Research Article

Impact of a simultaneous reduction in fishing subsidies and introduction of efficient management of rents: the case of the Northwest Spanish fleet

¹ Environmental and Natural Resource Economics at the Faculty of Science, University of Copenhagen, Copenhagen, Denmark
² Department of Economics, Swedish University of Agricultural Sciences (SLU), Lund, Sweden
³ Institute of Food and Resource Economics, Faculty of Science, University of Copenhagen, Rolighedsvej 25, 1958 Frederiksberg C, Denmark

^* Corresponding author: emegar@hotmail.com

Handling Editor: Olivier Thebaud

Received: 16 February 2017
Accepted: 10 October 2017

Abstract

Subsidies to the fishing sector have long been criticized for fueling over-fishing, and a reduction in subsidies is currently on the agenda in the negotiations within the World Trade Organization (WTO). This article analyzes the role of subsidies and other management measures for Spain, one of the largest fishing nations within the EU. A static bio-economic model is used to analyze the effect of simultaneous elimination of subsidies and introduction of an economically efficient management system for the Northwest Spanish fleet. It is concluded that improvements in management would bring substantial rents to the industry, up to €164 million, irrespective of subsidy level, but also a reduction in fishing effort of almost 60%. Under a management scheme that maximizes economic rents, elimination of subsidies in the fishery would increase social welfare, induced by a decrease in the equilibrium fishing effort level. However, the impact of subsidies under this scheme is limited.