A fish cartel for Africa

The paper addresses why African nations receive relatively low fees from foreign fishing access agreements and explores whether selling access as a coordinated cartel (bloc) would improve economic and ecological outcomes. The context is that many low- and middle-income countries rely on selling fishing access, yet foreign fleets (notably from the EU, China, Taiwan, South Korea) dominate activity in African waters while paying low fees. The authors highlight three core questions: (1) Why are African agreements comparatively disadvantageous? (2) What economic gains would accrue if African countries sold access as a cartel, similar to the Pacific Parties to the Nauru Agreement (PNA)? (3) What would be the conservation implications of such a cartel? Comparing Africa (which sells access individually) to the PNA (which sells jointly) reveals much higher per-ton access fees in the Pacific. The paper proposes a bilateral oligopoly framework—incorporating market power on both buyer and seller sides—combined with a simple bioeconomic model, to simulate outcomes under a continent-wide African coalition versus the status quo.

The paper situates African access agreements within broader patterns of resource extraction from formerly colonized regions and notes that foreign fleets comprise more than half of fishing activity in African waters. Several explanations for Africa’s low access fees relative to PNA countries are discussed: weaker enforcement against illegal fishing (raising expected returns to IUU fishing and reducing willingness to pay for legal access), biological and geographic differences (stock status, transboundary movement, species mix with lower market prices, greater transport distance to markets), and corruption that may depress negotiated fees. Illustrative comparisons include Senegal’s EU tuna access terms versus PNA access fees, and continent-level averages (2010–2021) showing Africa’s $128/ton versus PNA’s $307/ton. The literature cited encompasses satellite-based tracking of fishing effort, ex-vessel price reconstructions, and analyses of IUU fishing and fisheries management effectiveness, providing partial explanations for fee disparities while motivating the cartel-based market power hypothesis.

Study design: Compare two scenarios—status quo (African countries sell access individually) versus coalition (continent-level cartel selling access jointly). All other factors (enforcement, legal costs, stock movement, prices) are held constant to isolate effects of increased seller market power. Model framework: A bilateral oligopoly model (following Hendricks & McAfee, 2010) captures market power on both supply (African sellers) and demand (foreign buyers). Sellers and buyers strategically underreport true biomass or fishing capacity, respectively, to influence the equilibrium access fee and quantity. The model is coupled to a simple bioeconomic component (Pella–Tomlinson surplus production) to connect catch policies to biomass dynamics. Participants identification and data: - Sellers and buyers are identified using Global Fishing Watch (GFW) AIS-derived fishing hours (2016–2020) within African EEZs. A threshold of 2,420 hours selects 32 African selling countries and 33 buying countries; robustness to higher thresholds is tested. - Buying countries’ true distant-water fishing capacity is proxied by the sum of gross tonnage of vessels with more than half of fishing hours outside their flag-state EEZ (GFW vessel database). - Selling countries’ true biomass is constructed using Sea Around Us total catch (2010–2018), growth parameters from Costello et al. (2016), and a Pella–Tomlinson model with shape parameter set so B_MSY occurs at 40% of carrying capacity. The baseline assumes B/B_MSY = 0.8; robustness checks use 0.6 and 0.4. Bilateral oligopoly mechanics: - Sellers maximize access revenue minus opportunity (shadow) costs of foregone stock growth; buyers maximize fishing profits minus access fees. Functional forms with constant elasticities yield closed-form expressions for price and quantity conditional on reported biomass and capacity. Market power manifests via underreporting shares as characterized in Hendricks & McAfee (2010); Nash equilibrium in reports is found via fixed point algorithms. - Baseline elasticities set to η=1 (sellers’ opportunity cost) and ε=2 (buyers’ profit), with robustness to η in {0.5,1.5} and ε in {1.5,2.5}. Policy functions and equilibria: - For each country, access and non-access catch policy functions (catch as a function of biomass) are derived. Access policies are computed by varying a country’s biomass, resolving the Nash equilibrium, and allocating access quantity by reported biomass shares. Non-access policies (domestic and unauthorized foreign catch) are assumed linear in biomass, with slopes inferred from Sea Around Us total catch minus modeled access catch; these are held unchanged across scenarios (a key assumption discussed in limitations). - Total catch policy = access + non-access. The biological growth curve (country-specific) is intersected with the total catch policy to find equilibrium biomass in each scenario. This accounts for feedbacks: restricting access increases biomass, which can increase non-access catch. Scaling to real units and profits: - Access fee model units are converted to USD using the weighted average per-ton fee from EU published agreements (2010–2021): $128.20 corresponds to 0.961 fee units. - Access quantity model units are mapped to tons using EU’s average purchased access (283,640 tons/year = 11.5% of total), implying 0.935 quantity units correspond to 2.47 million tons. - Seller and buyer profits are computed from model profit units and converted to 2020 USD using the above scaling factors. Counterfactuals beyond the continent coalition: - Regional coalition scenario: Sellers grouped by the African Union’s eight Regional Economic Communities (with adjustments for overlaps and continuity). Biomass is aggregated by region; access quantities are allocated to countries by their share of regional status-quo biomass. Same fee/quantity scaling and profit calculations applied. - PNA application: The same framework is applied to the Parties to the Nauru Agreement (nine Pacific Island countries). Here, the status quo is a coalition; the counterfactual is individual selling. Access fees are converted to per-ton using license revenue and foreign catch; robustness includes alternative shares of unauthorized foreign catch and a healthier stock baseline (B/B_MSY=1.3). Robustness analyses include: varying fishing-hours thresholds for market definition; alternative B/B_MSY assumptions; alternative elasticity parameters; sensitivity in PNA assumptions about access versus unauthorized catch and stock status.

Continent-level (Africa coalition vs status quo): - Access catch: decreases from 2.47 to 1.75 million tons/year (−0.72 Mt, −29%). - Access fee: increases from $128.20 to $152.30 per ton (+$24.10, +19%). - African sellers’ profit: increases from $162.15M to $199.24M per year (+$37.09M, +23%). - Foreign buyers’ profit: decreases from $363.15M to $305.55M per year (−$57.60M, −16%). - Non-access catch: increases from 9.46 to 10.36 million tons/year (+0.90 Mt, +10%). - Total catch: increases slightly from 11.93 to 12.11 million tons/year (+0.18 Mt, +2%). - Biomass: increases from 117.20 to 136.12 million tons (+18.93 Mt, +16%). Country-level patterns: - Access catch declines in all countries (−24% to −36%). - Profits increase for all countries (+17% to +28%). - Total catch slightly increases in all countries as higher biomass boosts non-access catch. - Biomass increases in all countries (from +2.3% in Angola to +31.6% in Cape Verde). Averages: biomass +15%, profit +23%. Regional coalitions (RECs): - Modest gains relative to status quo: biomass +3 Mt (+2%), profits +$5M/year (+3%). Benefits are limited because most regional blocs aggregate a small share of Africa’s biomass; ECOWAS (largest) shows biomass gains of ~3–11% across members. Demand-side and surplus effects: - Buyer profits decrease by 16% under the Africa coalition; total economic surplus (seller + buyer profit) declines by ~4%. However, this excludes non-market values of higher biomass, increased domestic catch benefits, investment impacts, FX earnings, job creation, and equity considerations. PNA reverse counterfactual (if PNA did not exist): - Biomass would fall by ~16 Mt (−52%); seller profit −$113M/year (−41%); access catch −22%; total catch −33%; buyer profit −19%. Despite a small fee increase (~+4%) due to scarcity, overall profits decline. Total economic surplus would be 27% lower without the coalition, highlighting the PNA’s large conservation and economic benefits. Mechanism clarified: - Coalition market power enables effective restriction of access catch (−29%), raising fees (+19%) and biomass (+16%). Higher biomass then elevates non-access catch, more than offsetting access reductions, yielding slight total catch gains and higher seller profits.

The findings indicate that coordinated selling of fishing access by African countries would shift market power from foreign buyers to African sellers, enabling strategic restriction of access catch that increases both access fees and fish biomass. This directly addresses the research questions: it explains the disadvantage of fragmented selling, quantifies the economic benefits of a cartel (+23% seller profits), and demonstrates conservation gains (+16% biomass). While foreign buyer profits decline (−16%) and static total surplus is modestly lower (−4%), broader welfare considerations (non-market ecological value, domestic harvest and food security, possible investment-led growth, jobs, and distributional equity) suggest net societal benefits, particularly within Africa. The model underscores that market structure (bilateral oligopoly) matters for fisheries outcomes: seller coordination can countervail buyer blocs (e.g., EU) and correct overexploitation arising from competitive underpricing of access. Country-level uniform gains in profit and biomass imply potential political feasibility for coalition formation, although institutional arrangements and sustained cooperation remain challenging. The PNA comparison reinforces that coalitions can materially raise biomass and profits, and that their dissolution would impose significant ecological and economic losses, especially where access catch is a larger fraction of total catch.

The study develops and calibrates a bilateral oligopoly model linked to a bioeconomic framework to evaluate a continent-wide African fish access cartel. Results show that a unified African seller cartel would restrict access catch, raise access fees, increase seller profits by roughly 23%, and rebuild biomass by about 16%, with slight increases in total catch driven by higher non-access harvest. Regional coalitions yield only modest gains, implying that continent-level coordination is key. The analysis also demonstrates, via the PNA case, that seller coalitions can enhance both conservation and economic outcomes, benefiting even buyers in the long run through healthier stocks. Future research should quantify the administrative and negotiation costs of forming and maintaining such a coalition, evaluate alternative market mechanisms (e.g., coordinated auctions, quota pricing), incorporate stock-specific and spatial dynamics, and assess broader welfare impacts including nutrition, employment, and equity.

- Non-access policy functions are assumed unchanged between scenarios; in reality, improved enforcement or domestic policy shifts under a coalition could pivot these functions, potentially increasing or decreasing biomass gains relative to estimates. - True biomass levels for African stocks are largely unavailable; baseline assumes B/B_MSY=0.8 with robustness checks at 0.6 and 0.4, but uncertainty remains. - Identification of sellers/buyers uses an AIS fishing-hours threshold; misclassification risks exist despite robustness to higher thresholds. - Scaling from model units to tons and USD relies on EU access agreement data (per-ton fees and quantities), which may not generalize across all buyers. - Elasticity parameters (η=1, ε=2) are assumed, with robustness explored; different functional forms or parameterizations could alter magnitudes. - The model aggregates at the country level and does not model individual species/stocks or spatial heterogeneity within EEZs. - Enforcement, corruption, and illegal fishing responses are held constant; real-world coalition formation could change these, affecting outcomes. - Formation and maintenance costs of a coalition are not quantified; net welfare impacts depend on these costs and on broader socio-economic effects not fully modeled. - For the PNA analysis, assumptions on the share of foreign catch that is authorized and per-ton fee conversions introduce additional uncertainty.