Economic Research

The economic effects of changes to harvest levels can be far-reaching. Fisheries management policies that alter catch limits have a direct impact on commercial harvesters, but at the same time, there is a ripple effect through the economy. Industries that supply commercial fishing vessels with inputs, generally referred to as backward-linked sectors, rely on this demand when making decisions related to their production levels and expenditure patterns. For example, vessels making more fishing trips purchase more fuel and leave more money in a local grocery store that supplies crew members' provisions. More vessel activity means more business to vessel repair and maintenance sector or gear suppliers. An increase in landings also brings more employment opportunities, and, as a result, more income from wages is in circulation. When spending their incomes, local households support local economic activity that is indispensable to coastal communities' prosperity.

Changes in the domestic fisheries output, unless fully substituted by imports, are also associated with production adjustments by industries relying on fish supply, such as seafood processors. Similarly to the directly affected sector, any change in production by the forward-linked industry has a similar ripple effect on its suppliers. The complete path of landed fish, from the hook to the plate, also includes seafood wholesalers and retailers, and in the case of highly-prized fish such as Pacific halibut, services. Traditionally, the vast majority of Pacific halibut is consumed at white-tablecloth restaurants. Any change in gross revenue generated by these industries resulting from a change in the supply of directly affected fish is further magnifying the economic impact of management decision altering harvest levels.

Similar effects are attributed to the recreational fishing sector. By running their businesses, charter operators create demand for fuel, bait fish, boat equipment, and fishing trip provisions. They also create employment opportunities and generate incomes that, when spent locally, support various local businesses. What is more, anglers themselves contribute to the economy by creating demand for goods and services related to their fishing trips. There is a number of sectors supporting tourism relaying on the Pacific halibut fishing, both guided or unguided. These include lodging, local retailers, or restaurants.

These kinds of effects are typically estimated with the use of the input-output (IO) model. The traditional IO model is used to investigate how changes in final demand affect economic variables such as output, income and employment or contribution to the region’s gross domestic product (GDP). This is known as impact analysis. With an adjustment for the shock type, the model can also demonstrate the magnitude of changes in supply-constrained industries such as total allowable catch (TAC) constrained fisheries. 

Besides shaping the complex combination of local effects, the interlinked nature of the industries in the economy is creating cross-regional impacts. Economic benefits from the primary area of the resource extraction are leaked when inputs are imported or wages earned by non-residents are spent outside the place of employment. At the same time, the inflow of economic benefits to the local economies from outside is occurring when products are exported or local businesses are bringing cash to the region through support of tourism.

Adopting the IO model extended to the so-called social accounting matrix (SAM), the calculated effects account for labor commuting patterns and flow of profits related to non-resident investment in production factors. This is of particular interest when focusing on industries that employ a considerable share of non-residents or allow earnings from holdings by investors from out of state or province. In both of these cases, there is an outflow of income from the primary region.

Understanding the multiregional impacts of changes to fisheries sectors is now more important than ever considering how globalized it is becoming. Fish harvested on the other side of the globe can be easily found on the shelf or on the menu in the United States or Canada, competing with domestically produced seafood. The United States and Canada imported seafood worth over USD 28.8 billion (CAD 37.4 billion) in 2018. On the production side, the origin of inputs is increasingly distant, implying a gradual shift of economic activity supported by fisheries and seafood industries abroad. While generally cost-effective, such high exposure to international markets makes seafood accessibility fragile to perturbations, as shown by the covid-19 outbreak. Fisheries are also at the forefront of exposure to the accelerating impacts of climate change. A rapid increase in the water temperature of the coast of Alaska, termed the blob, is affecting fisheries and may have a profound impact on Pacific halibut distribution. Thus analyzing the sector in a broader context is crucial.

Pacific halibut multiregional economic impact assessment (PHMEIA) model is a multiregional SAM-based model describing economic interdependencies between sectors and regions developed to bring a better understanding of the role and importance of the Pacific halibut resource in the economy of Alaska, British Columbia, and the US West Coast. Moreover, the model simultaneously assesses indirect impacts on the rest of the United States and Canada to determine the resource’s full economic impact on IPHC Contracting Parties. The economic metrics derived from the PHMEIA model range from total economic impact on output along the value chain to impacts on employment and incomes, as well as contribution to the GDP and households’ prosperity.

This study's main contribution is the first consistent estimation of both backward- and forward-linked effects of changes in fisheries supply in a multiregional setup tracing the transmission of impacts internationally. By linking multiple spatial components, the model offers a better understanding of the impacts of shared stock supply changes. Moreover, given the complexity of Pacific halibut supply-side restriction in the form of region-based allocations, the regulators’ need for assessment of various combinations of TAC allocations is addressed by accompanying the result with a web-based tool allowing custom changes simultaneously applied to all IPHC-managed Pacific halibut producing areas (available here).

In order to accurately capture the economic impacts described, the IPHC designed a series of surveys to gather information from the sectors relying on the Pacific halibut resource. We call for active participation of our stakeholders, including commercial fishers, processing plant operators, and charter business owners, in developing the necessary data for analysis. The current version of the model, however, is based on secondary data sources. As such, the results are conditional on the adopted assumptions for the components for which data are not routinely collected and published. The subsequent revisions of the model incorporating IPHC-collected data will bring improved estimates on the Pacific-halibut sectors’ economic impact.

Besides providing economic impact estimates for broadly-defined regions, the PHMEIA model results can inform on the Pacific halibut’s community impacts throughout its range. However, while the quantitative analysis is conducted with respect to components that involve monetary transactions, Pacific halibut’s value is also in its contribution to the diet through subsistence fisheries and importance to the traditional users of the resource. To native people, traditional fisheries constitute a vital aspect of local identity and a major factor in cohesion. One can also consider the Pacific halibut’s existence value as an iconic fish of the Northeast Pacific. While these elements are not quantified at this time, recognizing such an all-encompassing definition of the Pacific halibut resource contribution, the IPHC echoes a broader call to include the human dimension into the research on the impact of management decisions, as well as changes in environmental or stock conditions.

Motivation

Under the Convention, the IPHC’s mandate is “optimum” management of the Pacific halibut resource, which necessarily includes an economic dimension. However, until now, the focus has been rather on the sustainable harvest from the ecological perspective. This is also the focus of the IPHC’s management strategy evaluation (MSE) project (more about it here).

Federal laws governing U.S. marine fisheries require assessing any proposed fishery management action in terms of its regional or community economic impacts. These laws include, among others, the Magnuson-Stevens Fishery Conservation and Management Act (MSA, amended on January 12, 2007), National Environmental Policy Act (NEPA), and Executive Order 12866. For example, the National Standard 8, one of the principles mandated by the MSA, requires that while the conservation and management measures must be consistent with the conservation requirements, they must also account for “the importance of fishery resources to fishing communities” and “to the extent practicable, minimize adverse economic impacts on such communities” (Section 301[a]8). It implies that fishery managers, when considering any action, must take into account the economic impact on various stakeholder groups, including fishers, but also processors and fishing-dependent communities. The MSA also establishes Regional Fishery Management Councils, which role is to develop fisheries management plans that “take into account the social and economic needs of the States” while working on the stewardship of fishery resources.

The document establishing national fisheries policy in Canada for the modern era is the 1976 Policy for Canada’s Commercial Fisheries. It states that “the guiding principle in fishery management no longer would be maximization of the crop sustainable over time but the best use of society’s resources.” The “best use” is defined as “the sum of net social benefits (personal income, occupational opportunity, consumer satisfaction and so on) derived from the fisheries and the industries linked to them” (Fisheries Act, R.S.C. 1985, c. F-14). These objectives have been affirmed in legislation (Oceans Act, S.C. 1996, c.31) according to which fisheries are expected to be managed to meet a full spectrum of social and economic objectives. More recently, the commitment to sustainability of fisheries – “as a vital part of our [Canada’s] food supply, as well as an important source of jobs and economic activity for coastal communities” – has been reaffirmed in in the Government Response to the report West Coast Fisheries: Sharing Risks and Benefits by the Standing Committee on Fisheries and Oceans from July 8, 2020.

Pacific Halibut and Covid-19

Recent perturbations in the markets caused by covid-19 serve as an additional argument for considering the broader economic dimension of Pacific halibut contribution to regional economies. Widespread closure of restaurants (Figure 1), the Pacific halibut’s biggest customers, diminished the demand for fish, particularly high-quality fresh fish that fetch higher prices. Lower prices, down in 2020 by up to 30% compared with the previous year (Stremple 2020), caused a slow first half of the season (Ess 2020, see also IPHC data on the year to date landings here). Less harvest activity has repercussions in the economy beyond the harvest sector as it affects also harvest sector suppliers and downstream industries that rely on its output. Outbreaks of covid-19 in fish processing plants (Estus 2020; Krakow 2020) also affect economic activity generated regionally by this directly related to the Pacific halibut supply sector. Moreover, seafood processors incur additional costs related to protective gear, testing, and quarantine accommodations (Ross 2020; Sapin and Fiorillo 2020; Welch 2020b).

It is difficult to predict such events and resulting market shifts. Although there may be a market for excess seafood that could not be sold to restaurants as worried customers are stockpiling frozen and canned products (Sapin 2020), and more adventurous home-cooking is on the rise (Varriano 2020), building in such transitions into the model structure requires strong assumptions as no reliable data on such events are available.

Figure 1: Monthly Retail Trade and Food Services - Food Services and Drinking Places: US Total. Based on US Census data.

Economic Impact Metrics

The supply and use tables (SUTs) focus on measuring the productive structure of the economy. They trace the production of commodities (both goods and services) by domestic industries, combined with imports, through their use as intermediate inputs or as final consumption, investment, or exports. The system provides a measure of value added by industry - total output less intermediate inputs. These tables can be used to calculate economy-wide gross domestic product (GDP). The supply and use tables can also be used to build an input-output (IO) model (Leontief 1966). The IO model is used to investigate how changes in final demand or supply (using modified IO model, see details in Leung and Pooley 2002) affect economic variables such as output, income and employment or value added that provides an assessment of the sector’s contribution to the GDP in a region. This is known as impact analysis.

The IO model typically accounts for three economic impact (EI) components:

• The direct EIs are the deliveries by domestic industries and imports necessary to satisfy final demand expenditures on products and services. In the context of the PHMEIA, this includes changes to Pacific halibut output realized by direct users of the Pacific halibut resource stock (fishers).
• The indirect EIs provide an estimate of the changes to the production related to expenditures on goods and services used in the production process of the directly impacted industry. In the context of the PHMEIA, this includes an impact on upstream economic activities associated with supplying intermediate inputs to the Pacific halibut fishing fleet, for example, the vessel repair and maintenance.
• The induced EIs cover production and imports associated with the spending of wages on consumption. In the context of the PHMEIA, this includes economic activity generated by spending wages that rely on the Pacific halibut resource.

Changes in the domestic fisheries output, unless fully substituted by imports, are associated with production adjustments by industries relying on fish supply, such as seafood processors. Forward linkages describe the effects on the industries for which the affected sector is a supplier, defining its relations with the downstream industries. While early attempts to include forward linkages in the calculation of economic impacts have been criticized for the lack of economic foundation, recent methodological advances (e.g., Seung 2014, 2017) allow for such extension.

The figure below summarizes the impacts considered when analyzing commercial harvesters as users of the Pacific halibut resource.

Besides shaping the complex combination of local effects, the interlinked nature of the industries in the economy is creating cross-regional impacts. Policies or any other exogenous changes may have an economic impact not only on the region where they are observed but also on the regions with strong economic ties with the region subjected to the change. A multiregional IO model accounts for that. The general structure of the input to the multiregional IO model is available here.

The standard input-output framework provides little insight into the workforce’s demographics that builds the market for supply and demand of labor. Adopting the IO model extended to the so-called social accounting matrix (SAM), the calculated effects account for commuting patterns where the labor’s place of employment and place of residence differ. It is of particular use when focusing on industries that employ a considerable share of non-residents for temporary assignments that imply a negative net flow of income to the region and, consequently, impacts on households are not necessarily equal to impacts on earnings in the region. The SAM-based model with endogenous households also allows for detailed accounting of household earnings by place of residence, including earnings from other sources (e.g., government transfers, dividends, interest, and rent), outflows to the government (e.g., personal income taxes), and households net savings by region. The structure of SAM with endogenized households is available here. The model components associated with household accounts largely align with these considered in Seung (2014).

PHMEIA model

The Pacific halibut multiregional economic impact assessment (PHMEIA) model is a multiregional SAM model developed with a specific purpose of assessing the economic contribution of Pacific halibut resource to the economy of the United States and Canada. The model reflects the interdependencies between eleven major sectors, both producing goods and services, as well as two Pacific halibut-specific sectors. These include the Pacific halibut commercial fishing sector and the forward-linked Pacific halibut processing sector. The inclusion of the Pacific halibut charter sector is underway. The list of industries considered in the PHMEIA model, as well as primary commodities they produce, is available in the table at the end of this section. The model considers three primary Pacific halibut producing regions, as well as residual regions, to account for cross-boundary effects of fishing in the Pacific northwest:

• Alaska (AK)
• West Coast (WC – including WA, OR, and CA)
• British Columbia (BC)
• Rest of the US (RUS)
• Rest of Canada (ROC)
• Rest of the world (ROW)

This multiregional setup implies an extension of the model in Seung, Waters, and Taylor (2019), which is limited to Alaska, the US West Coast, and the rest of the US.

The US components of the model use as a base the data from the species-based SAM developed by Seung, Waters, and Taylor (2019) updated using the MR-GRAS technique (Temursho, Oosterhaven, and Alejandro 2019) with data published by the US Bureau of Economic Analysis (BEA) supplemented with BEA Regional Data resources, data from United States Census Bureau’s Annual Survey of Manufactures (ASM) and Quarterly Census of Employment and Wages (QCEW), as well as detailed fisheries statistics (described in the next section). British Columbia’s Pacific halibut fishing production structure  is based on average operational and fixed cost available in the literature (Edwards and Pinkerton 2020). As no secondary data are available on British Columbia’s Pacific halibut processing production structure, the allocation expenditures for this sector follows that adopted for Alaska. Derived this way use of commodities is appended to SUTs and subtracted from production by general fishing and processing industries.

The model components describing the Canadian economy are based on SUTs published by Statistics Canada supplemented with data from Monthly Survey of Manufacturing, Labour Force Survey and Survey of Household Spending, as well as detailed fisheries statistics (described in the next section). As no secondary data are available on British Columbia’s Pacific halibut production structure, the allocation of Pacific halibut commercial fishing and processing expenditures follows that adopted for Alaska. Derived this way use of commodities is appended to SUTs and subtracted from production by general fishing and processing industries. This method is considered a sensible simplification given the input allocation for the same fishing techniques and comparable processing technology should not vary much between regions. Pacific halibut is harvested predominately using longliners and sold lightly processed, mainly fresh or frozen, throughout its whole range.

The multiregional model is assembled adopting a method suggested by Bachmann, Roorda, and Kennedy (2015). Accordingly, international linkages are established through trade matrices. These, in turn, are constructed based on available trade statistics (mainly US Census trade data and Canadian International Merchandise Trade Database). For industries with no regional trade statistics available (some services), distribution from the base model is adopted for the country of origin, and split between destination regions is done based on regional GDP estimates.

Flow of earnings is derived from national accounts and allocated using IRS tax stats and BEA data on International Transactions with details by country. The model also specifies the flow of earnings related to Pacific halibut fishing. If the vessel or quota share is owned by a non-resident, the returns to that property or holding leak away from the area of resource extraction towards owner’s place of residence. Outflow of earnings also occur when wages are paid to non-residents. The accommodation of Pacific halibut specific earnings flow in the SAM model is presented here, while statistics on these flows are described in the next section.

The ROW region in the model is considered exogenous. This implies that the trade relations with the ROW are not affected by the changes to the Pacific halibut sector considered in this project. However, the inclusion of the ROW component, constructed using World Input-Output Tables (WIOT), allows for assessment of impact also outside Canada and the United States if trade with ROW was to be considered responsive to changes in Pacific halibut sector activity.

In this model, all wild capture production, including all Pacific halibut harvest, is assumed to be supplying the seafood processing industry (Pacific halibut supplying Pacific halibut processing industry). This implies a broader scope of the processing sector that also includes entities responsible for product preparation and packaging. Under this assumption, Pacific halibut and other harvested species are sold to other industries or final users only as a seafood commodity as opposed to a fish commodity. Leonard and Watson (2011) note that about 30% of fish harvested in the US West Coast flow directly to the seafood wholesale sector, but no data to make such a distinction are available and simplifying assumption is made. At this stage, the model also omits the economic benefit of Pacific halibut not sold but retained by commercial fishers for personal consumption.

The model adopts exogenous changes to Pacific halibut processing based on constant margins for calculation of effects related to forward-link industries, adopting the method described in Seung (2014, 2017). This means the model assumes a proportional change between the Pacific halibut processing sector and the Pacific halibut fishing sector in each region. The model omits Pacific halibut impacts beyond the processing sector. As noted by Steinback and Thunberg (2006), there are many seafood substitutes available to buyers. Thus including impacts beyond processors and wholesalers could be misleading considering that it is unlikely that supply shortage would result in a noticeable change in retail level gross revenues. As noted earlier, data limitations dictate the exclusion of wholesale buyers from the assessment of forward-linked effects.

Note on the inclusion of the recreational sector in the PHMEIA model

The recreational component of the PHMEIA model is under development.

There are two components to consider when attempting to assess the full scope of the Pacific halibut resource’s economic impact occurring as a result of recreational fishing activities. The first is the contribution to the economy by the charter sector that provides service to anglers. These include services directly related to angling, such as providing a boat, trip supplies, and guides, and not directly related, for example, hospitality services in case of fly-in lodges that specialize in serving customers interested in the Pacific halibut fishing. The economic impact is generated by the sector’s demand for inputs from other industries, including manufacturing, professional services (e.g., accounting, marketing), and demand for labor. Assessment of the charter sector economic impact typically requires surveying charter business owners on their revenues and expenditures.

The second component is the contribution of anglers themselves by creating demand for goods and services related to their fishing trips. This includes expenses related to the travel that would otherwise not be incurred (e.g., auto rental, fuel cost, lodging, food, site access fees), as well as money spent on durable goods that are associated with recreational fishing activity, e.g., rods, tackle, outdoor gear, boat purchase, and applies to both guided and unguided recreational fishing. Assessment of anglers’ contribution to the economy typically requires surveying private anglers on their fishing-related expenditures and fishing preferences. The stated-preference model is usually used to estimate the change in fishing participation caused by trip characteristics changes.

The figure below summarizes the impacts of Pacific halibut recreational fishing on the economy.

Limitations of the IO/SAM approach and alternative techniques

The traditional input-output models assume that industries use inputs in fixed proportions (there is no factor substitution) and outputs are produced proportionally to all the inputs (constant returns to scale). In the multiregional model, constant are also interregional trading relationships. Thus, applying this approach, one has to assume that all sectors' structure remains the same. This assumption is generally satisfied when evaluating small change but not necessarily when the change is of high magnitude or occurring over an extended period of time (longer-term prediction).

Relaxing the assumption of fixed technical coefficients by specifying them econometrically as a function of relative prices of inputs is one of the most compelling extensions to the static IO and SAM models. Such models, generally referred to as computable general equilibrium (CGE) models, require extensive research to develop credible functional relationships between prices and consumption that would guide economic agents’ behavior in the model.

The CGE approach is a preferred way forward when expanding the model usability and considering applying it in conjunction with the IPHC MSE. The dynamic model is also well suited to analyze the impact of a broad suite of policies or external factors that would affect the stock over time.

There is a few decades’ worth of experience in developing input-output models with applications to fisheries. Seung and Waters (2006) provide an excellent overview of studies available up to 2006, starting with papers published as early as 1967 (Rorholm et al. 1967). The majority of these studies consider a single region with one exception. Butcher et al. (1981) offer an early example of multiregional analysis applied to the Alaska shellfish fishery. An early example of a supply-driven model for fisheries is available in Leung and Pooley (2002), who use the IO modeling technique to assess the impact of the reduction in fishing areas adopted in order to protect certain turtle populations. The majority of earlier models are using the demand-driven approach.

More recent models offer ever more complex mathematical depictions of the economy comprised of hundreds of interlinked sectors that are built with the purpose of assessing the economic effects of fishery management policies that alter seafood sectors. The majority of these models, developed for various regions of the United States, rely on adaptations to the widely distributed commercial regional input-output modeling system known as IMPLAN (IMPLAN Group LLC. IMPLAN 2020. Huntersville, NC. IMPLAN.com.). Currently, IMPLAN data contains 546 sectors representing all private industries in the United States classified based on the U.S. Census Bureau’s North American Industry Classification System (NAICS). It includes three sectors that are directly related to the seafood supply chain: commercial fishing (sector 17), seafood product preparation and packaging (sector 92), and wholesale - grocery and related product wholesalers (sector 398). There is also an animal production sector that includes aquaculture (sector 14). IMPLAN is a widely-used tool for academic and professional economists for the estimation of economic impact in a variety of sectors.

One of the earlier examples of IMPLAN adaptations to fisheries is the Northeast Region Commercial Fishing Input-Output Model (Steinback and Thunberg 2006). The model covers 24 regions in the Northeast and focuses on refining fishing-related sectors by disaggregating them into more detailed subsectors. The modifications include splitting the commercial fishing sector based on gear type and vessel size class, detaching seafood wholesalers from a more general wholesale category, and adding seafood dealer sectors for each coastal region. Given the high spatial granularity, the model makes a number of simplifying assumptions on the industries' structure. Harvesters are assumed to sell all of their output to wholesale dealers via direct sales or through fish exchanges/auctions. Wholesale dealers are assumed to sell their output to final consumers, intermediate demand industries (including seafood processors), and businesses located outside of the Northeast region (export). Seafood dealer sectors and fish exchanges/auctions are treated as margin sectors. This means the value of their sales excludes the cost of the sold goods, i.e., the sales include only the value added to the sold product, and impacts that may accrue beyond the processor level are not incorporated. The model is only partially multiregional as it accounts for the interconnections only between the fishing-related businesses (commercial harvesters, wholesale seafood dealers, bait suppliers, and seafood processors). The non-fishing effects are estimated jointly and appropriated to regions according to their relative importance to the total Northeast economy. Due to its extensive data requirements, this model was difficult to keep up-to-date and is not maintained anymore (Steinback, personal communication).

The US-wide application of the IO modeling technique to commercial fishing and seafood industry is a model developed for the National Marine Fisheries Service (NMFS) by Kirkley (2009). Economic impacts are expressed in terms of employment (full-time and part-time jobs), personal income, and output (sales by US businesses), separately for 18 categories of species of fish defined by the model, as well as for seafood processors, wholesalers/distributors, grocers, and restaurants. Geographically, the model estimates impacts for the US as a whole and for 23 coastal states. At the state level, estimates for each sector are based on fishery products harvested in that state or imported to that state from a foreign source. The model serves as a base for producing annual fisheries impacts estimates for the Fisheries Economics in the United States report, published since 2006 and available here. The latest report is available for 2016 (NOAA 2018).

IMPLAN customization for the US Pacific Coast has been developed by Leonard and Watson (2011), largely following the approach by Steinback and Thunberg (2006). The model distinguishes 19 vessel categories that produce 32 unique species and gear commodity outputs. These include three groundfish sectors (large groundfish trawlers, small groundfish trawlers, other groundfish fixed gear) that harvest Pacific halibut. Data used to build the custom fishing sectors were obtained from Pacific Fisheries Information Network (PacFIN) fish ticket data maintained by the Pacific States Marine Fisheries Commission, the Northwest Fisheries Science Center’s (NWFSC) cost earnings surveys, moorage rates from ports along the West Coast, and collection statistics for the Washington Enhanced Food Fish Tax used to estimate the flow of fish landings to wholesalers. Default IMPLAN 2006 data were used for the regional non-fishing economy, as well as the various institutions in the region such as households and the government.

Periodically, the National Oceanic and Atmospheric Administration (NOAA) also provides an assessment of the economic contribution of marine angler expenditures in the United States (Lovell et al. 2016; Lovell, Steinback, and Hilger 2013; Steinback and Gentner 2008). The latest estimates (based on data from 2014), limited to the contribution of expenditures on durable goods (excluding trip cost, covered in the report from 2013), suggest that at the national level, marine anglers spent USD 28 billion on fishing equipment and durable goods (e.g., fishing rods, tackle, boats). These expenditures are assessed to generate an estimated USD 49.6 billion in total output, added USD 29 billion in contribution to GDP, contributed USD 18 billion to personal income and supported more than 358 000 jobs across the United States. No estimates specific to subsectors defined based on target species are available.

BC Stats (Sun and Hallin 2018) provide estimates of direct, indirect, and induced effects arising from the economic activities of industries within the fisheries sector in British Columbia, including capture fisheries, seafood processing and sport fishing. The assessment is based on the British Columbia input-output model built using information from the 2014 IO tables for the province available from Statistics Canada (Statistics Canada 2019). The results suggest that for every dollar of output in capture fishery, aquaculture, and fish and seafood processing combined, an additional CAD 0.386 is generated in the province by industries supplying goods and services used by the commercial fishing, aquaculture, fish processing, and sport fishing industries. This model, however, does not provide Pacific-halibut specific estimates and analyses economic impact only within the region of the resource extraction, omitting impacts outside British Columbia.

As noted in the section Supply-driven approach, the fisheries sector is often fixed on the supply side as fisheries policies usually target output by setting total allowable catch (TAC) limits. Supply-driven approach applications have been applied in a variety of settings, for example, to study backward and forward linkage effects of Alaska fisheries (Seung and Waters 2009) or to assess the economic impacts of restricting catch of Pacific cod and Atka mackerel in the Aleutian Islands in order to protect Steller sea lions (Seung and Waters 2013), Chinook salmon fishery failures (Seung 2017) and catch limits on Alaska pollock fishery (Seung 2014).

The most advanced multiregional economic analysis focused on fisheries, applied at borough level to the seafood industry in Alaska, is a social accounting matrix developed at the NOAA Alaska Fisheries Science Center (AFSC) by Seung, Waters, and Taylor (2019). The model allows for analysis of the impacts on individual fishing-dependent communities rather than broad administrative areas (e.g., the entire state), serving as a useful tool to fishery managers interested in more localized impacts of exogenous shocks, either natural or policy-induced. The model uses the results of a detailed survey of fish harvesting vessel owners and interviews with key seafood business stakeholders from six boroughs and census areas in the Southwest Alaska region. The survey, designed specifically to account for cross-regional effects, collected information on the geographic distribution of expenditures. A detailed survey description is available in Waters, Baker, and Taylor (2016). An earlier, three-region version of this model (Alaska, West Coast, and rest of USA) has been used for several economic impact assessments in the pacific northwest, including Alaska head and gut (H&G) fishing fleet (Waters et al. 2014). The full description of this model, accompanied by a manual to a web-based application for custom estimates, is available in Seung and Miller (2018).

No models focused on fisheries connecting the economies of the United States and Canada were identified. Although (Gislason et al. 2017) analyze the impact of Pacific Salmon fisheries on the economy of both countries using the IO approach, their models are disconnected and do not offer the consistency of an integrated multiregional model.

The IO approach can also be used to assess the impact of the reduced number of recreational fishing trips. A multiregional CGE model developed by Seung and Lew (2017) assesses the economic impact of restrictions imposed on saltwater sport fishing in Alaska, considering a variety of limit changes to Pacific halibut, chinook salmon, and coho salmon. The findings suggest that although adverse economic impacts of reduced bag limits on Alaska can be to some degree compensated for by increases in economic activities in the other regions or other sectors, the cost of one fewer Pacific halibut allowance can still decrease the economic activity in Alaska by USD 4.7-9.0 mil. The model uses fishing participation changes arising due to changes in the limits predicted from a stated-preference model.

Commercial Fishing

Data on commercial fisheries landings in the United States are available through NOAA. Statistics for each state represent a census of the volume and value of finfish and shellfish landed and sold at the dock. Collecting these data is a joint state and federal responsibility. Alaska’s landings data are collected from mandatory trip tickets by the Alaska Department of Fish and Game (ADFG), then consolidated and disseminated (as aggregates) by the Alaska Fisheries Information Network (AKFIN). Commercial Fisheries Entry Commission (CFEC) reports on the number of permits, as well as earnings by residents and non-residents. Data on Pacific halibut fishing in Washington, Oregon, and California are collected by the Washington Department of Fish and Wildlife (WDFW), Oregon Department of Fish and Wildlife (ODFW), and California Department of Fish and Wildlife (CDFW), respectively. Each of these state agencies requires submission of fish tickets reporting on Pacific halibut sales. These data are processed and disseminated by the Pacific Fisheries Information Network (PacFIN).

Data on commercial fisheries landings in Canada are published by the Fisheries and Oceans Canada (DFO). The value of Pacific halibut in British Columbia comes from the mandatory fish slips. These are processed by the DFO’s Regional Data Unit.

Data on commercial landing value (available for all regions for 1951-2018, figure below) suggest a considerable increase in Pacific halibut output driven by Alaska fisheries since the 1980s. However, revenue has been dropping throughout the last decade. The statistics for recent years are available in Table 2.

Data on employment in major fisheries in Alaska, including Pacific halibut fisheries, is compiled on a monthly basis by the Alaska Department of Labor and Workforce Development (AK DLWD). Statistics Canada reports annually on employment in Fish, hunting and trapping sector, but no estimates are available for the Pacific halibut fishery. No specific estimates on jobs in the fisheries sector are available for the US West Coast states. Available employment statistics for Pacific halibut commercial fishing are summarized in Table 2.

Pacific halibut landings value (1951-2018) in 2018 USD.

Table 2: Summary of available data on Pacific halibut commercial fishery.

Seafood Processing

Alaska’s direct marketers, catcher processors, catcher exporters, buyer exporters, shore-based processors, or floating processor permit holders are required to complete and submit to the ADFG a Commercial Operator's Annual Report (COAR). COAR reports on the by species statewide raw input purchase cost and wholesale value of the processed seafood.

In British Columbia, there are three types of seafood industry licenses issued by the Ministry of Agriculture, Food Safety and Inspection Branch. These include fish vendor license, fish receiver license and fish processing license. Interprovincial sales and sales abroad require also a license from the Canadian Food Inspection Agency (CFIA) under Safe Seafood for Canadians Regulations (SFCR). Canada’s Ministry of Agriculture (AgriService BC) reports on British Columbia Pacific halibut wholesale value in its annual publication British Columbia Seafood Year in Review.

No data on the wholesale value of Pacific halibut are routinely collected for the US West Coast. The model uses the latest (2017) NOAA estimates on species-specific processor markups suggesting that for every dollar spent on Pacific halibut, the processors deliver USD 1.15 worth of product.

Alaska Department of Labor and Workforce Development reports on the number of resident and non-resident workers in the Alaska seafood industry, as well as the associated wages. No details on employment by processed species are available. Employment in seafood processing for the lower 48 is available from the Quarterly Census of Employment and Wages, but no statistics specific to Pacific halibut processing on the US West Coast are published. Detailed data on employment and wages in British Columbia seafood processing is available via AgriService BC series of publications British Columbia Fish Processing Employment. The statistics are reported by species, with estimates based on the additional information each company provides on the species groups that are processed in the facility and the estimated percent of jobs attributed to each group.

Table 3 summarizes statistics available for the Pacific halibut processing sector.

Table 3: Summary of available data on the Pacific halibut processing sector.

Seafood Trade

Data on trade in seafood products by the United States is available from NOAA Fisheries. The database provides no evidence for the export of fresh Pacific halibut, although some may be included in generic category HS 302290100/HS 302290190: Flatfish NSPF Fresh. Frozen Pacific halibut exports are lumped with other halibut species (Atlantic, Greenland, California).  However, the total frozen halibut products export (USD 6.9 mil. in 2019) is modest given the annual total output averaging over USD 100 mil. in recent years. This suggests that the majority of the US-caught Pacific halibut is contributing to the US economy throughout its value chain. Exports of processed Pacific halibut products (e.g., fillets) are difficult to trace because they are generally merged with other halibut species and could include imported products.

Imports of fresh Pacific halibut, primarily coming from Canada (USD 29.5 mil. in 2019), add to the US domestic supply. There is, however, strong evidence that the domestic Pacific halibut is facing increasing pressure from foreign imports. While the imports of fresh products (HS 302210020: Flatfish Halibut Pacific Fresh) increased between 2018 and 2019 only modestly (6%), import of frozen Pacific halibut (303310020: Flatfish Halibut Pacific Frozen) increased by 165.4%. The majority of the increase is attributed to imports from Russia. Although the import of frozen Pacific halibut is still modest (USD 7.4 mil.), there are growing concerns regarding the Alaskan Pacific halibut sector’s vitality given the competition flooding the market with cheaper products (Welch 2020c, 2020a).

Detailed data on Pacific halibut products trade by Canada are sourced directly from the Province of British Columbia. Fresh Pacific halibut accounts for about 5% of fresh fish exports from British Columbia, amounting to USD 24.4 mil. (CAD 31.4 mil.) in 2018. Canadian statistics on exports of frozen Pacific halibut (HS 3033120) end in 2016, but replacing it generic frozen halibut category (HS 3033100) suggest that British Columbia exported in 2018 also USD 1.5 mil. worth of frozen Pacific halibut products. There are no fresh Pacific halibut specific import statistics for Canada. Fresh Pacific halibut is lumped in HS 302210090:  Halibut, nes, fresh/chilled. Imports of frozen Pacific halibut amounted to USD 4.8 mil. (CAD 5.9 mil.) in 2018.

Cross-regional flow of earnings

In 2020, about 37% of Alaska quota share units were reported as owned by residents of other states, mainly Washington, about 23%, but this includes also landlocked states. Moreover, about 16% of vessels fishing halibut (under IFQ or CDQ license) were registered as owned by resident of a state other than Alaska. Detailed statistics on the structure of beneficial ownership of Pacific halibut fishing in Alaska in 2018 have been compiled using eLandings data and information available CFEC Public Search Application, and are available in Table 4.

In case of Canada, the cross-provincial transfer of benefits related to harvest profit is less pronounced. While the distribution issue is present, it is more of a question whether quota owner is an active participant or investor (Edwards and Pinkerton 2019). Most of the non-participants live in British Columbia, although many in the lower mainland, far from fishing grounds (Danielle Edwards, UBC, personal communication). No vessel holding a Pacific halibut quota is registered as foreign (DFO 2020), but it is important to note that there is no rule against it (House of Commons Canada 2019).

INSERT Table 4: Beneficial ownership of AK Pacific halibut fishery in 2018

Flow of earnings is also associated with labor compensation. When wages are paid to non-residents, the majority of that money will flow to the place of their primary residence. While no statistics on the composition of employment in the Pacific halibut fisheries sector are available for the regions considered in the model, some notable general statistics are worth mentioning. According to the Alaska Department of Labor and Workforce Development, nonresidents made up 20.7% of Alaska's workforce in 2018 and earned 15.0% of wages (Kreiger and Whitney 2020). This share is considerably higher, reaching 79.2%, for Fishing, Hunting and Trapping sector and 66.6% for Seafood processing sector. Details are available in Table 5. No estimates were identified for British Columbia or the US West Coast.

INSERT Table 5: Employment in AK by residency

Recreational Fishing

The Sport Fish Division of the ADFG conducts annually a mail survey to estimate sport fishing total harvest, total catch and participation in the number of anglers, and the number of days fished (generally referred to as Statewide Harvest Survey). Additionally, NOAA reports on the number of anglers by resident type (coastal vs. out-of-state). The charter sector is also required to report on daily trips through the Saltwater Logbook Program.

Alaska charter owners are also pretty regularly surveyed on their cost and earnings (Alaska Saltwater Sport Fishing Charter Business Cost and Earnings Survey). The survey was previously administered in 2012, 2013, 2014, and 2016 to collect data on the 2011-2013 and 2015 seasons. The latest survey, administered in 2018, describes the 2017 fishing season (Lew and Lee 2019).

On the West Coast, marine recreational fishing is monitored by the Pacific Coast Recreational Fisheries Information Network (RecFIN). RecFIN surveys include the Ocean Sampling Program and Puget Sound Sampling Program, administered in Washington, the Ocean Recreational Boat Survey and Shore and Estuary Boat Survey, administered in Oregon, and the California Recreational Fishing Surveys. Participation in the recreational fishery is reported in terms of the number of angler trips and the number of boat trips per region, mode, and trip type. Trip type is defined in terms of target species.

Periodically, all anglers in the United States are surveyed about their annual expenditures on saltwater recreational fishing. The latest survey covering both trip-based expenditures (e.g., ice, bait, and fuel) and cost of fishing equipment and other durable goods (e.g., fishing rods, fishing tackle, and boats) was conducted in 2011 (Lovell, Steinback, and Hilger 2013). A reduced scope survey, inquiring only about durable goods' expenditures, was conducted last in 2014 (Lovell et al. 2016).

DFO conducts a nation-wide Survey of Recreational Fishing in Canada every five years. The latest took place in 2015. The survey targets all individuals identified in the provincial and territorial recreational fishing license databases and inquires about direct expenditures associated with their fishing trips. No statistics specific to Pacific halibut recreational fishing are reported. BC Stats reports on key indicators for sport fishing, including GDP, revenue, employment, and wages associated with sport fishing activities in British Columbia’s Fisheries and Aquaculture Sector respot, but the latest data are available for 2016.

Table 6 summarizes available recreational fishing statistics, including data on participation, revenue, and expenditures in all Pacific halibut producing regions.

Table 6: Recreational fishing statistics – available data on participation, revenue and expenditures

Subsistence fishing

Previous research suggested that noncommercial or nonmarket oriented fisheries contribution to national GDP is often grossly underestimated, particularly in developing countries (e.g., Zeller, Booth, and Pauly 2006). Subsistence fishing is also important in traditional economies, often built around indigenous communities. Wolfe and Walker (1987) found that there is a significant relationship between the percentage of native population in the community and reliance on wildlife as for a food source in Alaska. However, no comprehensive assessment of the economic contribution of the subsistence fisheries to the Pacific northwest is available. The only identified study, published in 2000 by Wolfe (2000), suggest that the replacement value of the wild food harvests in rural Alaska may be between 131.1 and 218.6 million dollars, but it does not distinguish between different resources and assumes equal replacement expense per lbs. Aslaksen et al. (2008) proposed an updated estimate for 2008 based on the same volume, noting that transportation and food prices have risen significantly between 2000 and 2008 and USD 7 a pound is a more realistic replacement value. This gives the total value of USD 306 million, but the approach rely upon the existence of a like-for-like replacement food (in terms of taste and nutritional value), which is arguably difficult to identify in many cases (Haener et al. 2001) and ignores the deep cultural and traditional context of halibut in particular (Wolfe 2002). A more recent study by Krieg, Holen, and Koster (2009) suggests that some communities may be particularly dependent on wildlife, consuming annually up to 899 lbs per person, but no monetary estimates are derived. Moreover, although previous research points to the presence of sharing and bartering behavior that occurs in many communities (Szymkowiak and Kasperski 2020; Wolfe 2002), the economic and cultural values of these networks have yet to be thoroughly explored.

In order to accurately capture the economic impacts of the Pacific halibut, the IPHC has designed a series of surveys to gather information from the sectors relying on this resource. Further development of the PHMEIA model requires active participation of our stakeholders who we ask for necessary data for analysis.

Participants to the Pacific halibut fisheries (commercial, processing, and charter sector) can fill the form for 2020, but also retrospectively submit information for 2019. We leave the choice to the survey participants, noting the benefits of filling for each year:

• Data for 2019, covering pre-covid-19 operations, can be considered a baseline suitable for drawing conclusions under normal circumstances and using for predictions.
• Data for 2020, covering an abnormal year of operations, can be used to assess losses incurred by the Pacific halibut sectors, but also sectors’ resilience to unfavorable exogenous circumstances. If the project continues and data for 2021 are collected, the project could inform on the response to the crisis and undertake an analysis of the path to recovery.

The subsequent revisions of the model incorporating IPHC-collected data will bring improved estimates on the Pacific halibut sectors’ economic impact.

Commercial Vessel Expenditures Survey (Revised form)

Processing Plant Expenditures Survey (Revised form)

Charter Sector Expenditures Survey (New)

Questions and comments about the surveys can be directed to Barbara Hutniczak, Fisheries Economist, Fisheries Policy & Economics Branch, International Pacific Halibut Commission, at Barbara.Hutniczak@iphc.int