Case Study Methodology
INVESTIGATING THE LINKAGES
BETWEEN FISHERIES, POVERTY
KEY CONCEPTS AND
A report prepared for the
Department for International Development (DFID)
Project: ‘The Role of Fisheries in Poverty Alleviation
and Growth: Past, Present and Future’
DFID/PASS Contract: AG0213
February 2005 (Final version)
Dr. Stephen Cunningham
Dr. Arthur E. Neiland
Hants PO2 8FA
Tel: +44 (0) 2392 658232
Fax: +44 (0) 2392 658201
E-mail: firstname.lastname@example.org, email@example.com
This background report presents a methodology for the DFID/PASS Project ‘The
Role of Fisheries in Poverty Alleviation and Growth: Past, Present and Future’.
The objective of the study is to conceptualise the interface between poverty reduction
and fisheries development. In particular, the study seeks to identify the links between
poverty reduction and fisheries development under different policy arrangements,
supported by empirical evidence generated through a number of case study countries.
There are five sections to this report: Section 1 gives an introduction and the
objectives of the project overall. Section 2 outlines the study approach for Phase 1
(background report and methodology). Section 3 is the core of the report and
presents succinctly the key issues that are central to the study covering the areas of –
poverty and development, economic growth and fisheries, fisheries development and
management, policy and governance. The overview of the issues above is
underpinned by a series of more detailed appendices. Drawing on Section 3, Section
4 develops a template for the case study reports, and Section 5 presents the Terms of
Reference for the case study authors.
The national case-studies will be undertaken in 8 countries (Bangladesh, India,
Thailand, South Pacific Island States, Morocco, Mauritania, Malawi and Canada).
The results will be synthesized to produce a final report and policy brief by June
Fisheries; Policy; Poverty; Economic Growth; Concepts; Methodology;
ACRONYMS AND ABBREVIATIONS
BMI Body Mass Index
BN Basic Needs approach
CEC Commission of the European Community
DFID Department for International Development of the United Kingdom
DWFN Distance Water Fishing Nations
DC Developed Country
DevC Developing Countries
EU European Union
EEZ Exclusive Economic Zones
FAO United Nations Food and Agriculture Organisation
FFA Forum Fisheries Agency (South Pacific)
FGT Foster-Greer-Thorbecke measure
FMU Fisheries Management Unit
GDI Gender Development Index
GDP Gross Domestic Product
GNP Gross National Product
HDI Human Development Index
IMF International Monetary Fund
IQ Individual Quota
ITQ Individual Transferable Quota
MDG Millennium Development Goals
MEY Maximum Economic Yield
MSY Maximum Sustainable Yield
NAM Non-Aligned Movement
NGO Non-Government Organisation
NR Natural Resources
NRM Natural Resources Management
OAU Organisation for African Unity
OECD Organisation for Economic Cooperation and Development
PASS Programme of Advisory and Support Services to DFID (HTPSE Ltd)
PEP Poverty-Environment Partnership
PG Poverty Gap
PQLI Physical Quality of Life Index
PRS Poverty Reduction Strategy
PRSP Poverty Reduction Strategy Paper (World Bank)
RMR Resting Metabolic Rate
RNR Renewable Natural Resources
SAP Structural Adjustment Programme
SD Sustainable Development
SSF Small Scale Fisheries
SY Sustainable Yield
TAC Total Allowable Catch
TC Total Cost
TR Total Revenue
UNCLOS United Nations Conference on Law of the Sea
UNDP United Nations Development Programme
UNRISD United Nations Research Institute on Social Development
WFS World Food Survey
WTO World Trade Organisation
ACRONYMS AND ABBREVIATIONS 4
1. INTRODUCTION AND OBJECTIVES 7
2. STUDY APPROACH 8
2.1. General approach 8
2.2. Phase 1 study components 8
2.2.1. Literature review 8
2.2.2. Consultation with experts 9
2.2.3. Production of briefing papers 9
2.2.4. Synthesis of briefing papers 9
2.2.5. Development of study template and case-studies 9
2.2.6. Selection of country case-studies 10
2.2.7. Review and finalisation of methodology 10
2.2.8. Implementation of Phase 2 10
2.2.9. Preparation for Phase 3 11
3. KEY ISSUES 11
3.1 Introduction 11
3.2. Poverty and development; 13
3.3. Economic growth and fisheries 15
3.4. Fisheries development and management 16
3.5. Policy and governance 19
4. STUDY TEMPLATE 22
5. TERMS OF REFERENCE – COUNTRY CASE-STUDIES 27
6. CONCLUDING REMARKS 30
A1. Poverty and Development – Evolving Concepts and Approaches 32
A2. Economic Growth and Fisheries 48
A3. Fisheries Development and Management – Key Issues 57
A4. Policy and Governance for Development 75
1. INTRODUCTION AND OBJECTIVES
The objective of the Renewable Natural Resource (RNR) and Agriculture Team in
DFID’s Policy Division is to increase the contribution of RNR and agriculture
(including fisheries) to reducing poverty, by encouraging decision makers to adopt
policies and measures that can be integrated in practical ways into broader poverty
The fisheries programme initiated by the Team recognises that fisheries are often
instrumental in helping reduce poverty, and underpin the livelihoods of the absolute
poor in rural areas of many developing countries.
The objective of this study is to conceptualise the interface between poverty
reduction and fisheries development. In particular, the study seeks to identify the
links between poverty reduction and fisheries development under different policy
arrangements, supported by empirical evidence generated through a number of case
The main outputs of the study are shown in Box 1:
Box 1: Main outputs of the study
• the empirical evidence of the role of fisheries in supporting growth and
poverty reduction, presented in the form of a set of case studies, and
• a synthesis policy paper with outline strategy to guide future DFID
This background report is structured as follows. Section 2 outlines the study
Section 3 is the core of this report and presents succinctly the key issues that are
central to the study. Section 3.1 outlines current thinking on poverty, its
measurement, diagnosis and approaches to poverty reduction. A key general finding
is that a major factor in poverty reduction around the world is broad economic
growth. Section 3.2 looks therefore at the factors determining economic growth
performance and on the role that the fisheries sector might play in contributing to
economic growth. Section 3.3 considers the development and management of
fisheries. It focuses on the way in which fisheries can contribute to poverty
reduction. Section 3.4 discusses the importance of the policy environment for
ensuring that the potential contribution of the fisheries sector is fully realised.
Section 3 presents an overview of the issues. It is supported by Appendices A1-A4,
which provide more detailed discussion.
Drawing on Section 3 and on the Appendices, Section 4 develops a template for the
case study reports, and Section 5 presents the Terms of Reference for the Case Study
2. STUDY APPROACH
2.1. General approach
The study team drew upon their expertise in development economics, natural
resource management and fisheries policy and governance to address the specific
objectives of the current phase (Phase 1) of the overall study (Box 2). This includes
experience of fisheries management in both Developed and Developing Countries,
and with particular reference to the usage of multi-disciplinary approaches and
The overall study structure and implementation schedule is shown in Box 2 below:
Box 2: Overview of study
‘The Role of Fisheries in Poverty Alleviation and Growth: Past, Present and
Phase 1 (15 Nov 2004 – 4 Feb 2005):
Produce background paper in order to develop case-study approach including
template for case-studies and Terms of Reference for case-study authors;
Phase 2 (Feb 2005 – 31 March 2005)
Case-studies undertaken in eight countries (Bangladesh, India, Thailand, Forum
Fisheries Agency (South Pacific Island States), Mauritania, Morocco, Malawi and
Phase 3 (4 April 2005 – 13 May 2005)
Develop synthesis report, policy brief and final project report;
2.2. Phase 1: Study components
The approach for Phase 1 (November 2004 – February 2005) consisted of nine
components, as follows;
2.2.1. Literature review
To provide an essential underpinning to the study and to allow the development of a
background paper, a review of the international literature was undertaken. With an
emphasis on providing a good understanding of the conceptual link between poverty
reduction and fisheries development, it was necessary to draw on a broad range of
literature including areas such as fisheries management and development, natural
resource management, economic development and economic growth, poverty and
poverty analysis, and policy and governance. The idea is that the background paper
(this report) will be informed by both fisheries and non-fisheries elements, but that
the process is expected to be two-way, with the background paper from this project
having wider implications than just to the fishery sector in terms of ensuring pro-
poor growth based on common pool resources.
2.2.2. Consultation with relevant experts and practitioners
At various times during Phase 1, the work of the study was discussed with a number
of relevant experts and practitioners in the fields of fisheries and development,
principally at DFID. In addition, Arthur Neiland attended a one-day meeting on the
management of natural resources as part of the VI. Poverty-Environment Partnership
(PEP) meeting in Berlin on 2nd December 2004 (PEP, 2004), and gave a presentation
on fisheries and pro-poor growth. This provided a good opportunity to interact with
experts from a wide range of international development organisations, and to
participate in discussions on the role of natural resources in pro-poor growth.
2.2.3. Production of four briefing papers
The results of the literature review were used to produce four briefing papers which
attempt to identify and explain the major issues relevant to the study. Each of these
papers is included as a separate appendix to this report as follows:
A1: Poverty and Development – Evolving Concepts and Approaches;
A2: Economic Growth and Fisheries
A3. Fisheries Development and Management;
A4: Policy and Governance for Development;
2.2.4. Synthesis of briefing papers
The four briefing papers (above) were then synthesised to present a succinct
identification of the key issues and the inter-relationships between them. From the
beginning, the approach which was laid down for the study was used to guide the
synthesis. Essentially, it was decided to approach the problem of pro-poor growth
from the fish resource end of the spectrum, looking at two important aspects. First,
historically and in the present, to consider the strategy that has been adopted for the
exploitation of fish stocks, and the impact of this on economic growth, and on the
poor in particular. Second, alternative strategies for the exploitation of fish resources
and the impact that such strategies might be expected to have for pro-poor growth
and other important indicators, such as resource sustainability. Initially, therefore, the
synthesis focuses on poverty and poverty alleviation (A1), and the important role of
economic growth in this (A2). The contribution of fisheries to economic growth is
then considered, looking at fisheries development and management options (A3).
Finally, the impact of the policy and governance context on fisheries and its
contribution to economic growth and poverty alleviation is examined (A4).
2.2.5. Development of study template and national case studies
On the basis of the key issues identified and synthesised (above), a study template
was developed to form the basis of a series of national case-studies from around the
world. The case-studies will be implemented by nationals (or country specialists)
from a range of countries / regions (as explained below), using both primary and
secondary information sources, analysing the role of the fisheries sector for poverty
alleviation. Each case-study will be defined by a Terms of Reference (Section 5).
It is planned that the case-studies will examine information and trends from current
fisheries systems as well as historical information (where appropriate) to assist in
developing an understanding of the key role fisheries has played in the past,
continues to play today and is likely to play in the future.
The case-studies will take account of the impacts (and likely future impacts) of
recent declines in capture fisheries. Although these may have been offset by gains
through (say) value-added processing and high-value, export-oriented aquaculture,
the extent to which (i) this is sustainable; and (ii) the poor have benefited directly or
indirectly from these gains (or, conversely, the extent to which they have become
‘losers’) are factors to be examined.
2.2.6. Selection of case-study countries
The following countries have been identified for case studies:
Bangladesh; India; Thailand; Pacific Island States (Forum Fisheries Agency);
Mauritania; Morocco; Malawi; and Canada (Atlantic cod);
2.2.7. Review and finalisation of study methodology
As part of the process of developing the study, a draft version of the current report
was distributed to a number of relevant experts and development practitioners for
comment, and also to the selected case-study authors. Comments and suggestions on
the content were requested, with particular reference to the following points:
- Do the four briefing papers (A1 – A4) provide effective coverage of key issues
relevant to the study?
- Does the synthesis (Section 3) show the important linkages between issues?
- Does the study template (Section 4), building upon the synthesis (above), provide
a useful framework for the case-studies?
- Comment on the availability of information in your country relevant to
completing each of the template sections (for case-study authors in particular).
In the light of comments received, the draft report and methodology was finalised
and then re-distributed to the case-study authors and others.
2.2.8. Arrangements for implementation of Phase 2
Phase 2 will commence with the commissioning of the national case-studies in
February 2005. The case-study authors will be expected to provide an interim
progress report on 7th March, and the IDDRA team will provide comments on any
issues arising during the course of the work. An e-mailing list will be established for
this purpose. By 31 March 2005, the draft case-study reports should be completed
and sent to IDDRA.
2.2.9. Preparation for Phase 3
Following completion of the case studies, a key synthesis paper will be prepared.
Case study authors will be asked to comment on this paper, which will cover the
following broad areas (and others depending on the results obtained).
Key Synthesis Paper:
The IDDRA study team will distil relevant evidence from the case studies and
synthesise this into a key policy brief/strategy paper (to be defined) that will identify:
- Common facets of success in the development of fisheries for sustainable growth;
- Common facets of success in the development of fisheries for poverty reduction;
- Trade offs between efficiency (e.g. using DWFNs vs. local fleets), equity (e.g.
open access for the poor - safety nets with rent dissipation and the
sustainability/effectiveness of this compared with other possible scenarios such
as decommissioning and alternative income generation) and environment (e.g.
fishing within multi-species stocks vs. biodiversity);
- Recommendations for future strategies (including capacity building) inter alia to
support pro-poor growth.
The analysis will focus on features relevant to governance, policy processes and
management that have led to successful pro-poor outcomes as a result of wealth
generated sustainably from fisheries and aquatic resources.
3. KEY ISSUES
In this section, the key issues that are central to the overall study will be presented
succinctly. A more detailed discussion is provided in the Appendices (A1-A4) which
underpin this section.
It is recommended that case-study authors should read these sections and the
appendices carefully, and use them to focus their implementation of the study
template (Section 4 below). In other words, the case-study authors should attempt to
ensure adequate coverage of the key issues highlighted in this section (and the
appendices) within the reports which they produce. The reason for emphasising this
point (which will appear obvious to the experienced case-study authors selected for
work) is that many of the ideas and approaches to fisheries management and its
relationship to poverty presented in this methodology report are relatively novel – for
example, fisheries management is conventionally based on biological principles,
whereas in this study the focus is on ideas from economics and social sciences such
as resource rent generation and use, and institutional frameworks and policy
processes. A significant complication in all this is that government documents and
other likely sources of information in many countries will tend to focus on biological
management of fisheries, and it will require a significant level of detective work, by
case study authors, to put together the alternative information required for a more
broad-based analysis of fisheries and poverty. This is the challenge faced by the
To begin, it should be recognised that fish resources are inherently extremely
valuable, representing a potential source of renewable wealth to the countries which
own them. It was the observation (in Canada in the 1950s) that the fishers exploiting
these valuable resources were ironically amongst the poorest members of society that
gave the impetus for the development of fisheries economics.
Since the 1950s, much progress has been made to explain in theory why the
exploitation of such valuable resources is so often associated with poverty.
Regrettably, less progress has been made in developing and implementing policies
that allow the wealth inherent in fish resources to be generated and used for poverty
The lack of progress in practical implementation may be explained in many ways. A
number of broad themes may be identified, however, which are developed further in
the sub-sections 3.2 to 3.5 below.
The theory of fisheries economics demonstrates, and the empirical evidence
confirms, that unmanaged fisheries will be overexploited, always in an economic
sense and in many cases biologically also. The management of fisheries is therefore
required. But developing effective management schemes has proved to be a difficult
One important reason is that it has taken a long time for the concept of wealth (in the
form of resource rents) to enter policy consciousness, and this process is far from
complete. As a result, the benefits obtainable from fish resources have been, and in
many countries (both developed and developing) continue to be, perceived purely in
terms of the fishing activity itself (employment, incomes, value-added, livelihoods).
Perceiving the benefits solely in this way has at least two unfortunate effects. First, it
makes high exploitation levels appear attractive, since generally variable like
employment are positively correlated with the exploitation level. Second, it means
that in order to benefit from fish resources, people must be fishers (or be closely
associated with the fishing activity or someone who is).
To the extent that it is addressed at all in policy formulation, the issue of the nature
of the benefits from fish resources is generally only addressed implicitly. There is
often an implicit assumption that the benefits must be taken through the activity.
When the objective is to use such resources for poverty reduction, it becomes
essential to address explicitly the nature of the benefits available and sought.
Otherwise, it is impossible to answer questions such as: what is the target group of
poor people? A policy relying on activity-based benefits can only target poor fish
exploiters (or at best poor fishing communities) whereas a policy based on the wealth
of the resource allows much broader scope in terms of potential beneficiaries.
Important subsidiary aims of this study are:
• to demonstrate the nature, and through the case studies the quantitative
importance, of the different types of benefit obtainable from the
exploitation of fish resources, and
• to assess the potential contribution of fish resources to poverty reduction
as a function of the type of benefit.
A second major reason for the lack of practical progress in fisheries management is
the absence of appropriate instruments and institutional arrangements. Partly, this is
because inappropriate objectives have emerged from the policy process. For
example, resource sustainability, which is in fact simply a constraint on the ability to
achieve other goals, is probably the most common objective for fisheries
management. As a result, in many cases, fisheries management has become little
more than a forlorn attempt to keep exploitation levels within the resource constraint.
Even where it has been achieved, resource sustainability has usually been associated
with economic overexploitation, with the wealth of the resource dissipated.
However, even where the importance of economic factors is recognised in the policy
process, the design and implementation of appropriate instruments and institutional
arrangements has proven to be a difficult challenge.
The result is that the widespread failure of fisheries management has resulted in
missed opportunities for sustained fisheries-based growth and in many cases to the
gradual erosion of their potential to address poverty outcomes.
In order to reverse this situation, radical change in the approach to fisheries
development and management is needed. The following sections outline the main
issues in this change.
3.2. Poverty and development
Poverty is a major global problem with about half of the world’s population living on
less than US$2/day. In the World Development Report (2000), the World Bank states
that poverty elimination is the world’s greatest challenge, and an international
development target has been proposed (OECD) of reducing half of the proportion of
people living in extreme poverty by 2015. Many donors and international
development agencies have responded with a range of plans.
There is also an active and growing debate and associated research into key poverty
issues – How to measure poverty? How to identify and characterise the poor? What
are the causes of poverty? How to address poverty reduction? There has also been a
renewed interest and recognition of the role of economic growth in development,
with greater emphasis on the distribution of benefits (‘pro-poor growth’).
There are three broad categories of methods used to measure poverty – nutrition-
based methods, basic needs and composite indicators, and income-based measures.
All of these methods have both strengths and weaknesses. The limitations of income-
based measures (e.g. failure to include non-marketed production) originally spurred
attempts to develop new approaches, leading to the emergence of the Basic Needs
(BN) and Human Development Index (HDI).
However, subsequent research has shown a high degree of correlation between
income and HDI, BN-indicators and others. Overall, income-based measures aim to
quantify the number of individuals or households falling below selected poverty
lines. Other indicators of relative poverty include the $1/day and $2/day measures.
The reporting of income-based measures at national level provide a general overview
of poverty for policy-makers. They can also be decomposed by region, sector, gender
etc and provide an indication of which societal groups are vulnerable and how
poverty alleviation interventions might impact on such ‘at risk’ groups.
Poverty measures provide an indication of the scale of the problem, but they cannot
provide any explanation on why people are poor or why poverty is so significant in
particular sectors or countries. Since the 1950s, development economists have
attempted to provide an understanding of the causes of poverty, and in turn, the
various theories and explanations have been used, to varying degrees, by
governments and development agencies to inform relevant policy and actions.
Development thinking has centred on the following themes. First, the development
record and the experience of many East Asian countries during the 1970s and 1980s
indicated that economic growth could lead to poverty reduction. However, it was
also found that simply transferring policies (e.g. structural adjustment and neo-liberal
programmes) from one region to another was not always workable. Therefore future
policy to promote economic growth for poverty alleviation would have to take
account of a full range of factors (e.g. political stability, markets, investment climate
etc) on a country-specific basis.
Second, following further research into the mechanisms of poverty (e.g. impact
assessments of the SAP in Africa), investigators such as Sen concluded that a
person’s or household’s capability to access economic benefits is crucial in
determining vulnerability to poverty, and this will be determined by their position in
society (or entitlement). In other words, starvation could not simply be equated with
food shortages (a production problem), but could equally be a consequence of a lack
of purchasing power (a trade/exchange failing). Building upon this work, the
emergence of new, broad-based and multi-disciplinary approaches to poverty
analysis (e.g. sustainable livelihoods approach) have opened up a wide debate on
how poverty should be measured, assessed and deal with.
Third, there has been an increasing level of political attention and financial
commitment to international development and poverty reduction in the past five
years leading to the adoption of the Millennium Development Goals and the Poverty
Reduction Strategy Paper approach by most governments and international agencies.
There is also an on-going debate over the elements that should be at the centre of any
sensible poverty reducing strategy.
The topic of ‘pro-poor growth’ (the average growth rate of the incomes of the poor –
the absolute definition) has also emerged. While there is ongoing research into its
meaning and application, there seems to be a general consensus in a few areas:
- growth is fundamental for poverty reduction, and in principle growth as such
does not seem to affect inequality;
- growth accompanied by progressive distributional change is better than growth
- education, infrastructure and macro-economic stability seem to positively affect
both growth and distribution of income.
It is interesting to note that the absolute definition of pro-poor growth is an income-
defined measure of poverty status, and that it only considers the incomes of poor
people. DFID explains that the pro-poor banner is useful because it aligns economic
growth with changes in the well-being of the poor. Also that most policies that
increase growth also reduce poverty and many policies that are effective for reducing
poverty also increase growth.
3.3. Economic Growth and Fisheries
There is widespread agreement that economic growth is a necessary condition for
poverty to be reduced in an economy. It is not, however, sufficient since there is a
need to ensure that the opportunity that such growth provides does, in fact, translate
into poverty reduction.
Economic theory and empirical evidence suggest that government macroeconomic
policy is an important determinant of economic growth. Among the most important
factors identified are:
• Free trade
• Stable prices
• Private enterprise
• A well-educated and healthy labour force
• Diversified exports without the dominance of a few primary products
These macroeconomic factors are beyond the scope of a single sector of the economy
such as fishing, so the key question is: how best can the sector contribute?
The answer to this question is complicated by a number of factors. First, economic
growth is clearly not the only macroeconomic objective, and Governments may
decide, or have no choice but, to pursue other priorities, such as the immediate need
to provide livelihoods for the poor.
Second, even where it is chosen, economic growth is a demanding target, particularly
in the case of poor developing countries. There is now broad acceptance around the
world and across the political spectrum that growth requires market-based economic
and institutional reform and implementing such reforms is challenging.
The main difficulty is that many of the policies that promote economic growth are
effectively investments in the sense that they involve some sacrifice now in return for
a gain in the future. They may therefore worsen the Government' performance
concerning other policy dimensions, for instance changes in economic structure may
cause substantial short-run unemployment. Moreover, such investments will pose the
social welfare problem that some people will gain and others will lose. Those who
expect to lose will resist change, and being a relatively small identifiable group, each
of whom stands to lose significantly, they may well be able to organise themselves
into an effective political lobby group. Implementing economic growth policies is
not likely to be politically easy therefore.
In the case of the fisheries sector, two of the factors determining economic growth
performance have particular significance. First, there is the issue of free trade and its
corollary the liberalisation of trade, and second, there is the issue of dependence on
natural resources and primary products.
Liberalising trade to move towards free trade is recognised as a general factor
favouring economic growth. However, in the case of fisheries, the impact of such
liberalisation depends crucially on the fishery management structure in place. Many
fisheries around the world remain in conditions that approximate to free and open
access. In such cases, it can be demonstrated that liberalising trade is likely to have
perverse, counter-intuitive impacts. In particular, the fish-exporting country is likely
to lose from liberalisation.
Only if both the fish-exporting and the fish-importing countries have economically
rational fishery management systems in place (examples of such systems are
discussed in the next section) will trade liberalisation be unequivocally beneficial.
The second difficulty is that economic research suggests that heavy dependence by
countries on natural resources, such as fish, reduces economic growth (regardless of
how dependence is measured, e.g. % of GDP, % of exports). A number of
explanations have been put forward to explain this somewhat surprising result. In the
case of fishing, the most plausible explanation seems to be simply the fact that until
recently almost all of the world' fisheries were very poorly managed from an
economic point of view.
Maximising the contribution to economic growth requires therefore two related steps.
First, the focus of fisheries management must be placed far more centrally on the
issue of economic efficiency in the exploitation of fish resources. Second, the way in
which economically-rationally-exploited fish resources can contribute to growth
needs to be clarified.
Whether maximising the economic growth potential of fish resources also maximises
their contribution to poverty alleviation is a slightly different question.
3.4. Fisheries Development and Management
The previous section argued that economic growth is necessary, although not
sufficient, for poverty reduction, and that economically rational fisheries
management is necessary, although also not sufficient, to maximise the contribution
of fish resources to economic growth. This section discusses the problem of
economically rational fishery management.
If fisheries are not managed, and access to them remains free and open, then they
will be overexploited. This overexploitation arise first in its economic dimension of
overcapacity. If economic conditions permit (prices high enough relative to fishing
costs), overexploitation will also occur in its biological dimension of overfishing
(defined for instance as fishing beyond maximum sustainable yield – MSY).
The reason why such overexploitation occurs is because the fish resource is a
valuable capital asset. The implicit return on this asset is called the resource rent.
Under conditions of free and open access, this resource rent is perceived by fishers to
be profit, and drives overexploitation of the fishery.
Over the years, fishery management systems have often focussed on the overfishing
dimension of the overexploitation problem (to the extent of it being widely argued
that fisheries that are not overfished require development rather than management).
This focus has led to worsening of the overcapacity problem.
The key issue for fishery management success is resource rents, and to prevent them
from leading to overexploitation requires that either access no longer be open, or that
it no longer be free (or some combination of the two). As well as explaining
overexploitation, resource rents are a crucial indicator in fisheries. They measure on
the one hand the cost of fishery management failure and on the other the potential
contribution of the fish resource to economic and social welfare. It is very surprising
therefore that so few estimates of resource rent are available.
One reason perhaps for the lack of such estimates is that in order to be able to
calculate resource rents meaningfully, fisheries must be organised into fishery
management units - FMUs (that is, a fish stock, or group of stocks, associated with
the fishers, or groups of fishers, that do or might exploit them). This kind of
approach was promoted by the FAO in the 1980s but its implementation has been
very gradual, although there are some signs that it may be speeding up following
success in some countries.
This emphasis on FMUs contrasts with an approach of great importance in relation to
the topic of fisheries and poverty reduction. A standard approach has been to identify
small scale fisheries (SSF or artisanal fisheries as they are sometimes called) and to
argue that they require special treatment. However, although the intentions
underlying this approach are laudable, the outcome generally is to disadvantage SSF.
The big problem is that they have no interface with other groups of fishers and find it
difficult to establish and to protect their rights. The FMU approach on the other hand
sees SSF as one among many production technologies within a unit. They can be
managed either on the same basis as other groups within the unit, or may be given
special treatment if it is felt that they must be protected for some reason.
There are few fishery management systems that allow the issue of resource rents to
be dealt with. Under free and open access, the rents are dissipated, going to fund
unnecessary capacity or simply being lost as fish stocks are run down. An
economically rational management system then is one that allows resource rents
either to be capitalised in some way or to be extracted.
Capitalisation of resource rents can occur under use right systems. Two broad use
right systems exist (each with many possible variations) based either on catch or on
fishing effort. The best known example of the former is the individual transferable
quota system and of the latter, vessel licences. In both cases, resource rents will be
capitalised into the price of the use rights (i.e. the price of an ITQ or the price of a
vessel licence, assuming that they are transferable from one fisher to another).
In principle, catch and effort systems are equivalent. In practice, they differ. In some
fisheries it may be practically impossible to control the catch (too many landing
points, too many outlets for the catch) so there may be no option but to adopt effort
control. But where it can be adopted catch control is to be preferred. The reason is
that it is not possible to control all dimensions of effort so one or two dimensions
have to be chosen as proxies (e.g. vessel numbers and engine power). The problem is
that fishers will be given an incentive to expand the use of uncontrolled inputs to
replace the controlled ones in the production of effort, and effort-based management
tends to become therefore an ongoing race between the managers and the fishers.
Despite differences, in both cases resource rents will be capitalised into the price of
rights. If for instance resource rents were to increase, fishers would still seek to
expand their catch (as they would under free and open access) but to do so legally
they will have to purchase use rights, driving up the price of these.
The use of co-management may help the operation of both ITQ and licensing
systems. Community-based management is one form of co-management that is put
forward as a possible solution to the fishery management problem. But such schemes
are largely institutional, the choice of management instruments is no different under
them and the problems faced are similar, although they may help to ensure
An alternative to use rights, either individual or communal, is taxation. Rather than
attacking the free and open access problem through the open part of the problem,
taxation does so through the free part. By correcting fish prices, taxation can force
fishers to take into account the cost of using the fish stock. In this way resource rents
can be extracted. It is difficult however to use taxation as the sole management
An ideal economically rational management scheme probably has elements therefore
of use rights and taxation within a fishery management unit framework. A proportion
of resource rents will be capitalised into the price of the use rights and a proportion
will be extracted. In this way fish resources can contribute to economic growth by
adding to the process of capital accumulation. The capital made available can be
used to undertake investments to help the poor. One advantage of this approach is
that the target group of poor people is independent of fish exploitation itself. Some
economic growth benefits will also come through the fishing activity itself, although
such benefits may not necessarily be concentrated on the poor. The main poverty-
related benefits will appear through potential to fund pro-poor growth
This economic-growth-based approach can be contrasted with an alternative
approach which is to use to resource to provide activities (employment, livelihoods,
incomes) for poor fishers. In very poor countries, or very poor regions of poor
countries, there may be little choice but to follow such a strategy. And once it has
been followed for a while, the Government may become locked into it, because the
number of people involved may become very great. Although providing some
benefits to the poor, this approach creates poverty traps. The target group for such a
policy is necessarily poor fishers only (the poor in the rest of economy are excluded
from benefiting from valuable fish resources but it is not clear why). There is also a
clear limit to the policy, in that not everyone can be a fisher, so that eventually
choices will have to be made, even within the target group.
The point should also be made that the second broad policy approach has often been
chosen by default, being the consequence of fishery management failure rather than
the desired result of government policy. The first policy approach (based on growth)
might be seen as the opportunity cost of the second, but because few estimates of
foregone resource rents are available this cost is usually unknown.
Where the activity-based approach has arisen by default or is no longer considered
desirable, the policy problem will be how to move from one approach to the other.
The transitional period may be very difficult, especially if the activity-based
approach has been pursued for a long period of time.
Amongst other things, the case studies will provide empirical evidence on use of the
two broad approaches. They will also provide evidence of the policy options for
moving from activity-based to growth-based strategies
3.5. Policy and governance
In most countries, economic structure and the policy environment do not remain
constant. Even with respectable rates of growth, the total number in poverty can
increase. And it has done so in many countries because of adverse changes in
economic structure and the absence of appropriate policies by government. In simple
terms, growth does not help the poor unless it reaches the poor. Nor does government
help unless the poor are the beneficiaries of public policies.
The design and implementation of appropriate policies for economic growth,
development, poverty alleviation, natural resource management, fisheries,
management and other areas are major challenges in developing countries. In recent
years, an increased level of research activity in the policy domain in general has
provided a better understanding of how success can be achieved, or in other words,
how the performance of policy can be increased, measured against stated objectives
or other relevant indicators.
An important entry-point for research has been to consider and further develop the
definitions and concepts which underpin this domain, principally - policy, the policy
process and governance.
Policy can be defined as a course of action proposed or adopted by those with
responsibility for a given area (usually government) and expressed as formal
statements or positions. The linear (or rational) model presents policy-making as a
problem-solving process which is rational, balanced, objective and analytical. It is
assumed that policy-makers approach the issues rationally and carefully considering
all relevant information. Policy can also be viewed as the ‘policy process’, which is
not linear, at all, and incorporates a certain fluidity between decision-making,
knowledge and the operationalisation of policy. It can also be thought of as a broad
non-linear course of action, consisting of a web of inter-related decisions which
evolve over time during implementation. Policy is increasingly seen as an inherently
political process, rather than simply the instrumental execution of rational decisions.
Governance can also be defined in different ways. At one level, governance is the
manner in which power is exercised in the management of a country’s economic and
social resources. Governance also refers to the whole array of processes whereby
elements in society (government and non-government) wield power and authority,
and influence and enact policies and decisions concerning public life, and economic
and social development.
The close association between ‘governance’ and ‘government’ is an important entry-
point for considering the role of government, the nature of the state and the impact
on policy-making and implementation in different countries throughout the world. It
also focuses attention on the terms ‘good governance’ and ‘strong and weak states’.
In simple terms, some countries are classified as ‘Developed Countries’ and some as
‘Developing Countries’. Reynolds (1999) after surveying more than a century of
comparative development experience in 40 developing countries concluded that ‘the
single most important explanatory variable [of development] is political organisation
and the administrative competence of government’. A proper use of public resources
and donor transfers appears to be a good indication of good governance. A
government’s impact on development is not simply a function of fiscal resources, but
also a more intangible thing which one can call the ‘quality of government’.
Policy analysis, at all levels (international, national, meso and local), attempts to
assess (e.g. have stated policy objectives been achieved?) and evaluate (e.g. what
factors have affected implementation?) the performance of policy. This is not an easy
exercise given the associated complexity. However, with regards to the relationship
between natural resource management (e.g. fisheries management) and the impact on
livelihoods and poverty alleviation, recent research has helped to identify and
understand a range of important issues which affect policy performance, as follows:
- recognition: is the value of the natural resources sector valued by policy-makers?
- information/assessment: does this support policy and management decisions?
- policy narratives: is there an appropriate conceptualisation of the relationships,
development pathways and options?
- nature of the policy process: is it dynamic, active and willing to adapt and take
hard decisions? Is it transparent, evidence-based and accountable?
- participation: do all relevant stakeholders contribute to policy design and
implementation (through management systems)?
- laws: is there a well-established legal framework? (as a basis for rights and
- institutions: is there an appropriate institutional framework (rules and
- management capacity: is there an appropriate capacity to manage the natural
resources system (technical, financial capacity)?
- political will/desire: is there sufficient political will/desire to manage natural
Finally, given the range of factors which can affect the performance of policy in
important and inter-related areas of natural resource management, economic growth
and poverty reduction, where should the emphasis be placed for future work? Three
areas appear to be particularly important (from the international literature):
- to raise the profile of the ‘environment’ and ‘natural resources’ (re: Millennium
Development Goal 7) within the Poverty Reduction Strategy Papers process; for
fisheries, there is a need to clarify the role of the sector in national development
strategies, and to better understand the level and pathways of benefits flows;
- to develop analytical frameworks linking NR to economic growth and poverty
alleviation, incorporating a full range of factors affecting policy, at different
levels and over time; in fisheries there is a need to broaden the analysis relevant
to planning and management, with particular reference to fisheries as a source of
wealth for economic growth and poverty alleviation;
- to define appropriate policy recommendations and methods of operationalising
policy relevant to maximising the contribution of the environment and natural
resources to development and poverty alleviation; in fisheries, the key issue is
how to improve fisheries management performance in this respect.
4. CASE STUDY TEMPLATE
Template for Case Study Country Reports
(i) General instructions
This template outlines the main issues that case study reports should address. It is
intended to help the orientation of the reports but is not intended to be a
straightjacket. Where necessary, case study authors may develop other areas that are
of particular relevance to their country. In that case, IDDRA should be kept informed
so that it is possible to check the relevance for the other cases.
The purpose of each case study is:
- to present, for each the case study country, empirical evidence concerning the
impact of past and present fish resource exploitation and utilisation patterns for
economic growth and poverty reduction
- to analyse the potential contribution of fish resources to economic growth and
poverty reduction under different (improved) exploitation and utilisation patterns
in the future
- to provide a measure of the economic (opportunity) cost of past and current
policies (in terms of foregone resource rents)
- to identify data gaps and thereby identify priority areas for data collection and
research in the future
- to identify policy gaps and thereby identify areas for policy reform in the future
(iii) Important methodology considerations
Each country report should try to follow the structure consisting of five sections as
shown below. For each section you should consider carefully the objective of the
section, the variables to be considered and the types of information which should be
It is also important that each case study author should carefully consider the
information upon which the case study is based. In advance of collecting and using
information relevant to the study, it is worthwhile spending some time reviewing:
- the possible sources of information – for example, formal records and documents
(e.g. government reports), formal and informal documents from projects (e.g.
project survey reports), key informants (e.g. government officials or experts), and
community leaders (e.g. heads of fishing groups or communities);
- the likely gaps in the records, and the quality and reliability of the information
which is available;
- the best way of making such assessments about the information base, and
developing a strategy for dealing with any weaknesses. For example, for any
specific issue, such as the contribution of fisheries to employment or income, it is
advisable to obtain estimates from a number of sources (government records,
project records, NGOs etc) and then compare them. If the estimates are not a
good match, then it is important to investigate the reason for this, and try to
decide what is the most reliable estimate based on additional sources such as
It is also important to consider how each particular section below (1-5) relates to the
‘key issues’ which have been identified and discussed by the study methodology
report (and presented in detail in the report appendices). As indicated in the
methodology report, the current study aims to focus on a broad range of issues
relating to fisheries management and economic development (poverty), as opposed to
more conventional analyses of fisheries management which tends to emphasise fish
stock management and biology-based approaches. Therefore, one of the major
challenges which you will face in producing your report is to integrate conventional
analyses of fisheries management in your case study country (which will be widely
available through official reports) and the set of key issues identified in the study
The five sections which should make up the case study reports (and which can be
supplemented by additional appendices) are as follows:
1. BACKGROUND (2 to 3 pages, A4, 12 point, single-spaced)
Objective: to provide a general profile of the country (national context); based on
most recent statistics / information and with an indication of trends where possible;
Possible Information sources: Official Government Reports, World Bank country
profile document; or a World Bank Poverty Reduction Strategy Paper;
Key questions / variables to cover might include:
- history, structure and nature of government and national politics;
- important national policy priorities;
- Population (date of census)
- Population growth rate (value%). Is it increasing, decreasing, stable?
- Differences between rural and urban areas? Also coastal areas? Are people coming
to the coast? Where are the large cities?
- Economic structure: importance and growth rates of different sectors
- Balance of payments
- Indicators of national characteristics and development status (political, social,
economic, Human Development Index)
Notes: this should be a brief section, use summary tables and graphics where
possible; include more detailed statistics information in appendices to the main
report; where appropriate identify the reliability of the statistics / information used, if
2. POVERTY (3 to 5 pages)
Objective: to examine the poverty status of the case study country; to explain the
reasons for poverty; and to give an account of the relationship between poverty and
the fisheries sector;
Possible Information sources: Government Reports; National Statistics; Reports of
Research Programmes and Development Agencies; Reports from NGOs; Multi-
Lateral donor documents (e.g. WB-PRSPs); Fisheries Sector Reports and Research
Key Variables / Questions which might be covered:
- How is poverty defined in your country?
- What proportion of the population is estimated to be living in poverty on the
adopted definition? How is this figure changing over time?
- Which economic sectors and/or regions are most affected by poverty? What are the
factors that explain this? (Are there any specific empirical studies that look at these
- Report on any studies that have been undertaken of poverty in general; and also any
studies which have looked at poverty in the fisheries sector.
Notes: The overview of poverty measurement methodology, results and analysis
presented in Appendix A1 will provide an initial guide to the types of issues and
information important for this section. However, it is likely that poverty assessment
in the different case study countries will vary, and the case study authors should try
to highlight any issues specific to their country.
3. ECONOMIC GROWTH (3 to 5 pages)
Objective: to examine the nature and patterns of economic growth of the case study
country, and the contribution of the fisheries sector;
Possible Information sources: Government Reports; National Statistics; Reports of
donor and other international organsaitions;
Key questions / variables to cover might include:
- What are the contributors to economic growth?
- GDP per capita (1980, 1990, 2000, or series)
- What is the fishing sector contribution to GDP, to exports and to other key
economic indicators for your country
- How is the fishing sector defined for these purposes (marine fish catching, inland
fish catching, aquaculture, fish trading, fish processing)
Notes: An overview of economic growth and the relationship to the fisheries sector is
provided in Appendix A2, and raises a range of important issues relevant to this
section including the importance of effective fisheries and the difficulty of measuring
the contribution of environmental resources to economic growth. Each case study
author should try to consider these types of issues within the context of their case
4. FISHERIES DEVELOPMENT AND MANAGEMENT (5 to 10 pages)
Objective: to examine the role of fisheries in development by analysing both
fisheries exploitation (or activity-related) benefits and wealth-related benefits;
Possible information sources: Government Reports; Official Statistics; Reports from
Research Programmes; NGO Reports; Expert Interviews; Interviews with
Community leaders; Interviews with industry leaders;
Key questions / variables to cover might include:
- What are the principal fish resources?
- What are the landed values?
- Give the historical trends if possible?
Fisheries exploitation or activity-related benefits
- How many people are employed catching fish? Can this be broken down by
- What is the average wage of these people? And the variability in wages between
fishers and over time?
- How does this compare with the average wage for comparable activities (define
- What other activities are undertaken with respect to fishing?
- other specify
- How many people are employed in each activity? Breakdown women and men
- What are average incomes and their variability for each activity? Breakdown for
women and men
- Do fish resources play a role in food security? If so, how? How many people are
affected? How is the number changing over time?
- Are fish resources used to provide subsistence livelihoods? If so, how many people
are involved? How is the number changing over time?
- Are fisheries managed on a fishery management plan basis? If so, how are the
Fisheries Management Units (FMUs) defined?
- What are the main FMUs?
- Has resource rent been estimated for any fisheries? If so which? What are the
- Is access limited (restricted) for any fisheries? If so which? How is access limited?
How do new entrants enter the fishery?
- If use rights exist, are they traded? What information is available on their price?
- How much revenue does the Government generate from fishing? What proportion
comes from domestic fishing? How is it raised? What proportion comes from foreign
fishing? How is it raised?
Notes: An overview of some of the key issues relevant to this section is provided by
Appendix A3. Special emphasis is given to the importance of empirical information
to inform the analysis of different fisheries management approaches (re: management
which focuses on activity-related vs. wealth-related approaches). Case study authors
should recognise the importance of this empirical information, and attempt to secure
relevant and high quality data (a key part of the study overall).
5. POLICY MAKING (5 to 10 pages)
Objective: to examine the policy context, policy frameworks and policy processes
relevant to fisheries management and economic development (poverty alleviation) in
each case study country;
Possible information sources: Government Reports; Research Publications; Donor
and international organisations reports; NGO publications; Key interviews with
Government staff; Key interviews with actors in the fisheries sector; Key interviews
with other policy experts;
Key questions / variables might include:
- How is poverty issue addressed at macroeconomic level? (Is there a Poverty
Reduction or Eradication Plan)
- What other policies have been applied to address poverty? (e.g. Factor and product
market policies? Pro-poor spending on infrastructure? Policies to direct patterns of
- What are the government’s objectives?
- Which organisations (Government, non-Government, civil society) are responsible
for the design and implementation of policies and instruments for poverty reduction?
- What are the main instruments being used?
- What evaluations have been undertaken of these policies and instruments? How
successful are they judged to have been? What factors explain their success or
- How does the fishing sector figure in the policy? Is it specifically mentioned in the
PRSP or similar?
- How does the view of the fishing sector differ between different Ministries (e.g.
fisheries versus finance) and how are conflicting views reconciled?
- How is linkage between fish resources, economic growth and poverty reduction
articulated to policy makers?
- What socio-economic studies have been undertaken of the fisheries sector and how
are the results implemented in policy terms?
- What role is played by NGOs, fisher and other organisations and civil society in
- What factors affect the participation of poor people in economic growth activities,
policy-making and implementation?
- Are there any data or research gaps relevant to improved policy-making that need
to be addressed?
- What are the important areas for policy development in the future with reference to
the linkage between fisheries, economic growth and poverty reduction?
- What factors are likely to impact on the nature and rate of policy development in
these areas in the future? (constraints)
Notes: An overview of issues relevant to policy and governance is provided in
Appendix A4, and it is important to recognise that policy analysis for many fisheries
in relation to economic development (and poverty reduction) is very limited in most
countries. Case study authors may have to draw upon a wide range of information
sources (and to triangulate between them) in order to produce a succinct overview of
the policy framework (in general) and the factors which affect policy performance.
5. CASE STUDY TERMS OF REFERENCE
The UK Department for International Development (DfID) seeks to increase the
contribution of fisheries to reducing poverty, by encouraging decision makers to
adopt policies and measures that can be integrated in practical ways into broader
poverty reduction processes.
To this end, it has commissioned IDDRA to undertake a study to identify the links
between poverty reduction and fisheries development under different policy
An important part of this study is a number of case studies which will provide
empirical evidence on the role of fisheries in supporting growth and poverty
reduction. The case studies will be undertaken in close collaboration with IDDRA
staff. Case study authors will make the following contributions to the overall study:
1. Comment on the background document, produced by IDDRA, which outlines the
main issues in linking fisheries exploitation and poverty reduction. Comment in
particular on the proposed template for the case study reports, which is included
in the background report as section 4. On the basis of comments received,
IDDRA will finalise the background report and the template.
2. On the basis of the finalised template (attached), write for their case study
country a report of between 8,000 and 10,000 words, supported by appendices
3. Provide, where they are in the public domain, copies of key source documents
(e.g. PRSP or parts thereof relevant to fisheries, Fishery sector strategy
document, Fishery management plans for key fisheries, Studies of rents in key
fisheries, .....). Ideally, these documents should be provided in electronic format
(Word or scanned).
4. Read and comment on the synthesis report and policy brief produced by IDDRA
using the background document and case study material.
Case studies will be commissioned as soon as possible following receipt of
comments and finalisation of the background report and template.
Case study authors should provide a FIRST INTERIM PROGRESS REPORT BY
7TH MARCH 2005. This report should include a status report on the work in
progress, annotations of the template and indications of available background
material. It would be useful if copies of the material referred to in point 3 above
could be supplied by this date.
Case study authors should provide a COMPLETE DRAFT REPORT BY 31
MARCH 2005, plus copies of the material referred to in point 3 above.
Where necessary any revisions to the complete draft report must be completed by 30
6. CONCLUDING REMARKS
The current report is the main output of Phase 1 of the DFID/PASS project ‘The Role
of Fisheries in Poverty Alleviation and Growth: Past, Present and Future’. As a
background document to the study, it provides an overview of relevant conceptual,
theoretical and empirical information in four areas – poverty and development,
economic growth and fisheries, fisheries development and management, and policy
and governance. This information is summarised in the main body of the report
(underpinned by more detailed appendices) and is used to develop a methodology in
the form of a template for a series of national case-studies.
The information presented draws upon on a broad range of literature. This was
considered important in order to provide a good basis for research into the role of
fisheries in poverty alleviation and growth (the key objective). It is intended that the
research should be informed by both fisheries and non-fisheries elements and
perspectives, with the eventual outputs having implications for the fishery sector and
other common pool resources, in terms of ensuring pro-poor growth.
The next phase (2) of the project will involve national case-studies implemented in
eight developing countries using the study template. The resulting studies will be
synthesised into a main report and used to produce a policy brief by June 2005.
A1: POVERTY AND DEVELOPMENT – EVOLVING CONCEPTS
A1.1. INTRODUCTION AND OBJECTIVES
Poverty is a major global problem, with half of the world’s population living on less
than $2/day. In the World Development Report (2000), the World Bank recognised
poverty elimination as the “world’s greatest challenge”. The Organisation for
Economic Cooperation and Development (OECD) has proposed the international
development target of reducing by half the proportion of people living in extreme
poverty by 2015. International development agencies have responded with a wide
range of new plans and interventions, making poverty alleviation the new priority
agenda for these organisations.
In parallel, debate and discussion, and research into key poverty issues has also
increased, covering areas such as poverty measurement, the identification of the poor
and their characteristics, and the investigation of best policy approaches and
interventions for poverty alleviation. This has included an attempt to build upon
related concepts and ideas – for example, what is the relationship between economic
growth and poverty alleviation? – and, the possibility of learning from past
approaches – for example, what is the impact of economic structural adjustment
programmes (SAP) on poverty in particular countries?
An important recent development has been the broadening of poverty definitions and
analyses – to explain poverty by looking at a range of factors (economic, social,
institutional etc) – and to design interventions accordingly. At the same time, there
has been a renewed recognition of the role of economic growth in development, but
greater emphasis has been placed on the distribution of benefits as an important
factor in poverty alleviation (the concept of ‘pro-poor growth’). In the following
brief account, the relationship between the various concepts and ideas, and resultant
policy approaches for poverty alleviation which have emerged over the past 50 years
will be described. In turn, this will be used to identify relevant research priorities and
development approaches, with regards to the role of natural resource management,
and fisheries in particular (the focus of the current study).
There are three sections to follow. The first section addresses the fundamental
question ‘Who are the poor’ by examining the various methods used for measuring
poverty. The second section presents some empirical data from a selection of African
countries derived from the application of these methods. The third section addresses
the second fundamental question ‘Why are people poor?’ and what policy
approaches are used for poverty alleviation.
A1.2. WHO ARE THE POOR? METHODS FOR MEASURING POVERTY
There are three broad categories of methods used to measure poverty – nutrition-
based methods, basic needs and composite indicators, and income-based measures –
as shown in Table 1.
First, in the case of nutrition-based methods, a poverty index can be generated by
measuring the extent of food energy deficiency. There are two ways of doing this: (i)
direct computation – by recording the energy intakes of individuals relative to
requirements (e.g. in 1948, FAO started out by setting an average daily calorie intake
requirement for adults of 2,600 calories, an approach which has undergone various
refinements since then); (ii) anthropological studies – which compare an individual’s
physiological condition with calibrated norms (e.g. for children – underweight
condition connected with poor nutrition in the past can be gauged by measuring
height-for-weight; for adults, various Body Mass Indices, BMI, are often employed).
Overall, nutrition-based methods can give some idea of national malnourishment, but
fail to capture the magnitude of the nutritional shortfall. In the case of direct
computation, there are various limitations for policy-making (e.g. the measurements
represent a ‘snapshot’ of calorie intake at one point in time). For anthropological
studies there are also various weaknesses (e.g. it is difficult to compare calibrated
norms between countries).
Second, the basic needs and composite indicator methods arose in the 1970s in an
attempt to reflect that human needs include food, but also health, education, water,
shelter and transport (Streeten et al. 1982, p.7). The challenge was how to identify,
measure and aggregate appropriate indicators into a common index. Three
approaches evolved (i) UN Research Institute on Social Development (UNRISD)
Index (1970) which included 19 core indicators forming a composite development
index. This was judged to be more sensitive than income-based indices to changes in
economic and social conditions, but its principal weakness was that it tried to
measure development based on structural change rather than human welfare
requirements; (ii) the Physical Quality of Life Index (PQLI) (after Morris, 1979)
proposed three key variables as a basis – life expectancy at age 1, infant mortality,
and literacy levels. While this index permitted international comparisons, it was
criticised for the variables included, and the arbitrary allocation of weightings to
each; (iii) the UN Human Development Index (1990) was designed to take into
account relative international income levels, and also how such incomes are spent.
Computed annually by the UNDP since 1990, it combines proxies for individual
living standards (real GDP per capita), longevity (life expectancy at birth) and
knowledge (educational attainment). The resulting index figure per country are
between 0 (lowest level of development) and 1 (highest level). Overall, the HDI has
Table.1: Poverty measurement methodology – an overview (synthesized from
Poverty Method Comments
Nutrition-based Focus: Poverty index by measuring extent of food - overall give some idea of prevalence of
energy deficiency – 2 approaches; national malnourishment, but fail to capture
magnitude of nutritional shortfall;
(i) Direct computation: by recording the energy
intakes of individuals relative to requirements: Some limitations for policy-making:
- represent a ‘snapshot’ of calorie intake at
- FAO World Food Survey (1948): set an average one point in time;
daily calorie intake of 2,600/person; - global impact of disease is presumed
- FAO WFS (1952): level adjusted down to reflect constant;
‘needs’ in developing countries; - no account of behavioural adaptation to
- FAO WFS (1974): minimum nutritional low calorie intake;
benchmark of 1.2 Resting Metabolic Rate - underplays importance of nutrients (other
(RMR); to prevent stunted growth and health than calories);
- FAO WFS (1985): 1.4 RMR for active working - give a general indication of nutrition and
- FAO WFS (1996): attempts to integrate info on - some limitations:
metabolic rates and anthropometric studies to - majority of studies tend to focus on
give robust assessment of nutritional deficiency; vulnerable members of society (due to
(ii) Anthropological studies: compare an individual’s - difficult to compare calibrated norms
physiological condition with calibrated norms; key between countries;
areas: - behavioural adaptation can affect
interpretation of results;
- children: (I) wasting – low weight for height
(starvation); (ii) stunting – low height-for-age
(prolonged under-nutrition); (iii) underweight – low
weight-for-age (past under-nutrition or current
- adults: use of Body Mass Indices (BMIs)
Basic needs and Focus: human needs include food, but also health,
composite education, water, shelter and transport – problem of
indicators how to identify, quantify and aggregate into an index;
- more sensitive than income-based indices
(i) UN Research Institute on Social Development to changes in economic and social
(UNRISD) Index (1970) – 16 core indicators forming conditions; emphasis on measuring
a composite development index; structural change;
- permitted international comparisons;
(ii) Physical Quality of Life Index (PQLI) (Morris, criticised for variables included and
1979) – 3 variables: life expectancy at age 1, infant weightings (arbitrary?);
mortality and literacy levels;
- further extended concept of poverty, but
(iii) UN Human Development Index (1990 -) – some weaknesses: (I) some factors not
combines proxies for individual living standards (real included (e.g. governance); (ii) weak on
GDP per capita), longevity (life expectancy at birth) politics; (iii) data reliability (poor people
and knowledge (educational attainment); the resulting really included?); (iv) how are the individual
index figure per country are between 0 (lowest level factors weighted?
of development) and 1 (highest level).
Income-based Background: recent research has re-confirmed the - income based poverty measures reported at
measures importance of income-based poverty indicators; Dietz national level are frequently decomposed to
and Gibson (1994) have shown a high degree of indicate how poverty levels vary according
correlation between GNP per capita and HDI; to place of residence (e.g. urban/rural),
Isenman (1980) and Sen (1981) also note the sector of employment (e.g. agriculture,
correlation between BN-based indicators and average industry, etc), gender and educational level
real incomes; Dasgupta and Wheale (1992) disclose of household head. The resultant poverty
that political and civil liberties are positively related profiles enable policy-makers not only to
to real incomes per capita; identify which societal sub-groups are
vulnerable, but also to assess how proposed
Focus: to quantify the number of poverty alleviation measures may impact on
individuals/households falling below selected poverty such ‘at-risk’ groups;
and destitution lines;
- income-based measures (of income
Note: 4 key decisions underpin all measures of this shortfalls) also have limitations as a policy-
type: (I) how to establish an actual poverty line; (ii) guiding tool: (I) inflation needs to be taken
how to identify the extent of household poverty; (iii) into account in determining and re-
how to treat non-traded goods and services; (iv) how calculating poverty lines; (ii) provision of
to deal with under-reporting or mis-reporting of public goods and services must also be
income; treated carefully, and the social value
aggregated to reflect the true level of
Three measures: household income; (iii) inter-country
(i) The Headcount measure: the proportion of the comparisons must be treated with care (e.g.
population (persons or households) whose US$1/day is a useful indicator, but cannot be
consumption level falls below the specified poverty used to assess progress at the country level
line; or guide policy formulation).
(ii) The Poverty Gap (PG) measure: quantifies the
extent to which a poor person or household falls
below poverty line;
(iii) Foster-Greer-Thorbecke (FGT) (1984) measure:
or the squared poverty gap measure determines
income variation amongst the poor;
Indicators of the dimensions of relative poverty (or
- US$1/day or US$2/day measures;
- Bottom decile or quintile: proportion of income
received by the poorest 10 or 20 per cent;
- Top decile or quintile: proportion of income in
top 10 or 20 percent;
- Gini Coefficient (and Lorenz Curve) from 1
(perfect inequality – one person has all the
income) to 0 (income is divided equally amongst
helped to further extend the concepts of poverty and development, but it also has
some weaknesses (e.g. some key factors such as governance are not included, there
are questions about the reliability of the underlying data, and the weightings of
Third, with regards to income-based measures, according to Thorpe (2004), although
the shortcomings of income-based measures (e.g. failure to include non-marketed
production and remedy distorted prices) originally spurred attempts to develop
complements and alternatives – and led to the emergence of the Basic Needs (BN)
approach and the HDI – subsequent research has re-confirmed the importance of
income-based indicators (e.g. Dietz and Gibson (1994) have shown a high degree of
correlation between GNP per capita and HDI; Isenman (1980) and Sen (1981) also
note the correlation between BN-based indicators and average real incomes;
Dasgupta and Wheale (1992) show that political and civil liberties are positively
related to real incomes per capita). Overall, then, income-based measures aim to
quantify the number of individuals or households falling below selected poverty and
destitution lines. According to Thorpe (2004), there are four key decisions which
underpin all measures of this type: how to establish an actual poverty line, how to
identify the extent of household poverty, how to treat non-traded goods and services,
and how to deal with under-reporting or mis-reporting of income. There are three
main measures: (i) the Headcount measure – the proportion of the population
(persons or households) whose consumption level falls below the specified poverty
line; (ii) the Poverty Gap measure – the extent to which a poor person falls below the
poverty line; (iii) the Foster-Greer-Thorbecke (FGT) measure (or the squared poverty
gap measure) – determines income variation amongst the poor.
Other indicators of relative poverty (or inequality) can also be calculated including:
the ‘US$1/day’ or ‘US$2/day’ measures; income received by the top and bottom
deciles of the population; and Gini Coefficient (or Lorenz curve) expressing perfect
inequality (value =1) to perfect equality income (value =0).
The reporting of income-based measures at national level provide a general overview
of poverty for policy-makers. They are also useful when decomposed to indicate how
poverty levels vary according to place of residence (e.g. urban/rural), sector of
employment (e.g. agriculture, industry etc), gender and educational level of the
household head. This profiling exercise can help policy-makers to identify which
societal groups are vulnerable and how poverty alleviation interventions might
impact on such ‘at risk’ groups.
However, income-based measures also have certain limitations for policy-makers.
For example, the actual calculations must be transparent to see how factors such
inflation and the value of public service provision is treated. In addition, care is
needed with international comparisons involving measures such as the US$1 or
US$2/day incomes; although these are useful indicators of global progress, they
cannot be used to assess progress at the country level or guide policy-formation.
A1.3. EMPIRICAL EXAMPLES OF POVERTY MEASUREMENT
In this sub-section, empirical examples of the results of poverty measurements, using
the methods described above, from an arbitrary selection of countries in Africa are
provided by way of illustration.
First, Table 2 shows the prevalence of undernourishment (using a nutrition-based
method). The countries with highest prevalence are Somalia, Eritrea, Burundi and
Mozambique (percentage terms) and Ethiopia, Tanzania, Kenya and Mozambique
(absolute numbers). Whilst Benin, Burkina Faso, Ghana, Mali, Mauritania, Nigeria
and Senegal have all seen the undernourished proportion of their population fall
between 1979/81 and 1995/7, the reverse is true for Somalia, Tanzania, Madagascar,
Namibia and Mozambique.
Second, Table 3 shows results using the Human Development Index (HDI), its
components and the Gender Development Index (GDI). In general, Africa comes out
relatively badly under the HDI, with African countries occupying the last 28 places
in this global league table. In Table 3, Ghana (119) and Kenya (123) have the highest
rankings, and Burundi (160) and Burkina Faso (159) have the lowest. In general, for
Africa, Mauritius (63) is highest followed by Cape Verde (91) and South Africa (94).
Table 2 Prevalence of undernourishment in a selection of African countries
Pop 1996 Undernourishment in Total Population
Number Propn Propn Propn
1995/7 1979/81 1990/2 1995/7
Benin 5.5 0.8 36 21 15
Burkina Faso 10.7 3.2 64 32 30
Burundi 6.3 4.0 38 44 63
Eritrea 3.3 2.2 NA NA 67
Ethiopia 56.8 28.7 NA NA 51
Ghana 18.2 2.0 61 29 11
Kenya 27.8 11.4 25 47 41
Madagascar 14.2 5.6 18 34 39
Mali 10.2 2.9 59 30 29
Mauritania 2.4 0.3 35 15 13
Mozambique 17.9 11.3 54 66 63
Nigeria 101.4 8.3 40 13 8
Senegal 8.6 1.5 19 19 17
Somalia 8.5 6.2 55 70 73
Tanzania 30.7 12.3 23 30 40
Notes: Numbers are in millions, Popn are percentage figures. NA or non-availability of information.
Source: FAO (1999; Table 1)
Table 3 Human Development Index (HDI), its components and the Gender Development
HDI Life Adult Lit Enrol (%) GDP GDI
Rank Expect (%)
Benin 147 53.6 39.0 45 933 134
Burkina Faso 159 46.1 23.0 23 965 144
Burundi 160 40.6 46.9 19 578 145
Eritrea 148 51.8 52.7 26 880 133
Ethiopia 158 44.1 37.4 27 628 142
Ghana 119 56.6 70.3 42 1,881 108
Kenya 123 51.3 81.5 51 1,022 112
Madagascar 135 52.2 65.7 44 799 122
Mali 153 51.2 39.8 28 753 138
Mauritania 139 51.1 41.6 41 1,609 126
Mozambique 157 39.8 43.2 23 861 141
Nigeria 136 51.5 62.6 45 853 123
Senegal 145 52.9 36.4 36 1,419 130
Somalia - - - - - -
Tanzania 140 51.1 74.7 32 501 124
Notes: Life Expect. Is life expectancy at Birth (1995); Adult literacy rate is the percentage aged 15 and
above (1999). Enrol. Is the Combined primary, secondary and tertiary gross enrolment ratio for 1999. GDP
is GDP per capita (US$ adjusted in PPP terms, 1999), GDI is the Gender-related Development Index.
Source: UNDP (2001: Tables 1 and 21)
Third, Table 4 presents the most recent income-based estimates for poverty in Africa.
At a national level, over half of the populations of the following countries were
below the poverty line – Burkina Faso, Madagascar, Mauritania and Tanzania. The
converse was true for Benin, Burundi, Ghana, Kenya, Nigeria and Senegal (over
50% population above the poverty line). Interestingly, for all countries, where data
were available in Table 4, the level of poverty was higher in rural compared to urban
Table 4 Population below the Poverty Line (Most Recent Surveys)
Year Percentage below Line
Rural Urban National
Benin 1995 - - 33
Burkina Faso AAET 68.0 44.3 64.1
Burundi 1990 - - 36.2
Eritrea - - - -
Ethiopia - - - -
Ghana 1992 34.3 26.7 31.4
Kenya 1992 46.4 29.3 42.0
Madagascar 1993/4 77.0 47.0 70.0
Mali - - - -
Mauritania 1989/90 - - 57.0
Mozambique - - - -
Nigeria 1992/3 36.4 30.4 34.1
Senegal AAET 49.7 40.9 46.1
Somalia - - - -
Tanzania 1991 - - 51.1
Notes: AAET in the year column refers to data sourced from Ali and Thorbecke (2000: Tables A6 and A7);
Source: World Bank (2000, Table 4);
Fourth, Table 5 presents the poverty measurements for selected African countries
compared to International Poverty Lines. Mali and Nigeria have the highest
percentage of their populations (70-90%) living below the US$1 and US$2/day lines.
Table 5. International Poverty Lines (Relative Poverty)
Survey Year US$1 a Day US$2 a Day
% Pop Poverty Gap % Pop below Poverty Gap
below (%) (%)
Benin - - - - -
Burkina Faso 1994 61.2 25.5 85.8 50.9
Burundi - - - - -
Eritrea - - - - -
Ethiopia 1995 31.3 8.0 76.4 32.9
Ghana - - - - -
Kenya 1994 26.5 9.0 62.3 27.5
Madagascar 1993 60.2 24.5 88.8 51.3
Mali 1994 72.8 37.4 90.6 60.5
Mauritania 1995 3.8 1.0 22.1 6.6
Mozambique 1996 37.9 12.0 78.4 36.8
Nigeria 1997 70.2 34.9 90.8 59.0
Senegal 1995 26.3 7.0 67.8 28.2
Somalia - - - - -
Tanzania 1993 19.9 4.8 59.7 23.0
Source: World Bank (2000: Table 4) D-38
Fifth, Table 6 shows the results for Inequality in Africa (income-based). For
example, in Nigeria, Mali and Burkina Faso, the richest 10% of the population
account for about 40% of total national income/consumption, whereas the poorest
10% account for 1-2% of total national income, with Gini Coefficients of about 0.5
or above reflecting this level of inequality.
Table 6. Inequality in Africa
Survey Year Poorest 10% Poorest 20% Richest 10% Gini Coefficient
Benin - - - - -
Burkina Faso 1994 2.2 5.5 39.5 0.482
Burundi 1992 3.4 7.9 26.6 0.333
Eritrea - - - - -
Ethiopia 1995 3.0 7.1 33.7 0.40
Ghana 1998 2.4 5.9 29.5 0.396
Kenya 1994 1.8 5.0 34.9 0.445
Madagascar 1997 2.2 5.4 37.3 0.46
Mali 1994 1.8 4.6 40.4 0.505
Mauritania 1995 2.5 6.4 28.4 0.373
Mozambique 1996/97 2.5 6.5 31.7 0.396
Nigeria 1996/97 1.6 4.4 40.8 0.506
Senegal 1995 2.6 6.4 33.5 0.413
Somalia - - - - -
Tanzania 1993 2.8 6.8 30.1 0.382
Notes: The Poorest/Richest columns refer to this decile/quintiles share of total income / consumption.
Source: UNDP (2001: Table 12)
Finally, before leaving this section, it is important to re-emphasise the complexity of
poverty measurement. Thorpe (2004) in his overview, leaves this to Szekely et al
‘So how much poverty is there…? The answer is that it depends. It is largely driven
by the choice of equivalence scales, assumptions about the existence of economies of
scale in consumption, the way in which missing and zero incomes are treated, and by
the way in which the data is adjusted or not for mis-reporting. It also depends on the
definition of the poverty line, on the index chosen to summarise the information, and
on other choices…’
A1.4. WHY ARE PEOPLE POOR? AND WHAT POLICIES ARE NEEDED
FOR POVERTY ALLEVIATION?
The poverty measures presented above provide an indication of the scale of the
problem which needs to be addressed. They cannot provide any explanation on why
people are poor or why poverty is so significant in particular countries. Clearly, in
order to address poverty through specific policy actions, it is essential to understand
the circumstances and factors which have led to this state. Since the 1950s,
development economists have attempted to provide this understanding, leading to a
series of development theories, which have been used to varying degrees by national
governments and bi-lateral and multi-lateral assistance agencies to formulate and
implement policies for development and poverty alleviation. In the following section,
a brief overview will be presented of the evolution of development theory, and the
resultant policy approaches which have emerged and have been applied, with
particular reference to natural resources, agriculture and fisheries.
It is important to note that despite the fact that over 1 billion people are living in
poverty today, the past 25 years have also seen unprecedented progress in the
developing world. For example, per capita income has doubled, life expectancy has
increased by ten years, and infant mortality rates have been halved. However, this
overall pattern conceals an extremely uneven pattern of progress – while East Asian
countries have made significant progress, 36 countries (19 in Sub-Saharan Africa)
are poorer today than they were a generation ago.
Thirlwell (1994) proposes that four types of low-income countries (with high levels
of poverty) can be distinguished:
- countries with low per capita incomes but experiencing rapid progress and with
enormous future potential based on indigenous resources;
- countries with rising per capita incomes but with less hope of rapid self-
sustaining growth because of resource limitations;
- countries rich in resources, but with per capita income still relatively stagnant;
- countries with a stationary per capita income and with little prospect of raising
From one perspective, this simple classification emphasises that a rise in real national
income (i.e. economic growth) is an important basis for development (and the
alleviation of poverty). However, in recent years, many development economists
have stressed that development must imply more than just economic growth, and
should be a sustained secular rise in real income accompanied by changes in social
attitudes and customs which have in the past impeded economic advance. Meier
(1995) explains that economic development is not simply economic growth
‘Development involves growth plus change, that is, there are certain qualitative
dimensions in the development process that extend beyond the growth and expansion
of the economy. The qualitative dimensions will manifest themselves certainly as the
improved performance of factors of production and new technologies, but also
through the development of new institutions, and a change in attitudes and values’
The way in which development theories and associated policies have emerged in the
past 50 years has been characterised by a number of re-curing themes, as follows:
- the long-time debate over the role and relationship between economic growth and
increases in welfare at the national level;
- overlapping (and often confusing) definitions and usage of the terms economic
growth, development, economic development and sustainable development;
- the emergence of ‘poverty’ as a specific topic and policy area;
- the difficulty of integrating macro- and micro-level study findings and policy
- the varying roles given to natural resources sectors (including agriculture and
fisheries) in development and poverty alleviation;
It is possible to identify at least eight phases of development theory and policy
evolution since 1950. Table 6 provides a detailed overview of these phases with
particular reference to agriculture and fisheries policy in developing countries (A
detailed explanation of these phases can be found in Neiland 2001). In summary,
however, development thinking has centred on the following themes:
First, economic growth and poverty reduction – what have we learned from the past?
- it was initially assumed that development was synonymous with economic growth,
and that economic growth leads to poverty reduction. This seemed to be confirmed
by the experience of many East Asian countries during the 1970s and 1980s. In other
words, by introducing the policies for economic growth which had worked in E.Asia,
to other parts of the world, poverty alleviation would soon follow. This centred
mainly on policies for structural adjustment or neo-liberal programmes, designed to
promote broad-based economic growth and human capital development, which were
supported by the World Bank and IMF. However, despite some initial success, the
SAP also attracted widespread criticisms – it was found that a standard SAP policy
package could not be easily applied to the countries of the South, especially in Africa
where human, institutional, economic and infrastructure barriers were significant;
also SAP requires a relatively long transitional period (3-10 years?), with identifiable
human costs that inordinately burden the low income groups, in addition to the
uncertainly over the linkage between economic growth and poverty reduction in
many countries. In other words, could it be assumed that economic growth would be
pro-poor in a majority of situations?
What other lessons does the development record of the past 50 years reveal? In
general, many commentators indicate that there is room for cautious optimism in
most situations. The literature (e.g. Grindle, 1991; Lal, 1995; Meier, 1995; and
Sutton, 1999) indicates that ultimately the major issue is the quality of government
policy-making and the role of politics in determining that quality. There are many
dimensions to this relationship, as follows:
(i) Political stability: it is difficult to say what type of political regime is best for
development, but political instability matters – political instability hinders
(ii) Markets: They appear to be a necessary (but not sufficient alone) for
democracy; decentralisation of power in markets prevents political
(iii) Domestic constituency: Policy reforms depend on the emergence of
constituencies (associations of citizens who organise themselves with a
common objective in mind);
(iv) Strong/weak states: More significant that the strength of the state is the
quality of the state-craft (or governance) – the quality of policy decisions,
their credibility, their transparency, and the administrative capacity to
(v) Change: This can occur for various reasons including the rapid emergence of
enlightened leadership and technocrats, or the slower and more subtle
changes that are possible through the political reform process.
Second, access to benefits must complement the generation or availability of benefits
- the implementation of the SAP and the investigation of its impact, particularly in
Africa, led to a better understanding of the mechanisms by which people and
households in developing countries can become vulnerable to impoverishment, or
alternatively, how they prosper and capitalise on new opportunities which arise.
Fundamentally, the capability to access economic benefits is crucial, and this will be
determined by the person’s or household’s position in society. Sen (1981) asked
‘why did people starve in conditions of plenty?’ The answer was entitlement collapse
– starvation could not simply be equated with food shortages (a production problem),
but could equally be a consequence of a lack of purchasing power (a trade/exchange
failing). According to Sen (1981)
“A person’s ability to command food…depends on the entitlement relations that
govern possession and use in that society. It depends on what he owns, what
exchange possibilities are offered to him, what is given to him free, and what is taken
away from him” (p.154-155)
Building upon Sen’s and other work, the emergence of new, broad-based and multi-
disciplinary approaches to poverty analysis, and in particular, the sustainable
livelihoods approach and techniques such as poverty profiling, have opened up a
wide debate on how poverty should be measured, assessed and deal with. For
example, the World Bank appears to have complemented its conventional approach
(income poverty) with a more multi-dimensional model based on a capital asset
framework, as explained by Radoki (1999):
‘The crucial determinants of households’ ability to achieve increased well-being are
their access to capital assets and the effects of external conditioning variables which
constrain or encourage the productive use and accumulation of such assets’ (p.322)
Third, policy approaches for dealing with the complexity of poverty – there has been
an increasing level of political attention and financial commitment to international
development and poverty reduction in the past five years leading to the adoption of
the Millennium Development Goals and the Poverty Reduction Strategy Paper
approach by most international agencies. Lopez (2004) also observes that at the same
‘there is an on-going debate over the elements that should be at the center of any
sensible poverty reducing strategy. Should such a strategy have a growth bias or
instead mainly concentrate on empowering the poor to benefit from growth? Is
inequality affected in general by growth? How does existing inequality affect the
impact of growth on poverty, and how does inequality affect growth? More
importantly, which policies should be at the center of a poverty-reducing strategy?”
The topic of ‘pro-poor growth’ has emerged has emerged in recent years and there is
an increasing level of research activity attempting to better understand its meaning
and application. Lopez (2004) on the basis of his wide-ranging review ‘Pro-Poor
Growth: A review of what we know (and what we don’t)’ reaches the following
There seems to be a general consensus in a few areas:
(i) Growth is fundamental for poverty reduction, and in principle growth as such
does not seem to affect inequality;
(ii) Growth accompanied by progressive distributional change is better than
(iii) High initial inequality is a brake on poverty reduction;
(iv) Poverty itself is also likely to be a barrier for poverty reduction;
(v) Asset inequality seems to predict lower future growth rates;
(vi) Education, infrastructure and macroeconomic stability seem to positively
affect both growth and distribution of income;
Lopez continues ‘Beyond this, there seems to be little agreement. We still do not
know enough about the potential impact of income inequality and redistribution on
growth, and we know very little about the potential impact that a number of policies
(trade, financial sector liberalisation, fiscal adjustment among others) have on
inequality in general.
DFID (2004a/b) in two recent briefing sheets define pro-poor growth (the absolute
‘…the average growth rate of the incomes of poor people’ (p.1).
It is interesting to note that this is an ‘income-defined’ measure of poverty status (as
opposed to more broadly-based poverty indicators or approaches). The absolute
definition of pro-poor growth considers only the incomes of poor people. DFID
(2004) explain that
‘the ‘pro-poor’ growth banner is useful because it aligns economic growth with
changes in the well-being of the poor. This helps to build coalitions between
developing–country governments, the private sector and donors. In particular, it
makes clear that policy-makers do not have to choose between ‘pro-poor growth’ and
pro-poor’ policies. The two outcomes overlap because most policies that increase
growth also reduce poverty, and many policies that are effective for reducing poverty
also increase growth’ (p.3)
Another important dimension is that of pro-poor growth and inequality – a
preference for the absolute definition of pro-poor growth does not imply that
inequality should be ignored in the design of poverty reduction strategies. Indeed,
policy-makers should integrate overall growth rate with changes in inequality to find
the most pro-poor policy outcomes.
So what are the policies needed to raise the rate of pro-poor growth? DFID (2004b)
proposes four broad conditions as follows:
(i) Create strong incentives for investment;
(ii) Foster international economic links;
(iii) Provide broad access to assets and markets;
(iv) Reduce risk and vulnerability;
To elaborate more on these four points, first, private investment is essential for
growth, and governments have an important role in facilitating this by providing a
stable and secure national context (e.g. by putting in place sound macro-economic
policies and protecting legal rights). Second, the integration of the world economy
offers opportunities for developing countries, as new markets, business partners,
jobs, goods and services become available. Both policy and non-policy barriers (e.g.
tariff barriers and transport infrastructure) need to be overcome to promote
international trade. Third, people need access to a broad range of assets (human,
physical, financial, natural and social), and government can help (e.g. widespread
schooling of good quality and access to primary health care increases the poor’s
human assets). People also need access to a wide range of markets (e.g. input,
consumable and labour markets), and governments can again help to lower the main
barriers (e.g. transportation infrastructure and social structures). Fourth, measures are
needed to reduce the effects on poor people of risk, vulnerability and adverse
personal circumstances. For example, governments can do this by pursuing stable
economic policies, or by schemes which broaden access to assets and markets for
poor households (helping to smooth out consumption and income).
Finally, it should be noted that the four conditions to promote pro-poor growth
involve both trade-offs and choices. For example, encouraging international trade
may expose rural producers to greater income risks from fluctuating commodity
prices. Given limited budgets, governments face hard choices between expenditure
on health, education and infrastructure investments. Ultimately, success in achieving
pro-poor growth, through these meeting four conditions, will depend on the quality
of a country’s governance – requiring strong political leadership, persistence and
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Agriculture and fisheries development approaches compared, 1950- present
Pha Approach Point of interest Pha Approach Point of interest
1950s I Import Substitution • Prebisch-Singer: “Secular Decline I Expansion of • 1958 1st UN Conference on
Industrialisation (ISI) Hypothesis”; fisheries Law of Sea;
• Lewis “Two-sector model”; (technocratic,
1960s II Role of agriculture in • Jorgensen on “Agricultural Surplus”; modernist & • Production grows at 6% p.a.;
development recognised • “Diffusion model”; productivist) • Discovery of large fish stocks;
• Schultz “Efficient but poor • International fish market
• High yielding cereals perform well • Significant technology transfer
III Green Revolution in SE Asia; to LDCs;
• Significant Aid provided;
1970s IV Radical School • Role of political & institutional • 1973 OAU/NAM approve
structures emphasized; 200mile EEZs;
• Failure of “trickle-down” • 1977 Numerous countries
V Growth-with-Equity recognised; declare 200 mile EEZs;
• Research increases; • 1972-73 Anchovetta crashes
• McNamara speech on poor;
• Basic needs approach;
1980s VI Role of markets/states? • WB re-orientates to economic II Change and • 1982 Convention on Law of
growth approach; adjustment Sea adopted;
• Government-market axis explored; • 1984 FAO Conference on
• State-led development failure Fisheries Development;
VII Structural Adjustment recognised • Evidence of global fisheries
Programme (SAP) • WB shifts to economy-wide support decline;
• Recognition of socio-
economic role of artisanal
1990s VIII Sustainable • Rio Conference on SD; III New • 1995 FAO Code of Conduct
Development, • WTO set up; perspectives for Responsible Fisheries
Endogenous Growth • “Anti-development” outcomes • Community-based approaches
recognised to management
• Poverty alleviation becomes major
2000 Sustainable Livelihoods • Holistic approaches, role of capital • Sustainable Fishing
& institutions Livelihoods (DFID)
Role of NR and
Agriculture in Pro-Poor
A2 ECONOMIC GROWTH AND FISHERIES
There is widespread agreement that economic growth is an important, probably the
most important, factor enabling poverty to be reduced in an economy. DfID (2004)
estimates that many African countries require annual growth rates of 7% if they are
to achieve the Millennium Development Goals by 2015. However, although a
necessary condition, economic growth alone will not be sufficient since there is a
need to ensure that it also contributes to poverty reduction. This view was re-
affirmed by the May 2004 Shanghai Agenda on Poverty Reduction, which argued
that growth is critical for job creation and poverty reduction but it must be pro-poor
and accompanied by investments in poor people through adequate and effective
Given the importance of economic growth, this appendix looks first at the factors
that determine growth and at some explanations why the growth performance of
countries has differed through time. It then looks at some growth issues of particular
relevance to the fisheries sector.
A2.2. THE BIG PICTURE
The fundamental economic principles
Economic growth is a macroeconomic issue. For many years, the factors that
determined economic growth were a settled matter in economics. Broadly speaking,
so-called classical economists beginning with Adam Smith argued that growth
depended on increasing the quantity and the quality of the three main factors of
production: land, labour and capital. But the quantity of land is basically fixed. And
increasing the quantity of labour cannot have much impact on living standards
because it is output per capita that matters. This leaves two major sources of growth:
• Increases in the quantity of capital through saving and investment (capital
• Increases in the quality of land, labour and capital
And the way in which increases could be achieved were through:
• High levels of saving and investment leading to capital accumulation
• Increased efficiency through division of labour and through free trade
(which would effectively increase the size of the market), through
education, through technological progress and through laws and
This theory was challenged in the 1950s by the view that economic growth was
exogenous. It is not worth going into detail here concerning this theory. In essence, it
was argued that many of the factors identified had only a short run, transitory impact
and that in the long run, economic growth depended only on population growth and
technological progress. It was further argued that both of these factors were not
determined by economic factors. The important conclusion was that economic policy
was irrelevant for economic growth.
This exogenous growth theory held sway for a couple of decades, but by the 1980s
was increasingly called into question. In particular, if it were true, how was it
possible to explain the divergent growth performance of countries over long periods
Gradually, the classical economic theory outlined (very briefly) above was
rehabilitated. The main argument was that technological progress is not, in fact,
exogenous but depends on a range of economic factors. Hence, it is endogenous, and
so is economic growth, meaning that economic policy does matter after all, in exactly
the way that classical economists had argued for about 200 years....
Endogenous growth theory, as it is now called, identifies numerous factors
determining economic growth that depend on government policy. These factors are
all to be found at the macroeconomic level. Among the most important appear to be
the following five factors:
• Free trade
• Stable prices
• Private enterprise
• A well-educated and healthy labour force
• Diversified exports without the dominance of a few primary products
Clearly, each of these factors is beyond the scope of any single sector of the
economy. When looking therefore at a sector, such as fishing, the question is how
best can the sector contribute to macroeconomic goals in order to contribute to
It must also be recognised that, whilst achieving economic growth is an important
macroeconomic objective, governments are faced with other macroeconomic
imperatives. In developing countries, these other imperatives may dominate the
debate (the need to provide livelihoods for the poor for instance) and the fisheries
sector may be used in this way, rather than maximising its potential growth
It is important to recognise however that in many countries, the current state of the
fisheries sector is not due to a benign policy intended to help the poor, but rather to
the mismanagement of the sector which has resulted in the impoverishment of
otherwise wealthy fish resources and the creation of poverty traps for large numbers
of poor fishers.
There appear to be very few examples of countries where the macroeconomic role of
the fisheries sector has been evaluated and an appropriate policy determined. Instead,
the history of fisheries management, by and large, is one of fire-fighting, with
attempts to conserve the resource base being by far the dominant policy goal.
Policy reform and economic growth
It is the role of economic theory and empirical evidence to identify the factors that
determine economic growth. Assuming that growth is an objective, it is the role of
the political process to implement the necessary policy reforms in order to generate
the growth. The record of countries is variable in this regard.
One reason for the different economic growth performance of different countries is
perhaps related to knowledge of the factors determining growth. Following the
collapse of communism at the end of the 1980s and the beginning of the 1990s, there
has been general acceptance across the political spectrum of the importance of
market-based economic and institutional reform for growth.
Another reason for different performance is to do with politics. The case of Uganda
is instructive. Idi Amin took power in 1971. Taking the level of real per capita GDP
as 100 then, by the time that he was overthrown in 1979, after 8 years of economic
mismanagement and conflict, the value had fallen to around 65, a decline of one
third. His departure did not make an immediate economic difference, and it was only
when Yoweri Museveni came to power in 1986 that things began to improve. By
1995, real per capita GDP had reached a level of 87 (on the same index), still 13%
below the level it had been in 1970 before Idi Amin took power. The potential for
politicians to make a difference, at least negatively, is clearly immense.
Another difficulty is that many of the policies that promote economic growth are
effectively investments in the sense that they involve some sacrifice now in return for
a gain in the future. But there are important differences. With a private investment, it
is usually the same person who makes the sacrifice and reaps the gain. In the case of
economic growth, however, there is no guarantee that those who make the sacrifice
will be those who reap the gain.
Macroeconomic growth policy may, for instance, involve unemployment in the short
run associated with changes in economic structure. Since most governments have
policies in place to deal with unemployment, they may be reluctant to adopt other
policies which will worsen their performance, even in the short run, particularly
given the election cycle in democratic countries.
Governments are faced with the classic social welfare problem that some will gain
and some will lose. Although in principle the gainers should be able to compensate
the losers, with there still being a net gain, everyone knows that in practice
compensation is hardly ever forthcoming. Moreover, in many cases, the losers are a
small identifiable group, each of whom stands to lose significantly, whereas the
gainers are a large, often unidentifiable group, each of whom stands to make a
relatively small gain. As a result, it is far more in the losers interest to organise
themselves into an effective lobby group to resist change.
Finally, there is the problem that politicians have their own welfare functions to
consider. The theory of public choice argues, in essence, that politicians are more
interested in pursuing policies that will enhance their own welfare than that of their
There are many reasons therefore why reform leading to increased economic growth
may be slow in coming, even if the factors leading to growth are widely recognised.
A2.3. ISSUES CONCERNING GROWTH AND THE FISHERIES SECTOR
Having looked at the issue of growth from the viewpoint of the macroeconomy, this
section looks at two issues concerning economic growth that have particular
implications for the fisheries sector. The first is the relationship between
liberalisation and growth, and the second is the problem of dependence on natural
resources, like fish.
Relationship between free trade and growth in fisheries
A key issue for economic growth in general is liberalisation, in particular free trade
in goods and services. Fishing however is something of a special case.
Whilst liberalisation may be a good thing per se, in the case of fishing perverse
effects may be encountered depending on the fishery management regime. The issue
of liberalising trade in fish products and services has been extensively examined by
Hannesson' "most important conclusion […] is the critical role of fisheries
management for the effect of market liberalisation, whether it be of trade in fish
products, investment, or trade in fishing services" (2001, p.25).
The fisheries management system is important because the gains from trade,
resulting from liberalisation in either processed or unprocessed fish, will be reflected,
to a large extent, in increased (potential) resource rents. The impact of this increase
in resource rent will be the same as if it had come from any other source. To begin
with, it will show up in the operating profits of the fishing industry, providing an
incentive for existing fishers to increase fishing effort as well as for new entrants.
The effect of this incentive will depend on the fishery management system. If there is
no effective control on fishing effort then, in the usual way, such effort will increase
until resource rents are dissipated. If, however, an economically efficient
management system exists, then either the increase in resource rents can be extracted
or it can be capitalised into the price of a use-right (or some combination of the two).
Fishing effort will then increase only to the extent that it is economically rational for
it to do so and the management system will thus result in a sustainable increase in the
wealth that is generated by the fish resource, and hence a sustainable increased
contribution to economic growth.
How exactly do the gains from trade liberalisation appear? If trade is to be
liberalised, the implication is that there is currently some impediment to trade. An
obvious example is a tariff t, in which case fish exporters receive a price p, but fish
importers must pay a price p+t. Many other barriers to trade exist (e.g. quantitative
import restrictions, sanitary requirements etc) but it is possible to reduce any given
barrier to its tariff equivalent. From an analytical point of view, it is sufficient
therefore to analyse what happens in the case of tariffs.
A tariff obviously opens up a price differential between fish exporters and fish
importers. Since exports become more expensive, domestic producers of the same
product (or service) are offered some protection, this being the primary purpose of
tariffs (although at one time they also served as a revenue generating device for
Trade liberalisation closes the price differential. Generally, it might be expected that
prices will rise somewhat in the exporting country and fall somewhat in the
importing country. Liberalisation will increase the gains from trade for both
importing and exporting countries (the exact share of the gains will depend on
demand and supply curves and on other factors such as the relative sizes of the
In the case of fish, however, there is not necessarily a gain for the exporting country,
if that country does not have an effective fishery management system in place. This
counter-intuitive result is not easy to generalise because much depends on the
detailed management arrangements in place in the trading countries.
Consider first, however, a quite typical case of a fish exporting country that has
either an open access fishery, or one which is poorly managed so that access
conditions approximate to open access (so-called regulated open access). Trade
liberalisation will increase export prices. We know from Appendix 1 that an open
access fishery will be overexploited economically (overcapacity) and possibly also
biologically (overfishing). The increase in prices will worsen the overcapacity
problem, and will also increase the exploitation level which may worsen or begin an
overfishing problem depending on the starting point. The fish exporting country is
likely therefore to lose from trade liberalisation.
What happens in the fish importing country also depends on the fishery management
regime that it has in place. If it too operates under conditions of open access, then it
will obtain a double dividend. First, it will gain because it will have more fish
available at a lower price. Second, it will gain because the lower price of fish will
reduce the level of exploitation in its own overexploited fish stocks, enabling them to
recover to some extent.
Similar results are obtained if the fish exporting country is managing its fishery using
an overall quota (TAC) system, without individual quotas. Once the TAC is caught,
the fishery is simply closed. Such fisheries are well known for having overcapacity.
If trade liberalisation occurs with such a fishery, once again the fish exporting
country is likely to lose and the fish importing country gain. In this case, the total
catch cannot change because it is constrained by the TAC. But the increase in fish
price will attract more labour and capital to the fishery in the fish exporting country.
Such increases represent pure waste because no more fish can be landed (because of
the TAC limit). All that will happen therefore is that more fishers using more vessels
will land the same amount of fish in a shorter time.
In the fish importing country, the opposite impact will occur. Fish price reductions
will cause a reduction in fishing capacity (in the long run anyway) leading to the
available TAC being caught with fewer resources. Once again the fish importing
country will get a double dividend, this time in the form of more fish available at a
lower price, and a reduction in inputs devoted to fishing.
Only if both countries have an economically efficient management regime (eg ITQs,
licences or taxation) will standard international trade theory results apply. Where
both have efficient regimes, gains to the fish exporting country will come in the form
of increased resource rents, because higher fish prices will drive up the price of ITQs
or enable higher resource rentals to be levied. The opposite will occur in the fish
importing country. Those fishers who compete with the exporting country will find
their rents reduced. The fish importing country will still gain from having more fish
available at a lower price, but there will be no double dividend in this case.
Impact of natural resources and geography on economic growth
The importance of natural resources, such as fish, to a country is one of many
geographical and other natural factors that may impact upon economic growth. Some
factors, such as whether a country is landlocked or not, are clearly beyond the realm
of policy, but others such as the extent to which, and the way in which, a country
depends economically on natural resources are not.
Economic research suggests the following broad results:
• Being situated in the tropics tends to reduce a country' annual rate of
economic growth per capita by more than 1 percentage point, ceteris
paribus. The main problem seems to be the heat, but the concentration of
malaria on tropical countries is also a factor, as is the AIDS pandemic in
sub-Saharan Africa. In any event, tropical countries tend to be poor
• Being landlocked also tends to reduce growth by about half a percentage
point, ceteris paribus. The fact that there are some very wealthy
landlocked states (Switzerland for instance) does not alter this general
• Heavy dependence on natural resources (oil, minerals, fish, forests and so
on) also reduces economic growth, regardless of how dependence is
measured (eg share of the primary sector in total exports or in GDP).
The inverse relationship between natural resource abundance and economic growth
is at first sight surprising. A number of factors may be put forward to explain it:
• First and foremost, many natural resources have a long history of poor
management. This is certainly the case of fish resources. Although it is
possible to identify examples of successful management, the history of
fisheries management over the past 40 years or so is overwhelmingly one
of failure. This situation has occurred notwithstanding the widespread
move to extended fisheries jurisdiction (200 mile exclusive economic
zones). In some natural resources, the problem (from an economic
perspective) is one of excessive rent-seeking. In the case of fish, however,
as argued in Appendix 1, the primary problem has been the failure to
identify resource rents as the main issue for management.
• Second, dependence on primary exports may keep the real exchange rate
at a relatively high level, preventing the development of non-primary
exports and thereby hindering economic growth
• Third, heavy reliance on natural-resource-based activities (such as
agriculture and fishing) tends to be associated with low levels of saving
and investment and low levels of education. The reason is probably that
the primary sector needs less human capital than the manufacturing and
These factors emphasise the need for the rational economic management of the
fishery sector (and other natural resource sectors) if it is to make its full contribution
to economic growth. The evidence suggests that economic growth is not to be found
in the fishing sector itself but in the use that can be made of the resource rents
available from a well-managed sector.
A related problem is that many countries have not bothered unduly about
sustainability issues in the exploitation of their natural resources. For a while this
gives the impression that such resources are contributing substantially to economic
growth and welfare, but eventually sustainability becomes a constraint.
In the measurement of national income, traditional measurement of economic growth
tends to be too optimistic because it fails to take into account the way in which
natural resources have been depleted in order to deliver the growth. In fisheries, there
is a need to develop accounting systems that take into account the sustainable
management of fish stocks (and the same is true of other natural resources).
Doubtless the best way to do this would be to focus on resource rentals because as
argued in Appendix 3, maximising sustainable resource rentals implies a very
conservative use of resources. However, it will always be possible to do better than
sustainable rentals for a short period of time by running down the capital stock;
hence the need for constant vigilance to prevent the "mining" of otherwise renewable
Traditional evaluation methods underestimate the importance of environmental
resources that are not traded in markets. As a result the economic development of
market-based activities has dominated. For instance, the clearing of important habitat
for fish and other resources in order to build hotels or develop aquaculture facilities
has arisen at least in part because the true economic value of the habitat is difficult to
assess, and often has not been assessed at all.
In addition to the natural environment, the social and cultural environment also
matters for economic growth. Studies highlight infrastructure and good governance
(the quality of government institutions, including the absence of corruption) as being
important factors for growth.
In the case of fish resources and their exploitation, there is both a need for
infrastructure development and a potential contribution to it. Where it is sustainable,
fishing can represent a core economic activity around which it is possible to develop
other economic activities. In Morocco for instance the government has adopted a
policy of concentrating small-scale fishing activities in fishing villages along the
undeveloped southern Atlantic coast as a way of kick-starting economic
development. This policy has led to major infrastructure development, including
villages and roads. Clearly, to be successful in the long run, such a policy relies on
the sustainable management of the fish resource base, at least until the villages are
well enough established that other economic activities can drive them forward in the
absence of fishing.
Because well-managed fisheries often yield very high resource rents (relative to the
costs of fishing), there is scope for rent-seeking of all kinds, including corruption.
The management system requires therefore careful institutional design, including
appropriate control systems and checks and balances, in order to minimise the impact
of rent seeking. A number of countries (New Zealand and Australia for instance)
have shown that it is possible to design such systems.
REFERENCES AND FURTHER READING
Aghion, P. and Howitt, P. (1998) Endogenous Growth Theory. Cambridge, Mass:
Barro, R. (1997) The Determinants of Economic Growth. Cambridge, Mass: MIT.
Chenery, H. (1960) Patterns of Industrial Growth. American Economic Review.
Fisher, A.G.B. (1939) Production: Primary, Secondary and Tertiary. Economic
Hannesson R. (2001) "Effects of liberalising trade in fish, fishing services and
investment in fishing vessels" OECD Papers Offprint No 8, OECD, Paris, France
Harrod, R. (1948) Towards a Dynamic Economics. London: Macmillan.
Keynes, J.M. (1963) Economic Possibilities for our Grandchildren. In his Essays in
Persuasion. New York: WW Norton & Co.
Kuznets, S. (1965) Economic Growth and Structure. London: Heinnemann.
Lewis, A.W. (1954) Economic Development with Unlimited Supplies of Labour.
Manchester School of Economic and Social Studies 22(2): 139-91.
Smith, A. (1976) An Inquiry into the Nature and Causes of the Wealth of Nations.
Indianapolis: Liberty Classics.
Solow, R. (1956) A Contribution to the Theory of Economic Growth. Quarterly
Journal of Economics 70.
A3 FISHERIES DEVELOPMENT AND MANAGEMENT – KEY ISSUES
A3.1. INTRODUCTION AND OBJECTIVES
The purpose of this appendix is:
• to explore the reasons why unmanaged fisheries are overexploited
• to discuss the biological (overfishing and resource unsustainability) and
economic nature (overcapacity and economic waste) of overexploitation
• to consider the options available for fisheries management and their
implications for overexploitation (focus on wealth generation and
• to assess how fish resources might be used in the interests of the poor
A3.2. WHY ARE UNMANAGED FISHERIES OVEREXPLOITED?
A simple fisheries model
The problem of overexploitation can best be understood using a simple model
(Figure 1) of a fishery that combines biological (fish resource) and economic aspects.
When undertaking practical fisheries management, more detailed models are needed,
but the insights from the simple model remain valid as the models become more
The biological side of the model is described by a sustainable yield (SY) curve. If
there is no fishing, the fish stock will settle around its natural equilibrium level and
its net growth will be zero. If the fish stock were smaller than this equilibrium level
for some reason, then the fish stock would exhibit positive growth, pushing its size
back towards the equilibrium level. It is this net growth feature of fish stocks that
offers the possibility for sustainable fishing. If the amount of fish caught at a given
fish stock size equals the net growth, then the stock size will not change and the
situation will be sustainable.
As fishing effort increases, net growth, and hence SY, will increase but at a
decreasing rate. Eventually a stock size will be reached giving the maximum SY
(MSY). If fishing effort increases beyond this point, the fish stock size will be
reduced to such an extent that the SY begins to fall, eventually declining to zero if
fishing effort is increased sufficiently.
The SY curve is shown, in Figure 1, as an inverted parabola. This version of the SY
curve is usually called a Schaefer curve after the biologist MB Schaefer who first
applied this model to fisheries. Other version of the SY curve are non-symmetrical,
the right hand tail declining more slowly than in the case of a parabola, but this does
not affect the bio-economic analysis significantly.
This SY curve can be used as the basis of a bio-economic model if the price of fish
and the cost of catching them is added. To simplify, the price of fish is usually
assumed to be constant, in the sense that it does not vary according to the amount of
fish caught, the assumption being that the fishery under consideration supplies only a
small part of the total market for this species.
In this case, the SY curve is easily transformed into a total revenue (TR), since total
revenue is price times quantity. And given that the price is constant, it can be
standardised to one, so that the SY curve effectively doubles as a TR curve, showing
the way in which revenue generated by the fishery as a whole varies as fishing effort
Finally, exploitation cost must be added to the model. Again in the interest of
simplicity, assume that fishing effort varies by standard vessels being added to or
removed from the fleet. The unit cost of fishing effort is then just the cost of one
standard vessel, and the total cost (TC) is the cost per vessel multiplied by the
number of vessels. In Figure 1, TC is then shown as a straight line beginning at the
origin. If per vessel costs increase (decrease) the TC line will swing to the left (right).
SY, Revenue, Cost
One important point must be noted about the use of cost by economists in these
models. The TC line is assumed to include what is sometimes called "normal profit",
which may be defined as the return that fishing enterprises must earn if they are to
remain in this fishery. From an economic point of view, this level of profit is
considered a cost because if it is not met, fishing will no longer occur (in the long run
anyway), in the same way that if fishing enterprises do not pay for their fuel, they
will not be able to go fishing. This is an important point because it has been, and
continues to be, the origin of much misunderstanding of the bio-economic analysis of
Putting the TR and TC curves together in Figure 1 allows an analysis of what
happens in an unmanaged fishery. The key feature of an unmanaged fishery is that
access to the (very valuable) fish resource is left free and open. If TR is more than
(less than) TC, then fishing enterprises in the aggregate will earn more than (less
than) normal profits, and fishing vessels will enter (leave) the fishery - on the
assumption made here that fishing effort changes through changes in the number of
vessels. The equilibrium point occurs therefore where TR equals TC, with effort
level f1 and sustainable yield Y1.
Economists often refer to this equilibrium point as the zero profit level but this is a
very misleading use of terminology. It is correct from an economic point of view
because profits are defined as being returns over and above normal profits, which as
discussed above are included in TC. What is meant therefore is that fishing
enterprises are earning only normal profits.
Regrettably, those unfamiliar with economics have interpreted "zero profit" through
standard usage of the word "profit" to mean the break-even point of the company. As
a result, the problem with the free and open access has often been, and continues to
It would be better if the free and open access equilibrium were referred to as the zero
resource rent level (and not the zero profit level).
Resource rents and the nature of overexploitation
The fish resource is clearly a valuable asset upon which fishers rely, in the same way
as they rely on other assets, such as fishing capital, or fishing gear. Under conditions
of free and open access, there is a big difference between the different assets
however. For assets such as outboard motors, fishers either own them or pay the
owner in order to be able to use them. In the case of the fish stock, neither of these
situations exists, fishers neither own the stock nor do they pay anyone to use it.
Under such circumstances, it is hardly surprising that the fish stock is overexploited,
but in what sense exactly?
Suppose that in Figure 1, costs are given by the line TC1. Under free and open
access, equilibrium will occur with a fishing effort level f1 where TR equals TC. It
can be seen however that for fishing effort levels between zero and f1 TR exceeds
TC. The vertical difference between TR and TC at each level of fishing effort (and
the corresponding stock size) shows the implicit value of the fish stock. This value is
called the resource rent.
If the fish stock were owned by someone who were leasing fishing rights to fishers
(in the same way that some people own outboard motors that they lease to fishers),
the resource rent is the amount that they could charge at each exploitation level.
Alternatively if the fishers owned the resource themselves, the resource rent is the
return that they would get from ownership.
Under free and open access, because no one owns the fish resource, it appears as a
free good and the implicit resource rents appear to be excess profits to fishing
enterprises. As a result, excess capacity is attracted into the fishery until all resource
rents are dissipated and the zero resource rent equilibrium emerges.
The economic nature of overexploitation is therefore the problem of overcapacity.
The point where the difference between TR and TC is maximised is called the
maximum economic yield (MEY). In Figure 1, because of the parabolic shape of TR,
the MEY level of fishing effort is half of the open access level. In this case therefore
an unmanaged fishery will end up with twice the amount of capacity that it really
Another point may be noted about Figure 1. With the TC line TC1 the unmanaged
fishery is exploited below the MSY level.
This is important because MSY has often been used to define biological
overexploitation. A fishery that is exploited with fishing effort in excess of the level
needed for MSY is said to be over-fished. And whilst fishing effort remains below
the MSY level, the fishery would be considered to be under-fished.
The biological view of overexploitation revolves therefore around the concept of
In the case shown by Figure 1, there would be no biological need for management. In
fact quite the opposite would occur. Attempts would be made to develop the fishery
so that exploitation levels would move towards MSY.
Quite why MSY is of such importance is difficult to fathom. It seems to be based on
a misunderstanding of what constitutes waste in a society. If the fish stock is
exploited below the MSY level, fish are somehow wasted because they are left in the
SY, Revenue, Cost
In most fisheries, over time the gap between fishing revenues and costs has tended to
increase, for instance due to rising real demand for fish and improved fishing
technology. As a result, many fisheries are described by Figure 2, with TC line TC2.
In this case, free and open access leads to overexploitation on both economic and
biological definitions. From a management point of view, if the objective were to
achieve MSY, the goal would be to reduce fishing effort from f2 to fMSY. If the goal
were to achieve the economic optimum, an even greater effort reduction would be
sought to fMEY (not shown on the diagram but equal to half of f2).
It will be noted that in severely overexploited fisheries, the level of resource rent at
MSY and MEY is not very different so that aiming at MSY may not do much
economic damage. Nonetheless, in this model MEY will always be a more
conservative target than MSY (and in practice also, although in theory MEY could
exceed MSY in a dynamic version of the fisheries model if social discount rates were
In both Figures 1 and 2, it is clear that if fishing effort is reduced below the open
access level, resource rents, which in Figure 2 are very substantial relative to fishing
costs, will be generated. Successful fisheries management will depend on what
happens to the resource rents. If they continue to be perceived as excess profits, then
fishing effort will inexorably drift back (or more likely rush back) towards the free
and open access level and the sacrifices which have been made in the name of
fisheries management will be lost (for instance, the often substantial financial
resources devoted to capacity reduction programmes where the impact on resource
rents is not taken into consideration).
The principal conclusions are therefore that:
• resource rents are at the heart of the overexploitation problem in
unmanaged (and also in poorly managed) fisheries
• unmanaged fisheries will always be overexploited in an economic sense,
i.e. they will always have overcapacity
• unmanaged fisheries may also be overexploited in a biological sense, i.e.
they may exhibit overfishing but this will depend on the economic
characteristics of the fishery
• both overcapacity and overfishing are symptoms of the fundamental
problem which is resource rent dissipation. Attempting therefore to
resolve either overcapacity or overfishing problems without addressing
the resource rent issue is doomed to failure in the long run.
A3.3. OPTIONS AVAILABLE FOR FISHERIES MANAGEMENT
Fishery management measures may be introduced for a host of reasons. The most
common objective is to ensure fish stock conservation, but since overfishing is a
consequence of the fundamental resource rent dissipation problem, it is not
surprising that measures aiming only at conservation have had very limited success.
This section looks at fishery management measures that deal with the source of the
problem rather than its symptoms.
Before doing so, two important points might be noted. First, the simplest and
cheapest way of dealing with overexploitation is to prevent it from occurring in the
first place. Given that the economic dimension of overexploitation occurs from the
very beginning of a fishery, a fishery management and development plan should be
implemented as soon as possible with an explicit aims of preventing unnecessary
capacity development and preventing overfishing.
As overexploitation arises from resource rent dissipation due to free and open access
conditions, the development of a policy framework for fishery management requires
that fisheries authorities simultaneously develop policies to limit and/or price access.
Second, before developing a policy to deal with overexploitation, an important step
is to ensure policy coherence by evaluating the impact of current policies, which may
be worsening the overexploitation problem in a number of ways. It must be stressed
that overexploitation arises at the aggregate (fishery) level as a result of perverse
economic incentives perceived by fishers operating in the fishery.
A well-known source of perverse incentives is subsidies and other government
financial transfers. Such financial support to the fishing industry generally, although
not always, results in increased fishing capacity, worsening the overexploitation
problem, other things being equal. Moreover, such support is almost always targeted
at fishing capital, putting small scale fishers who depend more on labour at a
disadvantage. From the perspectives of both overexploitation and poverty, reducing
subsidies in general to fishing is likely to have a positive effect.
Once policies designed to make the problems worse have been corrected, there are a
number of options available to fishery managers.
Catch-based use rights: individual transferable quotas
Individual quotas (IQs) systems have been developed in a number of countries over
the last decade.
Such systems are in principle very simple, although as always the devil is in the
detail. In essence, under an IQ system, the fisheries authorities set a Total Allowable
Catch for the season (or other relevant period). This TAC is then divided amongst
fishers on the basis of their percentage shares in the fishery. Multiplying the TAC by
their percentage shares determines the quantity of fish that each fisher may land
(legally) over the period under consideration.
Where they can be used, IQs have a number of advantages. The most important is
that they enable the resource rent to be capitalised into the price of the right IQ (the
exact way in which this happens will depend on the detail of the system – length of
rights, transferability restrictions and so on). The resource rent will no longer drive
overexploitation of the fishery. And fishers will be given every incentive to avoid
overexploitation because it will reduce the value of their fishing rights.
IQs will remove the incentive to invest in excess capacity, and will provide an
adjustment mechanism for the fishery. Through the transfer of IQs, a country will be
able to get the maximum out of its fish resources since the most economically
efficient operators can increase their shares by trading, giving the less economically
efficient operators a means to leave the fishery.
An IQ system can be very flexible. One criticism levelled at IQs is that they enable
large-scale operators to corner the market. The evidence on this point is mixed.
Sometimes it is the large-scale operators who have the advantage, sometimes it is
small-scale fishers. In any event, if policy-makers which to protect poorer fishers, it
is a simple matter within an IQ system to create classes of IQs. Holders of small-
scale rights could for example only be permitted to trade with other small scale
fishers or not at all. Careful consideration must be given however to the protection
that such transfer restrictions really offer.
The use of IQs requires careful consideration of the characteristics of the fishery to
be managed. Clearly, a key consideration is whether fishers will comply, or can be
made to comply at reasonable cost, with the restrictions imposed by their catch
rights. Even if they do comply, consideration must be given as to how they do so. For
instance, if fishers meet their quotas by discarding large quantities of otherwise
marketable fish, then the system would appear to have a problem.
Where they can be used successfully, IQs give rise to very strong wealth effects. The
amounts involved often come as a surprise. For instance, it has been estimated that
potential resource rents in the Moroccan octopus fishery are in excess of 200 million
US dollars per annum. Estimating IQ prices is a tricky exercise but on the
assumption of a discount rate of 10% and the expectation that the rents will continue
ad infinitum on a stable basis, the total capitalised value of IQs in this one small,
although very valuable, fishery might be in the order of 2 billion US dollars.
Given the amounts involved, great care has to be taken in the design of the IQ
systems. Many developed countries have chosen to give the wealth to fishers, but for
developing countries it seems important to consider explicitly the link between IQs
and resource rental charges.
Input-based use rights: licences and limited entry
Licensing fishing vessels and restricting their number is a common management tool
that remains the main alternative to IQ systems. Licensing systems are relatively
simple to operate and there is some evidence, particularly in the form of high prices
paid for licences, that they can generate resource rents.
The big challenge with licensing systems is whether they can avoid rent-seeking
behaviour in the form of input substitution (colloquially known as "capital stuffing").
In essence, the problem is that whatever is licensed (vessel, gear, horsepower etc) is
being used as a proxy for fishing effort. Fishers will therefore seek to produce more
fishing effort by substituting uncontrolled inputs for controlled ones. The extent to
which this is possible will depend on the nature of the fishing effort production
function. If the degree of flexibility is low, then the management problem is greatly
simplified since controlling one input will effectively control all others. On the other
hand, if flexibility is substantial then it may be impossible to use input-based
management measures because as soon as one input is controlled it is replaced by
more of an uncontrolled one. There is a need, therefore, for technical work in support
of licensing to investigate the extent to which inputs may be substituted one for the
other in the production function.
But even in the case where technology is very inflexible so that input proportions are
difficult to vary, it is important to recognise that this gives only a short respite to the
fishery manager. Incentives will be established in both the fishery sector and the
sectors servicing it to innovate so as to increase the flexibility of the production
technology. Input regulation in the inflexible technology case is likely to create
distortions outside of the fishery sector in terms of excessive inventive and
Even apparently simple management measures will be subject to input substitution.
For instance, restrictions on fishing time in the form of closed seasons or days at sea
restrictions will quickly lead fishers to utilise the fact that there are different kinds of
time. They are likely to attempt to reduce travel time (faster vessels, re-designed
propellers etc.) and gear manipulation time (mechanised gear handling etc) so as to
be able to increase fishing time within the constraint imposed by the closed season.
Co-management and community-based management
“Co-management” covers a wide range of possible systems involving the sharing of
management responsibilities between the State and communities or more
conventional fisher organisations. If a co-management approach is to be
implemented, both research and extension work are likely to be required: the former
to consider how to create such groups, the latter to undertake training as to how they
should operate. There will also be a need for a mechanism (such as an overall co-
ordinating body) to deal with disputes between and within groups. Where there are
overlapping groups and/or stocks, a key issue will be how to change the allocation of
rights over time as relative efficiencies change. Also, consideration might have to be
given to the issue of what to do if the group no longer represents the best
management alternative. How are rights to be transferred away from the group?
Where a co-management approach is to be used, the main issue will be to decide
precisely what rights and responsibilities are being transferred to each group. A key
question will be whether the group has property or use rights.
The group is likely to be interested in managing fishing capacity to ensure sustained
benefits to all members. Its ability to do so will depend on a number of factors:
• Level of co-operation within the group. Note that this is required on a sustainable
basis – the State will have to monitor different groups to ensure that they do
not break down over time, particularly because this has tended to be the fate of
many traditional management systems.
• Exclusivity of access: a co-management system without exclusive access will be
as vulnerable to increases in capacity from uncontrolled elements as are
systems such as ITQs or exclusive zone
• Security of rights: the group will not attempt to control fishing capacity if it
cannot be sure that it will be able to reap the benefits.
• Objectives of the group: although controlling capacity will increase the
profitability of fishing, the group may have other goals which need to be
recognized (e.g. employment) even if they prevent effective control and
avoidance of excess capacity.
• The incentives at the individual level within the group may not be all that
different to those existing under State management systems. In particular the
group may find that input substitution undermines its capacity management
efforts. As is the case with the State, results will depend on management
methods used by the group.
• Respect for the group' leadership by all members.
Community-based systems are compatible with a range of different instruments. In
small-scale fisheries, it is common to allocate rights in terms of space. Such systems
do work well in policing fishing practices and may be upgraded by the community to
regulate capacity. With higher exploitation rates, however, they are vulnerable to the
fact that the space may cover a fraction of the stocks and therefore adjacent
communities will need to collaborate effectively. Otherwise, it may be preferable to
allocate catch rights instead of or, at least, in addition to spatial rights. Provided that
the community can be relied upon to ensure that in the aggregate its members do not
exceed their catch allocation, such systems can be very effective.
Taxes and resource rental charges
Taxes may be used both to correct the fisheries exploitation problem and to ensure an
appropriate sharing of wealth between stakeholders. In the first case, taxation can be
used to force fishers to take account of the value of the valuable fish stock that they
are using in order to produce fish output, in the same way that they are forced to take
account of the cost of other inputs, such as oil, gear, labour and so on.
In the second case, taxes can be used to extract a return from the fish resource for the
nation. In this view, the State plays the role of steward of the resource on behalf of
the owner - i.e. all citizens of the country. The State therefore collects resource rents
which it then uses for the benefit of all citizens. In this way everyone can derive
some benefit from the nation' fish resources, without necessarily having to become a
fisher. Many extractive industries are managed on this basis, through the payment of
royalties for example.
If taxation is to be used, States will have to consider a number of issues:
• What to tax? The choice is generally between catch and effort. In theory the two
are equivalent but in practice it is almost always easier to tax the catch. A
number of options exist for taxing catch: at the point of landing, at some point
in the processing chain or, in some cases, at the point of export. There is often
a presumption against export taxes but it needs to be made clear that the
fisheries case is special in that such taxes are being used as a way of enhancing
conservation and economically rational exploitation of the resource.
• What institutional arrangements are required? The system will only work if there
is compliance with it. As with all costs, there will be an incentive for
enterprises to reduce their tax burden so far as possible. An appropriate
institutional structure will have to be established to ensure compliance at
reasonable cost. One of the key issues regarding the use of a taxation system is
whether it can be made to work without all, or most, of the benefits of reduced
exploitation being used up as extra costs required to enforce the system.
• How to avoid rent-seeking behaviour within the tax system? Given the value of
fisheries resources, a taxation system can be expected to generate significant
amounts of revenue. Depending on the precise institutional arrangements that
are established, such revenue might encourage rent-seeking behaviour of
various kinds, going from the exploitation of regulatory loopholes to illegal
practices. An appropriate system of checks and balances will be required to
ensure that rent-seeking behaviour does not use up a substantial portion of the
benefits of the system.
A common practical objection to taxation is its political acceptability. Some find it
difficult to see how taxation can be introduced in overexploited fisheries when
fishing enterprises are often in poor economic shape. However, this simply means
that first, taxation must be introduced gradually on an opportunistic basis, taking
advantage of the variability of key economic parameters, such as fish prices, and
second, that taxation is best used as part of a set of management measures.
Because of its importance in extracting wealth to fund Government policy, it is
perhaps worth spending a little time considering how taxation (or resource rental
charges) might be introduced, and analysing the impact. In order to do this, it is
useful to transform the basic fisheries model into a supply and demand model.
Relating fishing costs and revenues directly to sustainable yield achieves this, and
results in a backward-bending supply curve (because supply declines as the fishery
expands beyond MSY). This supply curve can be associated with standard demand
curves (either horizontal, implying that fish price is independent of quantity, or
downward sloping, implying that fish price must fall if more is to be sold).
This supply and demand model allows a range of cases to be considered. Here,
because of its widespread relevance, we will consider the case of a fishery that is
overexploited both economically and biologically (i.e. beyond MSY). Figure 3
considers the case where the demand curve is horizontal and Figure 4 the case where
it is downward sloping.
One criticism of taxation is the difficulty to introduce it. Here, we take a simple
example. Looking first at the case shown by Figure 3, suppose that, for some reason,
demand in the fishery rises substantially so that the demand curve shifts from D1 to
D2. Suppose also that the Government sets the simple objective of neutralising the
demand increase so as to maintain the fishery in the condition it was in previously.
Y2 Output (SY) Y1
With the original demand curve D1 the fishery is in equilibrium producing an output
of Y1 at a price of P1. If the demand curve increases (shifts upwards) to D2 then, if
the fishery is unmanaged, the ultimate result is to reduce output to Y2 whilst
increasing price to p2. If the Government now introduces a resource rental equal to
the difference between the two demand curves (i.e. t = p2 - p1), then the fishery will
continue to produce Y1.
Table 1 below summarises the impact on consumers (C), producers (P) and
BEFORE AFTER EVALUATION
With resource With resource
C Y1 @ p1 Y2 @ p2 Y1 @ p2 -££ ↓Y and ↑p -£ ↔Y and ↑p
? ∆TR small,
Total Revenue =
P p2*Y2 p1*Y1 could be +ve or 0
G T=0 T=0 T = (p2-p1)*Y1 0 +££ ↑ T
Extraction of T
Increase in through
demand leads to availability of
a large loss for rents and some
consumers and transfer from C
little change to G. C better
(possibly a off than with no
decrease) for management, P
producers no worse off
than before ↑D.
Table 1 shows that the main impact of taxation is on consumers and the Government.
At least in the case shown, producers are left no worse off than they were previously.
Consumers gain under taxation, compared to no management, because they can have
the same quantity of fish as previously, at the new higher price. Government clearly
gains by the amount of taxation T.
Figure 4 presents the same analysis in the case of a fishery facing a downward
sloping demand curve. It is assumed that the Government objective remains the
same, to hold output at Y1.
Y2 Y1 Output (SY)
BEFORE AFTER EVALUATION
With resource With resource
C Y1 @ p1 Y2 @ p2 Y1 @ p3
↓Y and ↑↑p ↔Y and ↑p
? ∆TR small,
Total Revenue =
P p2*Y2 p1*Y1 could be +ve or 0
G T=0 T=0 T = (p3-p1)*Y1 0 +££ ↑ T
Extraction of T
Increase in through
demand leads to availability of
a large loss for rents and some
consumers and transfer from C
little change to G. C better
(possibly a off than with no
decrease) for management, P
producers no worse off
than before ↑D.
In this case, in the absence of management, the existence of the downward sloping
demand curve will result in a sharper increase in price. Consumers will lose because
they have less fish available at substantially higher prices. Once again producers will
find themselves more or less in the same position because their total revenue will
hardly change (p1*Y1 being more or less equal to p2*Y2). The tax per unit will not be
equal to (p2-p1) in this case. It can be seen from Figure 4 that in order to hold
production at Y1, the per unit tax will have to be (p3-p1). So with a downward-
sloping demand curve, taxation actually results in lower prices than would be the
case in an unmanaged fishery.
As summarised in table 2, the result is that both consumers and the Government are
better off under taxation than where the fishery is left unmanaged, and producers are
no worse off.
These results demonstrate first that taxation is worthy of far more consideration in
fisheries management than it has received to date, and second that, as emphasised
throughout this report, management is fundamentally about the wealth that fish
resources can generate.
A3.4. BENEFITS TO THE POOR OF FISH RESOURCES
The basic fisheries model highlights the importance of the inherent wealth of fish
resources, in the form of resource rent, in driving exploitation patterns. This same
wealth indicates the potential benefits that can be derived from such resources. This
section considers how the poor in particular can benefit from fish resources.
Rather than considering wealth, fisheries policy around the world has often focused
on fish production. For many fishery ministries, the key indicator of policy success is
the physical amount of fish produced each year. Such an indicator is problematic
when dealing with a renewable natural resource with a finite supply. To begin with,
since there is clearly a limit to sustainable physical production, using physical
production as an indicator places an apparent, although artificial, upper bound on
policy success. And having a physical production target adds to the overexploitation
pressure which already exists in abundance in the fishery. Such problems might
appear self-evident but numerous countries continue to use a physical production
success indicator, as do numerous international treaties, which often set MSY as their
goal. As a consequence, it is generally easy to obtain data on the amount of fish
produced, somewhat more difficult to obtain data on prices and hence values
produced, and usually quite difficult to obtain cost data. The result is that few
countries have much idea of the resource rents foregone in their current fisheries
The focus on production also tends to colour the way in which benefits from the
fishing activity are perceived. Many of the benefits relate to the activity itself and
result from being a fisher, or being related directly to the fishing activity in some
The most obvious kind of benefit is where the fishery is used to provide employment
or livelihoods of last resort. Where the poor have no alternative occupation available,
they can always go fishing. But this is a very curious employment of last resort.
Unless they are doing an activity with no input other than their labour, the poor, like
everyone else, are required to pay for their inputs. They do not usually get the boat or
the outboard motor or their fuel for free. It is only the fish resource that for some
reason is chosen for special treatment.
Whilst the provision of employment, and still more livelihoods, of last resort should
favour the poor, where the provision relies on fishery management failure, the result
is to increase the risks faced by the poor and their vulnerability to external shocks.
This problem arises in part because the strategy tends to result in fish resources being
exploited beyond their sustainable limits. A major reason for this that in order to
benefit from fish resources, the poor have to be involved in the activity (or be
economically related to someone who is), putting yet more upward pressure on the
Another problem is that the "last resort" element is seldom the centrepiece of fishery
development and management strategy. Many developing country governments
recognise only too well the wealth potential of their fish resources, but they do not
know how (or are politically unable) to extract this potential through domestic
fishers, especially where these are considered to be poor.
As a result, many such governments have come to depend on selling fishing rights to
technologically-superior (and often subsidised) foreign fishers, as a way of
generating some of the wealth potential of their fish resources.
These fishing access agreements have come in for much criticism. One advantage
that they may have is that they generate wealth that in principle may be used to
benefit the country as a whole, or the poor in general. This contrasts with the last
resort strategy which favours only those poor who are involved in the fishing activity
(or very closely associated with it in some way).
The combination of a policy of last resort for poor domestic fishers coupled with
access agreements with foreign fishers may represent a way of "muddling through"
in the sense that the poor receive benefits in two possible ways: either through the
activity (employment, income, food) or through the revenues generated by the access
agreement (depending of course on how these are spent).
The difficulty is that this approach appears to be unsustainable. As a result, there is
now intense pressure to improve fishery management systems world wide. The
problem is that such improvements pose a significant threat to the poor because their
livelihoods depend on the fishing activity itself, rather than on the wealth inherent in
Although policies to use fish resources as an employer of last resort may be
demonstrated to be economically sub-optimal, they may be socially and politically
preferred if there are problems with dealing with income and wealth distribution. If a
well-managed fishery produces more wealth but this wealth is concentrated in the
hands of an elite and wealthy group, then social welfare may be enhanced by
choosing an economic sub-optimum.
The best solution to this problem resides clearly in resolving distributional issues, but
this may be easier said than done. The economic and biological overexploitation of
some fish resources may be the price that has to be paid for social justice.
Nonetheless, it is important to analyse why the fisheries sector is being asked to play
the last resort role. There is often an assumption that small scale fishers are
economically inefficient and must therefore be protected in some way. For instance,
DfID (2004, p.1) argues that among the ways in which natural resources can
contribute to support growth in developing countries is through the provision of a
safety net, "helping the livelihoods of those who cannot play a central role in growth
processes, e.g. artisanal fishing". This implicit assumption that artisanal fishing is
somehow outside the main economy is widespread. Although in some cases it may
doubtless be representative, often the problem seems to arise from the way in which
fisheries are managed rather than any inherent characteristic associated with small-
scale fishers. In particular, the general absence of adequate use right systems means
first that small-scale fishers have no way to protect their livelihoods against
encroachment from other users of the same resource, and second that there is no
mechanism to facilitate adjustment in fish resource exploitation patterns when this is
required. Moreover, the standard approach of attempting to manage the "small-scale
fisheries sector" reinforces the bias against small-scale fishers because it tends to
exclude them from fisheries-based management plans.
Putting into place a use rights system including small-scale fishers would enable the
hypothesis that they require protection to be tested empirically. It is likely to turn out
that in some cases their technology is the most appropriate and in other cases it is
not. If the view is taken that such fisheries still require protection, use rights provide
a framework within which this may be implemented, for instance some use rights
may be designated as small-scale and their transfer to other users may be banned.
A.3.5. THE CRUCIAL IMPORTANCE OF DISTINGUISHING BETWEEN
WEALTH AND INCOME
A key issue when attempting to use one sector of the economy, such as the fishing
sector, to alleviate poverty is to clarify exactly what is feasible.
It is common to find the improvement of fishermen' incomes as an objective of
fisheries management systems, especially in the case of developing countries (e.g.
Lawson, 1984), and this might seem a reasonable goal in a poverty reduction
The difficulty is to analyse how such a goal might be achieved.
There has long been evidence that fishing incomes may be low in both developed (eg
MacKenzie, 1979) and developing countries (eg Panayotou, 1982). The key question
is "why?" or put differently "what determines fishers'incomes?".
One argument might be that incomes are low because fisheries are not managed, or
not managed well. As has been argued above, free and open access fisheries will be
exploited in such a way that all resource rent is dissipated, but does this necessarily
imply low fishing incomes? The answer seems to be no.
The fundamental reasoning was well explained by MacKenzie (1979, p816, footnote
5) who argued that "the received image of the poor fisherman is to be stood on its
head - he is a fisherman because he is poor, not the other way around". In other
words, fishing incomes depend on opportunity incomes (that is to say, the amount
fishers could earn in their next best alternative occupation).
Copes (1988) suggests six reasons why opportunity incomes may be low in small-
scale fisheries. These are: (i) the isolation of many fishing communities resulting in
poor educational facilities and infrastructure links as well as few alternative
employment opportunities, (ii) the existence of surplus labour due to productivity
gains, (iii) capital asset fixity, (iv) lifestyle preferences, (v) highliner illusion and (vi)
perverse assistance (i.e. welfare state measures designed to provide an income safety
net). Similar factors are advanced by Panayotou (1982) to explain labour immobility
although he adds caste restrictions, cultural factors and simple lack of knowledge of
The proposition that fishermen' incomes depend on opportunity incomes is
reinforced by evidence presented by Panayotou (1982, p.30) who notes that some
Red Sea and East African countries found it difficult to continue fisheries
exploitation in the face of more remunerative employment opportunities associated
with the oil industry. A similar situation exists in the case of the Pacific island of
Nauru where, in the past, the guano industry provided employment and wealth for
the island' population and attempts to develop fishing were unsuccessful.
Both standard economic theory and empirical evidence suggest therefore that
fishermen' incomes are determined by opportunity incomes rather than by anything
that happens within the fishery itself, except perhaps in the short run. This view has
major policy implications for the way in which the goal of improved fishing incomes
can be achieved.
Rational fisheries management is therefore (or at least should be) about wealth
generation if the objective is to improve incomes. This wealth must then be invested
in such a way as to benefit the poor so as to increase the opportunity cost of labour.
An obvious possibility would be to use the fisheries wealth to educate fishers,
thereby increasing their options in the labour market.
The fact that management is about wealth raises questions as to how to implement
fishery management measures, particularly those of an economic nature. Consider
for instance ITQs.
It is fairly easy to demonstrate that ITQs will lead to economically efficient fisheries.
But the consequences of this for poverty (and for many other things) depends on how
the ITQ rights are allocated, and the way in which they are supported by other
management measures. If, as is often the case, they are given free of charge to fishers
on the basis of their historical fishing performance, then these fishers can be
expected to become wealthy as the value of their ITQs increases.
But such an approach raises at least two difficulties. First, it is likely to be perceived
as unfair (e.g. by future fishermen, particularly those who would have fished in the
very near future, or by non-fishers, especially those living in the same locality or
community as the fishers, or even by society in general if the view is taken that the
government is custodian of natural resources on behalf of society) and equity issues
may undermine the management scheme over time. Second, the approach may have
serious economic consequences since the investment decisions that follow the private
accumulation of wealth are likely to be different to those if public accumulation is
involved. The major risk associated with operating via the private sector is that the
investments made may not improve the situation in the relevantly-defined economy
at all. For instance, recipients of fish resource rents in a developing country might
decide that their best private option would be to invest them in a Swiss bank account.
One alternative would be to link ITQs to a system to extract resource rentals. Where
taxes have been considered by economists for use in fisheries they have often been
rejected on grounds of impracticability. Sometimes taxation is simply considered to
be politically unacceptable. Sometimes the rejection seems to lie in a failure to
consider the necessary institutions. Perhaps most frequently however it results from
the approach of fisheries economics which is almost exclusively to consider optimal
solutions. For instance, Arnasson (1991, p.410) argues that "... to calculate the
correct Pigovian tax, it is necessary to know practically everything about the fishery.
... Clearly these requirements exceed the capabilities of any fisheries manager". But
this statement confuses the desired result with the way to achieve it. A satisficing
approach to rent extraction could yield substantial amounts of rent to a government
and, on a trial and error basis, could be expected to approach the maximum.
The main difficulty is to think of imaginative institutional arrangements that will
allow the desired results to be achieved.
One question which comes to mind is: if the State is considered the resource owner,
should the State not try to recover all resource rents? There may be something in this
point of view. However, a mixed strategy of rights coupled with taxes appears likely
to give the best results. It will be difficult in practice to extract all rents (because of
the variability associated with key parameters such as fish prices and input costs) but
even if it were possible it appears undesirable. The main problem is that it would
remove the incentive for fishers to try to improve their fishing operations. Leaving
them with a share of the resource rents would, on the other hand, give them an
incentive to try to increase prices and/or reduce costs because this will increase the
price of their fishing rights (whilst also increasing the return to the Exchequer).
In summary then the policy issues are:
• to recognise that management cannot increase fishermen' incomes s
directly. Incomes depend on alternative employment opportunities and
therefore specific policy measures to increase opportunity incomes will be
• if opportunity incomes do increase in depressed coastal areas, why will
they not be eroded by movements of labour from elsewhere in the
economy? Of course, there is no guarantee that they will not be. If labour
is mobile then the policy debate is somewhat different. Essentially the
debate is about the relative position of fishers, in which case it will be
necessary to adopt specific supply-side measures such as training to
ensure that the value of fishermen in the labour market is raised.
However, the policy debate, in many cases, is more than this. It is a
debate about the absolute condition of fishermen and fishing
communities. These communities are poor because there is a lack of
investment providing alternative employment opportunities. The
advantage that the fishery offers is a perennial source of funding based on
• in developing countries, there is a need to move beyond the idea of
fisheries development to a consideration of the role of fisheries within the
development process of the economy as a whole. There is a need for work
on institutions and methods of management, and particularly for an
analysis of alternatives and/or supplements to fishing rights such as ITQs.
• there is a need to clarify the role of the State in fisheries management and
in resource wealth appropriation. Although State performance world-wide
may not give grounds for unbridled optimism, the problem for developing
countries is that economically-efficient management methods that allow
resource rents to be capitalised may simply result in their transfer out of
the country. In such cases the country may find itself facing some strange
capital flows where wealth generated by its fish resources is placed with
banks in the developed world from which it re-appears as loans or aid. It
seems a somewhat more sensible policy that the developing country
should ensure that its resource wealth is used to develop its own economy.
• it is important that expectations of what economic management of
fisheries can achieve are realistic. Economic management will not
suddenly make everyone associated with the fishery much better off.
Rather, the fishery can be a very important renewable source of capital
that enables investments to occur (in productive activities, in
infrastructure, in health, in education ...) that gradually enable sustainable
living standards to improve.
REFERENCES AND FURTHER READING
Bailey, C. and Jentoft, S. (1990) Hard Choices in Fisheries Development. Marine
Policy, July, 333-344.
Bostock, T., Manning, P., Cunningham, S. Neiland, A.E. and Bennett, E. (2004)
Good Management Practice in Sustainable Fisheries: Policy Briefs.
Catanzano, J. and Mesnil, B. (1995) Economics and Biology Used in Fisheries
Research or When Social and Natural Sciences Try to Depict Together the Object of
their Research. Aquatic Living Resources 8: 223-232.
Cunningham, S., Dunn, M.R. and Whitmarsh, D.J. (1985) Fisheries Economics: An
Introduction. London and New York: Mansell.
DfID (2004) "Pro-poor growth: a guidance note to assess the contribution of natural
resources and the environment" Mimeo, 18p
FAO(2002) The State of the World Fisheries and Aquaculture. Rome: FAO.
Lawason, R. (1984) Economics of fisheries development (London, Frances Pinter)
Panayotou, T. (1982) Management Concepts for Small-Scale Fisheries: Economic
and Social Aspects. FAO Fish Tech Pap. 228. Rome: FAO.
Platteau, J.P. (1989) The Dynamics of Fisheries Development in Developing
Countries: A General Overview. Development and Change 20: 621-651.
A4. POLICY AND GOVERNANCE FOR DEVELOPMENT
A4.1. INTRODUCTION AND OBJECTIVES
In 1992, two decades after Robert MacNamara’s charge to the World Bank to
attempt to reduce poverty, the incumbent president, Lewis Preston, still had to
proclaim that “no task should command higher priority for the world’s policy makers
than that of reducing global poverty”. In many countries, the gains from growth have
not been reaching the poor, and the simple question is therefore ‘why not?’. The
answers relate in part to three key dimensions:
- the rate of growth
- the pattern of growth
- the failure of government policies
It can be shown that given a particular economic structure and policy environment,
rapid economic growth is better than slow growth in eradicating poverty. However,
the pattern of growth also matters in determining who are the beneficiaries of
growth. The incidence of poverty can increase if the pattern of growth is urban
biased, displaces unskilled labour, alters relative prices to the disadvantage of the
poor, creates a gender gap, deteriorates child welfare, and erodes traditional
entitlements that have served as safety nets (Lipton, 1976; Williamson, 1991). In
most countries, economic structure and the policy environment do not remain
constant. Even with respectable rates of growth, the total number in poverty can
increase. And it has done so in many countries because of the adverse changes in
economic structure and the absence of appropriate policies by government. In simple
terms, according to Meier (1995)
“Growth does not help the poor unless it reaches the poor. Nor does government help
unless the poor are the beneficiaries of public policies” (p.30)
In the following brief account, the nature and role of government policy-making and
policies will be explored, with particular reference to poverty alleviation and
economic growth. Particular emphasis will also be given to the relationship between
policies for the management of natural resources and poverty alleviation. In effect,
the primary objective is to provide a range of perspectives on the nature of the policy
process in these important domains and which can help in our analysis of policy
There are four sections to follow. The first section presents a set of key definitions
and important concepts in three areas – policy, the policy process and governance –
which are central to the analysis and discussion of natural resource management and
poverty alleviation strategies pursued by government. The second section presents
and highlights a range of key issues which have emerged recently as a result of on-
going research in the field of natural resource management policy (NRM), with
specific examples from fisheries. A third section, identifies and discusses how these
latest research findings are helping to guide new strategies for policy development
relating to NRM and poverty alleviation, with particular reference to pro-poor
A4.2. KEY DEFINITIONS AND CONCEPTS
From the outset, it is important to consider the definitions and concepts which
underpin the analysis of the relationship between NRM and poverty alleviation in
three areas – policy, the policy process and governance.
First, policy can be defined as ‘a course of action proposed or adopted by those with
responsibility for a given area and expressed as formal statements or positions’. In
most countries, the policy process, as undertaken by government, involves both the
development and design of policy and its subsequent implementation across the full
range of national sectors (e.g. industry, transport, health, agriculture, fisheries etc).
Policy analysis attempts to provide a better understanding of the policy process. For
example, by identifying the factors which have affected policy performance in the
past, it may be possible to improve policy performance in the future by addressing
Fig. 1. The policy process: linear model
AGENDA PHASE DECISION PHASE IMPLEMENTATION PHASE
On agenda reform
Reform Issue Unsuccessful
Not on Decision against
The linear (or rational) model is the most widely held view of the way
The linear (or rational) model is the most widely held view of the way in which
policy is made (Fig. 1). Policy-making is seen as a problem-solving process which is
rational, balanced, objective and analytical. Decisions are made in a series of
sequential phases as follows:
• Recognising and defining the nature of the issue to be dealt with;
• Identifying the possible courses of action to deal with the issue;
• Weighing up the advantages and disadvantages of each of these alternatives;
• Choosing the option which offers the best solution;
• Implementing the policy;
• Possibly evaluating the outcome;
Fig. 2: Policy process – non-linear
Fig. 2. The policy process: a new look at the linear model
Sutton (1999) states that this model assumes that policy makers approach the issues
rationally, going through each logical stage of the process, and carefully considering
all the relevant information. If policies do not achieve what they are intended to
achieve, blame is often not laid on the policy itself, but rather on political or
managerial failure in implementing it. Failure can be blamed on a lack of political
will, poor management or shortage of resources, for example.
Second, policy-making can also be viewed as a process, in other words, the ‘policy
process’. For a start, there is much evidence that this linear model of policy-making
is far from reality, and that in fact, a more appropriate conceptualisation would need
to incorporate a certain fluidity between decision-making, knowledge and the
operationalisation of policy (Fig. 2). According to Sutton (1999), who has produced a
review of how policy-making is considered by different disciplines (political science,
sociology, anthropology, international relations and business management) in an
attempt to build a broader picture of the process, there are six cross-cutting themes
which emerge from this analysis, which need to be considered carefully:
• There is a dichotomy between policy-making and implementation; implementers
are crucial actors whose actions determine the success or failure of policy
• Policy implementation needs to be carefully managed; it brings about change in
the relationships between the actors in a system, and this change needs to be
managed (requiring consensus-building, participation of stakeholders, conflict
resolution, contingency planning, compromise, resource mobilisation and
• The policy process is influenced by a range of interest groups that exert power
and authority over policy-making; this must be recognised and managed through
the development of epistemic communities or discourse coalitions (or ‘think-
• Ownership of the policy process tends to be drawn away from local and
indigenous groups to policy experts or outsiders, often through the use of
particular development narratives or discourses (e.g. labelling of the poor,
landless, women etc.).
• The simplification of issues (in order to promote understanding) can go too far;
the drawback is that it can lead to a misrepresentation of the situation and false
information upon which to make decisions.
• Narrowing down of policy options (to allow choice of alternatives) can be
counterproductive; it may restrict seeking out the best possible policy options.
Keeley and Scoones (1999) also highlight that policy is very difficult to define in a
simple linear manner. In reality, the broad policy process tends to be non-linear, and
policies generally consist of a broad course of action (or inaction, for that matter).
These can also be conceptualised as a web of interrelated decisions which evolve
over time during implementation. Policy also needs to be seen as an inherently
political process, rather than simply the instrumental execution of rational decisions.
While the complex and often poorly understood nature of the policy process presents
a major challenge for policy analysis, one of the first ways of getting started is to
examine the performance of the current policy framework in a sector such as
fisheries (assuming appropriate information exists). A simple 4-step approach to
policy analysis (ex-post) is shown in Box 1 below.
Clearly, this simple 4-step policy analysis procedure can provide a starting point for
the identification of future policy development opportunities. However, it should also
be noted that the analysis often becomes progressively more complicated and
difficult from Step 1 to Step 4, and each situation needs to be considered on a case-
by-case basis in the first instance.
Box 1: Policy analysis: 4 steps
Step 1: Identify policy profile
What are the objectives of policy?
What are the mandates related to and derived from this policy?
Which organisations or institutions are responsible for policy design & implementation?
What is the policy context?
Step 2: Assessment of policy performance
Have the stated objectives of policy been achieved?
To what extent have they been achieved?
What sources of information underpin the assessment?
Step 3: Evaluate policy performance
How can the level of performance be explained?
What influence have political interests had on performance?
How has policy been influenced by actor-networks?
How have policy approaches been shaped by particular development narratives?
Step 4: Identify options for policy change (new policy spaces)
What opportunities currently exist for policy change?
What opportunities might be anticipated in the future?
What constraints does policy change face in general?
How can these constraints be overcome?
The third concept is governance. It is also appropriate to consider how governance
and the policy context are inter-related, and this will be examined below.
Governance is a widely-used term, but in common with others (for example,
‘sustainable development’ and ‘bio-diversity’), it is not often properly defined and is
not easy to quantify. There are a number of useful and accessible definitions which
can be used as a starting point, as shown in Box 2 below:
The first definition from the World Bank is made with reference to the role of
government, and in fact, for most people, “governance” is what governments do.
However, the second definition from Kooiman (2001) reveals that the concept of
Box 2: Governance – 4 definitions
(1) ‘Governance is the manner in which power is exercised in the management of a country’s
economic and social resources’ (World Bank, 1997, p.7).
(2) ‘Governance is the totality of interactive activities and institutional arrangements, in which
public as well as private actors participate, which are aimed at solving societal problems, creating
societal opportunities, attending to the institutions within which these governing activities take
place, and establishing a normative foundation for all those activities’. (Kooiman, 2001, p.3).
(3) ‘Governance may be defined as the capacity to get things done without necessarily having the
legal competence to command that they be done’. (modified from Czempiel, 1992).
(4) ‘Governance refers to the whole array of processes whereby elements in society (government
and non-government) wield power and authority, and influence and enact policies and decisions
concerning public life, and economic and social development’. (Governance Working Group of the
International Institute of Administrative Sciences, 1996)
governance can be viewed in a much broader sense, and that all elements of society
(for example, the state, market and civil society) have a joint and interactive
responsibility for problem-solving and opportunity creation (Fig. 3). Kooiman also
identifies that the governance literature emphasises the need for all societal
institutions to be involved in these activities, and for all relevant societal and
institutional levels and inter-relations between them to be taken into account. This
approach assumes that problems and opportunities are embedded in broader societal
and political contexts, and cannot be properly understood in isolation. The third and
fourth definitions (Box 2) give emphasis to the role of power and authority, and to
the fact that these may be spread across different elements in society (both
government and non-government).
The close association between ‘governance’ and ‘government’, in most people’s
minds, is also an important entry-point for considering the role of government, the
nature of the state and the impact of these two important elements on different
countries throughout the world. It also focuses attention on the terms ‘good
governance’ and ‘strong and weak states’.
But why are these terms and the ideas behind them important? In simple terms, we
have to acknowledge that some countries can be classified as ‘Developed Countries’
and some as ‘Developing Countries’. Reynolds (cited in Dethier 1999), after
surveying more than a century of comparative development experience in 40
developing countries proposed an explanation as shown in Box 3.
Box 3: Explaining development outcomes
‘the single most important explanatory variable [of development] is political organisation
and the administrative competence of government.’ (Reynolds, 1999, p.3)
According to Dethier (1999) a proper use of public resources and donor transfers to
governments of developing and transition countries appears to be indicative of good
governance. Evidence links dismal growth and poverty to corruption, waste and
authoritarian practices in government. However, a government’s impact on
development is not simply a function of fiscal resources, but also a more intangible
thing which one can call the ‘quality of government’. The reason why a government
is good or bad, is not always apparent.
It is also important to recognise the distinction between the terms ‘government’ and
‘state’. As pointed out by Dreze and Sen (1995) ‘the state is in many ways a broader
concept which includes the government but also the legislature that votes on public
rules, the political system that regulates elections, the role that is given to opposition
parties, and the basic rights that are upheld by the judiciary. A democratic state
makes it much harder for the ruling government to be unresponsive to the needs and
values of the population at large’.
ig. 3. Governance: interactions of state, markets andOF INTERACTIONS
TRADITIONAL DIVISION civil society
Market Civil Society
INCREASING INTERACTION AND OVERLAP
Market Civil Society
Returning once more to Kooiman’s definition and framework for governance, the
state (including government) is clearly a crucial element, along with the other two
primary elements - markets and civil society. Within ‘strong states’, which are
characterised by ‘good governance’, one would expect a responsive and responsible
government, well-developed and active markets, and a civil society which is able to
benefit from both public (government) and private (market) actions and
opportunities. By contrast, in ‘weak states’, with ‘weak governance’, the opposite
will almost certainly be the case, with significant evidence of both government and
It is important to consider the challenges which policy-makers and the policy process
must face up to in attempting to bring about changes within any sector, whether it is
fisheries, agriculture, industry or public services. A good understanding of the policy
Fig 4. Policy situations characterised (after Meier, 1995)
High understanding of
Ordinary policy-making process
Chosen problems Future research agenda
More technical analysis
institutions given or ignored
Small, incremental Large, innovative
Policy changes policy changes
Less technical analysis
institutional change Political
Low understanding of policy-
situation or context of a country is an important starting point. The policy situation
often differs from one country to another, even when considering countries that
might otherwise be considered to be close neighbours with similar histories. Meier
(1995) provides a useful characterisation of the situations found in Developed
Countries (DCs) and Developing Countries (DevCs) using a simple diagram (Fig.
The two major policy situations are defined, firstly, by the extent to which the
policy-making process is understood (high to low understanding) shown on the Y-
axis, and secondly, by whether policy changes tend to be either incremental or large,
innovative ones, shown on the X-axis.
In general, in DCs (NW quadrant), there is a high understanding of the policy-
making process and the policy space is associated with incremental policy changes
involving ‘chosen problems’ (decision-makers choose as priorities). They are subject
to technical analysis (e.g. economic analysis) and there is a low degree of politics
(i.e. politics-as-usual). In this policy situation, technical policy instruments are the
means to achieve policy objectives (i.e. instrumental rationality), and the general
perspective is from a society-centred type of policy (with government as the
clearing-house or broker amongst interest groups). Institutions are often given or
By contrast, in DevCs (SE Quadrant), at the other end of the policy situation
spectrum, there is a low understanding of the policy-making process and the policy
space is associated with large innovative policy changes. Here pressing problems
predominate. They are forced upon policy-makers through pressure from injured or
interested outside parties. Pressing problems are generally those in which a
perception of crisis is apparent; the undertaking of policy reform involving large
innovative changes tends to be induced by pressing problems. They are also highly
politicised and tend not to be amenable to technical analysis. The rationality involved
is of a constitutive type i.e. decisions have to be made about how decisions are to be
made: a constitution is needed and an institutional context for decision-making has to
be established. The policy-making process is more state-centred, and institutional
structures need to change.
Clearly, the policy situation outlined for DevCs can be characterised by both market
and non-market or government failures. It represents the Weak State. For the policy
analyst, in attempting to identify and recommend policy reform, there are a number
of major challenges including:
• Resistance to policy change may be significant (from powerful and elite groups);
• Policy analysis needs to consider the winners and losers in policy reform;
• Policy reform may require the creation of Win-Win outcomes, or the means to
• The creation of political competition and new constituencies may be the key to
policy reform in some situations;
• New institutional arrangements will also be required to support policy reforms;
• Policy-makers will need protection from rent-seekers and interest groups, in
order to focus on issues of national priority.
In effect, the policy situation of DevCs requires a much broader analysis than the
conventional economic and technical analysis usually applied in the policy situation
of DCs. Policy analysis and the giving of policy advice in DevCs must have a good
knowledge of the underlying political process. It must also be willing to grapple with
difficult and sensitive issues such as the power relations within a country, the
relationship between state and society, and distribution of economic benefits.
However, at the present time, this type of policy analysis is only starting to emerge
for many DevC policy situations. At the same time, it is also important to recognise
that there exists a broad range of policy situations amongst DevCs – some countries
have relatively good policy environments and processes, while at the other end of the
spectrum, policy environments and processes are weak. Effective policy analyses and
comparisons must be able to deal with these differences.
Policy analysis is a difficult task in reality. Using some of the findings of a recent
study in Bangladesh (Neiland et al. 2002), it is possible to highlight the challenge
which the policy analyst must face (analytic constraints), while at the same time
helping to guide the design of a study approach (analytical priorities). The following
key features are amongst the most important, with particular reference to the
environment, natural resources and fisheries domains:
• A large number of policies have been produced over the last 30 years, covering
both national and sectoral agenda; there is considerable overlap and lack of
coherence between policies;
• Policy-making has been predominantly top-down originating from central
government; the content of policy has favoured the priorities of powerful, elite
groups in Bangladeshi society, often at the expense of rural people;
• Policy implementation has been extremely variable, and constrained by a weak
and bureaucratic institutional setting;
• The assessment of policy performance and policy evaluation has been limited,
with minimal feedback into the policy-formation process. The weakness of the
institutional setting and lack of fundamental data have been major constraints. In
general, policy performance with respect to development outcomes is considered
to be weak, with significance poverty and lack of economic development still a
major feature of Bangladesh;
• Policy changes can and do take place, often under the influence of external
pressures, particularly from donor and lending organisations (e.g. WB), and from
NGOs operating within the country;
Of course, many of these findings can also apply to other DevCs, and while this sort
of generalisation is worth keeping in mind, the important fact remains that the
improvement of policy performance for Bangladesh will depend on an improved
understanding of the specific factors or context which produce these outcomes in-
country, and which may of course be different to other DevCs.
Barenstein (1994) provides an interesting analysis on the nature of policy and
government in Bangladesh (Fig. 5.). In attempting to explain the nature of
governance in Bangladesh, he developed a conceptual model that highlights the
problems of linkage and feedback between various stages of the policy process.
Barenstein believes that the political process in Bangladesh can best be described as
one of ‘fuzzy governance’ whereby the usual relations and tensions in the machinery
of public policy and management are in such transition that their previous functions
change and become extremely hard to predict and understand. Whereas ‘bad
governance’ may be set on purpose (dictatorial government, for instance), ‘fuzzy
governance’ is the unplanned product of multiple factors in transition. Barenstein
demonstrates how ‘fuzzy governance’ affects the policy process by creating policy
fractures (Types 1-5) at all stages of the policy process, leading to an overall
situation of ‘policy dissonance’, as shown in Fig. 5.
Fig. 5. Policy dissonance in Bangladesh (after Barenstein, 1994)
Policy Declarations the ‘development objectives’ and mandates as stated by government
Enacted Policies the passing of laws, approval of budgets, issuance of ordinances etc.
Implemented Policies the establishment of suitable structures, staffing etc.
Policy Outcomes the impact (if any) of policy
Type 1 policy fractures are not enacted due to issues of political culture, lacking accountability or
simply ineffective planning. Limitations often associated with new parliamentary democracies.
Type 2 policy fractures are not implemented. This link requires the desegregation of policy
objectives into distinct programmes and projects so that the possibility of failure is multiplied. It
may be related to bureaucratic resistance or managerial incapacity.
Type 3 policy fractures result in unexpected outcomes in the short-run or do not lead to
sustainability in the long-run resulting from poor policy declarations or implementation.
Type 4 fractures occur due to lack of feedback between implementers and policy-makers.
Type 5 fractures occur because outcomes (if known) are manipulated or disowned by implementers
A4.3. KEY ISSUES BASED ON THEORETICAL AND EMPIRICAL
The definitions and concepts presented above in the broad areas of - policy, the
policy process and governance - provide an important underpinning of many of the
research initiatives which are currently focusing on the relationship between natural
resources (or NR) (and their management or NRM) and livelihoods (and poverty
alleviation). In this section, the objective is to highlight 9 key issues and findings
which have emerged recently from research, both theoretical and empirical, and
which are likely to affect future policy in this domain. Where appropriate, specific
examples from the fisheries sector have also been included.
(i) Recognition: is the value of NR recognised by policy-makers?
The extent to which the value (or importance) of NR is recognised by policy-makers
will affect the extent to which the sector is able to contribute to development. If a
government does not value, or even recognise the role of NR, then the sector will be
denied support for policy design and implementation. According to DFID (2003,
2004a, 2004b, 2004c), for most developing countries, NR provide foundations for
growth sectors: agriculture, forestry, fisheries and tourism. It is vital that the
country’s wealth is recognised and harnessed to its full potential to promote pro-poor
growth. Some of the fundamental questions which need to be addressed are: How
much do the country’s main natural resource sectors (e.g. forestry, fisheries, wildlife
tourism) contribute to economic growth? What percentage is this in terms of GDP?
Does this take into account informal markets or illegal trade and how large are they?
Is the importance of natural resources as inputs into other productive sectors
understood and appreciated (e.g. water abstraction for hydro-electricity generation or
rice production?). The international literature indicates that the ‘value’ of natural
resources is not known well-known or recognised in many parts of the world
(Neiland and Bennett, 2003). In the case of some NR systems the situation is very
serious. For example, the wetlands of the Mekong region of SE Asia are central to
the livelihoods of the majority of the rural people, but this ‘value’ is consistently
underestimated by development planners and the rural poor lose out (Ratner et al.
(ii) Information/assessment: is this sufficient to support policy and management
decisions and allow reaction and adaptation to change?
Recognition of the value of NR for development, and then decisions over how NR
will be utilised within a national policy framework and through an appropriate NR
management system requires a broad range of multi-disciplinary information. The
type and quality of information will be determined by the assessment methods used
and applied and the effectiveness of their integration within the policy process and
management systems. In all the NR resource sub-sectors (forestry, fisheries, water
etc) there has been an increased use of information from both the natural and social
sciences, fundamentally to understand the bio-physical nature of NR, and the impact
of human society on these systems directly through resource exploitation and
indirectly through such effects as pollution. Approaches within the domains of
systems analysis, bio-economic modelling, ecological economics and environmental
economics are helping to provide an improved basis for NR assessment and decision-
making. However, the relationship between information systems and assessment and
the nature and functioning of NR policy and management systems can be complex.
For example, the case of the Peruvian anchovetta fishery (one of the largest fisheries
in the world) is instructive (Glantz, 1983). It shows that simply generating new
information and assessments, and then making them available to policy-makers will
not be sufficient to ensure a high level of performance of a NR system (in this case a
major fishery). NRM decisions will be influenced by a wide range of factors –
political, economic, social etc. In the case of Peru, while policy-makers did not
ignore the advice of scientists (whose information suggested an imminent fishery
collapse), ultimately this advice was overshadowed by larger political factors and
issues, which made it difficult to take ‘hard decisions’ in the time available.
(iii) Policy narratives: do they include an appropriate conceptualisation of the
relationship between NR and development (pathways, options)?
The type of NR policy and NRM approach used by government and the relationship
to development policy will be underpinned by a particular set of policy narratives.
These narratives will be based upon a particular conceptualisation of the NR system,
and will be used to describe key issues and how to deal with them. A good
understanding of the relationship between the environment and NRM and livelihoods
of people in both rural and urban areas is fundamental for policy development. In
general, it is widely accepted that poor people in particular are highly dependent on
NR (land, water, wood fuel and clean air) (DFID, 2004a). The state of the
environment is therefore central to livelihoods, health and security of millions of
people living in poverty and therefore to pro-poor growth (DFID, 2004a). Clearly,
within the context of national policy-making, it is important therefore to ask: Is there
an explicit understanding of the poverty-environment links within a country (in other
words for health, livelihoods and vulnerability?) (DFID, EC, UNDP, WB, 2002).
However, the relationship between NR and poverty reduction can be viewed from a
number of perspectives. In some countries, NR will support large numbers of poor
people, through direct participation in resource exploitation. In other countries, NR
will contribute to livelihoods and poverty reduction indirectly, with indirect flows of
benefits to society through taxation and re-distribution of NR activities. For example,
in the case of fisheries, many countries have used policy narratives which emphasise
the maximisation of fisheries production through technical interventions to generate
a wide range of benefits for society. Unfortunately, these narratives and related
approaches have underestimated the complexity of the fisheries development process
and overall performance has been low (e.g. see the case of Mexican fisheries,
Hernandez and Kempton, 2003). More recently, policy narratives which recognise a
broad range of issues (technical, economic, social) have proved to be more
successful as a basis for effective fisheries development policy and fisheries
management (e.g. see the case of fisheries in Mauritania, Toueilib, 2002).
(iv) Nature of the policy process: is it dynamic, active and willing to adapt and
take hard decisions? Is it transparent, evidence-based and accountable?
The nature of the policy process itself is an important issue affecting NRM
performance. The policy process includes both the design and implementation of
policy, and it can be influenced and shaped by a wide range of factors. These factors
include both the national policy context (is it supportive and enabling?), the ability
and willingness of stakeholders to compromise and cooperate (is power distributed
symmetrically?) and the effectiveness and credibility of decision-making processes
(objective, transparent and accountable decision-making? Responsive and
An interesting comparison, with respect to the nature of the policy process and its
impact on NRM (fisheries), can be made between the Pacific Fisheries Forum
Agency (FFA) (Mueller, 2003) and the Estonian-Russian Fishery Commission
(ERFC) (Vetemaa et al. 2001). In the former case, the governments of the states
involved recognise the economic importance of fisheries, and have been willing to
cooperate and support the work of the FFA- the design and implementation of policy
operates within an enabling environment which allows stakeholders to cooperate
with one another, and to confidently put their trust in decision-making processes for
the benefit of all participants. By comparison, in the case of the ERFC, the political
and policy context has undergone major and rapid change in recent years, and the
enabling environment for the fisheries policy process has yet to emerge – new
institutions and organisations are still forming and learning about their roles, there
are financial constraints to their operation associated with economic transition, and
the relationship between stakeholders is often confused when vestiges of old
institutions still remain in place.
With regards to NR and the poverty reduction strategy process (PRS) in general in
developing countries, DFID (2004b) has set out a range of key questions which
should be addressed at each stage of analysis, formulation and implementation.
These include questions relating to information for policy decision-making and also
questions which focus on the nature of policy process itself. For example, at the PRS
formulation process stage, the questions are asked: to what degree is the PRS process
known among civil society and what has been their participation and influence in the
development of the PRS document? What were the obstacles in integrating
references to ENR issues and what have been overlooked in the PRS? What can be
learned for the future revisions of the PRS document and other PRS processes, and
what are the key next steps to improve pro-poor environmental outcomes through the
PRS? Clearly, this approach represents a step-forward in attempting to better
understand and manage the nature of the policy process.
(v) Participation: do all relevant stakeholders contribute to the policy process?
Globally, it is increasingly recognised that the effective management of natural
resources requires the appropriate participation of a full range of stakeholders in both
policy design and implementation. However, it is also recognised that in many
countries, policy is made and then handed-down by central government with only
limited involvement by other stakeholders. Under ideal circumstances, the
participation of stakeholders in the relevant national policy process will take place
through various processes of consultation and flows of information between
government and representativeness of key constituencies (e.g. forestry community
organisations, fishing organisations etc). Within strong States, with well-established
governance and institutions, constituencies of stakeholders would expect to have a
‘voice’ in national affairs relevant to their lives and work. However in weak States,
the possibility for stakeholders to form constituencies and to have a ‘voice’ in
national policy-making tends to be much reduced. In many situations, therefore the
challenge is two-fold: first, to encourage wider participation in the policy process,
and second, to ensure that the participation is appropriate and effective. With regards
to a national poverty reduction strategy (PRS) process, DFID (2004b) asks to what
extent the views and concerns of different groups within civil society have been
considered at the initial analysis and planning stages, and what roles are these groups
playing in PRS formulation and implementation.
With regards to the fisheries sector, a recent (albeit limited) survey of 50 case-study
fisheries from around the world, revealed that the participation of fishers and fisher
organizations is relatively limited (Neiland and Bene, 2003). In a majority of
countries, fisheries are controlled and managed by a centralized government
administration which makes policy, and this is handed down to the local fisheries
administration for implementation. However, there are some situations where this
pattern is changing. For example, in Kerala, India, where coastal fisheries provide
employment for thousands of small-scale and semi-industrial fishers, local fisher
organisations and the National Federation of Fishworkers (NFF) have resisted policy
decisions which impact adversely on their lives, and have established a ‘voice’
within the policy process (Reeves et al. 1997). However, this represents only a
‘partial’ success, since government does not have the full capacity or resources to
always implement the policy decisions agreed with fishers.
(vi) Laws: is there a well-established legal framework (as a basis for rights and
The laws of a country will define the rights of stakeholders in relation to the
exploitation of NR, and help to guide the operation of a NRM system through
relevant regulations. The successful implementation of NR policy will depend, in
part, on the right combination of regulatory tools, which must be appropriately
defined (as rules or laws), implemented and enforced (with respect to the legal
system of the country). However, there is much evidence to show that the definition
and enforcement of laws for NR, which are mainly common pool resources, is a
complex issue, with considerable variation in experience from different parts of the
The importance of a well-designed and functional legal system to underpin fisheries
policy and fisheries management can be illustrated by a comparison between Uganda
and Cambodia, countries where inland fisheries underpin the livelihoods of
thousands of rural households. The Government of Uganda has recognized and
incorporated a series of amendments into its fisheries policy and fisheries laws to
facilitate and enable the development of a co-management approach to fisheries
management (DFID, 2002). The legal amendments will pass the rights and
responsibilities for fisheries management to a partnership between local communities
and local government. There are good indications that these arrangements will lead
to an improved fisheries management performance, with particular reference to
poverty alleviation. In Cambodia, the necessary development and strengthening of
the legal system, in general, will require more time and assistance (Degen and
Thouk, 1998). For the time-being, the very large fisheries of the Tonle Sap and the
Mekong Basin, in general, are operating within the context of a weak policy and
legal environment. There is a significant asymmetrical economic and political
relationship between the licenced ‘owners’ of major inland fisheries (e.g. Tonle Sap
Lake) and the local communities, which means that the wealth of the fisheries is
monopolised by relatively few individuals. In time, and with changes to the fisheries
policy and law, there will be many possibilities for using the wealth from fisheries
for economic development and poverty alleviation. The challenge remains as to how
to bring this change about.
(vii) Institutions: is there an appropriate institutional framework (organisations and
The performance of a NRM system will be affected by the nature of the institutional
framework within which it must operate. Institutions represent the framework of
rules (both formal and informal) which define and govern the relationships between
different stakeholders within the system (e.g. farmers-fishers-traders-government
officers), and between the stakeholders and the NR (e.g. property rights over
particular resources or benefit streams). Institutions are a fundamental part of
It is well-recognised that sustainable development and pro-poor growth will be
supported or constrained by the institutional structures in-country (World Bank,
2003; World Resources Report, 2004). According to DFID (2004), some of the key
issues which need to be addressed are: What access to NR do the more marginalized
groups and those living in the vicinity have? How far is community ownership of
natural resources the norm and/or encouraged? How is the issue of who collects and
benefits from the revenues from NR use resolved? How do poor people benefit? Is
there an indication of how this money going to government is to be reinvested into
In the case of fisheries, there are a wide array of different institutional arrangements
depending on the type of fishery, and the socio-economic, cultural and political
characteristics of the associated stakeholders. The development of an appropriate
institutional framework (or set of rules) for fisheries management will require the
participation of all stakeholders. It must take into account existing institutional
frameworks, both modern and traditional, and be prepared to deal with the difficulty
of trying to modify or replace institutions in the face of this type of complexity. This
in turn may require a long and gradual process of persuasion and consensus-building
guided by effective leaders.
The impact of institutional arrangements on the performance of fisheries
management systems varies throughout the world. For example, in northern Nigeria,
where inland fisheries are an important component of rural livelihoods, fisheries
management is complicated by the existence and interaction of both traditional and
modern institutions, with new layers of institutions added over time as the nature of
the State and the wider political context changes (Neiland et al., 2004). Within this
large country and complex situation, it is difficult for the Fisheries Administration of
the modern State of Nigeria, to impose a standard fisheries management approach,
and to regulate the existing and diverse local fisheries management systems. In
effect, therefore, the performance of fisheries management in northern Nigeria is
directly related to local institutions – some of which perform well, and others which
do not, in terms of poverty alleviation. By contrast, the institutional arrangements in
many Pacific Island fisheries, which also support thousands of livelihoods, are
relatively uncomplicated. For example, in the Cook Islands the management
approach preferred by government is an ITQ system (Adams, 1998). Part of the
reason for this relates to the role of the Aitutaki Island Council which has been able
to involve the local communities in the management system, and all of the fishery
stakeholders can relate and understand the institutions which have emerged – a
simple blend of modern and traditional rules which have been legitimized by the
involvement of the Council and the communities working with government leading
to a successful fishery.
(viii) Management capacity: is there an appropriate capacity to manage the NR
(technically, financially etc)?
The performance of NR management systems is related to the capacity of the
management authority to make available the necessary management and technical
skills, and to provide other assets. The management bodies (or administrative
entities) have to operate within the context of agreed institutions or rules. They set
objectives for management, and apply the necessary technical, human and financial
(or assets) to achieve these objectives. Clearly, if a management organisation lacks
this type of capacity, then the performance of the management system overall is
likely to be impeded.
An assessment of management capacity is an essential part of introducing co-
management initiatives or transfers of responsibilities within NR systems. Capacity-
building also requires careful design and implementation, but can have immediate
and positive effects on target organizations and other entities such as community
(ix) Political will/desire: is there sufficient desire (incentives?) to manage NR
The performance of NR management systems are influenced by political will and
leadership. In many ways, this is an issue which cuts across all of the other nine
issues above. In fundamental terms, the term ‘political will’ expresses the extent and
nature of support which government and its policy-makers provide for a NR sector in
real terms. Clearly, without the support of government and policy-makers to create
an enabling environment for policy design and implementation, the performance of
NR systems (e.g. fisheries management systems) will almost certainly be
constrained. However, creating an enabling environment is not sufficient, and
effective fisheries management for example also requires a champion to take forward
the changes that are inevitably involved. Political will or support from government
for fisheries management is an essential prerequisite for the effective implementation
of policy, and it most readily appears once the value of the fisheries is recognised.
4.4. POLICY ISSUES FOR THE FUTURE – A SUMMARY
In summary, therefore, effective and appropriate government policy-making is
essential for poverty alleviation and economic growth. Within the domain of natural
resource management, and its role in development, it is important to understand the
underlying relationship between the policy process and governance. Theoretical and
empirical research has shown that there are a range of related factors – information,
participation, institutions, legal frameworks, management capacity - which impact
ultimately on the performance of natural resource management. However, in sectors
such as fisheries, further research is needed to provide a better understanding of these
factors, and how this might be used to improve policy design and implementation.
With the domain of the environment and natural resources in general, there are at
least three areas where a need for a better understanding and the application of new
policy approaches for a better future appear to be given particular emphasis in the
international literature, as follows:
(i) Role of environment and natural resources in development:
It has been noted that initiatives to improve growth – Poverty Reduction Strategy
Papers (PRSPs), donor plans (e.g. DFID Country Assistance Plans) and other
planning processes – have not always appreciated the environmental opportunities
and risks for economic growth (DFID, 2004). To date, about 50 countries have
prepared interim and full PRSPs, but only 12 of the 28 full PRSPs present some
information on the baselines and targets in line with the Millennium Development
Goal (MDG) 7: Ensuring Environmental Sustainability; and none of the 22 interim
PRSPs present discussion on the long-term perspective (Bojo and Reddy, 2003).
Within the PRSPs that present targets aligned with MDG7, attention is almost
exclusively focused on water and sanitation. Bojo and Reddy (2003) conclude that a
major effort is needed to raise the attention to MDG7 in the PRSPs.
In fisheries, there is a need to clarify the role of this sector in national development
strategies, and to understand the level and flow of benefits which can contribute to
development (and poverty alleviation).
(ii) Analysis and empirical work
Three important perspectives on analytical and empirical work are prominent in the
literature with reference to the role of natural resources (and environment) and
development (and poverty alleviation):
First, there is still a great shortage of empirical work in all areas. For example, to
document the contribution of particular sectors to economies, and to undertake
comparisons with other sectors; to describe and value the contribution of NR to
livelihoods; and to devise appropriate indicators for incorporation in PRSPs relevant
to environmental management.
Second, there is a need to develop an appropriate analytical framework linking
natural resources to economic growth and poverty alleviation, which is holistic and
which incorporates the political context and the nature of change over time. Steele
(2004) has recently presented a draft framework which attempts to incorporate these
important dimensions, and this represents an important starting point for future work.
Reed (2004) also presents an analytical approach for use by a full range of
stakeholders that ‘are seeking to change in fundamental ways, the dynamics of
poverty and environmental degradation in rural areas of the developing world’. The
approach is claimed to be distinguished from others (DFID – Livelihoods Approach,
UNDP – Win-Win approach, and World Bank – PRSPs) by meeting three specific
standards: (i) it must analyse the complex dynamics between the rural poor and the
environment in specific locations; (ii) it must interpret relations between the local
poverty-environment dynamics and policies and institutions at meso and macro
levels in each country; and (iii) it must analyse relations between economic policy
and institutional arrangements at the three levels as they affect poverty-environment
Third, fisheries sector analysis and planning is still dominated by consideration of the
size of fish stocks and levels of production. There is a need to broaden the analysis to
include a full range of cross-cutting and multi-disciplinary themes, with an emphasis
on the design and implementation of appropriate policies and management systems.
(iii) Policy and recommendations
First, in order to maximize the contribution of the environment and natural resources
in general to economic growth and poverty alleviation, policy-makers must address
the range of issues highlighted in Section 3(above), and attempt to overcome possible
constraints through appropriate actions. DFID (2004) has identified the following
- better understand the links between NR, the environment and economic growth;
- maximize the economic benefits from NR sectors;
- greater spending on NR and the environment;
- maximise government revenues from environmental fiscal reforms;
- recognize the economic costs of poor management;
- remove environmentally damaging subsidies;
- promote wise re-investment in other forms of capital and good governance;
- better participation of the poor in natural resource-based growth;
Second, for the fisheries sector, the central policy issue is that of improved fisheries
management performance. For many countries, governments need to ensure that
appropriate fisheries management systems and authorities are encouraged to be
proactive in pursuing certain critical issues that if tackled can achieve this goal
including improved fisheries governance, establishing rights and ending open-access
arrangements, developing an appropriate fisheries management authority, methods to
realise wealth from a fishery, and dealing with transition (making explicit the costs
and benefits of change) (World Bank/SIFAR, 2004).
4.5. REFERENCES AND ADDITIONAL READING
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