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The Economics of Whaling Today a “The Whaling Industry, Like Any Other Industry, Has to Obey the Market

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The Economics of Whaling Today a “The Whaling Industry, Like Any Other Industry, Has to Obey the Market A summary report produced by WWF and WDCS based on a study by Economics for the Environment Consultancy (eftec) Sink or Swim The Economics of Whaling Today A “The whaling industry, like any other industry, has to obey the market. If there is no profitability, there is no foundation for resuming with the killing of whales.” Einar K. Guðfinsson, former Minister of Fisheries, Iceland, 2007 BackgROUND hales have been hunted commercially the guise of scientific whaling, using a loophole for centuries. Historically, the main demand in the ICRW. Norway also continued commercial Wwas for oil made from their blubber, whaling registering an official objection to the which was used for fuel. In 1946, the International moratorium. Iceland has engaged in both scientific Convention for the Regulation of Whaling and commercial whaling since 2003. Indeed, since (ICRW) was signed, subsequently establishing 1986 more than 31,000 whales have been the International Whaling Commission (IWC) to killed for commercial purposes. regulate whaling and conserve whale stocks. Whilst anecdotal information has suggested The IWC started out essentially as a whalers’ that commercial (including scientific) whaling club, with only 15 members, all of which were operations would not be economically viable whaling nations. It had no provisions to detect were it not for significant government subsidies, and punish over-hunting and it paid scant no comprehensive economic analysis of whaling attention to the sustainability of whaling. The in these countries currently exists. To help fill results were disastrous for whales. Some species, this gap, and further inform the global debate such as blue and right whales, were hunted to about commercial whaling, WWF and WDCS near extinction; reduced to less than 5 per cent commissioned an independent economist to of their original population abundance. Yet it examine the available information on whaling in must be seen in the context of its time, which Norway and Japan and assess the commercial far pre-dated any environmental or conservation sustainability of whaling in those countries. treaties, or awareness of the need to utilise Iceland, which also carries out whaling after wild species sustainably. objecting to the moratorium, is not included in this In 1982, a growing conservation movement analysis because the Icelandic government has within the IWC secured a ban on commercial commissioned the University of Iceland’s Institute whaling. The ‘moratorium’ came into effect in 1986. of Economic Studies to undertake a macro- It applied to all whale species in all waters and left economic review of the influence of whaling on just a handful of ‘aboriginal’ hunts to continue for the Icelandic economy. WWF and WDCS look subsistence purposes. However, Japan continued forward to the results of this review. © Jørgen Freund / WWF-Canon © Jørgen Freund to hunt whales for commercial purposes under 2 A Spotlight on the Whaling Industry JAPAN Since 1986 Japan has killed more than 12,000 whales under the scientific whaling loophole (Article VIII of the ICRW). Its two separate hunts have dramatically increased in both scope and scale over that period, to include common minke, Antarctic minke, fin, sperm, Bryde’s and sei whales. The Japanese Government issues research whaling permits to the Institute of Cetacean Research (ICR) which, in turn, contracts a single whaling company, Kyodo Senpaku, to provide the vessels and crew. The ICR releases the products from the hunts twice a year to Kyodo Senpaku to sell at a price fixed by the ICR and Ministry of Fisheries to wholesalers, reports of unsold meat and retailers processors and local authorities.1 The cutting prices to ’get it off their shelves’. Since 1986 more primary purpose of the sale is to cover Wholesalers and retailers may be willing than 31,000 whales the costs of whaling and research, and to support losses in the short run, in although recent market conditions are order to maintain their rights to purchase have been killed taken into account, in recent years and sell whaling by-products in future ICR has set prices rather high relative years, but in the long run these losses for commercial to demand. Wholesalers and retailers, are not sustainable. however, are subject to market forces Furthermore actual sales have been purposes and their prices reflect current market less than planned sales in recent years. conditions. In recent years margins have For example, in 2006/7 planned sales 2 © Jørgen Freund / WWF-Canon © Jørgen Freund been squeezed and there have been were US$ 58.0 million while actual sales 1. “Policies governing the distribution of by-products from scientific and small-scale coastal whaling in Japan.” Aiko Endo, Masahiro Yamao Marine Policy 31 (2007) 169–181 2. Local currency figures are converted throughout using purchasing power parities in the base year, then the US GDP deflator for 2008 values. 3 were US$ 46.5 million. In 2007/8 planned main sources of subsidy: the National JAPAN KEY FINDINGS sales were US$64.6 million and actual Subsidy for the Nishin Maru research • Sales of whale meat, blubber sales were US$48.8 million. whaling programme (JARPA) in Antarctica, and other products have made Even though ICR sets prices high a commissioning fee for the coastal relative to demand, they are not high research whaling fleet off Japan, and a losses for almost all of the enough to cover all costs. High subsidies recently added budget supplement to last 20 years. Overall sales are required to maintain Japan’s “scientific cover costs involved in dealing with recent of whaling by-products have whaling” operations, and these subsidies protest activities surrounding the made a loss of around US$ have increased in recent years as the JARPA hunt. 223 million since 1988 hunts have expanded. There are three (see figure A). • In 2008/09 the whaling industry in Japan needed a Japan and the global economic recession subsidy approaching US$ 12 million in order to break even.8 • Japan’s GDP fell 9.1 per cent • Overall cummulative from the first quarter in 2008 subsidies reported since 1988 to the first quarter of 2009.3 • The first quarter 2009 average come to $164 million. of the Nikkei 225 index was • Wholesale prices of whale meat down 40 per cent compared per kg in Japan have been to the first quarter average of falling since 1994, starting at 4 the index in 2008. just over US$ 30/kg in 1994, • International exports fell from and declining to US$ 16.4/kg US$ 70.0 billion in the first quarter of 2008 to US$ 44.7 in 2006. billion, a fall of 36.2 per cent; 5 • The average amount of whale fisheries exports fell 12.7 per products in stockpile inventories cent between 2008 and 2009.6 in the main cold-stores (about • Unemployment rose by 1.3 40% of total refrigeration million people between the capacity) shows an increase third quarter of 2008 and the 7 from around 1500 tonnes in first quarter of 2009. © Morten LINDHARD / WWF-Canon 1997 to around 4000 tonnes in recent years (since 2005). Figure A: Japanese research whaling: sales of by-products minus all costs involved in production, 1988/9-2008/9. 10.00 with planned sales 5.00 after general costs ) 0.00 after all costs with actual sales -5.00 (06/7, 07/8) -10.00 -15.00 -20.00 Million US$ (2008 values at PPP -25.00 -30.00 88/89 89/90 90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 3500 Value 3. Quarterly National Accounts (GDP Constant Prices), OECD Statistics, Retrieved June 8, 2009. http://webnet.oecd.org/wbos/ 3000 4. Historical Prices, NIKKEI 225 (^N225), Yahoo! Finance. Retrieved June 8, 2009. http://finance.yahoo.com/q/hp?s=^N225 Subsidies 5. International Trade (MEI), OECD Statistics, Retrieved June 8, 2009. http://webnet.oecd.org/wbos/ 6. Monthly Information on Imports and Exports Agricultural, Forestry and Fisheries Products, International Department, Ministry of Agriculture, Forestry and Fisheries. Japan. Retrieved2500 June 8, 2009. http://www.maff.go.jp/toukei/geppo/geppo-e.html 7. Labour Force Statistics (MEI), OECD Statistics, Retrieved June 8, 2009. http://webnet.oecd.org/wbos/ 2000 4 1500 1000 500 US$ ‘000 (2008 values at PPP) 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 NORWAY development of new products from Prior to the adoption of the commercial whales such as health supplements, Norway and the global whaling moratorium by the IWC and the and even US$ 880,000 for the disposal corresponding bans on international of hundreds of tonnes of contaminated economic recession commercial trade in whale products whale blubber, much of which was by CITES (see box p.6), Norway killed actually used in pet food. • Norway’s GDP fell by 0.3 per cent © Morten LINDHARD / WWF-Canon approximately 2,000 minke whales per It was not possible in the course from the first quarter of 2008 to year, and exported more than 51% of the of this study to derive estimates of the first quarter of 2009. products from these kills to Japan. Since the profitability of Norwegian whaling • The 2009 first quarter average Norway’s resumption of commercial enterprises, as data on the operational for the Oslo OBX Index was down whaling under its objection in 1994 it has costs of Norwegian whaling were not by 43.7 per cent compared to the killed 7,333 minke whales through 2008. available. However the declining number index in the first quarter of 2008.10 Its self-assigned whaling quotas have of whaling vessels, low fixed prices, • International exports fell from risen in recent years, from 425 in 1996 new regulations to restrict landings and US$ 14.6 billion in the first quarter to 885 in 2009.
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