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Reimbursing the future: an evaluation of motivational, voluntary, price-based, property-right, and regulatory incentives for the conservation of biodiversity

Biodiversity Series, Paper No. 9
M.D. Young, N. Gunningham, J. Elix, J. Lambert, B. Howard, P. Grabosky and E. McCrone
CSIRO Division of Wildlife and Ecology, the Australian Centre for Environmental Law, and Community Solutions
Biodiversity Unit, Department of the Environment, Sport and Territories, 1996
ISBN 0 642 24429 4

Appendix 2.4: NSW fisheries case study

Prepared by Mike Young
CSIRO Division of Wildlife and Ecology, Canberra


This case study aims to identify the potential of incentive instruments and mechanisms to promote the conservation of biodiversity in the marine environment of New South Wales (NSW) and to encourage the sustainable use of these biodiverse resources. The emphasis is on biodiversity conservation and the ecologically sustainable use of its attributes, not economic development. At the outset, attention is drawn to the fact that, throughout the marine environment of most of Australia and NSW, knowledge about biodiversity is very poor and the threats to it are numerous. Indeed, many people who use these resources have not yet heard the word biodiversity. Pragmatically this study only examines the opportunity to use incentives to reduce a subset of observed threats.

The area

The area covered by this study is shown in Figure 2.4.1. It includes the area from the Queensland border to the Victorian border out to the 200 mile limit. Lord Howe Island is included in this study. Figure 2.4.1 attempts to summarise the means by which jurisdiction for fisheries management is divided between New South Wales and the Commonwealth. Essentially arrangements vary according to fishing method and whether or not fish are caught by recreational2 or commercial fishers.

Under the United Nations Convention on the Law of the Sea, Australia has proclaimed its right to manage the use of marine resources within 200 nautical miles of the coast. Generally the management of all waters within three nautical miles of the coast is defined as State responsibility. The rest of the area, out to 200 nautical miles from the coastal headlands, is under the jurisdiction of the Commonwealth government. But this situation is unworkable so, under a formal Off-shore Constitutional Settlement, responsibilities have been redefined so that NSW has responsibility for all recreational fishing out to 200 nautical miles and for the majority of types of fishing in the northern half of the State out to a line approximately 80 nautical miles from the coast. In recognition of the problems that these arrangements pose for fisheries management, the existing suite of Off-shore Constitutional Arrangements is being renegotiated, but at present NSW is essentially responsible for:

North of Barrenjoey Point, the Commonwealth is responsible for:

With the exception of recreational fishing, the Commonwealth is responsible for all trawling south of Barrenjoey Point and beyond 3 nautical miles from the coast.

NSW Fisheries is the State department responsible for all State managed fishing activity. The Commonwealth's responsibilities are managed through the auspices of the Australian Fisheries Management Authority.3 Responsibility for pollution of these waters and maintenance of its biodiversity is divided among State and Commonwealth departments, but lies predominantly with the NSW Environment Protection Authority.

Figure 2.4.1: The case study area and its key administrative arrangements.

Figure 2.4.1: The case study area and its key administrative arrangements.

Biodiversity status

By world standards, the NSW fishery is low in productivity and largely deep water in character. It is the inshore, coastal and estuarine environments where threats appear to be more acute, but this may only be because we know more about these areas. Around 90% of the marine groups found in this area are endemic to south and south-eastern Australia. A key consideration is the status of the State's estuaries. According to Saenger (cited in Zann, 1995) no estuary contains water of excellent quality and conservation values are threatened in 21% of the State's estuaries (see Table 2.4.1).

These estuaries are very important as nursery areas for many fish species and marine organisms. Examples of commercial species to which the estuaries are important include school prawns, yellowfin bream, luderick and sea mullet. The water that flows from these estuaries also influences the surrounding marine environment. Key problems include dieback of seagrass, and loss of coastal saltmarshes and mangroves through land fill and reclamation. The data for seagrass dieback in NSW is striking. According to the recent State of Marine Environment Report (Zann, 1995):

Most of these losses are thought to have occurred since 1950. Reliable data which show the rate of recent losses are not available.

Table 2.4.1: One overview of the status of NSW estuaries
% of estuaries with ... %
Uncleared catchments 24.7
Excellent water quality -0
High fisheries value 24.7
High conservation value 16.0
Threats to conservation value 21.0
Adequate state of knowledge -100.0

Source: Zann 1995, p.6, which cites Saenger (unpublished)

NSW fisheries

Each year, well over 100 species of fish are caught within the study area and sold by commercial fishers into NSW markets. Recreational fishing pressure, especially in the inner northern half of the region, is high. One in three Australians goes fishing at least once a year. About 26% live within 3 km of the coastline (McDonald et al., 1994). Most of the rest live within half a day's drive to the coast and routinely use the beaches and nearby hinterlands for recreation (Hamilton and Cocks, 1993). Estuaries are prized for the recreational and tourism opportunities they offer. Moreover, increase in the general environmental quality and biodiversity value of these estuaries and near coastal areas would result in significant increases in recreational and tourist income. However, this may itself pose an additional threat to biodiversity.

Stocks of a number of fish species exploited by the commercial industry alone and also those exploited by both the commercial and recreational sectors are in decline. As a result of an observed decline in the mean size of gemfish in the eastern spawning run and a significant decline in catch rates during the early 1980s, individually transferable quotas were introduced in 1988 (Rowling 1987, 1994, see Table 2.4.2). The reasons for this decline are not fully understood. It is clear that there has been significant recruitment failure in the eastern gemfish stock, but it is not certain whether or not this has been caused solely by overfishing or an environmental factor, or by a combination of both. Table 2.4.2 shows how quotas have been introduced and then used as a means to reduce fishing effort. The difference between the columns are due to practices such as discarding fish not suitable for the market, some illegal sales and fish caught as bycatch for which a quota is not required.

Unfortunately, whilst many problems can be identified, data on most of the State's fishery resources are patchy and, in most cases, inadequate for fine-scale management. In many cases, management decisions are underpinned by little scientific information. Stock estimates for most species are not available and have never been estimated. Whilst several fresh water fish are endangered, as yet, no marine species of fish have been listed as endangered.

Table 2.4.2 Recorded gemfish catch history for the South East Fishery which include all the Victorian and Tasmanian fisheries

Table 2.4.2: Recorded gemfish catch history for the South East Fishery which include all the Victorian and Tasmanian fisheries
Year Tonnes reported by fishers Actual Catch (tonnes) Total allowable catch (tonnes)
1984 2495 3100 -
1985 2776 3100 -
1986 2995 3800 -
1987 4046 4300 -
1988 3654 3700 300
1989 1936 2400 3000
1990 1198 1300 1750
1991 561 600 500
1992 700 930 200
1993 392 640 0
1994 - - 0

Source: Rowling, 1994.

Threats to biodiversity values

Throughout this case study, it is necessary to distinguish between threats to biodiversity and more general threats to the environment. Actions that lead to declines in biodiversity values can be grouped into habitat loss and modification, species use and modification of the gene pool.

Ecosystem and habitat loss and decline

One of the fundamental causes of decline in biodiversity values throughout the marine and coastal regions of NSW is human population increase which is resulting in increasing pressure on all aspects of the environment in this area. Except within National Parks, there is no 10 km strip along the coast of NSW that has not been accompanied by a significant increase in population during the last twenty years (Hamilton and Cocks, 1993). The resultant landscape development and modification has led to:

These losses, in turn, change the marine environment in a manner that diminishes biodiversity values and may eventually threaten them at either the ecosystem, species or genetic level. Of the above habitat modification issues, arguably those associated with point and non-point sources of pollution pose the most serious threats to biodiversity. Caused by urbanisation and a failure to upgrade standards, point sources of pollution flow via the sewerage system from industrial and household sectors into estuaries and the sea. Full treatment of much of this sewage is rare, with much of Sydney's sewage undergoing only advanced primary treatment. Another main source is stormwater run-off which is primarily a function of the proportion of impervious area in the catchment as conditioned by sediment traps. The problems associated with non-point sources of pollution include agricultural chemicals (pesticides and nutrients) and silt from areas that have been cleared or are being farmed or grazed.

Habitat modification can also arise from trawling, especially bottom trawling which can be very destructive for bottom dwelling plants and animals. Bottom trawling is often accompanied by considerable bycatch that is discarded. It has been estimated that Australian prawn trawlers discard about 3,000 tonnes of material, primarily crustaceans and echinoderms, for every 500 tonnes of prawns. Dumped over the side, this bycatch can raise nutrient levels and may lead to oxygen depletion as it sinks to the sea bed (Wassenberg and Hill 1990; Hill and Wassenburg, 1990; Jones 1992).

Direct species loss

The second class of threats arises from attempts to exploit natural populations of marine animals - fish, molluscs, crayfish, etc. In this case, the main issue is fishing at an intensity of harvest that results in collapse of the stock of one or more species unless strict controls are introduced. As can be seen from Table 2.4.2, this may have happened with gemfish and steps are being taken to bring about a recovery of that population (Tilzey, 1994). The only strategy known is to reduce the fishing effort until the stock recovers. It is not known if this recovery will be slow or rapid as such predictions require an appreciation of the factors that drive recruitment and survival of these fish. Unfortunately that knowledge is not yet available.

Gene loss

The third class of threat comes from the direct effects of an introduced species on other species. One example of this is the introduction of the Pacific oyster (Crassostrea gigas). This species was deliberately introduced into Tasmania, Western Australia and Victoria (Malcolm, 1987; Mather, 1993) and, subsequently, transferred accidentally to New South Wales where it is challenging the local Sydney rock oyster (Saccostrea commercialis). Cultivation of this alien oyster, which is capable of dislodging the Sydney rock oyster, may eventually lead to a substantial decline in the genetic diversity of the local rock oysters and/or significant modification of their genetic structure. The flow-on effects of this on the State's near coastal ecosystems are unknown.

Other threats of significance for biodiversity include:

Potential incentive instruments and mechanisms

In this section we discuss the role and potential of different incentive instruments and mechanisms. In each case we will assume that the existing regulatory system will remain, at least, as a precautionary minimum standard. The main conclusions that arise from the project team's initial research are:

Ecosystem and habitat loss

The first threat we address is direct marine ecosystem and habitat loss, which occurs largely as a result of the drainage and clearance of mangroves, sand and mud flats, and, also, the construction of weirs and sea walls. At present, throughout the entire coast, these processes are controlled, almost solely, by regulations. The main regulations are a series of development controls administered by local councils and, for large scale developments, the State government. As indicated earlier, the losses have been substantial and can be expected to continue unless a policy change occurs. For the purposes of discussion we assume that, at a regional level, the desired target is no further loss of critical marine habitat. It may be possible to allow some further loss in already degraded areas, but in such cases reclamation (either of the site in question or another site) to replace as many lost functions as possible would need to accompany any proposed development.

Policy opportunity 1
Replacement cost pricing

One option for the reversal of the gradual loss of further mangrove swamps and salt marshes is to introduce a mechanism whereby developers have an incentive to find ways to cost-effectively offset the damage they do. Clearly, replacement of ecological functions will never be possible but some restoration and construction to provide alternative ecological niches is possible. Where inshore habitat is disturbed, for example, artificial reefs can be constructed. When this approach is taken, some but not all the lost ecological functions can be replaced. The mechanism, however, does draw attention to the nature of the damage caused and, in some circumstances, does reduce the total amount of damage done. Opponents to this mechanism argue that it increases the number of development approvals given and thereby acts against the conservation of biodiversity.

Under current practice, developers are rarely required to attempt to offset the effects of their activities on the commercial and recreational fisheries and on the tourism industry. The most commonly advocated incentive mechanism to rectify this problem is to charge aspiring developers for the cost of replacing the habitat that is lost. To ensure that this money results in actual replacement of habitat, the money can be placed in a trust fund reserved for that purpose. The trust fund can then be managed by those most affected by the loss or, alternatively, a local council, catchment management body or coastal authority. A dynamic incentive to do better than that achievable by the trust managers can be introduced by allowing developers to undertake the work themselves within constraints set by an overseeing body. This approach has been tried in Germany and their regional government has found that developers usually prefer to do the work themselves (Young, 1992). This last incentive mechanism is particularly attractive as it encourages developers to search for innovative solutions to particularly intractable problems.

Policy opportunity 2
Tradeable development rights4

In a situation in which knowledge of biodiversity is significantly more complete and commitments to its conservation widely accepted, better developed and integrated into regional and national planning strategies, tradeable development rights could be considered as an option. Tradeable development rights offer a variant of the above replacement cost pricing model and are a mechanism whereby regional targets are set for each environmental objective. Thus, after an exhaustive environmental assessment and the setting of precautionary standards, a local council may decide to maintain, at least, 2,000 hectares of mangroves in the area it administers. If 3,000 hectares remain in the council area then the council could either auction 1,000 hectares of clearance rights or issue clearing rights to those who hold title to uncleared mangroves on a pro-rata basis. Areas set aside as areas of special significance would be designated as not being available for clearance but those who own title to them would still receive a transferable allocation of clearing rights. Speculators, fishers and environmentalists, local citizens and the State government would all be able to buy the clearance rights. Developers could obtain additional rights by restoring degraded swamps. Those who drained swamps without permission would need to be heavily penalised but they also could be required to acquire for conservation purposes sufficient rights to offset the damage they have caused.

Legislation would be necessary to set up such a mangrove protection scheme and it could operate at a statewide or local government level, with planning taking place within a bioregional or catchment context to ensure adequate protection across that region. The rights held could be either to clear a fixed area or a proportion of the area set aside for clearance during the next, say, five years. A developer who obtained sufficient clearance rights to proceed with a development in a non-designated mangrove area would be entitled to compensation if the proposed development was refused on the grounds that the affected mangroves could not be developed.

Ecosystem and habitat decline

Ecosystem and habitat modification can ultimately result in destruction in the same way as direct clearance or drainage. In most cases, however, the proximate cause is pollution from urban, industrial and agricultural sources. For clarity of analysis, pollution sources are usually partitioned into non-point and point sources. Point sources usually enter the waterway via a pipe that begins in a house, factory or shop. Industrial trade waste, which enters the sewage stream via a pipe, is one example of a point source pollutant. Non-point sources are so named because the exact source is often difficult to identify. The run-off of nitrogen from agricultural land is an example of a non-point pollutant. Some non-point source pollution problems, like soil erosion, are complicated by the fact that some erosion is due to natural causes.

Point-source pollution5

Generally, the challenge in resolving virtually all point-source pollution problems is to get industry and households to reduce emissions. One of the main attractions of some incentive approaches is that they encourage change in existing as well as new enterprises. Up and down the coast of NSW, incentive instruments are widely used with various degrees of effectiveness to reduce point sources of pollution. In the Hunter River region, for example, consumers are required to pay the full cost of supplying water to them and controlling water pollution problems (Resource Assessment Commission, 1993). Several shires recover the cost of cleaning up beach litter from those who hold beach site licences and permits. Such practices are, however, not widely adopted.

Policy opportunity 3
Load-based charging for waste and sewage by composition

Under present administrative arrangements, sewage is managed by a variety of licence arrangements that give little incentive to either reduce volume or change the composition of chemicals and pollutants that flow into the sewage stream. One option, "urgently" recommended by the Resource Assessment Commission (1993:299) but rarely adopted, is the introduction of a system of charges based on the volume and type of waste that is emitted. This is sometimes called load-based charging. Where this instrument has been used, it has proved effective. When the Hunter Water Corporation introduced a charge on the volume of waste water discharged from commercial premises in the Lower Hunter Valley, commercial operators were given a strong incentive to reduce waste flows (ABARE, 1993). If this option was adopted (and it could be done by local government) then significant reductions in waste emissions could be expected as industry seeks out ways to reuse waste and dispose of it in ways that do not enter the sewage stream. From a biodiversity perspective, the main beneficiaries would be long-lived species high up in the food chain like shark and orange roughy. Filter feeders like the Sydney rock oyster would also benefit.

An added benefit of the introduction of volumetric or load-based charging is that it would help to build the databases necessary for the introduction of tradeable emission permit systems discussed below.

Policy opportunity 4
Declaration of more marine protected areas

Across the terrestrial areas of Australia, the conservation of biodiversity has been achieved in part through the declaration of National Parks and reserves. In the case study area, however, the use of their equivalent – marine protected areas – is limited. Existing marine protected areas differ from National Parks and reserves in that they often permit multiple uses within some parts of the protected area. In some areas, for example, fishing is prohibited whilst in other areas all access is prohibited. But the issue is more complex than this. As well as protecting fish recruitment areas, it is also necessary to protect non-commercial species, as well as ecosystems and areas of value for recreation and ecotourism. Work is now going on throughout Australia to develop such areas and it is likely that these will soon have much greater coverage. Unless the use restrictions defined for these areas are supported by recreational fishers, charter boat operators and commercial fishers, the prevention of fishing in these areas may be difficult to enforce. Incentives to encourage this acceptance or in jargon terms – ownership of the decision – require attention to the public consultation processes used to select them. If the areas are chosen by the fishing industry and recreational users with assistance from scientists, ownership of the decision will be greater and, hence, abuse of the area less. As both the recreational and commercial industry can be expected to have a preference for the protection of recruitment sites, selection of these sites in advance of others may increase acceptance of the process and the end result.

Commercial industry acceptance of the need for marine protected areas could also be increased if recommendations for full recovery of commercial management costs (Industry Commission, 1992) are matched by mechanisms that provide a transparent allocation from the public, recreational and tourism sectors. Whilst some of this may need to come from consolidated revenue, as indicated later, a significant proportion could come from the coastal tourism and charter boat industry.

Policy opportunity 5
Off-shore Constitutional Settlement that gives pre-eminence to biodiversity conservation

A related issue is the question of the right of each jurisdiction involved in fishery and fishery habitat management to make decisions that affect the activities of another authority. The mechanisms used to resolve this set of problems are the series of Off-shore Constitutional Settlements, which are presently under renegotiation. The approach taken in these settlements, however, is one that apportions use according to fish species and type of activity. Given this, there is a risk that biodiversity considerations, which are more a function of interdependence between species and ecosystems, may be either over-ridden or not even considered because the data necessary to do this are not assembled. The most immediate solution to this potential problem lies in ensuring that the re-negotiated Off-shore Constitutional Settlements take account of biodiversity considerations. Alternatives might be either significant institutional reform or, alternatively, legislative arrangements that empower, for the reason of biodiversity conservation, each jurisdiction to restrict the approvals given by another. Such an arrangement could, for example, allow either NSW or AFMA to prevent all forms of fishing in the area between 3 and 80 nautical miles offshore and north of Barrenjoey Point.

Policy opportunity 6
Tradeable emission system for large industry in Sydney, Newcastle and Wollongong

A problem common to many industrial processes is that existing factories have little incentive to assist with the development and adoption of cleaner technology. They are licensed to do what they do and have no market incentive to improve. One way of providing an incentive is for industry to move to a system whereby emission caps are set for each region and then each firm is given a proportional share of the emission cap. These would be issued in the form of shares that entitle each firm to receive annual emission permits in proportion to the number of shares they had. Both shares and permits would be tradeable. The regional emission cap would be periodically revised. In regions where there are only a small number of companies, ownership concentration problems can be reduced by the use of 'zero-revenue auctions.' Under this arrangement, each year all shareholders are required to contribute a proportion of their shares to a competitive tender or auction process. Shareholders are then given the choice of either buying back their shares (at zero cost) or taking the money offered for them.

Under such a system any firm wishing to increase its emissions would have to buy shares or annual permits from another firm. Any group of people wishing to reduce total emissions in the area would be free to acquire emission shares or permits and/or lobby to have the cap reduced at the next review. If penalties were expressed in terms of the number of shares to be forfeited for each offence then the shares could also act as a pollution bond. If they are made mortgageable, then banks would be given an incentive to ensure compliance. For fishing and the encouragement of the sustained use of this biodiverse resource, the main advantage would be a system that effectively puts a cap on the stream of pollutants and provides a mechanism whereby the cost of pollution reduction becomes transparent.

Policy opportunity 7
Tradeable emission system for non-point source pollutants

Non-point sources of pollutants that pose a threat to marine ecosystems largely flow from two sources, stormwater run-off from urban areas, and run-off from agricultural areas. Storm water run-off is controlled, largely, via regulations that prevent the dumping of potential pollutants into places where they may come in contact with storm water and via engineering solutions such as the construction of sediment traps. Building controls also play a role and some councils in the Sydney region now require any extensions to result in no net increase in storm water flow.

Controls on agricultural run-off are few, and are largely constrained by market forces and land title boundaries. The prime mechanism for control is to keep all forms of agriculture away from the edges of streams so that sediment is trapped by a filter strip between the edge of the agricultural activity and the water course. Generally, the greater the 'gap' between the fence and the stream, and the greater the vegetation cover, the cleaner the water that enters the stream. Provision of better information about the profit-maximising quantity of fertiliser to apply is another strategy used.

An alternative strategy being explored by the NSW Environmental Protection Authority is the use of tradeable emission rights for both point and non-point sources of pollution (EPA, 1994a; 1994b). The attraction of this approach over many other approaches is that it rewards those people who give up emission rights and, because they receive a right, not previously held, the approach is financially attractive. One problem with this approach is the difficulty in measuring (particularly) non-point source emissions, and therefore quantifying the "right". The system also forces discussion about the volume of emissions that are ecologically sustainable and which, in theory, should include explicit consideration of biodiversity. The system being explored by the NSW Environmental Protection Authority is for phosphorus in the Hawkesbury River, but the model is readily adaptable to storm water run-off in Sydney, Newcastle or Wollongong, and to other non-point pollutants like nitrogen. It could also be extended to other river systems where there is pressure on biodiversity.

Policy opportunity 8
Conservation easements and covenants

As indicated above, one way of reducing run-off is to retain or construct vegetation filter strips between stream banks and agricultural activity. The main purpose of these filter strips is to trap sediment and surface run-off before it enters a stream. One way of doing this is to introduce mechanisms that enable the government and non-government organisations to acquire a conservation easement or covenant in the form of a filter strip over a land title. Changes to legislation in New South Wales would be necessary to facilitate acquisition and enforcement of covenant conditions acquired by either local government or non-government organisations. Provisions already exist for their use in areas of high value and the government is in the process of expanding their use as part of their efforts to encourage off-reserve conservation. To be effective from a biodiversity perspective, all grazing and fertilisation would have to be stopped within the area defined by the covenant. Opportunities to combine the use of covenants for the protection of endangered species may coincide with the use of covenants as a means to reduce non-point pollution.

Policy opportunity 9
Conditional sub-division rights (cross-compliance)

A variant of the above approach is to require people who wish to sub-divide a block of land to first commit themselves to a covenant requiring them and all subsequent landholders to maintain a filter strip along any waterway on that land. Essentially, this is a recommendation for cross-compliance in the sense that compliance with a social objective for biodiversity conservation is made a condition of approval to sub-divide. Some organisations oppose cross-compliance on the grounds that it has inequitable consequences for those who have made prior commitments to other objectives. An example of cross-compliance is the requirement that approval to sub-divide a farm only be given if an approved farm management plan is in place.

Policy opportunity 10
Storm water source reduction scheme

In urban areas the main non-point source of pollution is storm water. The main mechanism used to control storm water pollution is the construction of sediment traps and ponds. One alternative, however, is to provide councils with an economic incentive to reduce the extent of the sealed surface areas that are the source of much run-off. Streets, pavements, parking areas and roofs all contribute. One option being introduced in South Australia is the establishment of a body responsible for storm water management, coupled with a levy on all land owners to finance the cost of all its activities. Effectively, storm-water management is privatised. Significant gains, however, might be achievable if councils are made to contribute in proportion to the size off their contribution to run-off. If implemented in this manner then each council would have an incentive to find ways to reduce the contribution they make to storm water and, hence, the size of the payments they have to make to the central management authority.

Non-sustainable fishing

Rather than define a set of indicators of sustainable resource use, it is often more useful to regard ecologically sustainable development as a general concept and search for indicators of types of resource use which are not sustainable. In the case of NSW fisheries and from a biodiversity perspective, indicators of non-sustainable forms of resource use are assumed to include:

A key issue common to all fisheries is the extreme difficulty in enforcing conditions. Consequently, the case for developing mechanisms that encourage effective forms of self enforcement are greater than in many other policy areas.

Policy opportunity 11
Grants to NGOs

As so many people live near the coast, there are many opportunities to build strong non-government organisations with an interest in conserving marine biodiversity and encouraging its sustained use. Research conducted into the cost-effectiveness of these organisations suggests that for every dollar contributed by government, the community contributes more than three dollars. The challenge is to set up mechanisms that will enhance the effectiveness of networks and organisations like Coast Watch and the Marine and Coastal Community Network. Opportunities to do this include expanding the approvals under the existing definition of organisations eligible to receive tax-deductible donations and entrenching the provision of guaranteed funding for such organisations for several years.

Policy opportunity 12
Recreational licences and fees from charter boats

As of May 1995, there is no requirement for recreational anglers to obtain a licence to catch fish in NSW. One of the main reasons for this is a perception that the introduction of recreational fishing licences would be politically unacceptable. Nevertheless, they offer a mechanism to educate recreational fishers about fishing regulations and standards and, also, finance further work in this area.

Political acceptability could be improved by

From a biodiversity perspective, gains from the introduction of a recreational licence or equivalent mechanism would come from the chance to increase public awareness of the impact of, for example, anchors on reefs and the importance of respecting bag limits and minimum fish sizes.

The greater gains, however, might come from an integration of commercial and recreational fishing management driven by a need to work out how to spend the money collected. From a biodiversity perspective, the separate management of recreational and commercial catches over much of the study area is illogical. As observed by ABARE, "to ensure that fish stocks are shared efficiently and conserved for the future, the effects of both recreational and commercial fishing need to be considered in a single management framework and fish stocks explicitly shared between the two sectors" (Lal et al., 1992).

This suggestion for the introduction of recreational licences raises the issue of the need to find an equitable and efficient means to charge the tourism sector for the significant benefits it derives from activities associated with the conservation of marine biodiversity. As demonstrated by the Great Barrier Reef Marine Park Authority, one way of achieving this is to require a $1 (or higher) visitor fee for each passenger on a commercial charter vessel. Acceptability of the levy has been increased by allocating most of the money collected directly to research on the ecology of the reef (Preece, et al., 1994). Extension of this concept to NSW would fill a gap in research funding and generate the information necessary for the construction of a stronger marine-based ecotourism industry in NSW. Co-management of the means to allocate the money would keep it focused on the wide range of ecosystem management issues of relevance to the marine-based ecotourism industry.

Policy opportunity 13
Involving recreational, charter boat and conservation representatives in management

Traditionally, recreational and commercial fishing have been managed separately. The recent NSW Fisheries Management Act 1994, however, establishes a series of mandatory procedures designed to force consultation between recreational and commercial fishing advisory councils. At present, however, commercial fishers are not represented on recreational advisory committees (RACs) and recreational fishers are not represented on the State-based commercial fishery management advisory committees (MACs) who advise on commercial fishing issues. Moreover, neither structures are required to consult with conservation bodies.

In other parts of Australia and overseas, there are moves to build co-management structures which seek to achieve greater industry and community ownership of decisions made about fisheries. These co-management structures often have full responsibility and are accountable for the decisions they make. Theoretically, the result is much greater industry acceptance of decisions taken and, because these co-management structures can include recreational, commercial and conservation representatives, less conflict arises after decisions are taken. Recognising the benefits of involving conservation interests in decision making, AFMA has recently appointed a conservation representative to the committee that advises it on practices associated with tuna management in the western half of Australia's tuna fishery. An obvious possibility within the study area would be inclusion of a recreational or charter boat representative on the East Coast Tuna Management Advisory Committee. From a biodiversity perspective, gains will be greatest when the new structure has a fishery ecosystem rather than species focus where participation is limited to those with a substantial interest in each fishery.

Policy opportunity 14
Greater resource security and fuller specification of fishing rights

Commercial fishing

In recent years, there has been considerable reform of commercial fishing at both the State and Commonwealth level. Both jurisdictions are now moving toward mechanisms that encourage self enforcement and manage key fish species by controlling output. AFMA has established quotas for most of its key species and NSW Fisheries is introducing a share management system that facilitates management via combinations of input and output quotas. These arrangements all give the industry greater security and a strong incentive to give weight to long-term considerations.

From a biodiversity and ecologically sustainable use perspective, giving greater weight to long-term considerations is one of the most powerful means of achieving these objectives. Increased security via full specification of long-term considerations is one of the most powerful means of achieving these objectives. Increased security via full specification of long-term entitlements, especially when coupled with the development of management plans in association with industry, should further this process. The next steps include provisions for compensation for lost rights and trading arrangements that make it simple to transfer annual quota entitlements without affecting mortgage arrangements. There must be flexibility within such a system to accommodate new findings relevant to biodiversity conservation.

Policy opportunity 15
Increased incentives for research and development

As indicated at the start of this case study, knowledge about fishery ecosystems and marine biodiversity is limited and, consequently, it is likely that significant gains in terms of both biodiversity conservation and ecologically sustainable forms of use can be achieved through further research. Within Australia, two instruments are used to encourage private contributions to research. The first is a research levy matched by government funding. The second is a 150% tax rebate for syndicates that form to invest in research and development that involves considerable innovation or technical risk and is carried out in order to acquire new knowledge. This second instrument is only available for syndicates that form to spend in excess of $500,000 per annum which, for a locally managed fishery, is prohibitively expensive. Whilst not part of the case study area, one example made in a submission to us comes from Western Australia. There, the six abalone divers who form the Zone 2 Abalone Divers Association of Western Australia have paid $70,000 over 18 months to undertake the research necessary to enable the Western Australian Fisheries Department to assess the consequences of a proposed management plan.6 Replacement of a $500,000 limit with one that enabled small syndicates to gain rebates for research approved by or required by a management authority could lead to a significant increase in knowledge about fisheries management. Essentially, the process used would be similar to that which already applies for expenditure on structures of cultural significance. Under this arrangement, a 20% rebate is available against the expenditure on works approved by the Minister for Communication and Arts.

Policy opportunity 16
Capital gains exemptions for new allocations of fishing rights

Developments throughout the world are indicating that property right systems have a place in promoting the sustainable use of natural resources. Nevertheless, there is often significant resistance from industry to their introduction. One reason is that implied property rights are embodied as part of the value of a business, and when these implied rights are excised from that business and formalised in another business the resulting property right becomes liable to capital gains tax. Much of the tax-liability uncertainty that may be associated with the introduction of new property rights could be removed with a simple amendment to legislation. This amendment should make it clear that property rights issued to a business that was operating prior to 20 September 1985 (when capital gains tax provisions were introduced) would be classified as being in existence prior to that date and not subject to capital gains tax. This is now recognised by the Australian Taxation Office but only on a case-by-case basis. Opposition to the introduction of secure, fully tradeable and fully mortgageable rights would be less with such an arrangement. The issue is important, not just for the fishing industry, but also for the pollution control and development control issues mentioned earlier in this report.

From a biodiversity perspective, the case for such provisions depends upon the degree to which introduction of tradeable right systems will improve resource management and, through this, reduce pressures on biodiversity maintenance. The main advantages will be indirect and associated with the structural adjustment that such an innovation induces. Restructuring will bring with it new and, hopefully, less damaging fishing equipment which in turn will be less harmful to biodiversity values. Also, restructuring should make monitoring simpler and more cost-effective. To this end, industry has suggested that trading during the initial restructuring period of, say, two years should be exempt from capital gains tax. Such a sunset provision would speed up restructuring. It would certainly bring about a faster move to an industry structure with stronger prospects of keeping fishing exploitation within ecologically sustainable limits.

Policy opportunity 17
Devolution of power to MACs

At present both jurisdictions maintain management advisory committees to provide advice on decisions about management alternatives. One alternative that has yet to be tried is the delegation of significant responsibility for decision making to these committees so that, in effect, they become "councils" responsible for their own destiny. This would substantially enhance the sense of ownership and accountability critical for sustainable fishery management. The incentive for self enforcement would be increased and some sectors would be much more willing to take difficult decisions.

Interestingly, the Senate Standing Committee on Industry, Science, Technology, Transport, Communications and Infrastructure (1994) has recommended that Commonwealth MACs be converted into Management Committees, but the Commonwealth, whilst supporting greater industry involvement, is opposed to such a move in anything other than a gradual manner. They argue that any structure different from the current one would break the link between Ministerial accountability and decision making. The counter argument is that, when this nexus is broken, the industry (aided by recreational and conservation bodies) becomes accountable to itself.

In implementing this option, careful consideration would need to be given to the composition of a management committee and the means by which its activities are financed. Moreover, complex constitutional arrangements mean that, at best, it may be feasible only to devolve some, rather than all, powers to a fishery management committee.

Policy opportunity 18
Inter-system quota trading

One of the difficult issues common to most fisheries is the simple fact that fish move across jurisdictional boundaries. The usual advice in such situations is either to devolve responsibility for each species on fishing to one authority or, alternatively, to amalgamate the two administrative systems. An alternative approach is the introduction of a system that allows the formal transfer of quota between jurisdictions. Before this could occur, however, both jurisdictions (NSW Fisheries and AFMA) would need to cooperate and, jointly, set quotas. Once in place, however (and there are many administrative decisions before this step can be arrived at), such an arrangement would make enforcement easier and, as a result, increase prospects for sustainable resource use. From a biodiversity perspective, inter-system quota trading would be more logical than the maintenance of two separate systems.

Preferred mix of incentive instruments and mechanisms

This case study is speculative in style and designed to focus attention on the wide array of instruments and mechanisms available to promote biodiversity conservation in the marine environment. An additional focus for this case study is the mechanisms necessary to promote the ecologically sustainable use of fish species. In retrospect, each of the instruments and mechanisms put forward deserve much further development. The study, however, draws attention to three general strategies to be considered:


Many of the threats to marine biodiversity arise from land and fisheries managers not being sufficiently involved in the management of these onshore threats. As a consequence, estuary quality is poor which in turn has adverse impacts on opportunities for recreational and other forms of nature-based tourism. Development of the management structures to facilitate greater involvement of fishery managers, however, presents a major challenge. But involvement in the process does seem a prerequisite for action that includes consideration of impacts of land-based activity on estuarine and marine environments. Discussions about conservation covenants, for example, tend to focus on the issue of how well represented an area of native vegetation is in a land-based protected area network. The role of such areas in protecting marine biodiversity from pollution is rarely part of the agenda.

This spatial dimension of biodiversity highlights the interdependence of species and the critical role of ecosystem functions and processes. Fishing, however, tends to be managed by reference to the form of gear used and the species harvested, rather than the fishery ecosystem being considered. The risk for this approach is that the maintenance of marine habitats and the ecological systems that feed them are never central to the agenda. If stronger ecosystem orientations can be built into the framework, then the overall prospects for biodiversity conservation will be greater. Moreover, the level of harvest that can be sustained may be greater.

A related issue is the linkage between general resource management and biodiversity. Across the board, there is a need for legislative change to make it easier for local government, State government, co-management bodies and the Commonwealth government to make much greater use of property-right arrangements. Attention to compensation, registration, mortgage and enforcement requirements and the development of enabling legislation could speed structural adjustment. If this structural adjustment is conditioned by firm links to management plans which include full consideration of biodiversity values, then prospects for a transition to ecologically sustainable forms of use are substantial.

Finally, in many cases, the price signals given to resource users do not provide incentive for biodiversity conservation. For example, despite the fact that much fishery management is small scale and its greatest deficiency is knowledge, the tax benefits available to big industry for research are not available to the fishing industry. If changed to support small scale research, fishers would have an incentive to participate in this process, would own the conclusions and incorporate them in their management plans. The motivational dimension of offering fishers the chance to get involved in this activity should not be under-estimated.


This case study has benefited from discussions and input from staff in the Australian Fisheries Management Authority and NSW Fisheries. Whilst responsibility for all statements remains with the consultants, we would particularly like to thank Katrina Maguire, Bruce Phillips, Dave Pollard, Damian Ogburn and Dave Field for helping us to think through the issues presented in this case study. We would also like to thank Gail Hewitt and Jeremy Prince for important submissions.


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2. The recreational industry is defined to include people who charter boats for big game fishing and other forms of nature-based tourism.

3. Full details of existing arrangements are listed in the Commonwealth of Australia Gazette GNZ of 16 Hanuary 1991. It is stressed, however, that these arrangements are under review.

4. New legislation would be required to implement this option. Moreover, it would require a significant shift in state government policy towards the control of pollution. The EPA, however, has been exploring the feasibility of trading schemes as a means to improve environmental policy (see EPA 1994a, b).

5. For an excellent discussion of the potential of many of the instruments examined in this section, see James (1993)

6. Information supplied by Jeremy Prince from Biospherics Pty Ltd. June 1995.