Australia will have the largest system of marine reserves in the world and the largest single marine protected area in the world, covering the Great Barrier Reef and Coral Sea, under a new policy announced by Environment Minister Tony Burke this morning. Whether that is a good thing or not depends on who you believe.
Not surprisingly, the minister has trumpeted the reserve system as a remarkable achievement, claiming it represents “the most significant individual step in conservation that Australia has seen”. Equally predictable has been the response from the fishing industry; it is crying foul over the reserves and seeking hundreds of millions in compensation, based partly on the precedent set by the structural adjustment package rolled out by the Howard government after the rezoning of the Great Barrier Reef Marine Park in 2004.
While not completely devoid of merit, the claims made by the minister and industry need a dose of reality.
The establishment of the reserves is, without doubt, a significant step forward in marine conservation but the minister’s claim that it sets a new benchmark in environmental management is overstated. The conservation benefits that flow from these reserves are primarily a function of one thing: how much fishing effort they remove. The oil and gas industry will be virtually untouched and there are few other activities that will be impacted by the reserves.
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Early estimates suggest that the total value of fisheries production that will be displaced by the reserves will be in the order of $10-15 million per year, which constitutes roughly 0.7% of total gross value of Australian fisheries production. Assuming all of this production is lost and not merely shifted elsewhere, these figures suggest that the conservation outcome will be notable but hardly breathtaking.
The industry’s claims for hundreds of millions in compensation are equally exaggerated. They rest on two pillars:
- That the $10-15 million per annum displaced by the reserves equates to about $250 million when aggregated and discounted through time; and
- That they deserve to be treated the same as those impacted by the Great Barrier Reef rezoning, where in the order of $250 million was provided to displace about $14 million in gross value of production.
Gross value of production displaced is a poor metric to use when determining the quantum of assistance that should be provided to those impacted by marine reserves. First, it does not take into account the capacity of fishers to adapt to the management changes brought about by the reserves, the most obvious method being to change fishing grounds (noting that this is not always possible).
Second, gross value of production is the value of fish caught, whereas the more relevant issue is how much profit the fishers forgo (lost wages can also be a factor).
In the case of the rezoning of the Great Barrier Reef, after accounting for adaptation, the estimated impact on gross value of production dropped from $14 million to $3-$7 million per annum. The estimated impact on total value-added (which is as close to profit as the figures got) was between $520,000 and $1.29 million per year.
These figures cannot be directly transported into the fisheries impacted by the new reserves. However, given that the new reserves are likely to displace $10-$15 million in gross value of production, it would be startling if the reduction in total value added was more than$3 million per annum, and it is likely to be significantly less than that.
When aggregated and discounted over time, this equates to about $50 million. And the rumour is that the government is talking of a compensation package worth $100 million.
The fishers think this is inadequate when compared to the Great Barrier Reef Structural Adjustment Package. And they have a point. Those impacted by conservation measures are entitled to ask for consistency in the way they are treated.
The trouble is that the Great Barrier Reef Structural Adjustment Package was one of the most politically manipulated in Australian history. From the very outset, the then finance minister Nick Minchin complained that the package was too large, that it was being misallocated and that it would set a horrid precedent for future conservation programs. Prime minister Howard brushed his concerns aside and shovelled money at virtually anyone, near the Great Barrier Reef, who asked for it. In addition to the funds provided to commercial fishers, multiple onshore businesses got handouts, including several fish-and-chip shops. It got so farcical that even the Queensland Seafood Industry Association, the peak commercial fisheries lobby group, was given $200,000, apparently to help it restructure and “achieve longer term financial self-sufficiency’.
Using the Great Barrier Reef Structural Adjustment Package as the benchmark for assistance programs is untenable. It is unfair on the taxpayer and, as Minchin correctly surmised, it would unjustifiably stymie future conservation efforts.
A package about $100 million would be generous and, provided it is administered well, give adequate assistance to those in need. The trick here is to ensure the money is targeted at those that suffer genuine losses and have limited capacity to adapt. In the past, this has not always been achieved.