Transcript Identifying and Assessing Economic Contributions of the

An economist’s perspective on the
contribution of the ocean sector to
African economies
Stephen Hosking, NMMU
22 May 2014
Africa faces many challenging oceans
economics policy issues and responsibilities
• Arise from the desire to simultaneously
- exploit the resources and opportunities and
optimize the long-term yield of the resources
- fulfill the role of a steward of the ocean resources
and environment.
• Translate into needs to manage the resources:
- within its countries exclusive economic zones and
the continental shelf zone (a limited economic
jurisdiction)
- but also beyond this.
Satisfying these needs requires a range
of facilitation efforts, like
• damage prevention, assessment and restoration (stewardship)
• providing infrastructure that facilitates and sustains coastal
tourism and recreational activity and port activity
• trade policy that enhances the coastal economy
• managing fishing and other marine life extraction
• encouraging and managing the mining of minerals in the
seabed
• stimulating freshwater and energy production using the ocean
• managing the tradeoffs related to all of the above pursuits
How well have African countries done in satisfying these needs?
Partly in response to the stewardship
obligation
• The international community has become
more accommodative of requests to extend
the ‘ownership-management’ rights of
countries to the ocean resources nearest them
• The legal framework for this accommodation
is defined by the United Nations Convention
on the Law of the Sea (UNCLOS) as ratified in
1982.
Along with the stewardship responsibility has
come additional opportunities as well
• And as resource availability on land becomes
less able to satisfy demand (due to increased
population and economic growth),
• As international trade grows in importance as
a determinant of the welfare of Africans,
these opportunities will undoubtedly assume
greater importance
Need for information about the contribution of the
ocean sector
In 2012 the South African Department of
Environmental Affairs declared one of its four
key strategic goals to be: ‘informing
stakeholders of the value and sustainable use
potential of ocean and coastal ecosystems and
the role of stakeholders in contributing to ocean
stewardship’ (Government Gazette, 2012: 65).
So we may know less than we should.
This presentation aims to make a small
contribution to this knowledge
• It is analytically useful to calculate the contribution made by
the mining and agricultural sectors of the economy, and also
to calculate the contribution of what we may call the ocean
sector of the economy relative to a ‘land’ sector.
• An estimate of an ocean sector contribution estimate
provides a snap shot for a given period of the level of
economic exploitation of ocean resources and environment
relative to the land resources and environment.
• The exercise of estimating the contribution is that at the
macro level can alert us to income gaps, that is current
unrealised income generating potential at the micro level
Alternative methods of apportioning
GDP into ocean and non-ocean parts
• One method uses ocean ‘closeness’ as the
reference for apportioning GDP.
• The alternative (preferred) method is to divide
the value added per economic sub-sector (and
sub-set) into ocean and non-ocean parts and
sum the ocean parts.
What do we mean by the ocean sector
– case of South Africa?
Clearly activities related to stewardship
responsibility of ocean area is part of it
• It stretches 3 924 km along the coast from the Orange River
mouth in the West to the Mozambique border in the East
and a distance of 370 kilometers from a defined coastal
baseline (a line connecting mean low water marks) out into
the Southern Atlantic Ocean in the West and Western
Indian ocean in the East, and includes the islands of Prince
Edward and Marion.
• The size of South Africa’s Exclusive Economic Zone is
1 553 000 square kilometers, greater than the land area of
the country (which is 1 219 090 square kilometers). It is
governed in terms of South Africa’s Maritime Zones Act of
1994.
But stewardship activities are only one aspect
of the ocean sector – trade encompasses more
• Trade covers much more than simply the area
assigned as a South African stewardship
responsibility
• It includes the exploitation of the resources in
this area plus all trade maritime related
activities
Some research findings
• I led a group that applied the value added apportionment
method to South African GDP data for 2010.
• The data showed value added to GDP at the third digit level
of the standard industrial classification code list (ICCL or
SIC)- which classifies value added by ‘establishment’.
• We found:
- in 2010 the contribution of the ocean-linked sector to
GDP was about 4.4 per cent.
- in 2012 the job contribution of the ocean sector was
about 640 000.
Estimated value added for all sectors in the SA ocean sector - 2010
Industrial sector (and
standard industrial code in
brackets)
Identified sub-sectors
with ocean sector
qualifying parts in
R millions
(total industry value
added in parenthesis)
Proportion of
sub-sector
qualifying as
ocean
Sector
Ocean sector
contribution in
each sub-sector
In R millions
(% of total in
parenthesis)
Proportion of
ocean sector
value added
to industry
sector value
added (%)
Total for primary sector
25 078
(296 158.1)
18 724.3
(17%)
6.3
Total for secondary sector
197 881.38
(542 308.4)
15 280.2
(14%)
2.8
Total for tertiary sector
1 017 365.3
(1 656 849.2)
76 131.8
(69%)
4.6
Total for primary, secondary
and tertiary sectors
1 240 324.68
(2 495 315.7)
110 136.3
4.4
Conclusion
• The current relative smallness of the ocean sector
contribution, despite the large area covered by it,
does not imply that South Africa can almost do
without the ocean - the ocean’s influence is a
necessary and non-substitutable input in all
economic activities
• What income gaps did we come across in the
process of deducing the ocean sector
contribution?
Example of fisheries – consider 2008
estimates of stock status
Fishery Status
Under exploited
Moderately exploited
Fully Fished/exploited
Over fished
Recovering from
depletion
Under review –
uncertain
Depleted
Total
% of total Global
3
12
53
28
1
3
100
% SA - inshore % SA offshore
7.4
16
11
48.1
14.8
5
29.6
68
Reported problems in the ocean
fishery sector we came across
Due to the accessibility of the inshore fishery
resources to a wide range of marine user
groups, they are more difficult to manage.
Users include traditional linefishers, recreational
fishers, and inshore trawl and longline fisheries.
Illegal and uncontrolled harvesting or poaching
has a major negative impact.
Examples of poorly managed inshore
fishing
• Illegal abalone harvest is estimated to exceed the
legal one by 10 times.
• The West Coast rock lobster fishery peaked in the
early 1950s with an annual catch of 18 000
tonnes. Catches declined by nearly half in the
1960s indicating that the high catches of previous
years were unsustainable.
• The current status of the West Coast rock lobster
fishery is it requires a long recovery phase
Offshore commercial fisheries
• The Hake fishery is SA’s single most valuable one.
The current biomass of deep-water hake was
estimated to be about 15% of pristine in 2008,
i.e. over-fished
• Fishery management should focus attention on
maximising net benefits, such as social and
economic yield, rather than purely on biological
management strategies and short-term political
popular ones.
• This does not seem to be what is being done with
hake fishery management.
Our guess at the fisheries sector
income gap was
Due to :
• Inconsistent and (sometimes) inappropriate and ineffective
governance/management/control (e.g. of inshore fishing),
• Increased uncertainty in the allocation of fishing quotas
• Misallocation of fishing quotas to fishers who are unlikely
to be able to link to high value markets (like in the
allocations of white sand clams)
• Management that encourages the under- and misutilisation of lower-value fish species (anchovies vs hake).
The actual current net economic benefits from marine
fisheries may be only yielding about 60% of the potential net
economic benefit.
The end