Economy Survey

Economic Research

Under the Convention, the IPHC's mandate is optimum management of the Pacific halibut resource, which necessarily includes an economic dimension. Fisheries economics is an active field of research around the world in support of fisheries policy and management. Adding the economic expertise to the Secretariat, the IPHC has become the first regional fishery management organization (RFMO) in the world to do so.

The goal of the IPHC economic study is to provide stakeholders with an accurate and all-sectors-encompassing assessment of the economic impact of the Pacific halibut resource in Canada and the United States of America. The impacts, measured in terms of output along the value chain, but also employment and incomes, contribution to the GDP, and households' prosperity, will encompass all Pacific halibut sectors in Canada and the USA, including commercial, recreational, subsistence, and ceremonial. The study, described below, requires active participation of our stakeholders, including commercial fishers, processing plant operators, and charter business owners in developing the necessary data for analysis.

You can fill the IPHC economic survey by clicking the following links:

Commercial Vessel Expenditures Survey (Revised form)

Processing Plant Expenditures Survey (Revised form)

Charter Sector Expenditures Survey (New)

Economic impact assessment – what does it entail?

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. Adopting the IO model extended to the so-called social accounting matrix (SAM), the calculated effects account for labor commuting patterns. This is of particular interest when focusing on industries that employ a considerable share of non-residents that imply an outflow of income from the region.

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.

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 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.

Pacific Halibut and Covid-19‚Äč

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 in 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.

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