POTENTIAL SOCIO-ECONOMIC IMPACTS OF

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1 POTENTIAL SOCIO-ECONOMIC IMPACTS OF ADDING AND NOT ADDING ATLANTIC SALMON, SOUTH NEWFOUNDLAND DESIGNATABLE UNIT, TO THE LIST OF WILDLIFE SPECIES AT RISK, AS THREATENED, UNDER THE SPECIES AT RISK ACT POLICY AND ECONOMICS BRANCH FISHERIES AND OCEANS CANADA NEWFOUNDLAND AND LABRADOR REGION OCTOBER, 2013

2 TABLE OF CONTENTS List of Acronyms Introduction Context Purpose Background Species Assessment Species Profile Allowable Harm Assessment and Species Recovery Target Overview of Current Management for Atlantic salmon Analytical Framework Management Scenarios Management Scenario A Management Scenario B Profile of Stakeholder Groups Recreational Anglers Outfitters Aboriginal Groups Retail Trade Cost-Benefit Analysis of Management Scenarios Management Scenario A Management Scenario B Summary Cost Benefit Analysis Stakeholders Analysis Bibliography Appendix A DU Map Appendix B - Scheduled Rivers South Newfoundland DU Appendix C Detailed Management Scenarios Policy and Economics Branch, Fisheries and Oceans Canada Newfoundland and Labrador Region

3 LIST OF ACRONYMS FSC: Aboriginal Food, Social and Ceremonial Fishery COSEWIC: Committee on the Status of Endangered Wildlife in Canada CDRM: Cabinet Directive on Regulatory Management RPA: Recovery Potential Assessments SARA: Species At Risk Act DFO: Fisheries and Oceans Canada IFMP: Integrated Fishery Management Plan NAICS: North American Industry Classification System NAFO: Northwest Atlantic Fisheries Organization DU: Designatable Unit NPV: Net Present Value SME: Small and Medium Sized Enterprises MFN: Miawpukek First Nation RIAS: Regulatory Impact Analysis Statement SAR: Science Advisory Report CDRM: Cabinet Directive on Regulatory Management Policy and Economics Branch, Fisheries and Oceans Canada Newfoundland and Labrador Region

4 1. INTRODUCTION 1.1. CONTEXT 1 As a result of international commitments under the United Nations Convention on Biological Diversity 2 and, subsequently, the Canadian Biodiversity Strategy, the Species at Risk Act (SARA, the Act) was enacted in Canada in The Act aims to prevent Canadian indigenous wildlife species from becoming extirpated or extinct, to provide for the recovery of threatened or endangered species and to encourage the management of other species to prevent them from becoming at risk. Under the Act, the Committee on the Status of Endangered Wildlife in Canada (COSEWIC) was designated to advise the Canadian government on the classification (special concern, threatened, endangered, extirpated or extinct, as per the Act) of wildlife species. The Canadian Government is required by the SARA to respond to the advice provided by COSEWIC on the assessment of species. Specifically, for each species assessed by COSEWIC, the Minister of Environment must make a recommendation (listing recommendation) to the Governor in Council on whether a species should be added (listed) to the List of Wildlife Species at Risk (Schedule 1) of SARA. In the case of aquatic species, the Minister of Environment first seeks a recommendation from the Minister of Fisheries and Oceans. Once a species is listed, it benefits from all the legal protection afforded, and the mandatory management and/or recovery planning required under SARA (e.g., SARA management plans for species of special concern; recovery strategies and action plans for threatened, endangered and extirpated species). To develop recommendations for aquatic species, Fisheries and Oceans Canada (DFO) undertakes, on behalf of the Minister of Fisheries and Oceans, various activities, as appropriate, such as: scientific assessments of the recovery potential for the species in question; the development of scenarios pertaining to management activities that would mitigate threats to the species in question (management scenarios); public consultations; and socio-economic analyses of the potential impacts associated with the respective management scenarios PURPOSE The purpose of this report is to provide an analysis of the potential socio-economic impacts associated with management scenarios for listing and not listing Atlantic salmon (Salmo Salar), South Newfoundland Designatable Unit (DU). It will contribute to the development of a listing recommendation for this species. A map of the Designatable Unit is provided in Appendix A. Socio-economic analyses are considered to be an integral part of the process to protect and recover species at risk. Among other things, the Preamble of the SARA states that, 1 Canada, Species at Risk Public Registry, 2013, 2 United Nations (1992), Convention on Biological Diversity Policy and Economics Branch, DFO Newfoundland and Labrador Region Page 4

5 community knowledge and interests, including socio-economic interests, should be considered in developing and implementing recovery measures. The Act requires socio-economic analyses at several junctures including recovery action planning and subsequent reporting. 3 Furthermore, listing a species under SARA requires a regulatory order and, so, triggers the need for a cost-benefit analysis as per the 2012 Government of Canada Cabinet Directive on Regulatory Management (CDRM). The CDRM requires, among other things, an analysis of the incremental benefits and costs of regulation, including the potential positive and negative socio-economic impacts on industry, consumer, Aboriginal groups and government and how these impacts may be distributed across affected parties, sectors of the economy and regions of Canada. The analysis contained in this report will be used in preparing the Regulatory Impact Analysis Statement (RIAS) required by the CDRM. 4 3 Species at Risk Act, Statutes of Canada 2002, c.29, ss 38, 49(1), 55, /index.html. 4 Canada, Cabinet Directive on Regulatory Management, 2012, Catalogue No. BT22-110/2007. ISBN Policy and Economics Branch, DFO Newfoundland and Labrador Region Page 5

6 2. BACKGROUND 2.1 SPECIES ASSESSMENT The abundance of Atlantic salmon in the South Newfoundland Designated unit was assessed to have declined by 37% for large salmon and 26% for small salmon from 1994 to 2007 and on this basis was designated as Threatened in November 2010 (COSEWIC) 5. As a result the DU is being considered for listing on Schedule 1 of SARA. 2.2 SPECIES PROFILE 6 Distribution In Canada, the Atlantic salmon range extends northward from the St. Croix River (at the border with Maine) to outer Ungava Bay of Quebec, plus one population in Eastern Hudson Bay. COSEWIC has defined the South Newfoundland DU as extending from the southeast tip of the Avalon Peninsula, Mistaken Point, westward along the south coast of Newfoundland to Cape Ray, comprising Salmon Fishing Areas This DU includes 104 known rivers, 58 of which are scheduled. Abundance Estimate The most recent estimate (2010) of adult abundance for the Designatable Unit was 22,404 salmon (range 15,626 29,546), with 20,744 (range 14,065 27,423) small salmon and 1,660 (range 1,197 2,123) large salmon. The lowest abundance during the last three generations ( ) was in 2001 with 18,572 salmon and the highest was 1996 with 60,671 salmon. Threats A Recovery Potential Assessment (RPA) for Atlantic salmon in the Newfoundland and Labrador DU was held by DFO Science from February 14-17, The purpose of the meeting was to provide the information and scientific advice required to meet various requirements of the Species at Risk Act. The advice in the RPA was developed to inform both scientific and socio-economic elements of the listing decision, in the development of a recovery strategy and action plan, and to support decision-making with regards to the issuance of permits, agreements and related conditions, as per relevant sections of SARA. A Science Advisory Report (SAR) was subsequently developed from the meeting. The SAR (DFO 2012/007) forms the basis of reference for assumptions and scenarios used in this document. 5 Committee on the Status of Endangered Wildlife in Canada, COSEWIC assessment and status report on Atlantic salmon November 2010, 6 Recovery Potential Assessment for the South Newfoundland Atlantic Salmon (Salmo Salar) Designated Unit Policy and Economics Branch, DFO Newfoundland and Labrador Region Page 6

7 The RPA identified that the greatest threat to the recovery of the South Newfoundland DU of Atlantic salmon is continued low marine survival. Factors influencing marine survival may include: mixed-stock marine fisheries and by-catch, changes in marine ecosystems, ecological and genetic interactions with escaped domestic Atlantic salmon, and illegal fisheries. The degree of influence of these factors is unknown and many have the potential to affect salmon in other DUs where populations have been stable or increasing. The RPA indicates that habitat alteration, especially physical alteration in freshwater and coastal areas will reduce the habitat s biological value. Oceanographic changes in offshore marine areas and continued environmental impacts from climate change have the potential to significantly impact the distribution and production of Atlantic salmon in the Northwest Atlantic. 2.3 ALLOWABLE HARM ASSESSMENT AND SPECIES RECOVERY TARGET Allowable Harm Assessment The RPA examined the probabilities of meeting or exceeding the population targets under various angling regimes. The table below outlines the results of this modeling exercise. Table 1 Probabilities of Meeting or Exceeding the Population Targets Under Various Salmon Angling Regimes Total Removals Recovery Objective (Population Targets) No angling Current angling Catch-and-release angling No further decline 74% 50% 70% Conservation requirement 52% 23% 42% Pre-decline mean 27% 12% 26% Source - Recovery Potential Assessment for the South Newfoundland Atlantic Salmon Species Recovery Target The RPA proposed that the Conservation Requirement (30,852 salmon) which has been used to manage fisheries access and exploitation be used as the recovery target for this DU. The projections from the RPA indicate that under the current management regime, after 3 generations (15 years), there is a 23% probability of meeting the conservation requirement. Policy and Economics Branch, DFO Newfoundland and Labrador Region Page 7

8 Under the scenario of no angling (i.e. no directed fishing) there is a 52% probability of reaching the conservation requirement after 3 generations (15 years). 2.4 OVERVIEW OF CURRENT MANAGEMENT FOR ATLANTIC SALMON A moratorium has been in place on commercial Atlantic salmon fishing in insular Newfoundland since 1992 and retention of by-catch of this species is not permitted in the waters within and around insular Newfoundland. A recreational fishery is managed in accordance with an Integrated Fisheries Management Plan (IFMP), which includes a river classification system that establishes harvest limits for each river class and includes retention and catch-and-release angling. Other conservation measures implemented include fishing licenses, fish tags, season dates, fishing gear restrictions, bag limits (daily, seasonal), minimum retention size, maximum retention size with mandatory release of large salmon and environmental protocols (very low waters and high temperatures may warrant a closure). In some rivers, only catch-and-release angling is permitted and educational programs exist to promote proper catch-and-release practices. There is no food, social and ceremonial fishery by Aboriginal peoples at this time. There is a Watershed Management Plan for Conne River. The goal of the watershed management plan is to meet conservation objectives by considering the health of the stock, the river, and impediments to conservation for individual rivers. The individual management approach at Conne River affects: the daily and seasonal bag limit, catch-and-release limits, in season review of returns, season duration and timing, environmental protocols, and closed areas. Policy and Economics Branch, DFO Newfoundland and Labrador Region Page 8

9 3. ANALYTICAL FRAMEWORK Scope The scope of this socio-economic analysis is limited to the activities outlined in the management scenarios, which were developed jointly by DFO Newfoundland and Labrador Region s Species at Risk Management Division and Resource Management Division. Detailed information on the scenarios can be found in Appendix C. Cost-Benefit Analysis A cost-benefit analysis approach was used to identify, quantify and establish a monetary value, where possible, the incremental costs and benefits of the proposed management scenarios. Incremental impacts are determined by comparing the outcomes of new measures introduced in the management scenarios with those that are already in place, or committed to; measures already in place or committed to are referred to as the Base Case. Impacts are analyzed at the level of Canadian society as a whole and by stakeholder group and region. Costs have been estimated in monetary terms to the extent possible and are expressed in 2010 Canadian dollars. Whenever this was not possible, due either to lack of appropriate data or difficulties in valuing certain components, costs were evaluated in qualitative terms. Attempts were made to monetize benefits; however, due to the complexity of evaluating benefits of species recovery and impacts on associated ecosystem goods and services, it is often difficult to monetize these benefits. Whenever it was not possible to monetize benefits they were expressed in qualitative terms. Base Year The base year selected for this analysis is calendar year 2010 as this is the most recent year that expenditure data has been compiled by the department on recreational angling activity. Time Frame To ensure consistency with the period proposed for the recovery target in the RPA, a time period of 15 years was selected for this analysis. In this analysis, both short and long term impacts are estimated. The short term impact is the immediate impact for one year. The long term impact assumes the following: A 15-year time horizon; The long term nature of species protection and recovery leads to inherent uncertainties in costs and benefits of the same, as impacts must be projected into the distant future. Uncertainty enters through economic and biological factors far beyond the scope of the management scenarios in this analysis. As well, the requirement that discounting be employed in the analysis limits the impact of costs and benefits accruing in the distant Policy and Economics Branch, DFO Newfoundland and Labrador Region Page 9

10 future. To balance these elements with the need for a comprehensive analysis that encompasses adequate time for a biological response, the time frame of 15 years was chosen for the Accounting Statement in Section 7. Annual angling catches at 2010 levels; and Prices remain constant at 2010 levels. Dollar values are expressed in real terms (i.e., 2010 dollars). Discount Rate Following Treasury Board guidelines, discount rates of 3 percent and 7 percent were used for estimating the present value of incremental costs 7. As incremental benefits could not be estimated quantitatively, only the present value of the stream of incremental costs was calculated. Gross versus Net Revenues (Profit) Impacts are initially estimated in gross terms and where relevant and possible, the net revenue or profits were then estimated. Identifying and estimating gross and net revenue (i.e. profit) for outfitters operating in the DU is not possible given available data. However, Industry Canada s Small and Medium Sized Enterprises (SME) benchmarking tool 8 indicates that there were no positive profits associated with this sector in Newfoundland and Labrador in Therefore, the net profit impact associated with a listing decision would be zero. It is possible to establish gross revenue and profit margins (% of gross revenue) for retail expenditures associated with salmon angling activities. To some extent, related outfitting activity is captured within this broad category. Net profits for the retail sector were identified using the North American Industry Classification System (NAICS) code ( Retail Trade) and are on average in the range of 3.5%. This widest category of retail trade was selected for completeness. Profit estimation based on straight percentage of gross revenue is not the preferred estimation technique but it is the most feasible given available data. Number of Jobs and Income A valid estimate of the total number of outfitter related jobs in the DU cannot be estimated given available data. However, an estimate of the gross employment income can be crudely extrapolated 7 Fisheries and Oceans Canada, 2012a. Framework for Integrating Socio-Economic Analysis in Species at Risk Act Decision Making. 2 nd Edition. Economic Policy, Economic Analysis and Statistics Directorate. Fisheries and Oceans Canada. November Industry Canada s SME benchmarking tool Policy and Economics Branch, DFO Newfoundland and Labrador Region Page 10

11 using the Industry Canada (SME) benchmarking tool. The data indicates that employment income is 30% of gross revenue for the Hunting and Fishing Camps operating in the province. A large portion of the expenditures related to salmon angling is directed toward the retail sector. Employment income in the retail sector is approximately 12.3% of gross revenue. Spin-off Impacts In addition to the direct impacts of an activity, there will be additional secondary or spin-off impacts that may also be experienced. Further rounds of impacts could include reductions in economic activities as a result of households having less income to spend on goods and services. This report does not capture further spin-off impacts. Policy and Economics Branch, DFO Newfoundland and Labrador Region Page 11

12 4. MANAGEMENT SCENARIOS The scope of this socio-economic analysis is limited to the activities outlined in the management scenarios, which were developed by DFO Newfoundland and Labrador Region s Species at Risk Management Division and Resource Management Division. A summary of the management scenarios are provided below while the scenarios are described in detail in Appendix C MANAGEMENT SCENARIO A Do Not List the South Newfoundland DU of Atlantic Salmon as a Threatened Species under SARA (Status Quo) Current Management: Individuals and their habitat would continue to be managed and protected under existing federal legislation. The moratorium on commercial Atlantic salmon fishing would continue and retention bycatch of this species would continue to be prohibited. Management measures in place in other fisheries that prohibit retention and minimize bycatch of Atlantic salmon would continue. The recreational fishery would continue in accordance with the current Integrated Fisheries Management Plan (IFMP). o River Classification System that establishes harvest limits for each river class and includes retention and catch-and-release angling. o Conservation measures implemented include fishing licenses, fish tags, season dates, fishing gear restrictions, bag limits (daily, seasonal), minimum retention size, maximum retention size with mandatory release of large salmon and environmental protocols (very low waters and high temperatures may warrant a closure). o The special watershed management plan for the Conne River would continue. The current advisory process would continue. Retention levels on rivers in the South Newfoundland DU would continue to be reviewed through this process and retention levels reduced where it is deemed appropriate. DFO is considering the creation of additional river classes and retention levels, including the retention of one fish, which would allow a reduction in retention levels from two to one fish for rivers that have a high level of angling activity and/or catch. DFO would continue to encourage St. Pierre and Miquelon to report on the fisheries for Atlantic salmon that occur in French waters and continue to encourage St. Pierre and Miquelon to become a member of the North Atlantic Salmon Conservation Organization. Research activities by Fisheries and Oceans Canada would continue. Policy and Economics Branch, DFO Newfoundland and Labrador Region Page 12

13 4.2. MANAGEMENT SCENARIO B List the South Newfoundland Designatable Unit of Atlantic Salmon as a Threatened species under SARA, with Allowable Harm The general prohibitions of SARA would be triggered and s. 32/33 general prohibitions would come into effect. In accordance with s. 32, no one could kill, harm, harass, capture, or take an Atlantic salmon in the South Newfoundland DU unless authorized via a SARA permit (s. 73) or exempted under a Recovery Strategy or Action Plan (S. 83(4)). It would be illegal to possess, collect, buy, sell or trade an Atlantic salmon from the South Newfoundland DU. The recreational fishery would not be permitted. The moratorium on the commercial fishery would continue. There would be continued absence of an Aboriginal food, social and ceremonial fishery. In addition, the following include actions that will be taken and potential measures that would be explored following a SARA listing: Completion of a recovery strategy and action plan. Protection of critical habitat (if identified). The possibility of exempting by-catch in some/all fisheries would be explored during recovery planning. The exemption would replace the need for an incidental harm permit for these fisheries, however no fishery would be allowed to retain Atlantic salmon and bycatch would be required to be returned to the water. Expected Outcome The Recovery Potential Assessment indicates that under the current management regime and contemporary marine survival (4%), after 3 generations (15 years), there is a 23% probability of meeting the conservation requirement (30,852 salmon). Under the list scenario of no angling (i.e. no directed fishing) and contemporary marine survival (4%), there is a 52% probability of reaching the conservation requirement after 3 generations (15 years). Policy and Economics Branch, DFO Newfoundland and Labrador Region Page 13

14 5. PROFILE OF STAKEHOLDER GROUPS This profile provides a broad overview of stakeholders that may be impacted by a positive SARA listing decision. The intention is to provide a summary of the scale of potential impacts. Note that the net impacts of listing, both short and long term, are presented in detail in Section 6 (Cost- Benefit Analysis) RECREATIONAL ANGLERS In 2012, a special data tabulation from the 2010 Survey of Recreational Fishing in Canada 9 was completed. The survey estimated total expenditures comprising investments and trip expenses wholly attributable to Atlantic salmon angling. The data indicated that approximately 3,500 recreational Atlantic salmon anglers (resident, Canadian non-resident and other non-resident) 10 were engaged in salmon angling activity in the DU. These anglers spent approximately 24,700 days fishing, caught 10,700 fish and retained 3, OUTFITTERS Data obtained from the Province of Newfoundland and Labrador indicates there are 19 licenced outfitting entities operating 28 sites within the boundary of the DU. The level of business activity is not known with certainty, nor the proportion of activity associated exclusively with salmon angling. However, industry sources indicate that perhaps half of these facilities are highly active ABORIGINAL GROUPS There are currently no Food Social or Ceremonial fisheries in the South Newfoundland DU of Atlantic salmon. The Miawpukek First Nation is the only First Nation group to have Food Social or Ceremonial rights in the DU. However, the Miawpukek First Nation have voluntarily chosen not to participate in a Food, Social and Ceremonial Fishery for salmon, instead opting to allow a limited recreational fishery open to the general public. Representatives of the Miawpukek First Nation participate in the salmon advisory process, in co-operation with the Department of Fisheries and Oceans, have developed and implemented a watershed management plan specific to the Conne River. The goal of the plan is to increase returns and to allow limited angling when the level of returns permit. The plan considers the health of the stock, the river, and impediments to conservation. The management approach at Conne River affects: the daily and seasonal bag limit, catch-and-release limits, in season review of returns, season duration and timing, environmental protocols, and closed areas A resident angler is an angler who lived in the jurisdiction and who fished within that jurisdiction in 2010; a Canadian non-resident is a Canadian angler who fished in a jurisdiction other than his/her home jurisdiction; and an other nonresident angler is a non-canadian angler who fished in a Canadian jurisdiction. Policy and Economics Branch, DFO Newfoundland and Labrador Region Page 14

15 5.4. RETAIL TRADE Salmon angling activity in the DU contributed to various local economies of the province through expenses totalling approximately $1.53 million. Of this amount, approximately $677,000 was expended on major purchases and investments. 11 Approximately 80% of these expenditures were carried out by resident anglers, with a further 18% expended by Canadian non-residents. The remaining $858,000 was spent on direct expenditures attributable to Atlantic salmon angling, specifically; transportation, food, accommodation, fishing services and supplies incurred during angling trips. Approximately 92% of these expenditures were madet by resident anglers. The data indicate that a much lower percentage of out-of-province angling expenditures were associated with the rivers in this DU relative to other angling areas. Labrador had the highest percentage of out-of-province angler expenditures. Activity Expenditures Table 2 Salmon Angling Activity and Expenditures # salmon anglers 3,534 # days fished 24,707 # salmon caught 10,774 # salmon kept 3,864 Salmon investments &/or major purchases $676,808 Trip expenditures 12 $857,681 Total spending attributable to salmon angling $1,534,489 Source - DFO special data run 2010 recreational fishing survey 11 Major purchases and investments: the purchase of durable goods in support of recreational fishing activities. These include boats, motors, special vehicles, camping gear and other durable goods. Land and building purchases are also included. 12 Trip expenditures include package deals and other guide related activities. Policy and Economics Branch, DFO Newfoundland and Labrador Region Page 15

16 6. COST-BENEFIT ANALYSIS OF MANAGEMENT SCENARIOS Presented below is the socio-economic analysis of the expected impacts associated with the South Newfoundland DU of Atlantic salmon management scenarios. As previously mentioned, the impacts considered in the analysis are limited by the range of activities included in the management scenarios. Should Atlantic salmon be listed a variety of options and measures to protect the species beyond those considered in this analysis could form part of its management as a threatened species MANAGEMENT SCENARIO A Do Not List the South Newfoundland DU of Atlantic Salmon as a Threatened Species under SARA (Status Quo) Incremental Costs & Benefits If the species is not listed under SARA, it will be managed by DFO under the Fisheries Act. There are no incremental costs or benefits associated with the do not list scenario (status quo) MANAGEMENT SCENARIO B List the South Newfoundland Designatable Unit of Atlantic Salmon as a Threatened species under SARA, with Allowable Harm Incremental Costs Recreational Angling Listing the South Newfoundland DU of Atlantic salmon will preclude recreational angling on rivers contained within the DU. It is anticipated that a subset of resident and non-resident anglers, who normally are active on these rivers, will travel to other rivers throughout the province to fish for Atlantic salmon. Thus, it is uncertain as to the proportion of anglers who will ultimately be impacted by the closure of the DU in terms of their angling activity. However, it is assumed that salmon angling is a habitual pursuit and not an opportunistic activity. It would be prudent to assume that between 30% 70% of affected anglers would undertake to travel to other rivers within the province if impacted by the closure of the DU. For example, if 3 out of 10 displaced anglers decide to fish on other available rivers, their previous DU activity (days fished, # salmon Policy and Economics Branch, DFO Newfoundland and Labrador Region Page 16

17 caught, # salmon retained) would be replicated on other rivers. Table 3 shows the impact on salmon angling activity for various levels of salmon angling activity that may continue. Displacement of anglers on DU rivers to other rivers in the province may result in an incremental travel cost. The extent of this incremental cost is not known. The addition of displaced South Newfoundland DU anglers on other Newfoundland and Labrador rivers will result in incrementally higher levels of angling activity on these rivers. This may result in crowding or other disruptions of normal angling experiences of the local angling community. It may also result in higher fishing pressure which may have stock impacts. Such impacts would be considered negative externalities. The incremental costs associated with these externalities are highlighted but not assessed or monetized in this analysis. The loss of the recreational experience for the subset of anglers who do not travel to other rivers may be considered a net loss. The extent of this loss is not monetized. Policy and Economics Branch, DFO Newfoundland and Labrador Region Page 17

18 Table 3 Salmon Angling Activity and Expenditures by Percentage of Activity Continuing % of Angling Activity Continues Activity # salmon anglers 2,474 # days fished 17,296 # salmon caught 7,542 # salmon kept 2,705 Expenditures Salmon investments &/or major purchases $473,766 Trip expenditures $600,377 Total spending attributable to salmon angling $1,074,142 50% of Angling Activity Continues Activity # salmon anglers 1,767 # days fished 12,354 # salmon caught 5,387 # salmon kept 1,932 Expenditures Salmon investments &/or major purchases $338,404 Trip expenditures $428,841 Total spending attributable to salmon angling $767,245 30% of Angling Activity Continues Activity # salmon anglers 1,060 # days fished 7,412 # salmon caught 3,232 # salmon kept 1,159 Expenditures Salmon investments &/or major purchases $203,042 Trip expenditures $257,304 Total spending attributable to salmon angling $460,347 Source - DFO special data run 2010 recreational fishing survey Policy and Economics Branch, DFO Newfoundland and Labrador Region Page 18

19 Outfitters Provincial tourism data indicates that there are 19 outfitter entities licenced to operate within the DU. There are 28 sites associated with these outfitting entities. Outfitters located in these areas will undoubtedly be negatively impacted, to varying degrees, by possible river closures with the impact being hardest felt for single species camps (salmon). It is likely that the gross impacts on the overall Newfoundland and Labrador outfitting industry will be mitigated by increased economic activity resulting from displaced South DU anglers fishing in other areas of the province. DFOs Recreational Fishing Survey does not provide a reliable estimate of gross outfitting expenditures at the South Newfoundland DU level. However, Industry Canada s SME benchmarking data indicate no positive profits for this sector. Therefore, the impact of angling prohibitions on net profit is assumed to be zero. This is not to suggest that there was no economic benefit associated with this industry, indeed gross revenue may be relatively large. Industry Canada data was consulted to develop an estimate of the annual employment income generated in the outfitting sector in the DU. Annual employment income was estimated to be $452, Given varying levels of salmon angling activity that may continue, the annual loss in employment income (Table 4) for employees working the outfitting sector in Atlantic Canada is in the range of (-$135,600 : if 70% of angling continues elsewhere) to (-$316,500 : if only 30% of angling continues elsewhere). Table 4 Annual Net Impacts based on Percentage of Salmon Angling Activity that Continues Net Forgone Wages and Profits - % of Angling Activity that Continues Outfitter Sector 70% 50% 30% Gross Revenue Not Available Not Available Not Available Forgone Wages ($452K) -$135,600 -$226,100 -$316,500 Forgone Net Profit (0%) $0 $0 $0 Source - DFO special data run 2010 recreational fishing survey and Industry Canada SME Benchmarking 13 $47,600 average employment income by firm * % salmon revenue (50%) * 19 firms = $452,200 Policy and Economics Branch, DFO Newfoundland and Labrador Region Page 19

20 Aboriginal Food, Social and Ceremonial (FSC) Fishery There are currently no FSC fisheries in the South Newfoundland DU of Atlantic salmon. The Miawpukek First Nation is the only First Nation group to have Food Social or Ceremonial rights in the DU. However, the Miawpukek First Nation have voluntarily chosen not to participate in a Food, Social and Ceremonial Fishery for salmon, instead opting to allow a limited recreational fishery open to the general public. This group of anglers would be negatively impacted by river closures. Retail Trade Table 5 shows the impact on salmon investments &/or major purchases and trip expenditures for various levels of salmon angling activity that may continue. Gross annual retail trade revenue losses could be in the range of (-$460,000 : if 70% of angling continues elsewhere) to (-$1.07M : if only 30% of angling continues elsewhere). Assuming a profit margin on gross revenue in the general retail sector of 3.5%, annual losses in net profit could be in the range of (-$16,100 : if 70% of angling continues elsewhere) to (-$37,600 : if only 30% of angling continues elsewhere). Using a long term period of 15 years and a discount rate of 7 and 3 percent, the total present value of losses over a 15 year period is in the range of (-$147,800 to -$192,800: if 70% of angling continues elsewhere) to (-$344,900 to -$449,900: if only 30% of angling continues elsewhere). The possible annual loss of wages and salaries in the retail sector could be in the range of (-$56,600 : if 70% of angling continues elsewhere) to (-$132,100 : if only 30% of angling continues elsewhere). Table 5 Annual Net Impacts based on Percentage of Salmon Angling Activity that Continues Net Forgone Wages and Profits - % of Angling Activity that Continues Retail Sector 70% 50% 30% Gross Revenue -$460,347 -$767,245 -$1,074,143 Forgone Wages (12.3%) -$56,623 -$94,371 -$132,120 Forgone Net Profit (3.5%) -$16,112 -$26,854 -$37,595 Source - DFO special data run 2010 recreational fishing survey and Industry Canada SME Benchmarking Policy and Economics Branch, DFO Newfoundland and Labrador Region Page 20

21 Government Impacts on the Federal Government include a loss of tax revenue due to a loss in profits/income and administration costs associated with the SARA listing. It is expected that the administrative costs would be negligible and would be met through funds currently allocated for the implementation of SARA. Impacts on the Provincial Government include a loss of tax revenue due to a loss in profits/income and a loss of licence fee revenue dependent on level of displacement. Note that tax revenues losses represent a transfer and are not included in the direct impact analysis. Canadian Consumers There are currently no commercial fisheries for wild Atlantic salmon in Canada. The recreational fishery in the South Newfoundland DU is managed in accordance with an Integrated Fisheries Management Plan which does allow for limited retention of salmon. The 2010 Survey of Recreational Fishing in Canada Employment estimates that there were approximately 3,800 salmon retained in recreational angling. The estimated number of salmon retained under various level of angler displacement would be the range of 1,150 2,700 fish. This decline in retained catch would represent a consumptive loss. Incremental Benefits Species Abundance The RPA indicates that under the current management regime and contemporary marine survival (4%), after 3 generations (15 years), there is a 23% probability of meeting the conservation requirement (30,852 salmon). Under the list scenario of no angling (i.e. no directed fishing) and contemporary marine survival (4%), there is a 52% probability of reaching the conservation requirement after 3 generations (15 years). Improvement in species abundance represents an incremental benefit. Non-Market Benefits The protection and recovery of species at risk can result in both benefits and costs. The Act recognizes that wildlife, in all its forms, has value in and of itself and is valued by Canadians for aesthetic, cultural, spiritual, recreational, educational, historical, economic, medical, ecological and scientific reasons (SARA 2003). Self-sustaining and healthy ecosystems with their various elements in place, including species at risk, contribute positively to the livelihoods and the quality of life of all Canadians. To the extent that the listing of the DU to Schedule 1 of SARA leads to stability or improved species abundance, there may be non-use benefits derived by Canadians including a) knowledge that the species exists (existence value) and b) that the species will be available for future generations to enjoy (bequest value). It is documented that Canadians value the preservation and conservation of species in and of themselves, and the more the action contributes Policy and Economics Branch, DFO Newfoundland and Labrador Region Page 21

22 to the recovery of a species, the higher the value the public places on such actions (Loomis and White, 1996; Fisheries and Oceans, 2008). Other Potential Impacts Under SARA, the development of recovery strategies and action plans are required for threatened species. It is not known what the recovery strategy or action plan for South Newfoundland DU would comprise. As such, it is possible there could be other socio-economic impacts associated with the development and implementation of these plans beyond those considered in this analysis. Policy and Economics Branch, DFO Newfoundland and Labrador Region Page 22

23 7. SUMMARY 7.1. COST BENEFIT ANALYSIS Accounting Statement Section A Cost Benefit Analysis COST Monetized (annual/net): Scenario A (No Listing) Retail Sector $0 Scenario B (Listing) $16,112 (70% angling continues) - $37,595 (30% angling continues) Outfitter Sector $0 $0 Total cost to society $0 $16,112 (70% angling continues) - $37,595 (30% angling continues) Quantified/Non-monetized: - - Unquantified: - Additional administrative costs TOTAL FOR 15 YEARS 3% Discount Rate $0 $344,900 - $449,900 7% Discount Rate $0 $147,800 - $191,800 BENEFITS Quantified/Non Monetized: - Unquantified: Ecological and non-market benefits 29 percentage point increase in the probability of reaching the conservation requirement after 3 generations (15 years) Ecological and non-market benefits Policy and Economics Branch, DFO Newfoundland and Labrador Region Page 23

24 7.2. STAKEHOLDERS ANALYSIS Accounting Statement Section B Stakeholder Analysis Scenario A Scenario B (No Listing) (Listing) IMPACTS (annual) Industry Retail Sector - Revenue loss ($460,000 - $1.07M) Outfitter Sector - Revenue loss (salmon activities) 19 outfitting entities Government Federal Loss of Tax Revenue Additional administrative costs Provincial - Loss of Tax Revenue Loss of Licence Fee Revenue dependent on level of displacement Employment Loss of employment (not specified) and - employee income (annual $57K - $132K) in the retail sector Loss of employment (not specified) and employee income (annual $135K - $316K) in the outfitter sector Regions - Profit and possible employment losses; retail and outfitter sector Aboriginal Communities - Aboriginal anglers impacted by river closures No FSC fisheries in DU Canadian Consumers - Limited impact some degree of loss of consumptive value Note: In addition to the direct impacts noted above, additional secondary spin-off impacts my be present. These secondary impacts are not estimated in this report. Policy and Economics Branch, DFO Newfoundland and Labrador Region Page 24

25 BIBLIOGRAPHY Canada Cabinet Directive on Regulatory Management, 2012, Catalogue No. BT22-110/2007. ISBN Canada Species at Risk Public Registry. Canada. Species at Risk Act, Statutes of Canada 2002, c.29, ss 38, 49(1), 55, COSEWIC COSEWIC Assessment and Status Report on the Atlantic salmon in Canada. Ottawa. Xiii +105pp. Fisheries and Oceans Canada Recovery Potential Assessment (RPA) for the South Newfoundland Designatable Unit of Atlantic salmon. DFO Can Sci. Advis. Sec. Advis. Rep. 2012/ Fisheries and Oceans Canada. 2012a. Framework for Integrating Socio-Economic Analysis in Species at Risk Act Decision Making. 2 nd Edition. Economic Policy, Economic Analysis and Statistics Directorate. Fisheries and Oceans Canada. November Fisheries and Oceans Canada, 2012b. Survey of Recreational Fishing in Canada Catalogue No. Fs42-1/2010E. ISBN DFO/ Statistics Canada, Small Business Profiles, 2010, United Nations Convention on Biological Diversity. Policy and Economics Branch, DFO Newfoundland and Labrador Region Page 25

26 APPENDIX A DU MAPS Policy and Economics Branch, DFO Newfoundland and Labrador Region Page 26

27 Policy and Economics Branch, DFO Newfoundland and Labrador Region Page 27

28 APPENDIX B - SCHEDULED RIVERS SOUTH NEWFOUNDLAND DU Biscay Bay River Northeast Brook, Trepassey Northwest Brook, Trepassey Peter s River Salmonier River, including Back River below falls Colinet River, including north and east branches Rocky River & tributary streams North Harbour River, St. Mary s Bay Little Salmonier River, St. Mary s Bay Big Barachois Brook, St. Mary s Bay Branch River, St. Mary s Bay Great Barasway South East River (Placentia) &tributary streams Northeast River, Placentia Come By Chance River Watson s Brook, Placentia Bay North Harbour River, Placentia Bay Black River, Placentia Bay below falls Piper s Hole River Nonsuch Brook Cape Rodger River Bay de l Eau River Red Harbour River, Northeast &Northwest branches & tributary streams West Brook, North West Arm, Mortier Bay & tributary streams Tide s Brook, Mortier Bay, including Main Brook, Shearstick Brook & tributary streams Salmonier River, Burin Little St. Lawrence River & tributary streams Lawn River & tributary streams Taylor s Bay River, Burin Peninsula & tributary streams Salmonier Lamaline River & tributary streams Piercey s Brook & tributary streams Grand Bank Brook & tributary streams Garnish River, including Lower Garnish & Upper or Black River & tributary streams Long Harbour River & tributary streams, Fortune Bay Bay du Nord River Simmons Brook & tributary streams, Cinq Island Bay, Fortune Bay Southwest Brook & tributary streams, Cinq Island Bay, Fortune Bay Old Bay Brook, Bay de l Eau Taylor s Bay Brook, Bay de l Eau Conne River & tributary streams, including Bernard s Brook & Twillick Brooks, Bay d Espoir Policy and Economics Branch, DFO Newfoundland and Labrador Region Page 28

29 Long Reach Brook, East Bay Allen s Cove Brook, Facheau Bay Bottom Brook, Facheau Bay Hare Bay Rivers, Southwest Coast Grey River, including Salmon Brook White Bear River Bay de Lupe River King s Harbour River Grandy s River, including Top Pond Brook Cinq Cerf River East Bay Brook, La Poile La Poile River Farmer s Arm River Garia River, including North West Brook Burnt Island River (Grandy s Brook) Isle aux Morts River Grand Bay River North West Brook, Grand Bay Policy and Economics Branch, DFO Newfoundland and Labrador Region Page 29

30 APPENDIX C DETAILED MANAGEMENT SCENARIOS INTRODUCTION The development of a set of management scenarios is required to inform the listing decision for aquatic species assessed as endangered or threatened under Canada s Species at Risk Act (SARA). These scenarios are also required for the benefit-cost analysis of the Regulatory Impact Analysis Statement when species are under consideration for listing. The purpose of this report is to present the management scenarios for the Atlantic Salmon South Newfoundland Designatable Unit (DU). The Committee on the Status of Endangered Wildlife in Canada (COSEWIC) assessed the Atlantic Salmon - South Newfoundland DU as a threatened species in November Within the terms of the SARA, the federal government can make three possible choices concerning the assessment put forward by COSEWIC. The Government can: a) accept the COSEWIC assessment and add the species to the list; b) decide not to list the species; or c) refer the matter back to COSEWIC for further information or consideration. For the purpose of these scenarios, the Minister of Fisheries and Oceans will consider only the first two choices listed above (i.e., a and b ). The Recovery Potential Assessment (RPA) for the South Newfoundland Atlantic Salmon DU was held from February 14 16, 2012 and a Science Advisory Report (SAR) was developed from the meeting. The SAR (DFO 2012/007) forms the basis of reference for assumptions and scenarios used within this document. The management scenarios presented are illustrative only, and no decision has been made regarding either the listing of the Atlantic Salmon - South Newfoundland DU under SARA or the exact mitigation, management and recovery measures that will be undertaken should the species be listed. If the species is listed under SARA, a Recovery Strategy would need to be developed within two years of the species being listed on Schedule I. CANADIAN DISTRIBUTION In Canada, the Atlantic Salmon range extends northward from the St. Croix river (at the border with Maine) to outer Ungava Bay of Quebec, plus one population in Eastern Hudson Bay. COSEWIC has defined the South Newfoundland DU as extending from the southeast tip of the Avalon Peninsula, Mistaken Point, westward along the south coast of Newfoundland to Cape Ray, comprising Salmon Fishing Areas This DU includes 104 known rivers, 58 of which are scheduled. 30

31 HABITAT Atlantic Salmon spawn in fresh water, generally in their native river. Juveniles in the South Newfoundland DU usually spend three to four years in fresh water before migrating to salt water in the North Atlantic. Within this DU, most adults return to fresh water to spawn after one year. Salmon rivers or streams are generally clear, cool and well oxygenated, with gravel, cobble and boulder substrates. Marine habitat requirements for Atlantic Salmon are less well known than those for fresh water. The RPA stated that within this DU, there is no indication that the amount of suitable habitat is currently limiting the recovery of Atlantic Salmon, but that this habitat should be maintained as the impact of reducing it is unknown. RESIDENCE SARA s. 2(1) defines a residence as a dwelling-place, such as a den, nest or other similar area or place, that is occupied or habitually occupied by one or more individuals during all or part of their life cycles, including breeding, rearing, staging, wintering, feeding or hibernating. Female Atlantic Salmon excavate depressions and remove debris from gravels in the substrate to form redds (or nests). After spawning, females cover the eggs with substrate. These redds are essential for incubation of the eggs and for sheltering yolk-sac fry for an extended period of five months or more. If the physical structure of the redd is disturbed or destroyed, there would be very high to total mortality of eggs and yolk-sac fry. As a result, redds would meet the criteria of a residence as defined by SARA (DFO 2012/007). CURRENT MANAGEMENT AND PROTECTION (BASE CASE) A moratorium has been in place on commercial Atlantic Salmon fishing in insular Newfoundland since 1992 and retention of by-catch of this species is not permitted in the waters within and around insular Newfoundland. Under the current regulatory management regime, the Atlantic Salmon populations in the South Newfoundland DU have continued to decline. A recreational fishery is managed in accordance with an Integrated Fisheries Management Plan (IFMP), which includes a river classification system that establishes harvest limits for each river class and includes retention and catch and release angling. Other conservation measures implemented include fishing licenses, fish tags, season dates, fishing gear restrictions, bag limits (daily, seasonal), minimum retention size, maximum retention size with mandatory release of large salmon and environmental protocols (very low waters and high temperatures may warrant a closure). In some rivers, only catch and release angling is permitted and educational programs exist to promote proper catch and release practices. There is no food, social and ceremonial fishery by Aboriginal peoples at this time. There is a Watershed Management Plan for Conne River. The goal of the watershed management plan is to meet conservation objectives by considering the health of the stock, the river, and impediments to conservation for individual rivers. The individual management approach at Conne River affects: the daily and seasonal bag limit, catch and release limits, in season review of returns, season duration and timing, environmental protocols, and closed areas. 31