ECONOMICS of PHILIPPINE FISHERIES and AQUATIC RESOURCES: a LITERATURE SURVEY Marian S
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ECONOMICS OF PHILIPPINE FISHERIES AND AQUATIC RESOURCES: A LITERATURE SURVEY Marian S. delos Angeles, Ernesto P. Gonzales, Ramyleo Pelayo and Lota A. Ygrubay WORKING PAPER SERIES NO. 90-17 July 1990 Philippine Institute for Development Studies TABLE OF CONTENTS I. Introduction -1- A. The Aquatic Resource Base 1 B. Objectives and Scope of the Study 1 II. An Economic Conceptual Framework for Analyzing Policy issues in Philippine Fisheries and Aquatic Resource Management 2 A. Basic Microeconomics of an Aquatic Resource System.. 2 B. Limited Entry Schemes: Factors to Consider 6 C. interphase with Macroeconomic Conditions 8 III. Literature Survey 8 A. Marine (Capture) Fisheries 8 1. Data requirements for limiting entry into capture coastal fisheries 15 2. Encouraging entry into commercial fisheries .... 18 3. Prescribing less destructive fishing techniques. 18 4. Restoring the productivity of fishery habitat .. 19 5. Importance of examining determinants of direct production costs and allocation of rents 19 6. Measuring economic rent and environmental costs ... 20 B. Aquaculture Fisheries 21 1. Socio-economic Studies 21 2. Project Evaluation Studies 22 3. Input-Output Analysis 22 4. Technology Adoption 24 5. Societal Considerations 25 C. Inland Fisheries 26 D. Intersectoral and Macroconcerns 26 1. Credit support 26 2. Assessing alternative management schemes: the need for a framework 27 3. Valuing the importance of FARP at the macrolevel 28 IV. Summary and Recommended Research Priorities 28 Bibliography 223 Figure 1 Optimum Level of Resource Development 4 LIST OF TABLES AND ANNEXES Table 1 Problem Areas for Comparing Management Schemes 7 2 Studies on Capture Fisheries 9 3 Economic Indicators of Selected Aquaculture Studies.. 23 4 Selected Indicators on Philippine Fisheries 29 5 Coverage of Studies Inventoried 32 Annex I Appendix Table 1 Philippine Aquaculture Studies: Summary of Findings.. 36 II Abstracts Inland Fisheries 77 Aquaculture 85 Marine Fisheries 136 ECONOMICS OF PHILIPPINE FISHERIES AND AQUATIC RESOURCES: A LITERATURE SURVEY Marian S. delos Angeles, Ernesto P. Gonzales, Ramyleo Pelayo and Lota A. Ygrubay* I. INTRODUCTION A . The Aquatic _Re30_urce Base The Philippines, being archipelagic in nature, has a water resource area that is many times larger than its land area, and a coastline of 17,460 km. About 82 percent of its provinces border on the sea and of the more than 1,500 municipalities, nearly 65 percent are coastal. Thus, about 55 percent of the population reside along coastal areas and a significant propor- tion of the rural population depend on fishing for livelihood. As a country that counts as the second largest archipelago in the world with .over 7,100 islands, the Philippines' aquatic resources should be considered a significant factor in planning for national and regional development. B . Objectives_and_5cope_of the Study The general objectives of this study are: (1) to review literature on the Philippine experience in fisheries and aquatic resources management; and (2) to identify data gaps and prioritize issues where more research is necessary. This paper *The authors are Research Fellow, Research Associates and Senior Research Assistant, respectively, of the Pnilippine Institute for Development Studies (PIDS). Research funds from the USAID and staff support from Pilipinas Felix, research assistant and Susan Pizarro, secretary, of PIDS are gratefully acknowledged. 2 also aims to provide basis for a component of the Research Program on the Economics of Natural Resource and Environmental Policy of the Philippine Institute for Development Studies (PIDS), an economic, policy-oriented research institution. The present focus is thus on the economic aspects of selected policy issues in fisheries and aquatic resource management in the Philippines (FARP). An economic framework for looking at FARP management is first presented (Part 2), through which existing studies are reviewed (Part 3). Research gaps are subsequently identified and some prioritization is made on those that may be addressed by PIDS (Part 4) . II. AN ECONOMIC CONCEPTUAL FRAMEWORK FOR ANALYZING POLICY ISSUES IN PHILIPPINE FISHERIES AND AQUATIC RESOURCE MANAGEMENT We provide a conceptual framework for examining issues in FARP in terms of analytical tools of resource and environmental economics. This is done for two reasons: (a) to specifically factor in certain peculiarities of the Philippine aquatic resource system, and (b) to complement the fisheries-specific analytical framework that generally characterizes fisheries economics literature. ABasic Microeconomics of an Aquatic Resource System Whereas fishery biologists have prescribed maximum sustained yield management for fisheries, the application of fishery economic concepts for determining effort levels and hence catch levels, means lower harvest rates than implied by biological concerns. The more conservation-oriented, economic principle for sustained yield management considers not only fish output (and gross revenue) but also accounts for the factors of production required for catching fish which need to be paid for, or which have alternative uses. The maximum economic yield (MEY) criterion, where the difference between total revenue and total catch cost is maximized, thus results in lower fish production level as opposed to maximization of biological yield alone. Thus, contrary to the popular notion of discordance between economic principles and fishery resource conservation, the economic solution to fishery management is expected to result in a more conservation-oriented management. Notwithstanding such economic optimization, however, certain conditions governing fishery use do lead to non- sustainable fish catch. Foremost is the fugitive nature of the fish and the often uncontrolled open access nature of fisheries which does not assure prudent fishermen of their own future harvest, thereby encouraging overexploitation. This implies that for current fishing to be conservation-oriented, commonly-drawn 3 rule-making and implementation are particularly marked in this resource's management. Second, while dissipation of economic rent that arises from overfishing should encourage exit from the industry towards other economic activities, this does not usually occur under conditions of high unemployment and lack of alternatives (Clark 1973). The eventual result therefore is subsistence fishing in most less developed countries. Moreover, from the public perspective, three types of costs are incurred in fishery resource-based activities, namely: (a) the expenses paid on complementary production inputs such as labor and fuel for running motorized boats or private costs; (b) future costs that result from using a smaller resource stock or user cost; and (c) those that result from negative effects of the activity on the rest of the resource system or environmental cost. These costs are important in the following manner: (1) private costs are directly borne by the current producer and depend on his decisions cn input combinations; (2) user costs are experienced by future users who need not be identical with the current user particularly if the latter are not assured of future access to the same resource; and (3) environmental costs may be borne by other types of resource users, either at present or in the future, depending on the severity of impact on the rest of the ecosystem. A public decisionmaker who ideally considers the future generation's welfare and the other resource users' benefits should account for all three types of costs while deciding on how much to produce. He is expected to encourage private decisionmakers to act in accordance with societal considerations through various intervention mechanisms. Maximizing society's welfare implies producing at level F(s), the equilibrium quantity for the social marginal cost and demand curves indicated in Figure 1. On the other hand, for a private resource user who is not certain that he will have future access to the aquatic resource (particularly with fugitive fishery resources), and who is not concerned with the other commodities/services that may be derived from the resource system, only current, direct production cost matters; his preferred production rate is thus F(p), where private, marginal cost alone is relevant. Somewhere in-between the two is a 4 Cost, Price per Unit Time -H' C CD t C CL O CD > CD Q CD O L. 1 o CO CD o Q: M— Z3 o cn Li_ CD > -CJD E c c Q. O oTar or 5 private/public choice F(e), where'both private and environmental costs are considered but future costs are ignored. 1/ An extension of this single decisionmaker-specific framework to the industry aggregate, and to society in general, may be derived through the usual aggregation of individual supply (marginal cost) curves. From the public perspective, the cost of supplying an aquatic resource-based product is thus higher ^if more damage is simultaneously inflicted on the environment. From this framework, we note that to approximate socially desirable decisionmaking, the following should be considered: 1. Accounting for all factors of production - this implies that measurement of human, capital, and natural resource systems is necessary for proper incorporation by public decisionmakers of the effects on the ecosystem. 2. Such an accounting should allow the measurement of all costs of resource use and their incidence to provide basis for decisions on how the resource system should be allocated. Identification of the key parties involved, their behavior, and the nature of benefits