i 11111111111111111111111111111111111111111111111111111111111111 3 4067 02087 028 2 ISSN 1327-8231 WORKING PAPERS ON ECONOMICS, ECOLOGY AND THE ENVIRONMENT Working Paper No. 21 A Report Prepared for the Queensland Commercial Fishermen's Organisation by Gavin Ramsayt, Clem Tisdellt and Steve Harrisont; David Pullar+ and Samantha Sun+ in conjunction with Ian Tibbetts* January 1998 t Department of Economics, The University of Queensland, Brisbane, Qld 4072, Australia. + Department of Geographical Sciences and Planning, The University of Queensland, Brisbane, Qld 4072, Australia. * The School of Marine Schience, The University of Queensland, Brisbane, Qld 4072, Australia.
A Report Prepared for the Queensland Commercial Fishermen's Organisation
by
Gavin Ramsayt, Clem Tisdellt and Steve Harrisont; David Pullar+ and Samantha Sun+ in conjunction with Ian Tibbetts*
January 1998
t Department of Economics, The University of Queensland, Brisbane, Qld 4072, Australia. + Department of Geographical Sciences and Planning, The University of Queensland, Brisbane, Qld
4072, Australia. * The School of Marine Schience, The University of Queensland, Brisbane, Qld 4072, Australia.
WORKING PAPERS IN THE SERIES, Economics} Ecology and the Environment are published by the Department of Economics, University of Queensland, 4072, Australia, as follow up to the Australian Centre for International Agricultural Research Project 40 of which Professor Clem Tisdell was the Project Leader. Views expressed in these working papers are those of their authors and not necessarily of any of the organisations associated with the Proj ect. They should not be reproduced in whole or in part without the written permission of the Project Leader. It is planned to publish contributions to this series over the next few years.
Research for ACIAR project 40, Economic impact and rural adjustments to nature conservation (biodiversity) programmes: A case study ofXishuangbanna Dai Autonomous Prefecture, Yunnan} China was sponsored by the Australian Centre for International Agricultural Research (ACIAR), GPO Box 1571, Canberra, ACT, 2601, Australia.
The research for ACIAR project 40 has led in part, to the research being carried out in this current series.
For more information write to Professor Clem Tisdell, Department of Economics, University of Queensland, Brisbane 4072, Australia.
Documents Included
Outline of report
Summary
Acknowledgments
Tenus ofreference
A review of reports on optimal Australian dugong populations and proposed action/conservation plans: an economic perspective
Compensation for the taking of resource interests: practices in relation to the wet tropics and Fraser Island, general principles and their relevance to the extension of dugong protection areas
Economic impacts of imposition of restrictions on gill nets on the Queensland east coast fishery
Representations of fishing effort and catch in the east coast fishery of Queensland
Representations of fishery closures on the east coast of Queensland
Appendices
Questionnaire
Preliminary report on economic impacts of imposition of restrictions on gill nets on the Queensland east coast fishery (8 August, 1997)
Clem Tisdell
Clem Tisdell
Gavin Ramsay, Steve Harrison and Clem Tisdell
David Pullar and Samantha Sun
David Pullar and Samantha Sun
ii
Background and outline of report
In June 1997, Senator Hill as federal minister for the environment announced proposed dugong protection areas (DPAs) on the east coast of Queensland, where restrictions would be introduced on the use of gill nets for fishing, on the grounds that dugong deaths arose from use of these nets. A number of studies by the government and fishing industry arose, to shed light on dugong biology, changes in dugong populations and possible causes. The Queensland Commercial Fishermen's Organisation (QCFO) contacted the School of Marine Science (SOMS) at The University of Queensland (UQ) concerning advice on the impacts to the fishing industry of the proposed bans. SOMS in tum contacted Professor Clem Tisdell, head of the Department of Economics concerning estimation of economic impacts, principles of compensation for the takings of property rights to natural resources, and other issues relevant to the fishing industry. A series of meetings led to the formulation of research projects in the area of economic analysis and geographical information systems, to be undertaken by independent researchers without undue influence by industry or environmental interest groups.
The project reported here, which was commissioned by the Queensland Commercial Fishermen's Organisation (QCFO), investigates the implications of the closure of the coastal gill net fishery in Queensland, and options available to the participants (i.e. the federal government, state government, fishers and dependent communities). In particular it seeks to clarify the accuracy of assun1ptions used in formulating the proposed strategy, and examine likely income losses in the fishing industry and the extent of consideration for compensation.
The terms of reference for the studies are included in the report to provide background information on the studies being carried out and information on the aims of the studies.
The report consists of four components. The first two components consist of papers written by Professor Clem Tisdell. The first paper examines compen§ation for the taking of resource interests and particularly examines practices in relation to compensation following the World Heritage listings of the Wet Tropics region of North Queensland and of Fraser Island. The application and relevance of compensation principles to extension of dugong protection areas are also examined. The second of Professor Tisdell's papers reviews reports on optimal Australian dugong populations and proposed conservation plans from an economic perspective.
Results from the survey of net fishers carried out in July 1997 are presented in the third component. In this component information on labour working in the fishing industry, fishing vessels, on-shore facilities, total annual catch and profit are presented and examined. In addition, information on the predicted response of fishers to fishing closures and willingness to accept compensation in return for surrender of fishing licenses is presented.
The fourth component is made up maps produced using a. geographical information system to provide information on fishing catch and effort and fishing closures on the east coast of Queensland. .
iii
Acknowledgements
We thank; the Queensland Commercial Fishermen's Organisation for funding the studies, all fishers who attended meetings and patiently completed questionnaires, the staff of QCFO especially Ted Loveday, Daryl McPhee and Martin Breen, and the local QCFO representatives for organising and participating in the district meetings held to complete the questionnaires.
We also thank Nick Emtage, Joe Owen, Robert Harrison and Bryan Morgan who assisted in data collection, entry and analysis, and who worked long hours to ensure the survey was completed quickly.
iv
Summary of major findings
The summary is presented under four headings which cover the components of the studies presented in this report, namely optimal dugong populations, principles of compensation, results of survey of net fishing industry and results from geographical information system studies.
1. Optimal dugong populations
An economic approach to optimality would evaluate the social economic costs and benefits of reducing the incidental catch of dugongs. Policy measures must be formulated by weighing up these two components. From a social economic perspective it is clear that too much reduction in by-catch can be forced on fishermen and excessive costs imposed on them if strategies or policies are proposed without economic assessment. This type of assessment is missing from reports prepared on the management of dugong. Economic issues should be explored further, especially given the regional repercussions likely to result from the imposition of extended dugong protection areas. In addition, more ecological research is needed and in particular research is needed to find cost-effective ways of maintaining dugong populations.
". .i' 2. Principles of compensation
The availability of compensation depends on the existence of private property rights expressed or implied. The stronger the property right and the greater the owner's loss the more likely the taking will be viewed as compensable. Queensland fishers have firm licences and endorsements to use different types of nets. The dugong protection areas restrict these rights and reduces the value of businesses which rely on these rights, hence a case for compensation exists.
In the case of communities governments have no legal requirement to compensate communities which may be adversely affected by the loss of resource interests, political reality often requires that such restitution is made. The loss of exploitation of a resource can depress the local economy; therefore, adverse economic effects are not restricted to those directly affected by the withdrawal of resource rights or interests.
The rationale for the taking of resource interests should be carefully considered before a decision is made. The value to the state acting on behalf of the community should exceed the economic value to users of retaining the rights. In relation to proposed extension of DPA's, these values have not been estimated or discussed to any extent.
It is possible that fishers are not the main cause of decline in the size of dugong populations. Other factors such as spill-overs from land-based agriculture and other economic activities could be major causes of decline. If this is so it provides a further reason why the full cost of further protection for dugongs should not fall solely on fishermen because this would be inequitable.
v
3. Results of survey of net fishing industry
In general the Queensland east coast net fishing industry is made up small scale owner operated businesses with a small number of larger enterprises. Considerable variation is present between fishers in the level of investment in vessels, nets, the annual total value of catch and profit. Investments in on-shore assets averages a little over $100,000. Total costs typically are of the order of $36,000 leading to a net margin of about $14,000 per fisher, equivalent to about 30 cents per dollar of total value of catch. All fishers own more than one vessel. Most vessels are made from aluminium and built in regional centres of Queensland.
Most of the labour force is made up of the licence holder and his spouse. Some businesses employ part-time labour while there is also a small number of larger businesses involved in the net fishing industry which employ full-time labour. However, the larger enterprises are often involved in net fishing for part of the year only, in particular during the cyclone season when it is not possible to carry out other fishing activities.
Fishers have a strong desire to continue fishing rather than take a compensation pa.ckagefor surrender of their liceIlc~~This was reinforced by the high value placed on their licence package by most active net fishers ..While some would be prepared to accept buyout offers for licences of $40,000 to $60,000 or less about 75% would not surrender licences for buyout offers of $100,000.
Most fishers believe they could survive in business with a reduced catch or increased cost of up to 10% to 15%. Information provided on debt levels was inconclusive, but it would appear some fishers would have difficulty meeting repayments if profitability were to fall.
The vast majority of fishing related expenditure is made in the home port and nearby regional centres. Restrictions on fishing while not having a major impact on the state's economy, could have considerable impact on local traders.
Most fishers felt they would become unemployed if they were to lose their licence. The lack of alternative employment prospects is related to their age and lack of training and skills that would enable them to gain alternative en1ployment.
4. Results from GIS studies
As a short term objective maps were produced to show the distribution of fishing activity and fishing effort along the Queensland coast. The data for these maps is based upon Queensland Fish Management Authority Logbooks for 1996. Due to release constraints the information is not shown to a detailed level. The resulting maps provide indicative evidence of fishing activity rather than an exact qualitative description. One important indication is how marginal the catch is for offshore fishing. Any further closure of inshore waters will significantly reduce the resources available for viable fishing industry. A further exercise was to map the extent of closed waters for commercial fishing along the coast. This proved to be difficult due
vi
to the lack of boundary information on regulated fishing closures. However an indicative map has been produced showing the scope of constraints on fishing.
Longer tern1 objectives for the project are to develop a GIS that monitors the distribution and density of sea grass beds. This is important for both ecological reasons and for sustainable commercial fishing. A beginning has been made, new data will be added on a piecemeal basis to build up evidence for existence of sea grass beds.
vii
Terms of Reference
Prepared by the School of Marine Science The University of Queensland For the Queensland Commercial Fishermen's Organisation
This project investigates the implications of the closure of the coastal gill net fishery in Queensland, and options available to the participants (i.e. the federal government, state government, fishers and dependent communities). In particular it seeks to clarify the accuracy of assumptions used in formulating the proposed strategy, examine likely income losses in the fishing industry and the extent of consideration for compensation, and provide some suggestions on the accuracy of the implied cause and effect relationship between dugong population decline and the activities of commercial fishers. The study has three components.
1. The effect of new restrictions on fishing activities
A GIS is to be created to assist in the economic analysis and to answer spatial queries related to dugong protected areas and fishing activities. Specifically the GIS will include: • Coastal Information • Management Areas • Fishing Activity and Catch Impact • Ecological Variables (seagrass habitat, dugong stock, etc.)
The GIS will be used to answer quantitative queries including: i) gross rate of production of fish by region, date, and species, and ii) relation of fishing activity to gazetted fish habitat areas, management areas, and proposed dugong protection areas. The GIS will output maps and tables useful in economic assessment. Also the GIS will provide graphical maps indicating fishing activity with respect to seagrass habitat and dugong habitats. The later will be useful to interpret various scientific findings and validate the boundaries described for protected areas, in particular to assess if dugong stock can be better protected by alternative management strategies.
2. The economic implications of changes in fishing activities
The examination of economic implications of changes in fishing activities will involve four major tasks, namely: • Examination of proposals for dugong management from an economic perspective • Collection of data from fishers by a questionnaire • Determine the individual and regional consequences, and • Examination of compensation The aims and methods for carrying out these tasks are detailed in these terms of reference.
3. Produce anecdotal evidence from fishers on the distribution of seagrass in the affected fishing areas.
viii
TOR Procedure The TOR as described below have been established through the joint agreement of a committee including Dr Daryl McPhee and Mr Ted Loveday (QCFO), Professor Clem Tisdell, Associate Professor Steve Harrison and Gavin Ramsay (UQ, Department of Economics) and Dr Ian Tibbetts (UQ, School of Marine Science), and Dr David Pullar (UQ, Department of Geographical Science and Planning).
Section 1. GIS Summary of Closures
Dr David Pullar, Peter Johnson and Samantha Sun Department of Geographical Science and Planning The University of Queensland
Plan The tasks involved in the GIS are:
Task Sub-Task Create Base Layer Import map data for coastline, etc.
Management Zones Import map data from GBRMPA Digitise DPI Gazetted Fish Habitat Areas Import DOE Marine Parks and Management Zones
Fishing Activity Geocode Fish Log Data from DPI Validate DPI estimates for random regions Interpolation of seagrass maps from UQ survey Generate appropriate tables and maps
Ecological Variables Import DOE Directory of Important Wetlands Import DPI Sea Grass Habitat Geocode AMCS Habitat Database
Review and Critique Comment on Causal Relationships Maps and Final Report
Section 2. Economic Implications of the Closure
Prof. Clem Tisdell, Assoc. Prof. Steve Harrison and Gavin Ramsay Department of Economics The University of Queensland
Examine from an economic perspective the proposals for dugong management. Determine the likely changes in fishing activities as a result of the proposed regulations and the effects of those changes on incomes from fishing. The economic implications of the closure will be examined using data collected during a survey of fishers and secondary data such as data from government agencies, the QCFO and previous studies. The examination will include the direct effects of the decision on the incomes and viability of fishers in the affected areas and the indirect regional effects.
ix
Task 1. Examination of proposals for dugong management from an economic perspective
Aims Determine the economic validity of proposals for dugong management and the system of Dugong Protected Areas.
Method Review dugong management proposals
Task 2. Collection of data from fishers by a questionnaire Aims Determine the effects of the proposed gill net restrictions on • the catch, effort and viability of fishers currently fishing in the affected areas • the actions they will take to ensure income • the likely effects of actions of fishers taken to ensure income • the likely effects on employment in local area • effects of proposed restrictions on associated industries • effects of proposed restrictions on local communities
Method • develop questionnaire • test on individual fishers in southern Queensland • collect data from fishers in affected areas through district meetings • analyse data
Task 3. Determine the individual and regional consequences Aim To determine the effect on the viability of individual fishers, associated industries and local communities of the proposed changes.
Method Using data from the questionnaire and secondary data sources, determine the economic impact of the proposed changes on an individual and community basis. Multipliers based on those found to be applicable to the industry and region will be used in determining the economic impact.
Task 4. Examination of compensation
Aim To determine appropriate levels of compensation for fishers should restrictions be applied.
Method Levels of compensation desired by fishers will be estimated via questionnaire. Methods to determine appropriate levels of compensation will be examined.
x
Section 2. Distribution of seagrass
Aim Determine using the local knowledge of fishers the distribution of seagrass in the fishing areas affected by DPA's.
Method, At meetings of fishers and using maps generated in the GIS component of the study obtain detailed information on the distribution and density of seagrass in the interim and proposed DPA's. Produced maps of this information.
xi
Budget
1. Department of Geographical Sciences and Planning
Most the work involves compilation and collating information already help by various agencies. Most information is already in a digital form and can be imported into a GIS, the one exception was the DPI Gazetted Fish Habitat Areas which are in a map form and would require digital conversion. Other information, such as fish log data, can be geocoded into the GIS based upon recorded geographical data. Most of this work and the production of maps and reports from the GIS will be conduct by a research student under the direct supervision of Dr. David Pullar. The final critique and review will bedone by Dr. Ian Tibbetts and a qualified research assistant, Peter Johnson.
Cost Heading Funding PERSONNEL
GIS Coordinator - Dr. David PuUar (10 Days @ $400/Day) 4,000 Research Assistant - Samantha Sun (21 Days @ $192/Day) 4,032 Research Assistant - Peter Johnson (8 Days @ 264/Day) 2,112
CONSUMABLES GBRMPA Data Extraction Costs 250 AMCS Data Extraction Costs 500 Overhead - computer usage, map output, etc. (10% of Personnel Costs) 1014
ITotal GIS $11,908 r
2. Department of Economics Personnel
Number Days Rate Amount CAT 10 500 5000 SRH 10 500 5000 GCR 20 400 8000 Interviewers 4 11 150 6600 Statistician, data 15 160 2400 entry
Travel 6 500 3000 Accommodation 6 12 100 7200 and meals Phone 500 Photocopying 200 and paper Typing 300 Incidentals 400 (taxis, parking fees etc) ITotal $ 386001
3. School of Marine Science Personnel
Dr Ian Tibbetts 5 400 2000
IGrand total $52,50SI
xii
A REVIEW OF REPORTS ON OPTIMAL AUSTRALIAN DUGONG POPULATIONS AND PROPOSED ACTION/CONSERVATION PLANS: AN
ECONOMIC PERSPECTIVE
1. Introduction
Two important ecological reports, The Dugong Dugong dugon: An Action Planfor its
Conservation (Marsh et al., nod.) and A System of Dugong Sanctuaries for the Recovery and
Conservation ofDugong Populations in the Great Barrier ReefWorld Heritage Area (preen and
Morissette, 1997) have been prepared in recent times on the status of the dugong in Australia.
Each is accompanied by proposals to foster conservation of populations of dugong. The latter
report proposes ten dugong sanctuaries for the southern Great Barrier Reef and Hervey Bay (see
Figure 1). Gill nets are recommended to be banned in these sanctuaries.
Of the two reports, that by Marsh et al. (nod.) is the least categorical. It points out that
while dugong numbers have declined in The Great Barrier Reef (GBR) region south of
eooletown, 'the causes of the decline are unknown, but could include habitat loss, incidental
drowning in commercial gill nets and indigenous hunting', (p. 2). It states that 'apart from
dugongs drowned in shark nets in Queensland, there are no quantitative data on anthropogenic
impacts' (pp. 1-2). A well thought out list of research priorities essential for informed
management of dugong populations are set out (Marsh et at., nod, pp. 5-6).
jt Despite the fact that this research has not been completed, Preen and Morissette (1997)
make major policy recommendations for a system of dugong sanctuaries which are expected to
impact adversely on the livelihood of a large number of fishermen in Queensland, as well as
resulting in displacement of fishermen and possible crowding of fishermen in areas not set aside
as dugong sanctuaries. Flow-on adverse economic consequences for local communities in
1
NLlxality Map~ C. Bedford ...~~.
Coo'C.ownl. A
~" .
Roc:khamplDll •
100 o 100 200 300 400 I
Kilometre.
Figure 1
2
Location of the ten Dugong Sanctuaries proposed for the southern Great Barrier Reef and Hervey Bay.
regional coastal Queensland are anticipated. They make these recommendations with a view to
achieving an optimal population of dugongs. For them this seems to imply the requirement that
dugongs be not critically endangered locally anywhere within their current population range in
Australia. This however, begs the question of how the 'optimal' population of dugongs is to be
determined.
2. The Optimal Population of Dugongs
Figures given by Marsh et at., indicate that Australia's total dugong population is of the
order of 83,245 head. Most of this population is located in the 'top' of Australia from the north
of Cape Bedford in Queensland around to Shark Bay in Western Australia. The population in
southern Great Barrier Reef region is estimated to be relatively low at about 1,642 head and in
this region dugong is listed by Marsh et at. (nod) as a critically endangered species (not IUCN).
The IUCN Red book describes a critically endangered species as a one 'facing extremely high
risk of extinction in the wild in the immediate future'. Because dugongs in the southern GBR
probably do not form an isolated described population, they are unlikely to achieve separate
classification as critically endangered under IUCN criteria. In any case, the dugong is not
endangered throughout the whole of its population range in Australia according to Marsh et at.
(nod.) (see Figure 2). The exact contributors to low numbers of dugong in the southern GBR
region are not clear as yet, although a cyclone in the Hervey Bay area significantly lowered
dugong numbers there by reducing the extent of seagrass meadows. Periodic destruction of
seagrass meadows by cyclones and then their subsequent recovery along with that of the size of
'/ local dugong populations appears to be normal.
Preen and Morissette (1997, p. 8) state 'To allow dugong populations to recover to their
optimum sustainable level all significant dugong habitat, poth past and present, should be 'lj, , : '
3
\ o
TIIll Data Deficient
Low risk - least concern
•• o Low risk - conservation dependent
Nearthreatened
Critically endangered
Figure 2 Map showing the status of the dugong in various parts of Australia according to the IUCN (1995) criteria as interpreted by Marsh et al. (n.d.).
4
protected in sanctuaries. Protection of only a subset of dugong habitats, like those that contain
substantial dugong numbers may prevent dugong extinction in the southern GBR, but will not
allow for recovery'. Elsewhere they also speak of the optimum sustainable population of
dugong, but nowhere does their concept of the optimum population appear to be defined.
From their text, it is clear that Preen and Morissette want not just to maintain the
minimum population of dugong required to ensure the reasonable probability of survival of
dugong in Australian waters as a whole, but at least the minimum populations of dugong
throughout their whole range in Australia considered necessary for their survival in every region
where they now occur. Their aim is to try to prevent any local extinctions. Whether or not their
proposals are sufficient or more than sufficient to prevent local extinctions is a matter for
ecologists. What is the probability that local extinctions will occur without the DPAs proposed
and where? What difference do the restrictions make to these probabilities? Could similar
reductions in probabilities be obtained by alternative means and more cheaply? No specific
information seems to be available in relation to these questions.
Preen and Morissette (1997) seem to waiver between two ideas about optimum
populations ofdugong in the southern GBR region, which is the main focus of their attention and
policy recommendations. These are:
(1) The minimum populations of dugong required to ensure the survival of dugong
throughout their range in the southern GBR region, taking into account the mobility of
these animals.
(2) The (maximum sustainable) population which would emerge In the absence of
anthropogenic disturbance.
(3) A dugong population somewhere in between these.
5
What we are not told is what criterion is used to decide that these populations are optimal. From
what point ofview or points ofview are they optimal? From the point ofview of dugongs? How
is the human interest factored in? Are humans to be considered as part of the ecological system
or not? What human values should be factored into the optimisation problem and how? Without
account being taken on these factors, proposals for optimisation of dugong populations are very
narrowly based and unclear. Economic and social evaluation is not included in the problem by
Preen and Morissette unless they assume that saving of dugongs is of infinite value.
It is true that some appeal is made to Australia's obligations under international
conventions but there is no discussion of how legally binding they are and how these are to be
interpreted. In any case, it is doubtful if the international Convention on Biodiversity
Conservation obligates nations to 'save' species throughout their entire range.
It should furthermore be noted that there is usually no minimum population of a species
that guarantees its future existence (Hohl and Tisdell, 1993). All that one can conclude is that
the probability of survival of a species can be expected to rise as its habitats and its population
are more fully protected. So we have to ask what probability of survival of a species, in this case
dugong, are we aiming for and why? In addition, the above theory implies that application of
the precautionary principle requires an assessment ofthe weighted risk of various management
options. No attempt to do this has been made in the policy recommendation of Preen and
Morissette.
3. Economics and the Optimal Population of Species, in this case, Dugong
Economics, not considered in the reports mentioned above, can be factored into
decisions about optimal population or conservation of species in two different ways. These are:
(1) Cost minimisation in relation to some standard or target for population of a species and,
6
(2) economic optimisation of the population of the species.
Neither of these approaches have been applied in determining the optimal population of dugong
in Australia or in the GBR region.
Cost minimisation involves searching for strategies which will minimise the cost of
achieving the population of dugong aspired to. This for example, would involve search for
conservation strategies which would minimise costs imposed on fishermen. Has for exanlple,
the best configuration of DPAs been proposed to achieve protection of dugong populations and
minimise the cost imposed on fishermen? Should research be undertaken to search for effective
methods to deter dugong from entering the area of gill nets? Are there techniques available or
which could be developed to reduce unwanted incidental catch? Why is such research not being
funded and why is there not a programme for such research? The incidental catch problem is a
widespread problem and more attention needs to be given to it from a scientific research point
of view.
The second approach to this type of problem adopted by some economists is to treat it
as an economic optimisation problem using social cost~benefit analysis (Cf. Campbell et al.,
1997). For this method to be applied, it is ideal if all social costs and benefits can be expressed
in monetary units. If this is not possible, then one goes as far as is practical in quantifying social
costs and benefits in monetary terms and makes a list of the 'intangibles' that cannot be
quantified so these can be taken into account in the final judgement.
This approach is illustrated by diagrams which look at possible costs and benefits of
reducing the incidental catch ofdugong by fishermen. There are several possibilities to consider.
Firstly, it is possible that the economic costs imposed on fishermen in terms of reduced profit,
income and so on exceeds the willingness of conservationists to pay for any reduction in the
7
incidental catch of dugong in an area. This would imply that on purely economic grounds that
no reduction in the incidental catch of dugong would be justified. This case is illustrated in
Figure 3. Line DEF represents the additional costs imposed on fishermen of having to reduce
their incidental catch of dugong and line ABC represents the additional benefits to
$
Additional costs (economic loss) to fisherme F
~
D
A 1------.I:3L--__-J Addtitional benefits to conservationists ~ [
o Reduction in incidental catch of dugong % 100
Figure 3 No reduction in the incidental catch of dugong 1S optimal (economic) in this case.
conservationists (e.g., their marginal willingness to pay) for a reduction in the incidental catch
of dugong. In this case, it is not economic to reduce their incidental catch of dugong. This is
because the cost imposed to fishermen always exceeds the economic benefit to conservationists.
Although in the case shown in Figure 3 no reduction in the incidental take of dugong is
economic, if a new method of reducing the incidental take ofdugong happened to be developed,
this could reduce the cost to fishermen of reducing the incidental catch of dugong.
Consequently, it may become economic to reduce the incidental catch of dugong. Such a new
8
method would move the line DEF downward possibly sufficiently far to intersect line ABC, other
things constant. Its an intersection point would correspond to the optimal economic reduction
in the incidental catch of dugong after the introduction of the technique. A reduction in the
incidental catch of dugong would then be economic. New techniques of this kind result in a
'win-win' situation, that is benefit both conservationists and fishermen. However, little or no
sustained research appears to have been undertaken to find such methods.
Figure 4 illustrates a case in which it is economic from a social point of view to reduce
the incidental catch of dugong. Line OAB represents the additional costs to fishermen of
reducing their incidental catch of dugong and line CAD represents the additional benefit to
conservastionists of doing this. In this case, a reduction in the incidental catch of dugong by Xl
per cent maximises social net economic benefit: for this reduction the marginal benefit to
B$ Marginal benefit to conservationists
c
D
o 100
Percentage reduction in incidental catch of dugong
Figure 4 In this case some reduction in the incidental catch of dugong is economic socially but any greater reduction results in a social deadweight loss.
9
conservationists equals the marginal cost imposed on fishermen I. If the incidental catch of
dugong is reduced further, a social deadweight economic loss occurs. If, for example,
authorities require and achieve a reduction in the incidental catch of X2 per cent, the social
deadweight loss is equal to the equivalent of area of triangle AKL, the hatched area in Figure
4. It is clear from the above discussion that without proper attention to the costs and benefits
ofreducing the incidental catch ofdugongs, a social economic loss can occur. It is even possible
for regulation to be socially less favourable than no regulations from an economic standpoint.
In addition, if the measures, means and techniques for reducing the incidental catch are
prescribed, they may not be the most efficient or cost-effective ones from an economic point of
view. For example, the prescribed methods may, in relation to the case shown in Figure 4, result
in higher extra costs being imposed on fishermen so that their additional (marginal) cost is than
those shown by line OAB. For ease ofi1lustration a similar diagram to Figure 4 is shown as
Figure 5. The prescribed methods may result in extra costs being imposed on fishermen. When
these are accounted for, their marginal costs might be as shown by line OEF. If this is so and
authorities reduce the incidental catch by x2 percent, the deadweight economic loss from
regulation is equal to the equivalent of the dotted area, the area of triangle OLM, plus the
equivalent of the area of the hatched triangle AKL2, Consequently, 'social loss' is raised by
even more than the area of triangle AKL due to cost-effective methods not being prescribed.
There is a high risk of-this occurring as far as the present policy recommendations for attaining
'optimal' population of dugongs is concerned.
Observe that the steeper is the additional cost imposed on fishermen of having to reduce
the incidental catch of dugong, the smaller is the optimal reduction in the by-catch of dugong.
10
F
B
c
100
Percentage reduction in incidental catch of dugong
Figure 5 Public regulation of incidental catch can be excessive from an economics point of view and add unnecessarily to the cost imposed on fishermen.
If an economic approach to optimality is adopted, it is important to evaluate the social
economic costs and benefits of reducing the incidental catch of dugongs. Policy measures must
be formulated by weighing up these two components; costs and benefits. It is clear from a social
economic standpoint that too much reduction in the by-catch can be forced on fishermen and that
excessive costs can be imposed upon them if strategies or policies are proposed without
economic assessment. These type of assessments are missing in the reports prepared by Marsh,
et al., and Preen and Morissette.
4. Concluding Comments
From the above, it seems that not even the precautionary principle requires that hasty
emergency action is needed to save dugongs from imminent extinction in Australian waters.
Even the likelihood oflocal extinctions could be a subject for serious debate. Note also that
proper attention to the precautionary principle requires an ~ssessment of the weighted risks of
11
alternative management options; something which has not been done by policy-makers in this
case.
A decision to create or extend DPAs and tighten controls on fishing effort is bound to
have major economic repercussions regionally. Therefore, there is a need and time to assess
economic factors, take these into account and gather further ecological evidence before coming
to policy conclusions. This appears not to have been done in most cases by those making
recommendations for management of dugong.
While economics cannot be the sole arbiter on social decisions, it is nevertheless
unreasonable to ignore it, especially given that many of the impacts of regulations are likely to
have irreversible economic consequences. The economic issues should be explored further, more
ecological research is needed and in particular research is needed to find cost-effective methods
of maintaining populations of dugong. Hasty decision-making in this area seems both unwise
and unnecessary.
5. Notes
1. The optimality condition can easily be outlined in mathematical terms. If h(x) represents
the costs imposed on fishermen of reducing the incidental catch of dugong and if g(x)
represents the benefit to conservationists, then the net social benefit (NSB) of reducing
the incidental catch of dugong is NSB = g(x) - h(x) =j(x). The necessary condition for
fth° ( . l')' df dg dh• • 0 0 0a maXlImsatlOn 0 IS gIven an mtenor so ution IS - = - - - = 00 dx dx dx
The rate of change of benefits to conservationists should be equal to the rate of
increase in costs imposed on fishermen.
The second order condition for the maximum is that j "< O. Since g'(x) is
downward sloping and h'(x) has a positive slope, this condition will be automatically
12
satisfied if the first order condition is met.
Mathematically the optimisation problem is straightforward. In practice, the main
problem that is likely to occur is to estimate the functions accurately from an empirical
point of view. Furthennore, there is scope for philosophical argument about how best
to specify benefits to conservationists. Should for example willingness to pay form the
basis of such estimates or should willingness to accept compensation be used for
specification (Tisdell, 1991). Observe that deadweight social loss (DSL) shown by the
hatched area in Figure 4 would mathematically be obtained as follows: Xl Xl
DSL = Jh /(x)dx - fg /(x)dx.
o 0
2. Let r(x) represent the extra cost imposed on fishermen by regulation, that is costs in excess of
the efficient ones. Then the total economic loss from regulation equals
Xl
jr(x)dx
o
plus DSL as specified in note 1.
6. References
Campbell, H.F., McIlgorm, A. and Tsmenyi, B.M. (1997) 'Fishing Management, Environmental
Protection and Trade Liberalization', International Journal a/Social Economics, Vol. 24,
pp. 128-138.
Hohl, A. and Tisdell, C.A. (1993) 'How Useful are Environmental Safety Standards in
Economics? The Example of Safe Minimum Standards for Protection of Species',
13
Biodiversity and Conservation, Vol. 2, pp. 168-181.
Marsh, H., Corkeron, P., Breen, B. and Morissette, N. (n.d.) The Dugong Dugan dugan: An
Action Plan for its Conservation in Australia (Draft Report), Department of Tropical
Environment Studies and Geography, James Cook University, Townsville, 4811,
Australia.
Preen T. and Morissette, N. (1997) A System of Dugong Sanctuaries for the Recovery and
Conservation ofDugong Populations in the Great Barrier ReefWorld Heritage Area and
adjacent Southern Waters, Department ofTropical Environment Studies and Geography,
James Cook University, Townsville.
Tisdell, CA. (1991) Economics ofEnvironmental Conservation, Elsevier, Amsterdam.
14
1. Summary of Major Findings
Net fishing in the Queensland east coast fishery is predominantly an industry of small scale, owner operated businesses. Most enterprises rely on family labour, although employed parttime or casual labour with a few employing full time labour.
Fishers and their families rely principally on fishing for their livelihood, and most work fulltime in the industry.
Investments in offshore and on-shore assets averages a little over $100,000. Total costs typically are of the order of $???, leading to a net margin of about $14,000 per fisher, equivalent to about 3°cents per dollar of total value of catch.
Fishers have a strong desire to remain in the industry. While some would be prepared to accept buyout offers for licenses of $40,000 to $60,000 or less, these appear to be small scale operators. About 75% would not surrender licenses for buyout offers of $100,000.
Most fishing inputs appear to be purchased locally. Restrictions on fishing, while not having a major impact on the state's economy, could have considerable impact on local traders.
Most fishers believe they could survive in business for a reduced catch or increased cost of up to 10% to 15%. Information provided on debt levels was inconclusive, but it would appear some fishers would have difficulty meeting repayments if profitability were to fall.
2. Background to Study
In June 1997, Senator Hill as federal minister for the environment announced that new proposed dugong protection areas (DPAs) along the east coast of Queensland, where restriction would be introduced on the use of gill nets for fishing, on the grounds that dugong deaths arose from use of these nets. A number of studies by government agencies and the fishing industry were initiated, to shed light on dugong biology, changes in dugong populations and possible causes. The Queensland Commercial Fishermen's Organisation (QCFO) contacted the School ofMarine Science (SOMS) at The University of Queensland (UQ) with regard to advice on the impacts on the fishing industry of the proposed bans. SOMS in tum contacted Professor Clem Tisdell, head of the Department ofEconomics, concerning estimation of economic impacts, principles of compensation for the takings of property rights to natural resources, and other issues relevant to the fishing industry. A series of meetings led to the formulation of research projects in the area of economic analysis and geographical information systems, to be undertaken by independent researchers without undue influence by industry or environmental interest groups.
This project reported here, which was commissioned by the Queensland Commercial Fishermen's Organisation (QCFO), investigates the implications of bans on the use of various forms of fishing nets though to pose a risk to dugong, and options available to the participants (i.e. the federal government, state government, fishers and dependent communities). In particular it seeks to clarify the accuracy of assumptions used inJormulating the proposed strategy, and examine likely income losses in the fishing industiyand the case for and appropriate extent of financial compensation. The study has three components.
1. The effect ofnew restrictions on fishing activities
28 August, 1997
COMPENSATION FOR THE TAKING OF RESOURCE INTERESTS: PRACTICES IN RELATION TO THE WET TROPICS
AND FRASER ISLAND, GENERAL PRINCIPLES AND THEIR RELEVANCE
TO THE EXTENSION OF DUGONG PROTECTED AREAS1
Clem Tisde1l2 3
Department of Economics The University of Queensland
Brisbane Qld 4072
A background paper prepared for the Queensland Commercial Fishennen's Organisation on behalf of the School of Marine Science, The University of Queensland.
2 I wish to thank Dr Steve Harrison, Tatjana Kehren, Daryl McPhee, Gavin Ramsay and Dr Ian Tibbets for providing copies of some relevant background documents, or for comments.
3 Professor of Economics and Deputy Director, School of Marine Science, The University of Queensland.
Compensation for Taking of Resource Interests
1. Introduction
./}l!'
The question of whether compensation should be paid for the taking or abrogation of
natural resource rights or interests and how much should be paid and on what basis is complex.
The Report ofthe Commission ofInquiry into Compensationjor the Taking ojResource Interests
(British Columbia, 1992) indicates that the availability of compensation depends upon the
existence of private property rights expressed or implied. It points out (p. 17), 'Property is a
bundle of legally defined mutable right. The owner is free to exercise tho~e rights and is free
from interference by others in their exercise. These rights range from strong to weak, and even
the strongest are subject to restrictions. When rights are modified there is commonly an effect
on the value of the property'. These rights are often modified by government.
The report goes on elsewhere (p. 19) to state that 'not all [government] interferences with ;"
property can possibly be compensable...'The definition of (whether defined by statute, judicial "--.
interpretation, or custom) of a compensable taking is influenced strongly by pragmatism. There'
are no hard and fast rules, but some generalisations are possible. The stronger the property right,
and the greater the owner's loss, the more likely the taking will be viewed as compensabl~J
Queensland fishers have firm licences and endorsements to use different types of nets.
The proposed dugong protection areas limit these rights. Therefore, the value of businesses
which rely on these rights will be reduced, in many cases substantially. Hence, a primafacie case
for compensation exists.
In the Australian case, a number of precedents exist in relation to the taking ofnatural
resource interests by the state. Consider for example, the loss of private rights (expressed and
implied) in relation to the World Heritage listing of the Wet Tropics region ofNorth Queensland
and similarly in relation to Fraser Island.
1
2. The Wet Tropics Structural Adjustment Packages
The Wet Tropics Structural Adjustment Package consisted of three basic components:
(1) Business compensation;
(2) Labour adjustment assistance; and
(3) Alternative employment creation strategies.
All three components can be regarded as attempts to compensate community members for the
taking of resource rights from which'they previously enjoyed benefits.
Labour adjustment assistance included:
(1) Dislocation allowances;
(2) Early retirement benefits;
(3) Retraining subsidies, and
(4) Relocation allowances.
In order to create alternative sources of employment for displaced timber workers, the
Commonwealth Government, in addition to the above initiatives, began public sector and local
community programmes, and provided subsidies to the private sector to foster employment in
the local regions affected. Apart from providing compensation to displaced timber workers,
these initiatives also incidentally provided some compensation to local communities for the loss
of economic injections (and multiplier effects) due to cessation of logging operations.
Let us consider each of the three components of the Wet Tropics Structural Adjustment
Package (SAp) in more detail and consider its relevance to the proposed extension of Dugong
Protected Areas (DPAs).
BUSINESS COMPENSATION: This scheme allowed for payment of up to $24.4 million to
companies and businesses adversely affected by cessation of logging. Compensation was 'only
2
paid to those businesses who could clearly demonstrate that the Commonwealth Government
decision to cease logging in the World Heritage Listed forests resulted either:
• The closure of their operation;
• The forced rationalisation of their businesses; or
• A substantial reduction in their business viability' (Lynch-Blosse et al., 1991, p. 46).
It would be a reasonable expectation given this case that those with similar adverse effects on
their business due to extension of DPAs should be compensated by the Commonwealth
Government.
About three-quarters of businesses which sought compensation under the Wet Tropics
SAP were successful in that they were ruled to be eligible for compensation, Lynch-Blosse et al.,
(1991, p. 47) observe: 'The types of businesses which were successful in their claim for
compensation include larger timber mills, factories and manufacturing establishments which
were end-users of rainforest tirrlber, contract timber cutters, sleeper cutters, and organisations
which were involved in the maintenance and repairs of the timber-related equipment (e.g., Saw
Doctor)'. This meant that busine~ses.eithe! haviIlg a rel~tiy~lY dire9tJoI"Y\T~~OE1:>~c~ward
economic linkage with logging in the Wet Topics World Heritage listed areas were eligible for
compensation. By analogy, processors and others dependent on the supply offish from extended
DPAs would have a case for compensation as would those involved in the maintenance and
repair of equipment used in areas to be converted to DPAs, as well as of course fishers
themselves.
A two-staged process was involved in determination of business compensation claims.
Firstly, a government body (the Rainforest Unit of DASETT) determined whether in terms of
the criteria an applicant was eligible for compensation. Then an accounting finn (Price
Waterhouse), hired by the Government, was asked to assess the level of compensation
considered to be fair and reasonable on the basis of:
'. A detailed analysis of the earnings in recent years of the business being assessed and an
3
estimate of likely future earnings in the absence of World Heritage Listing;
An assessment of the value of assets used by that business in deriving income from • rainforest logging and milling activities; and,
An assessment of other compensation claims made by that business' . •
If a parallel procedure were adopted to the extension ofDPAs similar information would
need to be collected in relation to fishing in DPAs. Account would need to be taken of loss of
supply of fish from DPAs, business closures, lost contracts and business.
i
i Unfortunately, the method of deternlination of compensation is not precisely specified
above.'rt is more specific for the loss qftimher rights on Fraser Island. In that case (as discussed
below) the basis of business compensation was basically the anticipated reduction in the
capitalised value of the business as a result of the loss of timber right~~-7 . ---'J
LABOUR ADJUSTMENT ASSISTANCE: For employees adversely affected by the cessation
of crown rainforest operations in the nominated World Heritage Area this consisted of:
• Dislocation Allowance;
• Early Retirement Allowance;
• Retraining Subsidy; and
• Removal and Relocation Assistance.
To be eligible applicants had to have been employed in the timber industry or a closely related
business for at least 12 of the 18 months before retrenchment and have been retrenched as a A
result of the cessation of logging in the area included on the World Heritage List. Given this
precedent, a similar labour adjustment package should be available to employees adversely
affected by extension of the DPAs.
ALTERNATIVE EMPLOYMENT CREATION STRATEGIES: Means used to obtain
alternative employment for displaced timber workers included:
4
• Public Sector Projects such as new or additional local council projects;
• Tree planting proj ects funded by the Commonwealth Government;
• Financial assistance 'to individuals, private sector enterprises and other organizations
who could propose feasible and economically viable initiatives which would employ
eligible displaced timber workers' $3.7 million was allocated for this; and,
• Wage subsidy payable to employers (outside the timber industry) of eligible displaced
timber workers. (The subsidy was payable for six months).
The Wet Tropics Structural Adjustment Package was comprehensive. It provided
compensation to all those directly or closely affected by cessation of logging in the World
Heritage Area, and indirectly reduced the economic impact of this cessation on local
communities. It is abenchmark Australian case for the taking of resource interests by the state,
in this case the Commonwealth Government. On the basis of this precedent one would expect
similar types of compensation to be available should DPAs be extended in Queensland as is
proposed. Decisions on compensation following the Fraser Island Report to stop logging there
and to proceed with application for World Heritage Listing of Fraser Island provide additional
guidelines for compensation in Australia in relation to the taking of resource interests.
3. Compensation for the Loss of Timber Rights on Fraser Island
Following the Fraser Island Report, it was decided that logging on Fraser Island would
cease by the end of 1991, and a con1pensation package described as 'A Special Growth and
Development Package for the Great Sandy Region', was devised. In consequence, total financial
assistance of $37 million was proposed for the region. Of this $21.2 million was to be
contributed by the Queensland Government and the remaining $16.5 million by the
Commonwealth Government.
As in the case of the Wet Tropics, the package involved three basic elements:
• Workers' Adjustment Package;
• Schemes to create alternative employment opportunities; and,
5
Compensation for businesses directly and substantially affected by phasing out of logging• on Fraser Island.
However, there were some_cg:f:f~r~iicesin 'Fraser Island' packages compared to the Wet Tropics
settlement. For example, workers were not offered a retirement allowance in the Fraser Island
case. Emphasis was on obtaining alternative employment for displaced workers. Furthennore,
in the Fraser Island case, special mortgage assistance could be made available to displaced
workers. The Special Workers' Adjustment offered the following:
• Dislocation assistance of up to $35,000 based on years of service;
• Priority for alternative employment in government funded schemes;
• Relocation assistance of up to $5,000;
• Income supplementfor 12 months [to displaced workers sufficient to bring their income
to its previous level]; and
• Special mortgage assistance for up to three years to ensure that repayments do not exceed
30 per cent of gross household incomes' (The Queensland Government, 1991, p. 3).
Government-funded employment initiatives were designed to provide alternative
employment to displaced workers if they wished to take advantage of these. However,
employment in projects resulting from these initiatives was not confined to displaced workers
even though they were given priority in employment. The schemes were intended to compensate
or more than compensate, for any decline in regional incomes as a result of the cessation of
logging on Fraser Island.
It is worthwhile considering the basis of compensation for businesses directly or
substantially affected by the phasing out oflogging on Fraser Island. The State Government
claimed that, 'there is no legal obligation to pay compensation to affected businesses',
(Queensland Government, 1991, p. 11). Whether or not that is so is however probably unclear
given the practices adopted in the case of the Wet Tropics. Nevertheless, the State government
Was prepared to consider ex gratia payments to businesses directly or substantially affected by
the decision to phase out logging on Fraser Island.
6
The criteria for eligibility ofbusinesses to be considered for compensation were narrower
than in the case of the Wet Tropics. To be eligible for consideration, a business had to depend
heavily on the timber industry for its income. In the Dugong Protection case, if the same rule
applied, a business would have to be heavily reliant for its income on fishing for it to be
considered for compensation. The exact position in relation to Fraser Island was as follows:
'To be eligible for compensation, about 50 per cent of a business's income would need
to be reliant on the timber industry. The Treasurer would consider particular cases
involving less than 50 per cent if it could be shown the viability of the business had been
substantially affected.' (Queensland Govennnent, 1991, p. 11).
The basis of compensation was intended to be the loss of value of business due to the
cessation of logging on Fraser Island.
, 1m the case of a business forced to close as a result of the decision to phase out logging,
Price Waterhouse would:
[1] Value the existing business as a going concern based on capitalisation of future
maintainable earnings;
[2] Deduct from this value the net book value of the physical assets retained by the
business; and,
[3] Then adjust for any extraordinary expenses incurred by the business relating to
closure, (Queensland Government, 1991, p. 11).
In this case [1] - [2] - [3] would be the basis of compensation.
However, the Government did not necessarily pay the loss in value of business as
determined by Price Waterhouse. It decided on a case by case basis taking account of Price
Waterhouse's assessment and other factors such as:
• Avenues available for mitigation of losses and other business opportunities;
7
• The commercial risks associated with operating the business in an
environmentally sensitive area. e.g., if expensive assets were acquired recently,
it may not be appropriate to compensate the party for full loss of value; and,
• The Government's overall objectives for industry rationalisation in the region.
Compensation payments would be staged to avoid the situation where a lump sum is paid
up front but actual losses do not materialise in line with the original projection.'
(Queensland Government, 1991, p. 11).
Consequently the compensation available to businesses for the taking of resource rights was
relatively uncertain.
Regarding the treatment of physical assets in the case given above, one could question
whether these should be deducted at net book value. Market values would provide a better
indicator of their worth and could well be smaller than net book value.
4. Comparisons Between Compensation in the Wet Tropics and Fraser Island
Cases
The basis of eligibility for business compensation in the Wet Tropics was more generous
than in the Fraser Island case and actual payment of the compensation less restricted and
qualified.
Whereas early retirement allowances was available to displaced labour in the Wet Tropics
area, this was not so for the Great Sandy Region. In the latter case emphasis was on finding
displaced workers alternative employment. To find such alternative employment in the Great
Sandy Region may have been easier than in some regions affected by the Wet Tropics World
Heritage listing.
The creation of alternative employment opportunities in the Hervey Bay Region were
only partly intended to absorb workers displaced as a result of cessation of logging on Fraser
8
Island. New projects also directly created employment for other workers as well. In the case of
the Wet Tropics, more weight was placed on the absorption of displaced timber workers by the
alternative employment schemes devised. Therefore, the Fraser Island Package seems to have
been designed to provide greater community-wide compensation and benefits with these not all
tied specifically to displaced workers. The process of compensation is to a considerable extent
a political process. It is influenced by the political power of the parties involved; both those
directly affected and the communities in which they live.
5. General Observations on Compensation for the Taking of Resource Interests
and Relevance to DPAs
It was observed in the introduction that a good deal of pragmatism is involved in the
payment of compensation for the taking of resource interest by the state. The greater however
the economic loss sustained by a party affected by loss of resource interest and the more
established or definite are these rights, the more likely that compensation will be paid.
Furthermore, 'government is likely to respond to the demands of well-defined, compact
interest groups whose members clearly recognise either the benefits or costs which will fall on
them as a result of a particular policy, while ignoring or discounting the benefits or costs
occurring to ill defined, diffused interest groups who do not clearly recognize the impac~ of the
policy upon them' (Buchanan, et al., 1980; British Columbia, 1992). Therefore, compensation
is more likely to be paid to those damaged by a resource expropriation if they form well-defined
interest groups that 'are capable of clearly and forcefully making their interests known to policy
makers'. This indicates that it is essential that all who will be adversely affected by extension
of DPAs form or belong to such groups. Otherwise, they are more likely to suffer
uncompensated economic loss. Furthermore, the case for compensation must be put clearly and
forcefully to policy makers.
Assessing the economic loss occasioned by the taking of resource interests is a complex
task not least because of the considerable economic and other uncertainties involved. While a
complete coverage of the subject is not possible there some specific matters that are worth raising
9
because oftheir possible relevance to government decisions to extend the DPAs. Let us consider
in turn business compensation; compensation for displaced workers and community-wide
impacts and restitution.
BUSINESS COMPENSATION: The most important thing to consider in assessing the
economic loss incurred by a business as a result of the taking of its resource interests is the
reduction in its capitalised value as a consequence of this loss. This reduction (R) is equal to the
difference of net present value of its anticipated future net earnings should its resource interests
be maintained (VJ and this if its resource interests are lost. In other words R =VR - VE •
It is however difficult to estimate the reduction (R) in the capitalised value ofthe firm due
to loss of its resource interests because future income is uncertain. Furthermore, the size of R
depends on the rate of interest used to discount future earnings.
The reduction of capitalised value, R, does not take account of the value of assets
physical or otherwise retained by the firm. To the extent their assets can be sold they reduce the
loss suffered by the business. Ideally such assets should be valued at realizable or market value
once the business loses its resource interests. There does not seem to be any logic in valuing
them at net book value as in the Fraser Island case. If the business' assets are rather specific to
exploitation of its natural resource interests, then after loss of these resource interests these
asssets may have little use elsewhere. Hence, their market or realizable value may be much less
than their book value after expropriation of the natural resource under consideration. Hence, it
is appropriate to deduct, only the realizable value of the business' assets from its reduction in
capitalised value in determining the business' economic loss (EL). In addition, to estimate a
business' economic loss, it may be appropriate as mentioned in the Fraser Island case, to add any
special expenses (Cs) a business has to incur either because it must close down or restructure
substantially due to its resource loss.
Taking these matters into account, the economic loss of a business due to loss of resource
interests would be estimated as:
10
EL = R - A + C . M S
In relation to the extension of DPAs, it has been suggested that reduction in the value of
licences and endorsements might be used as a basis for compensation or the Commonwealth
might buy back entitlements from fishermen at their market value prior to moves to extend the
DPAs. This, however, would be inadequate to compensate fishers for their loss.
First the market for fishing entitlements is thin and therefore a far from a perfect market.
Secondly and more importantly no allowance is made for asset specificity - that is for the losses
of fishers on their physical capital, geared specifically to the netting operations in new areas to
be included in DPAs. At the most, the sale price of entitlements represents capitalised resource
rents and does not capitalise the normal return on capital used to exploit the resources in
question. The nonnal return from the capital will be lost on the taking ofthe resources and even
the undepreciated value of this capital may not be realisable in the market. Furthennore, no
allowance is made for the special cost factor, Cs, mentioned above.
The specificity of capital needs to be gIven particular attention in claims for
compensation for loss of resource interests. This is not only true ofphysical capital but of other
forms of capital too. Not enough attention has for example been given to human capital in the
past. Owner/managers as well as employees embody much human capital which may be specific
to their business operations reliant on natural resources. Their next best employment may not
be able to use this capital. So this capital becomes a sunk cost to individuals just as physical
capital may have a sunk cost. The longer individuals have been operators in an industry, the
larger is their human capital (as a rule) specific to those operations and the greater their loss is
likely to be when those operations are no longer possible. This needs to be taken into account
for example in the case of owner/operators.
COMPENSATION FOR DISPLACED WORKERS: \Vhile Fompensation for the taking
of resource interests from businesses may have a quasi-legal basis, the case for compensating
11
workers seems to be more a question of equity. Compensation packages have included measures
to find alternative employment for displaced workers, payments to compensate for lost income
in alternative employment (Fraser Island case) and allowances to cover expenses included in
finding alternative employment. Similar types of compensation could be expected for fishennen
displaced by extension of DPAs.
COMMUNITY-WIDE IMPACTS AND RESTITUTION: While governments have no
legal requirement to compensate communities which may be adversely affected by the loss of
resource-interests, politic,al reality often requires that such restitution be made. This is especially
so when a regional economy depends heavily on use of the resource as a source of economic
injections. The loss of exploitation ofthis resource though various multiplier effects can depress
the local economy. Therefore, adverse economic effects are not confined to those directly
affected by the withdrawal of resource rights or interests.
Because of asset specifity or capital specifity, including that of human capital, one
problem that can arise when natural resource rights are restricted is that displaced business and
workers increase their exploitation of closely related resources. If for example, fishers are
restricted in one fishery, they may crowd into other fisheries, thereby causing over exploitation
in these fisheries and depressing incomes in these to below nonnal levels. In a sense, this
exacerbates the social and biological damage caused.
6. Concluding Comments
Commissioner Richard Schwindt (British Columbia, 1992) indicates that the rationale
(including the economic rationale) for the taking of resource interests ought to be carefully
considered before a decision is made. Clearly the value to the state (government), acting on
behalf of the community, in taking resource interests should exceed the economic value to users
of these resources of retaining the rights. In relation to the proposed extension of DPAs these
values have not been estimated or even discussed to any extent.
Second note that community values are changing in relation to the economic exploitation
12
of natural resources. There is now less emphasis on the direct economic benefits to be obtained
from the use of these resources and more emphasis on indirect non-use values. While this may
be reasonable, it may be unreasonable to expect those given specific resource-interests not be
compensated for a change in community or government attitudes affecting their previously
settled interest.
Third, it could well be that fishers are not the main cause of the decline in the size of
dugong populations. For example, habitat change brought about by spillovers from land-based
agriculture and other economic activities could be a major cause of such a d~cline. If this is so,
this would be a further reason why the full cost of further protection for dugongs should not fall
solely on fishermen. To impose the full cost of dugong protection on fishennen would be
inequitable.
Sources
British Columbia Commission of Inquiry into Compensation for the Taking ofResource Interest (1992) Report of the Commission of Inquiry into Compensation for the Taking of Resource Interests, Resource Compensation Commission, Vancouver.
Buchanan, J.M., Tollison R. and Tullock, G. (ed) (1984) Towards a Theory ofthe Rent-Seeking Society, Texas, A. & M. University Press, College Station, Texas.
Lynch-Blosse, M; Turrell, G. and Western, J.. (1992) Impact Assessment: World Heritage Listing SCRU Report No. 22.8, Resource Assessment Commission, Canberra.
McGufflog, I and Western J.S. (1993) Social Impact Assessment ofthe Cessation ofLogging on Fraser Island: An Evaluation of the Workers Special Adjustment Package, Social Research Consultancy Unit, Department ofAnthropology and Sociology, The University of Queensland.
The Queensland Government (1991) The Great Sandy Region: The Queensland Governmen(s Growth and Development Package.
13
ECONOMIC IMPACTS OF IMPOSTION OF RESTRICTIONS ON GILL NETS ON THE QUEENSLAND EAST COAST
FISHERY
A REPORT PREPARED FOR THE QUEENSLAND COMMERCIAL FISHERMENS' ORGANISATION
Gavin Ramsay, Steve Harrison and Clem Tisdell
Department of Economics in conjunction with the School of Marine Science
The University of Queensland September, 1997
Table of Contents
Page 1 Summary of Major Findings 1
2 Background to study 1
3 Data Collection 2
4 Data Analysis 3
5 Fishing Operations and Effort 3
5.1 Importance of the fishing enterprise 3 5.2 Profile of vessels used in fishing operations 4 5.3 Value of nets 9 5.4 Value of on-shore facilities 10 5.5 Overall value of assets 11
6 Labour Inputs in Net Fishing 11
6.1 Fishers' labour inputs 11 6.2 Other family members working in the fishing enterprise 13 6.3 Employed labour 14
7 Calculation of Annual Gross and Net Margins 16
7.1 Expenses in fishing 17 7.2 Annual value of catch 18 7.3 Annual net margin 19
8 Response of Fishers to Bans on Net Fishing in Dugong Protection Areas 21
8.1 Impacts of net bans 21 8.2 Buyout of endorsements and licenses 22 8.3 Effect of changes on viability of fishing enterprises 24 8.4 Debt levels of fishers 25
9 Flow-on effects of fishing restrictions 25
10 Summary and Conclusions 27
11 References 29
1. Summary of Major Findings
In general the Queensland east coast net fishing industry is made up small scale owner operated businesses with a small number of larger enterprises. Fishers and their families rely principally on fishing for their livelihood, and most work full-time in the industry. Considerable variation is present between fishers in the level of investment in vessels, nets, the annual total value of catch and profit. Most of the labour force is made up of the licence holder and his spouse. Some businesses employ part-time labour while there is also a small number of larger businesses involved in the net fishing industry which employ full-time labour. However, the larger enterprises are often involved in net fishing for part of the year only, in particular during the cyclone season when it is not possible to carry out other fishing activities. All fishers own more than one vessel. Most vessels are made from aluminium and built in regional centres of Queensland. The vast majority of fishing related expenditure is made in the home port and nearby regional centres.
Investments in offshore and on-shore assets averages a little over $100,000. The total value of catch averages about $60,000, and total costs are of the order of $40,000, leading to a net margin of about $20,000 per fisher, equivalent to about 30 cents per dollar of total value of catch.
Most fishers believe they could survive in business for a reduced catch or increased cost of up to 10% to 15%. Information provided on debt levels was inconclusive, but it would appear some fishers would have difficulty meeting repayments if profitability were to fall.
Fishers have a strong desire to continue fishing rather than take a compensation package for surrender of their licence. This was reinforced by the high value placed on their licence package by most active net fishers. Most fishers believe they would become unemployed if they were to lose their licence. The lack of alternative employment prospects is related to their age and lack of training and skills that would enable them to gain· alternative employment.
2. Background to Study
In June 1997, Senator Hill as federal minister for the environment announced that new proposed dugong protection areas (DPAs) along the east coast of Queensland, where restriction would be introduced on the use of gill nets for fishing, on the grounds that dugong deaths arose from use of these nets. A number of studies by government agencies and the fishing industry were initiated, to shed light on dugong biology, changes in dugong populations and possible causes. The Queensland Commercial Fishermen's Organisation (QCFO) contacted the School of Marine Science (SOMS) at The University of Queensland (UQ) with regard to advice on the impacts on the fishing industry of the proposed bans. SOMS in turn contacted Professor Clem Tisdell, head of the Department of Economics, concerning estimation of economic impacts, principles of compensation for the takings of property rights to natural resources, and other issues relevant to the fishing industry. A series of meetings led to the formulation of research projects in the area of economic analysis and geographical information systems, to be undertaken by independent researchers without undue influence by industry or environmental interest groups.
----------
2
This project reported here, which was comn1issioned by the Queensland Commercial Fishermen's Organisation CQCFO), investigates the implications of bans on the use of various forms of fishing nets though to pose a risk to dugong, and options available to the participants (i.e. the federal government, state government, fishers and dependent communities). In particular it seeks to clarify the accuracy of assumptions used in formulating the proposed strategy, and examine likely income losses in the fishing industry and the case for and appropriate extent of financial compensation. The study has three components.
1. The effect ofnew restrictions on fishing activities
A geographical information system (GIS) is being created to answer spatial queries related to dugong protected areas and fishing activities. Specifically, the GIS will include: • Coastal Information • Management Areas • Fishing Activity and Catch Impact • Ecological Variables (seagrass habitat, dugong stock, etc.)
The GIS will be used to answer quantitative queries including: i) gross rate of production of fish by region, date, and species, and ii) relation of fishing activity to gazetted fish habitat areas, management areas, and dugong protection areas. The GIS will be used to produce maps and tables useful in economic assessment. Also, it will provide maps indicating fishing activity with respect to seagrass beds and dugong habitats.
2. The economic implications of changes in fishing activities
The examination of economic implications of changes in fishing activities involves four major tasks, namely: • Examination of proposals for dugong management from an economic perspective • Collection of data from fishers by means of a questionnaire • Determination of consequences for individuals and regions of the introduction of dugong
protection areas, and • Drawing implications with respect to compensation for fishers affected by the dugong
protection areas.
3. The distribution of seagrass along the Queensland East Coast fishery
Anecdotal evidence has been collected from fishers as part of the economic survey on the distribution of seagrass and of changes in that distribution for the affected fishing areas.
3. Data Collection
Data on the fishing enterprises were collected using a questionnaire, a copy of which is attached as Appendix A. The questionnaire was prepared after examining previous surveys of the east coast fishing industry. A limited time was available for,the survey and preliminary report (about six weeks) hence it was not possible to visit each fishers indiVidually to collect data. Rather, meetings organised by the QCFO were held in Hervey Bay, Gladstone, Mackay and Townsville. At these meetings, studies being funded by QCFO were outlined to fishers by
3
a representative of QCFO, and the questionnaire was introduced and explained by Gavin Ramsay. Questionnaires were handed out at the meetings. Any problems with interpretation of questions were dealt with by Mr Ramsay and research assistants at the meetings.
Fishers filling out the questionnaire were asked to provide their name, address, telephone number, commercial fisher's licence number, and vessel licence number. This ensured that all completed questionnaires came from licenced fishers. Respondents in the survey were those fishers who operated in the proposed or interim DPA's using gill nets. Fishers were assured that all information provided is confidential and individual infonnation will not be divulged. Some questionnaires were collected at the meetings, but most were posted to The University of Queensland subsequently.
Approximately 120 questionnaires were received. Most fishers answered the majority of questions, although some questions proved to be more difficult and provided fewer useable observations. While the number of fishers who would be affected by the net bans is difficult to determine, it would probably be of the order of 180, and it is believed that the majority of those who would be most affected filled out questionnaires.
4. Data Analysis
Data were entered into a series of MicroSoft Excel spreadsheets developed for this study. Spreadsheet functions were used to derive statistical characteristics including means, medians, histograms and cumulative relative frequencies.
5. Fishing Operations and Effort
This section summarises survey findings about the fishing enterprises including the importance of fishing in providing income to fishers, and the number and value of boats, nets and onshore facilities.
5.1 Importance of fishing as a source of income
Fishing is the only business activity carried out by most respondents, with 84% relying solely on fishing for their income. Table 1 outlines the proportion of fishers for whom fishing is the only enterprise, for the four districts and in aggregate. For those with other sources of income, fishing is still the most important source of income, generally providing in excess of 95% of income.
Table 1: Enterprise importance
District Fishing is only enterprise
Hervey Bay 95.0% Gladstone 78.6% Mackay 86.5% Townsville 65.5% All districts 84.0%
4
Most fishers (84%) own the licence under which they fish; however, there are some who lease licences. In Table 2 information on the percentage of fishers who own the licence under which they operate is presented for each fishing district and in aggregate.
Table 2: Licence ownership
District Owner of licence Hervey Bay 78% Gladstone 100% Mackay 86% Townsville 87% All districts 84%
5.2 Profile of vessels used in fishing operations
The number of boats per fisher and average age of boats are presented in Table 3. All fishers own more than one vessel, with an average of 2.9 vessels per respondent. The average age of boats is 9.7 years.
Table 3: Number and age of boats
District Number of boats per Average age of respondent (average) boats (years)
Hervey Bay 3.23 10.7 Gladstone 2.71 7.7 Mackay 2.62 9.6 Townsville 2.89 9.2 All districts 2.90 9.7
Figure 1 presents the frequency distribution of the age of primary fishing vessels while Figure 2 presents the frequency distribution of the age of all tender vessels. These figures reveal that primary fishing vessels are generally older than tender vessels. Primary vessels have an average age of 13 years, while for all tender vessels the average age is 8 years.
5
Figure 1: Age of primary fishing vessel, all districts
Table 4 presents information on the type of construction materials for all vessels owned by respondents. Aluminium was the predominant material used in vessel construction, with 57.1 % of vessels made from aluminium. Fibreglass and timber are the next most common construction materials with 19.2% of vessels made from fibreglass and 17.5% from timber.
,....-
,....-
I-
1--
-
-I-
~
25
o
5
30
10
~ 20 c: Ql :::l 0" ,lg 15
6
Table 4: Type of construction, all fishing vessels
Type of construction Number of boats Proportion of boats Aluminium 205 Steel 7 Timber 63 Fibreglass 69 Fibreglass/ply 15 Total 359 100%
Fishers were asked to estimate the market and replacement values of their boats. Table 5 provides information on the average and median values, for length, age, market value and replacement value for primary and tender vessels. On average, primary vesselS are 7.6 metres long in comparison to tender vessels that average 4.8 metres.
Table 5: Characteristics of primary and tender fishing vessels, all districts
Length (metres) Age (years) Market value ($) Replacement value ($)
Average Median Average Median Average Median Average Median Primary fishing vessel
Table 6 summarises market values of primary and tender vessels for each of the four fishing districts covered in the survey. Mean values varied from $37,600 in the Townsville district to $52,700 in the Mackay district. Median values were considerably lower, ranging from $16,000 (Hervey Bay) to $30,000 (Gladstone). It is apparent that a few high value vessels inflate the mean values.
Table 6: Mean and median market value of primary and tender vessels, by district
District Value of primary vessels Value of tender vessels Average Median Average Median
Figure 3 presents the frequency distribution of respondents estimates of the market value of primary fishing vessels. These values are highly variable, ranging from $1,000 to $325,000 with greatest concentration around the value of $15,000. The market values of 15% of
7
primary fishing vessels is less than $10,000, that for 35% of primary fishing vessels is between $10,000 and $20,000, while 15% of primary vessels are valued between $40,000 and $100,000.
Figure 3: Market value of primary fishing vessels, all districts
~ C\J' M -.:-- <.0 00 0" o' 0" 0" a a 0" ~ C\J C") U1 U1 U1 U1
~ C\J C")
market value
The frequency distribution for replacement values of primary vessels is presented in Figure 4. The estimates are highly variable with a range from $1,500 to $800,000. However there is a concentration around $20,000; estimated replacement value of 20% of vessels is less than $15,000, that for 50% of primary vessels is between $15,000 and $50,000, and that 14% is between $50,000 and $100,000.
The frequency distribution for the market value of all vessels per fisher is presented in Figure 5. Respondents estimates of market value varied considerably ranging from $3,500 to $341,000, with an average of $56,172 and median of $30,000. Fifty percent of fishers owned boats valued at less than $30,000, 70% at less than $50,000 and 90% at less than $120,000.
8
Figure 4: Replacement value of primary vessel, all districts
0 0 0 0 0 0 0 0 0 0 0 ll) l!)_ ll) ll) ll)
C\i co) .,f
0 0 0 0 0 0 8 0 0 0 0 u5 a;i 0" 0".... C\J
Replacement value ($)
0 0 0 ·0 0 0 0 0"
0 0 0"
0 0 0"
0 0 0"
0 0 0"
C') ll) ll).... ll) C\J
ll) C')
Figure 5: Market value of all vessels per fisher, all districts
The frequency distribution for the replacement value of all vessels per fisher is presented in Figure 6. Again, there is a wide range, of from $4,200 to $800,000;-!he average replacement value of all vessels per fisher is $90,000, but the median value is only $50,700 indicating strong positive skewness (i.e. a few very high estimates inflate the mean). There is a concentration of estimated replacement values of around $50,000. Fifty per cent of
9
respondents estimate the total replacement value of their boats as less than $50,000, 70% as less than $80,000, and 90% as less than $180,000.
Figure 6: Replacement value of all vessels per fisher, all districts
-
-
--
, f- --
- r- r -,.... - -
If ,....
r- n
12
18 t 16
14
2
4
6
o
~ 10c: g: 0Il! 8-
o 15000 30000 50000 80000 120000 180000 300000 450000
Replacement value ($)
5.3 Value of nets
Information on the value of nets held by fishers was collected in Gladstone, Mackay and Townsville but not collected in Hervey Bay. Most fishers (73%) own nets with an estimated market value of less than $14,000 in total while 44% own nets with an estimated value less than $6,000. A small percentage (3%) own nets valued at more than $40,000. The distribution of market value of nets per fisher is presented in Figure 7, and demonstrates variable nature of these estimates with a range from to $200 to $60,000.
10
Figure 7: Market value of all nets per fisher, all districts
1-18 16
14
>- 12 0 I: CIl 10 ::l C' 8(I!
6-4
2 0
a a a a a a a a 0 o a a a a a
IX) T'""
C\J "!" <0 a
5.4 Value of on-shore facilities
o a a a a a C\J "!" T'"" T'""
Value of nets ($)
a a a a a a a a o a a 8 a
IX)<0 a §T'"" T'"" C\J ~
On-shore facilities are defined in the survey under four categories, namely:
• sheds and other fixed structures • refrigeration units equipment tools • four wheel drive vehicles • other vehicles, and
• other.
Fishers where asked where possible to provide an estimation of the market value and replacement value for each of the categories. Table 7 presents estimate values for five categories of on-shore asset, for the four fishing districts and in aggregate. Averages stated here are for those respondents reporting on-shore assets only; that is, non-responses have been deleted rather than treated as zero values.
Table 7: Reported values of on-shore assets, all districts and in aggregate
Asset
Sheds - market - replt.
Fridges - market . replt.
4wd - market - replt.
Other veh. - market - replt.
Other asset - market . replt
All assets - market All assets· mkt (median) All assets - rep!. All assets - rep!. (median)
District Overall T'ville Mackay Hervey Bay Gladstone average 10124 23692 17403 46222 20592 17655 36250 25878 59250 31041 6124 7234 13734 5833 9062 9313 12559 23276 9417 14912
Average market values of on-shore assets ranged from about $30,000 in Mackay to $76,000 for Gladstone, with a mean over all districts of about $44,000. Replacement values were approximately 60% higher than market values, in aggregate. Median market values for onshore assets were about $30,000, and median replacement values about $50,000, across all districts.
5.5 Overall value of assets
As indicated in Table 8, the mean overall investment in the fishing industry ranged from about $85,000 for Townsville district to about $150,000 for Gladstone. Medians were rather lower than means, at between $65,000 and $90,000, suggesting the latter were affected by a few fishers with very large investments.
Table 8: Total value of all assets per respondent ($)
District Number Average Median Hervey Bay 40 94,429 68,000 Gladstone 14 148,416 88,450 Mackay 37 120,164 79,000 Townsville 27 84,929 65,800 All 118 106,730 73,700
6. Labour Inputs in Net Fishing
In the survey, information was collected for for three categories of labour, namely the fisher (and licence holder), other family labour and employed labour. For each category of labour, . information was collected on the age of persons, the number of years they have been fishing for a living, the number of weeks worked per year and whether they have alternative skills that might assist them to gain employment should they no longer be able to fish for a living.
6.1 Fishers' labour inputs
Information on the age and number of years respondents have been fishing fora living is presented in Table 9 and Figures 8 and 9. The age of licence holders ranges from 20 to 68 years. Most licence holders (80%) are less than 55 years old with 50% less than 45 years. Relatively few (10%) are less than 30 years old. The age distribution of licence holders is presented in Figure 8.
As indicated in Table 9, on average respondents have been fishing for 20. However, there is considerable variation in the time they have been fishing for a living ranging from one to 52 years, as illustrated in Figure 9.
12
Table 9: Profile of licence holders
District Average age Years fishing Weeks fishing Possess other (years) (average) per year work skills (%)
6.2 Other family members working in the fishing enterprise
A profile of family members working in the fishing enterprise is provided in Table 10. Their average age is 12 years less than that of respondents. The age distribution of family labour is illustrated in Figure 10.
Family members had been fishing for a living for half the time of licence holders with many. having fished for less than five years, as illustrated in Figure 11. A third of family labour have alternative work skills.
Table 10: Profile of family labour
District Average Years fishing Weeks fishing Possess other age (years) (average) per year work skills (%)
Figure 11: Number of years fishing, family labour, all districts
35
30
25
~o c Ol :l cOlu:r5
10
5
IIo 40 45 50
6.3 Employed labour
Only 27% of respondents employed any labour. A profile of employed labour is provided in Table 11. The average age of employed labour is 34 years with itho~e working having less fishing experience than either the licence holder or family workers. Most employed labour have less than five years experience in the fishing industry, and slightly less than one third
16
14
12
10 >(,) c CIt 8::J c~- 6
4
2
0
-
--
10--
~ --
II
5 10 15 20 25 30 35 Years fishing· family labour
15
had alternative employment skills. The age distribution of employed workers is illustrated in Figure 12 and the distribution of time spent fishing for a living is presented in Figure 13.
Table 11: Profile of employed labour, all districts
District Average age Years fishing Weeks fishing Other work (years) (average) per year skills (%)
(average) Hervey Bay 34.4 8.2 16.9 40 Gladstone 31.5 4.5 27.5 a Mackay 34.0 7.4 32.1 25 Townsville 35.3 2.0 32.3 33 All districts 34.4 6.7 25.7 32
Figure 12: Age distribution, employed labour, all districts
9
8
7
6
>g 5 C,) ::I tr e 4....
3
2
o
r-
f----
I-
-
I I I I 15 20 25 30 35 40 45 50 55 60 65 70
Age (years)
.16
Figure 13 : Years fishing experience, employed labour
I I
5 10 15 20 25 30 35 40 Years fishing -employed labour
Annual wages paid vary considerably between fishers. Most employ part-time staff. While in some cases wages bills as high as $200,000 have been reported, 50% of employers have wages bills less than $9,000, 80% less than 20,000 and 90% less than $50,000. Table 12 presents average and median wages paid by those employing labour. The high average wages paid by Townsville respondents is due to a small number of respondents in that district having wages bills in the vicinity of $200,000.
Table 12: Average and median wages paid by those employing staff
25
20
>1 5 ()c:: 41 ::s tT 41 It
10
5
o
District Average wages Median wages paid ($) paid ($)
Hervey Bay 14,884 8,000 Gladstone 8,910 3,522 Mackay 12,167 7,641 Townsville 56,070 12,400 All districts 22,409 10,000
7. Calculation of Annual Gross and Net Margins
An important task of the study has been to estimate the proportion of fishing income retained by respondents relative to that which is incurred as cost of procluGtion. Estimates were made of the "gross margin" and "net margin". The former is defined here' as the amount per dollar of income remaining after all variable costs are deducted. Net margin is expressed as the amount retained by fishers per dollar of income when all expenses identified in the survey are
17
deducted. As such, net margin provides ap indication of the loss of income to fishers when total value of catch is reduced. However, it is to be noted that closure of more productive fishing grounds close to the coast may lead to greater time fishing for a given size of catch and hence lower net margins. That is, the loss of income from closure of dugong protected areas could be exacerbated by reduced catch per unit effort.
7.1 Expenses in fishing
In the survey, expenses related to fishing have been collected under the following categories:
• operating costs (such as fuel, oil, gas, bait, ice, boat repairs, and gear replacement and repairs)
• repairs and maintenance to onshore facilities (such as sheds, refrigeration units and vehicle costs)
• marketing costs (such as packing, freight, commissions and selling costs) • administration costs, and • other costs.
Fishers were asked where possible to provide full details for each of the categories, but where this was not possible to provide a total figure. All figures were required to be for the latest available financial year.
Fishers were also asked to indicate the main town where expenses were incurred and the percentage of expenses incurred in that town. In almost all cases most of the expenses were incurred in the local port town or nearby centres.
Table 13 presents frequency information on total fishing expenses. Both absolute and relative frequencies are included. As indicated in this table, 80% of respondents have annual expenses of less than $50,000 and more than half have annual expenses of less than $25,000.
Table 13: Frequency and cumulative frequency for total fishing expenses, all districts
Total fishing Frequency Relative Cumulative expenses frequency (%) relative
Table 14 provides a breakdown of fishers 'expenses, exclusive of labour costs, according to fishing district and expenditure category. Both mean and median expenditure levels are presented. Expenditure per fisher is highest in the Gladstone and Mackay districts, and lowest for Townsville. Expenditure levels are strongly positively skewed, with the overall mean ($36,000) being 50% greater than the overall median ($24,000).
Table 14: Fishing expenses excluding labour
Expense category Townsville Mackay HeNey Bay Gladstone All areas Operating expenses: Average $12,177 $28,608 $15,694 $29,315 $19,840
Median $9,950 $20,000 $12,717 $22,174 $13,628 Onshore expenses: Average $2,647 $4,904 $3,046 $5,320 $3,657
Median $1,500 $3,080 $2,350 $4,451 $2,554 Marketing expenses: Average $1,628 $7,088 $395 $2,380 $2,311
Median $603 $2,000 $0 $1,806 $256 Administration costs: Average $4,755 $6,949 $5,125 $10,349 $5,949
Median $3,487 $5,042 $2,816 $5,700 $4,002 Other costs: Average a $10,268 $6,122 $68,717 $11,162
Median a $4,733 $5,100 $68,717 $5,200 Overall expenses Average $21,120 $51,194 $29,341 $51,626 $36,041
Median $15,328 $35,500 $24,505 $36,708 $24,509
a: No information was provided on "Other costs" by Townsville respondents.
Figure 14 presents a histogram of total fishing expenses excluding labour. As indicated here, the majority of respondents have expenses of less than $25,000.
Figure 14: Frequency distribution of fishing expenses excluding labour, all districts
20 18
16 14
>g12
~10 a l!! 8 LI.
6 4
O-l--+--+--+--+--+--+--+--+--+-+--+--I~"-f--+--+-+-+-~-+--I o o o o o o o o o o o o o o o8 o o o § o § o o o tn' tn' tn' o''!j g a g a a ,- C\J t') OJ qo OJ C\J, ,- ... C\J
Fishing expenses
"~ :7.2. Total value of catch
Means and medians for total value of catch (TVC) from all fishing operations for each district and in aggregate are presented in the first two rows of Table 15. The overall mean is about
2
19
$67,000 and the overall median about $47,000, the former being affected by a few large enterprises. The reported TVC for most fishers is less than $60,000, as illustrated in Figure 15.
Table 15: Total value of catch and net margin, by region ($)a
a: Values in some late questionnaires have not been included in this table.
7.3 Annual net margin
The aggregate "net margin" (NM) for fishing operations is defined here as the total value of catch less all expenses (as categorised above) including paid labour. Mean and median net nlargins per fisher are summarised in Table 15 above. Net margins are highest for Mackay and lowest for Townsville, with an overall average of about $20,000.
Net margins of individual fishers have a large range, as illustrated in Figure 16. The aggregate net margin is less than $15,000 for 42% of fishers, less than $30,000 for 750/0 and less than $50,000 for 90% of respondents.
Figure 15: Distribution of total value of catch (TVC) per fisher, all districts
The net margin may also be expressed as a proportion of the total value of the catch, i.e. cents retained per dollar of gross takings. As indicated in Figure 15, mean and median net margins vary considerably between fishing districts. The overall median NM is about 30 cents in the dollar of TVC. Figure 17 provides a histogram of net margins of individual fishers, and demonstrates the highly variable nature of this measure. Respondents enjoying very high net margins are mostly those undertaking small-scale fishing activity with low operating costs.
Figure 17: Net margin per dollar of catch for individual fishers, all districts
8. Response of Fishers to Bans on Net Fishing in Dugong Protection Areas
Several questions were included in the questionnaire to detennine fishers' responses to imposition of bans on net fishing in the Dugong Protection Areas. It was clear from responses to these questions and from comments at the four meetings that fishers have a strong desire to continue to fish rather than to leave the industry.
8.1 Impacts of net bans
Table 16 provides a summary of the responses of fishers to bans on set nets. About half indicated they would wish to remain in the industry permanently, while about one quarter would leave the industry immediately. The high proportion who would remain in the industry permanently or at least in the intermediate term should a ban on gill nets be introduced, has implications in terms of potential crowding and reduced profitability.
Table 16: Response if gill net bans were introduced
Response Hervey Bay Gladstone Mackay Townsville All areas
Number of respondents 40 14 37 29 119 Leave immediately 5 1 10 10 26 Remain in industry 18 6 12 17 53
Of those fishers who would remain in the industry, most indicated that they would continue to operate from the same port (Table 17). However, the majority stated they would increase fishing effort in areas not affected by bans and that they would increase effort in other fisheries and in particular in other inshore fisheries such as crabbing.
Table 17: Anticipated response of fishers to bans on set nets
Response Hervey Bay Gladstone Mackay Townsville All areas Continue from same port 25 10 23 20 78 Change to another port 3 1 1 4 9 Scale down operations 7 4 13 9 33 Increase netting other areas 17 4 17 18 56 Increase in other activities 18 6 22 19 65
Should fishers be forced to leave the industry, a small proportion expected they would retire (Table 18). Most felt that if net bans forced them to stop fishing they would become unemployed. Responses to this question depended on respondents' ages, the time they had spent fishing and their lack of skills that would have enabled them to gain alternative employment.
22
Table 18: Anticipated reactions of fishers to bans on set nets
Predicted reaction to bans Hervey Gladstone Mackay Townsville All areas Bay
Retire 3 2 ° 1 6 Seek employment in fishing 5 1 5 2 13 Seek employment out of fishing 2 4 5 4 15 Start another business 5 1 4 4 14 Become unemployed 27 5 24 18 74
8.2 Buyout of endorsements and licences
Fishers were asked what size of payment would induce them to sell their gill net endorsement. Overall mean and median valuations by respondents are presented in Table 19. These figures, which are considerably above the going price for endorsements, are a reflection of the desire of fishers to remain in the industry.
Table 19: Average and median buyout valuations for gill nets and the total licence package
Measure Endorsement category Gill net Total licence
Average $199,420 $343,267 Median $ 90,000 $203,000
Estimated "willingness to accept" valuations varied widely between fishers, as illustrated in Table 20 and Figure 18. About 45% would accept offers of $60,000 or less.
Table 20: Frequency distribution of stated buyout valuations for gill net endorsement, all districts
Upper class limit Frequency Cumulative ($) relative frequency
Table 21 and Figure 19 present the distribution of willingness-to-accept buyout offers for total licence packages. These values are somewhat higher than those for gill net endorsements.
Most fishers calculated their buyout value as the value of the licence plus the loss in income that would result from the loss of that licence. Often the loss in income was calculated as being until normal retirement age. Fishers did not discount the income stream and therefore did not allow for the time preference for money.
Table 21: Frequency distribution of stated buyout valuations for total licence packages, all districts
Upper class limit ($) Frequency Cumulative relative frequency (%)
Figure 19 indicates cumulative proportions of fishers who would be willing to sell their total licence package for various amounts. About 5% indicated they would be prepared to sell for
24
$40,000 or less and about 11 % indicated they would be willing to sell for $60,000 or less. Based on Figure 19, to obtain a 20% reduction in number of fishers, it would be necessary to pay up to about $90,000 to acquire licences. It is notable that the reduction in effort could be less than the reduction in number of fishers, since it is probable that those who would be willing to sell are less active in fishing. Further, it is possible that fishers who did not take part in the survey are less active in the industry and hence would be prepared to accept lower offers than those who provided information. A further complication is that some fishers who would sell licences in a buyback program would subsequently purchase licences from less active fishers. In summary, a buyback program could have a lower impact on fishing effort than would be predicted by Figure 19.
Figure 19: Cumulative relative frequency distribution of "willingness to accept" buyout offers for licence package
90.0 T 80.0
>~FO.O § g60.0 ~-~50.0
:;::
,*40.0 ~
iQ)
30 0 . 'Se20.0 ;:s
°10.0
0.0 -j4:---j-----t--------'!-------'f------/
o 100000 200000 300000 400000 500000
Buyout value ($)
8.3 Effect of changes on viability of fishing enterprises
Bans on the use of various forms of fishing net in dugong protection areas could be expected to lead to increased fishing costs and reduced catch, with adverse effects on the viability of fishing enterprises. A question was included in the survey to elicit views on what combinations of catch reduction and cost increase could be accommodated without eliminating profitability entirely in the east coast fishery. Responses are summarised in Table 22. If there were no reduction in catch, fishers could absorb a cost increase of the order of 10% to 20%. A 10% reduction in catch would reduce this tolerance for increased costs to about 5%. If the catch were reduced by more than 10%, fishers considered that they would not be able to absorb cost increases and still operate profitably.
Table 22: Cost increases for which fishing enterprises could remain viable
Average 17.29% 5.86% 2.64% 1.38% Median 10.00% 5.00% 0.00% 0.00%
25
8.4 Debt levels of fishers
The responses to the question on debt are difficult to interpret, in part because of the mixing of personal and business debt by many fishers. In addition, few fishers responded to the . question and it is difficult to know whether the lack of response is due to a lack of debt. Of those that responded, all stated that any increase in costs or a decrease in catch would make it difficult for them to meet loan repayments.
10. Flow-on effects of fishing restrictions
A reduction in expenditure in the fishing industry in any region would lead to a subsequent reduction of output, income and employment in that region. This arises because of reduced economic activity in upstream industries supplying inputs to the fishing industry. The extent of impact would depend on the extent of reduced effort in the fishing industry and the magnitude of the multipliers1
• While there would also be downstream effects for industries processing the outputs of the fishing industry, these are not usually taken into account in the multiplier analysis, on the grounds they would also occur if fish supplies were imported.
Multipliers reported to the Fraser Island Commission of Inquiry in 1990, were validated in a consultancy undertaken by the Queensland Government Statistician's Office and assisted by Associate Professor John Mangan of The University of Queensland (GSa, 1991; Mangan, 1991). Multlipliers estimated in that consultancy for the fishing industry of Hervey Bay and Fraser Island, based on input-output tables for the Wide Bay - Burnett Statistical Division, are provided in Table 23. Various types of multipliers may be derived, the most widely used of which are Type 2A multipliers, as presented here.
Table 23: Type 2A multipliers for Fishing and Hunting, Wide Bay - Burnett Statistical Division
Multiplier Value Total output multiplier 1.46 Total income multiplier 2.70 Total employment multiplier 1.61 Employment per $lm of output 23.8
These multipliers indicate that a $1 reduction in fishing industry output would cause a $1.46 reduction in regional output (the initial effect plus a further 46 cents) and a $2.70 reduction in
A multiplier measures response to economic stimulus, usually expressed in terms of change in sales to final demand of an industry. The effects may be grouped as initial, first round, industrial support and consumption-induced effects (GSa, 1991, p. 200). The initial effect is simply the change in expenditure, while the first round effect measure the purchases made by the industry experiencing the initial stimulus. The industrial support effects are the second round and subsequent flow-on effects resulting from the initial impact. Consumption-induced effects arise from increased income and consequent increased consumer spending.
regional income. Further, one job lost in the fishing industry would lead to 1.61 jobs lost in the region (the initial job plus 0.61 further jobs). For each $lm loss in industry output, there would be a loss of 23.8 jobs. Using a modified method, Mangan (1991) estimated a slightly higher employment multiplier, of 1.8, indicating that one job lost in the fishing industry would cause another 0.8 of a job loss in the region.
It is difficult to estimate the reduction in fishing effort likely to take place following new regulations on use of gill nets. The total operating cost over the four districts included in the survey is $3.93m. This amount applies to a full year (usually financial year 1995-96), and is comprised of off-shore and on-shore operating expenses, marketing and administration costs, and other costs (see Table 14).
If there were a 20% reduction in effort in the fishery, the aggregate expenditure would be reduced by approximately $0.8m. Applying the above multipliers, this would have the impacts on regions involved in the Queensland east coast fishery as set out in Table 24.
Table 24: Estimated regional impacts of a 20% reduction in fishing effort
Reduction in output $0.37m Reduction in income $IAm Reduction in nUlnber of jobs 20
It is probable that this is an underestimate of impacts. One reason is that annual expenditure is based on an incomplete sample, of only about 120 fishers. It is notable that the number of jobs here refers to full-time jobs. In that employees in the fishing industry typically work only a relatively small number of hours per week, many more people than indicated here would suffer a decline in livelihood.
The impact would be felt over a large area, since the sample of fishers operate between Hervey Bay and Townsville. However, the impact would be concentrated particularly on the port cities from which fishers operate, since most inputs are purchased in these cities.
It could be that most of the fishing activity will continue. This would depend on the extent of mobility of the fish species caught. To the extent that fish stay within newly protected areas, there will be a reduction in catch, and a consequent adjustment of effort. If effort is not reduced, there will be overcrowding in the industry and reduced incomes and profitability.
Any buyback of licences would lead to fewer operators in the industry. However, it is probable that fishers who are less active in the industry or are currently not operating at all (sleeper licences or latent effort) would sell licences first, so there could be some slippage in reduction in effective fishing effort from buyback of licences. On the other hand, net bans will be concentrated on waters close to the coast, for which catch per unit effort is typically highest, and fishers remaining in the industry may incur increased. effort travelling to more distant fishing grounds and fishing a wider ocean area.
27
10. Summary and conclusions
Respondents rely heavily on fishing, and have quite low income from other sources. Most own their own licence. The scale of operation is generally small, although there are a few enterprises much larger than the majority. In general, fishers place a high value on the lifestyle and have a strong desire to remain in the industry.
Fishers have an average of about three boats, mostly aluminium or fibreglass, typically about 10 years old. The average replacement value of boats per fisher is about $65,000 and the median replacement value is about $37,000. Investment in nets is typically less than $14,000, but ranges up to $60,000. Most fishers have on-shore assets to support their operations, and these have a mean market value of $44,000 and mean replacement value of $70,000. Overall investment in the industry per fisher averages $107,000, with a median of $74,000.
The age of licence holders ranges from 20 to 68 years, with a mean of 45 years. Most have been fishing for a living for more than five years, the average being 20 years. They spend an unexpectedly high average of 46 weeks a year on fishing activities. Only about one quarter have other skills which would help them obtain alternative employment should they have to leave the fishing industry.
Family members (other than the licence holder) working in the industry average about 34 years in age, with 10 years fishing experience. They work in the industry for an average 37 weeks a year. Less than one third possess skills which would help them obtain alternative employment.
About a quarter of the fishers employ non-family labour, mostly on a part-time basis. The average age is 34 years, most have less than five years experience in the industry, and less than one third have alternative employment skills. The wages bill averages about $10,000 per fisher per year.
The total value of catch averages about $60,000 a year, and operating expenses about $40,000, leaving an annual net margin of around $20,000 a year. This margin does not include an allowance for the fisher's own labour. The net margin per dollar of total value of catch is highly variable, but on average represents about 30 cents.
In response to bans on gill nets, only about one quarter of fishers considered they would leave the industry in the short term, and half said they would remain in the industry regardless. Of those who would remain in the industry, most said they would continue to operate from the same port, and would increase fishing effort in areas not affected by the bans, and in particular other inshore fisheries such as crabbing. This suggests there may be added resource pressure and reduced incomes as a result of bans. Most believed that if they were forced to leave the industry they would become unemployed.
About one quarter would be prepared to surrender gill net endorsements for $60,000 or less, While about 15% would be prepared to surrender their total licence package for $60,000 or less. On the other hand, about 50% and 75% respectively would not respond to a buyout offer of $100,000, and 10% would not respond to an offer of $500,000 for either the gill net endorsement or the total licence package.
28
Most respondents believe they could absorb small catch declines or cost increases, or the order of 10% to 15%, and remain viable. However, if the catch were to fall by 20%, the majority believe they could not continue to operate profitably. Insufficient information has been obtained on debt levels to judge the importance of debt servicing, although a number of fishers indicated that any decrease in catch or increase in costs would make it difficult for them to meet loan repayments.
Some clear differences are apparent between the four fishing district. Boats appear to be of lower age in Gladstone, and the investment in boats and on-shore assets is higher in Gladstone and Mackay than the other districts. Fishers and employed labour in Townsville have the shortest periods of experience in the industry. Fishers in Hervey Bay and Gladstone appear to have less alternative employment skills than those further north. Less is paid per fisher in wages in Gladstone than in other areas. The total value of catch and operating expenses are higher in Mackay and Gladstone than in Hervey Bay and Townsville.
A contraction in the Queensland east coast fishing industry would not have a major impact on the state economy, but the losses in incomes and jobs would be concentrated on the post towns from which fishers operate.
Concerning the accuracy of findings, while information was collected from only about 120 operators out of approximately 700 commercial fishers in the Queensland east coast fishery, we believe the estimates to be reasonably indicative of those most affected by new fishing restrictions. The approach of presenting and explaining questionnaires at four district meetings for return by post was highly cost effective, although it led to a less then perfect response rate. To the extent that fishers affected by net bans have been missed in the survey, the aggregate costs to the industry and region will be greater than estimated in this study.
29
References
GSO (Government Statistician's Office), 1991, "Input-Output Tables: Wide Bay - Burnett Statistical Division", consultancy report, Commission of Inquiry into the Conservation, Management and Use of Fraser Island and the Great Sandy Region, Appendixes, Volume 3, Goprint, Brisbane, pp. 194-210.
Mangan, J. (1991), "Input-Output Tables: Wide Bay - Burnett Statistical Division", consultancy report, Commission of Inquiry into the Conservation, Management and Use of Fraser Island and the Great Sandy Region, Appendixes, Volume 3, Goprint, Brisbane, pp. 211-246.
IMPACTS OF IMPOSTION OF RESTRICTION ON GILL NETS ON THE QUEENSLAND EAST COAST
FISHERY
ESTABLISHMENT OF A GEOGRAPHICAL INFORMATION SYSTEM (GIS) FOR SHOWING EFFECT OF NEW
RESTRICTIONS IN FISHING ACTIVITIES
David Pullar and Samantha Sun
Department of Geographical Sciences and Planning
The University of Queensland
,"
.'"I.,
~ I
1. Background Spatial infonnation was collected and compiled into a Geographic Information System (GIS) for the purpose of understanding: • the distribution of fishing catch and fishing activity • the extent of closures and constraints on fishing resources • the relationship between ecological variables and Dugong protection areas.
Results for the first two objectives are presented in this report. The last objective is seen as an issue of general interest and is being researched on a continual basis.
The GIS was created for short and long terms needs of the QCFO. It has developed with this intent in mind and could be used for future studies. For instance, maps showing summaries of fish catch and fish effort can be generated in future tears on a more routine basis.
2. Fishing Activity Information Information from fishing effort and catch was compiled for the year 1996. The Queensland Fish Management Authority (QFMA) require commercial fishennan to report on their fishing activity. Data is entered into Net and Crab Fishery Logbooks daily on catch size, type and location. Data from fisherman logbooks for 1996 were compiled and maps produced. The spatial units used to show the information was by grid and site. A grid is measured as a half degree square that is di vided evenly into 2S sites.
Due to disclosure issues the data was released by QFMA on the basis that a minimum of five vessels needed to operate in a location for data to be released. This gives reasonably reliable information on a grid basis, but at a site level the infonnation becomes very patchy, Therefore the maps display data mostly on a grid basis with site data superimposed to show spatial variability. Because of this limitation the resulting maps provide indicative evidence offishing activity rather than an exact qualitative description.
Maps showing the coastline between Harvey Bay and Cooktown based upon fishing logbook data for 1996 were produced. These provide contextual information on fishing effort and catch sizes. A map is included on the Appendix showing fish effort and catch. They also show the marginal return on fishing catch sizes further away from the coast. In general fisherman operating out from the coastline fished for long periods to get smaller catches. Therefore further restriction of fishing areas will significantly reduce the resources available for commercially viable fishing.
3. Fishing Constraints The motivation for this investigation was to assess the impact of imposing;restrictions on fishing in areas along the Queensland coast deemed as important for Dugong habitat protection. However this measure needs to be taken in perspective with the existing restrictions on net fishing. To provide this context an attempt was made to map all closures for commercial fishing along the coast. Closures
included: i) declared fish habitat areas I , and ii) regulated closed waters for commercial tishing~. It was possible to obtain reasonably current map information for declared fish habitat areas, but there does not exist any map information on regulated dosed waters. Furthermore, it was very problematic to obtain this information as the regulations described areas in descriptive terms using measurements from physical landmarks and official signs erected at the site. In most cases no coordinates are available for these points so it is impossible to define boundaries for closed waters. To obtain an indication of the extent of fishing closures their geographical point locations were mapped based upon the names giYen in the regulations for closed water areas. Again this is only indicative but does show the scope of restrictions already in place along the coast. A map showing locations of closures and fish habitat areas is included in the Appendix.
Significant discussion was carried out with the QDPI-Fisheries concerning the mapping of closed waters. A proposal was discussed where QDPI Fish Patrol Officers at each station would be provided with basic materials to interpret and mark fishing closures on a map. This would then be digitised and entered into the GIS. We believe this action is worth pursuing if only to pressure QDPI to correctly map these closures.
4. Ecological Evidence Preservation of sea grass beds is an important ecological concern for habitat conservation and for a sustainable fishing industry. Yet there is no comprehensive survey to show the distribution and density of this very important resource along the coast. In an effort to obtain first hand knowledge on this matter, the fisherman interviewed during the QCFO survey \vere asked to mark on maps their knowledge of the location and extent of sea grass beds. This data has been digitised and entered into the GIS. We are awaiting further data from the Great Barrier Reef Marine Park Authority (GBRI\lPA) to cross tabulate results with. But significant differences are expected due to temporal changes in their location and the sparsity of reliable dara. As a means to addressing this problem we have decided to
develop a long term GIS for recording evidence of sea grass beds. Data will be entered based upon belief factors to build up a reliable picture of sea grass distribution. This work is seen as an ongoing effort. The University will submit a formal proposal to QDPI fisheries for the advancement of this project.
No maps have been included in this report on sea grass distribution. We are awaiting data from an independent source, namely the GBRMPA, to correlate results with. But we are more than happy to provide information and maps on demand if requested.
Appendix Map 1: Data from QFJ\;IA Logbooks 1996 Map 2: Fishing Constraints
1 Declared Fish Habitat Areas in Queensland, Fisheries Group, Queensland Department of Primary Industries, February 1997. 2 Fisheries Regulations 1995, Government Printer. Schedule 2 and partly Schedule 13.
Appendix 1
Survey Questionnaire use to determine the economic impacts of imposition of restrictions on gill nets on the Queensland east coast
fishery
CONFIDENTIAL
The University of Queensland
Questionnaire for QCFO Netting Study
Name:
Address:
Phone number:
Fishing district:
Commmercial fishers license number:
Commercial fishing vessel licence number:
Date:
In this questionnaire a DPA is a dugong protection area.
Please return to:
Gill Net Study Department of Economics University of Queensland Queensland 4072 Facsimile: 07 3365 7299
FISHING OPERATIONS
1. Is fishing your only business enterprise? 2. If no, what percentage of your work time is devoted to fishing? 3. What percentage of your income is derived from fishing?
Yes / No % %
4. What endorsements are attached to your primary fishing licence?
5. Do you own or lease your primary fishing licence? own / lease
FISHING EFFORT (EXCLUDING LABOUR)
6. What boats and tender vessels do you use in your fishing operation? Boat 1 Boat 2 Boat 3 Boat 4 Others
Length of boat (LOA)
Type of construction
Town ofpurchase
Age of boat (in years)
Estimated market value ($)
Estimated replacement value ($)
~ ; \.
NETS
6a. What nets do you use in your fishing operation? Net type Age Estimated market Estimated
(years) value ($) replacement value ($)
2
LABOUR INPUTS
Please indicate in the two tables below, for each family member or employee, the number of weeks per year spent at sea and on fishing related land-based activities and whether these 'people have other work skills that would help them to get work in another area. Please provide information for family labour in the first table and for non family labour in the second table.
7. Family labour
Person Age (years)
Number of years fishing for a living
Number of weeks/yr.
Other work skills YeslNo
List skills
Self
8. Non-family labour
Person Age (years)
Number of years fishing for a living
Number of weeks/yr.
Other work skills YeslNo
List skills
1 2 3
9. What was your total wage bill in the last financial year (year )? $ _
9a. How much did you payout in shares in the last financial year?
Self $ _
Partner $--- Other labour $ _
3
LAND-BASED OPERATIONS
10. What is the estimated value of your onshore facilities directly related to fishing (not processing)?
Asset Estimated market value ($) .
Estimated replacement value ($)
Sheds and other fixed structures
Refrigeration units, equipment, tools etc
4wheel drive vehicles
Other vehicles
Other
4
FISHING RELATED EXPENDITURES
11. What were your fishing related expenses for the last available financial year? Please complete the following table, where possible please complete by individual categories. If not provide total amounts. Financial year _
Item Expenses incurred ($) Main town where Percentage of expenses expenses incurred incurred in that town
Operating costs such as
::~~~~:~~:~0~i:~~p.p.f.~~:~:::::::::::::::::::: ::::::::::::::::::::::::::::::::::::::::::::::::::::::: ::::::::::::::::::::::::::::::::::::::::::::::::::::::: :::::::::::::::::::::::::::::::::::::::::::::::::::::: ..~~~~.'..?~~.~~..~.~ : . Bait and ice
··Bo·a:t'repaIrs·an(l"maiiitenan~e'·· ..··· , . ::~~:~:~~p.~~~~~~~~::~:~:i~p.~!i.~:::::::: ::::::::::::::::::::::::::::::::::::::::::::::::::::::: ::::::::::::::::::::::::::::::::::::::::::::::::::::::: ::::::::::::::::::::::::::::::::::::::::::::::::::::::: Other
Total
Repairs and maintenance to onshore facilities such as .............................................................................................................- . Sheds
Marketing costs such as Packing freight Agents commisions Selling costs Other
Total
Administration costs such as Harbour dues and licence fees Insurance payments Interest payments on loans Postal and bank charges Rates and land taxes Accountancy fees
Total
Other
[Overall Total II
5
12. Do you fish in any of the interim or proposed DPA's? Yes INa
12a. Ifyes in which DPA's and which fishing activities?
Name afDPA Fishing activities
6
FISHING ACTIVITY 12b. Please identify the fishing activities you carry out and percentage of total fishing time spent operating in each activity over the last financial year. It is important to fill in a separate line for each type of fishing activity and where nets are used a separate line for each net type used.
Fishing activity Net type Percentage of time spent fishing in interim DPAs
Months spent fishing in interim DPAs
Percentage of time spent fishing in proposed DPAs
Months spent fishing in proposed DPAs
Percentage of time spent fishing in other areas
Months spent fishing in
-other areas
Percentage of total fishing time spent in that activity
Fishing activities include: Net (by net type), line, crab, otter trawl, beam trawl and any other fishing activities.
7
ANNUAL CATCH IN DPA'S USING NETS 13. Please indicate in the table the percentage of the total fish caught for each net type in each of the interim and proposed DPA's.. In the last row indicate the total quantity of fish (in kilograms) caught in each type ofnet.
Offshore Offshore Foreshore River set Ring net Tunnel net Haul/seine ~ Other set net (kg) drift net set net (kg) net (kg) (kg) (kg) net (kg)
(kg) I
Total (kg) each net type all areas
I Area I Offshore Offshore Foreshore River set Ring net Tunnel net Haul/seine Other
set net (%) drift net set net (%) net (%) (%) (%) net(%) (%)
------------------_._---~~-~- -------------
l _ ..! 1 , 1 1 1 .1
.__ __ l. 1 1 , 1 1 .1. 1 _ .
8
TOTAL CATCH FOR ALL AREAS
14. What was the total value of your catch for each of your fishing activities in the most recently available financial year for all areas and all fishing activities you carry out? Financial year _
15. What was the average total value of your catch for each of your fishing activities over the last three years for all areas and all fishing activities you carry out?
RESPONSE IF NET BANS INTRODUCED In this section please provide for each question your response for the situation where • a total net ban is introduced to the proposed DPAs, and • a gill net ban only is introduced.
16. If net bans are introduced would you? Total net Set gill net
ban ban only r"''Yes'''r''No'''''i i · ~ ·····..······i Lx~~::::T:~~:::::::l : ! :Leave the industry immediately : : ; 1 ~ ~ ;·· ..·····..····· .. ·1·················1
Leave the industry after a few months I..········.. ···..i ·· ·i r:::::::::::::::::r:::::::::::::::J : : :Leave the industry after a year : : :
; .; ,f ; y o\ : : :Remain in the industry i ! i 1 ! ! 1 .1 ~ •••_•••••••••••••• "" ••••••••••••••••• I
9
Total net ban
17. Ifyou remain in the industry would you a. r::Y:~~::::F::~:?:::::j Continue to fish from the same port?
!·················i············..···i Change to another port? ~ ! i
1 .1
..................- .·· ..· .· ·· ...· .· .b. If so to which port would you change? ! 1
~ ~ : ••••••••••••••••• _ H :
18. If you remain in the same port would you . ! Yes 1 No i\ , ,
a. Scale down your operations? L L. ] .....................- .. ··· ...· .· · · ...
b. If yes in what way? ~ ! ! ! ~ _ - .:
f..·..y·~s !"..·..No..·· ..·j ~ i _ 4
c. Increase netting effort in other fishing areas? i L ..! _ : . · ~ .· .· ..· · .
d.reduce staff hours worked per week? r · ·..·..--r..··..· i :. ••••••••••••••••••••••• ..:. ••••••••••••••••••••••••1I
i ........................._ ..· r..·......·..···..·..···....···......·....·..·l·e. Ifyes by how much would you ·····
....... reduce the hours worked? : !
1.. ..1 L i
21. Do the people that would lose their jobs have skills that would enable them to get other jobs in the district?
r::::::x~~:::::::F:::::~~::::::::j L:::::x~~::::::r:::::f.i~::::::::l iii : I :
.I. •• n •••••••••••••••••••• ..:. .. ~ t ••••••••••••••••••••••• :
22. Comments on the effects on employment
11
23. If you leave the industry would you !····y~s··..T····No·····] ~ _ ~ !
retire? f · ·\ ·.. ·1 seek other employment in the fishing industry? : : : r ,-.. _.~ ·····'1 seek other employment outside the fishing industry? : : :
r··················;··················istart another business? 1 : :
~ ••••••• u •••• ••• ••i _· i : ! :become unemployed?
·
i ! : ....................". 1
Other (please specify)
24. Comments Please make any additional comments on your likely response to the impositio~ of these restrictions.
COSTS OF PROPOSED NETTING BANS
Once you have made changes to enable you to continue your operation after the set gill net restrictions are imposed what would you expect the effects will be on your costs and the value of your catch?
25. What would be the effect of proposed restrictions onset gill nets on the value of your catch?
Increase by $ _
Decrease by $ _
12
-----
EFFECT OF PROPOSED RESTRICTIONS ON SET GILL NETS ON YOUR FISHING COSTS
26. What effects would you expect the set gill net bans in the proposed DPA's would have on your operating and maintenance costs?
Percentage change
Operating costs IIncrease/decrease
................................................... u ••••.•••••••• n ••••••••••• ~ ••••••••••••••••••••••••••••••• ................................................j•••....•.•..•...•.•..••.. u .
Repairs and maintenance to 1 Increase!decrease i onshore facilities' 1 1
: 1
BUYOUT OF ENDORSEMENTS
27. If gill net bans were introduced, and the federal government were to offer to buyout your fixed gill net endorsement or total licence package on a voluntary basis, what amount would induce you to sell?
a. Gill net endorsement $
b. Total licence package $ _
28. Why do you think these are fairamounts? a. Gill net endorsement
b. Total licence package
13
EFFECT OF REGULATORY CHANGES ON YOUR ABILITY TO REMAIN VIABLE IN THE INDUSTRY .
29. The proposed changes could lead to changes in both your costs and your catch. We want to get an indication of the effects of these changes on your ability to continue to operate in the fishing industry. Please indicate a break-even or survival level for each of the following questions. Please answer all questions.
a. If the value of your total annual catch does not change at what level of increase in annual costs would you no longer be able to continue to operate at a profit? 0% 5% 10% 15% 20% 25% more than 25%
b. If the value of your total annual catch decreases by 10% at what level of increase in annual costs would you no longer be able to continue to operate at a profit? 0% 5% 10% 15% 20% 25% more than 25%
c. If the value of your total annual catch decreases by 20% at what level of increase in annual costs would you no longer be able to continue to operate at a profit? 0% 5% 10% 15% 20% 25% more than 25%
d. If the value of your total annual catch decreases by 30% at what level of increase in annual costs would you no longer be able to continue to operate at a profit? 0% 5% 10% 15% 20% 25% more than 25%
14
DEBT
How much does your fishing business owe in loans? $ _
30. For both a total net ban and a set gill net ban would you be able to continue to meet your loan repayments
Total net
,, ban! . ["··Ves····r··..No···..la.
i ~ ·i
without selling other assets? i:
1:
~ :
with selling other fishing assets? C::::::::::::::r::::::::::::::::1 with selling other personal assets? L u •••• n.l ..!
........................................ b. Or would you be unable to meet loan repayments at all? 1 1.. .1
Thank you for completing the questionnaire.
...................". \
1 ..1. J
15
Appendix 2
Preliminary report on economic impacts of imposition of restrictions on gill nets on the Queensland east coast fishery
QCFO Netting Study Preliminary Report 8 August 1997
This document provides a summary of preliminary results of a survey carried out by the Department of Economics, University of Queensland on the impacts of netting restrictions in dugong protection areas.
Summary of findings
Data are summarised under the four centres at which meetings were held, namely: Hervey Bay, Gladstone, Mackay and Townsville. The data used in this summary are from questionnaires received on or before Thursday 31 July 1997. More completed questionnaires have been received and will be included in subsequent analysis. Data are summarised in Table 1.
Fishing was the only business enterprise of almost all of the respondents. Most fishers responding to the questionnaire owned rather than leased the fishing licence under which they operated.
Labour
Most of the businesses were small consisting of an owner operator who occasionally had family assistance and in some cases employed casual labour. The average age of the owner operators varied between the different centres but in all cases was greater than 40 years and was 44.5 years overall.
Response if bans introduced
The vast majority of respondents wished to continue fishing for a living and to continue to fish from the same port. However, if net restrictions were introduced most would increase netting effort in other areas and effort in other fishing activities. Those that employed staff would reduce staff numbers. Concern was expressed by respondents on the effects on industry sustainability of a greater concentration of fishing effort. Many felt that fishing would no longer be viable for all fishers if effort was concentrated over smaller fishing grounds.
If forced to leave the industry most respondents felt they would become unemployed. The main reasons given for this feeling were the age of respondents and lack of skills that would enable them to gain alternative employment.
Relatively few fishing enterprises responding to the survey stated that they had business debt. However, those that did felt it would be difficult to meet loan commitments without selling business and personal assets. It is important to note that information on personal debt of fishermen was not collected In ~his survey.
Almost all of the expenditures of fishing businesses surveyed were made locally in either the home port or nearby centres.
Table 1: Summary of preliminary results
No. of respondents Hervey Bay
33 Gladstone
8 Mackay
34 Townsville
25 Total 100
Fishing only enterprise
Own licence Lease licence
Yes No
31(94%) 1(6%)
24(73%) 9(27%)
8(100%) 0
7(87.5%) 1 (12.5%)
29(83%) 5(17%)
28(87.5%) 4(12.5%)
19(76%) 6(24%)
21(84%) 4 (16%)
87 12 80 18
Labour Average age (years) Time fishing (years) Other work skills
45.5 23.8
5(15%)
48 10
1(12.5%)
42.3 18.7
11(32%)
46 19.7
9 (36%)
44.5 19.9 26
Catch and expenses (aver~ge $) Total value of catch Operating costs Onshore costs Marketing costs Administration costs Other costs Total above expenses
·52,784 13920 2360 354 3649 5168
26,001
57,191 23994 5390 2708 5019
0 33,591
93,040 31059 5341 8524 7336 10268 55,447
47,812 13036 2868 1966 4936
0 22,257
66710
Labour costs (average per employer) Number of employers
. 10919
13 (39%)
7720
2 (25%)
41520
15 (44%)
6243
8 (32%)
21845
38
Response to bans (set net) leave industry immediately remain in industry
5 14
1 5
10 12
8 16
24 47
Continue to fish from same port Change to another port
22 1
6 1
22 1
17 4
67 7
Scale down operations 5 3 13 8 29
. Increase netting in other areas 15 3 18 17 53
Increase in other activities 16 3 22 17 58
Reduce staffnumbers 7 2 15 9 33
,
Uyou leave the industry retire seek employment in fishing seek employment out of fishing start another business become unemployed
3 3 1 3
24
2 1 1 1 4
0 5 4 4
23
1 2 4 3 16
6 11 10
"11 67
Table 2 Tve and NM for each region
Location Mean TVC Median TVC MeanNM MedianNM Mean NMlMean TVC Median NMlMedian TVC MeanNM/TVC Median NM/TVC Number
Where rve is total value of catch, and NM is net margin.
Gavin Ramsay Department of Economics University of Queensland
Hervey Bay Gladstone Mackay Townsville All areas
27. If bans were introduced, and 27. If bans were introduced, and offer 27. If bans were introduced, and offer 27. If bans were introduced, and offer offer to buyout made, what amount to buyout made, what amount would
would induce you to sell? induce you to sell?
a. Gill net b. Tolallicence a. Gill net b. Tolallicence endorsement package endorsement package
Sheds and other fixed structures Refridgeration units, eqUipment, tools 4WD vehicles Other vehicles
No. reporting
26 31 20 21
Current value
($1000) 13397 12997 7318 6327
Replt. value
($1000) 18294 20567 16030 11894
No. reporting
8 10 8 5
Current value
($1000) 22167 4833
11708 5083
RepJt. value
($1000) 32708 7417
25583 6292
No. reporting
21 27 26 23
Current value
($1000) 15032 5942
11618 4794
Replt. value
($1000) 20294 10760 27300 10015
No. reporting
17 24 22 16
Current value
($1000) 7379 6206
11200 5120
Replt. value
($1000) 12524 9006
24040 11800
Other All onshore facilities
9 3800 43840
6803 73588
4 26208 70000
26750 98750
11 3109 40495
4047 72416
11 1150 31055
1808 59178
Asset class Current Replt. value value
($1000) ($1000) Sheds and other fixed structures 13333 19110 Refridgeration units, eqUipment, tools 8348 13309 4WD vehicles 10009 22257 Other vehicles 5456 10674 Other . 5779 7317 All onshore facilities 42925 72668
•••• Showslocations~where some form of.Cairns
90 •
Tin Can.Bay
Maryborough
Gladstone
BowelLl • Airlie Bea&!
J..
Bundaberg
Rockhampton ,
. '1" '1 fi h'
90 180 Kilometerso
cOl1str,llnt '1mlts COmrn~rlca Ilet. IS . Ing
---"---'-"'----- -------...._---~--)
Townsville
-
-~-
I
I \
"-- \, \
\
. ,
\:-
Data from Queensland Fisheries Management Authority (QFMA) Logbooks 1996 2011 o 200 Data is for fish species affected by Dugong Protection (Barramnndi, Salmon, Mackerrel, Mullet, Whiting, Flathead) Data provided by QDPI Fisheries
PREVIOUS WORKING PAPERS IN THE BIODIVERSITY CONSERVATION: STUDIES IN ITS ECONOMICS AND MANAGEMENT, MAINLY IN YUNNAN, CHINA SERIES. RESEARCH PAPERS IN THIS CURRENT SERIES FOLLOWING ON FROM THIS
ABOVE MENTIONED SERIES
PREVIOUS WORKING PAPERS IN THIS SERIES
1. "Biodiversity Conservation: Economics, Gains and Costs in China Illustrated by Xishuangbanna Nature Reserve, Yunnan", Clem Tisdell and Xiang Zhu, February 1994.
2. "Does the Economic Use of Wildlife Favour Conservation and Sustainability?", Clem Tisdell, February 1994.
3. "The Environment and Asian-Pacific, Particularly East Asian, Economic Development", Clem Tisdell, March 1994.
4. "Presenting Requests for Financial Support for Protected Areas: The Role for Environmental Economics and Commonsense", Clem Tisdell, March 1994.
5. "Ranking Inter-country and Inter-regional Requests for Financial Support for Protected Areas: Environmental Economic Guidelines" , Clem Tisdell, March 1994.
6. "Conservation, Protected Areas and the Global Economic System: How Debt, Trade, Exchange Rates, Inflation and Macroeconomic Policy Affect Biological Diversity", Clem Tisdell, March 1994.
7. "Environmental and Resource Economics: Its Role In Planning Sustainable Development", Clem Tisdell, April 1994.
8. "Conservation of Biodiversity is the Most Important Aspect of Ecologically Sustainable Development: An Economic Perspective", Clem Tisdell, April 1994.
9. "Ecotourism, Economics and the Environment", Clem Tisdell, October 1994.
10. "Socio-Economic Issues and Strategies for Biodiversity Conservation in China with Observations from Xishuangbanna", Clem Tisdell, November, 1994.
11. "Ecotourism - Its Boundaries and its Economics with Examples from China", He Wen and Clem Tisdell, February, 1995.
12. "Reconciling Economic Development, Nature Conservation and Local Communities: Strategies for Biodiversity Conservation in Xishuangbanna, China", Clem Tisdell and Zhu Xiang February, 1995.
13. "Tourism Development in India and Bangladesh: General Issues, and Ecotourism in the Sunderbans", Clem Tisdell, March 1995.
14. "Trends in Tourism Development in China: Issues and Opportunities", Clem Tisdell, March 1995.
15. "Tourism Development and Conservation of Nature and Cultures in Xishuangbanna, Yunnan", Clem Tisdell and Zhu Xiang, May 1995.
16. "Protected Areas, Agricultural Pests and Economic Damage: A Study of Elephants and other Pests from Xishuangbanna State Nature Reserve", Clem Tisdell and Zhu Xiang, May 1995.
17. "Financing Nature Reserves in China - The Case of the State Nature Reserve of Xishuangbanna, Yunnan: Financial Issues, Political Economy and Conservation", Clem Tisdell and Zhu Xiang, May 1995.
18. "Investment in Ecotourism: Assessing its Economics", Clem Tisdell, May 1995.
19. "Rapid Rural Appraisal (RRA), Participatory Rural Appraisal (PRA) and their Application in the Global Environmental Facility (GEF-B) Program in China", Zhu Xiang, August 1995.
20. "The Environment, Biodiversity and Asian Development", Clem Tisdell, September 1995.
21. "Biodiversity, Conservation and Sustainable Development: Challenges for North- . East India in Context", Clem Tisdell, September 1995.
22. "Economic and Environmental Perspectives on Sustainable Agricultural Developments", Clem Tisdell, September 1995.
23. "India's Economic Development and Its Environment: General Patterns, Issues and Implications", Kartik Roy and Clem Tisdell, September 1995.
24. "Sustainability of Land Use in North-East India: Issues Involving Economics, the Environment and Biodiversity", Clem Tisdell and Kartik Roy, December 1995.
25. "Criteria for Sustainable Tourism: Why a Cautious Attitude is Needed", Clem Tisdell, January 1996.
26. "Protected Areas, Agricultural Pests and Economic Damage: Conflicts with Elephants and Pests in Yunnan", Clem Tisdell and Zhu Xiang, January 1996.
27. "Alternative Economic Instruments for Regulating Environmental Spillovers from Aquaculture: An Assessment", Clem Tisdell, January 1996.
28. "Economics as a Basis for Conserving Nature", Clem Tisdell, February 1996.
29. "Final Report on ACIAR Small Project: 'Economic Impact and Rural Adjustment to Nature Conservation (Biodiversity) Programmes: A Case Study of Xishuangbanna
Dai Autonomous Prefecture, Yunnan, China', Clement A. Tisdell, March 1996.
30. "Tourism in Yunnan Province and the Xishunangbanna Prefecture of China: Achievements and Prospects", He Wen, March 1996.
31. 'Developing Community-Based Forestry in the Uplands of Yunnan: Dictates of the Environment and Socio-Economics', Zhuge Ren and Clem Tisdell, April, 1996.
32. 'China's Environmental Problems: Selected Issued and Solutions in Context', Clem Tisdell, May 1996.
PREVIOUS WORKING PAPERS IN THIS SERIES:
1. Governance, Property Rights and Sustainable Resource Use: Analysis with Indian Ocean Rim Examples by Clem Tisdell and Kartik Roy, November 1996.
2. Protection of the Environment in Transitional Economies: Strategies and Practices by Clem Tisdell, November 1996.
3. Good Governance in Sustainable Development: The Impact of Institutions by K. C. Roy and C.A. Tisdell, November 1996.
4. Sustainability Issues and Socio-Economic Change in the Jingpo Communities of China: Governance, Culture and Land Rights by Ren Zhuge and Clem Tisdell, November 1996.
5. Sustainable Development and Environmental Conservation: Major Regional Issues with Asian Illustrations by Clem Tisdell, November, 1996.
6. Integrated Regional Environmental Studies: The Role of Environmental Economics by Clem Tisdell, December 1996.
7. Poverty and Its Alleviation in Yunnan Province China: Sources, Policies and Solutions by Ren Zhuge and Clem Tisdell, December 1996.
8. Deforestation and Capital Accumulation: Lessons from the Upper kerinci Region, Indonesia by Dradjad H. Wibowo, Clement A. Tisdell and R. Neil Byron, January 1997.
9. Sectoral Change, urbanisation and South Asia's Environment in Global Context by Clem Tisdell, April 1997.
10. China's Environmental Problems with Particular Attention to its Energy Supply and Air Quality by Clem Tisdell April 1997.
11. Weak and Strong Conditions for Sustainable Development: Clarification of Concepts and their Policy Application by Clem Tisdell, April 1997.
12. Economic Policy Instruments and Environmental Sustainability: A Second Look at Marketable or Tradeable Pollution or Environmental-Use Permits by Clem Tisdell, April 1997.
13. Agricultural Sustainability in Marginal Areas: Principles, Policies and Examples from Asia by Clem Tisdell, April 1997.
14. Impact on the Poor of Changing Rural Enviornments and Technologies: Evidence fromIndia and Bangladesh by Clem Tisdell, May 1997.
15. Tourism Economics and its Application to Regional Development by Clem Tisdell,
May 1997.
16. Brunei's Quest for Sustainable Development: Diversification and Other Strategies by Clem Tisdell, August 1997.
17. A Review of Reports on Optimal Australian Dugong Populations and Proposed Action/Conservation Plans: An Economic Perspective, by Clem Tisdell, October, 1997.
18. Compensation for the taking of Resource Interests: Practices in relation to the Wet Tropics and Fraser Island, General Principles and their Relevance to the Extension of Dugong Protected Areas, by Clem Tisdell, October 1997.
19. Deforestation Mechanisms: A Survey, by D.H. Wibowo and R. N. Byron, November, 1997.
20. Ecotourism: Aspects of its Sustainability and Compatibility, by Clem Tisdell, November 1997.
