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FISHERY ACCESS AGREEMENTS OR TRADE– ESTIMATING THE DETERMINANT OF COUNTIRES’ CHOICE FROM THE ECONOMICAL POINT OF VIEW CHESNOKOVA, Tatyana, Associate Professor

WHERE DO FISH ON YOUR PLATE COME FROM?

The popular view of fisheries access agreements is that they are an exploitive form of economic development which allows rich countries to exploit other countries’ fishing grounds after exhausting their own waters. But are these allegations well-grounded when seen from economists’ viewpoint?

Why do some countries with large fish stock prefer to sign fisheries access agreements, while others turn to exports, when their basic economic determinants such as the size of the economy and distance to fish consuming nations are similar?

In a joint research with my co-author Stephanie McWhinnie, we constructed a unique dataset to show that access agreement and fish trade are alternative pathways to provide fish from a source country to a destination country.

The estimation results demonstrate that a key determinant is the relative size of the fishing industries in two countries: when a source country has a bigger fishing industry than that of a destination country, the source country tends to engage in exports. If not, it will allow the destination country to harvest the fish stock under fisheries access agreement.

For example, Japan, a major distant water fishing nation along with the US and EU, goes to Australian waters NOT because their fish stock has been depleted but the Australian economy does not have the sufficiently large fishery industry that ensures smooth export to Japan.

Our empirical analysis puts access agreements into a broad international perspective, making the research the first of its kind in the area. It draws on expertise from two different fields in economics– environmental economics that looks at natural resources like fish stocks and international economics that sees international relationships of countries like trade and outsourcing – to analyze economic motives of agreements and trade.

Existing papers in these fields mostly examine case studies to look at, for instance, effect of a certain agreement on fish stock status, cost analysis or the evolutions of trade, rather than shedding lights on the international aspects of the agreements.

Let me briefly explain our predictions and how we constructed variables to measure each factors.

RELATIVE ADVANTAGE AND GRAVITY FACTORS

First, we identified two key motives that prompt countries to either sign an access agreement or enter a trading relationship. The first motive is a relative advantage in fishing. This advantage in turn depends on two different factors: fish stock and capacity of the fishing industry.

The second motive is related to gravity factors: the size of the economy and distance between countries. Like the gravity equation in physics, countries that are larger in economic size (in terms of per capita GDP and population) and closer to each other (in terms of physical and cultural closeness) are likely to engage more in relationships such as trade and access agreements.

Our basic prediction is that a source country tends to sign fisheries access agreements when they have relatively large fish stock, while a destination country has a relatively large fishing capacity. Clearly, there is no point for the destination country to travel to the source country’s waters if the areas’ fish stock is scarce.

As for the gravity factors, the size of the destination country’s economy should be sufficiently large with large fish demand in order to make fishing in distant waters economically viable. Similarly the countries should be located closely physically or culturally as distance costs of foreign fishing affect the business in a negative way.

On the other hand, a source country tends to choose export when it has a relatively large fish stock AND relatively developed fishing industry because this time it’s the source country that provides fish to consumers with its fleet. Gravity factors work in the same way: the larger and closer the countries are the more likely they to engage in trade. The large economy in a destination country generates large fish demand, while the large economy in a source country accelerates the pace of production.

CONSTRUCTING EMPIRICAL DATASET

To test our prediction, we built a fairly large-sized dataset for the years 1962-2000 by combining data from various sources and making necessary adjustments. We obtained data on fisheries access agreements, fish stock status and fish catch from the Sea Around Us project; data on fish trade from the NBER-United Nations Trade Data; and data on gravity country-pair characteristics from the CEPI Gravity Data.

Access agreements are typically bilateral. As data on the value of catch was not available but only the incidence of agreements, we focused on the determinants of incidence of access agreements and fish exports.

Figure 1 shows the number of access agreements signed by host and fishing countries based on Sea Around US data. The number of pairs was around 200 in 1962, but shows a steep rise after 1982, when the United Nations Convention on the Law of the Sea was signed and national property rights was extended out to 200 nautical miles from shore. A declining trend since the mid-1990s could reflect growing concerns on decreasing fish stocks, and a rise in domestic fishing capacity in some countries.

Figure 1: Number of access agreements 1962-2000

Figure 2 shows the number of exporting and importing country pairs over time. As shown on the graph, the number of trading pairs is much bigger than the number of agreement pairs. A precipitous decline in the number of trade pairs in 1984 can be explained by the EU agreement to establish the new Common Fisheries Policy in 1983, which led member countries to reduce the trade partnerships outside the EU. But a fairly constant value of total EU trade indicates the impact was limited and that EU countries dropped only trade deals with smaller trade partners.

Figure 2: Trade incidence 1962-2000

Key components that measure the extent of a country’s fishing advantage, and thus decide whether it chooses an agreement or trade, are its fish stock level and fishing capacity.

We used the Mean Trophic Level (MTL) as a measure of fish stock status and the past total catch by a fishing country as a proxy for fishing capacity, both from the Sea Around Us Project. MTL, seen as an indicator of biodiversity loss and a proxy of the measure of ocean area health, based on 6 trophic levels: a value of one is given to primary producers such as seaweed and two to herbivorous fish which feed on those of value one. The top carnivores of value six include large fish like shark and dolphin.

MTL is declining in most areas, an indication that we are fishing down the marine food web. From economic perspective, MTL may be thought of as representing the status of the economically exploitable stock.

For fishing capacity, we used ten-year lags of total tonnes caught because contemporaneous catch could be affected by existence of access agreements.

AREAS OF INTEREST IN FUTURE RESEARCH

Next, we are interested in looking into data on Japan’s fishing agreements and trades to find out their patterns. Since Japan’s fisheries agreements are signed between host countries’ governments and Japan’s private sector, available information is very limited. Still, we know with which countries Japan has the agreements (they are mainly in the Atlantic, Indian and Pacific Oceans) and a lot more about its value of exports and imports of fish.

Interview and Composition:Yuko Inoue
In cooperation with: Waseda University Graduate School of Political Science J-School

 

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