AMURE PUBLICATIONS. Working Papers Series

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1 AMURE PUBLICATIONS Working Papers Series N D < A Cos-Benefi Analysis of Improving Trawl Seleciviy: he Nephrops norvegicus Fishery in he Bay of Biscay > Claire MACHER */** Olivier GUYADER * Caherine TALIDEC *** Michel BERTIGNAC **** Working Papers Series * IFREMER, Cenre de Bres, Déparemen d Economie Mariime ** UBO, Cenre de Droi e d Economie de la Mer *** IFREMER, Saion de Lorien, Déparemen Sciences e Technologies Halieuiques, Laboraoire Ressources Halieuiques **** IFREMER, Cenre de Bres, Déparemen Sciences e Technologies Halieuiques, Laboraoire de Biologie des Pêcheries

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3 A Cos-Benefi Analysis of Improving Trawl Seleciviy: he Nephrops norvegicus Fishery in he Bay of Biscay Claire MACHER 1, 2,*, Olivier GUYADER 1 Caherine TALIDEC 3, Michel BERTIGNAC 4 1 IFREMER, Cenre de Bres, Déparemen d Economie Mariime, BP Plouzané, France 2 UBO, Cenre de Droi e d Economie de la Mer, 12 rue de Kergoa Ba. C.S , Bres Cedex 3, France 3 IFREMER, Saion de Lorien, Déparemen Sciences e Technologies Halieuiques, Laboraoire Ressources Halieuiques, 8 rue François Toullec, Lorien, France 4 IFREMER, Cenre de Bres, Déparemen Sciences e Technologies Halieuiques, Laboraoire de Biologie des Pêcheries, BP Plouzané, France * Corresponding auhor. Tel: +33 (0) ; Fax: +33 (0) address: Claire.Macher@ifremer.fr (C. Macher). Absrac The mixed Shellfish fishery of Nephrops in he Bay of Biscay is characerized by a high level of discards of many species. Nephrops rawlers discard abou half of heir Nephrops caches in numbers, and a hird in weigh. Discarding occurs mainly in he younger age groups. Because of he low percenage of survival afer discarding, his loss of Nephrops represens a resource ha could have been caugh and landed laer a a larger size. This generaes a wase for he socks as well as for he flee. A beer exploiaion paern hrough increased size-seleciviy would reduce discards leading o a more susainable siuaion wih a beer valorizaion of he producion poenial. The paper analyses he biological and economic consequences of several scenarios of seleciviy measures. The poenial impacs of hese scenarios on Nephrops biomass, landings, discards and economic indicaors (e.g. ren) are analyzed and a cos-benefi analysis of each scenario is discussed. We show ha in his kind of fishery, characerized by a high level of discards of he younger age groups below he minimum landing size, reducing discards does no necessarily lead o a negaive ne presen value of ren over a en year period of simulaion. Reducing discards of non marke value Nephrops would benefi he fishery as i would increase he yield per recrui. Since Nephrops is no a bycach for oher fisheries and is mainly exploied by French rawlers, he flee argeing Nephrops would ge he long erm gains. By aking ino accoun he consequences of he economic dynamics of increasing effor, we show however, ha seleciviy measures are insufficien o ensure he fishing recovery of he sock and a beer exploiaion of he producion poenial. Regulaion of access o he fishery is required. Keywords: Nephrops norvegicus; bio-economic simulaions; cos-benefi analysis; seleciviy; discards; fisheries managemen 1

4 1- Inroducion Boom rawls are known o be poorly selecive gears. They induce he cach of non argeed fishes ha are ofen discarded (Alverson e al., 1994). The argeing of Nephrops by rawlers in he bay of Biscay (ICES Divisions VIIIa,b) is characerisic of hese siuaions where high levels of by-caches and large quaniies of discards are produced, especially Nephrops, Hake, Anglerfish and Megrim. This is he consequence of he use of a low selecive gear - boom rawl wih relaively low mesh size - in a muli-species and muli-size ecosysem. In 2004, Nephrops discards represened 60% of he Nephrops caugh, in number of individuals, and 30% in weigh (Talidec e al., 2005). Because of he high moraliy of discards, only a small proporion (30%) of he Nephrops discarded survives (Guéguen and Charuau, 1975). This induces a high fishing moraliy rae on young Nephrops leading o a mis-exploiaion of he sock. To dae, here is no available quaniaive assessmen of poenial benefis for he flees of an improved exploiaion paern. The paper analyses he biological and economic consequences of several scenarios of seleciviy measures. The sakes of improved sizeseleciviy measures, aiming a improving he exploiaion paern hrough gear modificaions, appear eviden in fisheries characerized by high level of by-caches and discards (Beveron and Hol, 1957; Ward 1994; Shepherd, 1993; Suuronen, 2001, 2006; Pascoe e al, 1999). Seleciviy measures allow avoiding caches and discards of he younges individuals and hus reducing he undesirable addiional fishing moraliy caused by he discards (MacLennan; 1995; Sergiou e al., 1997; van Marlen, 2000; Kvamme and Froysa., 2004; Salini e al., 2000). I increases he age a firs capure and herefore increases he cach per uni effor and he susainable oal yield (MacLennan; 1995). From an economic perspecive, he caches conain larger individuals, which generally receive beer prices per weigh. The increase in he cach per uni of effor can also lead o landing a a lower cos (Pascoe, 1997). Kvamme and Froysa (2004) demonsraed ha a change in seleciviy lead owards a more efficien exploiaion of he sock s growh poenial, allowing a larger amoun of fish o reach maure size and spawn. This increases he spawning biomass and as a consequence he fishery is less dependen on recruimen. More sable caches are allowed. Some papers also show ha seleciviy measures can lead o high shor erm losses for he flee (Griffin and Oliver, 1991; Ferro and Graham, 2000; Heikinheimo e al., 2006; Tchernij e al., 2004). The perspecive of high shor-erm economic losses for he flees, compared o uncerain long-erm gains, is used as an argumen by fisheries managers o rejec he use of more selecive gears or o negae heir effec. However, reducing discards does no necessarily mean a reducion in landings. When seleciviy only affec he discarded fracion of he caches, landings can be unchanged. The objecive of his paper is o provide a cos-benefi analysis of seleciviy measures, using a bioeconomic model of he Nephrops fishery in he Bay of Biscay. Only a few papers are available in he lieraure on his subjec (see OCDE 1997, 2000; Suuronen 2001, Halliday and Pinhorn, 2002, Freese e al., 1995; Lucena and O Brien, 2005; Boncoeur e al., 2000). Griffin and Oliver (1991) esimaed ha he inroducion of urle excluding devices in he Gulf of Mexico shrimp fishery would cos an average of US$1 million calculaed as he ne presen value of ren losses over a en-year period. However, in his case an increase in caches and a change of he landings disribuion (more larger fishes) o offse he shor-erm losses does no follow he adopion of he device. Hendrickson and Griffin (1993) esimaed ha a device ha would remove some fish from he by-cach of he shrimp fishery in he Gulf of Mexico would cos beween US$1.6 million and US$2.7 million a year in los ren. 2

5 However, all he poenial long-erm benefis are no aken ino accoun in hese papers. High shor-erm losses are he consequence of he decrease in he by-cach of valuable species and sizes. In order o assess he cos-benefi analysis of improving seleciviy measures in he case of he Nephrops fishery, a bio-economic deerminisic simulaion model is developed. The model framework is based on an age-srucured model for he Nephrops sock wih several flees argeing Nephrops and considers effor as exogenous or endogenous. The model is able o produce differen indicaors over he simulaion period, such as sock biomass, cach, landings, discards, gross revenue and producer surplus (ren) used for he cos-benefi analysis. The paper is organized as follows. The firs secion presens he Nephrops fishery in he Bay of Biscay. We describe he curren srucure and aciviy of he rawler flee argeing Nephrops, he level of Nephrops discards and he relaed mis-exploiaion paern of he fishery. A shor descripion of he differen regulaion measures implemened o manage he fishery is also provided. The second secion presens he framework and he equaions of he bio-economic model as well as he basic informaion used o parameerize he model. Only he dynamics of he Nephrops sock is included in he analysis. We hen presen, in he hird secion, he resuls for he relevan indicaors of six seleciviy scenarios, boh a equilibrium and during he ransiion phases. The cos-benefi analysis is hen assessed based on he assumpion ha effor is eiher consan or adjused o he profiabiliy of he vessels. In conclusion, we discuss he limis of managing fisheries wih only seleciviy measures and he need o also adop righ based approaches for he regulaion of he fishery. 2 The Nephrops fishery in he Bay of Biscay Flee srucure and main economic indicaors Nephrops is argeed by boom rawlers on a sand-muddy area called he Grande Vasière (ICES Divisions VIIIa,b). The Nephrops rawler flee is one of he mos imporan segmens of he French flee in he Bay of Biscay represening around one quarer of he french rawlers in his area (Berhou e al, 2004). In 2003, 234 boom rawlers were involved in he Nephrops fishery (Figure 1). Figure 1: Nephrops Fishery in he Bay of Biscay (ICES Divisions VIIIa,b), Source: IFREMER 3

6 The flee is composed of rawlers wih an average lengh of 15 meers, 235 kw of engine power and a mean age of 19 years. The mean crew size is hree members. Nephrops rawlers spend around 200 days a sea per year and he duraion of he rips varies from 12 hours o 3 days. During he 1990 s single rawls were replaced by win-rawls which are now he common gear used o arge Nephrops. Table 1 provides he key physical and economic figures abou he Nephrops flee 1. Crew Caegories Number of vessels Mean lengh (m) Mean number of days a sea per year Mean Vessel Value (k Euros) Toal Gross reurn (millions Euros) Average Gross reurn per vessel (k Euros) [1,2] ]2;3] ]3;4] ]4;5] ]5; ] Table 1: Disribuion of he vessels per crew caegory and mean characerisics for The oal gross revenue of he flee was 82.4 M for he year 2003 for an added value of 45 M (Daurès e al., 2002). In 2003, 3900 onnes of Nephrops were landed generaing a gross revenue of 33.2 million 2. Nephrops conribues for 40% on average o he oal gross revenue bu varies from he Norh o he Souh of he fishery. The average proporion of Nephrops in he oal gross revenue is 51% in he Norhern par of he fishery (vessels operaing from Briany: Le Guilvinec, Lorien and Concarneau) and 25% in he oher regions. The oher par of he oal gross revenue comes from he muli species landings ha characerize his mixed fishery (Table 2). The Norhern par of he fishery concenraes 72% of he Nephrops rawlers and caches 60% o 70% of he Nephrops landed. Producion (onnes) Value (keuros) % of he Toal Gross Revenue Norhern flee Anglerfish % Nephrops % Hake % Sole % Oher species % Toal Norhern flee % Flee from oher regions Anglerfish % Nephrops % Hake % Sole % Oher species % Toal Oher Regions % Table 2: Mean Quaniy, value and percenage of he oal gross revenue of he main by-caches of he Nephrops fishery per region ( ). Nephrops discards and mis-exploiaion 1 The flee segmenaion is based on crew caegories raher han on vessel lengh caegories in order o improve he homogeneiy of gross revenues and cos srucure. 2 Almos all Nephrops landings are caugh by he French rawlers. 96% of he Nephrops TAC in his area is allocaed o France, he remainder being allocaed o Spain. 4

7 In 2004, he Nephrops discards were esimaed a 1875 onnes, represening 60% of he Nephrops caugh in number and 30% in weigh (Talidec e al., 2005) 3. As shown in Figure 2, mos of he caches of Nephrops of he firs wo age groups are discarded. 70% of he populaion in number (ICES, 2004) belong o he firs wo age groups, 11 % of hose wo age groups are caugh and 91% of hose caches are hen discarded. The sock is considered oo dependen on recruimen and ACFM (ICES, 2004) advised improving he survival rae of recruis in order o increase he spawning sock biomass. This would ensure susainabiliy of exploiaion and would reduce he risk of low recruimens. N ('000) Landings Discards Grades and prices Euros/kg Figure 2: Landings and discards of Nephrops in number of individuals per age group mean Mean price per age and grade ( ) The high level of caches and discards of younger age groups below he minimum landing size also conribues o he economic inefficiency of he exploiaion. Discards are made up of Nephrops ha, if no caugh, could be landed and sold laer a a larger size. On his issue, he ACFM (ICES, 2004) underlined ha he curren fishing moraliy on young age groups, especially because of discards, is oo high o yield he maximum level of producion. The impac is even sronger in erms of value of he producion, as prices increase wih he lengh (or age) of he Nephrops. Grade 40 made up of he smalles Nephrops in age 2 had a mean price of 6.5 euros per kilo for he period compared o grades 30 (ages 3 and 4), 20 (ages 5 and 6) and 10 (ages 7, 8 and 9+) which obained a mean price of 7.3, 9.7 and 12 euros per kilo, respecively. The managemen sysem The managemen of he Nephrops Fishery in he Bay of Biscay essenially relies on conservaion measures (Guyader e al., 2005 (b)). For a long-ime, a minimum landing size (MLS) of 26 mm Cephalohoracic Lengh, i.e. 8.5 cm oal lengh, was adoped by he French Producers Organisaions. This MLS is larger han he EU MLS se a 20 mm CL i.e. 7 cm oal lengh. Since December 2005, a new French MLS regulaion (9 cm oal lengh) has been esablished. Several regulaions regarding he mesh size were adoped successively hese las few years. In 2000, he minimum codend mesh size in he Bay of Biscay became 70 mm 4 insead of he former 55 mm for Nephrops (Council Regulaion (EC) No 850/98). A Toal Allowable Cach (TAC) has been in force since 1987 ogeher wih echnical measures. In 2004, he TAC was se a 3100, which means a French quoa of 2976 (96% of he TAC). 3 Esimaes of discards are also high for oher species. Because of he overlap of he spaial disribuion of he Hake nursery and he aciviy of he non selecive Nephrops fishery, 97% of hake caugh were discarded in mm mesh size is required in he Hake box bu in 2006, i should be noed ha Nephrops rawlers are allowed o fish, for one year, in he hake box wih he curren mesh size of 70 mm provided ha a square mesh panel of 100 mm. 5

8 The TAC is allocaed by Producers Organisaions bu here is no individual quoa allocaion. Besides hese conservaion managemen measures, he Nephrops flee has been submied o naional vessel decommissioning schemes ha explain parially he decrease in he number of vessels argeing Nephrops. They were 400 vessels in 1978, 300 in 1987 and are around 230 since However he decrease in he fishing effor was compensaed a leas in par by gains in he efficiency of he vessels due o echnical creeping (Guyader e al., 2005 (a)). In 2004, licences were esablished and a non-consraining numerus clausus of 250 Nephrops rawlers was adoped. The fishery was in an open access siuaion before. However no limiaion on he fishing effor (number of rips for example), gear or individual caches is implemened. The following secion presens a cos-benefi analysis of differen seleciviy measures. 3 - The bio-economic model A bio-economic model was developed in order o carry ou a cos-benefi analysis of several seleciviy scenarios. Ten sub-flees are defined according o coss srucure. We presen he framework of he model defining he link beween he economic siuaion of he sub-flees, he dynamics of he Nephrops sock, and seleciviy scenarios. The concepual model is given in Figure 3. Fishing moraliy by age group Seleciviy facor by age group % and discards moraliy by age group Nephrops Sock Biomass by age group Caches Quaniy by age group Fishing effor number of days a sea 10 sub-flees crieria: - 2 Geographic segmens - 5 crew caegories Discards by age group Landings Quaniy by age group vessels number coss srucure (variable and fixed) Price model by age group F(quaniy and grades) Toal Revenue Nephrops Toal Revenue Oher species wages profis Ren Figure 3: Schemaic represenaion of he bio-economic model 6

9 The biological model is age-srucured. All hings being equal, improved seleciviy reduces he fishing moraliy of he Nephrops sock (especially he younger age groups), which is also subjec o naural moraliy and individual growh. The dynamics of he oher species harvesed by he rawlers are no aken ino accoun in he analysis eiher because he moraliy conribuion of he Nephrops flee o hese species is low or he fishing moraliy mainly concerns he young age groups. In such cases, he feedback effecs of change in seleciviy on hese species should be very limied or benefi only oher flees. Based on inpu flee nominal effor and gear seleciviy, he model provides Nephrops caches, discards and landings. Toal revenue per vessel depends on he Nephrops landings, he prices given by a price model and on he revenues of oher species. Wages, profis per vessel and oal surplus per sub-flee are calculaed, ime sep, according o he average cos srucure of each subflee. The economic model is saic as we assume in his paper ha fishermen are able o change neiher heir nominal effor level, nor heir cach composiion. The key equaions used o model he dynamics of he Nephrops fishery are he following. The biological model The dynamics of he Nephrops sock is represened by a biological model srucured by age groups i. The model is annual and he subscrip for ime is. For each age group i+1, i [1,7 ] he Nephrops sock number for year +1 is calculaed using he survival equaion of Beveron and Hol (1957) (Gulland, 1983; Hilborn and Walers, 1992): Z i, N i+ 1, + 1 = N i, e if 1 < i + 1 < 9 (1) where Ni+ 1, + 1is he number ha survives a age i, N i, is he number of individuals of age i in year and Z i, is he oal moraliy. Z i, = mf Fi, Si + M wih F i, he fishing moraliy a age i for year 5, S i he relaive seleciviy of he fishing gear a age i in percenage compared o he reference (iniial seleciviy being aken ino accoun in F i ), mf, a muliplying facor o he fishing moraliy ha enables increases or decreases in fishing effor o be aken ino accoun and M, he naural moraliy, variable wih age bu assumed consan on he simulaion period mf. Fi,. S i M Thus, N i + 1, + 1 = N i, e (2) As age group 9 is a plus group, equaion (1) needs o be modified: Z Z N N e 8, 9, N. = e (3) 9, + 1 8,. + 9, The biomass of Nephrops in year is calculaed as follows: B = N i,. wi (4) i wih wi he mean weigh a age i, calculaed by using he Von Beralanffy growh curve and he lengh-weigh relaion parameers esimaed by he ICES (ICES, 2000); i is assumed o be consan over he simulaion period. 5 The fishing moraliy considered here akes ino accoun he survival of 30% of he discards ha reurn o he sock (see also Mesnil, 1996). I corresponds o he fishing moraliy of he removals (landings and dead discards) 7

10 The sock daa used in he simulaion are hose adoped by he ICES Nephrops working group for shor erm predicions, based on he resuls of he 2004 assessmen (Table 3). The biological parameers of he model are presened in appendix 1. Age groups i Fishing moraliy Fi (2003) Mean weigh Wi(2003) Sock size Xi (2003) Naural Moraliy M Mauriy ogive Table 3: Nephrops Sock daa (ICES, 2004) Caches (in numbers) of age group i during year are calculaed using he convenional cach equaion: Zi, C = X ( 1 e )( mf. F. S Z (5) i, i, i, i) i, The oal cach in weigh for he year, Y is he sum of he caches in weigh per age group for he year (Thompson and Bell, 1934) given by muliplying caches in number per age group for he year by he mean weigh a age. Discards D i, per age group in weigh are derived from he Nephrops cachesc i,, he percenage of Nephrops discarded in number per age group d i, and he mean weigh a age. Daa obained from he observaions and sampling on board (IFREMER-Obsmer) give he preliminary resuls of discarding proporion in number per age group, presened in able 4. Age groups i di() 1 96% 2 75% 3 28% 4 7% 5 4% 6 4% 7 1% 8 1% 9+ 0% Table 4: Percenage of Nephrops discarded in number per age group Source: daa Obsmer June 2002 o Sepember 2004 Landings per age L i, in weigh are deduced by subracing discards from he caches. Recruimen is assumed o occur once a he beginning of he year and o be consan over he simulaion o compare he poenial benefis of he differen seleciviy scenarios. I is calculaed as he geomeric mean of he esimaed recruimen over he las en years (ICES, 2004; GM =555 millions individuals). Assuming consan recruimens over he whole simulaion period is a srong hypohesis which may be reasonable for socks exploied a a level where he spawning biomass is no reduced o a low level. While his hypohesis is probably valid in he case of consan effor, his may no be he case for he variable effor simulaions. An alernaive way would be o incorporae a sock-recruimen relaionship which would explicily predic he recruimen level based on curren spawning sock biomass. However, a presen, such a relaionship has no ye been esablished for he 8

11 Nephrops sock (ICES, 2004). Sensiiviy analyses on he recruimen level were herefore carried ou. The biological analyical model enables he caches, landings and discards of Nephrops per age group o be calculaed for differen seleciviy measures simulaed for each year of he simulaion. The saic economic model The economic model akes a flee-based approach. Ten sub-flees f are defined according o cos srucure correlaed wih five crew size caegories and he geographic area (Norhern or Souhern par of he fishery) (see secion 2). The number of vessels and he nominal effor per sub-flee is considered consan over he simulaion period. Inpu values of he model are mean values for he period As daa on discarding raes per sub-flee are no available, he Nephrops fishing moraliy for he whole flee is allocaed by sub-flee in proporion o heir Nephrops landings from he reference period 2001 o 2003 insead of removals. Caches are hen calculaed using he cach equaion and landings and discards are deduced assuming ha he discarding rae is he same for all he sub-flees. From Nephrops landings per sub-flee, i is possible o calculae he Nephrops gross revenue of he sub-flee f for year, G N, f, defined as: P Li f = P Yi f i,,, i,,, G,, = ( D,, ) (6) N f i i i f where P i, is he Nephrops price of age group i as a funcion of he oal landings of he age group, L i, f, he landings of age i by sub-flee f, Y i, f, he cach of age group i and D i, f, he discards of Nephrops of age group i caused by sub-flee f. The proporion of discards per sub-flee is considered o be consan in he analysis. The price model is based on he esimaion by Mez (2004, personal communicaion): ln P i, = α i, + β i, ln Li, (7) α i, is a consan for grade corresponding o age group i, β i, is he price elasiciy parameer for each grade and L i, is he amoun of landings of age group i for he oal flee. The price of age group 1 is assumed o be consan, equal o he mean wihdrawal price applied according o he Common Fishery Policy regulaion 6. Landings L s, f and price P s, f of oher by-caches species are assumed o be consan over he simulaion period. The oal gross reurn of sub-flee f for year G f, is hen given by summing he Nephrops gross revenue and he gross revenue from oher species. G, = G f, / V is he average revenue per vessel in sub-flee f, V being he number of vessels in each sub-flee. The ne revenue for a vessel in sub-flee f is: NR, = ( 1 lc ) G, (8) wih lc he landing cos rae. 6 Nephrops of age group 1 are below he minimum landing size fixed by he Producer Organizaion., They should herefore no be sold on he fishing marke. However, we assume here a black marke ha would enable he small Nephrops o be sold a he wihdrawal price 9

12 The difference beween he vessel ne revenue and he so-called shared coss gives he reurn o be shared RS, wih he shared coss defined as: SC +, = fuelc E, + baic + icec foodc (9) Nominal effor E, is expressed here in erms of hours a sea. Fuel coss may vary according o he effor bu nominal effor is assumed o be consan in his simulaion. Crew remuneraion, based upon he share remuneraion sysem beween he owner and he crew is given by muliplying he crew share rae by he reurn o be shared, and he Vessel Share VS, is obained by subracing he crew share o he reurn o be shared. The ne crew share NCS, is he difference beween he crew share and he social insurance coss as a funcion of he social insurance uni cos, and he vessel crew size. The labour surplus or ren earned by he crew of sub-flee vessel can be calculaed as: LS, = NCS, OCLh, (10) wih OCLh, he opporuniy cos of labour defined as he produc of he crew size, he hours spen a he fishing aciviy by he crew and he hourly uni price of labour elsewhere in he economy 7. The vessel gross surplus is he difference beween he vessel share and oher variable coss ovac (gears) 8 and fixed coss ovec (insurance, firm managemen coss, ec.) ( VS ovac E ovec ), m M v GS, =., (11) v The capial surplus CS, earned by he vessel owner is hen defined as he difference beween he vessel gross surplus, he capial annual depreciaion and he opporuniy cos of capial: CS, GS, depc, OCK, = (12) wih depc = k. K, he capial depreciaion calculaed as a depreciaion rae k applied o he value of he vessel K and OCK = oppir. K, he opporuniy cos of capial K invesed elsewhere in he economy a rae oppir 9. Finally, he main indicaor used for he cos-benefi analysis is he producer surplus or ren defined as follows: PS = LS + f, v, CS, (13) f, v 7 The opporuniy cos of labour corresponds o he bes alernaive remuneraion for he fishermen. We consider ha all fishermen have he same qualificaion ha gives hem he same alernaives. The opporuniy cos of labour was calculaed using he annual minimum ne wage in force ( euros calculaed on a 35 h weekly basis). The hourly uni price used is 7.19 euros. 8 Seleciviy measures can imply an increase in gear coss due o eiher gear change or selecive device adopion. However, we assume in he model ha hose coss are negligible wih regards o he oher coss aken ino accoun. 9 The mean long erm rae of ineres in France over he period (4.6%) was used as a proxy for he opporuniy cos of capial (OCDE, Principaux Indicaeurs Economiques, juille 2004) 10

13 The ne presen value of differen seleciviy scenarios discouns, a a given rae r, he annual ren flows over he simulaed period n = 1,..., T according o he following equaion: NPV = T n= 1 n PS ( 1+ r) (14) Economic and echnical parameers are derived from he surveys organized by Ifremer (Berhou e al. 2003). Daa used for his paper were colleced for he years 2001 o 2003 on a represenaive sample of vessels of each sub-flee and all he parameer esimaes were calculaed per sub-flee. The srucure of revenues and coss per sub-flee is provided in appendix 2. Inegraion of he dynamics of effor An alernaive version of he model is provided, ha assumes effor is no consan bu endogenous 10. We assumed ha he number of vessels does no change 11. We assume ha he fishermen are incied o increase heir effor as long as he surplus formed is higher han he surplus ha hey would encouner in an alernaive fishery, which means, when here is a differenial ren beween he fisheries. When he surplus formed in he Nephrops fishery becomes equal o ha of he alernaive fishery, he effor is adjused according o he opporuniy cos of changing fishery. We assume, however, ha his opporuniy cos is high and ha fishermen are incied o say in he same fishery. In he model of he dynamics of effor, he assumpion is ha, each year, he ship-owner is incied o adjus his nominal effor expressed in number of days a sea in he curren year Nds, relaive o a reference year according o he following equaion: Nds v, v v = Nds v, ref PS ( v, 1 PS PS v, ref v, ref ) Nds, varies proporionally wih he growh of he producer surplus beween he las period and he period used as he reference 12. However, we assume ha he number of days a sea per vessel canno be higher han 260 days per year, which corresponds o he case where fishermen fish five days a week all he year wihou any inacive period or weaher condiions ha would no enable hem o fish. The fishing moraliy F i () is a funcion of he number of days a sea in year Nds() for he flee. When he effor varies, he fishing moraliy is adjused according o he following equaion: Nds F i, =. Fi (16), ref Ndsref Year 2004 is he reference for effor and fishing moraliy in he dynamic model of effor and Nds ( ) = nb Vessel. Nds v, wih Nds v,, he mean number a sea per vessel in year. 4 Seleciviy scenarios and simulaion resuls (15) 10 This mehodology has also been used in oher bio-economic models (MEFISTO Guillen e al., 2004). 11 Enry ino he fishery is limied by licences (PPS) 12 A reference surplus is defined as he mean surplus per vessel for

14 The seleciviy scenarios sudied in his paper consis in varying he seleciviy facor leading o an improvemen in he exploiaion paern of he Nephrops for he flee. These improvemens could be achieved in pracice eiher hrough he adopion of selecive devices or mesh size increases 13. In he simulaion model we assume ha he seleciviy is specific for Nephrops and does no affec he cach of oher by-cach species. Such seleciviy is close o he objecives followed by experimenaions on Nephrops grids ha aim o enable he Nephrops juveniles o escape, while oher valued by-caches are reained in order o limi he losses on commercial caches. We assume ha he same seleciviy is applied o each subflee. The saus quo scenario 1, used as a reference scenario, does no consider any change in he flee s exploiaion paern. Scenarios from 2 o 6 assume ha here is no cach (herefore no discard) of Nephrops under age 2 o 6, respecively (see Table 5 for corresponding Nephrops lenghs). Scenario No Cach below age Sau quo No Cach below Sau quo 6.3 cm *Minimum Landing Size Table 5: Seleciviy scenarios simulaed 8.8 cm 10.4 cm 11.8 cm 13.1 cm (MLS*) Scenario 3 considers no caches of Nephrops under age 3. The limi size beween age 2 and 3 corresponds o a Nephrops lengh of 8.8 cm, ha is, abou he minimum landing size esablished by he curren regulaion. Scenario 3 is equivalen o a scenario assuming no cach and no discard of Nephrops below minimum landing size. We assume ha changes in he seleciviy facor are implemened in The poenial impacs of hese seleciviy scenarios on he evoluion of discards, biomass, landings, gross revenue, average gross surplus per vessel, and producer surplus of he flee are analyzed over he simulaion period. Saus of he fishery a equilibrium Based on he assumpions of he biological model (in paricular, a consan recruimen hypohesis) and he assumpion ha he fishing effor is exogenous and remains consan hroughou he simulaion period, equilibrium siuaions are reached afer a relaively shor ime period, beween 5 and 7 years. The saus of he fishery in he final year is given in Figure 4 for each seleciviy scenario compared o he saus quo siuaion. 200% 150% 100% 50% 0% Biomass Discards Landings Gross Revenue Producer Surplus -50% -100% -150% Scenario 2 Scenario 3 Scenario 4 Scenario 5 Scenario 6 13 Experimenaions on Nephrops grids (a 13 mm gap grid, a 15 mm gap grid and recenly a 20 mm gap grid) have been conduced since 2004 by Ifremer wih represenaives of he indusry. These selecive devices enable he escapemen of he smalles Nephrops, oher by-caches being reained. However, i is no possible, a his dae, o use he resuls of he observaions on board. 12

15 Figure 4: Indicaors in he las year of simulaion as a funcion of seleciviy scenarios Concerning discards, he saus quo and scenario 2 are almos equivalen. Scenario 3 reduces discards by 40% and scenarios 4, 5 and 6 reduce he discards by 77 %, 85%, 90% respecively. These are low levels compared o he curren discard of around 1200 onnes per year. According o he simulaions carried ou, he change in he exploiaion paern wih a consan nominal effor has a posiive impac on he biomass. By adoping scenario 3, he biomass is resored up o he objecive of onnes esablished by ACFM (ICES, 2004). In he case of scenario 5, he biomass would be muliplied by wo 14. In erms of landings and revenues for he flee, he consequences of scenario 2 on he landings and revenues are close o hose provided by he saus quo scenario. Compared o he saus quo, scenario 3 provides a equilibrium, a 30% increase in landings and oal revenue (4700 onnes and 41 m, respecively). Average gross surplus of he sub-flees is also improved bu he impac varies according o he sub-flees. For example, he increase of he gross surplus of he 3 crew size vessels of he norhern region is around 52% and only 30% for he same crew size vessels of he souhern region. Vessels operaing in he souhern par of he fishery are indeed less sensiive o an improvemen in he sock siuaion han vessels operaing in he norhern par of he fishery as Nephrops represen a lower share of heir landings and gross revenues. Scenarios 4, 5 and 6 also benefi he differen flees a equilibrium compared o he saus quo siuaion bu, beyond scenario 5, landings decline. This decline in landings beween scenarios 5 and 6 is, however, parly compensaed by an increase in price implying a quasi sabilizaion in he flee oal revenue and producer surplus around 55 and 42 millions euros respecively. The flee may benefi from a 112% increase in producer surplus wihou any change in nominal effor; however hese scenarios would mee lile compliance among he fishermen. Transiion phases Despie long erm benefis o he sock and he flees, he flee has o cope wih ransiion phases owards equilibrium siuaions. The simulaion of scenario 3 indicaes ha here is no only no shor erm decrease bu increases in landings because escapemen mainly concerns discards and he subsequen biomass increase quickly improves he cach per uni of effor of he flee (fig.4). However, he landings reducion during he firs year is 12%, 47% and 73% for scenarios 4, 5 and 6, respecively. These negaive impacs on landings are smoohed in erms of revenues by posiive price effecs. The increase in price when quaniies landed are lower can indeed conribue o he offse of he poenial shor erm decrease in he landings 15. However revenues changes are significan for scenarios 5 and 6. Higher is he escapemen due o he seleciviy; longer are of course he negaive impacs on landings and revenues. 14 However, he increase of he biomass migh be limied by he load capaciy of he ecosysem. 15 Besides he elasiciy price-quaniy, an improvemen in he qualiy of he landings can be observed when adoping a selecive device. This can be compensaed by a beer price. 13

16 Landings in onnes Scenario 1 Scenario 2 Scenario 3 Scenario 4 Scenario 5 scenario Figure 5: Evoluion of he Nephrops landings Producer surplus in millions euros Scenario 1 Scenario 2 Scenario 3 Scenario 4 Scenario 5 Scenario Figure 6: Evoluion of he producer surplus Average Gross Surplus in KEuros Scenario 1 Scenario 2 Scenario 3 Scenario 4 Scenario 5 Scenario Figure 7: Evoluion of he average gross surplus of he 3 crew size vessels in he norhern region. 14

17 Average Gross Surplus in KEuros Scenario 1 Scenario 2 Scenario 3 Scenario 4 Scenario 5 Scenario Figure 8: Evoluion of he average gross surplus of he 3 crew size vessels in he souhern region. The ransiion phases could be criical for he shor erm viabiliy of he flees and he evoluion of he gross surplus can be used as a relevan indicaor for his issue (Figure 6-8). The bigges consrain for vessel owners is o pay back heir loans wih heir curren gross surplus flow 16. If he fishing firm gross surplus is negaive or oo low o cover he ineres paymens, hen he viabiliy of he firm could be hreaened. As illusraed in figure 7, he average gross surplus of he 3 crew size vessels in he norhern region is negaive in 2004 for scenario 6. I is below he level required o pay back he average loans level of hese firms (0.02 keuros). This means ha he fishing firms would have o cope wih his siuaion by drawing from heir available reasury funds. As shown in figures 5 o 8, significan increases in landings, gross revenues, gross surplus and producer surplus follow shor erm reducions even under he reasonable scenario 3. These long erm gains may offse he shor erm losses if any. Siuaion of he fishery when fishing effor is endogenous In order o ake ino accoun he dynamics of fishing effor, runs assuming endogenous effor were also carried ou. The model hen assumes ha each fisherman adjuss his effor according o he growh in his individual surplus. The oal landings of he flee in he case of endogenous effor can be compared wih he landings in he case of consan effor (Figure 9) scenario 1 consan effor scenario 3 consan effor scenario 3 variable effor Landings in onnes Figure 9: Difference in oal landings in onnes beween Scenario 3 a consan effor and Scenario 3 wih endogenous effor 16 They also have o save funds o compensae for capial depreciaion in order o have he possibiliy of invesing in a new boa a he end of is life ime, bu his consrain can be delayed over several years. 15

18 We observe ha an increase in effor induces higher oal landings he firs years of he simulaion hen, when effor sabilizes o he upper limi of 260 days a sea per year, he oal landings decrease. The analysis of landings per uni of effor (LPUE) shows ha an increase in effor decreases he LPUE and, as a consequence, decreases he surplus per effor uni (Figure 10). Ren in euros/day of fishing scenario 1 consan effor scenario 3 consan effor scenario 3 variable effor Figure 10: Difference of Surplus per effor uni (day of fishing) in euros beween Scenario 3 a consan effor and Scenario 3 wih endogenous effor When fishing effor increases, he surplus per effor uni remains below he surplus corresponding o consan effor hroughou he simulaion periods. Cos-benefi analysis The cos-benefi analysis is carried ou by using he classical ne presen value formula (see equaion 14) convering he fuure expeced flows of coss and benefis for he flees o a presen value amoun. The ne presen value calculaions for he seleciviy scenarios are based on differen assumpions for he discoun rae. The discoun rae measures he ime value of money for he decision-makers or fishery managers iniiaing he seleciviy projec. In line wih his, more weigh is given o earlier coss and benefis han laer ones by applying a discoun rae. Simulaion resuls show ha whaever he scenario seleced, he fishery provides posiive producer surplus or rens. The ne presen value of producer surplus over he periods is calculaed for he six scenarios and according o differen discoun raes (Table 6). Discoun Rae Scenario 1 Scenario 2 Scenario 3 Scenario 4 Scenario 5 Scenario 6 2% % % % % % % % % % % % % % % Table 6: Ne presen value of producer surplus (ren) in million euros over he period according o discoun raes beween 2% and 30%. We observe ha for low discoun raes, he ne presen value of producer surplus is higher when he scenario is more selecive, excep in he case of scenario 6 ha induces imporan 16

19 shor erm losses. Adoping more selecive gears may benefi he flee bu he opimal scenario changes as a funcion of he discoun rae. When he rae becomes higher (up o 10%) i may be preferable for he producer o adop a seleciviy corresponding o scenario 4 insead of scenario 5. However we have o consider very high discoun raes o find a selecive scenario worse han he saus quo. This case only occurs for scenario 6 and for a discoun rae of 30%. One imporan problem is herefore o choose he relevan ineres rae; Arrow e al. (1996), and Porney and Weyan (1999) have discussed his issue. They sugges adoping an opporuniy cos approach for he cos-benefi analysis of public projecs especially o reduce environmenal impacs (polluion, ec.) and o use a 4% rae 17. Applied o our case sudy, he public auhoriies could be he European Union, he French governmen or regional public auhoriies, ineresed in invesing in his ype of public projec by lending o he fishermen in order o compensae heir shor erm economic losses compared o he saus quo siuaion 18. In his case, scenario 5 providing he highes discouned ren (274 million Euros) should be adoped (Figure 11). The ne benefi of his scenario is 74%, 23%, 3%, 15% higher han he saus quo, scenarios 3, 4 and 6, respecively. keuros Scenario 2 Scenario 3 Scenario 4 Scenario 5 Scenario 6 Figure 11 - Difference beween he ren corresponding o a scenario of seleciviy and he ren of saus quo in keuros for an average vessel (discoun rae 4% over he period) If fishermen or heir represenaive organizaions decide by hemselves o borrow money from he banks in order o cover he shor erm reducion in producer surplus or gross surplus, hey probably would no fund fishermen a a 4% ineres rae bu a a rae including a risk premium. Up o a 12% ineres rae he bes opion is always scenario 5 ha would provide 171 millions Euros ren over he period. Above 12% ineres rae, scenario 4 should be preferred. Scenario 3 could lead o a recovery of he Nephrops sock wihou inducing any losses as his scenario assumes no cach on he wo younger age groups ha are usually discarded. Taking ino accoun a 4% discoun rae over he period, a seleciviy corresponding o scenario 3 would make i possible o form a ren of euros per vessel (fig.11). In his kind of fishery characerized by high levels of discard, recovering he sock and improving he valorizaion of he producion poenial migh herefore induce a posiive ne benefi. However, hese resuls are o be moderaed as hey do no consider any increase in he effor ha could occur as a response o an invesmen dynamic. We have now o consider he case where fishing effor is endogenous. These simulaions show ha if he benefis of seleciviy are reinvesed o increase effor, hey dissipae rapidly and he exploiaion is subopimal (see scenarios 1 o 4). For hese scenarios, he ren formed 17 This rae is also used by many public agencies o assess heir projec. The U.K Treasury recommended discoun rae for boh coss and benefis is 3.5% 18 This ype of public aid is permied in he conex of he Common Fisheries Policy, for compensaions when fisheries are closed or effor reducion is imposed. 17

20 is higher in he case of consan effor han in he case of endogenous effor (Table 7). This is o be linked o he surplus per effor uni presened in he previous secion. Consan effor Endogeneous effor Scenario 1 saus quo Scenario 2 age Scenario 3 age Scenario 4 age Scenario 5 age Scenario 6 age Table 7: Comparison of Ne presen values of producer surplus (ren) assuming consan effor and assuming endogenous effor over he period assuming a 4% discoun rae In he case of scenarios 5 and 6 however, he ne presen value of producer surplus is higher han in he case of consan effor. This is a bias induced by he model of dynamics of effor. Indeed, he increase in effor depends by assumpion on he growh of surplus; herefore for hese high selecive scenarios inducing a decrease in he surplus in he shor erm, we do no observe any increase in he effor in he firs years of he simulaion. When he biomass recovers he landings increase and he surplus becomes higher han he iniial surplus. The effor increases bu quickly reaches he maximum of 260 days a sea and hen remains consan. This explains ha he ne presen value of producer surplus is higher. The increase in effor makes i possible in his case o achieve he poenial of producion induced by he adopion of high seleciviy measures. However, assuming ha he surplus is reinvesed eiher o increase he number of days a sea or he echnical progress, we would find ha scenarios 5 and 6 a consan effor are preferable o high seleciviy scenarios wih increasing effor. Sensiiviy analyses o fishing effor versus seleciviy were also carried ou in order o analyze he consequences of endogenous effor and o illusrae he complemenariies beween seleciviy and effor limiaion (Figure 12) Ren of he flee in million euros Scenario 1 Scenario 2 Scenario 3 Scenario 4 Scenario 5 Scenario mf -100 Figure 12: Ne presen values of producer surplus (ren) over he period assuming a 4% discoun rae for he six seleciviy scenarios and for a muliplying facor of he fishing moraliy mf varying beween 0.1 (decrease in effor) and 1.5 (increase in effor). As shown in Figure 12, represening he ne presen value of he producer surplus assuming a discoun rae of 4%, increasing he effor for a given seleciviy scenario dissipaes he ren, 18

21 excep for low levels of fishing moraliy. When comparing scenarios ogeher, we can observe ha for a range of increases in effor, he ren of seleciviy measures can remain preferable o he saus quo. Given a seleciviy scenario, rens could be maximized wih a reducion in fishing moraliy from o 0.5 and compared o he saus quo value (mf=1). Technical measures are herefore no sufficien and a limiaion in effor is required o ensure ha he ren yielded by seleciviy measures is no dissipaed by an increase in effor. 5 - Discussion and perspecives The cos-benefi analysis presened in his paper, under he assumpion of consan effor, highlighs he poenial posiive ne benefi of seleciviy improvemen. I underlines he consequences of he selecive scenarios boh in erms of biological impac for he sock and economic impac for he flee. I compares he poenial benefis beween scenarios and analyzes he ransiion phases. This sudy focuses on he impac of seleciviy improvemen on he Nephrops sock only. Scenarios would correspond o selecive devices such as he Nephrops grids developed o offer a good compromise beween small Nephrops escapemen and commercial losses of Nephrops and o no affec he seleciviy of oher species. The producer surplus of he flee is sudied. One of he perspecives of his sudy is o analyze he impac of echnical measures on he oher socks affeced by his mixed fishery and o assess he social cos of discarding. This social cos is calculaed by aking ino accoun he coss of discarding behaviours endured by oher flees argeing he by-caches of he Nephrops fishery and he impac of reducing discards on he consumer surplus hrough price-quaniy effec or qualiy improvemens. As i is easy o modify gear, in such a way ha i complies wih legal requiremens bu does no produce he expeced improvemen in seleciviy, he efficiency of echnical measures depends on he willingness of he fishing indusry o accep hem (Suuronen and Sarda, 2006). The exising lieraure shows ha here is a srong incenive among fishermen o circumven echnical measures due o he expeced shor-erm losses (scenarios 4, 5 and 6) and cos increases (Suuronen, 2006). Ferro and Graham (2000) describe how he mesh size increase in he lae 1980s and early 1990s was gradually negaed in he UK Norh sea fishery by he codend design feaure ha reduced he seleciviy. Suuronen and Tchernij (2003) show ha in he Balic cod fishery, widespread gear manipulaion was observed o reduce he seleciviy of he gear. Suuronen e al. (2000) and Tchernij e al. (2004) highligh ha if he losses are oo large, he gears will be manipulaed and he rules will be circumvened (see also Halliday and Pinhorn, 2002). However, his paper highlighs ha in a fishery like he Nephrops fishery, characerized by a high level of discards on he smaller individuals, he recovery of a sock hrough an improvemen of he managemen of he producion poenial does no necessarily induce shor-erm losses and negaive ne benefi. Long-erm gains can offse shor erm losses (if any). Thus, seleciviy, adaped o he minimum landing size of Nephrops, which means wih no cach (herefore no discard) under he MLS, would make i possible o reach a conservaion objecive o recover he sock o he higher biomass values observed in he series wihou inducing shor-erm losses. In his case, he improvemen of he exploiaion paern, in order o obain a beer pricing of he producion poenial of he sock, would form a ren of euros per vessel, aking ino accoun a 4% discoun rae over he period. 19

22 The problem of compliance of fishermen wih seleciviy measures is also linked o he lengh of ransiion period owards more susainable sock levels. Heikinheimo e al. (2006) underlines he criicisms of fishermen of he pikeperch gillne fishery agains improving seleciviy measures in he Archipelago Sea in Finland. They argue ha i would harm he profiabiliy of he fishery by seriously reducing he caches and decreasing he prices. Transiion phase o a posiive ne presen value is oo long compared o he risks and he expeced reurn on invesmen, o be accepable for he fishermen. In he case of Nephrops, however, he lengh of he ransiion phase is limied o a few years and he benefis occur quickly afer he adopion of a selecive device. In any case, he siuaion is never worse han he saus quo for more han hree years and he poenial benefis associaed are very imporan. There are no shor-erm losses or limied shor-erm losses compared o he gains expeced and he rapid recovery of he sock induces shor lengh of he ransiion phases. This allows he seleciviy measures in his kind of fishery o be efficien. A way o limi shor-erm losses and increase he compliance by fishermen would be o implemen seleciviy measures gradually, by firs adoping a 15 mm gap grid hen, afer wo or hree years, a 20 mm gap grid. Given he small shor-erm losses and he gains prediced for he long erm, he quesion of shor erm loss compensaion is o be analyzed. Anoher oulook is o consider who would profi from such managemen measures and how he wealh would be disribued. By aking ino accoun economic dynamics of increasing effor we show however, ha seleciviy measures are insufficien and do no preven he race for fish (see also Shepherd, 1993, Suuronen and Sarda, 2006). When effor increases he ren is dissipaed. No only he conservaion of he poenial of producion of he juveniles is needed bu also he allocaion of he fishing capaciy. Righ-based approaches are herefore required o limi overcapaciy and o ensure he efficiency of a seleciviy measure. A sysem of individual quoas or licences wih a limi on he number of days a sea would ensure ha he ren formed by seleciviy measures will no be dissipaed by an increase in effor. References Alverson, D. L., Freeberg, M. H., Murawski, S. A., Pope, J. G., A global assessemen of fisheries bycach and dicards. FAO Fish. Tech. Pap. 339, FAO, Rome, 233 p. Arrow, K. J., Cropper, M. L., Eads, G. C., Hahn, R. W., Lave, L. B., Noll, R. G., Porney, P. R., Russell, M., Schmalensee, R., Smih, V. K., Savins, R. N., Policy Forum on benefi cos analysis. Science 272, ICES, Repor of he Sudy Group on Life Hisory of Nephrops. ICES CM 2000/G: 13, 151 p. ICES, Repor of he Working Group on Nephrops Socks, ICES CM 2004/ACFM:19, Lisbon, Porugal, 28 March-1 April 2004, 441 p. Berhou, P., Daures, F., Guyader, O., Merrien, C., Leblond, E., Demaneche, S., Jezequel, M., Guegan, F., Bermell, S., VanIseghem., V., Synhèse des Pêcheries Floe Mer du Nord - manche - Alanique, 80 p. 20