Linkages between Fisheries, Poverty and Growth: Key concepts and methodology

APPENDIX D

Case Study Methodology

and

Theoretical Background

INVESTIGATING THE LINKAGES
BETWEEN FISHERIES, POVERTY
AND GROWTH:

KEY CONCEPTS AND
METHODOLOGY

A report prepared for the

Department for International Development (DFID)
Project: ‘The Role of Fisheries in Poverty Alleviation
and Growth: Past, Present and Future’

DFID/PASS Contract: AG0213
February 2005 (Final version)

STUDY TEAM

Dr. Stephen Cunningham
Dr. Arthur E. Neiland

IDDRA Ltd
Portsmouth Technopole
Kingston Crescent
Portsmouth
Hants PO2 8FA

Tel: +44 (0) 2392 658232
Fax: +44 (0) 2392 658201
E-mail: cunningham@iddra.org, neiland@iddra.org

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SUMMARY

This background report presents a methodology for the DFID/PASS Project ‘The
Role of Fisheries in Poverty Alleviation and Growth: Past, Present and Future’.

The objective of the study is to conceptualise the interface between poverty reduction
and fisheries development. In particular, the study seeks to identify the links between
poverty reduction and fisheries development under different policy arrangements,
supported by empirical evidence generated through a number of case study countries.

There are five sections to this report: Section 1 gives an introduction and the
objectives of the project overall. Section 2 outlines the study approach for Phase 1
(background report and methodology). Section 3 is the core of the report and
presents succinctly the key issues that are central to the study covering the areas of –
poverty and development, economic growth and fisheries, fisheries development and
management, policy and governance. The overview of the issues above is
underpinned by a series of more detailed appendices. Drawing on Section 3, Section
4 develops a template for the case study reports, and Section 5 presents the Terms of
Reference for the case study authors.

The national case-studies will be undertaken in 8 countries (Bangladesh, India,
Thailand, South Pacific Island States, Morocco, Mauritania, Malawi and Canada).
The results will be synthesized to produce a final report and policy brief by June
2005.

KEY WORDS:

Fisheries; Policy; Poverty; Economic Growth; Concepts; Methodology;

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ACRONYMS AND ABBREVIATIONS

BMI Body Mass Index
BN Basic Needs approach
CEC Commission of the European Community
DFID Department for International Development of the United Kingdom
DWFN Distance Water Fishing Nations
DC Developed Country
DevC Developing Countries
EU European Union
EEZ Exclusive Economic Zones
FAO United Nations Food and Agriculture Organisation
FFA Forum Fisheries Agency (South Pacific)
FGT Foster-Greer-Thorbecke measure
FMU Fisheries Management Unit
GDI Gender Development Index
GDP Gross Domestic Product
GNP Gross National Product
HDI Human Development Index
IMF International Monetary Fund
IQ Individual Quota
ITQ Individual Transferable Quota
MDG Millennium Development Goals
MEY Maximum Economic Yield
MSY Maximum Sustainable Yield
NAM Non-Aligned Movement
NGO Non-Government Organisation
NR Natural Resources
NRM Natural Resources Management
OAU Organisation for African Unity
OECD Organisation for Economic Cooperation and Development
PASS Programme of Advisory and Support Services to DFID (HTPSE Ltd)
PEP Poverty-Environment Partnership
PG Poverty Gap
PQLI Physical Quality of Life Index
PRS Poverty Reduction Strategy
PRSP Poverty Reduction Strategy Paper (World Bank)
RMR Resting Metabolic Rate
RNR Renewable Natural Resources
SAP Structural Adjustment Programme
SD Sustainable Development
SSF Small Scale Fisheries
SY Sustainable Yield
TAC Total Allowable Catch
TC Total Cost
TR Total Revenue
UNCLOS United Nations Conference on Law of the Sea
UNDP United Nations Development Programme
UNRISD United Nations Research Institute on Social Development
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WFS World Food Survey
WTO World Trade Organisation

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CONTENTS

Page no.
SUMMARY 3
ACRONYMS AND ABBREVIATIONS 4
1. INTRODUCTION AND OBJECTIVES 7

2. STUDY APPROACH 8
2.1. General approach 8
2.2. Phase 1 study components 8
2.2.1. Literature review 8
2.2.2. Consultation with experts 9
2.2.3. Production of briefing papers 9
2.2.4. Synthesis of briefing papers 9
2.2.5. Development of study template and case-studies 9
2.2.6. Selection of country case-studies 10
2.2.7. Review and finalisation of methodology 10
2.2.8. Implementation of Phase 2 10
2.2.9. Preparation for Phase 3 11

3. KEY ISSUES 11
3.1 Introduction 11
3.2. Poverty and development; 13
3.3. Economic growth and fisheries 15
3.4. Fisheries development and management 16
3.5. Policy and governance 19

4. STUDY TEMPLATE 22

5. TERMS OF REFERENCE – COUNTRY CASE-STUDIES 27

6. CONCLUDING REMARKS 30

APPENDICES 31
A1. Poverty and Development – Evolving Concepts and Approaches 32
A2. Economic Growth and Fisheries 48
A3. Fisheries Development and Management – Key Issues 57
A4. Policy and Governance for Development 75

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1. INTRODUCTION AND OBJECTIVES

The objective of the Renewable Natural Resource (RNR) and Agriculture Team in
DFID’s Policy Division is to increase the contribution of RNR and agriculture
(including fisheries) to reducing poverty, by encouraging decision makers to adopt
policies and measures that can be integrated in practical ways into broader poverty
reduction processes.

The fisheries programme initiated by the Team recognises that fisheries are often
instrumental in helping reduce poverty, and underpin the livelihoods of the absolute
poor in rural areas of many developing countries.

The objective of this study is to conceptualise the interface between poverty
reduction and fisheries development. In particular, the study seeks to identify the
links between poverty reduction and fisheries development under different policy
arrangements, supported by empirical evidence generated through a number of case
study countries.

The main outputs of the study are shown in Box 1:

Box 1: Main outputs of the study

• the empirical evidence of the role of fisheries in supporting growth and
poverty reduction, presented in the form of a set of case studies, and
• a synthesis policy paper with outline strategy to guide future DFID
interventions.

This background report is structured as follows. Section 2 outlines the study
approach.

Section 3 is the core of this report and presents succinctly the key issues that are
central to the study. Section 3.1 outlines current thinking on poverty, its
measurement, diagnosis and approaches to poverty reduction. A key general finding
is that a major factor in poverty reduction around the world is broad economic
growth. Section 3.2 looks therefore at the factors determining economic growth
performance and on the role that the fisheries sector might play in contributing to
economic growth. Section 3.3 considers the development and management of
fisheries. It focuses on the way in which fisheries can contribute to poverty
reduction. Section 3.4 discusses the importance of the policy environment for
ensuring that the potential contribution of the fisheries sector is fully realised.

Section 3 presents an overview of the issues. It is supported by Appendices A1-A4,
which provide more detailed discussion.

Drawing on Section 3 and on the Appendices, Section 4 develops a template for the
case study reports, and Section 5 presents the Terms of Reference for the Case Study
authors.
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2. STUDY APPROACH

2.1. General approach

The study team drew upon their expertise in development economics, natural
resource management and fisheries policy and governance to address the specific
objectives of the current phase (Phase 1) of the overall study (Box 2). This includes
experience of fisheries management in both Developed and Developing Countries,
and with particular reference to the usage of multi-disciplinary approaches and
frameworks.

The overall study structure and implementation schedule is shown in Box 2 below:

Box 2: Overview of study

‘The Role of Fisheries in Poverty Alleviation and Growth: Past, Present and
Future’

Phase 1 (15 Nov 2004 – 4 Feb 2005):
Produce background paper in order to develop case-study approach including
template for case-studies and Terms of Reference for case-study authors;

Phase 2 (Feb 2005 – 31 March 2005)
Case-studies undertaken in eight countries (Bangladesh, India, Thailand, Forum
Fisheries Agency (South Pacific Island States), Mauritania, Morocco, Malawi and
Canada);

Phase 3 (4 April 2005 – 13 May 2005)
Develop synthesis report, policy brief and final project report;

2.2. Phase 1: Study components

The approach for Phase 1 (November 2004 – February 2005) consisted of nine
components, as follows;

2.2.1. Literature review

To provide an essential underpinning to the study and to allow the development of a
background paper, a review of the international literature was undertaken. With an
emphasis on providing a good understanding of the conceptual link between poverty
reduction and fisheries development, it was necessary to draw on a broad range of
literature including areas such as fisheries management and development, natural
resource management, economic development and economic growth, poverty and
poverty analysis, and policy and governance. The idea is that the background paper
(this report) will be informed by both fisheries and non-fisheries elements, but that
the process is expected to be two-way, with the background paper from this project

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having wider implications than just to the fishery sector in terms of ensuring pro-
poor growth based on common pool resources.

2.2.2. Consultation with relevant experts and practitioners

At various times during Phase 1, the work of the study was discussed with a number
of relevant experts and practitioners in the fields of fisheries and development,
principally at DFID. In addition, Arthur Neiland attended a one-day meeting on the
management of natural resources as part of the VI. Poverty-Environment Partnership
(PEP) meeting in Berlin on 2nd December 2004 (PEP, 2004), and gave a presentation
on fisheries and pro-poor growth. This provided a good opportunity to interact with
experts from a wide range of international development organisations, and to
participate in discussions on the role of natural resources in pro-poor growth.

2.2.3. Production of four briefing papers

The results of the literature review were used to produce four briefing papers which
attempt to identify and explain the major issues relevant to the study. Each of these
papers is included as a separate appendix to this report as follows:

A1: Poverty and Development – Evolving Concepts and Approaches;
A2: Economic Growth and Fisheries
A3. Fisheries Development and Management;
A4: Policy and Governance for Development;

2.2.4. Synthesis of briefing papers

The four briefing papers (above) were then synthesised to present a succinct
identification of the key issues and the inter-relationships between them. From the
beginning, the approach which was laid down for the study was used to guide the
synthesis. Essentially, it was decided to approach the problem of pro-poor growth
from the fish resource end of the spectrum, looking at two important aspects. First,
historically and in the present, to consider the strategy that has been adopted for the
exploitation of fish stocks, and the impact of this on economic growth, and on the
poor in particular. Second, alternative strategies for the exploitation of fish resources
and the impact that such strategies might be expected to have for pro-poor growth
and other important indicators, such as resource sustainability. Initially, therefore, the
synthesis focuses on poverty and poverty alleviation (A1), and the important role of
economic growth in this (A2). The contribution of fisheries to economic growth is
then considered, looking at fisheries development and management options (A3).
Finally, the impact of the policy and governance context on fisheries and its
contribution to economic growth and poverty alleviation is examined (A4).

2.2.5. Development of study template and national case studies

On the basis of the key issues identified and synthesised (above), a study template
was developed to form the basis of a series of national case-studies from around the
world. The case-studies will be implemented by nationals (or country specialists)
from a range of countries / regions (as explained below), using both primary and
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secondary information sources, analysing the role of the fisheries sector for poverty
alleviation. Each case-study will be defined by a Terms of Reference (Section 5).

It is planned that the case-studies will examine information and trends from current
fisheries systems as well as historical information (where appropriate) to assist in
developing an understanding of the key role fisheries has played in the past,
continues to play today and is likely to play in the future.

The case-studies will take account of the impacts (and likely future impacts) of
recent declines in capture fisheries. Although these may have been offset by gains
through (say) value-added processing and high-value, export-oriented aquaculture,
the extent to which (i) this is sustainable; and (ii) the poor have benefited directly or
indirectly from these gains (or, conversely, the extent to which they have become
‘losers’) are factors to be examined.

2.2.6. Selection of case-study countries

The following countries have been identified for case studies:

Bangladesh; India; Thailand; Pacific Island States (Forum Fisheries Agency);
Mauritania; Morocco; Malawi; and Canada (Atlantic cod);

2.2.7. Review and finalisation of study methodology

As part of the process of developing the study, a draft version of the current report
was distributed to a number of relevant experts and development practitioners for
comment, and also to the selected case-study authors. Comments and suggestions on
the content were requested, with particular reference to the following points:

- Do the four briefing papers (A1 – A4) provide effective coverage of key issues
relevant to the study?
- Does the synthesis (Section 3) show the important linkages between issues?
- Does the study template (Section 4), building upon the synthesis (above), provide
a useful framework for the case-studies?
- Comment on the availability of information in your country relevant to
completing each of the template sections (for case-study authors in particular).

In the light of comments received, the draft report and methodology was finalised
and then re-distributed to the case-study authors and others.

2.2.8. Arrangements for implementation of Phase 2

Phase 2 will commence with the commissioning of the national case-studies in
February 2005. The case-study authors will be expected to provide an interim
progress report on 7th March, and the IDDRA team will provide comments on any
issues arising during the course of the work. An e-mailing list will be established for
this purpose. By 31 March 2005, the draft case-study reports should be completed
and sent to IDDRA.

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2.2.9. Preparation for Phase 3

Following completion of the case studies, a key synthesis paper will be prepared.
Case study authors will be asked to comment on this paper, which will cover the
following broad areas (and others depending on the results obtained).

Key Synthesis Paper:

The IDDRA study team will distil relevant evidence from the case studies and
synthesise this into a key policy brief/strategy paper (to be defined) that will identify:

- Common facets of success in the development of fisheries for sustainable growth;
- Common facets of success in the development of fisheries for poverty reduction;
- Trade offs between efficiency (e.g. using DWFNs vs. local fleets), equity (e.g.
open access for the poor - safety nets with rent dissipation and the
sustainability/effectiveness of this compared with other possible scenarios such
as decommissioning and alternative income generation) and environment (e.g.
fishing within multi-species stocks vs. biodiversity);
- Recommendations for future strategies (including capacity building) inter alia to
support pro-poor growth.

The analysis will focus on features relevant to governance, policy processes and
management that have led to successful pro-poor outcomes as a result of wealth
generated sustainably from fisheries and aquatic resources.

3. KEY ISSUES

3.1. Introduction

In this section, the key issues that are central to the overall study will be presented
succinctly. A more detailed discussion is provided in the Appendices (A1-A4) which
underpin this section.

It is recommended that case-study authors should read these sections and the
appendices carefully, and use them to focus their implementation of the study
template (Section 4 below). In other words, the case-study authors should attempt to
ensure adequate coverage of the key issues highlighted in this section (and the
appendices) within the reports which they produce. The reason for emphasising this
point (which will appear obvious to the experienced case-study authors selected for
work) is that many of the ideas and approaches to fisheries management and its
relationship to poverty presented in this methodology report are relatively novel – for
example, fisheries management is conventionally based on biological principles,
whereas in this study the focus is on ideas from economics and social sciences such
as resource rent generation and use, and institutional frameworks and policy
processes. A significant complication in all this is that government documents and
other likely sources of information in many countries will tend to focus on biological
management of fisheries, and it will require a significant level of detective work, by
case study authors, to put together the alternative information required for a more

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broad-based analysis of fisheries and poverty. This is the challenge faced by the
current study.

To begin, it should be recognised that fish resources are inherently extremely
valuable, representing a potential source of renewable wealth to the countries which
own them. It was the observation (in Canada in the 1950s) that the fishers exploiting
these valuable resources were ironically amongst the poorest members of society that
gave the impetus for the development of fisheries economics.

Since the 1950s, much progress has been made to explain in theory why the
exploitation of such valuable resources is so often associated with poverty.
Regrettably, less progress has been made in developing and implementing policies
that allow the wealth inherent in fish resources to be generated and used for poverty
alleviation.

The lack of progress in practical implementation may be explained in many ways. A
number of broad themes may be identified, however, which are developed further in
the sub-sections 3.2 to 3.5 below.

The theory of fisheries economics demonstrates, and the empirical evidence
confirms, that unmanaged fisheries will be overexploited, always in an economic
sense and in many cases biologically also. The management of fisheries is therefore
required. But developing effective management schemes has proved to be a difficult
task.

One important reason is that it has taken a long time for the concept of wealth (in the
form of resource rents) to enter policy consciousness, and this process is far from
complete. As a result, the benefits obtainable from fish resources have been, and in
many countries (both developed and developing) continue to be, perceived purely in
terms of the fishing activity itself (employment, incomes, value-added, livelihoods).
Perceiving the benefits solely in this way has at least two unfortunate effects. First, it
makes high exploitation levels appear attractive, since generally variable like
employment are positively correlated with the exploitation level. Second, it means
that in order to benefit from fish resources, people must be fishers (or be closely
associated with the fishing activity or someone who is).

To the extent that it is addressed at all in policy formulation, the issue of the nature
of the benefits from fish resources is generally only addressed implicitly. There is
often an implicit assumption that the benefits must be taken through the activity.
When the objective is to use such resources for poverty reduction, it becomes
essential to address explicitly the nature of the benefits available and sought.
Otherwise, it is impossible to answer questions such as: what is the target group of
poor people? A policy relying on activity-based benefits can only target poor fish
exploiters (or at best poor fishing communities) whereas a policy based on the wealth
of the resource allows much broader scope in terms of potential beneficiaries.

Important subsidiary aims of this study are:

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• to demonstrate the nature, and through the case studies the quantitative
importance, of the different types of benefit obtainable from the
exploitation of fish resources, and
• to assess the potential contribution of fish resources to poverty reduction
as a function of the type of benefit.

A second major reason for the lack of practical progress in fisheries management is
the absence of appropriate instruments and institutional arrangements. Partly, this is
because inappropriate objectives have emerged from the policy process. For
example, resource sustainability, which is in fact simply a constraint on the ability to
achieve other goals, is probably the most common objective for fisheries
management. As a result, in many cases, fisheries management has become little
more than a forlorn attempt to keep exploitation levels within the resource constraint.
Even where it has been achieved, resource sustainability has usually been associated
with economic overexploitation, with the wealth of the resource dissipated.

However, even where the importance of economic factors is recognised in the policy
process, the design and implementation of appropriate instruments and institutional
arrangements has proven to be a difficult challenge.

The result is that the widespread failure of fisheries management has resulted in
missed opportunities for sustained fisheries-based growth and in many cases to the
gradual erosion of their potential to address poverty outcomes.

In order to reverse this situation, radical change in the approach to fisheries
development and management is needed. The following sections outline the main
issues in this change.

3.2. Poverty and development

Poverty is a major global problem with about half of the world’s population living on
less than US$2/day. In the World Development Report (2000), the World Bank states
that poverty elimination is the world’s greatest challenge, and an international
development target has been proposed (OECD) of reducing half of the proportion of
people living in extreme poverty by 2015. Many donors and international
development agencies have responded with a range of plans.

There is also an active and growing debate and associated research into key poverty
issues – How to measure poverty? How to identify and characterise the poor? What
are the causes of poverty? How to address poverty reduction? There has also been a
renewed interest and recognition of the role of economic growth in development,
with greater emphasis on the distribution of benefits (‘pro-poor growth’).

There are three broad categories of methods used to measure poverty – nutrition-
based methods, basic needs and composite indicators, and income-based measures.
All of these methods have both strengths and weaknesses. The limitations of income-
based measures (e.g. failure to include non-marketed production) originally spurred
attempts to develop new approaches, leading to the emergence of the Basic Needs
(BN) and Human Development Index (HDI).
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However, subsequent research has shown a high degree of correlation between
income and HDI, BN-indicators and others. Overall, income-based measures aim to
quantify the number of individuals or households falling below selected poverty
lines. Other indicators of relative poverty include the $1/day and $2/day measures.

The reporting of income-based measures at national level provide a general overview
of poverty for policy-makers. They can also be decomposed by region, sector, gender
etc and provide an indication of which societal groups are vulnerable and how
poverty alleviation interventions might impact on such ‘at risk’ groups.

Poverty measures provide an indication of the scale of the problem, but they cannot
provide any explanation on why people are poor or why poverty is so significant in
particular sectors or countries. Since the 1950s, development economists have
attempted to provide an understanding of the causes of poverty, and in turn, the
various theories and explanations have been used, to varying degrees, by
governments and development agencies to inform relevant policy and actions.

Development thinking has centred on the following themes. First, the development
record and the experience of many East Asian countries during the 1970s and 1980s
indicated that economic growth could lead to poverty reduction. However, it was
also found that simply transferring policies (e.g. structural adjustment and neo-liberal
programmes) from one region to another was not always workable. Therefore future
policy to promote economic growth for poverty alleviation would have to take
account of a full range of factors (e.g. political stability, markets, investment climate
etc) on a country-specific basis.

Second, following further research into the mechanisms of poverty (e.g. impact
assessments of the SAP in Africa), investigators such as Sen concluded that a
person’s or household’s capability to access economic benefits is crucial in
determining vulnerability to poverty, and this will be determined by their position in
society (or entitlement). In other words, starvation could not simply be equated with
food shortages (a production problem), but could equally be a consequence of a lack
of purchasing power (a trade/exchange failing). Building upon this work, the
emergence of new, broad-based and multi-disciplinary approaches to poverty
analysis (e.g. sustainable livelihoods approach) have opened up a wide debate on
how poverty should be measured, assessed and deal with.

Third, there has been an increasing level of political attention and financial
commitment to international development and poverty reduction in the past five
years leading to the adoption of the Millennium Development Goals and the Poverty
Reduction Strategy Paper approach by most governments and international agencies.
There is also an on-going debate over the elements that should be at the centre of any
sensible poverty reducing strategy.

The topic of ‘pro-poor growth’ (the average growth rate of the incomes of the poor –
the absolute definition) has also emerged. While there is ongoing research into its
meaning and application, there seems to be a general consensus in a few areas:

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- growth is fundamental for poverty reduction, and in principle growth as such
does not seem to affect inequality;
- growth accompanied by progressive distributional change is better than growth
alone;
- education, infrastructure and macro-economic stability seem to positively affect
both growth and distribution of income.

It is interesting to note that the absolute definition of pro-poor growth is an income-
defined measure of poverty status, and that it only considers the incomes of poor
people. DFID explains that the pro-poor banner is useful because it aligns economic
growth with changes in the well-being of the poor. Also that most policies that
increase growth also reduce poverty and many policies that are effective for reducing
poverty also increase growth.

3.3. Economic Growth and Fisheries

There is widespread agreement that economic growth is a necessary condition for
poverty to be reduced in an economy. It is not, however, sufficient since there is a
need to ensure that the opportunity that such growth provides does, in fact, translate
into poverty reduction.

Economic theory and empirical evidence suggest that government macroeconomic
policy is an important determinant of economic growth. Among the most important
factors identified are:
• Free trade
• Stable prices
• Private enterprise
• A well-educated and healthy labour force
• Diversified exports without the dominance of a few primary products

These macroeconomic factors are beyond the scope of a single sector of the economy
such as fishing, so the key question is: how best can the sector contribute?

The answer to this question is complicated by a number of factors. First, economic
growth is clearly not the only macroeconomic objective, and Governments may
decide, or have no choice but, to pursue other priorities, such as the immediate need
to provide livelihoods for the poor.

Second, even where it is chosen, economic growth is a demanding target, particularly
in the case of poor developing countries. There is now broad acceptance around the
world and across the political spectrum that growth requires market-based economic
and institutional reform and implementing such reforms is challenging.

The main difficulty is that many of the policies that promote economic growth are
effectively investments in the sense that they involve some sacrifice now in return for
a gain in the future. They may therefore worsen the Government' performance
s
concerning other policy dimensions, for instance changes in economic structure may
cause substantial short-run unemployment. Moreover, such investments will pose the
social welfare problem that some people will gain and others will lose. Those who
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expect to lose will resist change, and being a relatively small identifiable group, each
of whom stands to lose significantly, they may well be able to organise themselves
into an effective political lobby group. Implementing economic growth policies is
not likely to be politically easy therefore.

In the case of the fisheries sector, two of the factors determining economic growth
performance have particular significance. First, there is the issue of free trade and its
corollary the liberalisation of trade, and second, there is the issue of dependence on
natural resources and primary products.

Liberalising trade to move towards free trade is recognised as a general factor
favouring economic growth. However, in the case of fisheries, the impact of such
liberalisation depends crucially on the fishery management structure in place. Many
fisheries around the world remain in conditions that approximate to free and open
access. In such cases, it can be demonstrated that liberalising trade is likely to have
perverse, counter-intuitive impacts. In particular, the fish-exporting country is likely
to lose from liberalisation.

Only if both the fish-exporting and the fish-importing countries have economically
rational fishery management systems in place (examples of such systems are
discussed in the next section) will trade liberalisation be unequivocally beneficial.

The second difficulty is that economic research suggests that heavy dependence by
countries on natural resources, such as fish, reduces economic growth (regardless of
how dependence is measured, e.g. % of GDP, % of exports). A number of
explanations have been put forward to explain this somewhat surprising result. In the
case of fishing, the most plausible explanation seems to be simply the fact that until
recently almost all of the world' fisheries were very poorly managed from an
s
economic point of view.

Maximising the contribution to economic growth requires therefore two related steps.
First, the focus of fisheries management must be placed far more centrally on the
issue of economic efficiency in the exploitation of fish resources. Second, the way in
which economically-rationally-exploited fish resources can contribute to growth
needs to be clarified.

Whether maximising the economic growth potential of fish resources also maximises
their contribution to poverty alleviation is a slightly different question.

3.4. Fisheries Development and Management

The previous section argued that economic growth is necessary, although not
sufficient, for poverty reduction, and that economically rational fisheries
management is necessary, although also not sufficient, to maximise the contribution
of fish resources to economic growth. This section discusses the problem of
economically rational fishery management.

If fisheries are not managed, and access to them remains free and open, then they
will be overexploited. This overexploitation arise first in its economic dimension of
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overcapacity. If economic conditions permit (prices high enough relative to fishing
costs), overexploitation will also occur in its biological dimension of overfishing
(defined for instance as fishing beyond maximum sustainable yield – MSY).

The reason why such overexploitation occurs is because the fish resource is a
valuable capital asset. The implicit return on this asset is called the resource rent.
Under conditions of free and open access, this resource rent is perceived by fishers to
be profit, and drives overexploitation of the fishery.

Over the years, fishery management systems have often focussed on the overfishing
dimension of the overexploitation problem (to the extent of it being widely argued
that fisheries that are not overfished require development rather than management).
This focus has led to worsening of the overcapacity problem.

The key issue for fishery management success is resource rents, and to prevent them
from leading to overexploitation requires that either access no longer be open, or that
it no longer be free (or some combination of the two). As well as explaining
overexploitation, resource rents are a crucial indicator in fisheries. They measure on
the one hand the cost of fishery management failure and on the other the potential
contribution of the fish resource to economic and social welfare. It is very surprising
therefore that so few estimates of resource rent are available.

One reason perhaps for the lack of such estimates is that in order to be able to
calculate resource rents meaningfully, fisheries must be organised into fishery
management units - FMUs (that is, a fish stock, or group of stocks, associated with
the fishers, or groups of fishers, that do or might exploit them). This kind of
approach was promoted by the FAO in the 1980s but its implementation has been
very gradual, although there are some signs that it may be speeding up following
success in some countries.

This emphasis on FMUs contrasts with an approach of great importance in relation to
the topic of fisheries and poverty reduction. A standard approach has been to identify
small scale fisheries (SSF or artisanal fisheries as they are sometimes called) and to
argue that they require special treatment. However, although the intentions
underlying this approach are laudable, the outcome generally is to disadvantage SSF.
The big problem is that they have no interface with other groups of fishers and find it
difficult to establish and to protect their rights. The FMU approach on the other hand
sees SSF as one among many production technologies within a unit. They can be
managed either on the same basis as other groups within the unit, or may be given
special treatment if it is felt that they must be protected for some reason.

There are few fishery management systems that allow the issue of resource rents to
be dealt with. Under free and open access, the rents are dissipated, going to fund
unnecessary capacity or simply being lost as fish stocks are run down. An
economically rational management system then is one that allows resource rents
either to be capitalised in some way or to be extracted.

Capitalisation of resource rents can occur under use right systems. Two broad use
right systems exist (each with many possible variations) based either on catch or on
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fishing effort. The best known example of the former is the individual transferable
quota system and of the latter, vessel licences. In both cases, resource rents will be
capitalised into the price of the use rights (i.e. the price of an ITQ or the price of a
vessel licence, assuming that they are transferable from one fisher to another).

In principle, catch and effort systems are equivalent. In practice, they differ. In some
fisheries it may be practically impossible to control the catch (too many landing
points, too many outlets for the catch) so there may be no option but to adopt effort
control. But where it can be adopted catch control is to be preferred. The reason is
that it is not possible to control all dimensions of effort so one or two dimensions
have to be chosen as proxies (e.g. vessel numbers and engine power). The problem is
that fishers will be given an incentive to expand the use of uncontrolled inputs to
replace the controlled ones in the production of effort, and effort-based management
tends to become therefore an ongoing race between the managers and the fishers.

Despite differences, in both cases resource rents will be capitalised into the price of
rights. If for instance resource rents were to increase, fishers would still seek to
expand their catch (as they would under free and open access) but to do so legally
they will have to purchase use rights, driving up the price of these.

The use of co-management may help the operation of both ITQ and licensing
systems. Community-based management is one form of co-management that is put
forward as a possible solution to the fishery management problem. But such schemes
are largely institutional, the choice of management instruments is no different under
them and the problems faced are similar, although they may help to ensure
compliance.

An alternative to use rights, either individual or communal, is taxation. Rather than
attacking the free and open access problem through the open part of the problem,
taxation does so through the free part. By correcting fish prices, taxation can force
fishers to take into account the cost of using the fish stock. In this way resource rents
can be extracted. It is difficult however to use taxation as the sole management
method.

An ideal economically rational management scheme probably has elements therefore
of use rights and taxation within a fishery management unit framework. A proportion
of resource rents will be capitalised into the price of the use rights and a proportion
will be extracted. In this way fish resources can contribute to economic growth by
adding to the process of capital accumulation. The capital made available can be
used to undertake investments to help the poor. One advantage of this approach is
that the target group of poor people is independent of fish exploitation itself. Some
economic growth benefits will also come through the fishing activity itself, although
such benefits may not necessarily be concentrated on the poor. The main poverty-
related benefits will appear through potential to fund pro-poor growth

This economic-growth-based approach can be contrasted with an alternative
approach which is to use to resource to provide activities (employment, livelihoods,
incomes) for poor fishers. In very poor countries, or very poor regions of poor
countries, there may be little choice but to follow such a strategy. And once it has
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been followed for a while, the Government may become locked into it, because the
number of people involved may become very great. Although providing some
benefits to the poor, this approach creates poverty traps. The target group for such a
policy is necessarily poor fishers only (the poor in the rest of economy are excluded
from benefiting from valuable fish resources but it is not clear why). There is also a
clear limit to the policy, in that not everyone can be a fisher, so that eventually
choices will have to be made, even within the target group.

The point should also be made that the second broad policy approach has often been
chosen by default, being the consequence of fishery management failure rather than
the desired result of government policy. The first policy approach (based on growth)
might be seen as the opportunity cost of the second, but because few estimates of
foregone resource rents are available this cost is usually unknown.

Where the activity-based approach has arisen by default or is no longer considered
desirable, the policy problem will be how to move from one approach to the other.
The transitional period may be very difficult, especially if the activity-based
approach has been pursued for a long period of time.

Amongst other things, the case studies will provide empirical evidence on use of the
two broad approaches. They will also provide evidence of the policy options for
moving from activity-based to growth-based strategies

3.5. Policy and governance

In most countries, economic structure and the policy environment do not remain
constant. Even with respectable rates of growth, the total number in poverty can
increase. And it has done so in many countries because of adverse changes in
economic structure and the absence of appropriate policies by government. In simple
terms, growth does not help the poor unless it reaches the poor. Nor does government
help unless the poor are the beneficiaries of public policies.

The design and implementation of appropriate policies for economic growth,
development, poverty alleviation, natural resource management, fisheries,
management and other areas are major challenges in developing countries. In recent
years, an increased level of research activity in the policy domain in general has
provided a better understanding of how success can be achieved, or in other words,
how the performance of policy can be increased, measured against stated objectives
or other relevant indicators.

An important entry-point for research has been to consider and further develop the
definitions and concepts which underpin this domain, principally - policy, the policy
process and governance.

Policy can be defined as a course of action proposed or adopted by those with
responsibility for a given area (usually government) and expressed as formal
statements or positions. The linear (or rational) model presents policy-making as a
problem-solving process which is rational, balanced, objective and analytical. It is
assumed that policy-makers approach the issues rationally and carefully considering
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all relevant information. Policy can also be viewed as the ‘policy process’, which is
not linear, at all, and incorporates a certain fluidity between decision-making,
knowledge and the operationalisation of policy. It can also be thought of as a broad
non-linear course of action, consisting of a web of inter-related decisions which
evolve over time during implementation. Policy is increasingly seen as an inherently
political process, rather than simply the instrumental execution of rational decisions.

Governance can also be defined in different ways. At one level, governance is the
manner in which power is exercised in the management of a country’s economic and
social resources. Governance also refers to the whole array of processes whereby
elements in society (government and non-government) wield power and authority,
and influence and enact policies and decisions concerning public life, and economic
and social development.

The close association between ‘governance’ and ‘government’ is an important entry-
point for considering the role of government, the nature of the state and the impact
on policy-making and implementation in different countries throughout the world. It
also focuses attention on the terms ‘good governance’ and ‘strong and weak states’.

In simple terms, some countries are classified as ‘Developed Countries’ and some as
‘Developing Countries’. Reynolds (1999) after surveying more than a century of
comparative development experience in 40 developing countries concluded that ‘the
single most important explanatory variable [of development] is political organisation
and the administrative competence of government’. A proper use of public resources
and donor transfers appears to be a good indication of good governance. A
government’s impact on development is not simply a function of fiscal resources, but
also a more intangible thing which one can call the ‘quality of government’.

Policy analysis, at all levels (international, national, meso and local), attempts to
assess (e.g. have stated policy objectives been achieved?) and evaluate (e.g. what
factors have affected implementation?) the performance of policy. This is not an easy
exercise given the associated complexity. However, with regards to the relationship
between natural resource management (e.g. fisheries management) and the impact on
livelihoods and poverty alleviation, recent research has helped to identify and
understand a range of important issues which affect policy performance, as follows:

- recognition: is the value of the natural resources sector valued by policy-makers?
- information/assessment: does this support policy and management decisions?
- policy narratives: is there an appropriate conceptualisation of the relationships,
development pathways and options?
- nature of the policy process: is it dynamic, active and willing to adapt and take
hard decisions? Is it transparent, evidence-based and accountable?
- participation: do all relevant stakeholders contribute to policy design and
implementation (through management systems)?
- laws: is there a well-established legal framework? (as a basis for rights and
actions?)
- institutions: is there an appropriate institutional framework (rules and
organisations)?

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- management capacity: is there an appropriate capacity to manage the natural
resources system (technical, financial capacity)?
- political will/desire: is there sufficient political will/desire to manage natural
resources effectively?

Finally, given the range of factors which can affect the performance of policy in
important and inter-related areas of natural resource management, economic growth
and poverty reduction, where should the emphasis be placed for future work? Three
areas appear to be particularly important (from the international literature):

- to raise the profile of the ‘environment’ and ‘natural resources’ (re: Millennium
Development Goal 7) within the Poverty Reduction Strategy Papers process; for
fisheries, there is a need to clarify the role of the sector in national development
strategies, and to better understand the level and pathways of benefits flows;
- to develop analytical frameworks linking NR to economic growth and poverty
alleviation, incorporating a full range of factors affecting policy, at different
levels and over time; in fisheries there is a need to broaden the analysis relevant
to planning and management, with particular reference to fisheries as a source of
wealth for economic growth and poverty alleviation;
- to define appropriate policy recommendations and methods of operationalising
policy relevant to maximising the contribution of the environment and natural
resources to development and poverty alleviation; in fisheries, the key issue is
how to improve fisheries management performance in this respect.

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4. CASE STUDY TEMPLATE

Template for Case Study Country Reports

(i) General instructions

This template outlines the main issues that case study reports should address. It is
intended to help the orientation of the reports but is not intended to be a
straightjacket. Where necessary, case study authors may develop other areas that are
of particular relevance to their country. In that case, IDDRA should be kept informed
so that it is possible to check the relevance for the other cases.

(ii) Purpose

The purpose of each case study is:
- to present, for each the case study country, empirical evidence concerning the
impact of past and present fish resource exploitation and utilisation patterns for
economic growth and poverty reduction
- to analyse the potential contribution of fish resources to economic growth and
poverty reduction under different (improved) exploitation and utilisation patterns
in the future
- to provide a measure of the economic (opportunity) cost of past and current
policies (in terms of foregone resource rents)
- to identify data gaps and thereby identify priority areas for data collection and
research in the future
- to identify policy gaps and thereby identify areas for policy reform in the future

(iii) Important methodology considerations

Each country report should try to follow the structure consisting of five sections as
shown below. For each section you should consider carefully the objective of the
section, the variables to be considered and the types of information which should be
included.

It is also important that each case study author should carefully consider the
information upon which the case study is based. In advance of collecting and using
information relevant to the study, it is worthwhile spending some time reviewing:

- the possible sources of information – for example, formal records and documents
(e.g. government reports), formal and informal documents from projects (e.g.
project survey reports), key informants (e.g. government officials or experts), and
community leaders (e.g. heads of fishing groups or communities);
- the likely gaps in the records, and the quality and reliability of the information
which is available;
- the best way of making such assessments about the information base, and
developing a strategy for dealing with any weaknesses. For example, for any
specific issue, such as the contribution of fisheries to employment or income, it is
advisable to obtain estimates from a number of sources (government records,

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project records, NGOs etc) and then compare them. If the estimates are not a
good match, then it is important to investigate the reason for this, and try to
decide what is the most reliable estimate based on additional sources such as
expert opinion;

It is also important to consider how each particular section below (1-5) relates to the
‘key issues’ which have been identified and discussed by the study methodology
report (and presented in detail in the report appendices). As indicated in the
methodology report, the current study aims to focus on a broad range of issues
relating to fisheries management and economic development (poverty), as opposed to
more conventional analyses of fisheries management which tends to emphasise fish
stock management and biology-based approaches. Therefore, one of the major
challenges which you will face in producing your report is to integrate conventional
analyses of fisheries management in your case study country (which will be widely
available through official reports) and the set of key issues identified in the study
methodology.

The five sections which should make up the case study reports (and which can be
supplemented by additional appendices) are as follows:

1. BACKGROUND (2 to 3 pages, A4, 12 point, single-spaced)

Objective: to provide a general profile of the country (national context); based on
most recent statistics / information and with an indication of trends where possible;

Possible Information sources: Official Government Reports, World Bank country
profile document; or a World Bank Poverty Reduction Strategy Paper;

Key questions / variables to cover might include:

- history, structure and nature of government and national politics;
- important national policy priorities;

- Population (date of census)
- Population growth rate (value%). Is it increasing, decreasing, stable?
- Differences between rural and urban areas? Also coastal areas? Are people coming
to the coast? Where are the large cities?

- Economic structure: importance and growth rates of different sectors
- Unemployment
- Balance of payments

- Indicators of national characteristics and development status (political, social,
economic, Human Development Index)

Notes: this should be a brief section, use summary tables and graphics where
possible; include more detailed statistics information in appendices to the main
report; where appropriate identify the reliability of the statistics / information used, if
possible;
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2. POVERTY (3 to 5 pages)

Objective: to examine the poverty status of the case study country; to explain the
reasons for poverty; and to give an account of the relationship between poverty and
the fisheries sector;

Possible Information sources: Government Reports; National Statistics; Reports of
Research Programmes and Development Agencies; Reports from NGOs; Multi-
Lateral donor documents (e.g. WB-PRSPs); Fisheries Sector Reports and Research
Programmes Reports;

Key Variables / Questions which might be covered:

- How is poverty defined in your country?

- What proportion of the population is estimated to be living in poverty on the
adopted definition? How is this figure changing over time?

- Which economic sectors and/or regions are most affected by poverty? What are the
factors that explain this? (Are there any specific empirical studies that look at these
factors?)

- Report on any studies that have been undertaken of poverty in general; and also any
studies which have looked at poverty in the fisheries sector.

Notes: The overview of poverty measurement methodology, results and analysis
presented in Appendix A1 will provide an initial guide to the types of issues and
information important for this section. However, it is likely that poverty assessment
in the different case study countries will vary, and the case study authors should try
to highlight any issues specific to their country.

3. ECONOMIC GROWTH (3 to 5 pages)

Objective: to examine the nature and patterns of economic growth of the case study
country, and the contribution of the fisheries sector;

Possible Information sources: Government Reports; National Statistics; Reports of
donor and other international organsaitions;


- What are the contributors to economic growth?

- GDP per capita (1980, 1990, 2000, or series)

- What is the fishing sector contribution to GDP, to exports and to other key
economic indicators for your country

D-24

- How is the fishing sector defined for these purposes (marine fish catching, inland
fish catching, aquaculture, fish trading, fish processing)

Notes: An overview of economic growth and the relationship to the fisheries sector is
provided in Appendix A2, and raises a range of important issues relevant to this
section including the importance of effective fisheries and the difficulty of measuring
the contribution of environmental resources to economic growth. Each case study
author should try to consider these types of issues within the context of their case
study country.

4. FISHERIES DEVELOPMENT AND MANAGEMENT (5 to 10 pages)

Objective: to examine the role of fisheries in development by analysing both
fisheries exploitation (or activity-related) benefits and wealth-related benefits;

Possible information sources: Government Reports; Official Statistics; Reports from
Research Programmes; NGO Reports; Expert Interviews; Interviews with
Community leaders; Interviews with industry leaders;


- What are the principal fish resources?
- What are the landed values?
- Give the historical trends if possible?

Fisheries exploitation or activity-related benefits

- How many people are employed catching fish? Can this be broken down by
fishery?

- What is the average wage of these people? And the variability in wages between
fishers and over time?

- How does this compare with the average wage for comparable activities (define
these activities)

- What other activities are undertaken with respect to fishing?
- trading
- processing
- other specify

- How many people are employed in each activity? Breakdown women and men

- What are average incomes and their variability for each activity? Breakdown for
women and men

- Do fish resources play a role in food security? If so, how? How many people are
affected? How is the number changing over time?

D-25

- Are fish resources used to provide subsistence livelihoods? If so, how many people
are involved? How is the number changing over time?

Wealth-related benefits

- Are fisheries managed on a fishery management plan basis? If so, how are the
Fisheries Management Units (FMUs) defined?

- What are the main FMUs?

- Has resource rent been estimated for any fisheries? If so which? What are the
results?

- Is access limited (restricted) for any fisheries? If so which? How is access limited?
How do new entrants enter the fishery?

- If use rights exist, are they traded? What information is available on their price?

- How much revenue does the Government generate from fishing? What proportion
comes from domestic fishing? How is it raised? What proportion comes from foreign
fishing? How is it raised?

Notes: An overview of some of the key issues relevant to this section is provided by
Appendix A3. Special emphasis is given to the importance of empirical information
to inform the analysis of different fisheries management approaches (re: management
which focuses on activity-related vs. wealth-related approaches). Case study authors
should recognise the importance of this empirical information, and attempt to secure
relevant and high quality data (a key part of the study overall).

5. POLICY MAKING (5 to 10 pages)

Objective: to examine the policy context, policy frameworks and policy processes
relevant to fisheries management and economic development (poverty alleviation) in
each case study country;

Possible information sources: Government Reports; Research Publications; Donor
and international organisations reports; NGO publications; Key interviews with
Government staff; Key interviews with actors in the fisheries sector; Key interviews
with other policy experts;

Key questions / variables might include:

- How is poverty issue addressed at macroeconomic level? (Is there a Poverty
Reduction or Eradication Plan)

- What other policies have been applied to address poverty? (e.g. Factor and product
market policies? Pro-poor spending on infrastructure? Policies to direct patterns of
growth?)

D-26

- What are the government’s objectives?

- Which organisations (Government, non-Government, civil society) are responsible
for the design and implementation of policies and instruments for poverty reduction?

- What are the main instruments being used?

- What evaluations have been undertaken of these policies and instruments? How
successful are they judged to have been? What factors explain their success or
otherwise?

- How does the fishing sector figure in the policy? Is it specifically mentioned in the
PRSP or similar?

- How does the view of the fishing sector differ between different Ministries (e.g.
fisheries versus finance) and how are conflicting views reconciled?

- How is linkage between fish resources, economic growth and poverty reduction
articulated to policy makers?

- What socio-economic studies have been undertaken of the fisheries sector and how
are the results implemented in policy terms?

- What role is played by NGOs, fisher and other organisations and civil society in
general?

- What factors affect the participation of poor people in economic growth activities,
policy-making and implementation?

- Are there any data or research gaps relevant to improved policy-making that need
to be addressed?

- What are the important areas for policy development in the future with reference to
the linkage between fisheries, economic growth and poverty reduction?
(opportunities)

- What factors are likely to impact on the nature and rate of policy development in
these areas in the future? (constraints)

Notes: An overview of issues relevant to policy and governance is provided in
Appendix A4, and it is important to recognise that policy analysis for many fisheries
in relation to economic development (and poverty reduction) is very limited in most
countries. Case study authors may have to draw upon a wide range of information
sources (and to triangulate between them) in order to produce a succinct overview of
the policy framework (in general) and the factors which affect policy performance.

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5. CASE STUDY TERMS OF REFERENCE

The UK Department for International Development (DfID) seeks to increase the
contribution of fisheries to reducing poverty, by encouraging decision makers to
adopt policies and measures that can be integrated in practical ways into broader
poverty reduction processes.

To this end, it has commissioned IDDRA to undertake a study to identify the links
between poverty reduction and fisheries development under different policy
arrangements

An important part of this study is a number of case studies which will provide
empirical evidence on the role of fisheries in supporting growth and poverty
reduction. The case studies will be undertaken in close collaboration with IDDRA
staff. Case study authors will make the following contributions to the overall study:

1. Comment on the background document, produced by IDDRA, which outlines the
main issues in linking fisheries exploitation and poverty reduction. Comment in
particular on the proposed template for the case study reports, which is included
in the background report as section 4. On the basis of comments received,
IDDRA will finalise the background report and the template.

2. On the basis of the finalised template (attached), write for their case study
country a report of between 8,000 and 10,000 words, supported by appendices
where appropriate.

3. Provide, where they are in the public domain, copies of key source documents
(e.g. PRSP or parts thereof relevant to fisheries, Fishery sector strategy
document, Fishery management plans for key fisheries, Studies of rents in key
fisheries, .....). Ideally, these documents should be provided in electronic format
(Word or scanned).

4. Read and comment on the synthesis report and policy brief produced by IDDRA
using the background document and case study material.

Timing

Case studies will be commissioned as soon as possible following receipt of
comments and finalisation of the background report and template.

Case study authors should provide a FIRST INTERIM PROGRESS REPORT BY
7TH MARCH 2005. This report should include a status report on the work in
progress, annotations of the template and indications of available background
material. It would be useful if copies of the material referred to in point 3 above
could be supplied by this date.

Case study authors should provide a COMPLETE DRAFT REPORT BY 31
MARCH 2005, plus copies of the material referred to in point 3 above.

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Where necessary any revisions to the complete draft report must be completed by 30
APRIL 2005.

D-29

6. CONCLUDING REMARKS

The current report is the main output of Phase 1 of the DFID/PASS project ‘The Role
of Fisheries in Poverty Alleviation and Growth: Past, Present and Future’. As a
background document to the study, it provides an overview of relevant conceptual,
theoretical and empirical information in four areas – poverty and development,
economic growth and fisheries, fisheries development and management, and policy
and governance. This information is summarised in the main body of the report
(underpinned by more detailed appendices) and is used to develop a methodology in
the form of a template for a series of national case-studies.

The information presented draws upon on a broad range of literature. This was
considered important in order to provide a good basis for research into the role of
fisheries in poverty alleviation and growth (the key objective). It is intended that the
research should be informed by both fisheries and non-fisheries elements and
perspectives, with the eventual outputs having implications for the fishery sector and
other common pool resources, in terms of ensuring pro-poor growth.

The next phase (2) of the project will involve national case-studies implemented in
eight developing countries using the study template. The resulting studies will be
synthesised into a main report and used to produce a policy brief by June 2005.

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A1: POVERTY AND DEVELOPMENT – EVOLVING CONCEPTS
AND APPROACHES

A1.1. INTRODUCTION AND OBJECTIVES

Poverty is a major global problem, with half of the world’s population living on less
than $2/day. In the World Development Report (2000), the World Bank recognised
poverty elimination as the “world’s greatest challenge”. The Organisation for
Economic Cooperation and Development (OECD) has proposed the international
development target of reducing by half the proportion of people living in extreme
poverty by 2015. International development agencies have responded with a wide
range of new plans and interventions, making poverty alleviation the new priority
agenda for these organisations.

In parallel, debate and discussion, and research into key poverty issues has also
increased, covering areas such as poverty measurement, the identification of the poor
and their characteristics, and the investigation of best policy approaches and
interventions for poverty alleviation. This has included an attempt to build upon
related concepts and ideas – for example, what is the relationship between economic
growth and poverty alleviation? – and, the possibility of learning from past
approaches – for example, what is the impact of economic structural adjustment
programmes (SAP) on poverty in particular countries?

An important recent development has been the broadening of poverty definitions and
analyses – to explain poverty by looking at a range of factors (economic, social,
institutional etc) – and to design interventions accordingly. At the same time, there
has been a renewed recognition of the role of economic growth in development, but
greater emphasis has been placed on the distribution of benefits as an important
factor in poverty alleviation (the concept of ‘pro-poor growth’). In the following
brief account, the relationship between the various concepts and ideas, and resultant
policy approaches for poverty alleviation which have emerged over the past 50 years
will be described. In turn, this will be used to identify relevant research priorities and
development approaches, with regards to the role of natural resource management,
and fisheries in particular (the focus of the current study).

There are three sections to follow. The first section addresses the fundamental
question ‘Who are the poor’ by examining the various methods used for measuring
poverty. The second section presents some empirical data from a selection of African
countries derived from the application of these methods. The third section addresses
the second fundamental question ‘Why are people poor?’ and what policy
approaches are used for poverty alleviation.

A1.2. WHO ARE THE POOR? METHODS FOR MEASURING POVERTY

There are three broad categories of methods used to measure poverty – nutrition-
based methods, basic needs and composite indicators, and income-based measures –
as shown in Table 1.

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First, in the case of nutrition-based methods, a poverty index can be generated by
measuring the extent of food energy deficiency. There are two ways of doing this: (i)
direct computation – by recording the energy intakes of individuals relative to
requirements (e.g. in 1948, FAO started out by setting an average daily calorie intake
requirement for adults of 2,600 calories, an approach which has undergone various
refinements since then); (ii) anthropological studies – which compare an individual’s
physiological condition with calibrated norms (e.g. for children – underweight
condition connected with poor nutrition in the past can be gauged by measuring
height-for-weight; for adults, various Body Mass Indices, BMI, are often employed).
Overall, nutrition-based methods can give some idea of national malnourishment, but
fail to capture the magnitude of the nutritional shortfall. In the case of direct
computation, there are various limitations for policy-making (e.g. the measurements
represent a ‘snapshot’ of calorie intake at one point in time). For anthropological
studies there are also various weaknesses (e.g. it is difficult to compare calibrated
norms between countries).

Second, the basic needs and composite indicator methods arose in the 1970s in an
attempt to reflect that human needs include food, but also health, education, water,
shelter and transport (Streeten et al. 1982, p.7). The challenge was how to identify,
measure and aggregate appropriate indicators into a common index. Three
approaches evolved (i) UN Research Institute on Social Development (UNRISD)
Index (1970) which included 19 core indicators forming a composite development
index. This was judged to be more sensitive than income-based indices to changes in
economic and social conditions, but its principal weakness was that it tried to
measure development based on structural change rather than human welfare
requirements; (ii) the Physical Quality of Life Index (PQLI) (after Morris, 1979)
proposed three key variables as a basis – life expectancy at age 1, infant mortality,
and literacy levels. While this index permitted international comparisons, it was
criticised for the variables included, and the arbitrary allocation of weightings to
each; (iii) the UN Human Development Index (1990) was designed to take into
account relative international income levels, and also how such incomes are spent.
Computed annually by the UNDP since 1990, it combines proxies for individual
living standards (real GDP per capita), longevity (life expectancy at birth) and
knowledge (educational attainment). The resulting index figure per country are
between 0 (lowest level of development) and 1 (highest level). Overall, the HDI has

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Table.1: Poverty measurement methodology – an overview (synthesized from
Thorpe, 2004)

Poverty Method Comments
Measurements
Nutrition-based Focus: Poverty index by measuring extent of food - overall give some idea of prevalence of
energy deficiency – 2 approaches; national malnourishment, but fail to capture
magnitude of nutritional shortfall;
(i) Direct computation: by recording the energy
intakes of individuals relative to requirements: Some limitations for policy-making:
- represent a ‘snapshot’ of calorie intake at
- FAO World Food Survey (1948): set an average one point in time;
daily calorie intake of 2,600/person; - global impact of disease is presumed
- FAO WFS (1952): level adjusted down to reflect constant;
‘needs’ in developing countries; - no account of behavioural adaptation to
- FAO WFS (1974): minimum nutritional low calorie intake;
benchmark of 1.2 Resting Metabolic Rate - underplays importance of nutrients (other
(RMR); to prevent stunted growth and health than calories);
risks;
- FAO WFS (1985): 1.4 RMR for active working - give a general indication of nutrition and
life; poverty;
- FAO WFS (1996): attempts to integrate info on - some limitations:
metabolic rates and anthropometric studies to - majority of studies tend to focus on
give robust assessment of nutritional deficiency; vulnerable members of society (due to
resource constraints);
(ii) Anthropological studies: compare an individual’s - difficult to compare calibrated norms
physiological condition with calibrated norms; key between countries;
areas: - behavioural adaptation can affect
interpretation of results;
- children: (I) wasting – low weight for height
(starvation); (ii) stunting – low height-for-age
(prolonged under-nutrition); (iii) underweight – low
weight-for-age (past under-nutrition or current
vulnerability);
- adults: use of Body Mass Indices (BMIs)

Basic needs and Focus: human needs include food, but also health,
composite education, water, shelter and transport – problem of
indicators how to identify, quantify and aggregate into an index;
various attempts:
- more sensitive than income-based indices
(i) UN Research Institute on Social Development to changes in economic and social
(UNRISD) Index (1970) – 16 core indicators forming conditions; emphasis on measuring
a composite development index; structural change;

- permitted international comparisons;
(ii) Physical Quality of Life Index (PQLI) (Morris, criticised for variables included and
1979) – 3 variables: life expectancy at age 1, infant weightings (arbitrary?);
mortality and literacy levels;
- further extended concept of poverty, but
(iii) UN Human Development Index (1990 -) – some weaknesses: (I) some factors not
combines proxies for individual living standards (real included (e.g. governance); (ii) weak on
GDP per capita), longevity (life expectancy at birth) politics; (iii) data reliability (poor people
and knowledge (educational attainment); the resulting really included?); (iv) how are the individual
index figure per country are between 0 (lowest level factors weighted?
of development) and 1 (highest level).

D-34

Income-based Background: recent research has re-confirmed the - income based poverty measures reported at
measures importance of income-based poverty indicators; Dietz national level are frequently decomposed to
and Gibson (1994) have shown a high degree of indicate how poverty levels vary according
correlation between GNP per capita and HDI; to place of residence (e.g. urban/rural),
Isenman (1980) and Sen (1981) also note the sector of employment (e.g. agriculture,
correlation between BN-based indicators and average industry, etc), gender and educational level
real incomes; Dasgupta and Wheale (1992) disclose of household head. The resultant poverty
that political and civil liberties are positively related profiles enable policy-makers not only to
to real incomes per capita; identify which societal sub-groups are
vulnerable, but also to assess how proposed
Focus: to quantify the number of poverty alleviation measures may impact on
individuals/households falling below selected poverty such ‘at-risk’ groups;
and destitution lines;
- income-based measures (of income
Note: 4 key decisions underpin all measures of this shortfalls) also have limitations as a policy-
type: (I) how to establish an actual poverty line; (ii) guiding tool: (I) inflation needs to be taken
how to identify the extent of household poverty; (iii) into account in determining and re-
how to treat non-traded goods and services; (iv) how calculating poverty lines; (ii) provision of
to deal with under-reporting or mis-reporting of public goods and services must also be
income; treated carefully, and the social value
aggregated to reflect the true level of
Three measures: household income; (iii) inter-country
(i) The Headcount measure: the proportion of the comparisons must be treated with care (e.g.
population (persons or households) whose US$1/day is a useful indicator, but cannot be
consumption level falls below the specified poverty used to assess progress at the country level
line; or guide policy formulation).
(ii) The Poverty Gap (PG) measure: quantifies the
extent to which a poor person or household falls
below poverty line;
(iii) Foster-Greer-Thorbecke (FGT) (1984) measure:
or the squared poverty gap measure determines
income variation amongst the poor;

Other measures:
Indicators of the dimensions of relative poverty (or
inequality) include:
- US$1/day or US$2/day measures;
- Bottom decile or quintile: proportion of income
received by the poorest 10 or 20 per cent;
- Top decile or quintile: proportion of income in
top 10 or 20 percent;
- Gini Coefficient (and Lorenz Curve) from 1
(perfect inequality – one person has all the
income) to 0 (income is divided equally amongst
all);

helped to further extend the concepts of poverty and development, but it also has
some weaknesses (e.g. some key factors such as governance are not included, there
are questions about the reliability of the underlying data, and the weightings of
factors).

Third, with regards to income-based measures, according to Thorpe (2004), although
the shortcomings of income-based measures (e.g. failure to include non-marketed
D-35

production and remedy distorted prices) originally spurred attempts to develop
complements and alternatives – and led to the emergence of the Basic Needs (BN)
approach and the HDI – subsequent research has re-confirmed the importance of
income-based indicators (e.g. Dietz and Gibson (1994) have shown a high degree of
correlation between GNP per capita and HDI; Isenman (1980) and Sen (1981) also
note the correlation between BN-based indicators and average real incomes;
Dasgupta and Wheale (1992) show that political and civil liberties are positively
related to real incomes per capita). Overall, then, income-based measures aim to
quantify the number of individuals or households falling below selected poverty and
destitution lines. According to Thorpe (2004), there are four key decisions which
underpin all measures of this type: how to establish an actual poverty line, how to
identify the extent of household poverty, how to treat non-traded goods and services,
and how to deal with under-reporting or mis-reporting of income. There are three
main measures: (i) the Headcount measure – the proportion of the population
(persons or households) whose consumption level falls below the specified poverty
line; (ii) the Poverty Gap measure – the extent to which a poor person falls below the
poverty line; (iii) the Foster-Greer-Thorbecke (FGT) measure (or the squared poverty
gap measure) – determines income variation amongst the poor.

Other indicators of relative poverty (or inequality) can also be calculated including:
the ‘US$1/day’ or ‘US$2/day’ measures; income received by the top and bottom
deciles of the population; and Gini Coefficient (or Lorenz curve) expressing perfect
inequality (value =1) to perfect equality income (value =0).

The reporting of income-based measures at national level provide a general overview
of poverty for policy-makers. They are also useful when decomposed to indicate how
poverty levels vary according to place of residence (e.g. urban/rural), sector of
employment (e.g. agriculture, industry etc), gender and educational level of the
household head. This profiling exercise can help policy-makers to identify which
societal groups are vulnerable and how poverty alleviation interventions might
impact on such ‘at risk’ groups.

However, income-based measures also have certain limitations for policy-makers.
For example, the actual calculations must be transparent to see how factors such
inflation and the value of public service provision is treated. In addition, care is
needed with international comparisons involving measures such as the US$1 or
US$2/day incomes; although these are useful indicators of global progress, they
cannot be used to assess progress at the country level or guide policy-formation.

A1.3. EMPIRICAL EXAMPLES OF POVERTY MEASUREMENT

In this sub-section, empirical examples of the results of poverty measurements, using
the methods described above, from an arbitrary selection of countries in Africa are
provided by way of illustration.

First, Table 2 shows the prevalence of undernourishment (using a nutrition-based
method). The countries with highest prevalence are Somalia, Eritrea, Burundi and
Mozambique (percentage terms) and Ethiopia, Tanzania, Kenya and Mozambique
(absolute numbers). Whilst Benin, Burkina Faso, Ghana, Mali, Mauritania, Nigeria
D-36

and Senegal have all seen the undernourished proportion of their population fall
between 1979/81 and 1995/7, the reverse is true for Somalia, Tanzania, Madagascar,
Namibia and Mozambique.

Second, Table 3 shows results using the Human Development Index (HDI), its
components and the Gender Development Index (GDI). In general, Africa comes out
relatively badly under the HDI, with African countries occupying the last 28 places
in this global league table. In Table 3, Ghana (119) and Kenya (123) have the highest
rankings, and Burundi (160) and Burkina Faso (159) have the lowest. In general, for
Africa, Mauritius (63) is highest followed by Cape Verde (91) and South Africa (94).

Table 2 Prevalence of undernourishment in a selection of African countries

Pop 1996 Undernourishment in Total Population
Number Propn Propn Propn
1995/7 1979/81 1990/2 1995/7
Benin 5.5 0.8 36 21 15
Burkina Faso 10.7 3.2 64 32 30
Burundi 6.3 4.0 38 44 63
Eritrea 3.3 2.2 NA NA 67
Ethiopia 56.8 28.7 NA NA 51
Ghana 18.2 2.0 61 29 11
Kenya 27.8 11.4 25 47 41
Madagascar 14.2 5.6 18 34 39
Mali 10.2 2.9 59 30 29
Mauritania 2.4 0.3 35 15 13
Mozambique 17.9 11.3 54 66 63
Nigeria 101.4 8.3 40 13 8
Senegal 8.6 1.5 19 19 17
Somalia 8.5 6.2 55 70 73
Tanzania 30.7 12.3 23 30 40
Notes: Numbers are in millions, Popn are percentage figures. NA or non-availability of information.
Source: FAO (1999; Table 1)

Table 3 Human Development Index (HDI), its components and the Gender Development
Index (GDI)

HDI Life Adult Lit Enrol (%) GDP GDI
Rank Expect (%)
Benin 147 53.6 39.0 45 933 134
Burkina Faso 159 46.1 23.0 23 965 144
Burundi 160 40.6 46.9 19 578 145
Eritrea 148 51.8 52.7 26 880 133
Ethiopia 158 44.1 37.4 27 628 142
Ghana 119 56.6 70.3 42 1,881 108
Kenya 123 51.3 81.5 51 1,022 112
Madagascar 135 52.2 65.7 44 799 122
Mali 153 51.2 39.8 28 753 138
Mauritania 139 51.1 41.6 41 1,609 126
Mozambique 157 39.8 43.2 23 861 141
Nigeria 136 51.5 62.6 45 853 123
Senegal 145 52.9 36.4 36 1,419 130
Somalia - - - - - -
Tanzania 140 51.1 74.7 32 501 124
Notes: Life Expect. Is life expectancy at Birth (1995); Adult literacy rate is the percentage aged 15 and
above (1999). Enrol. Is the Combined primary, secondary and tertiary gross enrolment ratio for 1999. GDP
is GDP per capita (US$ adjusted in PPP terms, 1999), GDI is the Gender-related Development Index.
Source: UNDP (2001: Tables 1 and 21)
D-37

Third, Table 4 presents the most recent income-based estimates for poverty in Africa.
At a national level, over half of the populations of the following countries were
below the poverty line – Burkina Faso, Madagascar, Mauritania and Tanzania. The
converse was true for Benin, Burundi, Ghana, Kenya, Nigeria and Senegal (over
50% population above the poverty line). Interestingly, for all countries, where data
were available in Table 4, the level of poverty was higher in rural compared to urban
areas.

Table 4 Population below the Poverty Line (Most Recent Surveys)

Year Percentage below Line
Rural Urban National
Benin 1995 - - 33
Burkina Faso AAET 68.0 44.3 64.1
Burundi 1990 - - 36.2
Eritrea - - - -
Ethiopia - - - -
Ghana 1992 34.3 26.7 31.4
Kenya 1992 46.4 29.3 42.0
Madagascar 1993/4 77.0 47.0 70.0
Mali - - - -
Mauritania 1989/90 - - 57.0
Mozambique - - - -
Nigeria 1992/3 36.4 30.4 34.1
Senegal AAET 49.7 40.9 46.1
Somalia - - - -
Tanzania 1991 - - 51.1

Notes: AAET in the year column refers to data sourced from Ali and Thorbecke (2000: Tables A6 and A7);
Source: World Bank (2000, Table 4);

Fourth, Table 5 presents the poverty measurements for selected African countries
compared to International Poverty Lines. Mali and Nigeria have the highest
percentage of their populations (70-90%) living below the US$1 and US$2/day lines.

Table 5. International Poverty Lines (Relative Poverty)

Survey Year US$1 a Day US$2 a Day
% Pop Poverty Gap % Pop below Poverty Gap
below (%) (%)
Benin - - - - -
Burkina Faso 1994 61.2 25.5 85.8 50.9
Burundi - - - - -
Eritrea - - - - -
Ethiopia 1995 31.3 8.0 76.4 32.9
Ghana - - - - -
Kenya 1994 26.5 9.0 62.3 27.5
Madagascar 1993 60.2 24.5 88.8 51.3
Mali 1994 72.8 37.4 90.6 60.5
Mauritania 1995 3.8 1.0 22.1 6.6
Mozambique 1996 37.9 12.0 78.4 36.8
Nigeria 1997 70.2 34.9 90.8 59.0
Senegal 1995 26.3 7.0 67.8 28.2
Somalia - - - - -
Tanzania 1993 19.9 4.8 59.7 23.0

Source: World Bank (2000: Table 4) D-38

Fifth, Table 6 shows the results for Inequality in Africa (income-based). For
example, in Nigeria, Mali and Burkina Faso, the richest 10% of the population
account for about 40% of total national income/consumption, whereas the poorest
10% account for 1-2% of total national income, with Gini Coefficients of about 0.5
or above reflecting this level of inequality.

Table 6. Inequality in Africa

Survey Year Poorest 10% Poorest 20% Richest 10% Gini Coefficient
Benin - - - - -
Burkina Faso 1994 2.2 5.5 39.5 0.482
Burundi 1992 3.4 7.9 26.6 0.333
Eritrea - - - - -
Ethiopia 1995 3.0 7.1 33.7 0.40
Ghana 1998 2.4 5.9 29.5 0.396
Kenya 1994 1.8 5.0 34.9 0.445
Madagascar 1997 2.2 5.4 37.3 0.46
Mali 1994 1.8 4.6 40.4 0.505
Mauritania 1995 2.5 6.4 28.4 0.373
Mozambique 1996/97 2.5 6.5 31.7 0.396
Nigeria 1996/97 1.6 4.4 40.8 0.506
Senegal 1995 2.6 6.4 33.5 0.413
Somalia - - - - -
Tanzania 1993 2.8 6.8 30.1 0.382

Notes: The Poorest/Richest columns refer to this decile/quintiles share of total income / consumption.
Source: UNDP (2001: Table 12)

Finally, before leaving this section, it is important to re-emphasise the complexity of
poverty measurement. Thorpe (2004) in his overview, leaves this to Szekely et al
(2000, p.29)

‘So how much poverty is there…? The answer is that it depends. It is largely driven
by the choice of equivalence scales, assumptions about the existence of economies of
scale in consumption, the way in which missing and zero incomes are treated, and by
the way in which the data is adjusted or not for mis-reporting. It also depends on the
definition of the poverty line, on the index chosen to summarise the information, and
on other choices…’

A1.4. WHY ARE PEOPLE POOR? AND WHAT POLICIES ARE NEEDED
FOR POVERTY ALLEVIATION?

The poverty measures presented above provide an indication of the scale of the
problem which needs to be addressed. They cannot provide any explanation on why
people are poor or why poverty is so significant in particular countries. Clearly, in
order to address poverty through specific policy actions, it is essential to understand
the circumstances and factors which have led to this state. Since the 1950s,
development economists have attempted to provide this understanding, leading to a
series of development theories, which have been used to varying degrees by national
governments and bi-lateral and multi-lateral assistance agencies to formulate and
implement policies for development and poverty alleviation. In the following section,
D-39

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