Appendix VI presents an examination of government and industry programs which define, measure, and in several instances reduce, capacity. Three programs in the United States are examined. The European Union and its Multi-Annual Guidance Programmes are subsequently examined. A detailed examination of the United Kingdom and the Netherlands programs are next considered. The Australian northern prawn fishery program is then examined. The last program is that for Bangladesh.
1. UNITED STATES
1.1. Hawaii
The Southwest Region of the U.S. National Marine Fisheries Service (1993), employing the concept of available fishing effort, conceived as fishing power, defined by vessel attributes (measures of the capital stock). They observed that every vessel has a maximum harvesting capacity defined as the maximum amount of fish that the vessel could catch and deliver to port over a given time period if the vessel were used to its maximum potential. Longline harvesting capacity was considered as a measure of the relative fishing power of a longline vessel to harvest pelagic management unit species using longline gear. For the Hawaiian longline fleet, calculating this capacity would involve determining the maximum amount of fish that the vessel can hold at any one time, the maximum amount of longline gear that can be deployed by the vessel per set, establishing the maximum set time, assigning a maximum catch per hook hour rate, determining the number of sets that can be made per trip, and determining the maximum number of trips per year that the vessel can make.
The Southwest Region tested the possibility that harvesting capacity is related to the length, hold capacity, or net tonnage of the vessel. When length served as the base measurement, length was considered the primary determinant of the ability of the vessel to travel long distances and as a reasonable proxy for the volume of the vessel. An individual vessel's harvesting capacity was represented by the formula Vessel A's Harvesting Capacity Units = (100 * length index of Vessel A), where the length index is the ratio of the Vessel A's length to the length of the smallest active vessel in the fleet.
When net tons served as the base measurement, net tonnage was considered as a primary determinant of the ability of a vessel to catch, retain, store, and deliver fish to shore. The harvesting capacity of a vessel was derived by the formula Vessel A's Harvesting Capacity = 100 * net ton index for Vessel A, where the net ton index is the ratio of Vessel A's net tons to the net tons of the active vessel with the least net tons.
When an exponential of length provided a proxy for vessel volume capacity and served as the base measurement, the longline harvesting capacity was considered a function of the length to some power. The length was considered crucial in terms of ability to fish beyond the closed areas but overall harvesting power was also considered a function of the overall volume of the vessel, which can be expressed as lengthß where ß indicates the power to which length is raised. An individual vessel's harvesting capacity was represented by Vessel A's harvesting capacity units = lengthß, and where total fleet harvesting capacity depends on the power chosen.
1.2. The Pacific Northwest
The Northwest Region of the U.S. National Marine Fisheries Service (1993) employed the capacity concept of available fishing effort, equated to fishing defined by vessel attributes (measures of the capital stock), in a groundfish vessel limited entry program. They used this approach to establish a formula for combining two or more limited entry permits endorsed with vessel lengths from smaller vessels into a single limited entry permit endorsed with a larger length for use with a single fishing vessel. The limited entry program, Amendment 6 to the Pacific Coast Groundfish Fishery Management Plan, is intended to control the capacity of the groundfish fleet in three main ways: (1) limiting the overall number of vessels; (2) limiting the number of vessels using each of the three major gear types (trawl, longline, and fish trap/pot); and (3) limiting increases in vessel harvest capacity by limiting vessel length. Length is measured as overall length of the fishing vessel. It was deemed to be neither possible nor necessary to specify the exact harvesting capacity of fleet at any particular time since the system for combining permits need only describe the relationship between the harvesting capacity of vessels of different lengths to prevent overall harvesting capacity from increasing.
Beginning with an overall vessel length of 20 feet, the initial U.S. National Marine Fisheries Proposal adopted a formula of a 2.5 exponential function up to and including a length of 90 feet, followed by a linear increase from that point up to a value equal to 10 times that for a 60-foot vessel for vessels 200 feet in length. Above 200 feet in overall length, the rate of increase was zero and no further accumulation of permits was required. The U.S. National Marine Fisheries Service subsequently revised its initial mathematical expression of harvesting capacity power to the following: (1) a 2.5 exponentially based relationship from 20 to 150 feet, and (2) a linear increase between 150 and 400 feet, where 400 feet in overall vessel length would require the purchase of 20 60-foot permits. The formula for combining capacity was evaluated with data from groundfish fisheries where, to the extent possible, landings were not constrained by regulations. Catch per month was regressed on vessel length raised to various powers for all three gear types for all vessels and for vessel-periods falling in the top 25 percent of landings quantities for a vessel class (“highliners”). The catching power was evaluated by fit of the equation and graphically. Catch rates among different vessel size classes were compared, giving an indication of relative fishing power.
The Pacific coast multispecies groundfish fishery is currently considering a vessel buy-back program (Pacific Fishery Management Council, 1997). The goal of the groundfish capacity program is to achieve a permanent reduction of capacity in the groundfish fishery as a means to prevent overfishing, rebuild stocks, and achieve measurable and significant improvements in conservation and management of the groundfish fishery.
The harvesting capacity of the groundfish trawl fleet increased rapidly to harvest the surplus biomass of the resource stocks which at the time were thought to be in excess of maximum sustainable yield. After the perceived maximum sustainable yield was reached, regulations were introduced to extend the fishing and marketing opportunities throughout the year while preventing the annual Harvest Guideline from being exceeded. The trip limits reduced economic efficiency, especially on the larger and more productive vessels. The license limitation system that was introduced failed to sufficiently slow down fishing effort and continually lowered harvest guidelines and increased discards and wastage. The fishing industry has come to the conclusion that the only way to reverse this situation and trend is to reduce the current fishing fleet. The prospects of a publicly financed buy-back are low, and thus, industry must fund the purchase of permits.
The objective of the Pacific coast groundfish fishery vessel capacity reduction program is to reduce the fishing capacity of the non-factory trawl fleet by one third; this action followed a preceding twenty-five percent reduction in groundfish licenses of the factory trawl fleet. The program, if implemented, would establish a fee of not greater than five percent of the ex-vessel value that would be used to purchase and decommission permits. As discussed above, this market currently trades in a point-based system related to the length endorsement on the permit. Permits will be purchased first which have the lowest total price. Permits will be bought in purchasing rounds. The number of rounds is not fixed, but rather will continue until either the goal is achieved or the program has used all of its available funding, Each round will have a fixed duration for permit holders to submit bids and for the subsequent ranking and purchase of permits. When a permit holder submits a bid, it will be binding through a contractual offer for sale.
1.3. New England
The Northeast Region of the U.S. National Marine Fisheries Service (1997) has dealt with fishing capacity reduction in the New England multispecies groundfishery. They employed the notion of available fishing effort defined as a flow variable, accounting for fishing time (activity). The maximum potential fishing capacity of vessels holding multispecies permits was calculated based on principal gear, gross registered tonnage, engine horsepower, length, age, and other relevant characteristics. Given resource conditions, harvest capacity was considered a function of the physical technical capability of fishing capital and the amount of time the fishing capital was applied. Maximum harvest capacity results when all fishing capital is applied over the maximum amount of available (or permitted) groundfishing time.
Two indices were used to estimate maximum potential fishing capacity, the total Capital Inventory Index (CII) and the Harvest Capacity Index (HCI). The technical attributes of fishing capital were represented by the CII. The CII was calculated as the product of a set of vessel characteristics. The CII was independent of fishing time and resource conditions, thereby providing a mechanism to tract interannual changes in physical capital. The index was noted to not capture all relevant sources of technical change, such as gear modifications, electronics, or increases in skill.
The HCI was developed to measure harvest capacity. The HCI was defined in terms of expected catch, given current resource conditions; a set of fixed vessel characteristics (CII); and the maximum available (permitted) fishing time. This definition did not presume that vessels operate at maximum technical capacity at all times. The HCI provides a benchmark against which capacity reduction can be compared.
The CII was computed as the product of gross registered tons, vessel length in feet, and main engine horsepower. The HCI was estimated by using statistical linear regression procedures. The harvest data were fit by regression analysis to a production function of the form: GFlbs = A*CIIa1*DFa2*AGEa3, where GFlbs was defined as the total groundfish landings by each vessel (in pounds) on groundfish targeted trips. The variable A is an intercept term. CII is the capital inventory index for each vessel. DF, days fished, was defined as the total fishing time in 24-hour increments on groundfish targeted trips. AGE, age, was defined as the vessel's age in years. Separate regressions were estimated for trawl, hook, gillnet, and scallop dredge gears.
1.4. The Mid-Atlantic
The Mid-Atlantic Fishery Management Council (1995) observed that harvesting capacity, the ability to catch fish, should be in equilibrium with ecological productivity. Two key factors contributed to excess harvesting capacity, technological advances increasing the efficiency of vessels and crew, and an excessive number of (highly efficient) vessels.
Technological progress increases fishing capacity. To some extent, technological progress substitutes for fishing skill. Moreover, if a skipper spends money on a new piece of gear or equipment, then that gear must pay for itself in additional fish. Presently, operators of large vessels look at technology to allow them to fish deeper and farther offshore and for longer periods of time. Smaller vessels today have simple advancements that at first blush don’t seem to be technological advancements, such as the net reel. The net reel lets a small vessel operate as a stern trawler rather than as a side trawler, which in turn allows a smaller crew to operate the vessel, thereby increasing efficiency. In short, every piece of equipment increases a vessel’s efficiency and thus capacity. Marine surveyors may be the best sources of information of a vessel’s technology and capacity.
Several policy options were outlined to reduce the harvesting capacity to a level that can be sustained by the ecological productivity. The first option, restricting the employed technology, diminishes the fishers’ competitiveness in what is now a global market. The second option is to reduce the number of vessels in the fishery by a buy-back program. Third, since public support of a buy-back program may be lacking, a capacity point system might be established. Different vessels would be assigned transferable (marketable) capacity points that measure a vessel’s ability to catch fish. When transactions occur, some number of capacity points would automatically be retired. The capacity reduction program would be industry financed. A vessel moratorium would accompany the buy-back or capacity reduction program. A marketable capacity reduction program reduces the ability to fish while allowing retention of public resource ownership, in comparison to individual transferable quotas.
Several limits to a capacity reduction were observed. Capacity is significantly more straightforward to define and measure for a single-species fishery than a multi-species fishery. Management of capacity in multispecies and/or multistock fisheries is also limited, since it is difficult to redirect or limit effort from threatened stocks to others. Captain’s fishing skill was observed to be very important, and the ability of a marine surveyor to incorporate skill in developing a measure of capacity may be limited. Capacity is not a static concept, but rather one that constantly evolves with technological progress and other changes in the fishing process. Over time, as experience is gained with measuring capacity, more will be learned about how to define and measure capacity. Accounting for all the risks and uncertainties, the optimal amount of capacity may be higher than if operating in a completely certain environment.
2. EUROPEAN UNION
In the European Union, capacity is conceived in terms of fishing power, in turn conceived as the potential ability of a vessel to catch fish, defined in terms of physical attributes of vessels in the fleet (measures of capital stock). Fishing power, or capacity, multiplied by some measure of fishing time or activity then gives fishing effort. Standardization of effort is carried out. Capacity conceived in this manner represents available potential capacity (i.e., the potential to catch fish (Holden, 1994)), and activity expresses utilization of this available capacity. Capacity is sometimes interpreted in a manner close to the available capital stock, so that overcapacity is then identified with overcapitalization.
The European Union's Multi-Annual Guidance Programmes (MAGPs) uses capacity defined as fishing power, which is in turn a function of vessel attributes, notably vessel size and engine power. This notion of capacity is used to set targets in agreement with each of its member states in terms of reductions in the capacity of its fleet (Bishop and Smith, 1993; Egner, Pope, and Rogers, 1996; Concerted Action, 1997; Holden, 1994). These targets, known as MAGPs, specify percentage reductions in the effort exerted by each segment of a fleet (e.g. pelagic trawlers, distant water vessels, etc.).4
Fleet capacity is subdivided into two groupings: capacity of the vessel and capacity of the gear (Report of the Working Group on Capacity Measurement 1996).5 Effort is then an activity measure given the capacity measure: effort = capacity (vessels) * capacity (gear) * activity. Effort is directed at a fish stock and includes allocation of the available capacity between fisheries and the fishing mortality generated by a specified effort level. The available data on fishing effort varies widely and in many cases are unavailable, especially gear capacity data and activity (time) data. Capacity of the vessel can be simply the number of vessels or the number of vessels adjusted by fishing power. Capacity of the gear can be the net area or number of hooks or pots for fixed gears, trawl opening area for pelagic trawlers, seine area for purse seiners, and footrope length and beam length for demersal trawlers. Activity can be time set for fixed gear, days fishing for demersal trawlers, and search time for pelagic trawlers and purse seiners.6
The capacity of any given vessel can also be expressed by the installed power on board a vessel, and defined as the sum of the main engine power and the power of the auxiliary engines (Sub-Regional Fisheries Commission, 1996). This capacity measurement unit is viewed as a particularly good indicator of the fishing efficiency of vessels which use towed gear (traction power) or of “hunting” vessels that require speed at particular times. The unit that expresses power is continental horsepower (cv) or the kilowatt (kw), the conversion being: 1 cv = 0.73549 kw (rounded down to 0.73 kw in the Lloyds register). Declared power might not always take account of the auxiliary power, even though the latter must be regarded as contributing to fishing effort, either directly by increasing the fishing time, or indirectly when vessels which do not have it expend some of the power supplied by the main engine to perform the auxiliary power functions. This capacity measurement is viewed as a relatively poor indicator of the efficiency methods involving static gear, where the fishing capacity will tend rather to be measured in terms of the tonnage or even better, the size of the fishing gear.
Capacity reduction schemes by the Council of the European Communities adopted this definition of effort as {capacity * activity}, where capacity is fishing power (Sub-Regional Fisheries Commission, 1996; Bishop and Smith, 1996; European Commission, 1995; Frost, Landers, Smit, and Sparre, 1995; Concerted Action, 1997; Holden, 1994)7. Then effort can be reduced by lowering capacity and/or activity, where capacity includes gross registered tonnage of vessels and engine horsepower (kw)8. Porter (1997) adopted this conceptual approach in a discussion of fishing subsidies and trade, observing that the increase in capacity of a given fishing fleet is calculated not by the increase in number of boats in the fleet but by total increases in fleet tonnage, engine power, effectiveness of the gear used to catch fish, and other indicators of technological change. Porter further observed that engine power and tonnage are the two main measures of capacity. Tucker (1997) used this definition to estimate the long-term value to an economy made by a fishing fleet and the effects of capacity reduction. The study applied project evaluation (present value from the cash flow of value added by capital and labor), where future fish stock evolution is estimated using normal age structured models and where cost functions are estimated and price flexibilities are used.
The European Union Multi-Annual Guidance Programme is concerned with establishing and measuring a direct linkage between fleet capacity, conceived as fishing power (capital stock), and fishing mortality. That is, the question becomes quantification of how capacity is translated into effort and catches of the particular stocks of interest (Christy, 1996; Valatin, 1992). The scientific basis for limiting fishing capacity is the yield per recruit model (Holden, 1994; pages 25, 196). The European Commission bases its targets for fishing capacity under its multi-annual guidance programmes on the target of achieving Fmax or F0.1 for stocks for which Fmax is inappropriate. However, in practice there is no model which permits fishing capacity to be equated with rates of fishing mortality since fishing capacity is a measure of the potential of a vessel to catch fish (Holden, 1994). The quantity of fish actually caught depends on other factors, including the activity and quantity of fishing gear.
3. UNITED KINGDOM
The United Kingdom also equates capacity with fishing power, conceived as the potential ability of a vessel to fish, defined in terms of vessel attributes (measures of capital stock). The United Kingdom uses a system of Vessel Capacity Units, which comprises an aggregate of vessel length, breadth, and engine power such that Vessel Capacity Units = length * breadth + 0.45*power, where length is the overall length of the vessel in meters, breath is the breadth of the vessel in meters, and power is engine power of the vessel in kilowatts (Valatin, 1992; Smith, 1997).9 Valatin (1992) noted aggregation problems from the individual vessel to the fleet. Fleet capacity does not necessarily equal the simple sum of individual vessel capacities, due to factors such as positive or negative crowding externalities.
Overcapacity was considered in terms of fleet capacity exceeding catching opportunities due to economic forces, investment lags, stock depletion, and other factors. Valatin (1992) also noted that as fleets do not generally operate at full capacity, and effort cannot be easily related to capacity, it is likely to be necessary to control both capacity and capacity utilization to prevent an expansion of effort.
4. THE NETHERLANDS
For the Netherlands, Smit (1996) and others (Frost, et al., 1995; Concerted Action, 1997) report the engine power of Dutch vessels as a measure of capacity and engine power times number of days at sea (horsepower-days) as a measure of effort. Standardization of horsepower as a measure of fishing power was used.10 It was noted that the productivity per unit of engine power improves over time due to technical improvements on electronic equipment and fishing gear and the installation of one or more auxiliary engines. When the use of capacity is limited by effort regulations, changes in the economic result per unit of capacity may differ from changes in the results per unit of effort (Frost et al., 1995).
A capacity index, based on engine power and days at sea, was estimated for the Netherlands as follows (Frost et al., 1995; page 121). Starting with “nominal” capacity in horsepower (HP) and effort in horsepower-days (Hpdays), the fleet's nominal capacity and effort are simply aggregates of engine group size totals. These estimates are then standardized according to the most stable horsepower group over the time period considered. In a single species fishery, Standard Capacity and Effort of each engine size group are computed by multiplying nominal Capacity and Effort by the ratio of the catch per unit effort of the group under consideration and the catch per unit effort of the standard group. In multispecies fisheries, landings value (revenue) is used instead of landings quantity to give a measure of fleet capacity and effort.
5. NORWAY
The concept of fishing capacity is used in Norway to describe how much fish a certain fleet can harvest if the fleet were unimpeded without interference from vessel quotas, TACs, or other regulations, and under ideal conditions in general (Norwegian Department of Fisheries, 1991; Sandberg, 1997). Several factors may determine fishing capacity: vessel attributes (number, size, age, equipment), skill and motivation of fishers, and resource available.
Fishing capacity of Norwegian coastal vessels targeting cod was calculated under the following circumstances: good availability of the resource stock, full utilization of the vessels, and no quota restrictions. Historical records of catch per week were used for a year when there were strict quota regulations and most vessels had finished their quota during a month or two. For the cod season, these catch rates were prolonged for the weeks when the ships were tied up. For the rest of the season, the average of the amount which this fleet had caught during the previous years was used. An allowance was made for when the ships were assumed to be in for repair, bad weather, etc. Fishing capacity in that fleet was found to be larger than what had been fished previously and larger than the quota of that year. Critiques pointed out that fishing capacity could not be defined using a year with good availability of the stock as a reference and that vessels might not be as fully utilized as assumed.
6. AUSTRALIA
The license limitation program and buy-back scheme of the Australian northern prawn fishery conceives of capacity as fishing power defined in terms of vessel attributes (measures of capital stock). Physical capacity is measured in units (Buckworth, 1987; Pascoe, 1988; Haynes and Pascoe, 1988; Wesney, 1989). Each vessel is allocated a number of 'class A' units, based on the summation of underdeck volume (in hundreds of cubic feet) and the power of the main engine (in kilowatts). Each vessel is also allocated one 'class B' unit, which allows it to operate in the fishery. For a vessel to be replaced, the owner must forfeit one class B unit and a number of class A units, where the latter number is determined by the size of the replaced vessel and the size of the replacement vessel. Fishing effort is measured by days fished and standardized by relative fishing power to reflect the relative catch per hour of vessels that harvest in the same place, at the same time, and for the same species of prawn.
7. BANGLADESH
Ahmed (1991) used fishing gear capacity to measure available effort in a Bangladesh riverine fishery, where gear capacity is defined as surface area of the net(s) multiplied by the total fishing hours during the season. Hence, the second (flow) approach to measuring available fishing capacity was adopted. Gear capacity was considered a better indicator of fishing power than vessel and crew size.
