1 OBJECTIVES AND APPROACH
Scotland's inshore waters (out to 12 nautical miles) provide diverse and productive fisheries which are exploited by a variety of gears including demersal, nephrop and pelagic trawls, dredges, hand lines, hand diving, and creels. Within the commercial fishing sector there are concerns relating to excessive levels of exploitation of some stocks and conflicts between gear types, particularly between mobile and static gears.
It is also recognised that inshore fisheries are an important resource for recreational activity such as sea angling and scuba diving, whilst inshore biodiversity is a concern for those participating in wildlife observation and tourism. The inshore is very much a shared resource and policy needs to recognise demands of a diverse range of stakeholders and be based on robust evidence. This study is designed to help fill the substantial and widely recognised evidence gap which exists on inshore fisheries and which currently constrains the formation of policy.
1.1 The Study Remit
The tender document stipulated that the project will use cost benefit analysis and economic impact assessment to provide estimates of the impacts to Scotland of a number of nation-wide options. These were:
1. One nautical mile ( NM) limit on the use of mobile fishing gear.
2. Three NM limit on the use of mobile fishing gear.
3. Limit on the permitted number of creels per vessel which would operate in conjunction with an overall cap on creel numbers or, equivalently, a fixed number of licences for vessels in the fishery. The analysis should also consider sub-options where trading of creel allocations between vessels is and is not permitted.
4. Introduction of catch limits or landing quotas which would operate in conjunction with an overall cap on catches or landings or, equivalently, a fixed number of licences for vessels in the fishery. The analysis should consider sub-options where trading of quota allocations between vessels is and is not permitted.
In addition, the analysis was to be disaggregated to the level of the six Inshore Fishery Groups ( IFGs) plus Shetland. Given the 4 policy options and 7 geographical areas this implies 28 cost benefit analyses and 28 economic impact assessments.
Options 1 and 2 presented no real problems in interpretation. With respect to Options 3 and 4, as work progressed clarification was requested on a number of issues and it became apparent that seemingly minor changes in specifications could significantly alter economic outcomes. In the time available, it was not feasible for Marine Scotland to fully specify their preferred creel and catch limit regimes. In the absence of a clear specification, an economic evaluation was not feasible. At the same time, a 2013 Marine Scotland consultation on new controls in the Nephrops and crab and lobster fisheries concluded that there was no appetite for the imposition of national creel limits and that, given the lack of evidence, there is no proposal to introduce them  . For these reasons, this study's applied economic modelling of specific nation-wide policy options was therefore restricted to Options 1 and 2.
However, the majority of IFG's have indicated a desire for local creel limits, as well as some other gear restrictions. The 2013 consultation concluded that, at the local level, creel or other limits may have a role to play. There is therefore a more immediate need for a more nuanced understanding of local creel limits. It was therefore agreed that the study would develop a general discussion on the consequences of different creel limits regimes. The purpose is to identify the various incentive effects, behavioural responses and economic outcomes of different creel limit regimes. The study was not charged with evaluating the relative merits of alternative creel limit regimes. Indeed, this is not possible since the merits any management instrument can only be assessed in line with the declared objectives.
The issue of gear conflict has been increasing in importance and Marine Scotland's required better knowledge on the nature, the extent and the economic consequences of gear conflicts. It was originally intended that the study would rely on secondary data on gear conflict. In lieu of the applied analysis of creel and catch limits, the study was able to extend its analysis of the gear conflict by generating much needed primary data. Thus, an on-line questionnaire for fishery operators was developed, along with an email based survey of fishery officers.
1.2 The Amended Remit
The agreed remit was that project will use cost benefit analysis and economic impact assessment to provide estimates of the impacts to Scotland of a number of nation-wide options. These were:
1. One NM limit on the use of mobile fishing gear.
2. Three- NM limit on the use of mobile fishing gear.
3. The study would provide an overview of the nature, extent and economic consequences of gear conflicts in Scottish inshore waters. This information would also inform the analysis of the proposed mobile gear restrictions.
4. The study will provide an analysis, predominantly aimed at IFGs, setting out at a conceptual / qualitative level the key factors that they need to consider in order to determine whether and how to introduce regional or local creel limits. The analysis would set out the main issues that need to be evaluated before making decisions on regional or local creel limits.
5. As an additional element of the study, if IFG's can provide an explicit statement of what they are seeking to achieve by introducing creel limits, the contractor would work closely with the IFG to provide a detailed bespoke ex ante analysis which would evaluate the relative merits of alternative local creel limit regimes.
The analysis was to be disaggregated to the level of the six IFGs plus Shetland  . Given the 2 policy options and 7 geographical areas this implies 14 cost benefit analyses and 14 economic impact assessments.
It is very important to note that the analysis of option 1 and 2 relates to the impact of nation-wide restrictions on individual IFG areas. This might differ from the impact on an IFG of a restriction that applied exclusively to that particular IFG. This is primarily because, mobile operators might respond differently to a national restriction than to a local restriction. These differences are also explored.
The two policy initiatives being evaluated will probably result in some stakeholders being worse off and others better off. There are therefore sensitivities that need to be acknowledged, particularly with respect to the inshore mobile sector. Against that background, the authors have sought to deliver an independent report by applying agreed economic principles consistently and without knowingly favouring any particular interest group or outcome. The expectation is that broadly similar results would emerge if this study were undertaken by other independent economists.
In some instances adherence to complete neutrality can be difficult. For example, there may be situations where there are two or more sources of estimates of economic parameters, which, though different, are equally valid in terms of logic or provenance. In these circumstances the benefit of the doubt is given to those stakeholders who would be made worse off (i.e. that segment of the mobile sector fishing the inshore). Thus, other things being equal, this report utilises estimates which produce lower costs and higher benefits for the mobile sector, and vice versa for those stakeholders who might prosper from a 1 or 3 NM restriction. This bias towards the mobile sector only arises when there are no other criteria that can be used to rank alternatives.
Though independently produced, the evaluations in this report are not objective in the sense of being completely devoid of value judgements. On the contrary, any economic evaluation has some underlying value judgement(s). In practice, there are two types of economic evaluations and, though complementary, each starts from a different set of value judgements defining "what matters" and therefore what should be included and quantified.
Though not seeking objectivity, the authors have tried to ensure that the recognised value judgements of economics are clear and explicit. By doing do, we hope that all those engaged in debate are better able to understand the basis and implications of the results.
As it transpires, the value judgements used by economics are readily embraced by democratic mixed market economies, hence the commissioning of this kind of work and its influence on decision making. Sections 3, 4, and 5 explain the key concepts and how they are applied in this study.
As well as seeking to be independent, the authors have sought to be transparent. This is to enable their efforts to be scrutinised, criticised, checked and replicated. Since the primary purpose of this document is to better inform public debate on management of Scottish inshore fisheries, the authors very much welcome further input and comment from all interested parties.
In this context, neither the authors nor Marine Scotland regard this document as a finished entity. The uncertainty about the underlying biology and absence of some economic data and knowledge mean that the present results have the capacity to be improved. This improvement may come through; constructive criticism, better biological and economic data becoming available, or a better appreciation of how creelers, trawlers, dredgers, anglers and others might respond to policy initiatives.
Indeed, there are so many scientific and economic uncertainties that assumptions and informed judgements are unavoidable if progress is to be made. Since the results are sensitive to the assumptions, there needs to be a clear understanding of how varying the assumptions impact the results. Normally, this would be explored through a sensitivity analysis. The study goes beyond this by producing a model where users of the model can vary the assumptions themselves, produce their own sensitivity analysis and explore whether the balance of estimated costs and benefits is altered significantly by tweaking the model's assumptions.
Viewed overall, this study is designed to:
- Produce a clearly articulated and logically coherent framework of economic analysis relating to inshore fisheries policy options. This will promote greater equality in the opportunity to engage in debate about inshore policy options and help to ensure that the debate is not logically compromised through culpable or innocent misuse of economic concepts and data.
- Produce an evaluation of the economic consequences of policy options which is based on knowledge currently available.
- Produce a model which will enable the economic evaluation to be updated as knowledge advances and other stakeholders to produce their own estimates.
1.4 Limitations of the Evaluations
The estimates produced are a combination of a snapshot of the economics of Scottish inshore fisheries as currently exists and speculation about the economic conditions that might prevail were the 1 or 3 NM limits eventually to result in the revitalisation of the ecosystem and recovery of demersal fish stocks.
This study itself does not consider whether the policies being implemented would result in successful ecosystem restoration. Most of the debate among stakeholders will thus probably focus on these practical and biological issues, rather than the economics.
There is a regular flow of vessels entering and leaving a fishery and there can be significant fluctuations in fishery characteristics between different years. In this report, landings estimates relate to average gross vessel earnings in the period 2007-2011 and care needs to be exercised when reconciling estimates produced here with current ground level observations. Because of such variations, inferences should only be drawn from the orders of magnitude rather than the fine detail.
Finally, we would emphasise that this is largely desk study which has assembled existing knowledge to produce estimates of the economic indicators associated with ecosystem recovery, but only in terms of broad orders of magnitude. Depending on the results, what really matters is the relative magnitudes of key indicators, rather than the precision of the estimates themselves. It is the relative magnitudes which are likely to influence policy formation. Moreover, the relative magnitudes should provide some insight as to whether further economic research targeted at refining estimates would alter the implications of the results.
1.5 Structure of the Document
Sections 1 and 2 outline some of the key features of Scotland's inshore fisheries and explain how they are managed and monitored. This background is necessary to enable an understanding of the evidence and data available and the constraints which shaped the generation of new data.
Sections 3, 4, and 5 explore relevant economic analysis and together they build a coherent framework of economic analysis which is used to evaluate the inshore fisheries management policy options.
Section 6 explains how this study generated and manipulated fisheries data to build a comprehensive benchmark description of fish where fish are caught within each IFG area, as distinct from landings in the IFG ports.
Section 7 addresses the issue of economic dependency on inshore fishing and considers how economic dependency is defined and how it can be measured. The dependency of fishing communities across Scotland is then assessed.
Sections 8 through to 15 present the baseline descriptions for Scotland's inshore fisheries and for each of the IFG areas and Shetland. Each benchmark embraces; species type, where the catch was made (0-1, 1-3, 3-6, or 6-12 NM) the gear, the vessel size, the catch volume and value. The 3-6 and 6-12 NM zones were included in the baseline to enable an assessment of the potential displacement effects arising from the imposition of restrictions in the 0-1 and 0-3 NM zones.
Section 16 addresses the issue of gear conflict and presents the result of a survey of fishery operators' experience of gear conflict. Estimates of the financial implications are inputs into the model used to evaluate policy options.
Sections 17, 18, and 19 broaden the analysis to embrace recreational interests who directly use or interact with Scotland's inshore marine environment and who potentially could be impacted by the policy options. These recreational interests might include sea angling, sub aqua, ornithology, marine wildlife charters, sea kayaking, yachting and informal visits to Scottish coastal areas.
Section 20 addresses the issue of the general public's non-user value. This arises when members of the general public, despite having no direct or indirect interaction with the marine environment, are not indifferent to its quality. Their well-being, as they themselves define it, would be increased with improvements in the marine environment.
Section 21 explains the Excel model used to produce both an economic impact analysis and a cost benefit analysis for Scotland, for each IFG and for Shetland.
Sections 22, 23 and 24 presents the results and discuss their implications.
Section 25 presents the discussion on creel limits.