Cost-benefit Analysis of Fisheries Management in Malawi – Technical Report

Malawi’s new long-term development plan, Malawi 2063, has earmarked the fishing sector as an important contributor to the country’s “inclusive wealth creation” development agenda. Building on previous efforts in the sector, the MW2063 First Implementation Plan (MIP 1) places a particular emphasis on a set of progressive commercialization and diversification programmes in the fishing industry to boost incomes and spur growth for socio-economic transformation. Torell et al. (2020) point out that in 2017, the Malawian fishing industry contributed 7.2% to GDP. The sector directly employs nearly 63,000 fishers, and over 8000 fish farmers. Indirect employment supports over 600,000 people who are engaged in various activities across the value chain including fish processing, fish marketing, as well as boat building and engine repair. Although a large quantity of fish produced within Malawi is consumed locally, the nation derives a significant amount of foreign exchange from exporting fish. The Malawi National Fisheries and Aquaculture Policy estimated that more than 500 tonnes of fish are exported annually. The fisheries sector is therefore extremely important to the national economy. The analysis in this paper suggests that fisheries rents in 2018 – an estimated MWK 185.5 billion (USD 250 million), are around 5 times greater than the rent at maximum sustainable yield. A significant reduction in fishing effort is required to avoid a collapse of fishing stock. In conjunction with the Fisheries Department, we examine the costs and benefits of two potential strategies to address the challenge of overfishing – i) replacing illegal nets ii) fishing in rotation. The results indicate that fishing by rotation is the superior strategy from a cost-effectiveness standpoint. The upfront costs involve painting the boats to designate which days they are allowed to fish (MWK 0.3 billion), plus foregone revenue in the first year (MWK 164.3 billion). However, this would reduce effective fishing effort down to 2,475 ‘full time’ craft and avoid a drastic reduction in the fisheries stock. In the long run this would lead to an extra MWK 53.7 billion in sustainable revenue and ongoing fishing costs of MWK 4.4 billion per year. The benefit-cost ratio is 2.8.