The Methodology of ECOST Project to Assess Societal Costs and Benefits Centre for the Economics and Management of Aquatic Resources (CEMARE), University of Portsmouth, UK October 2006

Fishing Discards Landing Processing Consumption Distribution Consumption Service PopulationEmployment Functional income distribution Personal income distribution Labor, capital incomesPersonal incomes

Growth Effort Price CPUE table Use table Revenue An economic model to assess ecological, economic and social costs and benefits Stock Ecological changes Costs Benefits Surplus CapitalLabour Capitalists’ income Labours’ income Cost Price Revenue Surplus Capitalists’ income Labours’ income Cost CapitalLabour Price Revenue Surplus Capitalists’ income Labours’ income Cost Consumption Social changes ProductionProcessingDistribution Costs Benefits Service

Economic benefit (exploration) Social cost (depletion) Economic cost (operation) Ecological benefit (protection or management) Social system Economic system Ecological system Social benefit (consumption) Economic benefit (surplus) Ecological cost (degradation) Economic cost (depletion) Ecological benefit (restoration) Social cost (disturbance) Economic cost (correction) Social benefit (improvement)

The society = social system + economic system + ecological system The societal benefit = social benefit + economic benefit + ecological benefit The societal cost = social cost + economic cost + ecological cost Net social benefits = social benefits - social costs Net economic benefits = economic benefits - economic costs Net ecological benefit = ecological benefits - ecological costs

Social benefits = social benefit (consumption) + social benefits (improvement of poverty, inequality, gender) = value of consumption + economic costs (correction) Social costs = social cost (disturbance) + social cost (depletion) = economic cost (correction) + willingness-to-pay Economic benefits = surplus Economic costs = economic cost (operation) + economic cost (correction) + economic cost (depletion) Ecological benefits = ecological benefit (protection) + ecological benefit (restoration) = social cost (depletion) + economic cost (restoration) = willingness-to-pay + economic cost (depletion) Ecological costs = ecological cost (degradation) = economic cost (depletion) + [net economic benefit with action – net economic benefit with rest] + [net social benefit with action – net social benefit with rest]

Fishing-depended groups by small, medium and large scale and by employee and employer Processing-depended groups by small, medium and large scale and by employee and employer Marketing-depended groups by small, medium and large scale and by employee and employer Service-depended groups by small, medium and large scale and by employee and employer Government – representing outside fishery population Fishery society population by group

(3) Distribution Small-scale dealer (m/f) Retailer (m/f) Export worker Local wholesaler (m/f) Exporter (4) Business service Small-scale worker (m/f) Medium-scale worker (m/f) Large-scale worker (m/f) Small-scale owner (m/f) Medium-scale owner (m/f) Large-scale owner (m/f) Fishery society employment by group (1) Production Small-scale fisher (m/f) Medium-scale fishing worker (m/f) Large-scale fishing worker (m/f) Small-scale owner (m/f) Medium-scale owner (m/f) Large-scale owner (m/f) Foreign fleets - government (2) Processing Medium-scale fish-processing worker (m/f) Large-scale fish-processing worker (m/f) Medium-scale fish-processing owner (m/f) Large-scale fish-processing owner (m/f)

Small-scale fishery group average income N – number of population L – number of labor Y – total income AY – average income ss – small-scale sf – small-scale fisher sd – small-scale dealer sw – small-scale worker Y ss = AY sf *L sf + AY sd *L sd + AY sw *L sw AY L ss = Y ss /L ss AY N ss = Y ss /N ss

Industry fishery workers’ group average income ine – industry fishery employee if – industry fisher ipw – industry processing worker rt – retailer is – industry service worker m - metier Y ine = AY if *L if + AY ipw *L ipw + AY rt *L rt + AY is *L is AY N ine = Y ine /N ine AY L ine = Y ine /L ine

Industry fishery capitalists’ group average income inc – industry fishery capitalist ik – industry skipper ipc – industry processing capitalist lw – local wholesaler ex – exporter isc – industry service capitalist Y ine = AY ik *L ik + AY ipc *L ipc + AY lw *L lw + AY ex *L ex + AY isc *L isc AY N inc = Y inc /N inc AY L inc = Y inc /L inc

Government income from foreign fleets Pq – price of quota/access right Qq – quantity of quota/effort Y G = P q *Q q AY N = Y G /N

Sen’s comprehensive measure of poverty (1976) S – Sen poverty index H – the poverty headcount ratio I – the average income shortfall of the poor in percentage terms G – Gini coefficient of inequality

FGT comprehensive measure of poverty (1984) AY – poverty line i – ith group n – number of groups – P-alpha poverty index for all

Fish consumption index for food security FC – average fish consumption of each fishery group in KG i – ith group 50 – 50 KG consumption of fish C – constant F – fish consumption index – average price of fish

Gender development index W – gender development index Y w – total income of women in each group Y m – total income of men in each group i – ith group

Combined measure of social indices SI – combined social indices

Ecological change index EI – ecological change index B – biomass stock – historical biomass stock

The data required

MR AR p e OAE e MSY e MEY o c c1c1 c2c2 c3c3 o2o2 MC=AC (1) When social members give full permit for fishermen to capture fishes, Total value of effort = Total cost of effort Total value of effort = poe OAE o 2 = p*e OAE Total cost of effort = economic cost of fishing + social cost (rent) + ecological cost = coe OAE c 3 + pcc 3 o 1 + o 1 c 3 o 2 = c*e OAE + 0.5*(p-c)*(e OAE +e MSY ) + 0.5*(p-c)*(e OAE -e MSY ) o1o1 1. Uncontrolled competitive fisheries e CARE

MR/AR P=c e MSY = e MEY = e OAE o MC/AC (2) When social members prevent fishermen from capturing fishes, Total value of effort = Total cost of effort Total value of effort = poe MSY o 1 = p*e MSY Total cost of effort = economic cost + social cost (rent) + ecological cost = coe MSY o = c*e MSY o1o1

MR AR p e s OAE e s MSY e s MEY o c o1o1 MC/AC (3) When social members give partial permit for fishermen to capture fishes (quota), Total value of effort = Total cost of effort Total value of effort = poe s OAE o 2 = p*e s OAE Total cost of effort = economic cost + social cost (rent) + ecological cost = c s oe s OAE s 3 + pc s s 3 o 1 + o 1 s 3 o 2 = c s *e s OAE + 0.5*(p-c s )*(e s OAE +e s MSY ) + 0.5*(p-c s )*(e s OAE -e s MSY ) Where c s = (1 - m yes /M)*(p-c) + c s1s1 s2s2 s3s3 cscs o2o2 MC s /AC s

MR AR p e s OAE e s MSY e s MEY o o1o1 (4) In case that multiple metiers target a single species, efforts are distinguished by metier and a composite effort comprises of efforts of different metiers. Price and cost can be regarded as average value of those metiers. Italic symbols below represent average value over metiers. Total Total value of effort = Total cost of effort Total value of effort = poe s OAE o 2 = p*e s OAE Total cost of effort = economic cost + social cost (rent) + ecological cost = c s oe s OAE s 3 + pc s s 3 o 1 + o 1 s 3 o 2 = c s *e s OAE + 0.5*(p-c s )*(e s OAE +e s MSY ) + 0.5*(p-c s )*(e s OAE -e s MSY ) s1s1 s2s2 s3s3 cscs o2o2 MC s /AC s

MR AR p e s OAE e s MSY e s MEY o o3o3 (5) In case that multiple metiers target multiple species, a metier can have by-catch, which increase revenue of effort of the metier without additional costs. Thus, equilibrium effort is likely beyond OAE effort. Total Total value of effort = Total cost of effort Total value of effort = p MM oe s MM o 4 = p MM *e s MM Total cost of effort = economic cost + social cost (rent) + ecological cost = c s oe s OAE s 3 + pc s s 3 o 1 + o 1 s 3 o 2 = c s *e s MM + 0.5*(p MM -c s )*(e s MM +e s MSY ) + 0.5*(p MM -c s )*(e s MM -e s MSY ) s1s1 s2s2 s3s3 cscs o2o2 MC s /AC s MR s4s4 p MM o1o1 o4o4 e s MM

MR AR p e s OAE e s MSY e s MEY o p OBS o1o1 (6) If observed effort doesn’t reach OAE effort, fisheries are in disequilibrium and there are net economic cost and ecological cost. The movement towards equilibrium is through new investment in fisheries. Total value of effort = Total cost of effort Total value of effort = poe s OBS o 4 = p*e s OBS Total cost of effort = economic cost + social cost (rent) + ecological cost = c s oe s OBS s 4 + (p OBS c s s 4 s 5 + pp OBS s 5 o 1 ) + o 1 s 5 o 4 = c s *e s OBS + ((p OBS -c s )*e s OBS + 0.5*(p-p OBS )*(e s OBS +e s MSY )) + 0.5*(p-p OBS )*(e s OBS -e s MSY ) Where p OBS is observed average price of effort s1s1 s2s2 s3s3 cscs o3o3 e s OBS MC s /AC s o4o4 s4s4 s5s5

MR AR p e s OAE e s MSY e s MEY o p OBS o1o1 (7) If observed effort exceeds OAE effort without by-catch, fisheries are in disequilibrium and there are net economic cost and ecological cost. The movement towards equilibrium is through driving out the fisheries which are suffering losses. Total value of effort = Total cost of effort Total value of effort = poe s OBS o 4 = p*e s OBS Total cost of effort = economic cost + social cost (rent) + ecological cost extra economic cost + extra ecological cost = c s oe s OAE s 3 + pc s s 3 o 1 + o 1 s 3 o 3 + s 3 e s OAE e s OBS s 4 + o 3 s 3 s 4 o 4 = c s *e s OAE + 0.5*(p-c s )*(e s OAE +e s MSY ) + 0.5*(p-c s )*(e s OAE -e s MSY ) + c s* (e s OBS -e s OAE ) + (p-c s)* (e s OBS -e s OAE ) Economic loss = c s* (e s OBS -e s OAE ) - 0.5*(p OBS +c s )*(e s OBS -e s OAE ) Or Total cost of effort = economic cost + social cost (rent) + ecological cost = c s oe s OBS s 4 + (pp OBS s 5 o 1 – c s p OBS s 5 s 4 ) + o 1 s 5 o 4 = c s *e s OBS + (0.5*(p-p OBS )*(e s MSY +e s OBS ) - (c s -p OBS )*e s OBS ) *(p-p OBS )*(e s OBS -e s MSY ) = c s *e s OBS + ((p OBS -c s )*e s OBS + 0.5*(p-p OBS )*(e s OBS +e s MSY ) ) + 0.5*(p-p OBS )*(e s OBS -e s MSY ) s1s1 s2s2 s3s3 cscs o3o3 e s OBS MC s /AC s o4o4 s5s5 s4s4

AR p e s OAE e s MSY e s HIS o p OBS o1o1 (8) If historical efforts have reduced carrying capacity of biomass stock to current level of biomass stock that is below MSY level of biomass stock and observed effort doesn’t reach OAE effort, fisheries are in disequilibrium and there are net economic cost and ecological cost. The movement towards OAE equilibrium is through new investment in fisheries. Total value of effort = Total cost of effort Total value of effort = o 4 e s HIS e s OBS o 5 = p*e s OBS Total cost of effort = economic cost + social cost (rent) + ecological cost = s 2 e s HIS e s OBS s 4 + s 6 s 2 s 4 s 5 + o 4 s 6 s 5 o 5 = c s *e s OBS + 0.5*(p OBS -c s +p HIS -c s )*e s OBS + 0.5*(p-p HIS + p-p OBS )*e s OBS s1s1 s3s3 cscs o3o3 e s OBS MC s /AC s o4o4 s4s4 s5s5 s2s2 s6s6 o5o5 p HIS

AR p e s OAE e s MSY e s HIS o p OBS o1o1 (9) If historical efforts have reduced carrying capacity of biomass stock to current level of biomass stock that is below MSY level of biomass stock and observed effort exceeds OAE effort, fisheries are in disequilibrium and there are net economic cost and ecological cost. The movement towards OAE equilibrium is through new investment in fisheries. Total value of effort = Total cost of effort, Total value of effort = o 4 e s HIS e s OBS o 5 = p*e s OBS Total cost of effort = economic cost + social cost (rent) + ecological cost + extra economic cost + extra social cost + extra ecological cost = s 1 e s HIS e s OAE s 3 + s 6 s 1 s 3 + o 4 s 6 s 3 o 3 + s 3 e s OAE e s OBS s 4 + s 3 s 5 s 4 + o 3 s 3 s 5 o 5 = c s *(e s OAE -e s HIS ) + 0.5*(p HIS -c s )*(e s OAE -e s HIS ) + 0.5*(p-p HIS +p-c s )*(e s OAE -e s HIS ) + c s* (e s OBS -(e s OAE -e s HIS )) + 0.5*(c s -p OBS ) * (e s OBS -(e s OAE -e s HIS )) + 0.5*(p-c s +p-p OBS ) * (e s OBS - (e s OAE -e s HIS )) = c s* e s OBS Economic loss = c s* (e s OBS -e s OAE ) - 0.5*(p OBS +c s )*(e s OBS -e s OAE ) Or Total cost of effort = economic cost + social cost (rent) + ecological cost = s 1 e s HIS e s OBS s 4 + (s 6 s 2 s 5 – s 1 s 2 s 5 s 4 ) + o 4 s 6 s 5 o 5 = c s *e s OBS + 0.5*(p OBS -c s +p HIS -c s )*e s OBS + 0.5*(p-p HIS + p-p OBS )*e s OBS s1s1 s3s3 cscs o3o3 e s OBS MC s /AC s o4o4 s4s4 s5s5 s2s2 s6s6 o5o5 p HIS

MR AR p e OAE e MSY e MEY o c c1c1 c2c2 c3c3 o2o2 MC/AC (10) When social members give full permit for fishermen to capture fishes, Total value of effort = Total cost of effort Total value of effort = poe MEY o 2 = p*e MEY Total cost of effort = economic cost + social cost (rent) + ecological cost = coe MEY c 2 + pcc 2 o 1 + o 1 c 2 o 2 = c*e MEY + 0.5*(p-c)*(e MEY +e MSY ) + 0.5*(p-c)*(e MEY -e MSY ) o1o1 2. Controlled competitive fisheries

MR AR p e s OAE e s MSY e s MEY o c o1o1 MC/AC (11) When social members give partial permit for fishermen to capture fishes by quota, Total value of effort = Total cost of effort Total value of effort = poe s MEY o 2 = p*e s MEY Total cost of effort = economic cost + social cost (rent) + ecological cost = c s oe s MEY s 2 + pc s s 2 o 1 + o 1 s 2 o 2 = c s *e s MEY + 0.5*(p-c s )*(e s MEY +e s MSY ) + 0.5*(p-c s )*(e s MEY -e s MSY ) Where c s = (1 - m yes /M)*(p-c) + c s1s1 s2s2 s3s3 cscs o2o2 MC s /AC s

(1)A multi-metier and multi-species disequilibrium simulation model Aim: evaluate the costs and benefits of current fishery practice. Dimensions: m – metier s – species, Exogenous variables: K – carrying capacity of biomass stock B obs – current level of biomass stock by species e – effort by metier x – catch by metier p – price per catch of fish by species c – cost of effort by metier Parameters: q – catchability coefficient by metier r – instantaneous growth rate of biomass stock by species 3. The models

Endogenous variables: B MSY – maximum sustainable yield level of biomass stock by species B OAE – open access equilibrium level of biomass stock by species E – composite effort of different metiers P – price of composite effort of different metiers by species C – cost of composite effort of different metiers se – share of a metier’s effort in total composite effort EC – economic cost SC – social cost ELC – ecological cost TC – total societal cost of effort TB – total societal benefit of effort mec – marginal economic cost of effort by metier msc – marginal social cost of effort by metier melc – marginal ecological cost of effort by metier mtc – marginal total societal cost of effort by metier mtb – marginal total societal benefit of effort by metier

The model: a. The fishing reality Composite effort: Share of effort in composite effort: Average cost: Average prices: Economic cost of fishing: Social cost (economic benefit) : Ecological cost (social benefit): Total cost (benefit) of effort:

Marginal economic cost of fishing of effort by metier: Marginal social cost (economic benefit) of effort by metier: Marginal ecological cost (social benefit) by metier: Marginal total cost (benefit) of effort by metier:

The model: b. Open access equilibrium OAE effort: Economic cost of fishing: Social cost (economic benefit) : Ecological cost (social benefit): Total cost (benefit) of effort:

(2) A dynamic multi-metier and multi-species disequilibrium simulation model Aim: evaluate the costs and benefits of future fisheries. Dimensions: m – metier s – species, Exogenous variables: K – carrying capacity of biomass stock B obs – current level of biomass stock by species Parameters: q – catchability coefficient by metier r – instantaneous growth rate of biomass stock by species

Endogenous variables: e – effort by metier x – catch by metier p – price per catch of fish by species c – cost of effort by metier B MSY – maximum sustainable yield level of biomass stock by species B OAE – open access equilibrium level of biomass stock by species E – composite effort of different metiers P – price of composite effort of different metiers by species C – cost of composite effort of different metiers se – share of a metier’s effort in total composite effort EC – economic cost SC – social cost ELC – ecological cost TC – total societal cost of effort TB – total societal benefit of effort mec – marginal economic cost of effort by metier msc – marginal social cost of effort by metier melc – marginal ecological cost of effort by metier mtc – marginal total societal cost of effort by metier mtb – marginal total societal benefit of effort by metier

(3) A multi-metier and multi-species optimization model Aim: compute the costs and benefits of planned fisheries that fulfill current social, economic and ecological objectives. Dimensions: m – metier s – species, Exogenous variables: K – carrying capacity of biomass stock B obs – current level of biomass stock by species p – price per catch of fish by species c – cost of effort by metier Parameters: q – catchability coefficient by metier r – instantaneous growth rate of biomass stock by species

Endogenous variables: e – effort by metier x – catch by metier B MSY – maximum sustainable yield level of biomass stock by species B OAE – open access equilibrium level of biomass stock by species E – composite effort of different metiers P – price of composite effort of different metiers by species C – cost of composite effort of different metiers se – share of a metier’s effort in total composite effort EC – economic cost SC – social cost ELC – ecological cost TC – total societal cost of effort TB – total societal benefit of effort mec – marginal economic cost of effort by metier msc – marginal social cost of effort by metier melc – marginal ecological cost of effort by metier mtc – marginal total societal cost of effort by metier mtb – marginal total societal benefit of effort by metier

(4) A dynamic multi-metier and multi-species optimization model Aim: compute the costs and benefits of planned fisheries that fulfill future social, economic and ecological objectives. Dimensions: m – metier s – species, Exogenous variables: K – carrying capacity of biomass stock B obs – current level of biomass stock by species Parameters: q – catchability coefficient by metier r – instantaneous growth rate of biomass stock by species

Endogenous variables: e – effort by metier x – catch by metier p – price per catch of fish by species c – cost of effort by metier B MSY – maximum sustainable yield level of biomass stock by species B OAE – open access equilibrium level of biomass stock by species E – composite effort of different metiers P – price of composite effort of different metiers by species C – cost of composite effort of different metiers se – share of a metier’s effort in total composite effort EC – economic cost SC – social cost ELC – ecological cost TC – total societal cost of effort TB – total societal benefit of effort mec – marginal economic cost of effort by metier msc – marginal social cost of effort by metier melc – marginal ecological cost of effort by metier mtc – marginal total societal cost of effort by metier mtb – marginal total societal benefit of effort by metier

Data requests: Biomass stock Fishing activity CPUE table Use table