Aquaculture and fisheries economic development – examples from Norway and Vietnam

Norway and Vietnam: similarities and differences

Similarities: Size (length and area), Coastal area, Fishing and aquaculture nations

Differences: Population, Economy, GDP, Natural resources, Location – N in the North and Vn in the South - and this consequently creates different climate and weather conditions

HDI: N (0.944) – ranked 1^st, Vn (0.638) ranked 121^st

Transparency: N - 3^rd in the world, Vn ranked 107^th

Disputed sea areas and fishing rights?

Norway has settled, according to the Law of the sea, all EEZ disputes, including with Russia and EU.

Annual negotiations and share agreements on Total allowable catches (TACs) and other fishing issues.

The South of China Sea disputes are still unsettled? This creates competition between nations and de facto open access fisheries.

Fisheries Management and Governance

Vietnam: Open access, Small scale, Some high-liner/intra-marginal rent (IMR), but no resource rent

Norway: Regulated, Large scale, Some resource rent and IMR in capture fishing, and very high economic rent in aquaculture (ERA)

What is a (fishery) subsidy?

WTO: ”…(i) financial contributions (ii) by a government or public body (iii) that confer a benefit”, all three conditions must be met

Why harmful in fisheries?

- Incentives for increased output, endangering fish stocks and reducing potential long term resource rent and profit

- Trade distortion through provision of advantages for one exporting country (if underdeveloped stocks)

Fuel subsidies and environmental tax exemptions

Governmental financial transfers to the fishery sector are not necessarily subsidies, nor necessarily harmful – FAO/WTO/OECD reports (Example: Research versus Trawler)

Sumaila et al. (2010): Good, bad or ambiguous (ugly) subsidies

Fishery subsidies and profitability effects

Short run (2 years) effects fuel subsidies:

Profitability when the Government’s subsidy action takes place is greater than profitability without this action.

The increased profitability of the vessels is a result of both revenue-enhancing and cost-reducing subsidy schemes

More benefits for the owners than for the crewmembers.

Positive impacts on the OCF of large vessels but negative effects on their IMR, while the positive effects on the rent of small vessels.

Key findings of Thuy et al., 2018

In Vietnam, offshore vessels are profitable even without subsidies

Higher education, more experience and type of fishing gear decide the likelihood  of vessel owners taking part in the subsidy program

Remaining questions outside the scope of this project: What are the long term effects for fish stocks and harvest?

Subsidies and politics

Finley (2017) argues that much of the overcapacity that built up in the decades after World War II came about because of government subsidies, and that these subsidies largely were instruments in Cold War politics.

On high seas fishing subsidies:

Our results suggest that fishing at the current scale is enabled by large government subsidies, without which as much as 54% of the present high-seas fishing grounds would be unprofitable at current fishing rates (Sala et al., 2018).

Dear participants, do you think such arguments play a role today for countries like China in the South of China Sea?

The world total fish production increases due to aquaculture

Aquaculture production 2015, in quantity (thousand tonnes) and value (million USD), as well as the average annual change in the period 1985–2015. 74 countries ranked according to value (Sources: see Flaaten 2018 Ch.11)

Cost structure of three aquaculture industries, at farm gate

Additional info on Cost structure of three aquaculture industries. Cost and revenue per kg fish at farm gate

Table notes:

May include some management cost

Includes repair, maintenance, administration, fish health, energy, and environmental measures

Dong Thap province and South Central Vietnam for pangasius and shrimp, respectively

Includes Chemicals/pharmacy, power, pond regeneration and materials

Pond regeneration is partly included in Labour

Includes maintenance and other fixed cost

Net financial cost is very small. Some may have been included in Other

The buyer usually harvest the shrimp and carry the cost (some cost to the farmer could be included in Labour)

Three aquaculture industries, cost and revenue per kg fish at farm gate (Sources: see Flaaten, 2018 Ch.11)