Economic Drivers of Illegal, Unreported and Unregulated Fishing Carl-Christian Schmidt* Head of the Fisheries Division OECD Paris, France * Views expressed are those of the author and do not necessarily represent those of the OECD or its Member countries

IUU Fishing Activities -- an outline -- Why have we failed so far to address IUU effectively? Why have we failed so far to address IUU effectively? Drivers of IUU Fishing Activities Drivers of IUU Fishing Activities How big is the problem? How big is the problem? Where is IUU a problem? Where is IUU a problem? Environmental, social and economic consequences of IUU Environmental, social and economic consequences of IUU Changing the incentive structure: An agenda for the future Changing the incentive structure: An agenda for the future

Why have we failed so far to address IUU effectively? We have not addressed IUU as an economic activity We have not addressed IUU as an economic activity We have not understood the economic and social drivers that lead to IUU We have not understood the economic and social drivers that lead to IUU

The Economic Framework (1) Expected profit from IUU > 0 ↔ Expected benefit > Expected sanction (1) Expected profit from IUU > 0 ↔ Expected benefit > Expected sanction or (2) E (π) > 0 ↔ E (B) > E (S) or (2) E (π) > 0 ↔ E (B) > E (S) or (3) P2 x (B) > P1 x (S), or (3) P2 x (B) > P1 x (S), Where: Where: E (π): expected profit E (π): expected profit E (B): expected benefit E (B): expected benefit E (S): expected sanction (in absolute value) E (S): expected sanction (in absolute value) Prob1: probability of being punished, Prob1: probability of being punished, Prob2: probability of not being punished, with P2 = (1-P1), Prob2: probability of not being punished, with P2 = (1-P1),

Drivers of IUU Fishing Activities Overcapacity in the worldwide fishing fleet Overcapacity in the worldwide fishing fleet Market demand and the price for IUU fish Market demand and the price for IUU fish Level of MCS operations Level of MCS operations Level of sanctions, including fines and non- monetary sanctions Level of sanctions, including fines and non- monetary sanctions Management regimes Management regimes The current international framework The current international framework Economic and social conditions of fishers Economic and social conditions of fishers

How big is the IUU problem? Anecdotal evidence Anecdotal evidence The nature of IUU activities The nature of IUU activities Estimates by regional fisheries management organisations Estimates by regional fisheries management organisations Estimates by NGOs + COLTO/OPRT Estimates by NGOs + COLTO/OPRT And where does this lead us? And where does this lead us?

Where is High Seas IUU a problem? CCAMLR -- Patagonian toothfish CCAMLR -- Patagonian toothfish IOTC -- tuna IOTC -- tuna ICCAT -- tuna ICCAT -- tuna NEAFC -- redfish NEAFC -- redfish

Principal Environmental, Social and Economic Consequences of IUU Stock impacts Stock impacts Bio diversity; by-catches and accessory catches e.g. birds Bio diversity; by-catches and accessory catches e.g. birds Keep subsistence fishers from developing countries at bay; poor and unsafe working conditions Keep subsistence fishers from developing countries at bay; poor and unsafe working conditions Direct economic impact on fishers dependent on the stock i.e. lower income Direct economic impact on fishers dependent on the stock i.e. lower income

Changing the incentive structure: An agenda for the future Improve domestic fisheries management and address overcapacity: should improve fishers income Improve domestic fisheries management and address overcapacity: should improve fishers income More monitoring, control and surveillance (VMS) and improve use of existing techniques – BUT COSTS More monitoring, control and surveillance (VMS) and improve use of existing techniques – BUT COSTS Trace vessels registration Trace vessels registration Higher and concerted levels of penalty/fines Higher and concerted levels of penalty/fines

Changing the incentive structure: An agenda for the future Eliminate markets for IUU fish (trade measures, embargoes, port state controls, traceability) Eliminate markets for IUU fish (trade measures, embargoes, port state controls, traceability) RFMOs: Empowerment and increased budgets RFMOs: Empowerment and increased budgets Open membership of RFMOs and implement incentive structures more conducive to reducing IUU Open membership of RFMOs and implement incentive structures more conducive to reducing IUU Is it time to rethink the high seas governance regime? Is it time to rethink the high seas governance regime?