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Risk Management and Marine Conservation

December 30, 2014

Here’s a brief slideshare of the risk management approach to development.

The World Bank’s 2014 World Development Report – Risk and Opportunity: Managing Risk for Development – represents a valiant effort to introduce the risk management paradigm to its internal processes and the field of international development more generally. For this reason alone, it is well worth a look.

Another reason to read the report is it might well lead to some interesting management options for natural resource managers. While reading the report, I was struck how the risk management paradigm could also help facilitate better ocean conservation, particularly in those cases where negative impacts can be linked back to identifiable actors (e.g., fishers, coastal communities).

As the World Bank puts it:

Risk management is an essential tool for development because people in developing countries are exposed to many risks, and an inability to manage those risks can jeopardize development goals, including economic growth and poverty reduction.

As I read that statement I saw how you could just as easily talk about sustainable development. After all, actors like fishers and coastal communities also face “many risks” and their inability to manage those could lead to long-term negative outcomes, like coral reef destruction and fish stock collapse.

In my own work into illegal fishing, I think the risk management paradigm offers an interesting theory of why fishers sometimes do not comply with management rules. Simply put, such a theory would argue that noncompliance occurs when it is perceived by fishers to be an effective way to manage risk.

To explore such a theory, I think we’d need to look carefully at how fishers perceive risks across two domains.

The first domain would be fishery-specific risks, and is perhaps none-too-surprising. Just off the top of my head, I’d say these risks to could be categorized as maintenance risks (vessel repair costs, lost time to repairs, gear repair costs); labor risks (unstable employment); crime risks (piracy, illegal price fixing by processors); resource risks (stock collapse); market risks (price collapse, demand collapse, loss of market access); safety risks (injury, death); and management risks (rules adding additional costs, rules reduce potential legal revenue). And though I may be wrong here, I don’t believe any surveys of fishers have ever been conducted to formally assess how they perceive such risks, or how perceptions change over time.

The second domain would be more general to society at large. After all, fishers are not just fishers but people with a great many other interests beyond catching fish for money or sustenance. As the World Bank notes, people can face both systemic risks (recessions, natural disasters, epidemics, food price spikes) and idiosyncratic risks (getting sick, falling victim to crime, suffering a family breakup). On this, the World Bank provides some interesting survey data.

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Finally, the World Bank report provides a rather helpful framework to think about the obstacles that must be overcome to better manage risks. I see this as quite practical to the management of fishers.

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If you’re interested, I’d say it’s worth taking a look at the entirety of chapter 2 of the report, Beyond the ideal: Obstacles to risk management and ways to overcome them. As I read the chapter, I was quite intrigued by how four of the elements to the framework might apply to fisheries. In particular, I wondered what role cognitive failures, missing public goods, political economy, and deep uncertainty might play in motivating fisher noncompliance. Before wrapping up, I’ll provide a few thoughts on each.

Cognitive failures. As the report notes, a variety of studies have shed light on how people are naturally biased toward the status quo and just how inconsistent and incomplete people can be in their evaluation of risk. This suggests that there noncompliance should always be expected in a fishery when the status quo is changed unless there is a decent amount of effort to educate fishers or policing associated with the change. Similarly, it suggest that education to help fishers better understand their “true” risks could help shape behavior. In this vein, here’s a quote from the report that I enjoyed:

People are often overconfident about avoiding loss: they think they are able to drive safely under the influence of alcohol, and they think they can manage a flood and do not need to evacuate. They also have short memories about catastrophes, they discount the future too much and in inconsistent ways, and they fail to account for avoided losses that are not observable. After Hurricane Katrina hit New Orleans in 2005, the number of U.S. households with flood risk insurance increased more than three times more rapidly than observed in previous years. However, the average cancellation rate remained unchanged, at approximately 33 percent a year, suggesting a short effect of the disaster on household behavior.

Missing Public Goods. As I consider the importance of public goods in shaping the risk landscape, I recalled the importance of having appropriate and well-enforced property rights. A great many fisheries in the world are either functionally open access fisheries, and without something to better secure the benefits of following closed access rules, we shouldn’t expect good outcomes. I’d argue this is likely the reason that “data poor” fisheries, representing roughly 80% of the world’s catch, are trending towards decline.

Political economy limitations. There are a great many ways to cut this concept, but I like how the World Bank offered the idea that a lack of appropriate risk indicators will limit risk management. In my view, even the best managed fisheries lack a crucial metric: compliance. Law enforcement statistics are generally quite poor representations of what is really happening, and yet there aren’t many good alternatives for fisheries. My own work suggests that low-cost surveys of fishers might be a surprisingly effective way to gather compliance information.

Deep Uncertainty. This concept relates to the type of uncertainty that exists when even experts cannot agree. And like it or not, quite often experts cannot agree about the status of fisheries because there just isn’t any data. Let me repeat, the fisheries that account for about 80% of the world’s catch are considered “data poor”. Best practice suggests that a precautionary approach should be applied, but what this means in practice is often anyone’s guess. In the face of such deep uncertainty, it seems that what is “precaution” will need to be socially constructed through negotiation with fishers, scientists, and policymakers. If not, why would any fisher really follow a management rule? What science, natural or social, is there to justify it?


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