An Industry at a Tipping Point?

Name an economic activity which will soon be overtaken by a more dynamic competitor based mainly in Asia? Answer: catching wild fish for food.

According to the FAO, “by 2012 more than 50% of global fish consumption will originate from aquaculture” (1). Let’s look at the basis for this prediction.

The trends in global fish production are shown below, 2009 being the latest year for which figures are available. These figures are compiled by the FAO from those supplied by individual countries, and are unlikely to be highly accurate, but the trends should be fairly reliable. The message is clear: capture fishery production is no longer growing and may be beginning to decline, while aquaculture is growing rapidly.

1980 1990 2000 2009

Capture fisheries         67            85             94             89
Aquaculture                   5            13             32             56
Total                                  72            98           126           145

Global Production of Fish, Shellfish and Molluscs 1980-2009 (Mt) (2)

Of the total 2009 production, 23 Mt was not for human consumption (3). Most of this was used to produce fish meal and fish oil, and most was from capture fisheries (indeed, some was used as feed in aquaculture). When this is allowed for the FAO prediction (which relates to human consumption, not production) can be seen to be plausible.

Why is this happening? The limits on production from capture fisheries, arising from over-fishing and declining wild fish stocks, are well-known. Perhaps less familiar are the innovations that have contributed to the growth of aquaculture.

Technological Innovation in Aquaculture

Much aquaculture is undertaken by small-scale commercial operations (4). The physical infrastructure for containing the fish and ensuring clean water with adequate oxygen, though sometimes sophisticated, is often low-tech (earthen ponds, brush parks). However, three key innovations have been:

Selection of fish species that feed low in the food chain, reducing requirements for fish meal and fish oil for feed production.
Breeding of genetically improved species with higher yields.
Establishment of hatcheries supplying young fish of many species, avoiding dependence on unreliable wild sources (5).

Other than cultural factors and consumer tastes influencing preferences for particular species, there seems to be no reason why these innovations could not be exploited on a large scale in many parts of the world. However, it is in Asia that they have been most widely exploited to date. Of the total fish production from aquaculture in 2009 of 56 Mt, 50 Mt was in Asia, of which 35 Mt was in China (6).

Some Implications for the Study of Economics

The growth of aquaculture is an interesting example in the context of the strong / weak sustainability debate (7). To a considerable degree, aquaculture substitutes non-natural assets such as man-made infrastructure and young fish from hatcheries for natural fisheries. To that extent it is consistent with the weak sustainability view that there is a high degree of substitutability between natural and non-natural assets. However, aquaculture still requires natural resource inputs such as land and water, and at a global level its production to date is not substituting for but adding to that from capture fisheries.

The growth of aquaculture calls into question the relative prominence often given to fisheries within the study of natural resource economics. A textbook I have used – Hartwick & Olewiler (8) – devoted no less than 130 out of 432 pages to fisheries. Aquaculture received only a brief mention on one page. Aquaculture now merits more attention within introductory natural resource economics, as a substitute for fisheries, and alongside agriculture as an activity using and influencing demand for land and water.

References

(1) FAO http://www.fao.org/fishery/regional-aquaculture-reviews/reviews-2010/en/

(2) FAO Yearbook: Fishery and Aquaculture Statistics 2009
http://www.fao.org/fishery/publications/yearbooks/en p xxii

(3) FAO Yearbook as above, p xvi

(4) FAO No. 1061/5 Regional Review On Status And Trends In Aquaculture Development In Asia-Pacific – 2010
http://www.fao.org/docrep/014/i2311e/i2311e.pdf p iv

(5) FAO Fisheries and Aquaculture Circular as above, pp 33-37

(6) FAO Yearbook as above, pp 25-26

(7) For a simple explanation of strong and weak sustainability see http://www.sustainablemeasures.com/Training/Indicators/WeakStrg.html

(8) Hartwick J M & Olewiler N D, 2nd edn 1998 The Economics of Natural Resource Use Addison Wesley