Economic performance and management of the Gulf of Papua prawn fishery

• National Fisheries Authority, Papua New Guinea

The management of limited access fisheries is a difficult challenge. In most cases the harvesting capacity of the fishing fleet exceeds the biological capacity of the resource to regenerate, threatening the viability of the natural resource itself. As a result some type of control aimed at reducing catch or harvesting capacity is necessary. Ideally, management of the fishery should both enhance economic performance and guarantee the biological and economic sustainability of fish stocks for generations to come. The key target for the economic management of the fishery is Maximum Economic Yield (MEY), or a catch or effort level that maximises the discounted value of total revenue minus the total costs of fishing. Economic efficiency also requires that vessel and fleet capacity minimises the cost of harvest at this MEY catch rate.

The National Fisheries Authority (NFA) has the task of managing all fisheries in Papua New Guinea, including the Gulf of Papua Prawn Fishery (GPPF). The GPPF currently catches between 400 and 650 tonnes of banana prawns and 160 tonnes of black tiger prawns each year, worth roughly K15 million. There are 15 vessels in the fishery, with average landings that range between 25 and 70 tonnes. Formal assessment of the economic and biological status of the fishery has been hampered by poor quality logbook and financial data and a lack of an adequate time series of catches and catch rates needed to undertake a stock assessment or construct a bioeconomic model. Recent rises in fuel prices and catch rates have threatened the economic viability of the fishery.

The project objectives were to analyse the economics of the GPPF fishery and the industry, to:
document their economic status
assess economic performance
develop and evaluate management and policy options
assess the impact of a small boat (inshore) fishery on the Gulf of Papua prawn fishery.

The project worked in tandem with a biological stock assessment project (FIS/2002/056) to compile extensive paper logbook records, in order to estimate the biological and economic yield of the resource. The main component of the economic research was to combine the stock assessment analysis with a stochastic bioeconomic model to determine optimal catch and profit levels at MEY for the fishery. The stock assessment generated a standard surplus-production model, and a survey of fishing vessels provided the required information on the price of prawns by species and grade and the cost of fishing. Extensive data were compiled on both variable and fixed costs from fishing, including capital components, crew and skipper costs, repairs and maintenance and fuel.

The bioeconomic model revealed that the recent catches of about 550 tonnes were biologically but not economically sustainable (especially with current fleet size), and that the fishery should target a catch of 480 tonnes of banana prawns per year to maximise profits. Given these catch rates, the project also found that the number of fishing licenses should be reduced to around 10, improving the returns to each operator and matching fleet capacity to the amount of annual catch. Economic data collection and analysis revealed that a substantial portion of variable costs accrued to repairs and maintenance. Much of the GPPF fleet comprises vessels in excess of 20 years in age, purchased from operators in the Northern Prawn Fishery (NPF) of Australia. Current vessel capital and catch rates were not sufficient to allow for adequate upgrade and repairs of vessels. The MEY target of 480 tonnes and a fleet of 10 boats will generate sufficient revenues at current prices to address this problem, and allow for cost recovery management of the fishery.

The measure of MEY changes periodically, affected by changes in the price of fish and the cost of fishing. The project equipped and trained economists at NFA to conduct suitable bioeconomic analyses to determine dynamic MEY levels in the future, so that the target value of catch can be adjusted with proper economic management of the fishery. Current management directives indicate that MEY will be recalculated annually. This process is facilitated by the ongoing collection of economic data as a planned part of licence requirements to fish in the GPPF.

One of the consequences of the extensive data collection during the project has been to improve the level of interaction and trust between the fishing companies and the NFA. The combined projects recommend that these improved relations be sustained by appointing an industry liaison officer to facilitate collection of vessel logbooks and company landings, along with financial and economic data. The liaison officer will also provide data summaries to each company that will enable them to better track the status of the prawn resource.

As part of the overall management of the fishery, a key recommendation of this project is to allow an extension of fishing licenses from the current one-year renewable to a five-year renewable system. This would provide operators with more security (and a potential for accessing loans based on this right), and further secure effective property rights to fish. It was also recommended that these licenses be tradeable so that the right to fish can be effectively transferred from high to low marginal cost fishers. This transfer enhances efficiency in the fishery and lowers the overall cost of fishing.

A final component of the project was to assess the potential for an independent fishery inshore of the 3 nautical mile (nm) closure by small vessels operated by the local community. VMS and logbook data showed that about a third of the total prawn catch in the GPPF was coming from within the 3 nm closure zone, despite trawling in this zone being prohibited. Illegal accessing of the inshore waters has been a source of great tension between the fishing industry and traditional resource owners in the Gulf of Papua.

Although the biology project (FIS/2002/056) found that this illegal fishing into the 3 nm zone did not appear to substantially impact the sustainability of the prawn resource, from an economic perspective, catch rates within the 3 nm zone were over 30% higher than on the adjacent fishing grounds. Thus the economic viability of the fishery is largely dependent on accessibility by the operators in the industrial fishery to the inshore waters with higher prawn densities. With this in mind, the project recommended that fishing operators be allowed to access the zone up to 2 nm from the coast during the second half of the year. The project also recommended that individual operators enter into an access agreement with the traditional resource owners before they start to fish within the 3 nm limit. This resource sharing will enable some of the economic benefits gained by the industrial fishery to return to the community and thus reduce the tension between both parties.