Delivering sustainable fisheries through fiscal incentives

Project
Active
October 2017 to April 2020

Fisheries resources that support the livelihoods of millions of women and men are under threat due to overfishing and pollution. IIED is exploring how governments can use fiscal instruments – such as taxes and subsidies – to deliver positive socioeconomic and environmental outcomes for sustainable and inclusive fisheries management.

Fishing boats

Marine and coastal ecosystems provide a range of critical services reaching across supply chains, from food, biodiversity and culture to regulating important functions such as carbon sinks, climate and flood protection. Coastal waters are the workplace of small-scale fishers; their long-term viability is key to many men and women’s livelihoods. Despite this, they are under threat from over exploitation. 

Subsidies are one of the most commonly used fiscal instruments in fisheries. They are direct or indirect financial contributions made by governments to promote a specific activity or policy. Subsidies can be used to reduce the costs of inputs of a given activity, or to make it financially attractive when costs exceed revenue. When they encourage increases in fishing activity and capacity – known as ‘harmful subsidies’ – they often lead to overexploitation of natural resources. 

Fiscal reforms that support sustainable practices can make a difference to the conservation and sustainable use of fisheries resources. For example, ‘good or positive’ subsidies can be used to incentivise good fishing practices or promote the adoption of more environmentally-friendly technologies. Other fiscal tools, such as taxes, can also be used to improve the sustainability of fisheries, for example  by discouraging water polluting activities. 

It is important to make sure that fiscal instruments do not have a negative effect on fishing communities in general and vulnerable groups in particular, such as women, youth or ethnic minorities.

Most (if not all) policy reforms involve winners and losers and have distributional impacts. Policymakers need to put careful social considerations in place before bringing such fiscal changes into effect, by considering how the current fiscal instruments are affecting the livelihoods of different social groups and how reform will benefit or harm them. 

What is IIED doing?

We are working to demonstrate how governments can use fiscal instruments such as taxes, fees, subsidies and conditional transfers to deliver positive economic, social and environmental outcomes that support sustainable and inclusive fisheries management. We identify ‘winners and losers’ in relation to fiscal reforms in specific fisheries and country contexts in order to make policy recommendations that take into consideration both efficiency and equity.

We have already developed an evidence base demonstrating the urgent need for fair and inclusive fiscal reform around the world. In 2019, we published a working paper that highlights the important role an effective and equitable subsidy reform can play in improving the sustainability of worldwide fisheries.

It suggests incorporating an equity impact factor when assessing the beneficial or harmful nature of subsidies, on top of the environmental impact assessment. It also presents several elements governments need to consider for any reform to succeed: from stakeholder involvement and transparent communication to compensation measures and adequate design and timing. 

Also, in 2019, we prepared a toolkit that discusses fiscal fisheries management instruments, pointing at the need to reform harmful subsidies, the potential of taxes to increase governmental revenues while discouraging unsustainable practices and the need to tackle distributive impacts at any stage of fiscal reform.

Taking these publications as a starting point, we are currently conducting diagnostic analyses of fiscal policy in two specific fisheries and country contexts: Myanmar and Mozambique. With help from a local consultant and involving the stakeholders in these communities, we are doing a scoping exercise by looking at the fiscal incentives that are being used in the fishery sector and what the opportunities and challenges for fiscal reform are. This analysis helps us develop policy recommendations to guide the governments of these two countries towards more efficient and fairer fisheries management.

The project builds on, and is linked to, IIED’s work programme on ocean and fisheries economics, which has accumulated experience in South Asia, Coastal East Africa, and the Mediterranean region to ensure ownership, uptake and impact of the research.

In October 2018, IIED organised a seminar looking at how we can ensure that subsidies designed to benefit marine and coastal ecosystems don’t have a detrimental effect on smaller fisheries. The event was streamed live on Facebook and you can watch the video.

We also produced an animation showing how governments can use tools such as taxes, penalties and subsidies to support the health of the ocean and protect the livelihoods of people who depend on it. This can be viewed below or on IIED's YouTube channel.

In February 2019, an IIED event entitled “Towards a sustainable blue economy” discussed fisheries subsidy reform, with an eye on the World Trade Organization negotiations on prohibiting harmful subsidies in 2020. The potential of using subsidies to support small-scale producers across the value-chain contrasts with the fact that most subsidies go to large-scale fleets, contributing to overfishing.

It is evident that a subsidy reform is needed for sustainable fisheries, although recognising social diversity and gender dimension of fishing activities, and therefore, the different impacts reform may have, for example, on women and men.

Publications

Subsidy reform and distributive justice in fisheries, Eugenia Merayo, Ina Porras, Sarah Harper, Paul Steele, Essam Mohammed (2019), Working paper

Fair fishing: supporting inclusive fiscal reform in fisheries, Ina Porras (2019), Toolkit

The cost of harmful fishing subsidies, Robert Arthur, Stephanie Heyworth, John Pearce, William Sharkey (2019), Working paper

Distributional impacts of fisheries subsidies and their reform – case studies from Senegal and Vietnam, Sarah Harper, U Rashid Sumaila (2019), Working paper