Report No. PID7776 Project Name Argentina-Sustainable Fisheries (+) Management Project Region Sector Project ID Latin America and the Caribbean AF, SE ARLL57459 Estimated Project Cost: $6.5 million Expected Loan Size Implementation Agency Date PID Prepared April 1999 Projected Appraisal June 7, 1999 Projected Board Date Background $5 million (Learning and Innovation Loan) Secretariat of Agriculture, Livestock, Fisheries & Food (SAGPyA) NA The fisheries sector in Argentina is currently faced with a choice between continued revenue, export and employment growth, and complete collapse of populations of the most important commercial marine species. The sector, though small relative to overall GDP, has grown at an average annual rate of 15t over the past 10 years, generating approximately $ 1 billion in revenues in 1997 - almost 90t of which is exported - and directly employing approximately 25,000 workers. In addition to their direct, commercial benefits, fisheries resources are the basis of Argentina's unique fishing communities and are key elements of Argentina's marine ecosystem. As in many other countries, Argentina's rich marine resources are being exploited at a rate that significantly exceeds the biological capacity of the resource to reproduce itself. Captures of hake, the most important commercial species, were estimated at over 800,000 metric tons in 1997, compared to the recommended total allowable catch of 395,000 metric tons. The impact of over-fishing has become evident to all as fishing effort per unit catch has increased and the average size of fish caught has dropped dramatically. To address the crisis, Argentina has initiated several actions to avert collapse of its fisheries. A new fisheries' law was signed into effect in January 1998. The new law "promotes the development of fishing activity commensurate with the rational use of marine living resources while encouraging the use of environmentally friendly industrial processes that achieve the highest value added and generate the most employment for Argentine workers". The law created the Federal Fisheries Council and mandated the implementation of a quota management system (QMS) based on Individual Transferable Quotas (ITQs). QMS, by assigning quasi-property rights to harvest fish, is emerging as an international best-practice means of addressing the inefficiencies and perverse incentives associated with open-access or common property resource systems. A recent Bank review points out that while QMS has been an effective
instrument in many countries to achieve the ecological, commercial and social benefits associated with sustainable fisheries management, successful implementation requires a challenging process of decisions and actions by Government and other sector stakeholders. The report acknowledges that in Argentina, Government faces the difficult challenge of implementing the QMS concurrent with the need to substantially reduce catch to avert stock collapse. The considerable harvesting and processing over-capacity in the sector has led to substantial political lobbying and conflict regarding the initial allocation of ITQs. Despite this difficult scenario, there are several positive factors which support a limited program of assistance to Government at this time. Virtually all stakeholders recognize the need to improve resource management to avoid sectoral collapse, and all support the use of ITQs as a primary management tool. In addition, there is consensus on the need for Government to demonstrate decisive action in managing the hake crisis so as to build credibility for the new management system. Project Objectives The objective of the project is to build capacity for operation of a quota management system (QMS) for fisheries. Argentina is the first country in Latin America to legislate the use of individual transferable quotas (ITQs) as the primary resource management tool. The project would be the first Bank project to directly support implementation of a rights-based fisheries management system. The key performance indicators used to verify progress towards and achievement of the project objective would be: (i) fisheries law regulated; (ii) ITQs, at least for hake, assigned and registered; (iii) effective detection and enforcement actions to maintain individual and overall catch limits and enforce closure areas; (iv) roles of Government and private sector in the delivery and financing of fisheries management services defined; (v) policies in place governing by-catch and effort spill-over concerns; (vi) cost recovery mechanisms defined; (viii) longer-term industry adjustment strategy, including employment assistance and fleet reduction, defined and accepted by Government Project Description The project would support implementation of the QMS through the following project components: (i) Strengthened institutional capacity to implement QMS (primarily strengthened monitoring, control and surveillance, development of registry); (ii) Assistance for displaced fisheries workers (worker orientation and counseling for participation in existing national social programs); Project Implementation The overall project, including the Project Management and Monitoring and Evaluation component is expected to be implemented over a period of 28 months under the coordination of a project unit in SAGPyA which would be responsible for managing procurement, disbursement, audit and reporting and monitoring and evaluation activities with oversight from the Federal Fisheries Council. - 2-
The Strengthened Institutional Capacity to Implement QMS Component will be implemented by the Subsecretariat of Fisheries in SAGPyA with oversight from the Project Unit. The Assistance for Displaced Fisheries Workers component will be implemented by the project unit in SAGPyA, which will contract specialized consultants to work with fisheries workers organizations, local governments, MOL and SDS. Learning and innovation expectations The primary learning objective of the proposed program of support is: How to privatize access to public, natural resource assets in a socially just and acceptable manner? Within this more general learning objective, the project has two specific learning objectives: (i) How to implement a management system which supports the quality of property rights within the Argentine context; and (ii) How to effectively and efficiently assist vulnerable workers during industry's adjustment to more sustainable levels of resource exploitation under the new management system. The specific learning and innovation expectations of the proposed project are: Government (SAGPyA, Chief of Cabinet of Ministers, Ministry of Economy, Senate, Congress) will evaluate how well the innovative CFP structure is able to fulfill its management mandate, including regulation of the law, assignment of ITQs, establishment of TAC and dispute resolution. CFP and SSP will be able to determine the ability of SSP, in its current structure, to carry-out its essential functions under the QMS and what measures can be taken to improve its efficiency and effectiveness. CFP, SAGPyA, Chief of Cabinet of Ministers and Ministry of Economy will be able, as a result of studies, TA and experience gained under the LIL in strengthening key management functions, to more accurately estimate annual operational costs as a basis for establishing cost recovery goals and mechanisms. SAGPyA, MOL and SDS will pilot an unemployment assistance program, combining social and active labor assistance, based on targeting existing programs to specific geographical locations, and based on collaboration with local stakeholders and a broad range of assistance providers. CFP, MOL, SDS, Chief of Cabinet of Ministers, Ministry of Economy and Bank will learn what employment assistance programs provide most effective support to fisheries workers and what gaps, if any, exist in the social safety net and menu of active labor programs. CFP and SSP will develop models for their review with Chief of Cabinet of Ministers, Ministry of Economy, as well as industry stakeholders to review the economic, fiscal and social consequences of alternative fleet adjustment scenarios and mechanisms. Poverty Category Program of Targeted Interventions (PTI): Although unemployment assistance is expected to be targeted to poorest workers, the program is not classified as -3 -
PTI as the direct assistance will not be financed under the program. Environmental Impact The project is proposed for environmental category B. Although activities of the project are focused on improving management of marine resources and reducing pressure on fishing stocks, reduction of catches is expected to result in increased unemployment. In addition, the project will monitor environmental impacts, if any, of changes in gears and fishing practices under the new management regime. Program Objective Category Environment Contact Point: The InfoShop The World Bank 1818 H Street, N.W. Washington, D.C. 20433 Telephone No. (202)458 5454 Fax No. (202) 522 1500 Note: This is information on an evolving project. Certain activities and/or components may not be included in the final project. Processed by the InfoShop week ending May 28, 1999. - 4 -
Annex Because this is a Category B project, it may be required that the borrower prepare a separate EA report. If a separate EA report is required, once it is prepared and submitted to the Bank, in accordance with OP 4.01, Environmental Assessment, it will be filed as an annex to the Public Information Document (PID). If no separate EA report is required, the PID will not contain an EA annex; the findings and recommendations of the EA will be reflected in the body of the PID. Chile uses a variation of ITQs to manage three species. - 5 -