methodologies on capacity issues. Particularly, this would include the development of a methodology to assess capacity in small scale fisheries which have different issues to industrial fisheries and those in developed countries.


192. It was felt that community management was an evolving concept. It was suggested that existing community groups/organizations were starting to understand issues surrounding resource depletion. It was also felt that the market is providing strong incentives for outside exploitation of what have been in the past community resources.

193. The Group recommended to promote the involvement of fishermen and their organizations at all levels of management, including in particular the effort at understanding and assessing capacity.

194. It was considered that two way communication using community/fisherman - government involvement was necessary. That is, involvement of these groups results in a higher quality of information, and the involvement in an advisory role also increased the acceptance and incentives for responsible management.

195. The improvement of consultative mechanisms could also include the formal consultation of industry in the formulation of policies, regulations and legislation.

196. It was also noted that the legislative framework determines the level of co-management and policy involvement. For successful co-management it requires communities/industry to be empowered and a clear management area in terms of space to be defined. This is particularly the case for developing countries, where involvement is necessarily delineated by the area of operations which is quite small. Consequently the State must also play a role in co-management for the purpose of co-ordination between smaller areas.

Export/transfer of capacity internationally

197. The transfer of capacity internationally was raised as a major potential problem. Six major issues were raised:

198. It was noted that policies regulating the export of fishing vessels may allow a third country to purchase a fishing vessel and re-sell it to a Flag of Convenience Country. Some countries have quite stringent export control of fishing vessels removed from the fleet under its buy-out program.

199. The Group recommended that governments should be urged to encourage that capacity reduction in their countries (e.g., Vessel buy-out schemes) schemes do not result in the transfer of capacity to other fisheries. This may involve the use of economic incentives or a regulatory regime.

200. From the developing countries perspective capacity reduction programs that depend on government funding, e.g., vessel buy back schemes, could be difficult to implement.

201. The Group recommended that governments should endeavour to restrict the sale of fishing vessels if such a sale was contrary to internationally adopted management measures.

202. A long discussion was held on the potential impact of access payments of fleets to coastal states EEZ’s being subsidized by distant water fishing states Governments. A view was expressed that the payment of access payments by the government when this fee was not recovered from the industry could result in excess capacity. On the other hand it was felt that such agreements were negotiated in the context of national management regimes and the onus fell on those countries permitting access to determine the conditions of access. It was also raised that subsidies in the form of access payments not recovered from fishing operators may also mean that their activities on the high seas are implicitly subsidized resulting on increased capacity.

203. The Group stressed that governments should not use economic incentives to facilitate the transfer of their distant water fishing fleets to third country EEZ’s and on the high seas if the transfer undermines the sustainability of resources in these waters.

204. It further recommended that subsidies to the ship building industry, including fishing vessels, should be eliminated. In order to achieve this objective, activities in the OECD and WTO should be supported. Specifically, the inclusion of fishing vessels in the OECD shipbuilding agreement should be supported.


205. The chairman organized the discussion by dividing the topic in two major parts: elements with an international dimension and national elements. The international elements were further broken down into: research; monitoring and information; training; and, policy issues of an international nature.

International aspects


206. A large number of research topics to be incorporated into an international plan of action were suggested. Some aimed primarily at supporting urgent international policy initiatives, while other will increase the understanding of fundamental aspects of the issues related to fishing capacity, its control and reduction.

207. Four major research topics were identified by the TWG as having priority for coordinated international research:

208. The TWG identified other research topics which could benefit from coordinated initiatives at international or regional level. These relate to management methods; investment and sectoral dynamics; as well as economic and trade incentives or disincentives. They aim at:

Monitoring and information sharing

209. In relation to monitoring and information requirements, the TWG considered that the following four related recommendations should receive priority attention:

210. The TWG further considered that the international community, with the assistance of FAO in particular, should urgently attempt to :

211. The meeting recommended that FAO should obtain from all countries data on the catches of their flag vessels in high sea areas adjacent to their national EEZs. This would permit a truer estimate of high sea catches. It was also considered essential that FAO become a center for sharing of information on the operation of flag-of-convenience vessels. In this context it was emphasized that related data on vessels, effort, catches and prices must be made available in a more timely manner.

212. It was pointed out that a system should be established for sharing the results of research initiatives. Such an exchange might be facilitated by the establishment of a network of professionals – using the internet.


213. It was suggested that priority be given to developing standard computer software for measuring and monitoring fishing capacity and that related training and implementation programmes be developed at national level. It was also recommended that the international donors community provides funding and technical assistance to assist with human development in developing countries on all issues related to the management and effective control of fishing capacity.

International policy initiatives

214. Four major policy initiatives were recommended by the TWG. These involve the need to:

215. The TWG made complementary suggestions and recommendations. These call for increased international cooperation in the following areas:

216. In reference to the implementation of the various recommendations made for the management of fishing capacity, the TWG further recommended that steps be taken to strengthen FAO’s capabilities so as to enable the organization to support related international initiatives and to assist members and regional fisheries bodies in addressing this issue.

National Initiatives

217. The TWG felt that countries should develop policies aimed specifically at controlling fishing capacity and at reducing it if required. Initiatives related to the control and reduction of fishing capacity must accommodate the fact that national interest naturally prevails. However at the same time those preparing national policies on this matter must increasingly accommodate the international implications – often negative when they occur – of any induced reduction in national fishing capacity. It was therefore felt that countries should act responsibly when dealing with the reallocation of their fishing capacity.

218. In order to develop such policies, the TWG suggested that countries should systematically monitor and assess fishing capacity and its possible unbalance with available fisheries resources and management objectives. The cost and consequences of overcapacity and of any required adjustments would also need to be evaluated. However, it is important that those who assess policy options also draw the attention of decision-makers to the benefits of adjusting fishing capacity to available stocks and of capacity management in general. The most evident positive aspect is the possibility to realize the resource rent – or addition to national income – which inevitably is largely lost in those fisheries that are pursued by excessive fleets.

219. The meeting felt that in most instances, it was necessary to carefully review and address the issue of access prior to being able to properly manage fishing capacity. It was noted that although fisheries are largely regulated, open access conditions still prevailed and constituted the main distortion (together with subsidies) at the origin of the present overcapitalization problem.

220. The TWG considered it essential that clear and concise guidelines be developed on how to manage fishing capacity. However, it is evident that these will differ from country to country depending on the characteristics of the national economy and economic policies, in particular on the extent to which equity and other social considerations are important in relation to economic efficiency. Therefore it is likely that there will be clear distinctions between guidelines on fishing capacity applicable in the rich, industrial economies and those applying in developing economies, even if the general feeling of the meeting was that in both cases, incentive adjusting methods of control should be promoted in priority, whenever applicable.

221. In developing economies, guidelines should, for example, take into account that some governments may want to implement in marine fisheries a policy equivalent to "agrarian reform", which would mean defining access rights with due consideration being given to economic and social aspects . "Aquatic reform" would, if implemented, improve the possibilities of strengthening/introducing "group rights" of one form or another. Some participants also cautioned that, in this context, it was not advisable to attempt to solve both equity and efficiency issues through the use of one and the same policy measure.

222. In the rich, industrialized economies the distribution of national income and wealth will generally be less important as a component of the fisheries policy than economic efficiency, or more readily compatible. It was suggested that, in this context, the overriding concern will be "to get the institutions right"; that is, preferably, to have the market regulate access to the marine resource.

223. The TWG recommended that in any case, countries should clearly specify the conditions of entry and participation in the fishery sector and in specific fisheries. This should apply to both investment (capital) and labour. Given the nature of the fisheries resource, most participants felt that user fees (royalties) should be imposed in connection with the granting of access rights. The difficulty of initially imposing such fees in overcapitalized and barely profitable fisheries was recognized. However, royalties may be imposed as soon as fishing capacity as been brought under proper management.

224. In a related manner, the TWG recommended that countries reduce and progressively eliminate subsidies which contribute directly or indirectly to the build-up of excess fishing capacity.

225. It was suggested that, in developing policies for the management of fishing capacity, countries should undertake extensive consultation with all stakeholders and seek minimal consensus on capacity management among various user groups. In general terms, a strong involvement of the industry in the fishing capacity management process was considered essential.

226. The TWG also felt that countries should periodically assess and audit the management and administration of the fishery sector. As recently done in a number of countries, such initiative was perceived as essential to bring about the institutional and policy reforms which may be required to properly address the issue of overcapitalization and of fisheries management in general.

227. Finally, it was indicated that many of the recommendations made for consideration at the international level have direct implications or relevance to individual countries (e.g., in terms of research and monitoring).

Follow-up of the TWG meeting

228. Noting that the management of fishing capacity raises many unresolved issues, the TWG strongly recommended that FAO endeavors to organize a follow-up technical meeting within a year. It was suggested that this meeting could focus particularly on the measurement and monitoring of capacity, as well as on achieving a better understanding of the ‘spillover’ effects discussed in this report.

229. The text of this report was prepared by the Technical Secretariat, assisted by Group rapporteurs as regard the thematic reports, and adopted by the meeting on 18 April 1998.


Annex A


Simple practical measures of fishing capacity

Two basic dimensions are most practical: output (i.e., catch) and the primary input which characterizes the operation of the fishery. In many fisheries, particularly those most highly developed, vessels will be the best indicator, and represents capital. In many other fisheries, particularly artisanal fisheries, labour is the primary input. The following discussion will develop measures of capacity as numbers of vessels; the same principles apply in fisheries which have labour as the primary input.

Several considerations must be taken into account: heterogeneity of capital stock, which translates to different types of vessels or fleets; multiple fisheries activities by fleets; and the amount of possible fishing time relative to current time allowed for fishing on a particular stock.

In developing capacity measures, it is reasonable to make projections based on fleets fishing the maximum number of days possible for a fishery. In general, this would be all days in a year except those which cannot be fished due to weather or due to a need to protect against fishing during times where the stock is vulnerable (e.g., during spawning). Call this maximum time Tmax.

To allow for differences among vessels, let j=1,...,J be an index of the different fleets. These can be defined based on whatever observable data there are to distinguish differences in fishing power, such as length or tonnage, type and amount of gear, or amount of labour used. To consider the different fisheries which a fleet may target in the course of a year or season, let s represent fishery s.

First consider the simplest case, of a set of fleets fishing on a single stock. One measure of current fleet capacity, which is based on mean catch rates, number of vessels, and time fished, would be


(1) Q = S nj cj (Tmaxj/tj)


where Q is the potential catch by the current fleet given current stock conditions; nj is the number of vessels in fleet j; cj is the mean catch under current stock conditions for fleet j; and (Tmaxj/tj) is the "capacity utilization factor" which scales up the current catches by different fleets based on how much more time they could spend in the fishery if not constrained by TAC, other regulations, or market conditions. As a special case, when J=1, the measure of potential capacity is calculated for all vessels fishing the stock taken together.

Given the estimate of potential catch by current fleet, Q, a simple measure of overcapacity is

(2) OC = Q/TACmax

where TACmax is the allowable catch given current stock conditions, set to allow for factors such as fluctuations in stocks.

A limitation of this measure is that it is based on the current fleet, and does not account for vessels not in the fishery which could enter if conditions changed. Adjustments to the number of vessels in (1) would have to be made to account for this problem of "latent fleets."

A vessel-based indicator of overcapacity

Frequently it will be more convenient to develop measures of capacity based on vessels. The idea here is to calculate the "full-time equivalent" number of vessels which can take a given TAC for a single stock. When there are different fleets, this does not meaningfully result in a single scalar measure unless all vessels are taken to be similar. When fleets cannot be aggregated into a single fleet, it is most sensible to calculate a full-time equivalent for each fleet, as

(3) Nj= (TAC/cj) (tj/Tmaxj).

This procedure gives a series of scalars

(4a) N1,...,NJ

which represent minimum numbers of boats of each type which could take all of the TAC themselves. These can be compared to the actual current numbers of boats

(4b) n1,...,nJ

to give a perspective on how large current fleets are relative to the maximum needed for each type.

For example, if the actual fishery had two fleets, with 40 large vessels and 120 small vessels, but the minimum numbers needed to take the TAC were 27 large boats or 100 small boats, there would be clear indication of overcapacity. If the actual was larger than the minimum for large boats but not for small (e.g., if the minimum small boats needed was 140), the evidence would still indicate overcapacity, because one fleet alone could more than take the entire TAC.

If all minimum fleet numbers are greater than actual fleet numbers the evidence based on this simple measure would be less clear. In this case one could calculate a composite index of boats needed by using a fishery-wide average catch rate, in effect setting J=1.

Fleets fishing multiple stocks

The same principles can be extended to fleets fishing multiple stocks. In this case, let s=1,...,S represent stocks fished. For fleet j fishing on stock j, the capacity measure would be


(5) Qs= S nj cjs (Tmaxjs/tjs)


where cjs is the mean catch by fleet j fishing stock s; and (Tmaxjs/tjs) is the scaling up factor to generate full-time equivalent catch by fleet j fishing stock s. Note that this is the same principle motivating the catch-based overcapacity measure in (1), extended to the multiple-stock case. The measure of overcapacity for stock s in this multiple-stock case is


(6) OCs = S Qjs/TACs


To interpret the multispecies overcapacity measures, consider the case of 2 stocks, 1 and 2, being fished by several fleets, drawn in Figure 1. Equation (6) would lead to two capacity calculations, Q1 and Q2, which are the x-intercept and y-intercept in Figure 1. For simplicity (and in the absence of production models), assuming these stocks are perfect substitutes in production leads to the linear downward-sloping trade-off curve connecting the two intercepts. The TACmax for stock 1 is the vertical line in the graph, and the TAC max for stock 2 is the horizontal line in the graph. In this case, we have overcapacity for each species in isolation, but intercapacity for combinations of catch on segment ab.

The same measures are plotted in Figure 2. Here there is clear overcapacity for all combinations of Q1 and Q2.

The case of perfectly-substitutable products is a polar case which is an approximation which must be made in cases where there are no stock production models. Figures 3 and 4 present the situation expected if there are stock production models available. They are similar to Figures 1 and 2, except that the production possibilities trade-off between stock 1 and stock 2 is non-linear due to economic substitution possibilities.

Adjusting for target biomass conditions

The previous discussion used current stock conditions (e.g., biomass and mean catch rates). To adjust the indicators for target conditions, the cpue and TAC corresponding to target biomass should be substituted in (1) through (6).

Annex B



1. TACs

2. License limitation schemes

The Malaysian example

a) Curbing the problem of growing number of vessels in the commercial fisheries:

The commercial trawl fisheries are very efficient and possess high fishing capacity. This can be seen as these fisheries have contributed more than 55 percent of total marine landings. As these fisheries are very lucrative, many people are interested to invest in them. As a result, the number of trawl fishing vessels have increased from 20 vessels in 1965 to it’s peak at 4,587 vessels in 1980.

Recognizing the danger of over-capacity in the trawl fishery, the government of Malaysia has introduced a "Comprehensive Fishery Licensing Policy". In this policy, the government has frozen the issuance of new trawl fishing licenses in the coastal area, except for deep-sea fishing. Furthermore, the government has implemented the fisheries restructuring program whereby fishing vessels of less than 40 GRT must be owner-operated. A fisherman who has more than one vessel in this category is advised to sell or transfer to other genuine fishermen within a certain grace period. A large number of old and unproductive small vessels has been made available by the owners but there have been few buyers. As a result, the number of trawl fishing vessels in Peninsular Malaysia has declined to less than 4,000 vessels in 1996.

The same scenario applies to the fish purse-seine fisheries. The number of registered vessels is now stabilized at 700 vessels for the past 16 years.

b) Controlling the expansion of the gross registered tonnage (GRT):

An important dimension of fishing effort is the size of the vessel, measured as gross registered tonnage (GRT). If the average GRT increases, fishing capacity will definitely increase. The average GRT for inboard registered fishing vessels of the west coast of Peninsular Malaysia has shown an increasing trend from less than 10.8 GRT in 1970 to almost 15 GRT in 1988.

The government of Malaysia has introduced a "vessel replacement procedure" to check and curb the expansion of vessel size. Under this procedure, a fisherman is allowed to build a replacement vessel of the size of his old vessel. A fishing license will only be issued to the fisherman if this condition is being fulfilled.

The implementation of this procedure has shown remarkable success. The average inboard vessel size has declined from its peak of about 15 GRT in 1988 to about 14 GRT in 1966. There are several reasons for the declining of average GRT. The most important factor is that the cost of building vessels has increased, especially for larger vessels. Furthermore, many of the river-mouths in Peninsular Malaysia are shallow, creating an obstacle to a larger vessel to cruise in and out of fishing ports. Hence, it is in the individual fisherman’s interest not to use a large size fishing vessel to avoid the river-mouth problem and reducing vessel cost.

c) Failure in curbing the expansion of engine size:

Another important dimension of fishing effort is the engine horse-power. The average engine horse power for inboard vessels of the west coast of Peninsular Malaysia has shown a continuous increasing trend from 30 h.p. in 1970 to more than 100 h.p. in 1996. Why did this phenomenon occur despite government efforts to control it?

Although there was a engine replacement procedure in place with a high licensing fee imposed on bigger horse-power engines, fishermen still had the incentive to use a bigger horse-power engine in order to maximize personal catch. There is nothing wrong in this procedure but there are external factors that distort the incentive structure of the fishermen.

In Malaysia, there are no output controls such as ITQs. This means that every individual fisherman may face some form of dilemma in choosing their strategy, i.e., to adopt a collective strategy or short-term individual strategy. The individual decision is largely influenced by the rules of the game which later determine the incentive structure faced by them.

When a fisherman has the opportunity to use bigger horse-power reconditioned land-based engines at lower prices compared to marine engines, he will choose the strategy that has minimal cost and at the same time brings a higher expected catch. This is because the reconditioned engine industry is already established with backed-up services and spare-parts.

This is an example showing that input controls alone are not sufficient in controlling fishing capacity. In order to ensure the input controls work well, they must be supplemented by other measures such as output controls as well as taxation and/or subsidies. In the case of engine replacement, it is wise to introduce a high tax on reconditioned engines and/or give subsidies to low horse-power marine engines.

3. Vessel catch limits

4. Individual effort quotas

Both Morocco and Malaysia have programs whereby IEQs are implemented as conditions.


Annex 1



Aguero, Max (Mr)
Inter-American Centre for Sustainable Ecosystems Development
Casilla 27016, Santiago
Tel.: 00562 2021137
Fax.: 00562 2021142

Arnason, Ragnar (Mr)
Department of Economics
University of Iceland
Reykjavik, Iceland
Tel.: 00354 525 4539
Fax.: 00354 552 6806
or c/o Ministry of Fisheries
Skúlagata 4, 150 Reykjavik
Fax.: 00354 562 1853

Battaglene,Tony (Mr)
Commonwealth Fisheries Policy Section
Fisheries and Aquaculture Branch
Depart. of Primary Industries and Energy
GPO Box 858 Canberra City, ACT 2601
Tel.: 0061 262 725 760
Fax.: 0061 262 272 4215

Catanzano, Joseph (Mr)
155 rue Jean-Jacques Rousseau
92130 Issy-les-Moulineaux
Tel.: 00331. 46482256 or 00331.46482100
Fax.: 00331. 46482276

Cartwright, Ian (Mr)
Deputy Director
South Pacific Forum Fisheries Agency (FFA)
P.O. Box 629, Honiara
Solomon Islands
Tel.: (677) 21124
Fax.: (677) 23995

Chavez A. Ernesto (Mr)
Centro Interdisciplinario de Ciencias marinas (CICIMAR)
a.p. 592
La Paz, Baja California Sur 23000
Tel.: (112) 253 22 & 253 44
Fax.: (112) 253 66

Cunningham, Steve (Mr)
Chief Technical Adviser
FAO Project UTF/MOR/017/MOR
BP 1369, Rabat

Emerson, William (Mr)
Ministry of Fisheries
ASB Bank House
101-103 The Terrace
P.O. Box 1020, Wellington
New Zealand
Tel.: 0064 4 470 2650
Fax.: 0064 4 470 2669

Engesaeter, Sigmund (Mr)
Directorate of Fisheries
Strandgaten 229
N-50002 Bergen
Tel.: 0047 55 23 80 00
Fax.: 0047 55 23 80 90

Garcia, Serge (Mr)
Director, Fisheries Resource Division
Viale delle Terme di Caracalla
00100 Rome, Italy
Tel.: (3906) 570566467

Gunawardena M.H. (Mr)
Special Adviser
Ministry of Fisheries and Aquatic Resources
20/4 Rodnery Street
Colombo 8
Sri Lanka
Tel.: 0094 1 698876
Fax.: 0094 1 522932 or 522881 - c/o National Aquatic Resources
Research and Development Agency (NARA)

Hannesson, Rognvaldur (Mr)
Norges Handelshoyskole
Helleveien 30
N-5035 Bergen-Sandviken
Tel.: (47)
Fax.: (47)

Joseph, Jim (Mr)
Inter-American Tropical Tuna Commission
c/o Scripps Intitution of Oceanography
8604 La Jolla Shores Drive
La Jolla, CA 92037-1508

Kagawa, Kenji (Mr)
Assistant Director
Management of Tuna Fishery
Far Seas Fisheries Division
Fisheries Policy Planning Department
Fisheries Agency
1-2-1 Kasumigaseki Chiyoda-ku
Tokyo 100, Japan
Tel.: 0081 33502 2443
Fax.: 0081 33591 5824

Kamaruzaman, Haji Salim (Mr)
Fisheries Officer (Planning)
Department of Fisheries Malaysia
8 & 9 Floor, Wisma Tani
Jalan Sultan Salahuddin
50628 Kuala Lumpur
Tel.: 00603 2982011 ext. 3620
Fax.: 00603 2910305
Telex: KL Fish 28157

Kebe, Moustapha Mohamadou (Mr)
Bureau d’Analyses Macro-Economiques
Institut Sénégalais de Recherches Agricoles (BAME/ISRA)
BP 3120, Dakar,
Tel.: 00221 832 2313
Fax.: 00221 832 3361

John Kurien (Mr)
Centre for Development Studies
Prasantnagar Road, Ulloor
Trivandrum 695 011, Kerala
Tel.: CDS: 0091 471 448881
Home: 0091 471 446989
Fax CDS: 0091 471 447137

Yoshihiro Kuronuma (Mr)
Director, Fisheries Economics Section
Fisheries Management and Economics Division
National Res. Institute of Fisheries Science
Fisheries Agency, Ministry of Agriculture
Forestry and Fisheries
2-12-4 Fukuura, Kanazawa-ku
Yokohama-shi, Kanagawa, 236
Tel.:(81) 45 7887676
Fax.: (81) 45 7885001

Larson, Doug (Mr)
Department of Agricultural and Resource Economics
University of California, Davis
Davis, CA 95616. Etats-Unis
Tel.: (1) 916 752 3586
Fax.: (1) 916 752 5614

Marasco, Richard (Mr)
National Marine Fisheries Service
Alaska Fisheries Science Center
7800 Sandpoint Way NE, BIN C15700
Seattle, WA 98115
Tel.: (1) 206. 526.4172

Milazzo, Matteo (Mr)
National Marine Fisheries Service
1315 East-West Highway
Silver Spring, MD
20910, USA

Miyake, Peter (Mr)
Assistant Executive Secretary
Corazon de Maria, 8-6o
28002 Madrid,
Tel.: (34) 91 416 5600
Fax.: (34) 91 415 2612

Munro, Gordon (Mr)
Department of Economics
#997 – 1873 East Mall
Vancouver, B.C.
Canada V6T 1Z1
Tel.: (1) 604 822 2876
Fax.: (1) 604 822 5915

Newton, Christopher (Mr)
Fisheries Consultant
1655 22ND Street
West Vancouver, B.C.
Canada V7V4E2
Tel/Fax: (1) 604 925 9121

Piumsombun, Somying (Ms)
Fisheries Economics Senior Adviser
Department of Fisheries
Ministry of Agriculture and Cooperatives
Bangkhen, Bangkok 10900, Thailand
Tel. & Fax: (66) 2 5620580
or Fax: (66) 2 5620561

O’Boyle, Robert (Mr)
Office of the Regional Advisory Process
Bedford Institute of Oceanography
P.O. Box 1006 Dartmouth, Nova Scotia
Canada B2Y 4A2
Tel: (1) 902 426 3526
Fax: (1) 902 426 1506

Rami, Mohamed (Mr)
Secrétaire Général du Conseil Supérieur Pêches
Ministère des pêches maritimes et de la marine marchande
Haut Agdal - Rabat
Tel.: (212) 777 1241 or (212) 771 4474
Fax.: (212) 777 8508

Roitmann, Michael (Mr)
Commission Européenne
Direction Générale XIV, Pêche
Rue de la Loi, 200
B-1049 Bruxelles
Tel.: (32) 2.295.6035
Fax.: (32) 2.296.3033

Squires, Dale (Mr)
Southwest Fisheries Science Center
National Marine Fisheries Service
P.O. Box 271
La Jolla, California
92038, USA
Tel.: (1) 619.546. 7113

Sutinen, Jon G. (Mr)
Department of Environmental & Natural Resource Economics
University of Rhode Island
Kingston, Rhode Island 02881
Tel.: (1) 401 874 4586
Fax.: (1) 401 782 4766

Ziro Suzuki (Mr)
Pelagic Fish Resources Division
National Research Institute of Far Seas Fisheries
Fisheries Agency
5-7-1 Orido, Shimizu, Shizuoka 424
Tel.: (81) 54336 6041
Fax.: (81) 54335 9642

Song Yann- huei, (Mr)
Associate Research Fellow
Institute of European and American Studies, Academia Sinica
Nankang, Taipei
Taiwan Province of China
Tel.: 02 789 9390
Fax.: 02 785 1787

Verona, Carlos A. (Mr)
Scientific Adviser, Undersecretariat of Fisheries
Paseo Victoria Ocampo No1
ecsollera Norte 7600 Mar del Plata
Prov. de Buenos Aires
Tel/Fax: (54) 2351.7442

Ward M., John (Mr)
National Marine Fisheries Service
1315 East-West Highway
Silver Spring, MD 20910
Tel.: (1) 301. 713. 2328


Gréboval, Dominique (Mr)
Fishery Policy and Planning Division
FAO, F416
Viale delle Terme di Caracalla
00100 Rome, Italy
Tel.: (3906) 57052122
Fax.: (3906) 57056500

Komatsu, Masayuki (Mr)
Director for International Negociations
Policy Planning Division
Fisheries Agency of Japan
1-2-1, Kasumigaseki, Chiyoda-ku
Tokyo, 100, Japan
Tel.: (81) 3.3591.6582
Fax.: (81) 3.3591 5824

Mace, Pamela (Ms)
Northeast Fisheries Science Center
National Marine Fisheries Service
166 Water Street
Woods Hole, MA 02543
Tel.: (1) 508.495.2357
Fax.: (1) 508 495.2393

Takeda, Ikuo (Mr)
Section Chief
International Affair Division
Fisheries Agency
1-2-1, Kasumigaseki, Chiyoda-ku
Tokyo, 100, Japan
Tel.: (81) 3.3591.6582
Fax.: (81) 3.3591 5824

Zhou, Yingqi (Mr)
Shanghai Fisheries University
334 Jun Gong Road
Shanghai 200090
People’s Republic of China
Tel.:8621-65710296 or 65710293

Fox, William (Mr)
National Marine Fisheries Service
1315 East-West Highway
Silver Spring, MD 20910
Fax.: (1) 301. 7132313

Wijkstrom, Ulf (Mr)
Fishery Policy and Planning Division
FAO, F414
Viale delle Terme di Caracalla
00100 Rome, Italy
Tel.: (3906) 57053156
Fax.: (3906) 57056500


Fox, Prudence (Ms)
National Marine Fisheries Service
1315 East-West Highway
Silver Spring, MD 20910
Fax: (1) 301. 7132313

Freese, Stephen (Mr)
NMFS, Northwest Region
7600 Sand Point Way NE
Seattle WA 98115, Etats-Unis
Tel.: (1) 206 526 6113
Fax.: (1) 206 526 6544

Herrick, Jr. Samuel (Mr)
Southwest Fisheries Science Center
P.O. Box 271
La Jolla, CA 92038, USA
Tel: (1) 619 546 7111 or 7003

Tuttle, Robin (Mr)
National Marine Fisheries Service
1315 East-West Highway
Silver Spring, MD 20910
Fax.: (1) 301. 7132313

Annex 2


Wednesday, 15 April 1998

1. Opening ceremony

2. Presentation of agenda and expected outcome

3. Latest situation of major marine resources, including high seas stocks: Brief presentation by S. Garcia

4. Definition and underlying dynamics: Brief presentation by G. Munro

5. Discussion on the origin and consequences of overcapitalisation

6. Measurement of capacity: Brief presentation by D. Squires

7. Discussion on the main issues pertaining to the measurement and

monitoring of fishing capacity

8. Control of capacity: Brief presentation by J. Sutinen

9. Discussions on the main issues pertaining to the control of capacity

10. High seas aspects : Brief presentation by C. Newton

11. Discussions on the main issues pertaining to the management of fishing capacity for the high seas

Thursday, 16 April 1998

12. Subsidies: Brief presentation by M. Milazzo

13. Discussions on subsidies and the management of fishing capacity

Thursday, 16 April and Friday, 17 April 1998

14. Group work on measurement and monitoring

15. Group work on incentive blocking management measures and high seas

16. Group work on incentive adjusting management measures and capacity reduction

17. Group work on broader policy issues and institutional requirements

Saturday, 18 April 1997

18. Discussion of group findings

19. Discussions on elements of Plan of Action

20. Closing ceremony

Annex 3


The following documents were prepared for FAO, specifically for this meeting9:

1. Overcapitalization and Excess Capacity in World Fisheries: Underlying Economics and Methods of Control (by D. Gréboval and G. Munro)

2 Measuring Capacity and Capacity Utilization in Fisheries (by J. Kirkley and D. Squires)

3. Review of issues for the control and reduction of fishing capacity on the high seas (by C. Newton)

4. Draft Guidelines on Fishing Capacity (by D. Holland and J. Sutinen)

5. Review of the status of world High Seas Fisheries, particularly for Tuna and Tuna-like Fisheries (by NRI of Japan)

6. Review of Fishing Capacity Deployed on Tuna and Tuna-like Fisheries, particularly for Tuna Longline Fishery (by Z. Suzuki)

7. Adjustments to Fishing Capacity in the European Union (case study by R. Banks)

Documents or notes were also made available to the meeting by participants.

Annex 4


Working definitions of key terms considered by the TWG. These are restricted to definitions of capacity-related concepts, not measurement of capacity.

Stock: Assets, not the extent to which those assets are used.

Flow: A variable expressed in terms of the amount per time period, e.g., catch per day.

Fishing capacity: The ability of a stock of inputs (capital) to produce output (measured as either effort or catch). Fishing capacity is the ability of a vessel or fleet of vessels to catch fish.

Capital: A stock of inputs that includes both physical assets (such as vessels, gear and equipment -- referred to as physical capacity) and human skills (the set of skills of skippers and others directly involved in fishing operations -- referred to as human capital).

Types of capital: Capital can be physical, human, or natural (the fish resource).

Malleability of capital: The ease with which one can adjust the size of the stock of physical or human capital, which does not result in substantial economic loss. This depends on the mobility of physical and human capital and, in regards to human capital, it depends on the ease with which one can transfer skilled human capital to other occupations.

Non-malleable capital: It is capital that cannot be adjusted at a moment’s notice without risk of economic loss.

Optimal capacity: The desired stock of inputs that will produce a desired level of outputs (e.g., a set of target fishing mortality rates for the species being harvested) and will best achieve the objectives of a fishery management plan (e.g., minimizing costs). Current optimal capacity may differ from long run optimal capacity, particularly if the fishery resource is currently depleted and the management strategy is to rebuild this depleted resource.

Overcapacity (excess capacity): Capacity in excess of the optimal level.

Overcapitalization: The situation where the actual capital stock exceeds the capital stock that is necessary to achieve the desired level of outputs that best achieves the goals of a fishery management plan.

Overcapacity vs. overcapitalization: As working definitions, a distinction between the terms overcapacity and overcapitalization may be unnecessary. (Differences arise when questions of measurement are considered).

1 A list of these documents is provided in Annex 3. Some of these documents would be made available as a separate annex to this report, others will be published as FAO technical documents.
2 See Annex 4.
3 Described in Kirkley and Squires [1998]; see Annex 3.
4 The concepts of incentive blocking and incentive adjusting control measures are developed in Gréboval and Munro [1998]; see Annex 3.
5 In FAO terminology catches taken by vessels in the high seas in areas other than those adjacent to the EEZ of the flag state concerned.
6 Matteo Milazzo: "Subsidies in World Fisheries: A Reexamination". World Bank Technical Paper No 406. World Bank, Washington, 1998.
7 United Nations Agrement on Straddling Fish Stocks and Highly Migratory Fish Stocks, referred to during this meeting as the UN Implementation Agreement (UNIA).
8 FAO Agreement to Promote Compliance with International Conservation and Management Measures by Fishing Vessles on the High Seas, referred to during this meeting as the FAO Compliance Agreement.
9 Some of these documents would be made available as a separate annex to this report, others will be published as FAO technical documents.
10 This short document was prepared before the meeting to facilitate discussion. Some definitions were further discussed and amended during the meeting itself.