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Ocean & Coastal Management 102 (2014) 200e211

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Ocean & Coastal Management

journal homepage: www.elsevier .com/locate/ocecoaman

Review

Fisheries structural policy in the European Union: A critical analysis ofa subsidised sector

Encarnaci�on Cord�on Lagares*, F�elix García Ordaz*

Department of Quantitative Methods for Economics and Management, University of Huelva, Plaza de la Merced 11, 21002 Huelva, Spain

a r t i c l e i n f o

Article history:Received 20 March 2014Received in revised form25 September 2014Accepted 1 October 2014Available online

JEL classification:F53H25Q22Q28

Keywords:Marine fisheries subsidiesFisheries policyEffectiveness

* Corresponding authors.E-mail addresses: ecordon@uhu.es (E.C. Lagares), f

1 Sumaila et al. (2010) made a comparison betweetimates (US$) from FAO (1992), Milazzo (1998), Suma

http://dx.doi.org/10.1016/j.ocecoaman.2014.10.0010964-5691/© 2014 Elsevier Ltd. All rights reserved.

a b s t r a c t

Policies based on grants to specific economic sectors, such as the fisheries sector have become wide-spread over the last fifty years. Despite their long history, there is no consensus regarding their scope oreffects. In recent years, European economic policy has been subject to substantial change, not onlyregarding the level of funding but also concerning support mechanisms for Member States in the form ofgrants.

The primary objective of this article is to conduct a critical analysis of the impact of EU policies onfisheries subsidies. To this end, it was necessary to analyse the evolution of these subsidies over theperiod 1994e2012. The article highlights aid for modernising fishing vessels and reducing fishing effortsby scrapping vessels.

© 2014 Elsevier Ltd. All rights reserved.

1. Introduction

In a recent report, the European Commission estimated thatthree-quarters of commercial marine stocks are overfished. Un-doubtedly, the subsidy-based fisheries policy implemented inrecent decades has led to an unsustainable imbalance betweenavailable fish resources and fishing capacity in the European Union(hereafter EU). The inevitable result has been the gradual decline ofcatches and reduced profitability in the fishing sector. These resultsdo not only apply to the EU. Sumaila et al. (2010) computed totalfisheries subsidies for the year 2003 and included estimates ofsubsidies to developing countries1. According to them, fisherysubsidies are $ 27.1 billion. It reduces operating costs and increasesfishing capacity in an unsustainable manner. Asia provides thelargest amount of fisheries subsidies ($ 15.7 billion). In this regard,the most important Asian countries are China ($ 4.1 billion), Japan($ 4.6 billion), Republic of Korea ($ 0.9 billion), Vietnam ($ 0.7billion) and Thailand ($ 0.6 billion). USA also spends approximately

elix@uhu.es (F.G. Ordaz).n global fisheries subsidy es-ila and Pauly (2006).

$ 1.8 billion on fishery subsidies. These subsidies have been esti-mated at 20e25 per cent of the value of the catch (Milazzo, 1998).

These circumstances led to a reorientation of structural fisheriespolicy in the EU of reducing the community fleet by granting aid toscrap obsolete vessels2. As a consequence, the multiannual guid-ance programmes (MAGP) have been in place since 1983 to reducethe EU fleet and adjust fishing effort to match available resources.Although MAGP I (1983e1986) and MAGP II (1987e1991) failed toachieve their objectives, at a minimum, they prevented a significantincrease in fishing capacity and highlighted the lack of reliable in-formation on the tonnage and installed capacity of the communityfleet and the absence of control mechanisms that would ensurethat shipowners would receive the correct amounts of funding.MAGP III (1992e1996) represented a step forward, dividing thefleet into segments according to the target species and the gearused. Finally, the MAGP IV (1997e2001) was replaced with an en-try/exit scheme. Under this scheme, capacity, measured in terms of

2 The fisheries structural policy was established in 1970 with the decision toapply to the European Agriculture Guidance Guarantee Fund (EAGGF), GuidanceSection, to support modernisation, construction, processing and marketing withinthe fisheries sector.

E.C. Lagares, F.G. Ordaz / Ocean & Coastal Management 102 (2014) 200e211 201

both tonnage and power, is not allowed to rise above 1 January2003 levels.

The Financial Instrument for Fisheries Guidance (FIFG)3 wascreated in 1994 to achieve a balance between fishery resources andtheir exploitation and strengthen the competitiveness of the sectorand the socioeconomic development of areas dependent on fish-eries. In accordancewith the FIFG, fleet overcapacity was addressedthrough MAGP. The most common intervention in this regard wasfinancing measures to adjust fishing effort through the imple-mentation of permanent cessation premiums on fishing activities,aid for scrappingfishing vessels and the creation of joint enterprises.

In 2007, the FIFGwas replaced with the European Fisheries Fund(EFF), which was more closely aligned with the new emphasis onsustainability, had simpler procedures and was designed to reflectthe needs of the EU-27. Its priorities include measures to adapt thecommunity fishing fleet by permanently withdrawing vessels ortemporarily ceasing fishing activities4.

Overfishing remains one of the largest factors contributing tothe degradation of marine ecosystems, biomass depletion and lossof biodiversity around the world (Crowder et al., 2008). Accordingto the Millennium Ecosystem Assessment (MEA, 2005) the marineand coastal ecosystems are among the most productive in terms ofservices that are linked to human well-being. The total services ofthe ecosystems provide at least US$33 trillion dollars annually, 63%of which comes from the marine ecosystems (Costanza et al., 1997).

Although several definitions of ecosystem services may befound in the literature (Costanza et al., 1997; Daily, 1997; Daily andEllison, 2002; Boyd and Banzhaf, 2007), the definition that de-scribes ecosystem services as the benefits that people obtain fromecosystems is probably one of the most cited (MEA, 2005).

After twenty years of failed attempts, the overexploitation offisheries resources has become a major problem, regarded as theprimary threat to the preservation of fisheries in developed coun-tries. The policy based on subsidising reduced fishing effort wasimplemented in a comprehensive package of measures, some ofwhich were complete failures. To what extent have these policiesbased incentive grants not only achieved the desired goal but alsoencouraged the fishing industry to exceed them?5. According to theFisheries Research Centre at the University of British Columbia, “theonly subsidies that are considered to be good are those that enhancethe growth of fish stocks through conservation, and the monitoring ofcatch rates through control and surveillance measures to achieve abiological optimal use. These include fisheries management pro-grammes and services and fishery research and development”(Sumaila et al., 2010).

The new Common Fisheries Policy (CFP) aims to reducedependence on subsidies given the ineffectiveness of previousprogrammes. Thus, while the new European Maritime and Fish-eries Fund (EMFF), which would eliminate aid for scrappingbeginning in 2013 because it had failed to reduce excess fishingcapacity, ultimately came into force, it was opposed by Germany,the United Kingdom and Sweden.

The aim of this article is to analyse the causes of the currentsituation and the impact of major EU structural fisheries policiesover the last twenty years6. The remainder of the article is

3 Council Regulation (EC) No 2080/93 of 20 July 1993, and Council Regulation(EC) No 1263/1999 of 21 June on the Financial Instrument for Fisheries Guidance.

4 Council Regulation (EC) No 1198/2006 of 27 July 2006 on European FisheriesFund.

5 Munro and Sumaila (2002) and Sumaila and Pauly (2006) note that simpleeconomic models demonstrating that subsidies affect profits and therefore provideincentives for increased fishing effort have accompanied a number of overviews ofsubsidies published by leading intergovernmental and research institutions.

6 See, for example, Gonz�alez-Laxe (2002, 2010), Penas (2002, 2008).

structured as follows: first, we analyse the evolution of EU fish-eries subsides in two distinct sub-periods: 1994e2006 and2007e20127. Second, we present aid for scrapping fishing vessels,as it is emblematic of and highly relevant to the period considered,as an example to demonstrate the arguments advanced in thisstudy. The next section describes the current status of EU policieson fisheries subsidies and the prospects for the near future.Finally, we present and summarise the primary findings of thisarticle.

2. The state of the EU fishing sector

In the period 1994e2010, the EU fisheries sector underwent ageneral decline in the number of vessels to balance, to some extent,the gap between the size of the fleet and available fishery resources,while failing to recognise that the pressure exerted by these fishingvessels exceed the regenerative capacities of certain fishery re-sources. Some Member States, such as Ireland, France, Cyprus,Romania and Slovenia, failed to reduce their fishing fleets. Never-theless, in 2011, France scrapped 133 vessels by providing publicassistance, equivalent to approximately 7653 gross tonnes (GT).Cyprus plans to scrap approximately one hundred small coastalfishing vessels, which are not subject to effort limitations8. Sloveniais also considering using public subsidies for scrapping and thenadjusting the fishing efforts of those fleets, as most of its fishingfleets have excess capacity.

In the period 1994e2010, the restructuring plans for the EUfishing fleet succeeded in reducing the size of the EU fleet by 16.4%,from over 100,000 fishing vessels in 1994 to approximately 84,000in 2010 (Table 1). Despite recognising the high level of aggregationof the data, the reduction in the number of vessels has not signif-icantly changed harvest capacity, as the power and tonnageremained unchanged (at 21 Tm gross and 78 Kw per boat).

In the period 1994e2011, total EU fleet catches declined by37.62%, but this change was not homogenous across MemberStates (Table 2). Despite this reduction in catches, some MemberStates, such as Spain, suffer from overcapacity, resulting in animbalance between fishing capacity and available fishing oppor-tunities. The overcapacity of the fishing fleet relative to availableresources, combined with the significant increase in productioncosts (especially fuel) endangers the profitability of fishing ves-sels, which in some cases are only profitable thanks to EU fishingsubsidies.

The available data, in many cases provided by individualMember States, make it possible to verify a progressive reductionin overall fleet size accompanied by a decline in catches. Variousprogrammes to restructure the fishing fleet using subsidiesfunded a reduction in catches of more than 208,000 tons annu-ally. Two issues lie at the heart of discussions on the subject.First, there is the question of whether these grants improved theprofitability of fishing vessels. The second question is whetherthese programmes helped to place European fisheries on thepath to environmental and biological recovery. To answer theseand other related questions, it is necessary to study of theeffectiveness of various policy measures implemented in EUfisheries in recent years.

7 Hatcher (2000) outlines the development of the European Community'sstructural policy for fisheries in the period 1971e1999 and examines the extent towhich public funds were disbursed by the Community as aid to assist both thedevelopment and the restructuring of Europe's fishing fleets.

8 According to the Report of the Commission to the European Parliament and theCouncil on the efforts Member States made in 2011 to achieve a sustainable balancebetween fishing capacity and fishing opportunities.

Table 1Capacity of the EU fishing fleet for 1994 and 2010.

Member states 1994 2010

Vessels no. Tonnage (GT) Power (kW) Vessels no. Tonnage (GT) Power (kW)

Belgium 168 24,022 68,451 89 15,812 51,236Bulgaria na na na 2340 8014 63,378Denmark 5303 109,996 434,408 2826 66,353 241,962Germany 2458 78,810 172,280 1680 67,765 159,714Estonia na na na 935 14,645 40,209Ireland 2105 59,047 215,475 2148 69,427 198,008Greece 20,869 112,595 685,290 17,168 88,288 506,358Spain 18,917 644,226 1,714,490 10,847 414,527 934,078France 6831 182,994 1,010,928 7242 174,461 996,189Italy 19,660 263,892 1,508,912 13,515 186,079 1,111,999Cyprus na na na 1006 4161 42,930Latvia na na na 786 40,762 61,448Lithuania na na na 171 45,961 54,391Malta na na na 1093 11,992 85,532The Netherlands 1016 180,540 517,205 849 147,520 343,146Poland na na na 793 37,269 86,851Portugal 12,237 136,005 415,262 8492 101,483 372,173Romania na na na 475 1221 6577Slovenia na na na 185 1011 10,951Finland na na na 3365 16,549 172,233Sweden na na na 1369 33,020 179,032United Kingdom 10,702 272,634 1,179,014 6422 207,608 824,857

na: not available.Source: Eurostat.

E.C. Lagares, F.G. Ordaz / Ocean & Coastal Management 102 (2014) 200e211202

3. Analysis of fisheries policy in the European Union over thepast twenty years

Recent Food and Agriculture Organization (FAO) studies ana-lysing the impact of the subsidies in the fisheries sector questionedthis system based on subsidiarity and linked to the overfishing. TheEU is also aware that certain aid mechanisms may have a negativeimpact on the environment, while others have direct positive ef-fects and help to reduce fishing capacity. Therefore, it is extremelyimportant to clearly distinguish forms of aid that contribute to theconservation of the environment from those that can lead toovercapacity9.

The FAO document attributed a tremendous share of the fishingcrisis to the existence of fisheries subsidies (FAO, 1992). This reporthighlights the serious difficulty associated with defining appro-priate measures and assessing the effects of these subsidies. Elevenyears later, Schrank (2003) provided a means of conceptualisingsubsidies, characterising government policies supporting one ormore industries that provide a financial benefit to the industry andaffecting its sustainability, international trade and economicgrowth10.

Moreover, the Agreement on Subsidies and CountervailingMeasures of the World Trade Organization (WTO) considers threebasic elements in the definition of a “subsidy”: i) a financialcontribution or income or price support, ii) a government or anypublic body within the territory of a Member and iii) the grant ofsome benefit (WTO, 2007).

9 In this sense, UNEP (2004) highlights that fisheries subsidies tend to beparticularly harmful to fish stocks and the marine environment in areas whereovercapacities already exist, and Porter (2001) agrees that eliminating capacity-enhancing fisheries subsidies may be the most important single action that canbe taken to address global overfishing.10 According to Cox and Schmidt (2002), the use of different names and defini-tions can partially be explained by the various motivations of various subsidy an-alyses. These terms do not take the same definitions and have been used in variouscontexts over the years.

The critical view regarding an excessively subsidised fishingindustry can be summarised in the words of Milazzo (1998),arguing that while ineffective fisheries management is the under-lying cause of overexploitation, paradoxically, in the context offisheries management, subsidies have effectively contributed to themaintenance of sector revenue.

This work was supported by information provided atfishsubsidy.org, project coordinated by the EU to provide datarelating to payments and recipients of fisheries subsidies in all EUMember States and make these data available in a useful way11.

The analysis and evolution of the various forms of fishing in theEU provides information that is highly relevant to understandingthe current situation and the effects of major EU policies. Therefore,this sectionwill analyse, first, the period 1994e2006 when the FIFGwas in operation. The FIFG's objective included attempts to achievea balance between fisheries resources and their exploitation,strengthening the competitiveness of the fishing sector andcontributing to the revitalisation of areas dependent on fisheriesand aquaculture. Its priority areas included the adjustment offishing effort, the development of aquaculture and the modern-isation of fishing vessels, among others12. Subsequently, we willanalyse the period 2007e2012, when the EFF replaced the FIFG. TheEFF's objectives include, among others, adjusting fleet capacity toconform to the actual state of fishing resources, strengthening thecompetitiveness of the fishing sector and the incorporation ofquality management and environment systems into the productionprocess.

Although many of the measures included in the FIFG continuedin the FEP, the Fund also introduces innovative mechanisms to

11 The data presented at the fishsubsidy website come from the European Com-mission, which compiled them using data submitted by EU national governments,which administer the CFP.12 The FIFG operates on a co-financing principle, which implies that the fundingfor each project must include government funds from the Member State concerned.Moreover, if the Community assistance relates to a revenue-generating investment,there must be an own contribution from the recipient, who may be an individual ora group.

Table 2Catches by tonnage by member state: 1994e2011.

Member states 1994 2011 Evolution1994e2011 (%)

Belgium 34,259 22,191 �35.23%Bulgaria 6585 8956 36.01%Czech Republic 3955 3,990a 0.88%Denmark 1,843,716 716,233 �61.15%Germany 228,215 217,704 �4.61%Estonia 123,680 77,728 �37.15%Ireland 292,159 206,177 �29.43%Greece 181,125 71,028a �60.79%Spain 1,085,718 849,686 �21.74%France 646,496 409,304 �36.69%Italy 398,739 212,730 �46.65%Cyprus 9427 1163 �87.66%Latvia 138,105 156,130 13.05%Lithuania 49,162 137,063 178.80%Hungary 8307 6,216a �25.17%Malta 2356 1920 �18.51%The Netherlands 399,700 364,964 �8.69%Austria 388 350a �9.79%Poland 438,032 169,593 �61.28%Portugal 286,595 214,774 �25.06%Romania 22,251 3254 �85.38%Slovenia 2346 719 �69.35%Slovakia 1627 1,608a �1.17%Finland 151,187 119,686 �20.84%Sweden 386,821 179,836 �53.51%United Kingdom 877,984 599,523 �31.72%Total 7,618,935 4,752,526 ¡37.62%

a Data of 2010.Source: Eurostat.

13 Frost and Andersen (2006) noted that there are two contradictory economicperspectives on the subject. The optimistic perspective holds that ‘the improve-ment in our understanding of the exploitation of the EU fisheries resources hasbeen significant and is increasing’. The pessimist perspective is that ‘the biologicaland economic complexities are large and the political complexities are huge, so nosignificant improvement in the exploitation of EU fisheries resources can beexpected’.14 In the period 2007e2013, the financial instruments EAGGF Guarantee, EAGGFGuidance and FIFG are no longer structural funds.

E.C. Lagares, F.G. Ordaz / Ocean & Coastal Management 102 (2014) 200e211 203

address new difficulties in the fishing sector and accompany thereforms to the CFP. In brief, the EFF finances certain measures thatnot included in the FIFG, such as measures to accompany theimplementation of recovery plans and encourage more selectivefishing methods, promote the diversification and restructuring offishing areas affected by changes experienced in the fishing sector,support for the implementation of aquaculture productionmethods with positive impacts on the environment and inlandfishing.

3.1. The period between 1994 and 2006

Between 1994 and 2006, the EU fishing fleet received public aidamounting to V 8178 million, of which 20% was allocated to pro-mote the construction and modernisation of vessels, while 16% wasdevoted to scrapping. In addition to these grants, numerous fishingvessels received fuel subsidies. Additionally, the EU spent approx-imately V 165 million annually to ensure access for the fisheriesfleet by encouraging third countries to sign fishing agreements.

Table 3 presents a summary of the various types of fishingsubsidies in the EU during the period 1994e1999, according to theclassification established by the Fisheries Research Centre, Uni-versity of British Columbia (Canada). The study notes: “Bad sub-sidies are defined as subsidy programs that lead to overexploitation offishery, beyond the limits of the fishery's biological capacity toreplenish itself. For example: Tax exemption programmes; foreign ac-cess agreements; boat construction renewal and modernisation pro-grammes; fishing port construction and renovation programmes;fishery development projects and support services; marketing support,processing and storage infrastructure programmes”. However, ‘ugly’subsidies “have the potential to lead either to fisheries conservation orto overcapacity, depending on the context and their implementation.These include the fisher assistance programmes; vessel buyback pro-grammes; and rural fishers' community development programmes.”

The EU's financial support for fishing subsidies increasedthreefold, from V 333.4 million in 1994 to over V 975 million in1999. Moreover, in the period 1994e1999, only approximately 1% ofthe subsidies was allocated to the protection of aquatic resources.The major aspect of the EU investment at the community level wascame in the form of “bad subsidies”, which represented over 71% ofthe total in 1999. Public aid for the fishing vessel decommissioningscheme received a notable amount of funding, but public aid for theconstruction of new fishing vessels and the modernisation ofexisting vessels remained substantially larger. In 1999, approxi-mately V 150 million was dedicated to scrapping and approxi-mately 6 million euros went to the temporary cessation of fishingactivities;V 182millionwas dedicated to aid for the construction ofnew vessels and V 95 million for modernisation of fishing vessels.At the conclusion of this period, the EU promoted the scrapping of,mainly obsolete, fishing vessels but also promoted the constructionof new vessels with larger catching capacity and the modernisationof existing vessels, increasing their fishing capacity. This expansionof fishing effort was partially compensated by aid for the estab-lishment of joint ventures.

Table 4 presents a summary of various types of fishing subsidiesin EU during the period 2000e2006. During this subperiod, aidclassified as ‘good’ and ‘ugly’ increased by 110,84% and 128,58%,respectively, while aid classified as ‘bad’ increased by 15,59%. Weobserve a change in the purpose of the subsidies; in the latter partof the period, scrapping subsidies were prioritised in an attempt toreduce fishing effort. Moreover, new types of aid were introducedduring this second subperiod, with an emphasis on subsidies tosupport the retraining of fishermen forced to exit the industry dueto the finalisation of fishing agreements with third countries, in anattempt to diversify the economy in areas particularly dependenton activities related to fishing13.

These forms of aid have received substantial criticism for beingineffective. Parallel reports, including those completed by theconsultancy firm Poseidon and the NGO Pew Environment Groupfound that, during the period 2000e2006, 29% of the funds allo-cated to subsidies served to increase fishing capacity through theconstruction of new vessels and the modernisation of existingvessels, and only 17% of the aid served to reduce fishing capacity.The remaining 54% had no net effect.

3.2. Period between 2007 and 2012

The Structural Funds underwent significant changes for the newprogramming period 2007e2013 as a result of the reorientationand redefinition of European cohesion policy and the new geopo-litical context following the EU enlargement.

There was also an important simplification of the StructuralFunds, from six in the period 2000e2006 to three in the period2007e2013: the European Regional Development Fund (ERDF), theEuropean Social Fund (ESF) and the Cohesion Fund14.

In the new programming period, 2007e2013, the EFF, unlike itspredecessor (FIFG), is no longer part of the Structural Funds, as it isincluded under new heading “Conservation and Management ofthe Natural Resources”. Thus, the relationship between the

Table 3Summary of fishing subsidies in the EU during the period 1994e1999 (V million).

Fisheries subsidies schemes 1994 1995 1996 1997 1998 1999

GoodProtection/development aquatic resources

2.5 4.9 6.8 5.2 5.9 3.5

Total 2.5 4.9 6.8 5.2 5.9 3.5UglyAquaculture e not further defined 0.01 0.008 0.03 0.2 0.2 0.7Increase in aquaculture

production capacity11.4 14.0 26.2 36.7 38.6 57.8

Quality certification/productlabelling

1.0 0.1 0.4 0.1 0.1 17.2

Scrapping 71.8 143.7 89.1 76.5 82.9 149.2Professional initiatives 0.2 0.1 19.2 0.5 4.4 0.3Early retirement 0.7 2.4 0.2 0.2 0.9 0.2Socio-economic measures - not

further defined2.6 0.6 1.2 1.2 2.7 1.4

Modernisation of existingaquaculture units

6.5 8.7 17.7 13.3 21.9 29.0

Operations financed by the ERDF 0.4 2.6 2.7 2.6 2.3 0.4Temporary cessation of activities 10.5 61.2 0.8 0.2 0.3 5.9Flat-rate individual cessation

premium0.017 1.7 2.5 4.3

Pilot/demonstration projects 0.8 8.7 38.6 9.2 4.7 8.6Total 105.9 242.1 196.0 142.2 160.6 274.7BadPromotion 1.3 9.2 17.8 18.1 17.8 28.8Increase in processing capacity 24.0 30.0 92.7 88.3 85.7 164.3Construction new vessels 36.5 46.2 105.2 96.0 126.2 182.3Construction of new port facilities 15.8 15.1 18.3 25.2 32.8 62.4Exportation/Reassignment/

Transfer tothird country

32.3 5.9 8.8 3.5 1.5 3.2

Modernisation of vessels 11.9 23.8 58.2 38.0 49.4 95.4Modernisation of existing port

facilities2.7 10.2 4.9 13.9 9.4 31.6

Modernisation of existingmarketing establishments

18.1 8.9 15.4 17.7 16.4 16.7

Modernisation of existingprocessing units

14.3 38.7 31.4 27.5 23.2 50.3

Processing and marketing- notfurther defined

4.9 13.9 7.0 16.9 12.0 14.4

Joint enterprises 54.5 47.6 10.8 39.4 9.8 40.8Temporary joint enterprises 8.7 5.4 9.1 9.5 5.7 6.8Total 225 254.9 379.6 394 389.9 697Overall total 333.4 502 582.6 541.5 557.2 975.4

Source: Prepared by the authors based on Fishsubsidy.org.

E.C. Lagares, F.G. Ordaz / Ocean & Coastal Management 102 (2014) 200e211204

economic development of the fishing sector and respect for naturalresources and the marine environment has become vitally impor-tant. The EFF, as was the case with the FIFG, was specificallydesigned to achieve the goals of the CFP, highlighting the adapta-tion of fleet capacity to the actual state of fishing resources,increasing the competitiveness of the fishing sector, the incorpo-ration of the quality management and environmental systems intothe production process and the development of new techniquesrespecting the environment and on-board safety15.

The EFF codifies regulatory authorities’ commitment to aban-doning direct aid for the renovation of the fleet, as the constructionof more powerful vessels worsened the situation of the fishing fleet.Renovations of the fishing fleet are now conditional on improvedon-board safety and working conditions, as well as improvementsin the quality of fish catches and the selectivity of fishing gear and,above all, the use of more efficient engines that significantly reducefuel consumption. Council Regulation (EC) No 1198/2006 of 27 July2006 on the EFF outlines five priorities:

Axis 1: Measures to adapt the EU fishing fleet: intended toensure the sustainable use of fishery resources in an environ-mentally friendly manner and implement socio-economicmeasures for fishers affected by fishing effort adjustment plans.Axis 2: Aquaculture, inland fishing, processing and market-ing of fishing and aquaculture products: aims to prioritise thesustainable development of aquaculture and processing and themarketing of fishery aquaculture products.Axis 3: Collective action: aims to contribute to the conservationof resources or sustainable development, improve the servicesoffered by fishing ports, strengthen markets for fishery prod-ucts, as well as promoting partnerships between scientists andoperators in the fisheries sector.Axis 4: Sustainable development of fishing areas: aims todiversify and strengthen economic development in areasaffected by declining fishing activities.Axis 5: Technical assistance: intended to support all actionsrelated to the preparation, monitoring, administrative andtechnical support, evaluation, audit and control necessary forimplementing the EFF Regulation.

The purpose of the New Operational Programme is to providefinancial assistance for the implementation of the 2002 reform ofthe CFP and support necessary restructuring in the fishing sectorthrough measures intended to ensure sustainable fisheries anddiversify economic activities in fishing areas, among otherobjectives.

The EFF measures are adapted to the changing needs of both thefisheries and aquaculture sectors and the coastal fishing areas mostaffected by the decline in fishing activities. Thus, it is intended toreduce fishing pressure to allow the stocks to replenish to sus-tainable levels and encourage the use of more environmentallyfriendly equipment and practices in the fisheries and aquaculturesector16. Unemployment in the fishing sector has become a veryserious problem; hence the EFF has attempted to benefit the re-gions most affected by employment loss by granting financial

15 Markus (2010) attempts to respond to some of the questions posed by theEuropean Commission in its Green Paper regarding the contradiction in policy,noting, on one hand, that public financial support for the Community's fisheriessector is substantial, but on the other hand, such support is often incompatible withother CFP objectives, particularly the need to reduce overcapacities.16 According to Proelss and Houghton (2012) and Villasante et al., (2012) the EUfish stocks are under high fishing pressure and that their recovery will generate notonly environmental or ecosystem benefits but also greater profitability for thefisheries sector.

assistance to promote the economic diversification of areasdependent on fisheries (Cord�on and García, 2010).

The EFF has a budget of approximately EUR 4305 billion for theperiod 2007e2013, with Spain receiving the largest percentage ofthe EFF, at 26.29% (EUR 1132 billion) of total funding17.

Table 5 summarises the distribution of EFF in the EU by priorityaxis. The highest percentages of the EFF were allocated to axis 2(aquaculture), axis 1 (measures to adapt the EU fishing fleet) andaxis 3 (collective action), at 28.75%, 27.68% and 26.94%, respectively.

An analysis of the data in Table 5 allows us to verify thatMemberStates have not benefited equally from the EFF. Regarding measuresto adapt the EU fishing fleet (axis 1), we found that Greece and Italy,which represent larger shares of the fleet (20% and 16% of com-munity vessels in 2010, respectively), receive the fourth- andsecond-most of this type of aid of all Member States. While Spainhas the third largest number of vessels (13%), it is the most sub-sidised Member State in the EU, receiving 37% of the total amount

17 The Sector Conference of 10 April 2007 established the criteria for the distri-bution of funds, as well as the distribution among Autonomous Communities forthe period 2007e2013.

Table 4Summary of fishing subsidies in EU during the period 2000e2006 (V million).

Fisheries subsidies schemes 2000 2001 2002 2003 2004 2005 2006

GoodTechnical assistance 5.2 10.4 16.8 14.6 11.8 11.4 11.5Protection and developmentof aquatic resources

3.1 11.3 9.8 13.2 12.6 18.5 6.0

Total 8.3 21.7 26.6 27.8 24.4 29.9 17.5UglyAquaculture - not further defined 3.6 0.007 0.003 0.02 1.1 0.5Increase in aquaculture production capacity 5.4 22.8 47.2 31.2 39.0 48.6 27.3Scrapping 10.4 121.0 107.6 78.0 149.5 98.9 165.2Professional initiatives 6.4 35.2 52.0 53.3 57.1 61.5 40.3Early retirement 0.06 1.0 0.7 2.2 1.1 4.6 2.0Operations financed by the ERDF 1.0 0.4 1.3Socio-economic measures - not further defined 0.01Modernisation of existing aquaculture units 2.0 20.8 34.8 32.5 26.7 32.4 23.2Other measures to assist inland fishing 0.04 0.1 0.4 0.3 0.2 0.4 0.3Temporary cessation of activities 101.6 84.6 36.6 65.7 8.4 34.0 15.9Retraining premium (job diversification) 1.1 1.3 2.2 3.0 3.4Flat-rate individual cessation premium 0.7 4.6 2.2 1.9 12.8 6.0Pilot/demonstration projects 4.6 16.3 23.1 19.3 60.5 60.7 13.7Total 130.5 306.0 308.5 287.9 347.72 359.8 298.3BadPromotion 7.1 30.1 18.0 34.0 21.1 38.5 30.9Increase in processing capacity 45.8 83.6 84.9 108.5 106.9 73.9 43.8Setting-up aid for young fishermen 0.004 0.01 0.1 0.03 0.1 0.3Construction of inland vessels 11.4 0.1 0.4 0.2 0.5 0.5 0.2Construction new vessels 52.5 101.8 272.7 57.4 94.4 17.4 4.1Construction of new port facilities 53.1 27.0 41.0 80.4 53.6 75.3 50.5Construction of new marketing establishments 5.2 17.5 23.8 21.6 17.5 16.0 6.9Exportation/Reassignment/Transfer to third country 0.02 4.2 6.5 4.9 4.8 8.4 16.3Processing and marketing - not further defined 0.02 0.5Modernisation of vessels 6.3 27.5 38.0 33.1 27.5 16.9 25.8Modernisation of existing inland vessels 0.001 0.1 0.08 0.07 0.08 0.1 0.1Modernisation of existing port facilities 4.2 12.7 18.8 32.3 27.1 25.5 18.1Modernisation of existing marketing establishments 4.3 10.3 14.4 16.3 24.2 10.4 7.8Modernisation of existing processing units 13.2 20.9 26.4 28.1 28.2 26.1 14.5Small-scale coastal fishing 0.3 0.7 3.8 5.6 4.8 4.2Joint enterprises 2.7 8.6 11.1 7.8 15.8 0.7 0.8Total 194.4 344.5 556.8 428.6 427.3 314.8 224.7Overall total 333.2 672.2 891.9 744.4 799.4 704.5 540.4

Source: Prepared by the authors based on Fishsubsidy.org.

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dedicated to the previously mentioned purposes. Moreover, thecorrelation between the number of vessels in each Member Statesin the year 2010 and the amount of aid dedicated to axis 1 is 55,89%;this coefficient would be 83,73% if Spain and Poland were excludedfrom this analysis.

In conclusion, during this period, the fishing capacity of theCommunity fleet declined at a rate of between 2% and 3% annually.Despite this continuous reduction, in a 2011 report to the EuropeanParliament, the European Commission noted that the indicatorsused to measure fishing effort (the number of vessels, vesseltonnage and engine power) do not accurately measure effectivefishing power. Community authorities recognise, therefore, thatdespite the substantial investment in fishing subsidies, the nominalreduction in fishing capacity achieved has translated into a signif-icant reduction the vessels' fishing power. The substantial depen-dence of fishing efforts’ profitability on fuel consumption andtremendous increase in fuel costs in 2008, among other factors,revealed the economic weakness of many vessels. For the first time,the EU recognised that numerous vessels are only profitable due toCommunity subsidies (European Commission, 2011).

In 2009 alone, over 70% of fishing capacity was eliminated dueto public subsidies. Despite the sustained decline in fishing capacityachieved through subsidies, the Report of the Commission to theEuropean Parliament is grim: fishing capacities in the majority ofMember States continue to exceed available fishing resources, and,despite the fleet capacity ceilings established by regulators, the

modernisation of the fleet through the incorporation of subsidisedtechnological improvements offset the decline in nominal fishingeffort (Khalilian et al., 2010). Paradoxically, the programmes usingsubsidies to ensure the withdrawal of the fishing vessels are beingexploited by shipowners more concerned with the little or noprofitability in their fishing activities than by the economic in-centives intended by the subsidies. Moreover, this is not the onlyinstance in which the European Commission recognised the rela-tive failure of this type of subsidy and the excessive dependence onsubsidies in the fishing sector (Surís-Regueiro and Varela-Lafuente,2011; Surís-Regueiro et al., 2011).

An analysis of scrapping subsidies can explainwhymany fishingfleets simply subsist on the subsidies they have received (Andersonand Guillen, 2010).

4. Scrapping aids

The EU has failed to establish sufficiently clear rules for thetreatment of fishing rights (cancellation, transfer or sale) whenfishing vessels are scrapped in response to subsidies. This is rele-vant to the optimal management of fishing activities, as the CouncilRegulations (EC) are not sufficiently specific regarding the role offishing rights in efforts to conform fishing capacity to availablestocks.

The CFP regulation provides for the withdrawal of fishing li-cences when vessels are decommissioned and receive subsidies.

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Moreover, the vessel's underlying capacity, measured in GTand kW,is eliminated from the total fishing capacity ceilings18. Neverthe-less, when fishing quotas are allocated among the Member States,the withdrawal of fishing licences and the removal of the fishingcapacities of retired vessels are not taken into account. Thus, thesequotas cannot be permanently withdrawn, as Member States mayreallocate them to individual fishing vessels in a manner of theirchoosing, for example transferable quota systems.

Thus, there is no clear definition of what fishing rights(authorisations and licences) need to be withdrawn when fishingvessels are decommissioned under public subsidy schemes. Thisrequirement in the CFP regulation to withdraw fishing rights iscontradicted by the annual Total Allowable Catches (TACs) regula-tions, which allow for the reallocation of fishing rights related tothese vessels in certain circumstances19. Although some MemberStates, such as Denmark and Spain, allow certain fishing rights to betransferred to other fishing vessels or other fishers, other MemberStates, such as France and Poland, cancel them.

Table 6 reports the total amount received for fishing vesselscrapping during the period 1994e1999 and their distribution byMember State; Spain and Italy account for over 60% of totalscrapping subsidies.

Table 7 indicates that the funds allocated to scrapping increasedin the period 2000e2006. Our analysis also identified inadequaterules for the treatment of fishing rights when fishing vessels arescrapped under public subsidies. Specifically, Member States haveallowed the beneficiaries of public subsidies for fishing vesseldecommissioning to transfer their fishing rights or quotas, therebyproviding the beneficiaries with additional resources to contributeto restructure their remaining fishing activities or pursue otherinterests. The EFF regulation does not account for the possibility ofrecognising these additional resources when setting the rates ofpublic subsidies for fishing vessel decommissioning.

In other countries, the ability to transfer fishing rights hasencouraged the restructuring of fleets and thereby also contributedto reducing fishing overcapacity. For example, the fishing capacityof the Danish fishing fleet declined by 27% between 2003 and 2009,primarily without the use of subsidies for fishing vessel decom-missioning. This capacity reduction was facilitated by the intro-duction of transferable quota systems for most of the fishing fleet.However, the United Kingdom introduced a fishing vessel decom-missioning scheme in 2010 that included public subsidies, whichrequired beneficiaries to transfer fishing rights to other fishingvessels. These examples indicate that fishing rights transferschemes, which are not expressly included in the CFP, can be usedto provide an incentive for restructuring fishing fleets andcontribute to reductions in fishing overcapacity20.

Council Regulation (EC) No 2792/1999 of 17 December 1999establishes that vessels less than 10 years old were ineligible forsubsidies for the permanent cessation of fishing activities,including vessel scrapping subsidies, permanent transfer of thevessel to a third country and permanent reassignment of the vesselto uses other than fishing.

The fleet segment that benefited the most from the FIFGscrapping assistance is vessels using static gear (Table 8)21.

18 Council Regulation (EC) No 2371/2002.19 See also, for example, Council Regulation (EC) No 40/2008, Council Regulation(EC) No 43/2009 and Council Regulation (EC) No 53/2010.20 In Spain, one condition for obtaining fishing vessel decommissioning subsidieswas that the fishing vessel must either have been fishing for at least 90 days in eachof the two years before the application date or must have been fishing for at least120 days in the year before the application date.21 The Infosys database was established under Council Regulation (EC) No 366/2001 and is the supervision procedure of the FIFG used by EU.

Specifically, 65% of scrapped vessels benefited from FIFG aids;however, in terms of the capacity scrapped, trawlers declined in thetotal power (kW) by 57% and in tonnage (GT) by 68%.

This analysis enabled us to identify vessels that received an EUsubsidy for scrapping soon after receiving an EU modernisationsubsidy. Fig. 1 depicts the distribution of the time elapsed betweenthe receipt of the modernisation subsidy and the receipt of a sub-sequent subsidy for scrapping during the period 1998e2011. Thetotal number of vessels benefited from both subsidies was 860,during the period under review. The total amount received was V19.2 million for modernisation assistance and V 253.2 million forthe scrapping assistance, of whichV 14.6 million andV 15.4 millionwere provided by community funds, respectively.

During the period 2006e2010, 671 vessels received an EUscrapping subsidy; 2010 is the year inwhich the greatest number ofvessels received these subsidies (199 vessels). The period between1999 and 2003 had a relatively higher percentage of vesselsreceiving such aid at 67%, with 2003 exhibiting the largest numberof affected vessels (187 vessels).

As Table 9 shows, Spain had the highest number of vessels thathave received an EU scrapping subsidy soon after receiving an EUmodernisation subsidy.

While subsidies for the construction of new fishing vessels wereeliminated in late 2006, it is still possible to receive fleet modern-isation subsidies through other mechanisms, which encouragesfishing overcapacity and the overexploitation of fishing grounds byan already oversized fleet.

The time elapsed between the receipt of modernisation assis-tance and the subsequent receipt of a scrapping subsidy furthersour understanding of the imbalance between the purpose of thesubsidies and the result achieved. The x-axis of Fig. 2 reports thetime elapsed, in years, and the y-axis reports the number of vesselsbenefiting from each type of assistance. The analysis reveals thatover half of the vessels (57%) received both types of assistance in aperiod equal to or less than 5 years. Moreover, thirty-two fishingvessels received both types of subsidies over one year or less.

5. Current circumstances and future prospects

The previous sections outlined the primary approaches tostructural fisheries structural based on EU subsidies and theirevolution in the period 1994e2012, with the purpose of analysingthe reasons for current conditions in the fishing sector and theimpacts of the EU's principal policies in this area.

The presence of an oversized fishing fleet, meaning that there isa gap between the existing resources and fishing capacity, persists.Regarding reducing the capacity of fishing vessels, in terms of GTand kW, and efforts made to reduce fishing overcapacity, the Eu-ropean Commission notes that the current fishing fleet is still fartoo large relative to available fishery resources. Currently, thecatches made by Community fleets are significantly higher than thequantities of fish than would be consistent with maintaining fishstocks at sustainable levels. As a result, the European Court of Au-ditors contends that one or several of the following issues may beencountered: first, fishermen will have the opportunity to catchmore than their allocated quotas or fishing rights, entailing anincreased risk of illegal, unreported and unregulated fishing. Sec-ond, the fleet cannot make full use of expensive fishing vessels dueto the large sizes of some vessels, which make them economicallyinefficient. Third, places pressure on the Council, which often es-tablishes annual TAC quotas at levels above those proposed by theEuropean Commission and recommended by scientific advisors.Finally, these imbalancesmake it difficult to achieve themonitoringand control necessary for the successful implementation of

Table 5Distribution of EFF (2007e2013) in the EU by priority axis (1000 V).

Axis 1 Axis 2 Axis 3 Axis 4 Axis 5 Total per country % Per country

Belgium 11,562 3500 7988 1900 1312 26,262 0.61%Bulgaria 8001 36,004 20,002 12,001 4000 80,010 1.86%Czech Republic 0 11,927 13,824 0 1355 27,107 0.63%Denmark 40,365 37,650 36,515 12,461 6684 133,675 3.11%Germany 7491 54,913 70,236 18,554 2517 153,711 3.57%Estonia 15,265 24,584 21,210 19,282 4228 84,568 1.97%Ireland 34,766 0 6000 1501 0 42,267 0.98%Greece 77,272 59,690 32,320 33,300 5250 207,832 4.83%Spain 439,496 307,066 314,440 50,754 20,135 1,131,891 26.31%France 65,021 54,179 88,499 5700 2653 216,053 5.02%Italy 161,250 106,086 106,086 16,974 33,947 424,343 9.86%Cyprus 5200 3250 9924 1000 350 19,724 0.46%Latvia 7553 28,111 9684 6694 2672 54,713 1.27%Lithuania 26,197 49,330 27,354 17,173 4961 125,016 2.91%Hungary 0 24,164 8944 0 1743 34,851 0.81%Malta 2175 1708 4095 0 395 8372 0.19%The Netherlands 16,913 7379 16,903 4987 2395 48,578 1.13%Austria 0 5164 50 0 45 5259 0.12%Poland 140,510 162,873 159,095 234,910 36,705 734,093 17.06%Portugal 62,865 74,187 83,408 17,403 8622 246,485 5.73%Romania 9975 105,000 30,000 75,000 10,739 230,714 5.36%Slovenia 2164 7141 7574 2164 2597 21,640 0.50%Slovakia 0 11,432 1464 0 684 13,580 0.32%Finland 3445 16,990 14,784 3606 624 39,449 0.92%Sweden 13,666 10,933 19,133 8200 2733 54,665 1.27%United Kingdom 39,635 33,590 49,621 11,598 3384 137,828 3.20%Total per axis 1,190,789 1 236,850 1,159,156 555,161 160,731 4,302,686Total in % 27.68% 28.75% 26.94% 12.90% 3.74% 100.00% 100.00%

Source: Operational programmes adopted by the European Commission. Latest update: 24.1.2012.

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complex rules regarding quotas and fishing effort limits (EuropeanCourt of Auditors (2011)).

One of the objectives of the CFP and the FIFG and EFF is forMember States to adapt their fishing capacity to meet available fishstocks. Nevertheless, and surprisingly, the concept of fishing over-capacity is not addressed in the CFP, FIFG or EFF regulations. Noformal assessment of the level of overcapacity in the MemberStates’ fishing fleets has been conducted since 1995, when it wasestimated at 40%. Thus, this lack of definition and quantificationresults in difficulties in identifying fishing overcapacity, decidingwhether or how to reduce it and assessing the impacts of suchactions.

The results of the analysis in this study demonstrated the inef-fectiveness of certain types of aid in reducing excess fleet capacity,entailing a negative impact on natural resources. Therefore, it isunsurprising that in the impact assessment for the CFP for theperiod 2007e2013, the European Commission concluded that none

Table 6Scrapping subsidies by member State (V million): 1994e1999.

Member states 1994 1995 1996 1997 1998 1999 Total %

Belgium 0.5 0.5 0.08%Denmark 14.1 3.3 15.2 6.9 1.1 1.3 41.9 6.88%Finland 1.4 0.1 2.1 0.6 0.1 3.7 0.61%France 7.8 5.3 2.1 6.5 10.5 5.2 37.4 6.14%Germany 0.9 2.0 0.3 0.4 0.7 4.3 0.71%Greece 15.6 9.1 8.8 2.0 23.0 58.5 9.60%Ireland 2.5 2.5 0.41%Italy 9.4 1.7 0.8 5.4 15.5 102.2 135 22.16%The Netherlands 0.3 0.3 0.05%Portugal 10.1 2.8 8.7 2.3 9.5 3.0 36.4 5.98%Spain 14.1 100.3 35.8 26.1 42.7 14.3 233.3 38.30%Sweden 2.4 1.2 0.2 0.09 3.89 0.64%United Kingdom 11.0 11.5 12.2 16.7 51.4 8.44%Total 71.8 143.7 89.1 76.5 82.9 149.2 609.09 100.00%

Source: Prepared by the authors based on Fishsubsidy.org.

of the established objectives had been met and the financial in-struments had not been effective. In particular, despite the sub-stantial funds allocated to decommissioning plans for certain fleets,overcapacity was not reduced and discard rates remained high. Asimilar conclusion is obtained from an analysis of assistance pro-vided for the supervision and control of fishing activities.

The reform of the CFP requires the adaptation of the fishing fleetto ensure the sustainable use of fishery resources, respect for theenvironment and the implementation of socio-economic measuresto minimise adverse impacts on workers affected by fishing effortadjustment plans.

It would be desirable to promote the progressive implementa-tion of an ecosystem approach to fisheries management in theforeseeable future, which would contribute to efficient fishing ac-tivities in an economically viable and competitive fisheries andaquaculture industry, in turn providing a fair standard of living forthose who depend on fishing activities.

To this end, the European Commission proposed a new fund forthe period 2014e2020, the European Maritime and Fisheries Fund(EMFF). The Fundwill help to achieve the objectives of the CommonFisheries Policy reform and help fishermen to transition towardssustainable fishing and coastal communities to diversify theireconomies. The fund will finance projects that help to create newjobs and improve the quality of life along European coasts.

In the local context, artisanal fishing and aquaculture willbenefit from the green budgeting of the CFP, as no public aid will begranted for the construction of fishing vessels under the EMFF. TheEU regards artisanal fleets as the main form of economic support inmany coastal areas and therefore intends to enhance the subsidiesdedicated to them. The allocation proposed for the period2014e2020 is V 6500 million.

The EMFF will be a strategic tool to reform the CFP, as the tran-sition towards sustainability requires certain important changes inthe way that fishing and the fund will provide the incentives thatfishermen require to ensure that the state of overfishing is corrected,

Table 7Scrapping subsidies by member State (V million): 2000e2006.

Member states 2000 2001 2002 2003 2004 2005 2006 Total %

Belgium 2.4 6.9 9.3 1.29%Cyprus 0.5 0.5 1 0.14%Denmark 5.1 25.9 5.8 6.5 1.0 14.1 58.4 8.09%Estonia 1.1 1.1 0.15%Finland 1.9 2.2 4.1 0.57%France 2.1 6.0 3.4 7.3 20.6 22.1 0.3 61.8 8.56%Germany 0.02 0.003 0.2 0.2 0.03%Greece 37.7 10.3 5.6 7.7 18.9 80.2 11.10%Italy 34.1 6.3 9.7 10.5 6.6 43.5 110.7 15.33%Latvia 8.5 1.2 3.4 13.1 1.81%Lithuania 6.3 1.1 7.4 1.02%Malta 0.5 0.5 0.07%The Netherlands 0.09 3.6 2.8 2.8 8.5 17.8 2.46%Poland 42.6 32.2 4.0 78.8 10.91%Portugal 7.2 5.7 4.7 2.2 11.8 6.2 37.8 5.23%Spain 8.3 25.3 11.6 24.4 28.9 32.6 33.9 165 22.84%Sweden 4.4 2.4 2.1 0.2 0.1 1.6 10.8 1.50%United Kingdom 38.9 10.4 13.7 1.3 64.3 8.90%Total 10.4 121.0 107.6 78.0 149.5 98.9 165.2 722.3 100.00%

Source: Prepared by the authors based on Fishsubsidy.org.

Table 8Contribution of the FIFG measure to scrapping, by segment (main gear registered), excluding the Morocco action.

Gear category Vessels with FIFG aid for the scrapping Total scrapping % Of scrapping vessels with scrapping aid/total scrapping

Tonnage (GT) Power (Kw) Vessels (number) Tonnage (GT) Power (Kw) Vessels (number) Tonnage (GT) Power (Kw) Vessels (number)

Dredges 1861 9171 40 4178 21,429 171 45% 43% 23%Trawls 149,733 469,990 1759 356,248 1,024,551 3631 42% 46% 48%Seines 2144 10,582 94 3147 14,701 162 68% 72% 58%Surrounding nets 15,296 73,458 501 47,518 195,549 1216 32% 38% 41%Lift nets 20 99 1 37 251 11 55% 39% 9%Gillnets and entangling nets 22,709 115,178 1875 50,168 263,275 6085 45% 44% 31%Hook and lines 20,873 119,673 2301 53,100 227,013 4042 39% 53% 57%Traps 1024 9162 167 3316 25,369 580 31% 36% 29%Unknown 6441 18,610 60 9632 28,104 117 67% 66% 51%Total 220,102 825,922 6798 527,344 1,800,241 16,015 42% 46% 42%

Source: Infosys and EU fleet register.

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thereby allowing fish stocks to recover and rendering fishing lessdamaging to marine ecosystems. Moreover, the EMFF will assistcommunities highly dependent on fishing to discover innovativeways to realise better values for their catches and diversify theireconomies,while providing the time to allow for the recovery offishstocks by decreasing the pressure placed on them.

Despite the V 1700 million invested to promote scrapping sincethe1990s, the EU fleet suffers from a significant fishing overcapacitybecause the scrapping of fishing vessels has been compensated bythe technological upgrades to the remaining vessels, which havegreater harvesting capacity. Therefore, the new Fund will notallocate additional scrapping assistance and will instead investCommunity funds in activities with positive economic and socialimpacts; the fundamental goal of these policies is diversification.

The total budget will be allocated toMember States according tothe importance of the fishing sector in each country. Thus, theprinciples of shared management between the European Com-mission and the Member States will be applied22.

In brief, the aim of the new Fund is to effectively contribute tothe achievement of the new priority objectives, including theestablishment of transferable fishing concessions, a prohibition

22 The Member States will develop an operational programme for this period,specifying how the allocated funds will be spent. Following the Commission'sapproval of the programme, each Member State will decide which projects willreceive funding. The Member States and the European Commission will monitor theeligibility of support measures such as the implementation of the programme.

against discarding and the achievement of maximum sustainableyields. For this purpose, it includes certain measures and in-novations, including the following:

� The EMFF will be the result of a combination of certain financialinstruments from the 2007e2013 programming period, such asthe European Fisheries Fund (EFF), the Common Market Orga-nisation (CMO), which was previously financed by the EuropeanAgricultural Guarantee Fund (EAGF), and assistance for the In-tegrated Maritime Policy (IMP). Therefore, the combination ofthe funds should entail greater attention being paid to this issuearea.

� The development of aquaculture is an objective of the EMFF, andas such it receives important support.

� Certain provisions of the fund promote collaboration betweenscientists and fishermen. The evaluation of available resourcesand data collection are established as priorities.

� It forbids the financing of decommissioning schemes, as well asbiological and temporal recovery periods.

� The NUTS level 3 is considered, which invites the collaborationof local partners in fishing regions concerted. Thus, the EMFFwill be a financial instrument available to Regional AdvisoryCouncils23.

23 Council Regulation (EC) No 1059/2003 of the European Parliament and of theCouncil, 26 May 2003, on the establishment of a common classification of territorialunits for statistics (NUTS).

Fig. 2. Time elapsed since the receipt of modernisation and scrapping assistance(years).

Fig. 1. Number of ships receiving modernisation and scrapping assistance in the period1998e2011.

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� The conditions for the receipt of assistance will be morestringent.

� Themechanisms for withdrawing authorisations are eliminated.Producer organisations can benefit from subsidies to establishmanufacturing and marketing plans and must also managediscards. Moreover, supports to compensate producer organi-sations that store fishery products should be maintained untilthe end of the EMFF's authorisation period.

� The Funds may finance the establishment of transferable fishingconcessions.

� Efforts concerning the control policies established by theMember States will be intensified, especially with respect tocoordination.

Thus, the success of EU Maritime and Fisheries policy is inex-tricably linked to the health and resilience of the natural systemsthat sustain the economic activities. In recent years a number ofinitiatives on EU marine policy highlight the importance of pro-gressing towards the sustainable management of marine andcoastal ecosystems, including the IPM and the Biodiversity Strategyto 2020. Both call for new methods to identify and quantify theservices of these ecosystems to better integrate this informationinto decision-making processes (Lopes and Videira, 2013). From aneconomic perspective, Blue Growth has been presented as a longterm strategy to support sustainable growth in the marine andmaritime sectors as a whole, which highlights the productiveimportance of marine and coastal zones.

Several studies have been conducted on the importance andvalue of ecosystem services provided by natural resources, espe-cially in ocean and coastal ecosystems. The MEA (2005) and The

Table 9Vessels that received an EUmodernisation subsidy and subsequently received an EUscrapping subsidy by Member State: 1998e2011 (V).

Member states Number of vessels Modernisation aid Scrapping aid

Belgium 11 189,858 7,606,367Denmark 108 810,498 32,821,186Finland 15 64,643 4,166,083,81France 120 2,634,187 39,575,357Germany 1 46,733 278,300Greece 56 500,035 4,055,987Italy 59 3,041,934 17,364,464Portugal 71 2,823,257 20,460,166Spain 326 7,754,930 95,276,381Sweden 27 114,944 7,070,003,99United Kingdom 66 1,248,909 24,563,594Total 860 19,229,927 253,237,894

Source: Prepared by the authors based on Fishsubsidy.org.

Economics of Ecosystems and Biodiversity (TEEB, 2009) are two ofthe studies that have examined the consequences of ecosystemchange for human well-being and provided the scientific basis foractions needed to enhance the conservation and sustainable use ofnature resources.

The valuation of ecosystem services is an increasingly commonpractice in literature (Costanza, 1999; de Groot et al., 2012).Nevertheless, the complex nature of marine and coastal ecosystemcombined with the inaccessibility and invisibility of the majority oftheir goods and services require the integration of ecology, society,sociology and economics into an interdisciplinary framework(Lopes and Videira, 2013).

Thus far, the results of the efforts to balance ecological andsocio-economic goals in policy have not been satisfactory, not leastshown in the overcapacity in the fishing fleet (EuropeanCommission, 2012).

The EU has already made efforts to integrate biodiversity intothe development and implementation of other policies. However,given the benefits that biodiversity and ecosystem services bring tofishing sector, these efforts are still not sufficient.

6. Conclusions

While fishing play a significant role in the economies of certainEU Member States, the degree of overfishing, which applies to anumber of fishing stocks, means that the fishing industry faces adifficult situation due to declining catches and a loss of profitabilityin the sector.

Since the pioneering works of Huxley (1881) and McIntosh(1899), in which they suggested that marine resources were inex-haustible, this field hasmade substantial progress. By the early 20thcentury, policymakers began to realise the consequences of irre-sponsible fishing practices resulting from the belief that the fisheryresources were inexhaustible. Despite the excellent contribution ofGordon (1954), which established the theoretical basis for sociallyoptimal levels of fishing activity, our conclusion is that we havelearnt nothing.

The aim of this article is to analyse the causes of the currentsituation and the impact of major EU structural fisheries policiesover the last twenty years. The controversy resides in whethersubsidies represent an economic policy tool that is capable, in thefirst instance, of ensuring the survival of fishing activities and, inturn, the rational and sustainable exploitation of fishery resources.

Subsidies have a long history in the fishing sector. While manyhave attempted to demonstrate their benefits, at present there areserious doubts regarding the suitability of maintaining these

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policies in the long term. There are serious problems regardingtheir effectiveness, the possibility of regulating fishing activities,and its relation to overfishing, as indicated in the report publishedby Schrank (2003). Thus, more research and discussion on themechanism deserve the priority on ocean management agenda.

The EU is also aware that certain forms of assistance can have anegative impact on the environment, while others have directpositive effects and help to reduce fishing capacity, such as sub-sidies for retraining fishermen or to promote economic diversifi-cation of fisheries-dependent areas. Therefore, it is crucial todistinguish forms of assistance that contribute to the conservationof the environment from those that can lead to overexploitation.

Throughout this work, we have been shown that the measurestaken thus far to reduce excess capacity by adapting the fleet toavailable fish stocks have failed. Given the quantitative and quali-tative importance of these funds, assessing their impacts is essen-tial to understanding the explanations for the current situation andthe impacts of major EU policies. Additionally, the success of EUMaritime and Fisheries policy is inextricably linked to the healthand resilience of the natural systems that sustain the economicactivities. The EU has already made efforts to integrate biodiversityinto the development and implementation of other policies.Nevertheless, given the benefits that biodiversity and ecosystemservices bring to fishing sector, these efforts are still not sufficient.

The Operational Programme for the fishing sector in the EUcommitted to a model of sustainable and balanced economicgrowth, based on enhanced firm competitiveness and increasedfishing fleet productivity. A combination of factors, includingdeclining resources, fuel price shocks, technological improvements,the use of decommissioning subsidies and business mergers andclosures, is reducing the size of fishing fleets each year.

The overcapacity of the fishing fleet remains one of the mainreasons that the CFP failed to ensure sustainable fishing activity.Although the reduction of fishing overcapacity was a recurrentissue in previous reforms of the CFP, the measures adopted for thispurpose have failed. Therefore, a new approach to the problemneeds to be adopted.

To reduce the overcapacity of the fishing fleet and contribute tothe development of a sustainable fishing sector, the EuropeanCommission should clarify how fishing rights should be treatedwhen fishing vessels are decommissioned in response to publicsubsidies. Moreover, the Commission should clarify whether fish-ing right transfer schemes play a role in reducing fishing over-capacity. Finally, it also should establish whether the scheme forproviding public assistance for on-board investments needs to bereconsidered in light of the difficulties in avoiding investments thatincrease fishing ability and, if the scheme is to continue, clarifywhich on-board investments are eligible for public aid and whichare not.

Thus, Regulation (EC) No 2371/2002 establishes that fishing li-cences and, where applicable, fishing authorisations should bewithdrawn when public subsidies are granted for the decom-missioning of a vessel. The differences in the application of this ruleacross Member States result from different national systems. Thus,in some countries, fishing licences include fishing rights, while thisis not the case in others. Each Member State is responsible foradopting its own procedures, and a common system cannot beimposed at the EU level. Such an imposition would violate theprinciple of subsidiarity.

As the permanent cessation of fishing activities is designed totarget overcapacity both from an environmental and economicsustainability perspective, in the most economically viable fish-eries, it is possible to transfer the fishing rights of scrapped vessels,which would provide the necessary incentives to reduce fleetcapacity.

Ultimately, the analysis and evolution of fishery subsidies in EUduring the period 1994e2012 reveal that financial instruments hadnot been effective. Moreover, we identified substantial allocationsto forms of aid classified as poor, namely V 4831 million in theperiod 1994e2006.

Moreover, we also determined that the scrapping subsidiesfailed to reduce excess fishing capacity. Thus, this study reveals thata considerable number of vessels have received public assistancefor scrapping soon after receiving modernisation aid. Of theMember States, Spain received the greatest amount of funding forvessel scrapping in the period 1994e2006, at 29.92% of the total (V398.3 million). The country receiving the second most was Italy at18.45% (V 245.7 million).

Acknowledgements

We would like to thank to the three anonymous reviewers fortheir constructive suggestions and their helpful comments that ledto substantial improvements of the paper. We also appreciate thesupport and guidance of the Editor-in-Chief of the journal, Dr.Victor de Jonge, who generously helped us during the publicationprocess.

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