The impact of subsidies upon fisheries management and sustainability: the case of the North Atlantic

This paper provides both an estimate and assessment of subsidies in fisheries in the North Atlantic. The subsidies are estimated, on the basis of data taken from an OECD study and the Sea Around US Project database, to be in the order of US$ 2.0-2.5 billion per year. The assessment of the impact of the subsidies upon resource management and sustainability requires an examination of the underlying economics of subsidies in fisheries. There is general agreement, to which we subscribe, that fisheries subsidies do great harm by exacerbating the problems arising from the 'common pool' aspects of capture fisheries. Many economists, however, believe it that, if the 'common pool' aspects of a fishery could be removed by, for example, establishing a full-fledged property rights system, the negative impact of fisheries subsidies would prove to be trivial. This paper demonstrates that the aforementioned comfortable belief is unfounded. Fisheries subsidies can be seriously damaging, even if the 'common pool' aspects of the fishery are removed. There is also a widely held belief among economists and government officials that subsidies used for vessel decommissioning schemes, far from being harmful, actually have a beneficial impact upon resource management and sustainability, or are at worst, neutral. About 20% of the fisheries subsidies in the North Atlantic are directed towards these purposes. In this paper, we argue that these seemingly beneficial subsides can, in fact, be highly negative in their impact.