3. Government support to fisheries

The fisheries sector makes a key contribution to global food security and the ocean economy (see Chapter 1). Government support can enhance this contribution when it helps ensure the health of fish stocks and ecosystems, increase fish stock productivity, and build resilience in the fisheries sector. But government support can also result in undesirable outcomes when it encourages the build-up of excess fishing capacity; overfishing; and IUU fishing. This is more likely to happen when management does not effectively limit fishing to sustainable levels (OECD, 2020[1]; Martini and Innes, 2018[2]).

When government support encourages unsustainable fishing, it ultimately compromises the fishers’ livelihoods – harming the productivity, and the very existence, of the resource they depend on while potentially making them more dependent on support in the process. In such cases, support is also generally not effective at raising fishers’ incomes and can have unintended negative impacts on the competitiveness of small-scale fishers (Martini and Innes, 2018[2]).

In June 2022, members of the WTO agreed on a series of disciplines that prohibit some of the most harmful types of subsidies: those that benefit IUU fishing; those that benefit the fishing of overfished stocks; and those that benefit fishing in the unregulated high seas (see Chapter 1). They also committed to continue negotiating to agree on disciplines to eliminate subsidies that encourage overcapacity and overfishing. Governments now face the challenge of implementing the WTO Agreement on Fisheries Subsidies.

Reforming fisheries support to ensure that it delivers on the objectives governments have for their fisheries is made all the more necessary by the numerous challenges global fisheries currently face: adapting to climate change and its impacts on fish stock abundance and migration while contributing to global emissions reductions; adapting to increasing energy prices and disruptions to value chains; and, in many places, attracting a new generation of fishers to the industry. Many other sectors face similar challenges, raising critical questions for government budgets on how best to support the changes required in an environmentally sustainable and equitable way.

To develop concrete fisheries support reform agendas, governments and stakeholders in the fisheries sector first need comprehensive information on support. Providing such data is a long-standing objective of the OECD Committee of Fisheries. Central to this is the evidence provided by the OECD Fisheries Support Estimate (FSE) database, which describes, measures and classifies fisheries support policies consistently and transparently. This chapter starts by presenting the most up-to-date data on government support to fisheries for 40 countries and economies which together account for 90% of global landings. It outlines the level and composition of fisheries support and its evolution over about a decade.

To identify any need for reform, and prioritise action, governments also need to understand the impacts of different support policies. Assessing the impacts of individual policies is, however, challenging, as it demands information and data that are not readily available: the recipients of particular policies and their socio-economic situation; the health of the fish stocks they target; and how these stocks are managed.

To guide reform, this chapter identifies the possible risks different support policies can pose to fishery resources and ecosystems in the absence of effective management, building on how different forms of government support create different incentives in fisheries and have a different potential to influence socio-economic performance and environmental sustainability. As demonstrated in Chapter 2, effective management is not yet the norm in many regions, and, in every region, some fisheries could be better managed. This risk-based framework can thus help governments identify the policies that can present a risk of encouraging unsustainable fishing and consider improving their targeting or using alternative support policies when they cannot ensure that all recipients of such support operate in sustainably managed fisheries.

This chapter consists of four main sections. Section 3.2 presents and discusses current levels and trends in government support to fisheries, as reported in the recently updated FSE database. Section 3.3 summarises what is known about the potential impact of fisheries support on fish stock health into a matrix classifying support policies according to the risk that they may encourage unsustainable fishing in the absence of effective management. The section also presents data on support to fisheries, as recorded in the FSE database, seen through that matrix. Section 3.4 discusses how to practically eliminate government support to IUU fishing. Section 3.5 concludes with an exploratory discussion of non-specific support policies that benefit the fisheries sector, alongside a range of other economic sectors.

The OECD FSE database (Box 3.1) attempts to capture the total monetary value of government support to the fishing industry by providing an inventory of all the policies that generate a transfer from taxpayers to fishers. The database records information on the attributes of policies along with the annual value to the industry in both USD and the national currency of the reporting country. The FSE records support in two main categories of policies, each of which is subdivided further based on factors that include implementation criteria and policy intent. Support to services for the sector (SSS) comprises government spending that benefits the sector as a whole, or entire segments. Direct support to individuals and companies in the fisheries sector (DSI), on the other hand, covers all spending that is directed to individual beneficiaries. In addition, the FSE database records payments made by the fisheries sector (PMS); that is, fees paid by service users, such as for port access or management, and taxes or fees on resource use and associated profits. These payments reduce the extent to which taxpayers finance support to fisheries and are thus deducted from total support (SSS + DSI) to compute total net support (SSS + DSI – PMS).

The discussion in this chapter covers the period 2012-20 and is undertaken in USD. To avoid the undue influence of short-term fluctuations, three-year rolling averages are used when discussing the data, and the periods 2012-14, 2015-17 and 2018-20 are used as reference periods when the level of detail is too high to present or discuss the entire time series.

This section starts by looking at trends in total support (and net support) to provide some context on overall levels and trends in government intervention in fisheries (Section 3.2.1). However, it should be noted upfront that the total values of support recorded in the FSE database are made up of many different support policies which vary in nature and potential socio-economic or environmental outcomes (as will be exposed in Section 3.3). Thus, when comparing levels of support, it is informative to distinguish between the types of policies being considered. It is also important to contextualise the levels of support with the value of landings (per USD), fleet size (per gross tonne [gt]) and employment (per fisher) as appropriate. The levels and trends for each sub-category of support are discussed in detail in Sections 3.2.2 for SSS and 3.2.3 for DSI.

Total support to fisheries over 2018-20 for the 40 countries and economies that reported their support to fisheries to the FSE database equalled a gross annual average of USD 10.4 billion (Figure 3.1). Total support has fallen by 23% since 2012-14 (when it reached USD 13.4 billion) but has increased slightly in recent years (from a low of USD 9.1 billion in 2016-18). Total support equated to 10.7% of landings value in 2018-20, down by 3.2 percentage points from 13.9% in 2012-14.1 This represented, on average, USD 421 of support per fisher in 2018-20, down from USD 518 in 2012-14 (Table 3.1).

When PMS are accounted for, the net total FSE amounted to USD 10.1 billion in 2018-20. Net total FSE has also fallen, by 23%, since 2012-14 (down from USD 13.1 billion in 2012-14) but has increased by 15% in recent years (from a low of USD 8.8 billion in 2016-18).

OECD countries reporting to the FSE delivered support totalling USD 5.11 billion per year, on average in 2018-20 (net FSE USD 4.87 billion), a negligible increase on the USD 5.08 billion reported for 2012-14 (net FSE USD 4.86 billion) (Figure 3.1). Total support as a proportion of landings value was 14.0% in 2018-20, up more than 1 percentage point from 12.7% in 2012-14, mostly as a result of a decline in the value of landings (by 8.7%) between the base and most recent periods. In the interim periods, both total FSE and net total FSE declined until 2015-17 (to a total FSE of USD 4.5 billion, and net total FSE of USD 4.3 billion) before trending upwards since. In the OECD countries, total FSE equated to USD 5 163 per fisher in 2018-20, up from USD 4 760 in 2012-14 (Table 3.1).

Non-OECD emerging economies reporting to the FSE, provided a combined total of USD 4 billion per year in support, on average, over 2018-20 (net FSE USD 5.3 billion) (Figure 3.1). This is a reduction of almost 40% compared to the USD 8.3 billion reported for the same group of countries for 2012-14 (net FSE USD 8.3 billion). Low levels of PMS in these economies result in little difference between total FSE and net total FSE. For the emerging economies for which the value of landings was also available, total FSE equated to 8.2% of the average value of landings in 2018-20, on average, a substantial decrease from 15.0% in 2012-14.2 The decline is a consequence of both the reduction in total FSE and the value of landings increasing by 18.7%. In the emerging economies, total FSE equated to USD 222 per fisher in 2018-20, a relatively large reduction from USD 335 per fisher in 2012-14 (Table 3.1).

Six countries, or groups of countries, accounted for 86% of all support reported in the FSE in 2018-20 (China – 38%, Japan – 13%, the United States – 10%, Canada – 8% and Brazil – 6%), while EU Member States together accounted for just under 9%.3 The relative contribution of China has fallen over time, from just under half of all reported support in 2012-14. India, Norway and Poland individually accounted for 2-3% of total reported support while Denmark, Italy, Korea and Sweden accounted for 1-2% each. The remaining countries and economies in the database each accounted for less than 1%.

Absolute levels of support and their trends vary considerably across individual countries, but one pattern is relatively clear: countries providing the greatest levels of support to their fisheries also tend to have some of the largest fisheries sectors.4 Of the top six support reporters, all are also in the top seven countries and economies reporting to the FSE database in terms of global catch volume, fleet capacity or employment. When seen relative to different measures of sector size, the top providers of support over 2018-20 are different (Annex Table 3.A.1). As a share of the value of landings, support was the highest in Poland, followed by Slovenia and Sweden. On a per-fisher basis, support was the highest in Sweden, followed by Denmark and Poland, while the highest levels of support per gross tonne of fleet capacity were seen in Poland, followed by Sweden and Brazil.

Before turning to a detailed analysis of levels and trends in sub-categories of support, an overview is provided of the evolution in the policy mix over the reference periods across all countries and economies (Figure 3.2) and of the current policy mix at the level of OECD countries and emerging economies (Figure 3.3) and at the country level (Figure 3.4).

One initial observation is that support to fuel is no longer the single largest form of support in the database, having been overtaken by increased levels of spending on MMCS. This is due to a decrease in fuel spending in emerging economies and increased spending on MMCS in OECD countries. However, as shown below, fuel support has increased in absolute terms in OECD countries in recent years and remains the single largest type of support provided by the emerging economies (Figure 3.3). It is also important to note that fisheries typically benefit from other types of energy support, not reported to the FSE, because they are provided through non-specific policies; that is, policies that benefit a range of economic sectors such as forestry, shipping and off-road vehicle use (Section 3.5).

On average, the policy mix is quite different between the OECD countries and the emerging economies under study (Figure 3.3). In the OECD, on average, 42% of support is spending on MMCS, followed by spending on infrastructure (19%), income support (12%) and support to fuel (8%). The relative importance of these four types of support was the opposite in emerging economies, where, on average, fuel support accounted for 33% of total support, followed by income support (15%), spending on infrastructure (5%) and MMCS (4%). However, within these groups, policy mixes at the country level are quite different as well (Figure 3.4).

A final initial observation is that, despite having fallen in absolute terms, the overall magnitude of support provided by China means it continues to have an influence on levels and trends in overall support numbers (and on average levels and trends at the level of emerging economies).

Over 2018-20, on average, SSS totalled USD 4.6 billion per year, across all countries and economies (with a net cost of USD 4.34 billion when deducting PMS). Across the OECD, SSS totalled USD 3.9 billion per year (with a net cost of USD 3.7 billion), while it was USD 0.68 billion per year in emerging economies (with a net cost of 0.67 billion) (Table 3.2).

Net SSS (that is SSS minus PMS) remained high as a proportion of net total support in OECD countries in 2018-20 (at 75%, down from 76% in 2012-14 – and even more so when compared to the high of 80% in 2015-17). These fluctuations were mainly the result of changes in the level of DSI rather than in SSS. The trend in net SSS (increase and subsequent decrease) for all countries and economies in the FSE database is driven by the changes seen in the emerging economies, where net SSS increased to a high of USD 1.20 billion in 2015-17 before falling to a new low of USD 0.67 billion in 2018-20.5

The observed changes in SSS (and net SSS) in the emerging economies are largely a consequence of changes to support policies in China, where reported spending on SSS increased from USD 0.35 billion to USD 0.78 billion between 2012-14 and 2015-17, before falling to USD 0.30 billion in 2018-20. On the contrary, spending on SSS increased in more than half of the emerging economies between 2012-14 and 2018-20, but the magnitude of spending associated with China’s policies means that even relatively small proportional changes tend to dominate any aggregate trend it is a part of. Less than half of the emerging economies in the FSE report PMS. However, PMS is significant in Argentina, compensating for 41% of SSS spending.

A useful way of looking at support is by considering the intensity at which it is provided. The intensity of support can be calculated in relation to different measures of sector size, such as the value of landings and capacity.6 Net SSS relative to the value of landings in 2018-20 was the highest in OECD countries (where SSS equated to 10% of the value of landings) and an order of magnitude lower in the group of emerging economies (where it was only 0.8%). On average, across all countries and economies, net SSS relative to the value of landings was 4.7% in 2018-20. The pattern of increase and then decline imposed by changes in China’s SSS, along with the value of landings continuing to increase over time for the group of emerging economies, can be seen in both this group and when all countries and economies are considered together (Figure 3.5, upper panel).7 The intensity of net SSS relative to the value of landings has been consistently higher in OECD countries and is currently at its highest level due to an increase in net SSS and a concurrent decline in the value of landings.8

The typically higher levels of SSS and relatively smaller fleets in the OECD countries result in the level of spending on services to the sector per gross tonne (gt) of fleet being consistently and substantially higher than in the emerging economies. While across all countries and economies an annual average of USD 200/gt was spent on net SSS in 2018-20, it reached USD 614/ gt in the OECD countries.9 It was only USD 33/gt in the emerging economies (Figure 3.5, lower panel).10

Across all countries and economies, spending on MMCS totalled USD 2.4 billion annually over 2018-20. Spending on MMCS has been relatively stable, having fallen only slightly compared to 2012-14 (USD 2.5 billion). MMCS predominantly, and increasingly so, originates from the OECD countries, which accounted for 90% of all spending on MMCS reported in the FSE database (up from 82% in 2012-14). MMCS has consistently been the single largest form of support reported across the OECD in all periods and is more than twice as much as the next largest form of support (support to infrastructure). Spending on MMCS across the OECD rose from USD 2.03 billion to USD 2.14 billion between 2012-14 and 2018-20, having increased in two-thirds of the OECD countries. The largest proportional increases in support to MMCS were in Italy, the United Kingdom, Belgium, Spain and Costa Rica, where MMCS at least doubled between 2012-14 and 2018-20. However, all these countries had relatively low levels of spending on MMCS to begin with (for example, in Italy MMCS increased from USD 1 million to USD 25 million). Substantial reductions in MMCS have also been reported at the country level: Australia (-68%), the Netherlands (-65%) and Mexico (-49%), while Ireland, Japan, Norway and Türkiye all reported reductions of around 30%. On average, MMCS accounted for 41.9% of total OECD support in 2018-20.

In comparison, the absolute level of spending on MMCS was relatively low in the group of emerging economies in 2018-20, at USD 0.23 billion and almost halved over the period considered (from USD 0.44 billion in 2012-14). This was driven primarily by reported spending on MMCS falling by 53% in China and by 98% in Brazil. Support for MMCS as a proportion of total support fell slightly to 5.9% in 2018-20 compared to 5.4% in 2012-14, as total emerging economy FSE also fell over the period.11

The differences in spending on MMCS are even more apparent when considered in the context of fleet size (Figure 3.7) – due to the gross tonnage of the emerging economy fleets being more than double that of the OECD countries. In 2018-20, the OECD countries spent USD 297/gt on MMCS while the emerging economies spent USD 15/gt. Spending has increased slightly compared to 2012-14 in the OECD countries (from USD 281/gt) but more than halved in the emerging economies (from USD 35/gt).

In addition to reflecting relatively lower levels of support to MMCS, and thus capacity in this area, the low proportional contribution of MMCS to total FSE in emerging economies may also at least partly reflect potential reporting challenges. While differences in support to MMCS (both relative and absolute) between countries and groups of countries are influenced by differences in policy objectives and local context, comprehensively identifying the levels of support provided for MMCS can be difficult in some cases as multiple authorities may be involved in implementing the associated activities. It can also be the case that in some settings, components of MMCS are not captured in the FSE as they are funded directly by the industry (Box 3.2).

A further factor to consider when interpreting support to MMCS is that while these activities are necessary for achieving sustainability goals, determining whether observed levels of support are optimal – or even sufficient – is context-specific and requires additional information, such as the status of stocks associated with the fishery receiving the support. Despite this, the low absolute and relative levels of reported support for MMCS in some cases may warrant further investigation into the underlying causes.

Support to infrastructure, which includes funding to construct or access facilities such as ports, was USD 1.25 billion in 2018-20 across all countries and economies. Most of this form of support was reported by OECD countries (at USD 0.97 billion, compared to USD 0.27 billion for the emerging economies). Relative to fleet size, spending on infrastructure was substantially higher in 2018-20 in the OECD countries (USD 213/gt) than in the emerging economies (USD 13/gt) (Figure 3.8).

Across all countries and economies, between 2012-14 and 2018-20, support to infrastructure increased in absolute terms (from USD 1.08 billion), relative importance (from 24.1% to 26.8% of SSS) and per gross tonne of fleet capacity (from USD 66/gt to USD 70/gt), reflecting absolute increases in both the OECD countries and the emerging economies.

However, trends at the individual country level are much more varied. Support to infrastructure fell in almost three-quarters of the OECD countries, especially Poland (from USD 38 million to USD 2 million), but larger increases in Japan (USD 688 million to USD 769 million) and Canada (USD 98 million to USD 142 million) over the period more than offset the reductions. Spending on support to infrastructure also fell substantially in Brazil (from USD 78 million to USD 5 million) and Viet Nam (from USD 29 million to USD 7 million) but increased in most of the other emerging economies, and especially China (from USD 33 million to USD 128 million).

In 2018-20, support for R&D averaged USD 0.49 billion per year across all countries and economies, representing 12% of SSS, and has changed little in both absolute and relative terms since 2012-14 (USD 0.51 billion, 11% of SSS). Most support to R&D is reported by the OECD countries, where it was USD 0.45 billion in 2018-20 and 12% of SSS. Absolute spending is lower for the emerging economies (USD 0.04 billion in 2018-20), as is the relative proportion of SSS it accounts for (6%). The level of spending on R&D has changed little over time in the OECD. It increased slightly in the emerging economies between 2012-14 and 2015-17 before falling back to slightly below its original level by 2018-20.

At the country level, several OECD countries (notably Iceland, Australia and New Zealand), along with Argentina and Malaysia, reported relatively high and stable proportions of SSS going to R&D.

Relative to fleet size, the patterns are similar to those observed for infrastructure: considerably higher spending per gross tonne by the OECD countries in 2018-20 (USD 83/gt) than by the emerging economies (USD 1/gt), and an increase in spending by the OECD countries (from USD 79/gt in 2012-14) but a decrease in spending by the emerging economies (from USD 2/gt in 2012-14) (Figure 3.9).

Support to fishing communities averaged USD 124.3 million per year in the 2018-20 period, across all countries and economies in the FSE database. The level of this support has fluctuated since 2012-14, when it was USD 151.9 million per year. Support to fishing communities is almost exclusively reported by the OECD countries, where it was USD 112.8 million per year in 2018-20, down by 24% compared to 2012-14 (when it was USD 148.8 million per year). Its relative importance in terms of its contribution to spending on SSS was low for both the OECD countries (3% of SSS) and the emerging economies (less than 2% of SSS) in 2018-20. At the individual country level, the relative importance of support to fishing communities is also low in most cases, but there are some notable exceptions where spending as a proportion of total FSE was high in 2018-20: Estonia (47%), Colombia (44%), Slovenia (29%) and Spain (24%).

Currently, the FSE database only records payments for access to foreign waters for the European Union (EU) (as a group) and for China. For the European Union, payments for access to foreign waters averaged USD 152 million per year in 2018-20, a slight reduction compared to the USD 157 million reported for 2012-14.12 These payments include both financial compensation for access to resources in the exclusive economic zone (EEZ) of third countries (which accounted for about three-quarters of the payments on average) and a financial contribution to promote the sustainable management of fisheries in these countries, for example though the reinforcement of control and surveillance capacities, and support to local fishing communities. As a proportion of total EU FSE, payments for access to foreign waters rose from 14% in 2012-14 to 17% in 2018-20. China only reported such support for the most recent period considered (2018-20), where it averaged USD 30.5 million per annum. These payments equated to less than 1% of China’s total FSE in 2018-20.

Government supported payments for access to foreign waters are known to exist in other countries, highlighting the need for greater transparency on payments for access to foreign waters. Effective evidence-based policy advice depends on data being comprehensive and correct. Incomplete reporting of time series results in data gaps and an incomplete and potentially unbalanced understanding of government support to fisheries.

DSI averaged USD 5.8 billion per year in the period 2018-20 for all countries and economies (Figure 3.10 upper panel), down by 33% compared to 2012-14 (USD 8.6 billion). This equated to 5.7% of the value of landings in 2018-20, down from 8.6% in 2012-14 (Figure 3.10 lower panel; see also Table 3.3).

Most direct support is provided by the emerging economies (79% of all DSI reported to the FSE in 2018-20), in contrast to the situation seen for SSS, where the OECD countries account for the greatest levels of spending. The overall reduction in DSI results from a substantial reduction in this form of support by the emerging economies.

For the OECD countries, DSI totalled an average of USD 1.22 billion per year in 2018-20, an increase from the USD 0.88 billion reported in 2015-17, following a fall from USD 1.16 billion in 2012-14 (Figure 3.10 upper panel). The slight increase in DSI combined with the continued fall in the value of landings has resulted in OECD direct support equating to 3.3% of the value of landings in 2018-20, up from 2.9% in 2012-14 but still less than half the level seen in the emerging economies.

The pattern of increase in DSI relative to the value of landings is also seen at the country level, where it rose in just over half of the OECD countries over the period under consideration. Direct support was also high relative to the value of landings in a few countries in 2018-20 (for example, 459% in Poland, 30% in Sweden and 24% in Slovenia).

The emerging economy DSI was USD 4.6 billion per year in 2018-20, a 38% reduction compared to the USD 7.4 billion reported for 2012-14. This equates to 7.4% of the value of landings in 2018-20, which is considerably below the 14.0% seen in 2012-14 and resulted from reduced spending on DSI and a 19% increase in the value of landings. The influence of individual countries is again strong: in China, DSI accounted for just over 11% of the value of landings in 2018-20 whereas it was around 1% or less in the remaining emerging economies for which the value of landings is available.

Absolute spending on DSI has fallen substantially in most of the emerging economies, particularly China, Brazil, Malaysia and Indonesia, but spending on DSI has increased in India (where payments to fuel and income have both risen). Reductions in support to fuel are the primary cause of the more general fall in DSI in the emerging economies and the OECD. Of the five emerging economies reporting support to fuel (Brazil, China, India, Malaysia and Chinese Taipei), this type of support has fallen by at least 70% in Brazil, China and Malaysia (and in 2018-20 accounted for less than 25% of DSI in all of these economies except for China, where it was 45%). In India, support to fuel accounted for 42% of DSI in 2018-20. In Malaysia, support to fuel has been replaced by support to income as the primary DSI policy and in Brazil support to income accounts for more than 99% of DSI. In absolute terms, the movement away from support to fuel in China dominates both the levels and trends at the level of emerging economies. Support to fuel in China alone accounted for 74% of all the emerging economy DSI in 2012-14, falling to 36% in 2018-20 as support to fuel was reduced (from USD 5.5 billion to USD 1.6 billion). Other direct support increased notably over the same period in China (from USD 158 510 to USD 799 442 051), but this growth was smaller than the reduction in support to fuel; hence China’s DSI fell by 37%.

DSI is often provided via policies that aim to help fishing businesses operate (more) profitably, with the general objective of directly maintaining or increasing fishers’ incomes (and in doing so, potentially indirectly contributing to associated sectors or communities). Across all countries and economies in this study, the intensity of DSI was USD 235 per fisher in 2018-20, a reduction from USD 333 per fisher in 2012-14 driven by absolute spending on DSI falling by a substantially greater proportion than employment over this period.

In the OECD, USD 1 228 of support was provided per fisher in 2018-20, an increase from the USD 1 089 in 2012-14 (but following a dip to USD 868 in 2015-17) (Table 3.3). The relatively low levels of employment in the OECD result in the average level of support per fisher being almost an order of magnitude higher in the OECD countries than in the emerging economies (OECD employment in fisheries representing only about 5% of total employment in fisheries in all countries and economies considered in 2018-20).13 In the emerging economies, DSI per fisher was USD 194 in 2018-20 (having fallen from USD 301 in 2012-14).

At the level of individual countries, the intensity of support was far above the average in some OECD countries, with Denmark, Poland and Sweden standing out, with DSI USD 23 000 or more per fisher in 2018-20. DSI in the EU countries considered was, on average, almost three times the OECD average over the same period (USD 3 338 per fisher).

A variety of policy types sit within the classification of DSI. Policies such as support for fuel, for other variable inputs (including payments to reduce the cost of ice or bait) and for fixed inputs (like payments for vessel construction and modernisation or the purchase of gear) aim to increase profitability by directly reducing the cost of inputs. Support for decommissioning schemes or payments for early retirement aims to reduce capacity in the fishery by providing compensation. Other policies such as income support or special insurance systems, which typically aim to provide a financial safety net, are partially decoupled from fishing activities.

Across all countries and economies, support directed at lowering the cost of inputs totalled USD 3.1 billion in 2018-20, accounting for 54% of reported DSI (Figure 3.11) and 30% of total support. Both total reported support to inputs and the proportion of DSI this accounts for fell over the period considered (from USD 6.8 billion, 80% of DSI in 2012-14) but policies of this type still represent the greatest area of spending within DSI.

In the OECD, policies lowering the cost of inputs were also the main form of DSI until recently, but by 2018-20, partially decoupled payments, specifically income support, had increased in significance (53% of DSI, or USD 0.64 billion) compared to support to inputs (38% of DSI, or USD 0.46 billion).

Policies lowering the cost of inputs remain the main source of DSI in the emerging economies but have fallen sharply both in level and as a proportion of DSI. The reduction in spending on these policies is the single most significant absolute change in any group of support recorded in the FSE database, having fallen by almost two-thirds between 2012-14 and 2018-20 from USD 6.3 billion (85% of DSI) to USD 2.7 billion (58% of DSI) (Figure 3.11). The reduction is indicative of a general decrease in the extent to which governments in the emerging economies (Brazil, China, Indonesia, Malaysia and Chinese Taipei) reportedly use these forms of support and, more precisely, a trend of reduced spending on support to fuel in particular (in all emerging economies except for India).

While there has been a general decline in support to inputs, especially fuel, across all of the emerging economies, the magnitude of support policies in China (and changes to these) tends to result in them dominating the levels and trends of any aggregate of which they are a part. To illustrate this point, in 2018-20, support to inputs in China represented 96% of all the emerging economy support to inputs and China’s support to fuel alone accounted for 52% of the value of policies lowering the cost of inputs in all countries and economies in the FSE database (down from 80% in 2012-14).

The intensity of spending on support to inputs is considerably higher in the OECD countries (USD 465 per fisher) than in the emerging economies (USD 113 per fisher). Again, this highlights the typically far lower levels of employment in the OECD country fisheries.

Across all countries and economies, policies that reduce the cost of fuel made up the biggest component of DSI in 2018-20 (37% of DSI, USD 2.1 billion). These policies accounted for 21% of net total support in this group, second only in magnitude to support for MMCS (USD 2.4 billion in 2018-20). Moreover, in many countries, fisheries benefit from fuel support policies that benefit a range of sectors simultaneously rather than fisheries exclusively (for example agriculture, forestry, and shipping and navigation). As such, these policies, which are considered to be non-specific, are generally not reported to the FSE database (see the discussion on non-specific support to fisheries in Section 3.5).

Support to fuel was lower in the OECD in 2018-20 (USD 0.40 billion) than in 2012-14 (USD 0.44 billion) but increased by USD 0.03 billion in the most recent period (between 2015-17 and 2018-20). By 2018-20, support to fuel was no longer the largest reported form of DSI for this group, having been superseded by support to income (USD 0.64 billion). In 2018-20, support to fuel accounted for 33% of OECD DSI and 8% of net total support.

The recent increase in support to fuel in the OECD was driven by increases in EU countries (from USD 0.21 billion in 2015-17 to USD 0.26 billion in 2018-20), which more than offset reductions elsewhere in the OECD (e.g. Mexico and Türkiye). The relative magnitude of EU support to fuel has increased both as a proportion of DSI (from 49% in 2012-14 to 67% in 2018-20) and net total support (from 21% in 2012-14 to 30% in 2018-20).

In the emerging economies, reported support to fuel fell by 71% between 2012-14 and 2018-20 (from USD 6.0 billion to USD 1.7 billion), making its contribution to DSI fall as well (from 81% in 2012-14 to 38% in 2018-20). Despite the reductions, it continued to be the single largest support policy of any kind in the emerging economies in 2018-20, when it accounted for 33% of net total support.

Spending on support to fuel was 1.1% of the value of landings across the OECD in 2018-20. The intensity of support has been relatively stable over time (1.1% in 2012-14 and 1.0% in 2015-17). In the emerging economies, support to fuel represented 3.3% of the value of landings in 2018-20, having fallen progressively and substantially from 13.1% in 2012-14. In more than two-thirds of the nine OECD countries that report providing fuel support, support accounted for over 3% of the value of landings, and substantially so in some countries. For the EU countries considered, support to fuel equated to 3.9% of the value of landings in 2018-20, an increase compared to the 3.0% reported for 2012-14.

As spending on support to fuel has fallen, so has the intensity at which support to fuel is provided by all reporting countries and economies on a per-fisher basis. The per-fisher intensity of fuel support remains substantially higher in the OECD countries (Figure 3.12), which spent USD 401 per fisher in 2018-20 (USD 409 per fisher in 2012-14). In the emerging economies this amount was USD 73 per fisher in 2018-20 (USD 242 per fisher in 2012-14). Relative to fleet capacity, the OECD countries spent USD 87/gt in 2018-20 (USD 92/gt in 2012-14) and the emerging economies USD 145/gt in 2018-20 (USD 490/gt in 2012-14).

While this declining trend was also observed with respect to fleet for the group of EU countries, where support was USD 1 615/gt in 2018-20 compared to USD 4 308/gt in 2012-14, the intensity of support per fisher has increased over time, to USD 2 246 per fisher in 2018-20, up from USD 1 935 per fisher in 2012-14. This is more than five times the intensity seen for the OECD group as a whole. Of particular note is the intensity of support to fuel per fisher in Poland (USD 43 693), Denmark (USD 23 931) and Sweden (USD 21 317), countries identified above as having high levels of DSI per fisher.

Finally, extreme care should be taken in interpreting differences across countries or groups of countries given the unequal nature of reporting for support to fuel; only 14 of the 40 countries reported support to fuel in 2018-20.

Across all countries and economies, partially decoupled payments (which include income support and special insurance systems) represented an average of 27% of spending on DSI per year in 2018-20 (USD 1.5 billion). This was an increase in relative terms, from 17% in 2012-14 (USD 1.5 billion), and predominantly the result of falling total DSI.

Partially decoupled payments have increased in the OECD and represented the majority (53%) of spending on DSI in 2018-20 (USD 0.64 billion), up from 37% (USD 0.43 billion) in 2012-14. However, at the country level, a third of the OECD countries did not report any decoupled support in 2018-20. Another third reported it accounting for less than 35% of their DSI. Decoupled payments were the predominant form of DSI in the remaining third: the United States (99%), Canada (93%), Germany (80%), Korea (50%) and Mexico (58%); in all cases, the decoupled support went entirely to income.

The increase in support to income reported for the OECD is relatively large, up 50%, to USD 0.64 billion in 2018-20 from USD 0.43 billion in 2012-14. Levels of support to income fell in more OECD countries than in countries in which it increased, but the increase was substantial in some, including the United States, Mexico, Italy and Korea. This was especially true for the United States, which increased spending on income support more than eightfold, from USD 26.6 million to USD 228.3 million between 2012-14 and 2018-20. OECD countries, on average, granted USD 645 of income support per fisher in 2018-20, almost double the amount granted in 2015-17 (Figure 3.13).

In the emerging economies, partially decoupled payments have fallen in absolute terms (from USD 1.0 billion in 2012-14 to USD 0.9 billion in 2018-20) but their relative contribution to DSI increased over the same period (from 14% to 20%). There is considerable variation at the country level, where it accounts for high proportions of DSI in some cases: Brazil and Indonesia (100%), Viet Nam (92%), Chinese Taipei (77%), and Malaysia (52%), and substantially less in others: China (4%) and the Philippines, Peru and Argentina (0%). Relative to employment, income support was substantially lower in the emerging economies than in the OECD countries, with USD 33 of income support granted per fisher, on average, in 2018-20, slightly down from the amounts granted in the earlier periods (Figure 3.13).

The remaining group of direct support policies includes those that aim to reduce fishing capacity. This type of support includes decommissioning schemes and payments for early retirement. Across all countries and economies, this type of support was a relatively small component of overall spending on DSI in 2018-20 (4.5%, USD 0.3 billion) but had increased from 2012-14 (2.9%, USD 0.2 billion).

In the OECD countries, payments aiming to reduce capacity have been falling, from 16.5% of DSI in 2012-14 (USD 0.2 billion) to 6.8% of DSI in 2018-20 (USD 0.1 billion). While only a minority of countries report this type of policy, in those that do it often accounts for major proportions of the country’s DSI (100% in Australia, 93% in Greece, 41% in both Italy and Korea, and 35% in Spain). In some cases this is because the country has little other DSI.

In the emerging economies, support aimed at capacity reduction increased between 2012-14 (0.8% of DSI, USD 0.1 billion) and 2018-20 (3.9% of DSI, USD 0.2 billion). Only China and Chinese Taipei report this form of support. While it fell in Chinese Taipei (from USD 2.8 million in 2012-14 to USD 1.6 million in 2018-20), it increased substantially in China (from USD 54.4 million in 2012-14 to USD 178.3 million in 2018-20). However, China’s support to capacity reduction fell in 2018-20 (from USD 193.0 million in 2015-17), potentially indicating a change in trend.

Typically, governments support their fisheries sectors in an attempt to achieve a range of objectives, including: maintaining coastal employment; improving fishers’ welfare; promoting the competitiveness of fisheries; encouraging production when it is seen as important to food security; and ensuring the sustainability of the sector – notably by sustainably managing fish stocks and facilitating adaptation to climate change. Increasingly, support also aims to help reduce the sector’s greenhouse gas (GHG) emissions.

However, government support can sometimes result in unintended outcomes. In particular, it may distort the economic environment within which fishers operate (e.g. by reducing marginal costs or increasing the marginal benefits of fishing). These distortions may result in a build-up of excess fishing capacity; overfishing; and incentives to engage in IUU fishing, all of which are detrimental to the health of fish stocks and ecosystems.

Any negative impacts on fish stock health caused by government support will, in turn, impact other policy objectives in the medium to long term (Figure 3.14). Ultimately, policies that harm stocks are economically detrimental to those they aim to help. Lower stock abundance reduces the volume of fish that can be sustainably harvested (e.g. the maximum sustainable yield) while increasing harvesting costs, thereby affecting the productivity and resilience of the sector. In addition, support to fisheries can be counterproductive to equity objectives. For example, support that lowers the cost of fuel may disproportionally benefit fuel-intensive fishing operations, thereby reducing the competitiveness of smaller scale fishers and making them worse off (Martini and Innes, 2018[2]).

Ensuring that support to fisheries does not undermine the health of fish stocks is thus key to achieving socio-economic objectives. It is also key to the sustainability of the ocean economy at large. Policies that encourage unsustainable fishing are also detrimental to society and the environment more generally as they result in suboptimal contributions to food security, greater impacts on non-target species and ecosystems, and higher GHG emissions (Hilborn et al., 2020[8]).14 Section 3.3.2 summarises what is known about the impact of fisheries support on fish stock health then Section 3.3.3 proposes a framework that can help policy makers identify the policies that can present a risk of encouraging unsustainable fishing under particular conditions.

OECD work, including the FishPEM model (Martini and Innes, 2018[2]) and analysis that builds on the theoretical and empirical literature (notably OECD (2006[9])), has comprehensively addressed the links between capacity, overfishing and the depletion of resources; the effects of different types of support; and how alternative management frameworks can potentially mitigate these impacts. The wider body of theoretical and empirical literature is also rich and relatively well-established (see, for example, APEC (2020[10]); Arthur et al. (2019[11]); Costello et al. (2020[12]); Da-Rocha et al. (2017[13]); Duy and Flaaten (2016[14]); Merayo, Waldo and Nielsen (2017[15]); Munro and Sumaila (2002[16]); Sakai (2017[17]); Sumaila, Dyck and Cheung (2013[18]); Sumaila et al. (2016[19]); UNEP (2004[20]); Yagi, Senda and Ariji (2008[21]).

According to this literature, categorising individual support policies as either strictly “positive” or “negative” along a matrix of socio-economic and environmental objectives is complex. Indeed, modelling work by the OECD has shown that the relative effects of support can vary significantly, depending on a combination of mitigating factors (Martini and Innes, 2018[2]) (Figure 3.15).15 These include:

  • the management framework within which fisheries that benefit from support operate (including regulation and enforcement) and the extent to which it is effective at controlling catch, effort and capacity

  • the health of fish stocks targeted by support recipients

  • the policy design, including eligibility (i.e. who can receive support) and the conditions under which support can be received (e.g. for how long)

  • the type of support policy.

Fishers generally fish to the point where their total revenue equals their total costs (including salaries). The mitigating potential of fisheries management can be illustrated by considering a situation whereby catch and effort are not controlled by management. Where this occurs, if support alters the revenue/cost balance by either increasing revenues or reducing costs – e.g. by reducing the cost of investment in new fishing equipment (such as vessels and gear) or reducing the cost of variable inputs (such as fuel) – this will result in the level of fishing effort increasing until revenues once again equal costs. Management can mitigate this impact by constraining total capacity, effort or, ideally, catch.16

In theory, where fisheries management and enforcement effectively limit fishing to sustainable levels, there would be no risk of support harming fish stocks, as the fishing effort would not be allowed to go beyond the levels that sustainably maximise catches. As the efficacy of fisheries management and enforcement declines, however, the risk that certain types of support result in harm to fish stocks increases.

Even when the management framework effectively imposes limits on the total volume of fish that can be caught or landed, support can still create incentives for overcapacity and overfishing to the extent that management may mitigate but not entirely eliminate the impact of support on fishing costs (Clark, Munro and Sumaila, 2005[22]; Martini and Innes, 2018[2]).17 In such cases, support may increase incentives for IUU fishing. Excess capacity may also result in pressure on the management decision-making process, leading to decisions that do not align with sustainability commitments resulting in, for example, quotas that exceed scientific advice (Carpenter and Heisse, 2019[23]).

The health of a fish stock at the time support is implemented is a second significant factor influencing the relative impact support can have on fish stock health. Underfished stocks have the potential to produce higher levels of catch and value as effort increases to the point of maximum sustainable yield (MSY) or maximum economic yield (MEY). As long as the stocks remain underfished, support that increases capacity will not result in overfishing. There is no such potential for fully or overfished stocks. In such cases, if effort increases as a result of the support, the sustainable yield will fall below (or further below) the optimum, away from MSY and MEY, and produce suboptimal economic and social outcomes in the short to medium term.

This factor only matters in the short to medium term. If support results in sustained increases in fishing effort, the longer term impacts of support will be the same irrespective of the initial health of the resources. The extent to which detrimental impacts on the resources and the fishery’s economic and social performance can occur will depend on how close to fully fished a stock was initially and the magnitude of the support-induced fishing response (Hilborn et al., 2020[8]).

Policy design (i.e. the specific conditions under which support is granted) is the third factor that can influence the relative impact of government support on fish stock sustainability. These conditions may specify who is eligible to receive support (e.g. specific segments of a fleet, typically the small-scale segment, or a specific fishery) and under what conditions, including for how long. Such conditions will influence the extent to which support may impact capacity, effort and sustainability – as well as the distributional impacts of support (Schuhbauer et al., 2017[24]; Harper and Sumaila, 2019[25]; Schuhbauer et al., 2020[26]). For example, if policy design restricts eligibility for support to vessels operating in effectively managed fisheries, or fisheries that only target underfished stocks, the risk of encouraging unsustainable fishing will be minimal, at least in the short to medium term.

The last factor that influences the relative impact of support on fish stock health is the type of support policy and how directly it affects operational costs and revenues, and hence the profitability of fishing. This is discussed in detail below.

Determining the likely impact of a single support policy on the health of fish stocks requires granular information on all the factors that influence its relative impact; that is, information on the fisheries that benefit from support, how they are managed, the fish stocks they harvest, the health of those fish stocks and the type of support received, including the associated conditions. However, linking information on support policies to individual fisheries and harvested stocks is challenging using information typically available at the country level (notably because the status of many fish stocks remains unassessed, as outlined in Chapter 2).

In the absence of such granular information, this chapter proposes assessing the risks of encouraging unsustainable fishing that different support policies can present in the absence of effective management, when stocks are not underfished and the design of support does not restrict eligibility significantly. clusters fisheries support policies into four categories: high risk, moderate risk, uncertain risk and no risk, based on the findings of previous OECD analyses and the extensive body of research in this area (see above). Each category of support is discussed in detail below.

In addition, the arrows at the bottom of Figure 3.16 indicate how the policy context can mitigate the risks of encouraging unsustainable fishing – i.e. fisheries management, the initial health of the fish stocks harvested by the support recipients and policy design. The high, moderate and uncertain risk categories tend towards lower risk if management is effective, stocks are underfished or policy design is restrictive in a way that targets support to effectively managed or underfished fisheries.

In practice, however, the FSE data suggest that the caveat related to policy design currently rarely applies: support policies are generally designed in a way that makes them available to fisheries indiscriminately. This suggests there is scope for countries to reduce the risks posed by some types of support policies by applying specific conditions so that only fishers operating in effectively managed and sustainable fisheries are eligible. Similarly, the caveat related to the status of fish stocks also rarely applies: the Food and Agriculture Organization (FAO) estimates that in 2019, only 7.2% of stocks were underfished globally (FAO, 2022[27]).

The caveat related to fisheries management, on the other hand, is an important one: its effectiveness indeed varies significantly across countries, time and fish stocks – not only as a result of management efforts, but also because of external factors such as the impacts of climate change on ocean ecosystems and fish abundance and location. Evidence presented in Chapter 2 shows that many fisheries operate somewhere between effective management and enforcement and no management at all: about a fifth of total landings volume and over two-fifths of total landings value from the key species harvested by the countries and economies studied in this report came from stocks for which catch was not fully controlled. The discussion below focuses on this last caveat, referring to the risks of encouraging unsustainable fishing in the absence of effective management.

Applying the classification presented in Figure 3.16 to a support policy mix can provide a pragmatic basis upon which to consider whether support policies at the national level can present risks of encouraging unsustainable fishing.18 On this basis, governments can examine the individual support policies that can present such risks and investigate whether recipients of such support operate in effectively managed fisheries. Where this is not the case, governments should consider better targeting these policies or using alternative forms of support. Countries may also want to move away from policies which can present risks of harming fish stocks more generally, as a precautionary approach, given the difficulty, and cost, of regularly assessing whether individual recipients of support are operating in sustainably managed fisheries. Careful examination will be necessary for final self-determination of the level of risk a particular policy presents, as a policy can fall into different risk categories depending on the policy-specific conditions and circumstances.

The first category brings together those policies that can present a high risk of encouraging unsustainable fishing in the absence of effective fisheries management (hereafter “high-risk” policies). These policies directly reduce operational costs or increase revenues from fishing, thus directly increasing profitability. Therefore, they create financial incentives (and make it viable) for the levels of capacity and fishing to increase when management and enforcement are ineffective at constraining catches to sustainable levels (e.g. MSY or MEY) and deterring IUU fishing (Martini and Innes, 2018[2]). In such cases, where targeted fish stocks are at least fully fished in the first place, this results in overexploitation.

These policies include direct support to variable inputs and tax concessions, notably: support to fuel, access to infrastructure or other variable inputs; fuel tax concessions; subsidised vessel insurance; and subsidised access to port infrastructure. By reducing operating costs, such policies allow for greater use of inputs, making it possible for vessels to fish more intensively and at longer distances. The impact of such support increases with the share of the costs supported and tends to be stronger when what is supported is responsive to changes in price and substitutable. As such, policies that support purchased inputs, such as fuel, or costs related to running the fishing operation, such as the use of port services, pose the highest risk of provoking overfishing and the depletion of fish stocks (OECD, 2021[28]; OECD, 2020[1]; Martini and Innes, 2018[2]; Martini, 2022[29]).

Support to fixed costs also falls under the “high-risk” category, notably support for the construction or capacity-enhancing modernisation of vessels and gear. When management is ineffective, such support increases (or maintains) levels of capacity above what is required to sustainably exploit the resource. With excess capacity, too many boats are chasing too few fish, as there is an incentive to use this capital so long as operating costs (which may also be supported) can be covered (potentially exacerbated by the need to service loans).19 Support for vessel construction and modernisation is recognised to have contributed to problems of excess capacity in many of the world’s fisheries (see, for example, Westlund (2004[30]); Gréboval and Munro (1999[31]); Cunningham and Gréboval (2001[32])). Finally, the longevity and fixed-cost nature of vessels mean that the effects of policies supporting vessel construction and purchase can persist for some time after the support itself ends.

High-risk policies can also be found in support to the sector more generally. Access agreements that provide additional fishing opportunities allow fleets to access foreign waters without bearing the full cost of access. As such, they promote fishing beyond the level of harvesting that would take place if the foreign fleets had to bear the full cost of access. This risks encouraging fishing in excess of what is sustainable within the waters of the funding country in the absence of effective management. Countries that sell access to their resources sometimes do so because they lack the capacity to exploit the fish stocks, which may be underfished at the time of the agreement. In many cases, however, these countries lack the ability to assess the status of the stocks and to manage and monitor fishing activities effectively. Some access agreements also provide for additional payments intended to support sustainable fisheries management in the country providing access to its resources. These payments can improve fisheries management and limit the risk of encouraging unsustainable fishing if used effectively.20

The second category groups together policies that have indirect and potentially less distorting impacts on the economic incentives facing the sector. As a result, they present a more moderate risk of encouraging unsustainable fishing in the absence of effective management but still have the potential to increase fishing effort and capacity in ways that could harm fish stocks. Again, both direct support to individual fishers and companies and some types of support to the sector, in general, are found in this category.

Support to vessels and gear that improves on-board safety or reduces the environmental impact of fishing is theoretically benign with respect to the risk of encouraging unsustainable fishing. However, while these policies may have some positive environmental impacts, such as reducing bycatch or GHG emissions, they can also increase fishing efficiency and reduce costs (e.g. through lower fuel consumption) (Steele et al., 2002[33]), which, if unconstrained by management, can result in greater pressure on resources and overfishing.21

Support to build new infrastructure reduces the costs the industry may otherwise have had to bear. As such, it can send mixed signals about the sustainability and profitability of fishing activities, help support excess capacity, and potentially attract further investment in a fishing area.

Decommissioning schemes have generally been applied to fisheries facing overcapacity and overfishing to reduce capacity and pressure on stocks. Yet, evidence indicates that capacity is generally not reduced in the long term. In the absence of significant and effective management reform addressing the underlying reasons for existing overcapacity, support tends to leak back into the fishery, injecting new capital and ultimately further increasing capacity and effort (Weninger and McConnell, 2000[34]; Beddington and Rettig, 1984[35]; OECD, 1997[36]; Holland, Gudmundsson and Gates, 1999[37]; Curtis and Squires, 2007[38]; OECD, 2006[9]). This is the case when the industry anticipates these forms of support. When industry is convinced governments will fund the retirement of excess capacity, it can incentivise investment in new vessels, leading to greater overcapacity than would otherwise occur, creating a moral hazard (Clark, Munro and Sumaila, 2005[22]). In practice, the lack of information or ineffective design can also result in insufficient capacity being removed (OECD, 2006[9]).

Programmes such as income support can help small-scale fishers cope with market uncertainty and exceptional events, yet they can also reduce the wages firms need to pay fishers, which reduces the costs of fishing. This can promote labour-intensive operations, inhibit adjustment and maintain excess capacity in a fishery. By helping to maintain a level of excess capacity, such policies can slow or prevent fish stocks from recovering. By encouraging fishers to remain in the industry, unemployment insurance (a form of income support) is believed to have been a major hindrance to the long-term adjustment and commercial viability of certain Atlantic fisheries (Schrank, 1998[39]).22 These programmes have also undermined quota management systems by increasing effort and contributing to incentives to lobby for expanding fishing efforts (Poole, 2000[40]).

The implications of some forms of support are not clear as they can be designed and applied in various ways with very different impacts, and therefore are context-dependent.23 These types of support, with the potential to either reduce or increase capacity and effort, resulting in positive or negative impacts on fish stock health, are classified under the “uncertain risk” category. Increasing transparency on policy design for support policies in this category would help better anticipate the risks they may pose in terms of fish resources health and inform any need for reform.

Education and training can potentially reduce fishing pressure if it provides new skills for fishers and creates opportunities outside the sector. It can also reduce fishing pressure if it promotes the uptake of more sustainable fishing practices (Roberson and Wilcox, 2022[41]). However, if it increases fishers’ efficiency, there is a risk of it contributing to increases in effort.

The impact of support to fishing communities is potentially mixed for similar reasons; if it reduces a community’s dependence on fishing or improves engagement with management, it may help improve the health of fish stocks. However, if its application (or the expectation of its use) perpetuates a situation of excess capacity and overfishing, then it is potentially detrimental to those same stocks.

In the same vein, support to marketing and promotion may increase the value of fisheries products or the demand for them, hence increasing profits and creating incentives to increase effort. However, marketing and promotion can have positive impacts if they target sustainability. For example, creating appropriate standards or labels may increase the demand for sustainably fished products, potentially resulting in incentives to fish more sustainably.

Finally, R&D objectives and associated outcomes can differ significantly. Cost-reducing or benefit-enhancing R&D, such as improved gear technology and selectivity, can result in developments that reduce fishing costs and improve fishers’ productivity, which can incentivise increases in the level of fishing effort and capacity growth. However, research that contributes to better resource management, such as research on the health of stocks, could have positive impacts on fish stock health.24

The only types of support that do not present any risk of encouraging unsustainable fishing are those that contribute to ensuring that fisheries’ resources are appropriately managed and regulations are enforced. Where effectively implemented, they are instrumental in improving stock status (Hilborn et al., 2020[8]) by providing a better understanding of the state of fisheries resources, better aligning capacity and effort with the resources available, monitoring and controlling fishing activities, and ensuring that catches are controlled. Management, including research on fish stock health, and enforcement are essential components for effective and sustainable fisheries management, and need to be provided, or at least overseen, by some level of government.

Figure 3.17 presents the FSE data clustered according to the risks that they may encourage unsustainable fishing in the absence of effective management, as outlined in Figure 3.16.25 When all countries and economies in the FSE database are considered, 33% (USD 3.4 billion) of the total FSE in 2018-20 went to support policies that present a high risk of encouraging unsustainable fishing in the absence of effective management. This is a notable decline compared to 2012-14, when support in this category of support represented just over 52% of the total FSE (USD 7.0 billion). Encouragingly, this decline has not been accompanied by an equivalent growth in policies that can present a more moderate risk of encouraging unsustainable fishing. These policies accounted for 28% in 2018-20, up from 21% in 2012-14, a small increase in real terms (from USD 2.86 billion in 2012-14 to USD 2.94 billion in 2018-20).

The proportion of support considered to present no risk of encouraging unsustainable fishing also, encouragingly, increased, to 23% (USD 2.4 billion) of the total FSE in 2018-20, up from 18% (USD 2.5 billion) in 2012-14. This was driven by an overall decrease in total FSE. In absolute terms, spending on these policies fell slightly. The greatest proportional (and real) increase in any category of support was in policies presenting an uncertain level of risk. These policies accounted for 16% of the total FSE, up from 8% in 2012-14 (USD 1.6 billion and USD 1.1 billion, respectively). Further work is needed to better understand the nature of policies in this category.

Across the OECD, the support mix was relatively stable in both absolute and proportional terms over the period considered. In 2018-20, the greatest proportion of support went to policies categorised as presenting no risk of encouraging unsustainable fishing (42% of total FSE, USD 2.1 billion). This was consistently the case over the review period, with a slight increase in both absolute and proportional terms in recent years (from 40% of total FSE, USD 2.0 billion, in 2012-14). Support that presents a moderate risk of encouraging unsustainable fishing in the absence of effective management was the second-largest category in the OECD, at 33% in 2018-20 (USD 1.7 billion), and also changed little (31%, USD 1.6 billion, in 2012-14). Support that can present a high risk of encouraging unsustainable fishing accounted for a relatively low 12% of total support (USD 0.6 billion) in 2018-20, and, again, was relatively stable (13% of FSE, USD 0.7 billion, in 2012-14).

The situation is different in the emerging economies: in 2018-20, most support was allocated to policies with a high risk of encouraging unsustainable fishing in the absence of effective management (53%, USD 2.8 billion). Their proportional contribution to total support, and absolute spending on these policies, has, however, declined over time (from 76% of total FSE, USD 6.3 billion, in 2012-14). The reduction in this category of support is encouraging, particularly given that the emerging economies also typically have less capacity to ensure effective management and enforcement. In that context, however, the high levels of support from policies that can present a high risk of encouraging unsustainable fishing are a concern for resource sustainability. Policies that can present a moderate risk of encouraging unsustainable fishing are the next largest category in the emerging economies, accounting for 24% of total FSE (USD 1.2 billion) in 2018-20. Absolute spending through such policies has fallen since 2012-14 (from 16% of FSE, USD 1.3 billion, in 2012-14). Of further concern is the relatively low and declining proportion of support categorised as presenting no risk and the increase in policies presenting an uncertain level of risk.26 Spending on MMCS accounted for only 4% of total support in 2018-20 (USD 0.2 billion), down from 5% in 2012-14 (USD 0.4 billion).

When support is considered at the level of individual countries, the proportions of support by risk category, that is, their “risk profiles”, vary considerably within the groups (Figure 3.18). When comparing the middle half of countries (i.e. the interquartile range), as indicated by the boxes in Figure 3.18, the proportion of support that presents a high or moderate risk of encouraging unsustainable fishing in the absence of effective management is relatively similar in both the OECD countries and the emerging economies. However, the median (indicated by the horizontal line within each box) is lower for OECD countries in both cases, and substantially so for policies that can present a moderate risk. The median proportion of support going to policies that present no risk is also notably higher for OECD countries.

In terms of trends, the most notable change across the OECD countries is that country-level proportions of support that are allocated to “no risk” policies steadily increased between 2012-14 and 2018-20 and the level of variation between countries has diminished (Annex Figure 3.A.1). In the emerging economies, the median proportion of support that presents a high risk of encouraging unsustainable fishing in the absence of effective management increased between 2012-14 and 2018-20, but the level of variability and, in particular the upper limits to this variability, have fallen (Annex Figure 3.A.1). Median levels of support that can present a moderate risk have also increased, even more so than “high-risk” support. The level of variation between countries has also increased slightly.

The OECD FSE database now covers 40 countries and economies. Together, these countries and economies accounted for 90% of world landings over the period 2018-20 and annually provided a total of USD 10.4 billion to the fisheries sector. Encouragingly, spending on MMCS is now the largest type of support (with USD 2.37 billion spent in 2018-20). However, support policies lowering the cost of inputs – that is support to fuel, vessels and gear – together continue to be the largest component of support (USD 3.12 billion in 2018-20), although their levels have declined substantially since 2012-14.

Considering overall support policy mixes in terms of the risk of encouraging unsustainable fishing they can present in the absence of effective fisheries management leads to two main observations. First, at the level of all countries and economies covered in this report, progress was seen in the first half of the review period, with a notable decrease in the proportion of support that can present a high risk of encouraging unsustainable fishing. Notably, this was driven by a reduction in fuel support in China. Overall progress has, however, stalled since 2016-18 and the policies that can present a high risk of encouraging unsustainable fishing continue to account for about a third of total support.

Second, policy mixes in the OECD countries generally result in a lower exposure to the risk of encouraging unsustainable fishing in the absence of effective fisheries management compared to policy mixes seen in the emerging economies. In the OECD, 42% of support presents no risk of encouraging unsustainable fishing. However, in both the OECD countries and the emerging economies, variation in these shares is significant, and some countries and economies have policy mixes with relatively high risk profiles. In all cases, there are areas where policy reform could contribute to further lowering the risk of encouraging unsustainable fishing.

Countries should carefully review the policies that can present risks of encouraging unsustainable fishing and determine whether recipients of such support operate in sustainably managed fisheries. Where this is not the case, countries should consider using alternative forms of support or better targeting these policies, for example by attaching conditions that restrict eligibility. This may be a particularly helpful approach to reviewing and potentially reforming policies that can present a moderate risk of encouraging unsustainable fishing, and those for which that risk is uncertain. As a precautionary approach, countries may also want to move away from policies which can present risks of harming fish stocks more generally, given the difficulty, and cost, of regularly monitoring whether individual recipients of support are operating in sustainably managed fisheries.

One promising development in this area is the recent WTO Fisheries Agreement which disciplines some of the most potentially harmful types of subsidies: those that benefit IUU fishing; those that benefit the fishing of overfished stocks; and those that benefit fishing in the unregulated high seas. The detailed information on country-level support available in the FSE database could help governments target reform to implement the agreement. The next section discusses the specific mechanisms governments can put in place to avoid supporting IUU fishing.

Drawing on a recent OECD report (Delpeuch, Migliaccio and Symes, 2022[42]), this section considers how OECD countries and partner economies engaging in the OECD Fisheries Committee can ensure that support to fisheries does not contribute to IUU fishing.27 It suggests avenues to more effectively close public budgets to IUU fishing by maximising the chances of excluding individuals and companies with links to IUU fishing from government support, and minimising the risk that such support benefits IUU fishing ex ante, given the inherent difficulty to take action ex post.

In looking at how to eliminate government support to IUU fishing, this section considers IUU fishing in a broad sense, without limiting the concept of IUU fishing to one particular definition.28 This broad understanding of IUU fishing includes a range of fishing activities that a common-sense interpretation would consider “unregulated”, “unreported” or “insufficiently regulated”. This comprises, for example, fishing on the high seas that concerns species or areas outside the competence of any regional fisheries management organisations and agreements (RFMO/A) and that is not co-operatively regulated in a way that would allow for evidence-based sustainable management of the resources. This also comprises fishing-related activities, which is central to IUU fishing.

This section, and this report, thus have a broader scope than one of the key provisions of the WTO Agreement on Fisheries Subsidies adopted at the 12th Ministerial Conference on 17 June 2022 is a prohibition on subsidies contributing to IUU fishing (contained in Article 3 of the agreement). This prohibition was negotiated as a response to SDG Target 14.6, which aims to “eliminate subsidies that contribute to IUU fishing and refrain from introducing new such subsidies”.29 The agreement also calls on WTO members to notify, within one year of the date of entry into force of the agreement, the measures that allow for its implementation and administration – including those taken to implement prohibitions in relation to IUU fishing. Thereafter, members shall promptly notify any changes to such measures and new measures. In addition, members have to notify, on a yearly basis, a list of vessels and operators that they have affirmatively determined as having been engaged in IUU fishing (Article 8). It should also be noted that this report is working with a broader definition of IUU fishing than the one used in the WTO Agreement on Fisheries Subsidies, which is based on the FAO’s International Plan of Action against IUU Fishing (IPOA-IUU) (FAO, 2001[43]).

Similarly, government support is understood in this report in a broader sense, including both direct payments and tax exemptions that benefit individuals and companies, as well as support to the sector more generally, such as in the form of subsidised access to infrastructure. In addition, it is also understood to comprise support to fishing-related activities as well as non-specific support that benefits fisheries; that is, support that is available to fisheries as well as other sectors. These broader perspectives on IUU fishing and on government support are motivated by the fact that all the types of IUU fishing and fishing-related activities considered can be unsustainable, and with the objective of closing public budgets to such unsustainable activities. As such, this section has a broader scope than the WTO Agreement on Fisheries Subsidies, using different definitions and having different purposes. The WTO Agreement only disciplines specific subsidies as defined by the WTO.

The varied nature of fishing around the world, and the intricate and diverse way in which fisheries activities are governed, make closing public budgets to IUU fishing a genuinely complex objective. The nature of legal and regulatory systems in place, more generally, also affects what measures are needed and appropriate to avoid supporting IUU fishing in particular economies.

Broadly, there are three common ways in which economies try to avoid supporting IUU fishing. First, some economies use specific mechanisms to deny or withdraw support in relation to IUU fishing, which are set in overarching legislation and regulation. Others use specific mechanisms that are embedded in individual support programmes’ agreements or contracts. Finally, others rely on the withdrawal of fishing authorisations, which, combined with the need for an authorisation to be eligible for support, may, implicitly, suspend support eligibility.

Several challenges are common to these three approaches. First, by nature, IUU fishing is hard to observe and document. Establishing links between IUU fishing activities – most often identified in relation to a vessel – and the individual fishers and companies that benefit from these activities and public support can be even more difficult.

Second, delineating what actions should trigger the denial, withholding or withdrawal of support is complicated. IUU fishing, as described in the IPOA-IUU (FAO, 2001[44]), covers a range of different fishing activities and contexts. These include industrial vessels fishing illegally in the waters of a foreign country, fishing in the high seas by a vessel without nationality, small-scale fishers failing to diligently report their catch, the use of prohibited gear or fishing in excess of a quota in the coastal areas of the fisher’s own country. The sustainability and socio-economic implications of excluding such different types of activities from support, and the opportunity cost of doing so, vary accordingly.

Furthermore, fishing-related activities are generally less subject to legislation and regulation and harder to monitor, sanction and exclude from government support. These activities include transhipment – whereby fish are transferred from fishing boats onto larger refrigerated vessels, which then carry the fish to port – and the provisioning of personnel, fuel and other supplies at sea, which can play a central role in IUU fishing.

Finally, some types of government support to fisheries are made available to the sector as a whole. This is often the case of public investment in infrastructure or tax exemptions, for example. Excluding particular individuals, companies and vessels from the associated benefits may prove more challenging for these types of support.

Ex ante, the first step through which governments can deny eligibility to support is embedded in the authorisation process, when a fishing authorisation is needed to access support. This is the case in many economies. Where fishing authorisation is not yet a condition for support eligibility, establishing such a condition should be an immediate priority. In addition, this could help create the incentive for informal fishers to apply for vessel registration and fishing authorisations where governments are trying to transition informal fisheries away from open-access regimes. A similar condition for fishing-related activities would incentivise creating comprehensive licensing systems to cover them.

In addition, requiring vessels to be flagged in the state providing the support will ensure that the supporting state has jurisdiction to sanction the supported vessel. This may help avoid ambiguities that may occur if the supporting state and flag state employ different definitions of IUU fishing.

Requiring detailed and verified information from vessels during the registration and authorisation processes increases the chances of identifying any links to IUU fishing and facilitates the tracking of vessel activities, including IUU fishing. Excluding IUU fishing from support effectively, therefore, requires registration and authorisation processes that are as comprehensive as possible – and appropriate to different contexts (many economies have simplified procedures for small-scale fisheries).

Progress has been made in registration and licensing processes. For example, in 2018, all economies covered in the OECD Review of Fisheries 2020 (OECD, 2020[1]) required fishing vessels to be registered and collected information on vessels’ characteristics and details on the natural or legal persons in whose names vessels were registered.

However, that report also highlighted two weaknesses of authorisation and registration processes which are directly relevant to ensuring that support does not benefit IUU fishing. First, the identification of vessels’ beneficial owners lags behind other areas: in 2018, a third of the economies covered in the OECD Review of Fisheries 2020 did not ask for information on beneficial owners in the context of registration processes. A quarter of these economies also did not mandate the use of unique, verified and permanent vessel identifiers, such as an International Maritime Organization (IMO) number. Using unique identifiers can facilitate monitoring, control and surveillance by avoiding cases whereby vessels change flags or names to escape global oversight or register in another jurisdiction when their illegal activities are discovered. Second, the regulation of fishing-related activities lags behind that of fishing. In many economies, the licensing processes are less demanding for fishing-related activities than they are for fishing, while in others fishing-related activities are not subject to authorisation at all.

In summary, to minimise the risk that government support benefits IUU fishing, governments should make all support conditional on being flagged to the supporting country and having a fishing authorisation. In addition to conditions that are typically included in authorisations processes, such as position transmission through vessel monitoring systems or reporting of catch, where appropriate, the authorisations themselves should require unique vessel identifiers, such as an IMO number, where appropriate; and detailed information on vessel beneficial owners.

Specific mechanisms to effectively exclude potential beneficiaries from all types of support (ex ante) – and withdraw and withhold support (ex post) where appropriate – can complement the use of eligibility criteria related to registration and licensing. Such mechanisms can create more flexibility for addressing different types of IUU fishing and speed up the process. They should be sensitive to the national governance context – notably in terms of whether they should occur in overarching legislation and regulation or in an individual support programme agreement or contract – and follow due process. Key issues to be considered in their design include: what triggers action, who is concerned, for how long and whether past support needs to be recovered.

In addition, how different criteria trigger action needs to be clearly established. Action on support is often possible once a vessel has been included on an IUU vessel list or when legal proceedings have been finalised. In some instances, however, the supporting economy might suspend support before a vessel is listed as being engaged in IUU fishing if there is clear evidence of infringement of domestic regulation or RFMO/A conservation and management measures. Making greater use of such provisions would facilitate action in relation to support, by decoupling it from potentially long processes that may partly fall outside the competence of the supporting authorities, such as vessel listing for IUU fishing by RFMO/As (Tipping, Irschlinger and Bellmann, 2020[50]). Ultimately, this would allow governments to react more promptly to infringements and avoid situations where vessels and operators involved in IUU fishing continue to benefit from support even following an infringement.

While some fishing-related activities, such as transhipment, can be included in fisheries regulation, other types of fisheries-related activities, such as the transfer of fuel, food and crew from “mother ships”, may be dealt with more effectively in other areas of regulation (such as labour or energy). Therefore, to fully exclude IUU fishing-related activities from support, it may be necessary to ensure that infringements of non-fisheries regulation can also lead to the withdrawal or withholding of support.

The duration of applicability of support-related sanctions impacts the extent to which they disincentivise IUU fishing (Tipping, Irschlinger and Bellmann, 2020[50]). The duration of sanctions for IUU fishing needs to be graduated and proportional. Similarly, there is a case for support eligibility restriction periods for actors found to have engaged in IUU fishing to be proportional to the gravity of the action. However, if withdrawing support is only linked to authorisation for fishing, authorities may have less flexibility to tailor the sanctions to the gravity of the action. This is important since IUU fishing covers such a broad range of activities, including those for which the withdrawal of fishing authorisation (and all support) would be disproportionately harsh.

Some economies set eligibility restrictions that have minimal and maximal durations depending on the severity of the infringement committed (for up to over 25 years). In addition, many economies restrict eligibility to support as long as vessels are included on an IUU fishing list. EU legislation, for example, applies the principle of proportionality of sanctions by establishing periods for exclusion from support based on a point system that rates the seriousness of each infringement, and the duration of exclusion from support depends on the number of points. In addition, when a vessel is included on the EU list of vessels engaged in IUU fishing, operators are excluded from support for at least 24 months and for the whole period during which the vessel is listed. The effectiveness of such mechanisms rests on the effectiveness of IUU vessel listing and delisting processes and their responsiveness to new information, which implies a need for effective and responsive decision making, particularly where several countries or authorities are concerned (this is discussed below under “transparency and information-sharing”).

In summary, it is recommended to use appropriate processes to effectively exclude from all types of support all potential recipients linked to IUU fishing (understood in a broad sense) and fishing-related activities in support of IUU fishing. This notably entails:

  • being transparent about the consequences of IUU fishing before support is provided and the use of support-related enforcement actions

  • ensuring proportionality of government action by giving due consideration to the nature of the IUU fishing activity and the context in which it happened

  • delineating who is concerned, for how long and whether past support needs to be recovered

  • not necessarily tying action on support to other IUU enforcement actions (such as processes related to IUU vessel listing).

The definition of IUU fishing and IUU fishing-related activities in legislation is a key issue. A definition of IUU fishing set in national legislation is often used as one of the criteria that can trigger action in relation to support. Where IUU fishing definitions are not used to cut support to IUU fishing, either because the national legislation does not define IUU fishing per se or because the definition is meant for other purposes, IUU fishing is implicitly defined as stemming from breaches of the law and infringement of regulations or the conditions set in the support programme contracts or agreements. Cutting support based on breaches of the law or infringements of domestic regulation, including reporting obligations, may thus be sufficient to exclude IUU fishing from support.

However, defining IUU fishing per se in legislation is potentially useful to cut support for infringements that happen outside the supporting state’s jurisdiction. By adopting comprehensive and practical definitions of IUU fishing and associated fishing-related activities, governments can both facilitate co-operation and ensure greater clarity for flag states, coastal states and vessel operators on what activities will be considered IUU and result in the loss of support.

Definitions also need to be flexible to different contexts and types of fishing. If they are too rigid, they risk excluding (or even criminalising) more customary or informal types of management, especially in areas where centralised reporting of catches is challenging or impossible (Song et al., 2020[51]). These considerations can also extend beyond the national contexts if trade agreements contain provisions on IUU fishing and support, as is increasingly the case.

Fishing-related activities, which can be central to IUU fishing, are not specifically included in the IPOA IUU description of IUU fishing. Fishing-related activities themselves are rarely defined in national legislation at all. The Agreement on Port State Measures to Prevent, Deter and Eliminate Illegal, Unreported and Unregulated Fishing (PSMA) defines fishing-related activities for the purpose of the agreement in Article 1(d) as: “any operation in support of, or in preparation for, fishing, including the landing, packaging, processing, transhipping or transporting of fish that have not been previously landed at a port, as well as the provisioning of personnel, fuel, gear and other supplies at sea”. Better definitions of fishing-related activities in relevant legislation, and implicit inclusion of fishing-related activities in support of IUU fishing in IUU fishing definitions, would contribute to strengthening regulation and to more effective deterrence of IUU fishing (OECD, 2020[1]), including by denying support

In summary, it is recommended that governments adopt a definition of IUU fishing and fishing-related activities under national legislation, regulation or other relevant official document, in line with existing international definitions. Such a definition will be particularly helpful when international co-operation is required. The IPOA-IUU is the most commonly used reference for defining IUU fishing, and the PSMA for defining fishing-related activities.

It is also recommended that governments better regulate and monitor the transhipment of fish and other fisheries-related activities, such as at-sea vessel supplying, including with authorisation and reporting obligations. The FAO Draft Voluntary Guidelines on Transhipment (FAO, 2022[52]) provide a detailed list of recommendations to help countries establish the authorisation, conditions, notification, reporting and monitoring systems needed to better regulate and monitor transhipment.

By its nature, IUU fishing is hard to observe and document. Establishing links between IUU fishing activities – most often identified in relation to a vessel – and the individual fishers and companies that benefit from these activities as well as from public support can be even more difficult.

In addition to legal provisions to deny, withdraw or withhold support, ensuring fisheries support does not benefit IUU fishing, therefore, requires processes to concretely target the vessels that engage in IUU fishing and IUU fishing-related activities, their operators, and owners and beneficial owners (Tipping, Irschlinger and Bellmann, 2020[50]). In some serious cases of IUU fishing, it may also be desirable to target all the vessels operated or owned by the guilty party to maximise the impact on their risk-benefit prospects of engaging in IUU fishing (Hutniczak, Delpeuch and Leroy, 2019[53]; FATF, 2014[54]). This stresses the importance of Recommendation No. 4.1 on using more detailed information on vessel beneficial owners in authorisation processes.

Detecting and sanctioning IUU fishing requires effective monitoring of fishing activities, both inside and outside a country’s jurisdiction. Improving monitoring capacity, including on the high seas, is therefore vital for detecting IUU and ensuring support is withdrawn and, where necessary, repaid. However, between 2012-14 and 2016-18, spending on MMCS fell substantially relative to fleet size in several economies (OECD, 2020[1]). Reforming subsidies in line with the disciplines agreed on in the WTO Agreement on Fisheries Subsidies, and more generally moving away from subsidies that encourages overfishing and overcapacity, could free resources that could be repurposed to MMCS. Linking fishing authorisation to the use of vessel monitoring instruments and unique vessel identifiers (as suggested in Recommendation No. 4.1) and better regulation of transhipment in line with the FAO Draft voluntary guidelines on ranshipment (FAO, 2022[52]) provide would also increase the chances of detecting IUU fishing and reduce the likelihood of governments supporting IUU fishing unknowingly.

The monitoring of vessels in port can also help countries identify IUU fishing. Port states can inspect vessels entering their ports and deny access or use in cases of IUU fishing. The PSMA establishes a commitment for parties to meet a minimum standard of port inspection, and encourages international co-operation in this respect (Box 3.3). Fully implementing the PSMA provisions would not only improve the detection of IUU fishing, but also reduce the profitability of IUU fishing by denying the use of facilities and access to markets. Further, if the port in question is supported by the government, implementing the PSMA provisions will also directly prevent IUU fishing from benefiting from government support. The OECD Review of Fisheries 2020 showed that while 85% of economies covered in the report were parties of the PSMA and most of them had the legislation in place to implement its key provisions, a number of them were still facing difficulties in implementing a risk-based approach to prioritise inspections, set inspection targets, and deny port entry or use to vessels suspected of IUU (OECD, 2020[1]).30

It is thus recommended to continue enhancing the monitoring of fishing and fishing-related activities to better detect and deter IUU fishing, fully implement the key provisions of the PSMA, and, where possible, become a party to the agreement.

Information-sharing among government agencies, between economies and with RFMO/As is key to improving the evidence base on which to exclude IUU fishing from support – both ex ante and ex post – and shorten associated processes. A rapid and effective flow of information from the authority making a determination of IUU fishing to the authorities delivering fishing authorisations and those delivering the support is required.

Notably, this requires access to data on those receiving support, which remains unavailable at a disaggregated level in many countries; data on registered and authorised vessels (as well as their operators, owners and beneficial owners); and data on vessels identified as engaging in IUU fishing. Making these data available to all relevant authorities would help states providing support stay informed and check IUU vessel lists against the records of vessels and individuals and companies having received support. This remains a key area for progress. Often, existing lists are incomplete; they list vessels but not the individual fishers and companies that are linked to them; and updates are not frequent enough. In many instances, lists are not fully available to the public or across government agencies. Lastly, many countries rely on the RFMO IUU vessel lists. These, however, need to be complemented by information on vessels, individuals and companies found to have breached the law or infringed domestic regulation, including reporting obligations, in the EEZ – even when this is not labelled as IUU fishing, per se, as per national definitions of IUU fishing.

One particular area for which information tends to be missing is beneficial ownership, as information is not always collected in the context of vessel registration and authorisation processes. This information is not only useful for domestic fishing authorities, but can also be the basis for co-operation and tracking of the foreign investments of beneficial owners. In cases where there is one beneficial owner for multiple vessels, this information can be used to exclude all of the owner’s vessels from support in cases of severe IUU fishing (even if the IUU activities take place in other jurisdictions). Where possible, ensuring appropriate data sharing of beneficial ownership information between authorities, including fisheries-relevant authorities – in the same country, and with partner countries and RFMO/As – in cases of IUU fishing would be very helpful for targeting enforcement actions.

In some countries, information on beneficial ownership is publicly available through public company registries. Other countries are considering adopting similar systems. In addition, there is already international co-operation and exchange of beneficial ownership information for tax purposes. The OECD Global Forum on Transparency and the Exchange of Information for Tax Purposes, which includes 163 member jurisdictions, monitors the implementation of the standards on the automatic exchange of information and exchange of information on request. These two standards include various requirements pertaining to beneficial ownership information on legal entities and arrangements, including reporting, availability, access and exchange (OECD, 2017[55]).

The peer reviews of these requirements have shown that deficiencies remain in many jurisdictions’ legal framework, and they have faced challenges with implementation in practice. However, while beneficial ownership information may not always be readily available to tax authorities (IADB/OECD, 2019[56]), jurisdictions have made steady progress in recent years to implement the beneficial ownership requirements – some of them introducing a beneficial ownership register.

In addition, investing in recording and publishing clear information about the processes in place to cut support to IUU fishing and how they are implemented could reinforce their effectiveness. Publishing this type of information can deter IUU fishing by increasing the expected costs of engaging in these activities and reducing the financial incentive for operators (Tipping, Irschlinger and Bellmann, 2020[50]). While rarely publicly accessible, some economies record information on the number of support measures withheld or withdrawn and, more rarely, on their value. However, little to no information is available about cases where support was denied in the first place.

As a result, it is recommended to improve the capacity to make IUU fishing determinations; identify the people and companies concerned; and identify support recipients among them by: improving information-sharing within and between government agencies, economies and RFMO/As; publishing and regularly updating IUU vessel lists, or lists of vessels contravening to fisheries legislation and regulation, in the EEZ where this may not considered IUU fishing per se; increasing transparency on the processes in place to cut support to IUU fishing and their implementation; and, where compatible with privacy legislation, increasing transparency on the recipients of government support.

The pervasive nature of IUU fishing means that ensuring that government support does not benefit IUU fishing is challenging for policy makers. This issue is exacerbated when considering jurisdictions where the capacity to regulate and monitor fishing is limited. The fragmented governance environment in which fishers operate further muddies the waters by requiring policies to ensure that the support programmes comply with several legal frameworks at the national, supranational and international levels (in many cases).

To supplement the mechanisms to both prevent support from flowing to IUU fishing and to withdraw support from operators found to have engaged in IUU fishing, as discussed above, governments can depressurise the system by reforming how they support fisheries in the first place. This requires transitioning away from the types of support the most likely to encourage overcapacity and IUU fishing.

Support to fishers is delivered in many forms, with many objectives, and how these contribute to IUU fishing varies. While no support explicitly promotes IUU fishing or provides incentives for IUU fishers that are different from those provided to legal fishers, some forms of support are more likely to contribute to IUU fishing. It is, therefore, possible to design policies that minimise the potential to contribute to IUU fishing.

The main difference between IUU fishing and other fishing is that IUU fishing does not respect the management control that limits fishing efforts. Therefore, assuming equal access, support that incentivises increased effort will increase IUU fishing effort proportionally more than regulated effort. Conversely, support with a more neutral effect on effort will affect IUU fishing and regulated fishing more equally, and with a generally less negative impact on the health of fish stocks.

Support that reduces the costs of fishing, such as by subsidising the cost of inputs – fixed (vessels and gear), and, even more so, operating expenses, fuel in particular – are the most likely to increase IUU fishing through impacts on effort levels (Martini and Innes, 2018[2]). An effective means of preventing IUU fishing from benefiting from government support is, therefore, to transition away from support to inputs.

In addition, IUU fishing is likely to benefit from some forms of support to the sector as a whole, such as infrastructure, where exclusion ex ante is difficult or impossible. As these forms of support can also be effort-increasing in nature and, given the difficulty of preventing individual operators from benefiting from them, eliminating such support will still be the most effective action in most instances. Where such support remains, other methods of tackling IUU fishing, such as port state measures or improved MCS, will be necessary.

It is thus recommended to reduce or redirect support away from policies that have the most potential to increase fishing effort and capacity and consequently drive higher levels of IUU fishing. This is notably the case of support that reduces the costs of vessels and fuel.

Finally, while not considered “unregulated” under the IPOA-IUU, and authorised by some countries, fishing on the high seas that concerns species or areas outside the area of competence of any RFMO/A is not co-operatively regulated in a way that would allow for the sustainable management of the resources. It is therefore also recommended to explicitly exclude from support fishing on the high seas that occurs outside the competence of any RFMO/A.

This may prove difficult in practice, as fishing outside the competence of any RFMO/A may represent only a fraction of a vessel’s activities on the high seas and the practice of transhipping, whereby vessels transfer harvested fish to other vessels, further complicates the tracing of operations in the high seas and the task facing governments.

As shown above, alternatives to support the sector exist. Government support can be reoriented towards policies that improve the sustainability of the sector (such as investment in MMCS) or support that increases the well-being of fishing communities while not entering into the revenues and costs of individual fishers. Ideally, such support will be targeted at coastal communities in need generally, and contribute to their well-being, or create economic opportunities generally. Support policies that reduce the value of illegal fish products, such as policies that improve the traceability of fish products, can discourage IUU fishing while also rewarding regulated operators.

Repurposing support away from policies that have the potential to benefit IUU fishing and towards mithose that do not would be a win-win for governments. Not only would such reforms reduce the opportunity for IUU fishing to benefit from government support, they would also contribute to creating a more equitable and socially, economically and environmentally sustainable sector. They would benefit ocean health more generally and level the playing field for global fisheries. Supporting the achievement of Sustainable Development Goal 14, such repurposing would overall contribute towards a net improvement in the social benefits of fishing.

The section considers support that benefits a range of different sectors, including the fisheries sector, a relatively new area of research. It should not be confused with the features of the WTO Agreement, as this agreement refers to the definition of (specific) subsidies as set in the Agreement on Subsidies and Countervailing Measures. It only aims to start enriching discussions on how government action in general can contribute to the sustainability and resilience of fisheries in a domestic context, recognising a general lack of comparable data, and making no attempt to quantify, nor measure its impact on fisheries’ socio-economic performance and sustainability.

Global challenges such as recovery from the COVID-19 pandemic have spurred government support for energy. Support for fossil fuels almost doubled in 2021 and the large-scale aggression by the Russian against Ukraine has brought new challenges which are expected to precipitate an additional rise in consumption subsidies (OECD, 2022[57]). At the same time, the world faces the pressing challenge of adapting to climate change while mitigating GHG emissions. To overcome these challenges, governments need to understand how their support policies impact different sectors of the economy and how best to target public spending to achieve its objectives.

To better target reforms, governments need information on the nature and scale of support received by different sectors and how that support affects socio-economic performance and sustainability. This includes support provided through non-specific policies; that is, support that does not target one sector exclusively, but benefits a range of sectors simultaneously. Examples of non-specific policies that provide support to fisheries include support to coastal infrastructure that can be used by the fishing industry but also by maritime transport or tourism, or support to the marketing and transport of all food products. Further examples include fuel tax exemptions or preferential rates that benefit agriculture, forestry, shipping and off-road vehicle use. Hereafter, such policies are referred to as providing non-specific support to fisheries (NSSF).

Similar to support policies that are specifically targeted at one particular sector, policies that provide non-specific support have the potential to impact industries in several different ways. For example, in fisheries, non-specific support can be environmentally beneficial if it promotes effective fisheries management or be environmentally harmful if it ends up encouraging overfishing (OECD, 2020[1]; Martini and Innes, 2018[2]). Thus, to fully understand the impact of government policy on a sector’s performance, it is thus necessary to consider the long-term impacts of support broadly. Discussions around the role of government support are ongoing across many sectors, with the objective of identifying those policies that can usefully correct market failures and those that present risks in terms of equity or environmental sustainability (Sauvage, 2019[58]).

To date, however, these discussions are constrained by the absence of information on the nature and overall magnitudes of support received by particular sectors through non-specific policies.31 This is not covered by the scope of the WTO Agreement on Fisheries Subsidies, which concerns only specific subsidies. Furthermore, there are no officially recognised data or overarching mechanisms for reporting policies that provide non-specific support. Finally, measuring non-specific support and analysing variations in magnitudes over time and across countries is a complicated task. In many cases it can be difficult to identify a relevant reference price for the supported goods or services and, in the case that support comes from a tax exemption, the magnitude of support derives both from the extent of the exemption and the initial level of taxation (IMF, 2019[59]).

To fill the information gap on NSSF, this section reviews the available information about the nature of policies providing NSSF. The objective is to provide preliminary insights on NSSF to policy makers as a first step in supporting dialogue on this complex issue and enriching discussions on fisheries support more generally and how to ensure it contributes to sustainability and resilience in a domestic context. No attempt is made to quantify NSSF, nor to measure its impact on fisheries’ socio-economic performance and sustainability.

This section builds on an analysis of publicly available policy data to illustrate where policies that provide NSSF may be found along the fisheries value chain and describe the nature of energy-related policies that provide NSSF using the OECD Inventory of Support Measures for Fossil Fuels, the only source of comparable and officially recognised data on policies that provide NSSF.32

Without pre-empting any future attempt to agree on an official definition of non-specific support in other fora, NSSF is considered here to comprise any government support that benefits the fisheries sector along with a defined set of other sectors, while not being available economy wide. Support, itself, is defined in the same way as it is defined in the FSE database, however unconstrained by specificity. It, therefore, includes both direct support to individuals and companies and support for services to the sector (see Box 3.1).

Like specific support, policies that provide NSSF can occur at many stages of the fisheries value chain. Figure 3.19 illustrates the many ways in which this can occur. Examples of policies that provide NSSF before fishing takes place include supporting the provision and modernisation of port infrastructure. Policies that provide NSSF post-fishing include support to food marketing and promotion, at-port storage, or transport in coastal areas. Table 3.4 provides real-life examples of such policies identified in open-source data reviewed for this section.

The only source of comparable and officially recognised data on policies that provide NSSF is the OECD Inventory of Support Measures for Fossil Fuels (hereafter, “the Inventory”). This subsection analyses this data set to give a preliminary picture of energy-related NSSF.33

The Inventory provides information on energy support policies collected by the OECD for 50 member countries and partner economies (Box 3.4). The metadata included in the Inventory was used to identify the policies that benefit the fisheries sector, in addition to other sectors.34 A total of 136 policies were found, with at least one policy for most of the OECD countries and emerging economies covered in this report, suggesting that policies providing energy-related NSSF are a common form of support to the fisheries sector.35

The Inventory covers a large time horizon. One of the policies identified as providing NSSF is reported to have started in 1928. The vast majority (98%) of such policies were active in some years after 2010; 78% were active over the 2016-18 period; and about 60% were reported to have started from 1991 onwards.36

The Inventory contains descriptions of the policies, information on the sectors that benefit and overall associated amounts. In most cases, information on how much the policies benefited individual sectors is not available. As such, the Inventory does not provide information on the magnitude of NSSF, but only signals that some NSSF was provided by a number of policies.

The Inventory shows that many other sectors benefit from the policies that provide NSSF (Figure 3.20). Agriculture most commonly benefits from these policies. It is followed by dredging, mining and mineral extraction activities; forestry; and shipping and navigation.

To gauge implicit policy intent, benefiting sectors were clustered and those clusters were scanned to identify those that corresponded to plausible implicit policy intent. Three such clusters were detected in the data:

  • “Off-road use”: 44% of the policies which provided NSSF benefited aviation, rail, forestry, mining and dredging, shipping and navigation, agriculture, aquaculture and/or other seafood sectors (but no other sector).

  • “Primary sector production”: 12% of these policies benefited agriculture, forestry, aquaculture and/or other seafood sectors (but no other sector).

  • “Food production”: 7% of these policies benefited agriculture, aquaculture and/or other seafood sectors (but no other sector).

The majority of the energy-related policies that provided NSSF were tax concessions (89%), such as tax exemptions, rebates, refunds and preferential rates for certain users from taxes that are normally levied by the government in the economy (Table 3.5). The majority of countries and economies included in this chapter (87%) have provided NSSF through at least one tax concession policy.

Policies providing energy-related NSSF overwhelmingly concerned fuel (99%), although some policies were directed at, or covered, electricity. Approximately 10% of these were tax concessions for various taxes with environmental purposes, such as carbon dioxide tax exemptions.

Some of the countries covered in this chapter publish data on amounts transferred to the fisheries sector through non-specific energy-related policies. These amounts were compared to the total amounts transferred through fisheries-specific policies reported to the FSE database. These data suggest that non-specific energy-related policies can be an important source of support for the sector.

For example, in the Netherlands, the fisheries sector benefited from a non-specific fuel tax exemption, which resulted in support up to four times the value of total FSE between 2009 and 2018 (depending on the year).37 This fuel tax exemption is designed to offset a nationally applied fuel levy that is one the highest in the world (IEA, 2020[67]) to level the playing field for the fishing fleets fuelling in the Netherlands. All sea-going vessels purchasing fuel in the Netherlands are eligible for this fuel tax exemption regardless of their flag or coastal state.

To date, information on policies that provide NSSF remains difficult to gather. Comparison across countries and time is even more difficult. The only source of comparable information on policies that provide NSSF is the OECD Inventory of Support Measures for Fossil Fuels, which describes the policies providing energy-related support used by 50 countries and economies (comprising most of the countries and economies covered in this chapter). This Inventory shows that many of these countries and economies have provided some NSSF through energy-related policies in recent years. However, the Inventory does not contain information on the amounts transferred to the fisheries sector through these policies. It shows that most of the policies providing energy-related NSSF are fuel tax concessions, and agriculture is the sector that benefits from these policies most frequently, in addition to other sectors. The limited evidence available suggests that, in some countries, energy-related NSSF can be significant relative to fisheries-specific support.

Better understanding the effectiveness of public policies in reaching the goals governments set for their fisheries calls for further work describing the nature and magnitude of support granted through non-specific policies, including policies that are not energy-related, and analysis of its impacts on fisheries performance and sustainability, which, similar to specific government support to fisheries, may depend on the nature of the policy, existing management systems and the status of the resource.

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Notes

← 1. Landings value data were unavailable for Brazil, India, Malaysia, Peru, the Philippines and Viet Nam, so the FSE for these countries was excluded from this calculation.

← 2. This is based on a subset of countries, where data on both support and the value of landings were available (Argentina, China, Indonesia and Chinese Taipei).

← 3. It is reasonable to consider the EU as a single entity when discussing fisheries support as funding and its allocation are largely determined at the EU level.

← 4. Support, catch volume, fleet gross tonnage and employment are, to some extent, all correlated. Large fleets may need more money in absolute terms, but more support can also mean a larger fleet, employment and catches.

← 5. Over the whole period, spending on SSS in emerging economies fell by a total of USD 0.17 billion, from USD 0.86 billion in 2012-14. PMS changed little, from USD 0.05 billion in 2012-14. The relative contribution of net SSS to net total FSE across emerging economies also increased, then decreased over the period, but it was higher in 2018-20 (13%) than it was in 2012-14 (10%) as the level of DSI also fell.

← 6. Some services will also depend on the size of the exclusive economic zone, as large bodies of waters are more expensive to control; on the diversity of fishing activities; and on various country-specific characteristics, such as the geographical context or governance. In short, it is unlikely that a clear and direct relationship exists between any single factor and the appropriate level of SSS.

← 7. This indicator does not include data for some of the emerging countries (Brazil, India, Malaysia, Peru, the Philippines or Viet Nam), as the value of landings was not available.

← 8. When considering FSE relative to the value of landings, it should be noted that while some countries have both marine and inland fisheries, only data on the value of marine landings are available. When all countries and economies are accounted for, marine landings represent the vast majority of landings value, so while the indicator is overestimated, it is not anticipated to be substantially so. This will be different at the country level, where employment data suggest that inland fishing is potentially significant in some cases (e.g. in Argentina, Colombia, Estonia, Germany, Lithuania and Poland, where inland employment accounts for over 30% of the total, and in India where it is over 70%) even if the unit values of inland landings are generally relatively low compared to marine landings.

← 9. The intensity of spending on net SSS fell between 2012-14 and 2016-18 in the OECD (from USD 618/gt to USD 579/gt) but has increased since, despite a slight reduction in net spending on SSS across the OECD, as the size of the fleet declined more (-4%).

← 10. While fleets are typically relatively large and reported spending on SSS relatively low in the emerging economies, data limitations also exist. Information on gt is not available for all the emerging countries and there is uncertainty about how comprehensively spending on services like management, often a significant component of SSS, are reported to the FSE.

← 11. While total FSE increased in some of these economies (India, Peru and Chinese Taipei), it was more than offset by larger reductions in others (mainly Brazil, China and Malaysia).

← 12. These figures may be conservative estimates of the financial contribution for access to foreign waters granted under the EU Fisheries Partnership Agreements. Indeed, they reflect the “fixed” component of the payments foreseen in the agreements. In some cases, additional payments may have been made when fishing exceeded the reference tonnage, according to conditions specific to each agreement. Data were not available to adjust the amounts accordingly in the FSE database.

← 13. This may also be influenced by differences in the capacity to grant budgetary support, which may constrain the total DSI. Differences in purchasing power at the level of different countries or economies may also mean that the relative level of support per dollar is not the same in all cases.

← 14. Detrimental impact on global warming can come both through increased GHG emissions resulting from increased fishing effort and detrimental impacts on fish stocks and ocean ecosystems, which affect its climate regulation potential.

← 15. To go beyond first-principles analysis of effects, a bio-economic model of the global fishery based on economic theory of production was developed allowing the effects of six common forms of fisheries support on capacity, effort and stock size to be determined under different management conditions (Martini and Innes, 2018[2]). The six main categories of policies that provide direct support to individuals and companies were: 1) payments based on fishers’ income; 2) own capita (i.e. return to fishing operations); 3) vessels; 4) variable input use (i.e. gear); 5) fuel; and 6) output (i.e. catch volume). Income effects were quantified by calculating transfer efficiency. Forthcoming OECD work, building upon this, provides additional insights in this area by modelling and assessing the impacts of different support policies from the perspective of trade between regions.

← 16. Management measures that aim to constrain caches (e.g. total allowable catch limits), effort (e.g. effort controls) or both (e.g. individual transferable quotas) have recognised differing potential to influence how and the extent to which support manifests in a fishery (OECD, 2006[9]; UNEP, 2004[20]), along with policies addressing more specific issues such as IUU fishing (OECD, 2020[1]).

← 17. Investigating the relative effects of common types of direct support policies, Martini and Innes (2018[2]) have demonstrated that all forms of support assessed reduce fish stocks to some extent and reducing support leads to a net decline in effort and an improvement in fish stocks.

← 18. It is perhaps worth clarifying that Figure 3.4 is concerned with clarifying differences in the inherent risk (i.e. likelihood) that different policy types present with respect to encouraging unsustainable fishing and the factors that can influence this risk. The size of impact (i.e. the outcome), should unsustainable fishing eventuate, is also influenced by the level of spending on the support in question. As such, the indicated level of risk does not presuppose the magnitude of the potential outcome.

← 19. The broadly analogous manner in which both support to variable costs and support to fixed costs can lead to a decline in fish stocks – and for long-term catch to increase if the stock is underfished and to rise if the stock is overfished – has been formally demonstrated in previous OECD work, see Annex 5.A in OECD (2006[9]).

← 20. This is the case, for example, of the EU Fisheries Partnership Agreements, , which target the surplus of the total allowable catch of the living resources and include both a financial compensation for access to resources in the EEZ of third countries as well as a financial contribution to promote the sustainable management of fisheries in these countries, for example though the reinforcement of control and surveillance capacities, and support to local fishing communities.

← 21. Such “effort creep” is a recognised and persistent issue for fisheries management (see, for example, O’Neill and Leigh (2007[68]) and Palomares and Pauly (2019[69])).

← 22. While direct income support does not reduce participation in the fishery, more success can be achieved when funding is explicitly targeted at reducing the number of people dependent on fishing. Under the licence and early retirement components of the Northern Cod Adjustment and Rehabilitation Program and the Atlantic Groundfish Strategy, approximately 35% of groundfish licence holders in Newfoundland and Labrador, Canada, retired their enterprises and left the industry.

← 23. Likewise, support classified under “other” (in the FSE or elsewhere) would be allocated here because it contains a mix of policies (in addition to applying to categories that can have different types of impact depending on policy features).

← 24. More granular information on the nature of the policies classified in the “uncertain risk” category could, in the future, allow for the allocation of individual programmes to other cells of the matrix.

← 25. The FSE indicators do not currently distinguish between support to infrastructure (access) and support to infrastructure (capital), resulting in all spending on infrastructure being assigned to the “moderate risk” category. Distinction also cannot currently be made between support to vessels and gear (capacity enhancing) and support to gear (safety and environmental impact). Evidence, however, suggests that across the whole data set, a large share of this support is probably capacity enhancing (e.g. support to vessel construction in China). Following the risk-based approach taken to analyse support in this section, all support to vessels and gear has been assigned to the “high” risk category. Future revisions of the FSE structure and reporting requirements could allow for these allocations to be refined.

← 26. Policies with uncertain risk represented 19% of total support (USD 1.0 billion) in 2018-20, having progressively increased in both absolute and relative terms (3% of FSE, USD 0.3 billion, in 2012-14).

← 27. This section draws on a recent OECD paper “Eliminating government support to IUU fishing” (Delpeuch, Migliaccio and Symes, 2022[42]). It summarises the paper’s findings, including by reproducing text, with an updated framing in light of the recent WTO Agreement on Fisheries Subsidies.

← 28. The WTO Agreement refers to the IPOA-IUU definition of IUU fishing. In their domestic legislation, economies sometimes also use the IPOA-IUU definition, but specific definitions are also often used (see Section 3.4.2).

← 29. The international community has recognised the need to eliminate support to IUU fishing and has made it a priority for action for over two decades. For example, the FAO voluntary IPOA-IUU already called on countries to avoid support to IUU fishing in 2001.

← 30. As of September 2022, eight countries and economies covered in this report were not party to the PSMA: Argentina, Brazil, China, Colombia, India, Malaysia, Mexico and Chinese Taipei/

← 31. , alternative information sources based predominately on estimations are often being used as a basis for policy discussions.

← 32. Open source data sets used to extract policy data for analysis include the OECD Inventory of Support Measures (for more information, see Box 3.4) and data published by the International Institute for Sustainable Development on support to fisheries in India and Indonesia. IISD data can be accessed at: https://www.iisd.org/publications/supporting-marine-fisheries-india and https://www.iisd.org/publications/sustainable-marine-fisheries-indonesia.

← 33. A small number of additional policies from the FSE reporting process have been included in the NSSF Inventory, where requested by the reporting country or economy or where deemed appropriate.

← 34. With a similar method, the OECD Sustainable Ocean Economy data set reports the measures that benefit the ocean economy in a series of indicators on ocean-related fossil-fuel support. See: https://www.oecd.org/ocean/data.

← 35. Colombia, Costa Rica, Iceland and Sweden are the only OECD countries covered in this report and in the Inventory for which no measures were identified as providing NSSF.

← 36. This is assuming that no end date in the metadata means policies have remained active until 2020. Calculation of polices that started from 1991 onwards includes those where no start date was available in the metadata.

← 37. Between 2009 and 2018, the value of the non-specific fuel tax exemption was at least 15 times more than the “direct support to individuals and companies” reported in the FSE database.

Disclaimers

This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

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