Investigación de riesgo climático de la SEC de Responsible Alpha utilizada por 123 instituciones

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Introduction 

Commercial fishing is a cornerstone of the U.S. economy, contributing billions of dollars annually and supporting millions of jobs at both national and local levels. In 2022, U.S. commercial fisheries harvested over 8.3 billion pounds of seafood valued at $5.9 billion. The industry generated an additional $183.4 billion in sales, $47.2 billion in income, and $74 billion in value-added impacts, supporting 1.6 million jobs across the broader economy. Sustaining this critical industry requires balancing economic growth with environmental sustainability.

This paper builds upon the findings of the previous report, which examined the economic and operational state of U.S. fisheries, by summarizing key data and focusing on actionable strategies. It highlights the need to measure the long-term benefits of supporting small-scale domestic fisheries to reduce reliance on unsustainable sources and prevent complacency. Furthermore, it addresses the major challenges facing U.S. fisheries, including navigating regulations, securing access to capital, and adapting to market dynamics. The report also explores potential solutions such as risk pooling, accounting reforms, public-private partnerships, and the establishment of community development corporations to support sustainable practices and economic resilience.

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Opportunity 1: Create a Risk Pool

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Access to capital is a binding constraint on individual fishers and on their communities because vessels, permits, and quotas cannot be easily pledged as collateral. Banks are unfamiliar with these assets and lack mechanisms to value or sell them during credit events. Thus, bankers must be educated about fisheries across the U.S. and bankers need a mechanism to both issue loans by valuing collateral, ways to de-risk loans and de-risk loan portfolios.

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Note: Individual fishing quotas are a federal permit under a limited access system to harvest a quantity of fish, expressed by a unit or units representing a percentage of the total allowable catch of a fishery that may be received or held for exclusive use by a person

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Within this opportunity is the recommendation to support public / private partnerships to support small-scale fisheries. Public/private partnerships between local banks and state governments can help small fisheries grow by offering loan guarantees, training for banks, and showing how fisheries support local economies.

Opportunity 2: Clarify Financial Accounting Rules for Fisheries

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Fisheries lack standardized financial accounting systems, making it difficult to value fisheries or establish credit histories. This creates challenges for fishers seeking to use forward or futures contracts.

IAS 41 addresses accounting in agriculture but specifically excludes fisheries. It is not necessary to wait ten years or more for formal guidance from the accounting regulators; what is needed is a simple guidance document or term sheet to increase transparency and standardize financial information. For additional information see Thoumi and Roper (2020).

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Opportunity 3: Establish National Community Development Corporations

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A non-profit organization, such as a Community Development Corporation (CDC), created to support communities, which is not a government agency but may receive government funding and include government representation in its governing body. This CDC could employ accounting practices to align social and ecological performance, effectively driving an integrated approach. Besides CDCs, bioregional financial institutions can help support local fisheries.

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Opportunity 4: Markets and Pricing
 

The absence of price transparency also distorts markets by creating a power asymmetry between buyers and sellers, resulting in a lack of agency for fishers in the marketplace. Consequently, fishers are price takers, not price makers.

• Further study of the constraints to market forecasting for wild caught fisheries may reveal remedies to price in-transparency.

• A comprehensive trade analysis with the goal of providing a better understanding of who bears risk in fisheries based on transactions, would reveal implicit and explicit trading costs

• Options could be explored to produce an algorithm to predict prices based upon past prices and a range of variables that could affect production.

• The Chicago Mercantile Exchange could potentially offer mini contracts as they do with some agricultural products.

Survey Questions and Replies

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The next session lists the survey questions poised to fishers across the four fisheries surveyed, and their responses. 

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What drivers of economic choice are at play in target communities?

• The principal drivers of economic choice at play in target fisheries are regulation, access to capital, and access to markets.

• A big challenge for small-scale fisheries is the lack of clear data on long-term benefits, which makes it difficult for them to compete with larger companies and imports.

What factors affect financial choice?

• Government regulation: Where sector-based management is practiced, fishers can choose to join a sector or participate in the common pool fishery. Regulation limits choice about which fishery to participate in.

• financial literacy: Fishers require a robust business plan, as well as detailed knowledge and access to professional advice on finance, including tax planning. Some fishers are for example unaware of the capital gains tax that they face if and when they sell their quota.

• Adaptability: Financially successful fishers are on the whole more willing to take risks, and to make changes (e.g., in choice of target species and gear), than are unsuccessful fishermen.

• Seniority: Those on the “ground floor” of an IFQ received a quota at no cost, which has appreciated significantly, putting newer entrants at a significant disadvantage with fewer financial options.

• Social capital: Trust is problematic for fishers because fishing is a highly competitive and somewhat solitary career. Trust affects decisions about how to participate in a fishery, including deciding whether or not to join a sector, relationships with buyers and processors, and the decisions about collective action.

• Bridging institutions: Mitigate constraints imposed by regulation through technical assistance or through alternatives when quota is unavailable (i.e., permit banks). Programs like the Young Fishermen’s Development Act aims to improve the capacity of fishermen to navigate complex regulatory environments, including tax laws.