Tuna-Led Sustainable Development in the

Pacific

Hannah Parris and R. Quentin Grafton

Australian National University

Economics and Environment Network Working Paper
EEN0507

26 August 2005
 TUNA-LED SUSTAINABLE DEVELOPMENT IN THE PACIFIC

by

Hannah Parris2
Asia Pacific School of Economics and Government
Australian National University
and
R. Quentin Grafton3
Asia Pacific School of Economics and Government
Australian National University

June 2005

1. We are grateful to the Australian Research Council and the Bureau of Rural Sciences for partial
funding of this research. We thank Tom Kompas, Kate Barclay and participants at the International
Workshop on Pacific Integration and Regional Governance 8-9 June, Canberra for helpful comments
and suggestions.
2. Asia Pacific School of Economics and Government, Australian National University, Canberra ACT
0200 Australia. E-mail: hannah.parris@anu.edu.au.
3. Corresponding author: Asia Pacific School of Economics and Government, Australian National
University, Canberra ACT 0200 Australia. E-mail: quentin.grafton@anu.edu.au.

Abstract
The paper reviews the importance of tuna fisheries in the western and central Pacific

Island Countries (PICs) and examines whether current and proposed economically

focussed institutional mechanisms, that underpin tuna management, are sufficient to

promote appropriate and long term tuna-led development. Substantial potential gains

are shown to exist from co-operation in terms of tuna management, but it seems

highly unlikely such benefits will be realised in the short or medium term despite the

formation in 2004 of the Western and Central Pacific Fisheries Commission. Even if

gains from co-operation were to be realised, without substantial improvements in the

institutional quality and capacity of many PICs the tuna fisheries might still fail to

sustain the region’s long-term development. The study’s implications are that the twin

development priorities in the region should be support for social infrastructure,

especially capacity building to increase the effectiveness of the public sector, and the

promotion of co-operative approaches to ensure the sustainability and profitable use

of the region’s shared fishery resources.

Key words: sustainable development, Pacific Island Countries (PICs), tuna, resource
rents, governance

1
1. Introduction

The development challenges facing the countries of the southern central and western

Pacific Ocean (collectively Melanesia, Polynesia and Micronesia – or Pacific Island

Countries) are daunting despite substantial in flows of development assistance.1

Commonly recognised problems include high rates of unemployment and

underemployment, low levels of economic growth and, in some countries, social unrest

and political instability (World Bank 2000a; Asian Development Bank 2004). In the

forefront of the development agenda of many PICs is how to utilise the region’s natural

resources (fisheries, forests, tourist potential) to promote social and economic goals in a

manner that is sustainable.

In this paper, we focus on the western and central Pacific region’s highly prized fish

stocks found in the exclusive economic zones (EEZs) of PICs, and in the high seas in

between. Specifically, we evaluate some of the economic institutions of current tuna

management practices to show how tuna resources might be used to improve development

outcomes. In section two, we briefly sketch the importance of the tuna fisheries and the

extent to which PICs have been successful in pursuing tuna led development. Section

three highlights the major challenges to co-operatively managing the tuna resources to

maximise the benefits to the island states. In particular, we examine whether the recent

Convention on the Conservation and Management of Highly Migratory Fish Stocks in the

Western and Central Pacific Ocean (hereafter the ‘Tuna Convention’) can deliver the

potential benefits of co-operation. In section four we examine other constraints, and in

particular the quality and capacity of public institutions, that prevent PICs from making

1
Not including aid from France to New Caledonia and French Polynesia, total development assistance
is a little less than $100 per capita, although some countries receive substantially more than this
amount.

2
the best use of the resource rents from their tuna fisheries. We conclude by proposing two

approaches that PICs, with assistance from donor countries, may wish to consider to

sustain the region’s development.

2. Tuna-led Development in Pacific Island Countries

Income levels in the Pacific region are low by world standards, although there is

substantial variability among countries. Table one indicates that only one country, Palau,

has an upper middle level of income, and all others fall in the lower half of the world’s

countries in terms of their Human Development Ranking (HDI)2. Some countries have

also experienced negative economic growth in the recent past, and many PICs have the

challenge of ensuring rising living standards in the face of rapid increases in population.

Although the 14 independent countries and the 8 dependent territories that constitute the

region have very small populations (only Papua New Guinea has a population greater than

one million) their exclusive economic zones (EEZs) extend 200 nautical miles from land

and represent a huge area of the Pacific Ocean (see Figure 1). Not surprisingly, marine

resources are critically important to the well being of some PICs, especially those with a

large EEZ, a small population and a tiny land mass. In the case of the Federated States of

Micronesia, Tuvalu and Kiribati, the value of fish caught in their EEZs exceeds their gross

national income while in the Marshall Islands, Samoa and Solomon Islands it almost half

of their national income. PICs, however, receive only a tiny faction of the benefits from

the fisheries found in their territories because about 90% of the fish caught in their EEZs is

2
HDI is an index of life expectancy at birth, educational achievement (adult literacy and combined
gross primary, secondary and tertiary enrolment) and real per capita GDP.

3
harvested by Distant Water Fishing Nations (DWFNs), and these nations only pay

approximately 3-4% of the landed value in access fees (Petersen 2005).

The failure to fully realise the potential benefits from their fishery resources is of major

concern for PICs. Many thought that conferring of EEZs under the third United Nations

Convention on the Law of the Sea (UNCLOS)3 would provide an economic ‘bonanza’. It

was hoped that fisheries would address two major challenges: one, reduce the risks of

overexploitation of a common-pool resource and two, provide the PICs with a reliable

source of income with which to finance economic development (Chand et al. 2003).

Whatever EEZs may have delivered to PICs, they have coincided with a substantial

increase in fishing effort and harvests. For instance, Figure 2 shows that the total harvest

of tuna has more than doubled since the 1980s, and the region now supplies about 40% of

the world’s global catch of tuna. The latest data suggests that catches of some tuna in the

region may have peaked, such as yellowfin tuna, and that some stocks, such as bigeye

tuna, may even be overexploited (Langley et al. 2005). Another worrying trend has been a

70% decline in the catch per unit of effort of yellow-fin tuna in the western Pacific over

the past 50 years, although the significance of this trend in terms of what it implies about

declines in tuna populations is disputed (Hampton et al. 2005; Myers and Worm, 2005).

Most tuna in the region are caught by large purse seiner vessels worth up to several million

dollars, and are almost exclusively owned and operated by DWFNs. Of the total landed

value of fish in the Western and Central Pacific, worth some US$ 2 billion, only about

US$60 million is paid in access fees to PICs (Gillett et al. 2001). These access fees are low

3
The United Nations Law of the Sea Convention is a universal legal framework designed to manage
and conserve marine resources at the international level. It incorporates many different areas of marine
and ocean governance of which the granting of exclusive economic zones to coastal states and the
management of fisheries is just one part. It was finalised in 1982 and came into force in 1994.

4
by comparison to those paid in other parts of the world (Chand et al. 2003; Inhedru 1995).

This, in part, is explained by the lack of bargaining power of PICs relative to DWFNs,

provisions imposed on DWFNS, such as transhipment of fish (Duncan and Temu 1997)

that reduce returns to fishing, the linking of development aid and assistance with access

fees, and because it appears that fishing effort is at a level that exceeds that which would

maximise the economic surplus (Bertignac et al. 2000).

2.1 Bargaining Power

Initial attempts by the PICs to obtain reasonable access to resource rents accruing from

their fisheries were hampered by their negotiation experiences with the Japanese, who in

the early 1980s harvested about three-quarters of the tuna stocks. Moreover, early

experiences of multilateralism in the 1970s in other areas, such as air transportation,

which have been less than successful (Fry 2005) have made some PICs reluctant to

collaborate and bargain as a group. This made it easier for the Japanese to manipulate

negotiations through a ‘divide and conquer’ strategy ― by refusing to negotiate with

PICs collectively that wished to do so, and ensuring that at least one access arrangement

to a EEZ was always in operation, they were able to keep PICs in competitive positions

with respect to each other (Schurman 1998). This strategy was enhanced by the fact that

the benefits and costs of implementing collective bargaining by PICs are likely to be

unevenly distributed, thus lowering the incentive to form co-operative arrangements.

It appears that PICs have become more adept in bargaining with DWFNs over time and

co-operation in discussions of access. For example, the formation of the Nauru, Palau and

FSM Agreements represent successful efforts at coordinating behaviour, although these

5
agreements only explicitly cover licensing conditions. In addition, there is evidence that

the Nauru Group that consists of seven PICs that have the most to gain from a better

bargaining with DWFNs have improved access agreements and payoffs to Pacific states

(Munro et al. 2004). Over time the relative importance of the Japanese has also

diminished, (see Table 2) and increased access and competition by the Taiwanese,

Korean, Chinese and US fleets has also forced the Japanese to concede to more

reasonable access fees (Schurman 1998, Petersen 2005). Unfortunately, increased

harvests from the new entrants appear to also have reduced overall returns and the ability

of DWFNs to pay increased access fees.

2.2. Bundling of Aid and Fisheries Access

It is common practice in the Pacific for donors to bundle in-kind or financial development

assistance in the expectation that they will be favourably considered in negotiations over

access to resources and fees. Schurman (1998) cites the example of the National Fisheries

Corporation of the Federated States of Micronesia (FSM) receiving ‘gifts’ of training

boats, while the Asian Development Bank (ADB) observes that almost half of the ‘access

fees’ paid by US boats actually takes the form of development aid (ADB 1998). Given the

secretive nature of the bilateral access arrangements it is difficult to determine the extent

of this practice, but it does appear to have reduced the access fees paid to PICs.

2.3 Fostering a Domestic and Commercially Competitive Fishing Industry

A major strategy pursued by PICs to achieve the desired economic benefits from their

tuna fisheries has been ‘domestication’, or the process of developing and/or then

6
integrating domestically located harvesting and processing sectors to serve export

markets. PICs have encouraged domestication through a two-pronged strategy of direct

public finance of national industrial enterprises, designed to grow a domestic tuna

industry, and by attaching industry development conditions on the licensing arrangements

for DWFNs. Typically, this second approach has seen PICs requiring foreign vessels to

utilise domestic infrastructure and/or nationals to crew boats, as well as maintaining and

completing compliance procedures such as those set out in the FSM Agreement.4

Unfortunately, these strategies have largely failed to bear fruit (Petersen 2002, 2005;

Schurman 1998; Chand et al.; van Santen and Muller 2000; ADB 1998), but some

benefits have been generated through direct and indirect employment in the tuna industry

and also foreign currency earnings (Barclay and Yoshikazu 2000; Gillett et al. 2001).

In general, PICs have chosen to focus on the harvesting sector in terms of their public

sector investment. Unfortunately, the harvesting of tuna generates highly variable

revenues, requires large upfront sunk costs and substantial technical requirements. The

high investment costs and the fickle nature of fishing has meant that mistakes have been

made that are financially burdensome for some PICs (ADB 1998).5 The lack of

appropriate technical skills domestically has also meant that PICs have often had to rely

on foreign investment partners to implement projects, or enter into partnerships with

foreign firms ― reducing the potential financial gains from projects. Van Santen and

Muller (2000) summarise some of the investments made by three PICs (Federated States

of Micronesia, Fiji and Marshall Islands) in tuna harvesting totalling over US$70 million

4
One compliance mechanism is the requirement to participate in a vessel monitoring system (VMS)
run by the Forum Fisheries Agency. The VMS allows FFA members to track the location, speed and
direction of licensed boats operating in the EEZs of member countries (van Santen and Muller 2000).
5
The Asian Development Bank cites the following reasons why port development has not been a
successful strategy: fleet operators prefer to service vessels in the same ports where they service fish,
the later usually lying outside the WCPO Region, volatile access policies by PIC Governments,

7
― a sum in excess of the region’s annual access fees. In general, these investments have

been made by the public sector and many have failed to yield a positive financial return

(Petersen 2005).

Equally as important is whether PICs could receive a greater amount from access fees

alone than a mix of access fees and an export-orientated domestic industry, assuming the

investment by PICs generates a positive rate of return. The answer depends on the relative

cost efficiency of DWFNs (Munro 1979). If DWFNs have lower harvesting costs, as

seems likely given their ability to profitably harvest tuna resources and pay access fees,

the potential economic surplus is greater than if PICs were to do the harvesting. This

possibility is illustrated in Figure 3 where PICs are shown to receive an even greater

return from only a 50% share of the resource rent at the economic optimum rate of

exploitation undertaken by DWFNs than simply harvesting tuna themselves at their own

economic optimum level of harvesting.

Another consideration for PICs, in terms of the domestication of their fishing industry, is

the very substantial cost associated with fisheries management. In a number of countries

outside of the region the costs of fisheries management exceed the potential benefits from

the fisheries (Schrank et al. 2003). This suggests that a ‘go-it-alone’ strategy in terms of

harvesting and managing tuna may be a costly exercise for PICs that may generate few, if

any, net benefits. The question for advocates of ‘domestication’ is, therefore, what should

be the nature of the partnerships between PICs and DWFNs that will maximise the

payoffs to the Pacific states.

variable and seasonal nature of resource making use of single ports impractical, poor port and other
services and concerns about law and order in some ports (ADB 1998).

8
3. Institutional Innovation in the Western and Central Pacific Tuna Convention

Although some cooperation between PICs has been successful, it may be possible that

PICs could improve potential payoffs through further co-operation, particularly on

economic issues. These potential benefits follow on from the problems identified above:

one, better bargaining power in terms of access fees with DWFNs from the current mean

level of about 40% of the total rent,6 two, increased resource rent and greater population

resilience from moving to lower rates of exploitation that could more than double the

resource rent from the fisheries (Bertignac et al. 2000), three, higher returns from

harvesting older age classes of fish and mitigating the ‘race to fish’ and, four, reduced

management costs and increased monitoring from better co-ordination of enforcement

and surveillance activities. Although potentially all countries, PICs and DWFNs, could

be made better off with co-operation that reduces current harvesting and directs it to older

age classes to raise the overall resource rent, obtaining such an agreement would require

that every country be at least as well off with co-operation. Moreover, there would be

significant transitional losses in moving to a lower harvest, but high fish stock

environment, and these costs would be unevenly distributed among DWFNS and PICs.

Thus to achieve an agreement some form of ‘side-payments’ in terms of harvest rights or

monetary compensation would probably be required from the winners to the losers as

well incentives for all countries to comply with a co-operative agreement. It would also

require barriers to entry for new participants or countries that might also wish to benefit

from increased returns from co-operation.

6
A ‘back of the envelope’ calculation of the proportion of the resource rent accruing to PICs is to take
the estimated total access fees paid of around US$60 million in 1999 (Gillett et al. 2001) and divide by
the estimated resource rent in 1996 of some US$160 million (Bertignac et al. 2000). Given the high

9
Chand et al. (2003) propose a possible way to achieve a co-operative agreement by the

creation of a commission, composed of both PICs and DWFNs, that would allocate

harvesting rights as a percentage of a total allowable catch denominated by species and

area based on EEZs and historical fishing patterns. These harvesting rights would be

transferable and divisible between vessels flagged by the countries that are signatories to

the agreement. Other countries could enter the agreement, but would be required to buy or

lease harvesting rights to legally catch tuna in the region. Population assessments and

monitoring and enforcement would be paid for out of rentals based on the allocated

rights, and because of economies of size and scope, could significantly reduce overall

management costs. To give greater transparency as to the size of the resource rents in the

fisheries, Chand et al. (2003) recommend that a small percentage of the total rights held

by all countries would have to be tendered for sale every year and the prices for the rights

made available to all parties.

The objective of the recently ratified Convention on the Conservation and Management of

Highly Migratory Fish Stocks in the Western and Central Pacific Ocean (hereafter the

‘Tuna Convention’) is to ensure, through management, the long term conservation and

sustainable use of highly migratory tuna stocks (WCPF Convention 2004). While

primarily a conservation oriented agreement, the opportunity to use the Convention as a

forum for economic cooperation could assist the PICs in addressing the tuna development

problems outlined in section two of this paper and also provide a critical incentive

mechanism to ensure that PICs (and DWFNs) continue to participate, and enforce, the

conservation aspects of this cooperative agreement.

risks associated with tuna harvesting it would be surprising if PICs were able to obtain, on a long-term
basis, more than half the available resource rent in the form of access fees.

10
With the important exception of catch limits and allocation, analysis of the text of the

Convention suggests that the drafters have chosen not to pursue economic objectives.

Rather it appears that the PICs view the Convention as a measure to ensure management

compatibility between high seas and the management regimes already existing within

their EEZs (Ram-Bidesi and Tsamenyi 2004).

The Tuna Convention’s in-principle agreement to establish total allowable catches for

tuna at the regional level is a significant break from previous practices of controlling

catches through controlling fishing effort. Selection of an appropriate TAC could provide

a powerful mechanism to help guard against economic and ecological overfishing and

provide an institutional mechanism over which to focus regional cooperation and

dialogue. However, the effectiveness of this component may be undermined by the

process adopted for its implementation. Rather than establishing a process similar to the

one outlined in Chand et al (2003) for determining TAC, the Convention has charged the

secretariat body to the Convention (the Western and Central Pacific Fisheries

Commission) with responsibility to coordinate a mechanism whereby TACs are set by

consensus amongst signatories. In the list of factors the Tuna Convention has specified

must be ‘taken into account’, the setting of TACs to maximise the economic yield or

surplus from fishing is conspicuously absent. Predictably, this has already created fierce

debate of competing models of fisheries allocation (Ram-Bidesi and Tsamenyi 2004) and

any benefits from the Tuna Convention as a whole is limited until these debates are

resolved. Aside from the TAC issue, an analysis of the Tuna Convention’s text

demonstrates that it is poorly equipped to deal with any other economic issues and there

are significant institutional ‘gaps’ in the management framework proposed by he Tuna

Convention.

11
Table 3 summarises key results of the Tuna Convention. A major deficiency is that it does

little to help PICs work co-operatively to maximise resource rents at a sustainable level.

Moreover, the Tuna Convention does not prevent the PICs from attaching conditions to

access and licensing arrangements similar to those set out in the Nauru, Palau and FSM

arrangements. Thus the Tuna Convention is a treaty about the amount of fish to be caught

― rather than about helping PICs overcome their development issues through better use

of their tuna resources.

Nevertheless, the Tuna Convention’s entry into force as a body of international law

represents an impressive development: it is a genuine multilateral regime that includes all

PICs and allows for, and encourages, the membership by DWFNs.7 It also explicitly

recognises the importance of sustainability, ecosystem management and

interdependencies of tuna management, something which was envisaged, but until now an

unimplemented, component of the UN Fish Stocks Agreement.8

As with any international treaty, the effectiveness of the Tuna Convention and its

supporting secretariat, the Fisheries Commission, is limited by the political will of the

member countries and the economic resources that they make available to undertake its

mandate. The Fisheries Commission will be another organisation, along with the

7
As of March 2005, the republic of Korea and Chinese Taipei are the only members that are distant
water fishing nations.
8
The United Nations Agreement for the Implementation of the Provisions of the United Nations
Convention on the Law of the Sea of 10 December 1982 relating to the Conservation and Management
of Straddling Fish Stocks and Highly Migratory Fish Stocks (the “UN Fish Stocks Agreement”) sets
out principles for the conservation and management of highly migratory and straddling fish stocks
existing in both international waters and EEZs. Key principles in this agreement include: a
precautionary approach, cooperation amongst stakeholders and consistency in management across
national/international boundaries. The Treaty envisaged that regional agreements would be established
to act as the regional operational framework. The Western and Central Pacific Ocean Convention is the
regional agreement corresponding to the UN Fish Stocks Agreement. (United Nations 2004).

12
Secretariat of the South Pacific Community (SPC) located in New Caledonia and the

Forum Fisheries Agency (FFA) based in the Solomon Islands that will provide support

for fisheries management. It is not clear to what responsibilities will be divided among

the organisations, the level of co-ordination between the three organisations, and to what

extent, if any, resources will be shared in terms of fisheries management. Thus although

the FFA was recently awarded US$ 11 million over five years from the Global

Environment Facility to support fisheries management in the Pacific (Forum Fisheries

Agency 2005), the allocated budget of less than US$ 1 million for the 2005 operations of

the Fisheries Commission is a matter of concern (Fisheries Commission 2004).

4. Tuna and governance in Pacific Island Countries: the potential for a resource

curse?

The ADB identifies four key principles to good governance: accountability, participation,

predictability and transparency (ADB 2004). The inability of PICs to promote and

implement these principles is generally recognised as one of the key factors underscoring

poor socio-economic performance across the Pacific (ADB 2004). Indeed, some

observers argue that poor governance and poor institutional quality is the major barrier to

the future development prospects for PICs.9

Root causes of poor governance lie in a complex mixture of socio-cultural and historical

factors. In part, these arise from the interplay between western and traditional Pacific

cultures and the colonial history of much of the region (Salandha 2002). Poor

institutional performance is also linked to lack of suitably qualified people able ― and

9
AusAid Country Programmes: Pacific http://www.ausaid.gov.au/country/southpacific.cfm.

13
willing ― to address governance issues (ADB 2004). It is most strongly expressed in the

poor quality of the national based public institutions ― political instability, weak

parliamentary systems, corruption, a politicised public service, and a failure to establish

strong institutions of governance (such as auditors or ombudsman).

Figures 3 and 4 provide estimates of the ability of PICs to control corruption and a

measure of government effectiveness in 2004. For comparison purposes, the estimated

levels for Australia and New Zealand are also illustrated. Both figures place most PICs in

the lower half of world rankings with some countries, such as the Solomon Islands and

Papua New Guinea, listed in the lowest decile of countries.

While poor quality institutions and governance structures are critical factors in explaining

the historically poor economic performance of tuna fisheries (Chand et al. 2003; Petersen

2002; Petersen 2005; ADB 1998; Schurman 1998; Hinds 2003), it is difficult to pinpoint

any direct causal relationship, other than one of influence. Poor institutions and

governance practices are pervasive rather than being specific to tuna management itself,

and thus poor management in the fisheries is a symptom rather than a driver of poor

economic performance. Moreover, the evidence relating to poor governance as it directly

affects tuna management tends to be anecdotal ― although it is possible to make some

general observations.

First, the historical approach of setting access conditions and fees is both non-transparent

and non-participatory. A secret agreement between national governments makes it

extremely difficult for analysts, or the Pacific communities themselves, to identify

whether these common-pool tuna resources are being used in the most efficient manner.

14
This is reinforced by the (explicit or implicit) bundling of donor assistance with access

― although the provision of aid is of benefit to the PIC in question, it is impossible to

determine whether the combination of fees and aid represents the best economic outcome

that could be derived from scarce tuna resources (Petersen 2005). This tendency towards

‘bundling’ is reinforced by the traditional and governance cultures pervasive in the

Pacific: the traditional familial links between politicians and their communities and the

expectations that these connections deliver financial benefits.

Petersen (2002) also highlights the importance of governance in stimulating private sector

participation in the tuna fisheries. Here again, poor governance and inappropriate

economic policy settings appear to have failed to stimulate extensive private sector

participation in the fisheries. Evidence of this is anecdotal for specific tuna fisheries

across the region because the failure to develop a viable private sector is a general, rather

than a tuna specific, issue. For example, Gillett et al. (2001) discuss the Papua New

Guinea National Fisheries Authority, which, it is claimed, has insufficient internal and

external controls applied, obscure licensing processes which are subject to manipulation,

poor record keeping, mismanagement of trust accounts, and extensive use of influence

rather than merit to determine management decisions.

4.1 Potential for a resource Curse

Over the longer term, even with the successful implementation of the Tuna Convention,

tuna-led development represents more governance challenges to the PICs. If Pacific

Island states are able to increase their access fees this has the potential, in the absence of

strong institutions, to generate a ‘resource curse’ (Auty 2001; Sachs and Warner 2000) for

15
some countries. PICs require capital to promote their economic development, but in the

absence of good governance these funds could contribute to political, economic and

social problems ― difficulties that have arisen elsewhere with resource rich developing

countries.

The potential for a ‘resource curse’ phenomenon to become established due to a resource

boom is real: both PNG and Nauru have experienced the resource boom-bust cycle to

various degrees. However, until recently, the potential for a resource curse phenomenon

from fisheries in the Pacific region, and its potential consequences, has been largely

ignored.

Resource booms may have both positive and negative consequences on the socio-

economic milieu of resource rich countries. The processes by which resource rents

ultimately lead to negative consequences are often referred to as ‘transmission’

mechanisms, and usually include phenomena such as declines in the non-resource export

sector, crowding out effects, poor decision making at the government level, and a decline

in the quality of institutions. Unfortunately, it is possible to discern many of the typical

‘transmittal’ dynamics in existence in the Pacific. For example, corruption is key in

spreading the impacts of the resource curse, and is also an unfortunate feature of some

public institutions in the region.

Table 4 provides a comparison of institutional quality and the potential risk factors for

PICs to develop a ‘resource curse’. The data set out in columns A and B provide some

information about how each PIC government has formal structures in guarding against

poor governance ― namely accountability mechanisms and independence of the

16
judiciary. Column C shows another important mechanism of promoting good governance

― whether communities are active in monitoring government performance in service

delivery. Column D tracks whether PIC governments have put into place ‘anti-corruption’

strategies and column E records whether conflict, often seen as a long-term consequence

of poor governance, has actually occurred in the PIC. Overall, columns A – E record

information on the general health of governance in the PICs.

Columns F – I in Table 4 records the extent to which the fish caught in the EEZs of PICs

might affect overall economic performance. Given the previous performance of

government led investments, it is reasonable to argue that the greater the size of the

government sector in the economy and the less diverse is the economy, the more

vulnerable it is to a resource curse, in the absence of good institutional quality. As shown

in column G, the size of the fisheries resource within the EEZs of some Pacific states is

very large indeed. For example, in the case of Kiribati and Tuvalu the value of fish caught

exceeds the countries’ GDP. The potential for the resource curse may be further

reinforced, the greater the relative amount of aid that is received from DWFNs seeking

licence arrangements with a PIC, as presented in column H. The final column, gross

fishing revenues in a PIC’s EEZ, provides an indication of the absolute size of fishery

resources. Although there is substantial variability among countries, Table 4 indicates a

very real potential of a resource curse.

4.2 Avoiding the Curse

The overall indications are that PICs are at real risk of misusing both existing and future

returns that they may accrue from their fisheries resources. This suggests that a major

17
development focus should be to improve the quality of institutions and governance in the

western and central Pacific. In other words, simply ensuring sustainable and economically

profitable tuna fisheries is unlikely to be sufficient to bring about sustained development.

A successful example of managing fisheries and their revenues is provided by the

Falkland Islands Government (FIG) which suggests that very large fisheries revenues, if

used wisely, can provide substantial social and economic benefits (Thomas 2002). For

instance, the FIG has been able to extract substantial access fess while also ensuring the

monitoring, data collection, surveys and analysis of catch and abundance data to

sustainably manage the resources (Falkland Islands Government 2005).

In addition to supporting capacity and institutional development, PICs and donors could

develop ‘trust funds’ which would be managed separately from other government

revenues. The money in the trust funds would be independently managed and audited and

any expenditure from the fund, beyond a pre-determined level, would be prohibited

without an act of parliament or legislation. It would also be possible to specify the sort of

expenditures (such as physical infrastructure) that would be permitted from the fund.

Trust funds cannot substitute for good quality institutions, but can provide greater

transparency in terms of both fishing revenues and expenditures. A trust fund could also

provide a sustainable revenue stream for both present and future generations. The

successful use of a trust fund by Kiribati for its phosphate royalties, which has generated

returns long after mining ceased (Petersen 2005), suggests that similar funds should be

seriously considered by PICs in terms of fishery access fees.

5. Conclusions

18
The countries and the territories of the western and central Pacific face formidable

challenges to promote their development. Their shared fisheries resources, and in

particular tuna, provide the possibility for ‘tuna-led’ economic development for some

states. The ability for the fishery resources to assist Pacific Island countries is, however,

constrained by economic overfishing, the inability to deter new entrants and fishing

effort, and failed strategies to develop a profitable domestic, but export-orientated,

industry. The countries of the region also face problems with corruption and government

effectiveness that pose real risks that fishing revenues will not generate a sustainable flow

of income to sustain the region’s long-term development.

To address these problems, both Pacific Island countries and donor nations should

consider a twin strategy to maximise the development potential of the region’s fishery

resources. First, given the potential for co-operation to make every stake holder better off,

including distant water fishing nations, greater efforts should be directed at devising and

supporting multinational institutions that reduce harvests, increase the transparency of

access fee arrangements, and allow for transferability of harvesting rights across countries

and vessels. Second, to ensure the most effective use of funds generated from fishing

resources, greater attention should be given to increasing capacity in the public sector,

improving government effectiveness. This could include, but should not be limited to,

developing innovative ways to reduce corruption and the possible misuse of public

revenues by the creation of trust funds for fishing access fees. Both strategies, if

successful, offer the real possibility to promote tuna-led sustainable development in the

Pacific.

19
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26
 120E 140E 160E 180 160W 140W 120W

Minami Hawaii
Tori Shima
20N

20N
Wake
Northern
Marianas Johnston

Guam Marshall
Islands

Palmyra
Federated States of Micronesia
Palau
Howland
& Baker
EQ

EQ
Papua New Guinea Nauru Kiribati Jarvis
Line
Phoenix
Islands
Tuvalu
Solomon Is Tokelau
Cook
Wallis & Islands
Futuna
Samoa Am
Fiji
Samoa
Vanuatu Tonga
Australia

20S
20S

New Niue
Caledonia
French Polynesia
Matthew
& Hunter Pitcairn

Norfolk

40S
40S

New Zealand

120E 140E 160E 180 160W 140W 120W

Figure One: Map of Western and Central Pacific Region

Source: Secretariat of the Pacific Community.

27
 1800000

1600000

1400000
Tons of tuna caught

1200000
Total
1000000 Catch
Pacific,
800000 Wester
n
600000 Central
400000

200000

0
50

53

56

59

62

65

68

71

74

77

80

83

86

89

92

95

98

01
19

19

19

19

19

19

19

19

19

19

19

19

19

19

19

19

19

20

Years

Figure Two: The volume of tuna resources harvested in the Western and Central
Pacific 1950-2003

Source: FAO (2005).

28
 T C P IC

TC DW FN

TR

F is h S to c k
X *D W FN X * P IC
LO W STO CK H IG H S T O C K
Legend: TC = total harvesting costs, TR = total revenue, X*DWFN = rent maximising biomass for
DWFN, X*PIC = rent maximising biomass for PIC.

Figure 3: Illustration of Rent-Maximising Stocks Levels for a Distant Water

Fishing Nation (DWFN) and a Pacific island Country (PIC).

29
 NEW ZEALAND
3

AUSTRALIA
Control of Corruption - 2004
(C ho sen co m p arato r also sho w n fo r selected co untries)

HIGH
2

AMERICAN SAMOA
Normalized Control of Corruption Index

GUAM
COOK ISLANDS
MARSHALL ISLANDS

MICRONESIA

KIRIBATI
SAMOA
PAPUA NEW GUINEA
SOLOMON ISLANDS

VANUATU

FIJI
0
TONGA
TUVALU

-1

-2

204 Countries
LOW
-3

Key: Control of corruption measures perceptions of corruption in terms of using

public power for private gain. Chosen comparator is the year 2000. All scores are
normalised to be between –3 and 3.0 where a higher score indicates greater control of
corruption. Confidence intervals are denoted by the upper and lower bars for each
country.

Figure 4: Measure of the Control of Corruption for Selected Pacific Island

Countries.

Source: Kaufmann et al. (2005) and authors’ calculations.

30
 AUSTRALIA
NEW ZEALAND
3
Government Effectiveness- 2004
(C ho sen co m p arato r also sho w n fo r selected co untries)

2 HIGH

SAMOA
MARSHALL ISLANDS

COOK ISLANDS

AMERICAN
PAPUA NEW GUINEA

PALAU
GUAM
MICRONESIA
1

SAMOA
VANUATU

NIUE
KIRIBATI
SOLOMON ISLANDS

TUVALU
TONGA

0
FIJI
NAURU

-1

-2

LOW
209 Countries
-3

Key: Government effectiveness combines measures of quality of public service,

provision, quality of bureaucracy, competence and independence of the civil service
and credibility of the government’s commitment to policies. Confidence intervals are
denoted by the upper and lower bars for each country.

Figure 5: Measure of Government Effectiveness for Selected Pacific Island

Countries

Source: Kaufmann et al. (2005) and authors’ calculations.

31
Table One: Development and Fishery Statistics of Selected Pacific Island
Countries
Country Population Annual GNI Mean Adult Life Global
(2001 in Population Per Gross Literacy Expectancy HDI
thousands) Growth capita Fisheries at birth Rank
(1990-98) (US$ Revenues
2001) 1993-98
as %
GNI
2001
FSM 120 2.1 2,150 215% 71.3 65.7 120
Fiji 824 0.9 2,130 0% 92.9 66.6 101
Kiribati 93 2.1 830 503% 92.2 61.6 129
Marshall 53 3.6 2,190 85% 74.4 65 121
Islands
Palau 20 2.4 6,730 5% 91.4 69 46
Tonga 101 0.3 1.530 0% 99.0 68 107
Samoa 171 1.2 1,520 6% 95.7 66.6 117
Solomon 432 3.3 580 87% 30.3 64.7 147
Islands
Vanuatu 203 2.7 1,050 0% 33.5 65.8 140

Notes: 1. FSM = Federate States of Micronesia. 2. GNI = Gross National Income

Source: World Bank (2000a), World Bank (2003), Petersen (2005) and authors’
calculations.

32
Table 2: Average Annual Tuna Catches in the Western and Central Pacific
Region for Selected Countries

Country Estimated Catch (average 2000-2003)

Japan 225,567
Taiwan 282,458
Korea 190,761
USA 97,422
Solomon Islands 19,063
Vanuatu 9,593
Papua New Guinea 112,098
Federated States of Micronesia 22,747
Australia 1,892
Total 961,599

Source: FAO (2005) and authors’ calculations.

33
 Table 3 Selected Features of the Western and Central Pacific Ocean Tuna
Convention with Comments
Desirable Features of a Features of the WCPO Tuna Convention
Convention
Well defined property rights and system of Rights exist at national level, but are not well defined at the fisher level.
and agreeing to and distributing ‘entitlements’
over common-pool resources
Direct link between resource No
ownership/control and economic return
Clear mechanisms for dispute resolution No ― some procedures are set out covering potential disputes with non-
between Convention members and between parties to the Convention, but these are weak and rely on diplomatic
members and non-members/other convention pressure.
areas.
Mechanisms to prevent further entry into the No
fisheries

Mechanisms to prevent economic overfishing Not a management objective or criteria for setting TACs.

Mechanisms to address social and In theory, yes, as environmental and social externalities form part of the
environmental externalities list of issues ‘taken into account’ in managing and conserving fish stocks.
However, exact mechanisms to account for these issues are not defined.
Clear decision making procedures established. Yes ― decisions made in the first place by consensus. If not achieved,
Decision making processes are transparent then decisions made by voting. Voting parties divided into two
and open to scrutiny by third parties ‘chambers’ – those who are members of the FFA and those who are not.
Article 21 allows for participation of third parties where appropriate, as a
mechanism to promote transparency.
Mechanisms to ensure compliance with Enforcement of provisions of convention on fishing vessels lie with flag
Convention goals and targets state. Sanctions may be used to enforce compliance by flag states in the
event of vessel non-compliance. Convention also establishes a regional
observer programme to promote compliance. No provisions to enforce
member states to translate provisions in Convention into national laws.
Convention supports develops the capacity of In theory, yes, – article 30 recognises the ‘special needs’ of developing
member countries to implement Convention country members and provides for financial, technical and other assistance
goals as appropriate. Current budget, however, precludes such capacity
development.
Secretariat is adequately resourced No. The Fisheries Commission is under resourced by several orders of
magnitude (< $US 1 million in 2005).

34
 Table 4 Measures of Institutional Quality and Potential for Misuse of Fisheries Revenues in the Western and Central Pacific
A B C D E F G H I

Amount of
Existence of Existence and Existence of Government Ratio of value of fish development
external Existence of implementation of conflict or other expenditure as harvested to overall assistance Gross Fisheries
accountability active an ‘anti- law and order a percentage of economic performancevii received from Revenues ($US
mechanism for Independence citizens corruption’ problems in the GDP (average GDP top four million, average
governmenti of judiciary ii groups?iii strategy? iv last 10 yearsv 1990-2002)vi Exports DWFNs viii
1993-1999)
Yes – large
Independent audit focus on Cook Islands Anti-
office – but under corruption Corruption Action Plan
resourced. activities by adopted by Cabinet in 0.08 <0.01
Cook Islands Ombudsman exists Independent government 2001 No 44% (0.05-0.11) (0.0 – 0.01) 0.15 0.6
Independent audit
office.
Ombudsperson Yes – military
exists and is coups occurred in 0.01 <0.01
Fiji Islands independent Independent 1987 and 2000 29% (<0.01-0.01) (<0.01) 22.6 9.1
No, but
members of
parliament can
and often raises
Auditor issues about
independent, but service delivery
poorly resourced on behalf of
and poor follow up. their 2.29
Kiribati No ombudsman. Independent constituents. No No 117% N/A (1.62 – 3.2) 7.2 392.4
Not explicitly. Some
Independent No – but local measures have been
auditor but under governments implemented but with
resourced. No active in this no timetable for 5.81 0.47
Marshall Islands ombudsman Independent area. completion. No 91% (4.11-8.14) (0.33-0.66) 52.61 98.5
Micronesia, Fed. 131.53 1.24
States of N/A N/A N/A N/A No 82% (93.07-184.3) (0.88-1.74) 109.42 557.4
Audit Office
independence not Independent but No overall strategy but No civil conflict,
enshrined in this is not some related but significant
legislation. No constitutionally commitments made – political instability
Nauru ombudsman. guaranteed. No no timetable. in recent years N/A N/A N/A 0.22 122.7
Independent
auditor. No
Palau ombudsman exists. Independent No No. No 68% N/A N/A 27.71 7.0
Yes ― significant
political instability
Auditor Independent – including civil
independent, but but conflict over
poorly resourced. appointments Yes, a bill to establish resources on
Papua New Independent ‘raises an ICAC is before Bougainville 0.10 0.05
Guinea ombudsman. eyebrows’. Yes parliament. Island 32% (0.07-0.14) (0.04-0.07) 20 408.4
No.
Independent, Government
although proposed departments Not specifically, but
changes could must publish related measures are
undermine this. ‘service incorporated within
Independent charters’ by end broader public sector 0.44 0.4
Samoa ombudsman Independent 2003. reform. No 44% (0.31-0.61) (0.03-0.06) 14.7 16.6
Independent
auditor but
inadequately
resourced. Yes, the NGO
Independent Solomon Island
ombudsman but Development
currently non- Trust monitors Yes ― civil
operating due to government unrest through 0.82 0.32
Solomon Islands lack of resources. Independent performance. No 1998-2000 33% (0.58-1.14) (0.23-0.45) 1.4 217.9

7.1
Tonga In legislation – Independent Not really – No strategy, but has No 34% 0.04 <0.1 0.9
however, auditor some groups developed an (0.03-0.06) (<0.01)
reports to PM and act as lobby Economic and Public
is inadequately groups for Sector Reform
resourced. particular areas. Programme in 2002 to
Ombudsman exists address some of the
but has little relevant issues.
profile.
Independent No, but is examining
auditor but under- related issues in the
resourced. No context of developing 4.05
Tuvalu ombudsman Independent No a ‘leadership code’. No 117% N/A (2.87 – 5.67) 5.36 120.1
Independent at
higher levels.
Some concern
about suitability
Independent audit of appointments
office but under and A Comprehensive
resourced. effectiveness in Reform Programme No recent civil
Ombudsman exists lower level was established 1997 conflict, but some 0.01 <0.01
Vanuatu and is independent. courts. No to address these issues. political instability 28% (<0.01 – 0.01) (<0.01) 3.6 0.3

i
Transparency International (2004) various country reports.
ii
Transparency International (2004) various country reports.
iii
Transparency International (2004) National Integrity Reports, various countries. Information here summarises answer to question in the Report: Are their citizen’s groups
actively monitoring government’s performance in areas of service delivery?
iv
Transparency International (2004) National Integrity Reports, various countries. Information here summarises answer to question in the Report: Has the government
announced an anti-corruption strategy and a timetable for implementation?
v
Source: Australian Government Department of Foreign Affairs and Trade Country, economy and regional information website: http://www.dfat.gov.au/geo/ accessed: 26 May
2005.
vi
Source: Asian Development Bank (2004). http://www.adb.org/statistics accessed 6 June 2005.
vii
Source: Authors own calculations determined as follows. Data for quantity of total fish harvested in each EEZ was multiplied by a weighted average estimate of price per
tonne ($US) to estimate total value of fish harvested by all fleets operating within that EEZ. The total value was then compared to the value of exports and the value of GNP.
Variations in price (US$990 and US$1960) were also calculated to illustrate a range of possible outcomes. These outcomes are reflected as a range in brackets. Harvest data from
Gillett et al (1999) for the year 1999. Price data for the year 2000 from van Santen and Muller (2000). Export and GNP data (for 1999) from ADB (2001).
viii
These DWFNs are: Japan, Korea, Taiwan and United States. Development assistance only recorded if donor is within the top 10 of donors to the recipient country. Source:
Source: OECD (2005) Aid statistics, Aid recipient Charts http://www.oecd.org/dac/stats/recipientcharts accessed: 26 May 2005.