The price for overfishing: 199% interest rate on North Sea cod

Overfishing is expensive. By fishing at today’s levels, the EU is borrowing from future fish resources and thus future income at high interest rates – ranging from 10% to over 200% – according to scientists.

In order to quantify the degree of overfishing on 13 European fish stocks, German scientists have used biological and economic data to calculate the so-called ‘shadow interest rate’ that society has to pay when we allow continued fishing at low stock sizes instead of letting the stock grow to a more productive level.

With the rate of fishing applied in 2010, the EU payed 199% interest rate compared to the most economically viable way of fishing. The interest rate was 90% compared to fishing at levels which can produce the maximum sustainable yield (MSY).

This also illustrates that fishing at MSY is not the most economically efficient way of fishing; higher profits would be made if catches were below the fishing mortality Fmsy (which can lead to fish stocks above the biomass Bmsy).

In other words: according to the researchers, lowering the total allowable catch could be regarded as an investment in future fish stocks that could lead to a considerable return in profits.

On 18 December an important vote takes place in the European Parliament’s Fisheries Committee: should the Common Fisheries Policy aim at rebuilding fish stocks to profitable levels where we pay a low interest rate, or should we keep the status quo? The vote concerns the basic regulation in the Common Fisheries Policy (Rapporteur: Ulrike Rodust), which will be voted in plenary early next year before negotiations between the Parliament and Council.

Fisheries ministers have a chance to lower the interest rates already next week, as they meet to set the 2013 quotas for the Atlantic, North Sea and Black Sea.

Table: Shadow interest rates for 13 major European fish stocks. Shadow interest rates for the TAC in 2010, assuming that economically efficient or Fmsy management would be applied from 2011 onwards.

Stock Shadow interest rate (compared to most efficient management) Shadow interest rate (compared to Fmsy management)
Cod, Eastern Baltic Sea 66% 40%
Cod, North Sea 199% 90%
Herring, Central Baltic Sea 48% 29%
Herring, North Sea 19% 21%
Herring, Irish Sea 17% 11%
Norway Pout, North Sea 16% 10%
Plaice, Western English Channel 135% 67%
Plaice, Irish Sea 67% 39%
Plaice, North Sea 56% 34%
Saithe, North Sea 220% 93%
Sole, Celtic Sea 27% 18%
Sole, Eastern English Channel 34% 24%
Sole, North Sea 103% 55%

Read more:
The European Commission summarises the study: Viewing fish stocks as economic investments

Martin F. Quaas, Rainer Froese, Helmut Herwartz, Till Requate, Jörn O. Schmidt, Rüdiger Voss: Fishing industry borrows from natural capital at high shadow interest rates, Ecological Economics, Volume 82, October 2012, Pages 45–52

Axel Naver

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