The Economics of Open-Access Fisheries: Subsidies and Performance of Vietnamese Fisheries

Abstract

This dissertation focuses on analysing the economics of an open-access fishery and on evaluating the effects of government subsidy programmes on the fishing industry. The dissertation adopts a sustainable development perspective for assessing the effects of subsidies. Although the key focus of the research is on the economic effects of subsidies, the ecological and social dimensions are taken into account. The dissertation integrates the theoretical frameworks of bioeconomics and vessel economics of fisheries and empirical investigations to examine the research problems. The empirical analyses are applied to Vietnam’s open-access offshore fisheries operating in the South China Sea (SCS). The dissertation indicates that the Government’s subsidy interventions have had a negative impact on the sustainable development of the offshore fisheries. The design of such subsidy programmes provides incentives for fishers to invest in their fishing effort and capacity. The policy goal of improving the income and profitability of the fisheries by the use of subsidies can be achieved only in the short term under the open-access fishing scheme. In the long term, the environmental deterioration will counter the effect of the subsidies on economic and social sustainability. The dissertation recommends that it would be wise for Vietnam to seek to operate a fisheries management system that is designed to prevent overfishing and overcapacity and to promote the recovery of overfished stocks for offshore fisheries, hence approaching the goals of sustainable development. However, international negotiations and the existing dispute settlements based on international law should firstly be used to identify an internationally recognized delineation of the SCS to avoid encouraging the presence of countries’ own vessels in this region with the use of subsidies. The establishment of an effectively cooperative fishing regime in the SCS region should be promoted. The calls for sharing the total allowable catch among the involved countries should be considered. Finally, the dissertation contributes to the further development of the methods for comparing the economic performance and efficiency of vessels by the standardization of fishing effort and the estimation of a Salter diagram. It extends the traditional economic model of Gordon to illustrate the existence of intra-marginal rent for an open-access fishery with heterogeneous vessels and to model the static effects of revenue-enhancing lump sum subsidies on the fishery and individual vessels. It provides the first contribution to the literature regarding the treatment effect evaluation of a subsidy programme on a Southeast Asian fishery. It also uses different fish stock measures to estimate the technical efficiency of vessels due to the lack of stock estimates, which have been ignored in the previously published studies on Vietnam’s fisheries. For future work, a proper analysis framework for assessing the effects of fisheries subsidies, including consistent methodologies, should be developed for the SCS fisheries. This review and assessment should address the economic, environmental and social outcomes, potential trade-offs and cost-effectiveness, as well as taking into account the size of the impacts and the probabilities associated with the potential outcomes.